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<SEC-DOCUMENT>0001003297-10-000020.txt : 20100204
<SEC-HEADER>0001003297-10-000020.hdr.sgml : 20100204
<ACCEPTANCE-DATETIME>20100204160113
ACCESSION NUMBER:		0001003297-10-000020
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20091231
FILED AS OF DATE:		20100204
DATE AS OF CHANGE:		20100204

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PRO DEX INC
		CENTRAL INDEX KEY:			0000788920
		STANDARD INDUSTRIAL CLASSIFICATION:	SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841]
		IRS NUMBER:				841261240
		STATE OF INCORPORATION:			CO
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-14942
		FILM NUMBER:		10574161

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

	MAIL ADDRESS:	
		STREET 1:		2361 MCGAW AVENUE
		CITY:			IRVINE
		STATE:			CA
		ZIP:			92614
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>espdexq2.htm
<TEXT>
<html>

<head>
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<title>PRO DEX INC(Form: 10Q)</title>



</head>

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

<div style='page:Section1;'>

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

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

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

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

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

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

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0
 style='border-collapse:collapse' width="100%">
 <tr>
  <td valign=top style='padding:0in; '>
  <h4 style='margin:0in;margin-bottom:.0001pt;text-align:center;page-break-after:avoid;font-size:12.0pt;font-family:"Times New Roman";font-weight:normal;'><b><font style="font-size: 14.0pt">UNITED STATES </font></b></h4>
  <h4 style='margin:0in;margin-bottom:.0001pt;text-align:center;page-break-after:avoid;font-size:12.0pt;font-family:"Times New Roman";font-weight:normal;'><b><font style="font-size: 14.0pt">SECURITIES AND EXCHANGE COMMISSION</font></b></h4>
  <h5 style='margin-top:12.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in;font-size:13.0pt;font-family:"Times New Roman";font-weight:bold;text-align:center'>Washington, D.C. 20549</h5>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b><font style="font-size: 6.0pt">&nbsp;</font></b></p>
  <h6 style='margin-top:12.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in;font-size:11.0pt;font-family:"Times New Roman";font-weight:bold;text-align:center'><font style="font-size: 24.0pt">FORM
  10-Q</font></h6>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b>&nbsp;</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:.75in;text-indent:-.75in;text-autospace:
  none'><b>[X]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>&nbsp;</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b>For
  the quarterly period ended December 31, 2009</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b><font style="font-size: 6.0pt">&nbsp;</font></b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>OR</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>&nbsp;</b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:.75in;text-indent:-.75in;text-autospace:
  none'><b>[&nbsp; ]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.&nbsp;&nbsp;
  FOR THE TRANSITION PERIOD FROM&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>TO&nbsp;
  <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; .</u></b></p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>&nbsp;</b></p>
  </td>
  <td width=0 valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>&nbsp;</b></p>
  </td>
 </tr>
</table>

</div>

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

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=721
 style='width:100%;border-collapse:collapse'>
 <tr>
  <td width=720 colspan=2 valign=top style='width:7.5in;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b>Commission
  File Number&nbsp;&nbsp;&nbsp; 0-14942 </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td width=720 colspan=2 valign=top style='width:7.5in;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b>&nbsp;</b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td colspan=2 valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b><font style="font-size: 24.0pt">PRO-DEX, INC.&nbsp;&nbsp;&nbsp; </font></b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td colspan=2 valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b>(Exact
  name of Registrant as specified in its charter)&nbsp;&nbsp;&nbsp;&nbsp; </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>&nbsp;&nbsp; </b></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>&nbsp;&nbsp;&nbsp;&nbsp; </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b><u>Colorado </u></b></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b><u>84-1261240
  </u></b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b>(State
  or Other Jurisdiction of&nbsp;&nbsp;&nbsp; </b></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b>(IRS
  Employer Identification No.) </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b>Incorporation
  or Organization)&nbsp;&nbsp;&nbsp; </b></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>&nbsp;&nbsp; </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>&nbsp;&nbsp; </b></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>&nbsp;&nbsp;&nbsp;&nbsp; </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td colspan=2 valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b><u>2361 McGaw Avenue, Irvine, California 92614&nbsp;&nbsp;&nbsp;</u></b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td colspan=2 valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b>(Address
  of Principal Executive Offices)&nbsp;&nbsp;&nbsp;&nbsp; </b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;&nbsp; </font></b></p>
  </td>
  <td valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;&nbsp; &nbsp; </font></b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
 <tr>
  <td colspan=2 valign=top style='padding:0in; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b>Registrant's
  telephone number: <u>949-769-3200&nbsp;&nbsp;&nbsp;</u></b></p>
  </td>
  <td width=1 valign=top style='width:1.0pt;padding:0in 0in 0in 0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b><font style="font-size: 10.0pt">&nbsp;</font></b></p>
  </td>
 </tr>
</table>

</div>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'><font style="font-size: 10.0pt">Indicate by check mark whether the Registrant (1) has
filed all reports required by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past ninety days.&nbsp;&nbsp;&nbsp; Yes [X] No [ ] </font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'><font style="font-size: 10.0pt">Indicate by check mark whether the Registrant has
submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T during the preceding 12 months (or for such shorter period
that the Registrant was required to submit and post such files).&nbsp; Yes [] No [
]&nbsp;&nbsp; </font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>Indicate by check mark whether the Registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or
a smaller reporting company under &nbsp;Rule 12b-2 of the Exchange Act. (Check one):</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>Large accelerated filer [ ] Accelerated
filer [ ]&nbsp; Non-accelerated filer [ ] &nbsp;Smaller reporting company [ X ] </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">Indicate
whether the Registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">Yes
[&nbsp; ] No [X]</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">Indicate
the number of shares outstanding of each of the Registrant&#146;s classes of Common
Stock as of the latest practicable date:&nbsp; 9,668,671shares of Common Stock, no
par value, as of February 4, 2010. </font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>

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

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

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

</div>

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

<font face="Times New Roman">

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


</font>


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

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

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

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:9.0pt;margin-right:0in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt;text-align:center'>Pro-Dex, Inc.</p>

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

<div align=center>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width="100%"
 style='width:100.0%;border-collapse:collapse'>
 <tr style='height:1.05pt'>
  <td width="91%" colspan=2 style='width:91.14%;padding:0in 0in 0in 0in;
  height:1.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b><font style="font-size: .5pt">&nbsp;</font></b></p>
  </td>
  <td width="8%" colspan=2 style='width:8.86%;padding:0in 0in 0in 0in;
  height:1.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: .5pt">&nbsp;</font></p>
  </td>
 </tr>
 <tr style='height:17.1pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:17.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b><font style="font-size: 10.0pt">
	<a href="#Financial_Statements">Part I.&nbsp;Financial
  Information </a> </font></b></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:17.1pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>2</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:8.55pt'>
  <td width="89%" style='width:89.66%;padding:0in 0in 0in 0in;height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:-2.3pt;text-align:right;
  text-indent:2.3pt'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:17.1pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:17.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#Financial_Statements">Item&nbsp;1.&nbsp;Financial
  Statements: </a> </font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:17.1pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>2</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:8.55pt'>
  <td width="89%" style='width:89.66%;padding:0in 0in 0in 0in;height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:-2.3pt;text-align:right;
  text-indent:2.3pt'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:17.1pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:17.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#Financial_Statements">Condensed consolidated
  balance sheets &#150; June 30, 2009 and December 31, 2009 (unaudited)</a></font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:17.1pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>2</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:8.55pt'>
  <td width="89%" style='width:89.66%;padding:0in 0in 0in 0in;height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:-2.3pt;text-align:right;
  text-indent:2.3pt'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:17.1pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:17.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#CONDENSED&nbsp;CONSOLIDATED&nbsp;STATEMENTS&nbsp;OF&nbsp;OPERATIONS_">Condensed consolidated
  statements of operations (unaudited) &#150; Three months ended December 31, 2009
  and 2008</a></font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:17.1pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>3</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:8.1pt'>
  <td width="89%" style='width:89.66%;padding:0in 0in 0in 0in;height:8.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:8.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:-2.3pt;text-align:right;
  text-indent:2.3pt'><font style="font-size: 10.0pt">&nbsp;</font></p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:16.65pt'>
  <td width="89%" style='width:89.66%;padding:0in 0in 0in 0in;height:16.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#CONDENSED&nbsp;CONSOLIDATED&nbsp;STATEMENTS&nbsp;OF&nbsp;CASH&nbsp;FLOWS_">Condensed consolidated
  statements of operations (unaudited) &#150; Six months ended December 31, 2009 and
  2008</a></font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:16.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right;text-indent:2.3pt'><font style="font-size: 10.0pt">4</font></p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:5.4pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:5.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:5.4pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:-2.3pt;text-align:right;text-indent:2.3pt'>&nbsp;</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:17.1pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:17.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#CONDENSED&nbsp;CONSOLIDATED&nbsp;STATEMENTS&nbsp;OF&nbsp;CASH&nbsp;FLOWS_">Condensed consolidated
  statements of cash flows (unaudited) &#150; Six months ended December 31, 2009 and
  2008</a></font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:17.1pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>5</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:8.55pt'>
  <td width="89%" style='width:89.66%;padding:0in 0in 0in 0in;height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:-2.3pt;text-align:right;
  text-indent:2.3pt'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:17.1pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:17.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#NOTES_TO_CONDENSED_CONSOLIDATED_FINANCIAL_STATEMENTS__">Notes to condensed
  consolidated financial statements (unaudited) &#150; December 31, 2009</a></font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:17.1pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>6</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:8.55pt'>
  <td width="89%" style='width:89.66%;padding:0in 0in 0in 0in;height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:-2.3pt;text-align:right;
  text-indent:2.3pt'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:17.1pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:17.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#Item_2._Managements_Discussion_and_Analysis_of_Financial_Condition_and_Results_of_Operations_">Item&nbsp;2.&nbsp;Management&#146;s
  Discussion and Analysis of Financial Condition and Results of Operations </a> </font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:17.1pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>18</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:8.55pt'>
  <td width="89%" style='width:89.66%;padding:0in 0in 0in 0in;height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:-2.3pt;text-align:right;
  text-indent:2.3pt'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:17.1pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:17.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#Item_3.">Item&nbsp;3.&nbsp;Quantitative
  and Qualitative Disclosures About Market Risk </a> </font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:17.1pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>31</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:8.55pt'>
  <td width="89%" style='width:89.66%;padding:0in 0in 0in 0in;height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:-2.3pt;text-align:right;
  text-indent:2.3pt'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:17.1pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:17.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#Item_3.">Item 4T.&nbsp; Controls and
  Procedures</a></font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:17.1pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>31</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:8.55pt'>
  <td width="89%" style='width:89.66%;padding:0in 0in 0in 0in;height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:8.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:-2.3pt;text-align:right;
  text-indent:2.3pt'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:18.15pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:18.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b><font style="font-size: 10.0pt">
	<a href="#Item_1.">Part II.&nbsp;Other
  Information </a> </font></b></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:18.15pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>31</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:6.75pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:6.75pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:6.75pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:-2.3pt;text-align:right;text-indent:2.3pt'>&nbsp;</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:15.75pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:15.75pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#Item_1.">Item&nbsp;1.&nbsp;Legal
  Proceedings </a> </font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:15.75pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>31</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:4.0pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:4.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:4.0pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:-2.3pt;text-align:right;text-indent:2.3pt'>&nbsp;</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:12.6pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:12.6pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#Item_1A.">Item 1A. Risk Factors </a> </font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:12.6pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>32</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:7.65pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:7.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:7.65pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:-2.3pt;text-align:right;text-indent:2.3pt'>&nbsp;</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:.25in'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:.25in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#Item_2">Item&nbsp;2. Unregistered
  Sales of Equity Securities and Use of&nbsp; Proceeds</a></font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:.25in'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>33</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:4.5pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:4.5pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:4.5pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:-2.3pt;text-align:right;text-indent:2.3pt'>&nbsp;</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:15.75pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:15.75pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#Item_3">Item&nbsp;3. Defaults Upon
  Senior Securities </a> </font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:15.75pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>33</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:4.5pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:4.5pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:4.5pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:-2.3pt;text-align:right;text-indent:2.3pt'>&nbsp;</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:17.1pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:17.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#Item_4">Item&nbsp;4. Submissions of
  Matters to a Vote of Securities Holders </a> </font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:17.1pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>33</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:7.65pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:7.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:7.65pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:-2.3pt;text-align:right;text-indent:2.3pt'>&nbsp;</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:17.1pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:17.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#Item_5._">Item&nbsp;5. Other
  Information </a> </font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:17.1pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>34</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:5.4pt'>
  <td width="89%" style='width:89.66%;padding:0in 0in 0in 0in;height:5.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:5.4pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:-2.3pt;text-align:right;text-indent:2.3pt'>&nbsp;</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:18.9pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:18.9pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#Item_6._">Item&nbsp;6.&nbsp;Exhibits </a> </font></p>
  </td>
  <td width="8%" colspan=2 style='width:8.02%;padding:0in 0in 0in 0in;
  height:18.9pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right;text-indent:2.3pt'><font style="font-size: 10.0pt">34</font></p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:8.1pt'>
  <td width="89%" style='width:89.66%;padding:0in 0in 0in 0in;height:8.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 6.0pt">&nbsp;</font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:8.1pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial Unicode MS";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:-2.3pt;text-align:right;text-indent:2.3pt'>&nbsp;</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr style='height:18.9pt'>
  <td width="89%" valign=top style='width:89.66%;padding:0in 0in 0in 0in;
  height:18.9pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">
	<a href="#SIGNATURES_">Signatures </a> </font></p>
  </td>
  <td width="8%" nowrap colspan=2 style='width:8.02%;padding:0in 0in 0in .1in;
  height:18.9pt'>
  <p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:.75pt;
  margin-left:0in;text-align:right;text-indent:2.3pt'>34</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width="2%"><p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</td>
 </tr>
 <tr height=0>
  <td width=671 style='border:none'></td>
  <td width=11 style='border:none'></td>
  <td width=49 style='border:none'></td>
  <td width=17 style='border:none'></td>
 </tr>
</table>

</div>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>

<div>

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

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

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

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

</div>

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

<font face="Times New Roman">

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


</font>


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

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b><font style="font-size: 11.0pt">Item 1. &nbsp;&nbsp;&nbsp;&nbsp; </font>
<a name="Financial_Statements">Financial
Statements</a></b></p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width="100%"
 style='width:100.0%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td width="66%" valign=top style='width:66.72%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b>&nbsp;</b></p>
  </td>
  <td width="2%" valign=top style='width:2.36%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="12%" valign=top style='width:12.56%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="2%" valign=top style='width:2.36%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="12%" valign=top style='width:12.56%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=top style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td width="96%" colspan=5 valign=bottom style='width:96.54%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>PRO-DEX,&nbsp;INC.&nbsp;and&nbsp;SUBSIDIARIES</b></p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td width="96%" colspan=5 valign=bottom style='width:96.54%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>CONDENSED&nbsp;CONSOLIDATED&nbsp;BALANCE&nbsp;SHEETS&nbsp;(unaudited)</b></p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.55pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:solid windowtext 1.0pt;
  border-left:none;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.55pt' align="center">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><i>12/31/2009</i></p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:solid windowtext 1.0pt;
  border-left:none;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:14.55pt' align="center">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i>6/30/2009</i></p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b>ASSETS</b></p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Current&nbsp;assets:</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash&nbsp;and&nbsp;cash&nbsp;equivalents</p>
  </td>
  <td width="2%" valign=bottom style='width:2.36%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="12%" valign=bottom style='width:12.56%;border:none;border-right:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,790,000&nbsp;</p>
  </td>
  <td width="2%" valign=bottom style='width:2.36%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="12%" valign=bottom style='width:12.56%;border:none;border-right:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,124,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts&nbsp;receivable,&nbsp;net&nbsp;of&nbsp;allowance&nbsp;for&nbsp;doubtful&nbsp;accounts</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;of&nbsp;$57,000&nbsp;at&nbsp;12/31/09&nbsp;and&nbsp;$52,000&nbsp;at&nbsp;6/30/09</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,300,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,515,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other&nbsp;Current&nbsp;Receivables</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>16,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,216,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,365,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid&nbsp;expenses</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>302,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>117,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid&nbsp;income&nbsp;taxes</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>118,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred&nbsp;income&nbsp;taxes</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>643,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total&nbsp;current&nbsp;assets</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>8,251,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>7,255,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:4.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:4.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:4.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:4.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:4.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Property,&nbsp;plant,&nbsp;equipment&nbsp;and&nbsp;leasehold&nbsp;improvements,&nbsp;net</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,706,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,981,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Other&nbsp;assets:</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,997,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,997,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intangibles&nbsp;-&nbsp;Patents,&nbsp;net</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>147,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>87,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>87,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total&nbsp;other&nbsp;assets</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,084,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,231,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width="66%" valign=bottom style='width:66.72%;border:solid windowtext 1.0pt;
  border-top:none;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;assets</p>
  </td>
  <td width="2%" valign=bottom style='width:2.36%;border:none;border-bottom:
  double windowtext 2.25pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="12%" valign=bottom style='width:12.56%;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:double windowtext 2.25pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>17,041,000&nbsp;</p>
  </td>
  <td width="2%" valign=bottom style='width:2.36%;border:none;border-bottom:
  double windowtext 2.25pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="12%" valign=bottom style='width:12.56%;border-top:none;border-left:
  none;border-bottom:double windowtext 2.25pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>16,467,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:7.95pt'>
  <td width="66%" valign=bottom style='width:66.72%;border:none;border-bottom:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:7.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-bottom:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:7.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-bottom:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:7.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:7.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b>LIABILITIES&nbsp;AND&nbsp;SHAREHOLDERS'&nbsp;EQUITY</b></p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Current&nbsp;liabilities:</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts&nbsp;payable</p>
  </td>
  <td width="2%" valign=bottom style='width:2.36%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="12%" valign=bottom style='width:12.56%;border:none;border-right:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>568,000&nbsp;</p>
  </td>
  <td width="2%" valign=bottom style='width:2.36%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="12%" valign=bottom style='width:12.56%;border:none;border-right:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>827,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued&nbsp;expenses</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,561,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,394,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income&nbsp;taxes&nbsp;payable</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>64,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>53,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current&nbsp;Portion&nbsp;of&nbsp;T.I.&nbsp;Loan</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>400,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>400,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current&nbsp;portion&nbsp;of&nbsp;real&nbsp;estate&nbsp;loan</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>34,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>33,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total&nbsp;current&nbsp;liabilities</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,627,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,707,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Long-term&nbsp;liabilities:</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Notes&nbsp;Payable&nbsp;-&nbsp;T.I.&nbsp;Loan</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,167,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,367,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Real&nbsp;estate&nbsp;loan</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,511,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,528,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Deferred&nbsp;income&nbsp;taxes</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>184,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>171,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Deferred&nbsp;rent</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>236,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>212,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total&nbsp;long-term&nbsp;liabilities</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,098,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,278,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;liabilities</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,725,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,985,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Commitments&nbsp;and&nbsp;contingencies</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Shareholders'&nbsp;equity:</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common&nbsp;shares;&nbsp;no&nbsp;par&nbsp;value;&nbsp;50,000,000&nbsp;shares&nbsp;authorized;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9,668,671&nbsp;shares&nbsp;issued&nbsp;and&nbsp;outstanding&nbsp;Dec&nbsp;31,&nbsp;2009</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9,668,671&nbsp;shares&nbsp;issued&nbsp;and&nbsp;outstanding&nbsp;June&nbsp;30,&nbsp;2009</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>16,645,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>16,574,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated&nbsp;deficit</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(5,329,000)</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(6,092,000)</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:3.65pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:3.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:3.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:3.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:3.65pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total&nbsp;shareholders'&nbsp;equity</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11,316,000&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>10,482,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:6.55pt'>
  <td width="66%" valign=bottom style='width:66.72%;border:solid windowtext 1.0pt;
  border-top:none;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:6.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:6.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:6.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:6.55pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:13.05pt'>
  <td width="66%" valign=bottom style='width:66.72%;border:solid windowtext 1.0pt;
  border-top:none;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:13.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total&nbsp;liabilities&nbsp;and&nbsp;shareholders'&nbsp;equity</p>
  </td>
  <td width="2%" valign=bottom style='width:2.36%;border:none;border-bottom:
  double windowtext 2.25pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:13.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="12%" valign=bottom style='width:12.56%;border-top:none;border-left:
  none;border-bottom:double windowtext 2.25pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:13.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>17,041,000&nbsp;</p>
  </td>
  <td width="2%" valign=bottom style='width:2.36%;border:none;border-bottom:
  double windowtext 2.25pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:13.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="12%" valign=bottom style='width:12.56%;border-top:none;border-left:
  none;border-bottom:double windowtext 2.25pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:13.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>16,467,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:13.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:13.1pt'>
  <td width="96%" colspan=5 valign=bottom style='width:96.54%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:13.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i>See&nbsp;notes&nbsp;to&nbsp;condensed&nbsp;consolidated&nbsp;financial&nbsp;statements.</i></p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:13.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="66%" valign=bottom style='width:66.72%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="14%" colspan=2 valign=bottom style='width:14.9%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.46%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b><i><font style="font-size: 11.0pt">&nbsp;</font></i></b></p>

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

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

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

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

</div>

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

<font face="Times New Roman">

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


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

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

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width="100%"
 style='width:100.0%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td width="59%" valign=top style='width:59.62%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
  </td>
  <td width="2%" valign=top style='width:2.3%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="17%" valign=top style='width:17.1%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="2%" valign=top style='width:2.3%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="17%" valign=top style='width:17.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=top style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td width="98%" colspan=5 valign=bottom style='width:98.42%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>PRO-DEX,&nbsp;INC.&nbsp;and&nbsp;SUBSIDIARIES</b></p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td width="98%" colspan=5 valign=bottom style='width:98.42%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>
	<a name="CONDENSED&nbsp;CONSOLIDATED&nbsp;STATEMENTS&nbsp;OF&nbsp;OPERATIONS_">CONDENSED&nbsp;CONSOLIDATED&nbsp;STATEMENTS&nbsp;OF&nbsp;OPERATIONS</a></b></p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.25pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.3pt'>
  <td width="98%" colspan=5 valign=bottom style='width:98.42%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.3pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>Three&nbsp;months&nbsp;ended&nbsp;December&nbsp;31&nbsp;(unaudited)</b></p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.3pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-bottom:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-bottom:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i>2009</i></p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i>2008</i></p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;sales</p>
  </td>
  <td width="2%" valign=bottom style='width:2.3%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="17%" valign=bottom style='width:17.1%;border:none;border-right:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,696,000&nbsp;</p>
  </td>
  <td width="2%" valign=bottom style='width:2.3%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="17%" valign=bottom style='width:17.12%;border:none;border-right:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,237,000&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cost&nbsp;of&nbsp;sales</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,696,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,305,000&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross&nbsp;profit</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,000,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,932,000&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Operating&nbsp;expenses:</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Selling&nbsp;expense</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>353,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>329,000&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>General&nbsp;and&nbsp;administrative&nbsp;expenses</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>799,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>833,000&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Impairment&nbsp;of&nbsp;intangible&nbsp;asset</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>140,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Research&nbsp;and&nbsp;development&nbsp;costs</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>576,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>677,000&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;operating&nbsp;expenses</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,868,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,839,000&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Income&nbsp;from&nbsp;operations</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>132,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>93,000&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Other&nbsp;income&nbsp;(expense):</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Royalty&nbsp;income</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>8,000&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Interest&nbsp;expense</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(53,000)</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(60,000)</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(51,000)</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(52,000)</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Income&nbsp;before&nbsp;(benefit)&nbsp;for&nbsp;income&nbsp;taxes</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>81,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>41,000&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:13.05pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:13.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:13.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:13.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:13.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>(Benefit)&nbsp;for&nbsp;income&nbsp;taxes</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(499,000)</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(40,000)</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;income</p>
  </td>
  <td width="2%" valign=bottom style='width:2.3%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="17%" valign=bottom style='width:17.1%;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>580,000&nbsp;</p>
  </td>
  <td width="2%" valign=bottom style='width:2.3%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="17%" valign=bottom style='width:17.12%;border:none;border-right:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>81,000&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;income&nbsp;per&nbsp;share:</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Basic</p>
  </td>
  <td width="2%" valign=bottom style='width:2.3%;border:none;border-bottom:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="17%" valign=bottom style='width:17.1%;border:solid windowtext 1.0pt;
  border-left:none;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.06&nbsp;</p>
  </td>
  <td width="2%" valign=bottom style='width:2.3%;border:none;border-bottom:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="17%" valign=bottom style='width:17.12%;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.01&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Diluted</p>
  </td>
  <td width="2%" valign=bottom style='width:2.3%;border:none;border-bottom:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="17%" valign=bottom style='width:17.1%;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.06&nbsp;</p>
  </td>
  <td width="2%" valign=bottom style='width:2.3%;border:none;border-bottom:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="17%" valign=bottom style='width:17.12%;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.01&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Weighted&nbsp;average&nbsp;shares&nbsp;outstanding&nbsp;-&nbsp;basic</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,668,671&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,698,913&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td width="59%" valign=bottom style='width:59.62%;border:solid windowtext 1.0pt;
  border-top:none;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Weighted&nbsp;average&nbsp;shares&nbsp;outstanding&nbsp;-&nbsp;diluted</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,695,518&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.4%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,714,917&nbsp;</p>
  </td>
  <td width="1%" valign=bottom style='width:1.58%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.35pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i><font style="font-size: 9.0pt">&nbsp;</font></i></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i><font style="font-size: 9.0pt">See notes to condensed consolidated financial
statements.</font></i></p>

<div>

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

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

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

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

</div>

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

<font face="Times New Roman">

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


</font>


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

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

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width="100%"
 style='width:100.0%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td width="58%" valign=top style='width:58.68%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
  </td>
  <td width="2%" valign=top style='width:2.26%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="16%" valign=top style='width:16.84%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="2%" valign=top style='width:2.26%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="16%" valign=top style='width:16.84%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=top style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.8pt'>
  <td width="96%" colspan=5 valign=bottom style='width:96.88%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.8pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>PRO-DEX,&nbsp;INC.&nbsp;and&nbsp;SUBSIDIARIES</b></p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.8pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.8pt'>
  <td width="96%" colspan=5 valign=bottom style='width:96.88%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.8pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>CONDENSED&nbsp;CONSOLIDATED&nbsp;STATEMENTS&nbsp;OF&nbsp;OPERATIONS</b></p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.8pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.8pt'>
  <td width="96%" colspan=5 valign=bottom style='width:96.88%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.8pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>Six&nbsp;months&nbsp;ended&nbsp;December&nbsp;31&nbsp;(unaudited)</b></p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.8pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-bottom:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-bottom:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i>2009</i></p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i>2008</i></p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;sales</p>
  </td>
  <td width="2%" valign=bottom style='width:2.26%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="16%" valign=bottom style='width:16.84%;border:none;border-right:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11,329,000&nbsp;</p>
  </td>
  <td width="2%" valign=bottom style='width:2.26%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="16%" valign=bottom style='width:16.84%;border:none;border-right:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>10,893,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cost&nbsp;of&nbsp;sales</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>7,456,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>7,206,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross&nbsp;profit</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,873,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,687,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Operating&nbsp;expenses:</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Selling&nbsp;expense</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>641,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>673,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>General&nbsp;and&nbsp;administrative&nbsp;expenses</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,526,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,681,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Impairment&nbsp;of&nbsp;intangible&nbsp;asset</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>140,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Research&nbsp;and&nbsp;development&nbsp;costs</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,197,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,396,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;operating&nbsp;expenses</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,504,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,750,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Income&nbsp;(loss)&nbsp;from&nbsp;operations</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>369,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(63,000)</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Other&nbsp;income&nbsp;(expense):</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Royalty&nbsp;income</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Interest&nbsp;expense</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(103,000)</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(121,000)</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(100,000)</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(112,000)</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Income&nbsp;before&nbsp;(benefit)&nbsp;for&nbsp;income&nbsp;taxes</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>269,000&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(175,000)</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.7pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Provision&nbsp;(Benefit)&nbsp;for&nbsp;income&nbsp;taxes</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.7pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(494,000)</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.7pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(138,000)</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.7pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;Income&nbsp;(loss)</p>
  </td>
  <td width="2%" valign=bottom style='width:2.26%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="16%" valign=bottom style='width:16.84%;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>763,000&nbsp;</p>
  </td>
  <td width="2%" valign=bottom style='width:2.26%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="16%" valign=bottom style='width:16.84%;border:none;border-right:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(37,000)</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;income&nbsp;(loss)&nbsp;per&nbsp;share:</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Basic</p>
  </td>
  <td width="2%" valign=bottom style='width:2.26%;border:none;border-bottom:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="16%" valign=bottom style='width:16.84%;border:solid windowtext 1.0pt;
  border-left:none;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.08&nbsp;</p>
  </td>
  <td width="2%" valign=bottom style='width:2.26%;border:none;border-bottom:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="16%" valign=bottom style='width:16.84%;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(0.00)</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Diluted</p>
  </td>
  <td width="2%" valign=bottom style='width:2.26%;border:none;border-bottom:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="16%" valign=bottom style='width:16.84%;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.08&nbsp;</p>
  </td>
  <td width="2%" valign=bottom style='width:2.26%;border:none;border-bottom:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="16%" valign=bottom style='width:16.84%;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(0.00)</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td width="58%" valign=bottom style='width:58.68%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Weighted&nbsp;average&nbsp;shares&nbsp;outstanding&nbsp;-&nbsp;basic</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,668,671&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,741,160&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.95pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td width="58%" valign=bottom style='width:58.68%;border:solid windowtext 1.0pt;
  border-top:none;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Weighted&nbsp;average&nbsp;shares&nbsp;outstanding&nbsp;-&nbsp;diluted</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,686,331&nbsp;</p>
  </td>
  <td width="19%" colspan=2 valign=bottom style='width:19.1%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,741,160&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:12.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i><font style="font-size: 9.0pt">&nbsp;</font></i></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i><font style="font-size: 9.0pt">See notes to condensed consolidated financial
statements.</font></i></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i><font style="font-size: 9.0pt">&nbsp;</font></i></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i><font style="font-size: 9.0pt">&nbsp;</font></i></p>

<div>

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

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=722
 style='width:541.8pt;border-collapse:collapse'>
 <tr style='height:9.15pt'>
  <td width=252 valign=bottom style='width:189.0pt;padding:0in 1.8pt 0in 1.8pt;
  height:9.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b>&nbsp;</b></p>
  </td>
  <td width=252 valign=bottom style='width:189.0pt;padding:0in 1.8pt 0in 1.8pt;
  height:9.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 7.0pt">&nbsp;</font></p>
  </td>
  <td width=218 valign=bottom style='width:163.8pt;padding:0in 1.8pt 0in 1.8pt;
  height:9.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b>&nbsp;</b></p>
  </td>
 </tr>
</table>

<p style='margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><u>&nbsp;</u></p>

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

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

</div>

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

<font face="Times New Roman">

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


</font>


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

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i><font style="font-size: 9.0pt">&nbsp;</font></i></p>

<table class=MsoNormalTable border=0 cellpadding=0 width=704
 style='width:100%;border-collapse:collapse'>
 <tr style='height:12.0pt'>
  <td colspan=5 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>PRO-DEX,&nbsp;INC.&nbsp;and&nbsp;SUBSIDIARIES</b></p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td colspan=5 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>
	<a name="CONDENSED&nbsp;CONSOLIDATED&nbsp;STATEMENTS&nbsp;OF&nbsp;CASH&nbsp;FLOWS_">CONDENSED&nbsp;CONSOLIDATED&nbsp;STATEMENTS&nbsp;OF&nbsp;CASH&nbsp;FLOWS</a></b></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td colspan=5 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><b>Six&nbsp;months&nbsp;ended&nbsp;December&nbsp;31&nbsp;(unaudited)</b></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i>2009</i></p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i>2008</i></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cash&nbsp;Flows&nbsp;from&nbsp;Operating&nbsp;Activities:</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;Income&nbsp;(loss)</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>763,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(37,000)</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Adjustments&nbsp;to&nbsp;reconcile&nbsp;net&nbsp;income&nbsp;to&nbsp;net&nbsp;cash&nbsp;provided&nbsp;by&nbsp;operating&nbsp;activities:</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Depreciation&nbsp;and&nbsp;amortization</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>371,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>417,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Impairment&nbsp;of&nbsp;intangible&nbsp;asset</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>140,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Stock&nbsp;based&nbsp;compensation</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>71,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>86,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Provision&nbsp;for&nbsp;(Recovery&nbsp;of)&nbsp;doubtful&nbsp;accounts</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(5,000)</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>(Decrease)&nbsp;in&nbsp;deferred&nbsp;tax&nbsp;allowance</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(525,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(7,000)</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Changes&nbsp;in:</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Decrease&nbsp;in&nbsp;accounts&nbsp;receivable</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>226,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>362,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Decrease&nbsp;in&nbsp;inventories</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>148,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,095,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>(Increase)&nbsp;Decrease&nbsp;in&nbsp;prepaid&nbsp;expenses</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(185,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>43,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>(Increase)&nbsp;in&nbsp;other&nbsp;assets</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(17,000)</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>(Decrease)&nbsp;in&nbsp;accounts&nbsp;payable&nbsp;and&nbsp;accrued&nbsp;expenses</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(68,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(1,887,000)</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>(Decrease)&nbsp;in&nbsp;income&nbsp;taxes&nbsp;payable</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>25,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(106,000)</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;Cash&nbsp;provided&nbsp;(used)&nbsp;by&nbsp;Operating&nbsp;Activities</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>971,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(56,000)</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cash&nbsp;Flows&nbsp;From&nbsp;Investing&nbsp;Activities:</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Purchases&nbsp;of&nbsp;equipment&nbsp;and&nbsp;leasehold&nbsp;improvements</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(90,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(180,000)</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;Cash&nbsp;used&nbsp;in&nbsp;Investing&nbsp;Activities</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(90,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(180,000)</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cash&nbsp;Flows&nbsp;from&nbsp;Financing&nbsp;Activities:</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;(payments)&nbsp;on&nbsp;line&nbsp;of&nbsp;credit</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(1,600,000)</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Principal&nbsp;(payments)&nbsp;on&nbsp;term&nbsp;note</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(125,000)</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Principal&nbsp;(payments)&nbsp;borrowing&nbsp;on&nbsp;TI&nbsp;Loan</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(200,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,967,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Principal&nbsp;(payments)&nbsp;on&nbsp;mortgage</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(16,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(16,000)</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Stock&nbsp;repurchases</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(101,000)</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;Cash&nbsp;(used)&nbsp;provided&nbsp;by&nbsp;Financing&nbsp;Activities</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(216,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>125,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;increase&nbsp;(decrease)&nbsp;in&nbsp;Cash&nbsp;and&nbsp;Cash&nbsp;Equivalents</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>665,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(111,000)</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cash&nbsp;and&nbsp;Cash&nbsp;Equivalents,&nbsp;beginning&nbsp;of&nbsp;period</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,125,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>517,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cash&nbsp;and&nbsp;Cash&nbsp;Equivalents,&nbsp;end&nbsp;of&nbsp;period</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,790,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:2.25pt double windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:2.25pt double windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>406,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td colspan=5 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i>Supplemental&nbsp;Information</i></p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cash&nbsp;payments&nbsp;for&nbsp;interest</p>
  </td>
  <td valign=bottom style='border:medium none;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>105,000&nbsp;</p>
  </td>
  <td valign=bottom style='border:medium none;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>117,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:9.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cash&nbsp;payments&nbsp;for&nbsp;income&nbsp;taxes</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>6,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.95pt'>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.0pt'>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><font style="font-size: 10.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i><font style="font-size: 9.0pt">&nbsp;</font></i></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i><font style="font-size: 9.0pt">&nbsp;</font></i></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><i><font style="font-size: 9.0pt">&nbsp;</font></i></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i><font style="font-size: 9.0pt">&nbsp;</font></i></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i><font style="font-size: 9.0pt">&nbsp;</font></i></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'><i><font style="font-size: 9.0pt">See notes to condensed consolidated financial
statements.</font></i></p>

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

<div>

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

</div>

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

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

</div>

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

<font face="Times New Roman">

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


</font>


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

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b>PRO-DEX,
INC. AND SUBSIDIARIES </b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
<b><a name="NOTES_TO_CONDENSED_CONSOLIDATED_FINANCIAL_STATEMENTS__">NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS </a> </b></p>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>NOTE 1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; BASIS OF PRESENTATION</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The accompanying unaudited condensed consolidated financial statements of
Pro-Dex, Inc. (&#147;we&#148;, &#147;us&#148;, &#147;our&#148;, &#147;Pro-Dex&#148; or the &quot;Company&quot;) have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Regulation S-K. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. These financial statements should be read in conjunction
with the audited financial statements presented in our Annual Report on Form
10-K for the fiscal year ended June 30, 2009.&nbsp; In the opinion of management,
all adjustments considered necessary for a fair presentation have been
included. The results of operations for such interim periods are not
necessarily indicative of the results that may be expected for the full year.
For further information, refer to the consolidated financial statements and
footnotes thereto included in our Annual Report on Form 10-K for the fiscal year
ended June 30, 2009. </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>NOTE 2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; INVENTORIES</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories
are stated at the lower of cost (the first-in, first-out method) or market and consist
of the following: </p>

<table class=MsoNormalTable border=0 cellpadding=0 width="100%"
 style='width:80%;border-collapse:collapse;margin-left:36pt'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td width="49%" valign=top style='width:49.44%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
  </td>
  <td width="3%" valign=top style='width:3.38%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="23%" valign=top style='width:23.12%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="3%" valign=top style='width:3.2%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="20%" valign=top style='width:20.88%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td width="49%" valign=bottom style='width:49.44%;border:none;border-right:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="26%" colspan=2 valign=bottom style='width:26.5%;border:none;
  border-top:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:
  15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>December&nbsp;31,&nbsp;2009</p>
  </td>
  <td width="24%" colspan=2 valign=bottom style='width:24.06%;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>June&nbsp;30,&nbsp;2009</p>
  </td>
 </tr>
 <tr style='height:15.1pt'>
  <td width="49%" valign=bottom style='width:49.44%;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width="26%" colspan=2 valign=bottom style='width:26.5%;border:none;
  border-bottom:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(unaudited)</p>
  </td>
  <td width="24%" colspan=2 valign=bottom style='width:24.06%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(audited)</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td width="49%" valign=bottom style='width:49.44%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Raw&nbsp;Materials</p>
  </td>
  <td width="3%" valign=bottom style='width:3.38%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="23%" valign=bottom style='width:23.12%;border:none;border-right:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,219,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.2%;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="20%" valign=bottom style='width:20.88%;border:none;border-right:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,290,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td width="49%" valign=bottom style='width:49.44%;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Work&nbsp;in&nbsp;process</p>
  </td>
  <td width="26%" colspan=2 valign=bottom style='width:26.5%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>919,000&nbsp;</p>
  </td>
  <td width="24%" colspan=2 valign=bottom style='width:24.06%;border:none;
  border-right:solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>867,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.1pt'>
  <td width="49%" valign=bottom style='width:49.44%;border:solid windowtext 1.0pt;
  border-top:none;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Finished&nbsp;goods</p>
  </td>
  <td width="3%" valign=bottom style='width:3.38%;border:none;border-bottom:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="23%" valign=bottom style='width:23.12%;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,078,000&nbsp;</p>
  </td>
  <td width="24%" colspan=2 valign=bottom style='width:24.06%;border-top:none;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,208,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td width="49%" valign=bottom style='width:49.44%;border:solid windowtext 1.0pt;
  border-top:none;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Total&nbsp;inventories</p>
  </td>
  <td width="3%" valign=bottom style='width:3.38%;border:none;border-bottom:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="23%" valign=bottom style='width:23.12%;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,216,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='width:3.2%;border:none;border-bottom:
  solid windowtext 1.0pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="20%" valign=bottom style='width:20.88%;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:1.1pt 1.1pt 1.1pt 1.1pt;height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,365,000&nbsp;</p>
  </td>
 </tr>
</table>

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>NOTE 3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WARRANTY</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The warranty reserve is based on historical costs of warranty repairs and
expected future identifiable warranty expenses.&nbsp; As of December 31, 2009,
within our accrued expenses, we carried a warranty reserve of $648,000 which
was comprised of $54,000 for future warranty expenses related to products that
are currently in the process of being repaired, $533,000 for future warranty
expenses related to medical and aerospace products that are still in the field and
$61,000 for our legacy dental and industrial products.&nbsp; Warranty expenses are
reflected in the financial statements in cost of sales (&#147;COS&#148;).&nbsp; Adjustments to
pre-existing warranties are due to assumption changes resulting from updating
the cost to repair and warranty return rates to the current estimated cost and
return rates.&nbsp; The total warranty expense reflected in the COS for the quarter
ended December 31, 2009 was $179,000 and for the six-months ended December 31, 2009
was $366,000.&nbsp; The total warranty (benefit) reflected in the COS for the
quarter ended December 31, 2008 was a benefit of ($42,000) and for the
six-months ended December 31, 2008 was an expense of $159,000.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The warranty accrual and (benefit)/expenses for the three and six-months
ended December 31, 2009 and 2008 are presented below:</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>

<div>

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

</div>

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

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

</div>

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

<font face="Times New Roman">

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


</font>


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

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

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

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

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

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=585
 style='width:75%;border-collapse:collapse'>
 <tr style='height:15.3pt'>
  <td width="51%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Three&nbsp;months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td width="51%" valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:15.3pt'>
  <td width="51%" valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Beginning&nbsp;Balance</p>
  </td>
  <td width="4%" valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="20%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>569,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="21%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>878,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.3pt'>
  <td width="51%" valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Warranties&nbsp;issued&nbsp;during&nbsp;period</p>
  </td>
  <td width="4%" valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="20%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>211,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="21%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>247,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.3pt'>
  <td colspan=3 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Adjustments&nbsp;to&nbsp;pre-existing&nbsp;warranties</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td width="51%" valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;due&nbsp;to&nbsp;assumption&nbsp;changes</p>
  </td>
  <td width="4%" valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="20%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(32,000)</p>
  </td>
  <td width="3%" valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="21%" valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(289,000)</p>
  </td>
 </tr>
 <tr style='height:15.3pt'>
  <td width="51%" valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Settlements&nbsp;(actual&nbsp;expenditures)</p>
  </td>
  <td width="4%" valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="20%" valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(100,000)</p>
  </td>
  <td width="3%" valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="21%" valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(151,000)</p>
  </td>
 </tr>
 <tr style='height:15.3pt'>
  <td width="51%" valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Ending&nbsp;Balance</p>
  </td>
  <td width="4%" valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="20%" valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>648,000&nbsp;</p>
  </td>
  <td width="3%" valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td width="21%" valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>685,000&nbsp;</p>
  </td>
 </tr>
</table>

</div>

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

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

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=585
 style='width:75%;border-collapse:collapse'>
 <tr style='height:15.3pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Six&nbsp;months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:15.3pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Beginning&nbsp;Balance</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>518,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>861,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.3pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Warranties&nbsp;issued&nbsp;during&nbsp;period</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>380,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>416,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.3pt'>
  <td colspan=3 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Adjustments&nbsp;to&nbsp;pre-existing&nbsp;warranties</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;due&nbsp;to&nbsp;assumption&nbsp;changes</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(14,000)</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(257,000)</p>
  </td>
 </tr>
 <tr style='height:15.3pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Settlements&nbsp;(actual&nbsp;expenditures)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(236,000)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(335,000)</p>
  </td>
 </tr>
 <tr style='height:15.3pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Ending&nbsp;Balance</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>648,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>685,000&nbsp;</p>
  </td>
 </tr>
</table>

</div>

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>NOTE 4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NET INCOME (LOSS) PER SHARE </b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:6.0pt;text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
following table reconciles the weighted average shares outstanding for basic
and diluted net income per share for the periods indicated.&nbsp; </p>

<table class=MsoNormalTable border=0 cellpadding=0 width=683
 style='width:100%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:6.0pt;text-align:center'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=top style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Three&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;Income</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>580,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>81,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Basic&nbsp;net&nbsp;income&nbsp;per&nbsp;common&nbsp;share:</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Weighted&nbsp;average&nbsp;number&nbsp;of&nbsp;common&nbsp;shares&nbsp;outstanding</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,668,671&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,698,913&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Basic&nbsp;net&nbsp;income&nbsp;per&nbsp;common&nbsp;share</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.06&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.01&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Diluted&nbsp;net&nbsp;income&nbsp;per&nbsp;share:</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Weighted&nbsp;average&nbsp;of&nbsp;common&nbsp;shares&nbsp;outstanding</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,668,671&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,698,913&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effect&nbsp;of&nbsp;potentially&nbsp;dilutive&nbsp;securities&nbsp;(options)</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>26,847&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>16,004&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Weighted&nbsp;average&nbsp;number&nbsp;of&nbsp;common&nbsp;and&nbsp;shares&nbsp;-</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Diluted</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,695,518&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,714,917&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.0pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Diluted&nbsp;net&nbsp;income&nbsp;per&nbsp;common&nbsp;share</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.06&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.01&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:6.0pt;text-align:center'>&nbsp;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>7</p>
  </td>
 </tr>
</table>

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

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

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

</div>

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

<font face="Times New Roman">

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


</font>


<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=691
 style='width:85%;border-collapse:collapse'>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Six&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
  <td width=19 valign=bottom style='width:14.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td width=19 valign=bottom style='width:14.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;income&nbsp;(loss)</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>763,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(37,000)</p>
  </td>
  <td width=19 valign=bottom style='width:14.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Basic&nbsp;net&nbsp;income&nbsp;per&nbsp;common&nbsp;share:</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Weighted&nbsp;average&nbsp;number&nbsp;of&nbsp;common&nbsp;shares&nbsp;outstanding</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,668,671&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,741,160&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Basic&nbsp;net&nbsp;income&nbsp;(loss)&nbsp;per&nbsp;common&nbsp;share</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.08&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(0.00)</p>
  </td>
  <td width=19 valign=bottom style='width:14.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Diluted&nbsp;net&nbsp;income&nbsp;per&nbsp;share:</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Weighted&nbsp;average&nbsp;of&nbsp;common&nbsp;shares&nbsp;outstanding</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,668,671&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,741,160&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effect&nbsp;of&nbsp;potentially&nbsp;dilutive&nbsp;securities&nbsp;(options)</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>17,660&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Weighted&nbsp;average&nbsp;number&nbsp;of&nbsp;common&nbsp;and&nbsp;shares&nbsp;-</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Diluted</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,686,331&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9,741,160&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.0pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Diluted&nbsp;net&nbsp;income&nbsp;(loss)&nbsp;per&nbsp;common&nbsp;share</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.08&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(0.00)</p>
  </td>
  <td width=19 valign=bottom style='width:14.2pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.0pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

</div>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:6.0pt;text-align:center'>&nbsp;</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Potentially dilutive securities not included in the diluted loss per
share calculation due to net losses from continuing operations and for options
that have a strike price higher than the market price for our common stock (no
intrinsic value) are as follows (unaudited):</p>

<div align="left">

<table class=MsoNormalTable border=0 cellpadding=0 width=730
 style='width:95%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Three&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
  <td width=19 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td width=19 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Options&nbsp;to&nbsp;purchase&nbsp;common&nbsp;shares</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>833,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,045,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Restricted&nbsp;Shares</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>85,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>170,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Warrants&nbsp;to&nbsp;purchase&nbsp;common&nbsp;shares</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;potentially&nbsp;dilutive&nbsp;securities&nbsp;excluded&nbsp;due&nbsp;to&nbsp;no&nbsp;intrinsic&nbsp;value</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>918,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,315,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

</div>

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

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

<div align="left">

<table class=MsoNormalTable border=0 cellpadding=0 width=730
 style='width:95%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td width=847 valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=top style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td width=846 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Six&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td width=846 valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td width=845 valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Options&nbsp;to&nbsp;purchase&nbsp;common&nbsp;shares</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,161,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td width=845 valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Restricted&nbsp;Shares</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>170,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td width=845 valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Warrants&nbsp;to&nbsp;purchase&nbsp;common&nbsp;shares</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td width=845 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;potentially&nbsp;dilutive&nbsp;securities&nbsp;excluded&nbsp;due&nbsp;to&nbsp;net&nbsp;loss</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,431,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.4pt'>
  <td width=847 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td width=845 valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Options&nbsp;to&nbsp;purchase&nbsp;common&nbsp;shares</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>833,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,045,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td width=845 valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Restricted&nbsp;Shares</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>85,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>170,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.05pt'>
  <td width=845 valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;Warrants&nbsp;to&nbsp;purchase&nbsp;common&nbsp;shares</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td width=845 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;potentially&nbsp;dilutive&nbsp;securities&nbsp;excluded&nbsp;due&nbsp;to&nbsp;no&nbsp;intrinsic&nbsp;value</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>918,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,315,000&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:14.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:11.4pt'>
  <td width=847 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td width=19 valign=bottom style='width:14.15pt;padding:1.1pt 1.1pt 1.1pt 1.1pt;
  height:11.4pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

</div>

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

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>We have a credit facility with
Wells Fargo and a mortgage with Union Bank.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'><i><u>Wells Fargo Credit Facility</u></i></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>As of December
31, 2009, the Wells Fargo credit facility had two components:&nbsp; </p>

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

<ul>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.3in;text-align:justify;margin-right:0in; margin-top:0in'>a revolving Credit Line Note (&#147;line of credit&#148;) of up to $1,000,000
in borrowing availability, and</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.3in;text-align:justify;margin-right:0in; margin-top:0in'>a Five year Term Note (the &#147;TI Loan&#148;) with an initial balance of&nbsp;
$2,000,000, of which $1,566,667 was outstanding as of December 31, 2009. </p>
	</li>
</ul>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>8</p>
  </td>
 </tr>
</table>

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=722
 style='width:541.8pt;border-collapse:collapse'>
 <tr style='height:9.15pt'>
  <td width=252 valign=bottom style='width:189.0pt;padding:0in 1.8pt 0in 1.8pt;
  height:9.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b>&nbsp;</b></p>
  </td>
  <td width=252 valign=bottom style='width:189.0pt;padding:0in 1.8pt 0in 1.8pt;
  height:9.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 7.0pt">&nbsp;</font></p>
  </td>
  <td width=218 valign=bottom style='width:163.8pt;padding:0in 1.8pt 0in 1.8pt;
  height:9.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b>&nbsp;</b></p>
  </td>
 </tr>
</table>

<p style='margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><u>&nbsp;</u></p>

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

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

</div>

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

<font face="Times New Roman">

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


</font>


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

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>If borrowings
under the line of credit exceed $500,000, the maximum amount of borrowing is limited
to the lesser of $1,000,000 or 70% of the eligible accounts receivable plus 40%
of the eligible inventory. &nbsp;Its terms require monthly interest payments at
either (i) the prime rate of interest (3.25% at December 31, 2009) plus 1.50%,
or (ii) three-month LIBOR (0.253% at December 31, 2009) plus 2.50%, at our
discretion, based on outstanding borrowings.&nbsp; The line of credit expires
on November 1, 2010.&nbsp; We are charged an unused credit line fee of 1.5% per
annum payable quarterly on the average balance of the line of credit that is
not used. <font style="font-size: 10.0pt">&nbsp;</font>There was no outstanding
balance under the credit line as of December 31, 2009.&nbsp; Therefore, the
total eligible additional borrowing capacity under the line of credit as of December
31, 2009 was $1,000,000.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The TI Loan had
an initial balance of $2,000,000.&nbsp; The borrowings from this term
commitment were used for construction of tenant improvements for our Irvine, California facility.&nbsp; Its terms require monthly principal and interest
payments over the 60-month life of the loan, based on outstanding
borrowings.&nbsp; The interest rate is fixed at 5.72% over the life of the loan.&nbsp;
There was a $1,566,667 outstanding balance under the TI Loan as of December 31,
2009.&nbsp;</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>All assets of
the Company except our Carson City land and building secure the outstanding
borrowings under the Wells Fargo credit facility.</p>

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>In March 2006, we entered into a ten-year mortgage with Union Bank for
$1,650,000.&nbsp; The principal balance of the mortgage bears interest at a
fixed annual rate of 6.73%.&nbsp; Payments on the mortgage are $11,379 per
month (based on a 25 year amortization), with the balance of $1,291,666 in
principal due on April&nbsp;1, 2016.&nbsp; The mortgage is secured by our Carson City land and building.&nbsp; There was $1,544,265 in principal outstanding under
the mortgage as of December 31, 2009.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>There are
certain financial and non-financial covenants that the Company must meet to be
in compliance with the terms of the Wells Fargo credit facility and mortgage
with Union Bank.&nbsp; As of the quarter ended December 31, 2009, we were in
compliance with the Wells Fargo and Union Bank covenants.</p>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>NOTE 6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; INCOME TAXES</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Deferred income taxes are provided on a liability method whereby deferred
tax assets and liabilities are recognized for temporary differences.&nbsp; Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases.&nbsp; Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Significant
management judgment is required in determining our provision for income taxes
and the recoverability of our deferred tax assets.&nbsp; Such determination is based
primarily on our historical taxable income, with some consideration given to
our estimates of future taxable income by jurisdictions in which we operate and
the period over which our deferred tax assets will be recoverable.&nbsp; Due to
cumulative taxable losses during the prior three years, we recorded a $2,241,000
valuation allowance against our deferred tax assets in the year ended June 30,
2009.&nbsp; </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>As of December
31, 2009, the valuation allowance against our deferred tax assets is
approximately $1,703,000.&nbsp; The change in valuation allowance is due primarily
to the expected realization of the Company's deferred tax asset for the federal
net operating loss carryover generated in the year ended June 30, 2009.&nbsp;
Federal legislation enacted on November 6, 2009 provided for a five year carry
back of certain Net Operating Losses (&#147;NOL&#148;), increasing the time period
eligible to take the benefit of these losses from two years.&nbsp; The Company
intends to carry back the NOL from the year ended June 30, 2009 to earlier
permissible years under the new tax law.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>As of December 31, 2009, pursuant to ASC 740 (formerly FASB
Interpretation No. 48, &quot;Accounting for Uncertainty in Income Taxes&quot;),
we have accrued $55,000 of uncertain tax positions related to state income tax
matters that would reduce the Company&#146;s income tax expense if recognized and
would result in a corresponding decrease in the Company&#146;s effective tax rate.</p>

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

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>9</p>
  </td>
 </tr>
</table>

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

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

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

</div>

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

<font face="Times New Roman">

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


</font>


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

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

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

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;page-break-after:avoid'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>
<table border="0" style="border-collapse: collapse" width="75%" id="table1">
	<tr>
		<td width="81%">

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;page-break-after:avoid'>
Balance at July 1, 2009&nbsp; </p>

		</td>
		<td align="right" nowrap width="19%">$&nbsp; 54,000</td>
	</tr>
	<tr>
		<td width="81%">

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;page-break-after:avoid'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Additions based on tax positions related to the current year </p>

		</td>
		<td align="right" nowrap width="19%">0</td>
	</tr>
	<tr>
		<td width="81%">

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;page-break-after:avoid'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Additions for tax positions of prior years&nbsp;&nbsp;&nbsp; </p>

		</td>
		<td align="right" nowrap width="19%">1,000</td>
	</tr>
	<tr>
		<td width="81%">

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;page-break-after:avoid'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Reductions for tax positions of prior years&nbsp;&nbsp; </p>

		</td>
		<td align="right" nowrap width="19%">0</td>
	</tr>
	<tr>
		<td width="81%">

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;page-break-after:avoid'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Settlements </p></td>
		<td align="right" nowrap width="19%">0</td>
	</tr>
	<tr>
		<td width="81%">

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

		</td>
		<td align="right" nowrap width="19%">------------</td>
	</tr>
	<tr>
		<td width="81%">

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Balance at December 31, 2009&nbsp;&nbsp;&nbsp; </p>

		</td>
		<td align="right" nowrap width="19%">$&nbsp; 55,000</td>
	</tr>
</table>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We recognize
accrued interest and penalties related to unrecognized tax benefits in income
tax expense. As of December 31, 2009, we had
approximately $14,000 in accrued interest and penalties which is included as a
component of the $55,000 unrecognized tax benefit noted above. The liability
for the payment of interest and penalties has increased by approximately $1,000
for the six months ended December 31, 2009.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Pro-Dex and its
subsidiaries are subject to U.S. federal income tax, as well as income tax of
multiple state tax jurisdictions. We are currently
open to audit under the statute of limitations by the Internal Revenue Service
for the years ended June 30, 2007 through June 30, 2009.&nbsp; Our state income tax
returns are open to audit under the statute of limitations for the years ended
June 30, 2005 through June 30, 2009.&nbsp; We do not anticipate a significant
change to the total amount of unrecognized tax benefits within the next 12
months.</p>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>NOTE 7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SHARE-BASED COMPENSATION</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Share-based compensation pre-tax expense pursuant
to ASC 718 (formerly SFAS 123(R)) was $35,000 and $44,000 for the three
months and was $71,000 and $87,000 for the six months ended December 31, 2009 and
2008, respectively, which were related to stock options and restricted stock grants.&nbsp;
Share-based compensation expense reduced our results of operations as shown: </p>

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

<table class=MsoNormalTable border=0 cellpadding=0 width=653
 style='width:95%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b>&nbsp;</b></p>
  </td>
  <td valign=top style='padding:1.1pt;
  ' width="53%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  ' width="15%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  ' width="5%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  ' width="16%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='padding:1.1pt;
  ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="53%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Three&nbsp;months&nbsp;ended&nbsp;December&nbsp;31,</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='padding:1.1pt;
  ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="53%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(unaudited)</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;' width="53%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Share-based&nbsp;compensation&nbsp;expense&nbsp;recognized:</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="53%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>General&nbsp;and&nbsp;administrative,&nbsp;options</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>6,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>15,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="53%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>General&nbsp;and&nbsp;administrative,&nbsp;restricted&nbsp;stock</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>29,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>29,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Subtotal&nbsp;expense</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>35,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>44,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="53%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Related&nbsp;deferred&nbsp;tax&nbsp;benefit</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(12,000)</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Decrease&nbsp;in&nbsp;net&nbsp;income</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>35,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>32,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:7.5pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="53%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.65pt'>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Decrease&nbsp;in&nbsp;basic&nbsp;earnings&nbsp;per&nbsp;share</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="15%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.00&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  ' width="5%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="16%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.00&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Decrease&nbsp;in&nbsp;diluted&nbsp;earnings&nbsp;per&nbsp;share</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; ' width="4%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;' width="15%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.00&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; ' width="5%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;' width="16%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.00&nbsp;</p>
  </td>
 </tr>
</table>

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

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>10</p>
  </td>
 </tr>
</table>

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

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

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

</div>

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

<font face="Times New Roman">

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


</font>
<table class=MsoNormalTable border=0 cellpadding=0 width=653
 style='width:95%;border-collapse:collapse'>
	<tr style='page-break-inside:avoid;height:.05pt'>
		<td valign=top style='padding:1.1pt;
  ' width="4%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>
		<b>&nbsp;</b></p></td>
		<td valign=top style='padding:1.1pt;
  ' width="55%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td valign=top style='padding:1.1pt;
  ' width="4%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td valign=top style='padding:1.1pt;
  ' width="14%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td valign=top style='padding:1.1pt;
  ' width="5%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td valign=top style='padding:1.1pt;
  ' width="16%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
	</tr>
	<tr style='height:12.7pt'>
		<td valign=bottom style='padding:1.1pt;
  ' width="4%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="55%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Six&nbsp;months&nbsp;ended&nbsp;December&nbsp;31,</p>
		</td>
	</tr>
	<tr style='height:12.65pt'>
		<td valign=bottom style='padding:1.1pt;
  ' width="4%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="55%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td colspan=4 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(unaudited)</p>
		</td>
	</tr>
	<tr style='height:12.7pt'>
		<td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; ' width="4%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;' width="55%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
		</td>
		<td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
		</td>
	</tr>
	<tr style='height:12.7pt'>
		<td colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Share-based&nbsp;compensation&nbsp;expense&nbsp;recognized:</p>
		</td>
		<td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
	</tr>
	<tr style='height:12.7pt'>
		<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; ' width="4%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="55%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>General&nbsp;and&nbsp;administrative,&nbsp;options</p>
		</td>
		<td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>12,000&nbsp;</p>
		</td>
		<td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>28,000&nbsp;</p>
		</td>
	</tr>
	<tr style='height:12.65pt'>
		<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; ' width="4%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="55%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>General&nbsp;and&nbsp;administrative,&nbsp;restricted&nbsp;stock</p>
		</td>
		<td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>59,000&nbsp;</p>
		</td>
		<td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>59,000&nbsp;</p>
		</td>
	</tr>
	<tr style='height:12.7pt'>
		<td colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Subtotal&nbsp;expense</p>
		</td>
		<td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>71,000&nbsp;</p>
		</td>
		<td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>87,000&nbsp;</p>
		</td>
	</tr>
	<tr style='height:12.7pt'>
		<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; ' width="4%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="55%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Related&nbsp;deferred&nbsp;tax&nbsp;benefit</p>
		</td>
		<td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
		</td>
		<td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(24,000)</p>
		</td>
	</tr>
	<tr style='height:12.65pt'>
		<td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Decrease&nbsp;in&nbsp;net&nbsp;income</p>
		</td>
		<td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>71,000&nbsp;</p>
		</td>
		<td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>63,000&nbsp;</p>
		</td>
	</tr>
	<tr style='height:7.5pt'>
		<td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; ' width="4%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="55%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
		<td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
		</td>
	</tr>
	<tr style='height:12.65pt'>
		<td colspan=2 valign=bottom style='border-top:medium none;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Decrease&nbsp;in&nbsp;basic&nbsp;earnings&nbsp;per&nbsp;share</p>
		</td>
		<td valign=bottom style='padding:1.1pt;
  ' width="4%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
		</td>
		<td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="14%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.01&nbsp;</p>
		</td>
		<td valign=bottom style='padding:1.1pt;
  ' width="5%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
		</td>
		<td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; ' width="16%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.01&nbsp;</p>
		</td>
	</tr>
	<tr style='height:12.7pt'>
		<td colspan=2 valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Decrease&nbsp;in&nbsp;diluted&nbsp;earnings&nbsp;per&nbsp;share</p>
		</td>
		<td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; ' width="4%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
		</td>
		<td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;' width="14%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.01&nbsp;</p>
		</td>
		<td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; ' width="5%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
		</td>
		<td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;' width="16%">
		<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.01&nbsp;</p>
		</td>
	</tr>
</table>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>As of December 31, 2009, there was $38,000 of total unrecognized
compensation cost related to 93,750 non-vested outstanding stock options with a
per share weighted average value of $1.14.&nbsp; The unrecognized expense is
anticipated to be recognized on a straight-line basis over a weighted average
period of 0.7 years.&nbsp; The following is a summary of stock option activity in
the six months ending December 31, 2009 and 2008 (unaudited):</p>

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

<table class=MsoNormalTable border=0 cellpadding=0 width=715
 style='width:100%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=3 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=3 valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:25.4pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Weighted-</p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Average</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Weighted-</p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Average</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Options</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Shares</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Exercise&nbsp;Price</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Shares</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Exercise&nbsp;Price</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Outstanding&nbsp;at&nbsp;beginning&nbsp;of&nbsp;fiscal&nbsp;year&nbsp;(7/1)</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>933,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border:medium none;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.42&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,109,500&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.58&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Granted</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>36,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.55&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>66,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.70&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Exercised</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.9pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Forfeited</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(15,000)</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.92&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Outstanding&nbsp;at&nbsp;end&nbsp;of&nbsp;period&nbsp;(12/31)</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>969,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border:medium none;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.39&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,160,500&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.50&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Exercisable&nbsp;at&nbsp;end&nbsp;of&nbsp;period&nbsp;(12/31)</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>875,250&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.41&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>980,750&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.61&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Weighted-average&nbsp;fair&nbsp;value&nbsp;per</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.7pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Option&nbsp;granted&nbsp;during&nbsp;the&nbsp;period</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.24&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.32&nbsp;</p>
  </td>
 </tr>
</table>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in;text-autospace:none'>The following
table summarizes information regarding options outstanding and options
exercisable at December 31, 2009 (unaudited). The intrinsic value indicated on
the table below is based on the stock price at December 31, 2009 of $0.51 per
common share.&nbsp; </p>

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

<table class=MsoNormalTable border=0 cellpadding=0 width=684
 style='width:100%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b>&nbsp;</b></p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=3 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Options&nbsp;Outstanding</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=5 valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Options&nbsp;Exercisable</p>
  </td>
 </tr>
 <tr style='height:28.3pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Weighted-</p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Average</p>
  </td>
  <td colspan=2 valign=bottom style='border:medium none;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Weighted-</p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Average</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Aggregate</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Weighted-</p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Average</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Aggregate</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Range&nbsp;of</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Number</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Remaining</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Exercise</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Intrinsic</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Number</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Exercise</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Intrinsic</p>
  </td>
 </tr>
 <tr style='height:28.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Exercise&nbsp;Price</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Outstanding
  Contractual&nbsp;Life</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Price</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Value</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Outstanding</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Price</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Value</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>$0.42&nbsp;to&nbsp;$0.81</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>332,000&nbsp;</p>
  </td>
  <td valign=bottom style='border:medium none;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>4.3&nbsp;years</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border:medium none;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.65&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border:medium none;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>8,320&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>291,500&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border:medium none;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.66&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>7,330&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>$1.00&nbsp;to&nbsp;$1.56</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>357,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>4.4&nbsp;years</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.33&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>310,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.31&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>$1.74&nbsp;to&nbsp;$2.18</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>190,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>1.7&nbsp;years</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2.07&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>190,000&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2.07&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
 <tr style='height:16.65pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>$2.55&nbsp;to&nbsp;$3.30</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>90,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>5.5&nbsp;years</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2.89&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>83,750&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2.91&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>969,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>3.9&nbsp;years</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.39&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>8,320&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>875,250&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.41&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>7,330&nbsp;</p>
  </td>
 </tr>
</table>

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

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The following is a summary of restricted share activity in the six months
ending December 31, 2009 and 2008 respectively (unaudited):</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>11</p>
  </td>
 </tr>
</table>

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

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

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

</div>

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

<font face="Times New Roman">

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


</font>

<table class=MsoNormalTable border=0 cellpadding=0 width=725
 style='width:95%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:1.0pt solid windowtext;border-bottom:medium none;border-right:medium none;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=3 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=3 valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:24.7pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Weighted-Average</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Weighted-</p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Average</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Restricted&nbsp;shares</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Shares</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Exercise&nbsp;Price</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Shares</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Exercise&nbsp;Price</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Outstanding&nbsp;at&nbsp;beginning&nbsp;of&nbsp;fiscal&nbsp;year&nbsp;(7/1)</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>85,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border:medium none;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.38&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>170,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.38&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Granted</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Issued</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.55pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;Forfeited</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Outstanding&nbsp;at&nbsp;end&nbsp;of&nbsp;period&nbsp;(12/31)</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>85,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border:medium none;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.38&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>170,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1.38&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:12.35pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Exercisable&nbsp;at&nbsp;end&nbsp;of&nbsp;period&nbsp;(12/31)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
 </tr>
</table>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>As of December 31, 2009, there was $19,550 of total unrecognized
compensation cost related to 85,000 non-vested outstanding restricted shares
with a per share weighted average value of $1.38.&nbsp; The unrecognized expense is
anticipated to be recognized on a straight-line basis over a weighted average
period of 0.2 years.&nbsp; </p>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>NOTE 8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; MAJOR CUSTOMERS</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>We had two major customers (defined as a customer that represents greater
than 10% of the Company&#146;s total revenues) in the six months ended December 31, 2009
and 2008.&nbsp;&nbsp; </p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=514
 style='width:75%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
  none'><b>&nbsp;</b></p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=5 valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">Six&nbsp;months&nbsp;ended&nbsp;December&nbsp;31,</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=5 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(unaudited)</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Revenues</p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Accts.&nbsp;Rec.</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Revenues</p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Accts.&nbsp;Rec.</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Customer&nbsp;1</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border:medium none;padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,549,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>702,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,800,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>407,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Customer&nbsp;2</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>4,351,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>320,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,007,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>415,000&nbsp;</p>
  </td>
 </tr>
</table>

</div>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We have been notified by Customer 2 that they are in the
process of developing, and plan to eventually manufacture their own surgical
hand pieces which are functionally comparable to the two products currently
provided by the Company.&nbsp; Pro-Dex has been the exclusive manufacturer of these
products since they were developed.&nbsp; </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The Customer has not provided firm transition dates or
volumes due to the inherent uncertainty in the design, testing, and
qualification process.&nbsp; The Customer advised that it expects to maintain its
current level of purchases from us at least through August of 2010 for one
product and at least through December of 2010 for the second product.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>On December 4, 2009, the Customer placed a $1.5 million
purchase order with the Company for delivery of the second product at
historical monthly quantities through September, 2010.&nbsp; The Customer also
stated that it expects to continue to buy some volume of these products from
the Company beyond those dates as its initial success is not assured, certain
markets may not adopt the Customer's design, and regulatory registration in
certain markets is a lengthy process.&nbsp; Further, the Customer indicated that it
will continue to rely on the Company for the repair of Company manufactured
units in the field.&nbsp; </p>

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

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>12</p>
  </td>
 </tr>
</table>

</div>

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<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The design and production of these products is quite
technologically challenging, as such devices are exposed to extremely harsh
surgical and sterilization conditions.&nbsp; A different large customer of the
Company pursued a similar course of action several years ago and ultimately
canceled its in-sourcing project, continuing its purchases from Pro-Dex.&nbsp; The Customer currently pursuing this course has indicated a high commitment to proceeding cautiously.&nbsp;
Accordingly, the actual occurrence of, and certainly the specific timing of any
transition is very difficult to estimate.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The Company intends to find additional business and reduce
its operating costs as necessary to minimize the impact of a potential revenue
reduction.&nbsp; In the event that the Customer's future purchases are reduced
beyond the additional business won and the cost savings realized, the Company
is likely to experience a material and adverse impact on its business.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The Company has no commitment from the Customer that it
will update the Company with the status of its product development efforts and
the Customer has no obligation to do so.&nbsp; Accordingly, the Company is unable to
know or predict the status of the Customer's initiative on an ongoing basis.&nbsp;
The name of the Customer is protected by a confidentiality agreement. </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>NOTE 9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; COMMITMENTS AND CONTINGENCIES</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Our manufacture and distribution of certain products involves a risk of
legal action, and, from time to time, we are named as defendants in lawsuits.
It is not reasonably possible to estimate the awards or damages, or the range
of awards or damages, if any, we might incur in connection with such
litigation.&nbsp; Other than the case pending with the Orange County Water District
discussed below, management is not aware of any material actual, pending or
threatened litigation at this time.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>On June 23,
2008, the Orange County Water District (&#147;OCWD&#148;) filed a complaint in the
Superior Court of the State of California in the County of Orange concerning
remediation of alleged ground water contamination in the Orange County
Groundwater South Basin; <u>Orange County Water District v. Sabic Innovative Plastics
U.S. LLC, et al.</u>, Case No. 00078246.&nbsp; The South Basin underlies parts of Santa Ana, California and adjacent cities.&nbsp; The complaint identifies 17 named defendants,
including Pro-Dex, and also designates 400 unnamed Doe defendants.&nbsp; The Company
moved out of this Santa Ana site in April, 2008 and has no remaining operations
there.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The complaint
alleges that the defendants contaminated the South Basin with volatile organic
chemicals (&#147;VOCs&#148;) and perchlorate through various activities at properties
each defendant now controls or has controlled in the past.&nbsp; Through its
lawsuit, the OCWD seeks compensatory relief for all its own remedial
activities, and injunctive relief to compel the defendants to undertake
remedial activities in general.&nbsp; The complaint does not, however, specify any
remedial activities that the OCWD has undertaken to date or any remedial
activities that it seeks any particular defendants to undertake.&nbsp; Moreover,
from our investigation of OCWD&#146;s remedial activities to date, we have
determined that the OCWD is in the early stages of its remedial investigation
for the South Basin groundwater contamination.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>As noted above,
16 other entities are named defendants in this case along with Pro-Dex.&nbsp; While
some are small businesses, others are larger corporations or their
subsidiaries.&nbsp; Further, as this case progresses, the OCWD is likely to add at
least a few more named defendants to the case from the 400 Doe defendants it
has designated in the current complaint.&nbsp; In the indeterminable event that we
would be held liable in the case, OCWD&#146;s total recovery probably would be
allocated among several defendants, each of which would pay only a
proportionate share of that total recovery.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>One of our past
insurers has committed to pay most of our defense costs for the lawsuit, while
reserving its rights as to whether it will cover any damages awarded against us,
or any settlement payment to which Pro-Dex agrees to resolve the lawsuit, under
past policies issued to us for a three-year period, March 31, 1983 to March 31,
1986.&nbsp; The policies of these years have&nbsp;occurrence payment limits of
$500,000.&nbsp; </p>

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

<div>

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 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>13</p>
  </td>
 </tr>
</table>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Overall, as the
OCWD complaint remains vague, the OCWD is in an early stage of its remedial
activities in the South Basin, the lawsuit is in the early stages of discovery,
one of our insurers has committed to pay most defense costs and has reserved
rights under one&nbsp;three-year set of&nbsp;policies and is continuing to
consider extending coverage to us under other past policies, and any recovery the
OCWD may gain through the lawsuit is likely to be allocated among several
defendants.&nbsp; Therefore, our liabilities, as well as our costs of
defending, monitoring and concluding our involvement in this case are
uncertain, and those costs cannot now be estimated.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>NOTE 10. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FAIR VALUE MEASUREMENTS</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b><i>Fair Value
Measurements</i>&nbsp;&#151; Effective July&nbsp;1, 2008, the Company adopted ASC 820 (formerly Statement of Financial Accounting
Standards No.&nbsp;157, &#147;Fair Value Measurements&#148;)&nbsp;for financial assets
and liabilities measured at fair value on a recurring basis. &nbsp;ASC 820 defines
fair value, establishes a framework for measuring fair value in accordance with
generally accepted accounting principles, and expands disclosures about fair
value measurements. &nbsp;In addition to expanding the disclosures surrounding fair
value measurements, ASC 820 indicates that fair value represents the amount
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants. As such, fair value is
determined based upon assumptions that market participants would use in pricing
an asset or liability. As a basis for considering such assumptions, ASC 820
establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value as follows: </p>
<ul>
	<li>
	<p style='margin-bottom:.0001pt;text-autospace:none;font-size:12.0pt;font-family:"HelveticaNeue LT 55 Roman";margin-left:0.25in;text-align:justify;margin-right:0in; margin-top:0in'>
	<font face="Times New Roman">Level 1 - Valuations based on unadjusted quoted prices in
active markets for identical assets or liabilities that the Company has the
ability to access. <br>
&nbsp;</font></p></li>
	<li>
	<p style='margin-bottom:.0001pt;text-autospace:none;font-size:12.0pt;font-family:"HelveticaNeue LT 55 Roman";margin-left:0.25in;text-align:justify;margin-right:0in; margin-top:0in'>
	<font face="Times New Roman">Level 2 - Valuations
based on quoted prices in markets that are not active or for which all
significant inputs are observable, either directly or indirectly. <br>
&nbsp;</font></p></li>
	<li>
	<p style='margin-bottom:.0001pt;text-autospace:none;font-size:12.0pt;font-family:"HelveticaNeue LT 55 Roman";margin-left:0.25in;text-align:justify;margin-right:0in; margin-top:0in'>
	<font face="Times New Roman">Level 3 - Valuations
based on inputs that are unobservable and significant to the overall fair value
measurement.</font></p></li>
</ul>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In many cases, a
valuation technique used to measure fair value includes inputs from multiple
levels of the fair value hierarchy described above. The lowest level of
significant input determines the placement of the entire fair value measurement
in the hierarchy. </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The following valuation methodology was used for the Company&#146;s assets to
measure fair value at December 31, 2009:</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><i>Cash and cash equivalents:&nbsp; </i>The carrying value of cash and cash
equivalents is considered to be representative of their fair values based on
the short term nature of these instruments.&nbsp; As such these investments are
classified within level 1 of the valuation hierarchy.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Although the methods above may produce a fair value calculation that may
not be indicative of the net realizable value or reflective of future fair
values, the Company believes its valuation methods are appropriate.&nbsp; </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The use of different methodologies or assumptions to determine the fair
value of certain financial instruments could result in a different fair value
measurement at the reporting date.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The following fair value hierarchy table presents information about the Company&#146;s
assets measured at fair value on a recurring basis as of December 31, 2009
(unaudited):</p>

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

<div align="center">

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  </td>
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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Description</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Level&nbsp;1</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Level&nbsp;2</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Level&nbsp;3</p>
  </td>
  <td colspan=2 valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Total</p>
  </td>
 </tr>
 <tr style='height:7.85pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.0pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cash&nbsp;and&nbsp;cash&nbsp;equivalents</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,790,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,790,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:7.9pt'>
  <td valign=bottom style='border-right:medium none; border-top:medium none; border-bottom:medium none; border-left:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1px solid windowtext; padding:1.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1px solid windowtext; padding:1.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1px solid windowtext; padding:1.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1px solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.0pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:1.0pt solid windowtext;border-right:
  medium none;padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none windowtext;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:medium none;
  padding:1.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,790,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,790,000&nbsp;</p>
  </td>
 </tr>
</table>

</div>

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

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

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

<div>

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

</div>

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

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

</div>

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

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<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b>NOTE 11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; INTANGIBLE
ASSET IMPAIRMENT</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In accordance with Statement of Financial Accounting
Standards (&#147;SFAS&#148;), ASC 360 (formerly SFAS&nbsp;No.&nbsp;144), &#147;Accounting for
the Impairment or Disposal for Long-Lived Assets&#148; long-lived assets and
intangible assets with definite lives are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Impairment indicators include, among other
conditions, cash flow deficits, historic or anticipated declines in revenue or
operating profit and adverse legal or regulatory developments. If it is
determined that such indicators are present and the review indicates that the
assets will not be fully recoverable, based on undiscounted estimated cash flow
over the remaining amortization periods, their carrying values are reduced to
estimated fair market value. Estimated fair market value is determined
primarily using the anticipated cash flow discounted at a rate commensurate
with the risk involved. For the purposes of identifying and measuring
impairment, long-lived assets are grouped with other assets and liabilities at
the lowest level for which identifiable cash flow are largely independent of
the cash flow of other assets and liabilities.&#148;&nbsp; Our standard annual
impairment testing is done April 1 of each year.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We monitor
current market conditions and review for potential triggering events quarterly
to determine if there is a need for interim impairment testing. We determined
that a triggering event for the Astromec and Micro Motors goodwill occurred in
the past three months as a large current customer notified us they were
developing a product that would take the place of one that we currently sell
them and another customer chose not to enter into a production contract for a
product we developed for them.&nbsp; We determined that a triggering event occurred
with the patent intangible asset because no distribution partner or acquirer
surfaced since the previous fiscal year end.&nbsp; </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In determining
if a triggering event has occurred, we consider not only expectations for
growth in the entire US economy, but also expectations for regional growth
specific to our sales markets and specific to our industry and product lines. &nbsp;While
our operating units are influenced by changes in the general economic outlook
of the United States, they are most heavily influenced by changes specific to
the medical device industry.&nbsp; Furthermore, the magnitude of economic changes
within the industry is viewed alongside the outlooks and forecasts specific to
the reporting units to obtain a better sense of the likelihood that goodwill
may be impaired.&nbsp; Declines within the industry&#146;s outlook are reflected in the
unit&#146;s revenue projections. &nbsp;</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We identify two
reporting units for purposes of our annual goodwill impairment testing arising
from our acquisitions of Micro Motors and Astromec. &nbsp;In accordance with ASC 350
(formerly SFAS No.&nbsp;142), goodwill is not amortized and is assessed annually
for impairment (as of April 1) or whenever events or changes in circumstances
indicate that the carrying value of such assets may not be recoverable. &nbsp;Our Carson City reporting unit corresponds to the operations resulting from the Astromec
acquisition, while our Irvine reporting unit corresponds to the operations
resulting from the Micro Motors acquisition.&nbsp; Our intangible asset is related
to the interosseous patents associated with the &#147;Intraflow&#148; acquisition.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Goodwill and
Intangible assets are tested for impairment using a discounted cash flow
analysis. The discounted cash flow analysis relies upon estimates of the
entity&#146;s future revenue and expenses to ultimately project the future cash
flows resulting from the business activity of each entity. The projected future
cash flows are discounted to present value at an appropriate discount rate.&nbsp; An
appropriate discount rate is reached by calculating the weighted average cost
of capital &#147;WACC,&#148; which is determined by the assumptions underlying the Capital
Asset Pricing Model &#147;CAPM&#148; and is considered to reflect the view of &#147;Market
Participants,&#148; as required under ASC 825 (formerly SFAS 157). The inputs used
in calculating the WACC are described below.&nbsp; </p>

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

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center id="table3">
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>15</p>
  </td>
 </tr>
</table>

</div>

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

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

</div>

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

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<ol type="a">
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>The assumed capital structure is based upon the Company&#146;s actual capital
structure and debt to equity ratio at the time of analysis.</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>The cost of debt is based on the Company&#146;s actual contracted rates.</p>
	</li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>The cost of equity is equal to the risk free rate represented by the 10
year Treasury note, plus the Company&#146;s historical correlation to market
movement &#147;beta&#148; times the historical equity risk premium, plus an additional
small stock premium.</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>In valuing the Company&#146;s patents, an additional risk premium is added to
reflect the increased risk inherent in intangible assets.</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>Also in valuing the patents, an expected value calculation was performed
that weighted the values of different scenarios based on their expected
probability of occurrence.</p></li>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We performed
separate calculations to determine the sensitivity of our intangible asset
impairment conclusions to increases in the assumed discount rates. In the case
of Astromec, the goodwill impairment test is not failed until the discount rate
is increased to over 27 percent.&nbsp; In the case of Micro Motors, the goodwill
impairment test is not failed until the discount rate is increased to over 23
percent. </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The material
assumptions relied upon in the discounted cash flow analysis used to value the
Company&#146;s Intraflow patents are shown below.</p>

<ol type="a">
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>The patent was valued as an ongoing product line without any additional
distribution partner or &#147;Market Participant&#148; value.&nbsp; </p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>There was no value determined for the patent from the perspective of
&#147;Market Participants,&#148; which are believed to possess sales and marketing
expertise in the dental and medical device field, as there were no market
participants likely.</p></li>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The material
assumptions relied upon in the discounted cash flow analysis used to value the
goodwill held in the Carson City reporting unit are shown below.</p>

<ol type="a">
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>As the ultimate timing, outcome and effect of the customer&#146;s decision is
unknown, three scenarios were valued representing a range of possibilities.&nbsp;
The resulting values were then weighted based on managements&#146; estimates of
probability of occurrence to derive a single estimated value.</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>Goodwill resulting from the Company&#146;s acquisition of Astromec is tested
for impairment under its Carson City motor manufacturing operations.</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>Motor sales of existing products are assumed to decline as products age,
but are more than replaced by revenue growth from new products and increased
intercompany sales for medical hand piece products. </p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>The existing fixed cost structure of the motor manufacturing operations
will be better absorbed by the higher forecasted volume of production,
resulting in increased profit margins. </p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>In addition to the value of the goodwill held in the Carson City
reporting unit as if it stands alone, an additional analysis is performed to
estimate a value to Pro-Dex of having an in-house motor manufacturer for the
medical device product line.&nbsp; This captive capability enables development speed
and focus, which produces revenue in other operating units.&nbsp; </p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>The value of the Carson City manufacturing operation is added to the
value of the additional capability provided to Pro-Dex for the total value of
the goodwill. </p></li>
</ol>

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

<div>

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

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</div>

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</font>


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

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;The material
assumptions relied upon in the discounted cash flow analysis used to value the
goodwill held in the Micro Motors reporting unit are shown below.</p>

<ol type="a">
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>Goodwill resulting from the Company&#146;s acquisition of Micro Motors is
tested for impairment under its Irvine reporting unit, which houses the
operations resulting from the base technology acquired from Micro Motors.</p>
	</li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>As the ultimate timing, outcome and effect of the customer&#146;s decision is
unknown, three scenarios were valued representing a range of possibilities.&nbsp;
The resulting values were then weighted based on managements&#146; estimates of
probability of occurrence to derive a single estimated value.</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>Sales to existing customers are assumed to decline, but are more than
replaced by revenue growth from new customers.</p></li>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Given the
company&#146;s lack of a direct dental distribution channel, in fiscal year 2009
third quarter, it stopped actively promoting the product that is 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 ASC 360 (formerly Statement
of Financial Accounting Standards No. 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 probabilities of
occurring) was that the asset&#146;s value was impaired and, accordingly a charge of
$997,000 was taken in the fiscal 2009 third quarter.&nbsp; As market conditions
have not improved and no distribution partner has been found as of December 31,
2009, management concluded that the asset&#146;s value was further impaired and,
accordingly a charge for the remaining value of $140,000 was taken in the
fiscal 2010 second 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.</p>

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

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=532
 style='width:70%;border-collapse:collapse'>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-left:1px solid #000000; border-right:medium none; border-bottom:1px solid #000000; border-top:1px solid windowtext; padding:1.1pt; height:15.15pt'>
  &nbsp;</td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:1px solid #000000; border-top:1px solid windowtext; padding:1.1pt; height:
  15.15pt'>
  &nbsp;</td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:1px solid #000000; border-top:1px solid windowtext; padding:1.1pt; height:
  15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b>Carrying&nbsp;Value</b></p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:1px solid #000000; border-top:1px solid windowtext; padding:1.1pt; height:
  15.15pt'>
  &nbsp;</td>
  <td valign=bottom style='border-top:1px solid windowtext;
  border-left:medium none;border-bottom:1px solid #000000;border-right:1px solid windowtext;
  padding:1.1pt;height:15.15pt'>
  &nbsp;</td>
 </tr>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-left:1px solid #000000; border-right:medium none; border-bottom:1px solid #000000; border-top:medium none windowtext; padding:1.1pt; height:15.15pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:1px solid #000000; border-top:medium none windowtext; padding:1.1pt; height:
  15.15pt' align="center">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>6/30/2009</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:1px solid #000000; border-top:medium none windowtext; padding:1.1pt; height:
  15.15pt' align="center">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Amortization</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:1px solid #000000; border-top:medium none windowtext; padding:1.1pt; height:
  15.15pt' align="center">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Impairment</p>
  </td>
  <td valign=bottom style='border-top:medium none windowtext;
  border-left:medium none;border-bottom:1px solid #000000;border-right:1px solid windowtext;
  padding:1.1pt;height:15.15pt' align="center">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>12/31/2009</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-left:1px solid #000000; border-bottom:1px solid #000000; padding:1.1pt; height:15.15pt; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Intangibles&nbsp;-&nbsp;Patents</p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; padding:1.1pt; height:15.15pt; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;147,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; padding:1.1pt; height:15.15pt; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7,000)</p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; padding:1.1pt; height:15.15pt; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>$&nbsp;&nbsp;(140,000)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid #000000; border-right:1px solid windowtext; padding:1.1pt; height:15.15pt' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-&nbsp;</p>
  </td>
 </tr>
 </table>

</div>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>For the Astromec
reporting unit&#146;s impairment testing there was an assumption of decreased
external sales growth to current customers compared to 2009 and year to date
2010, which was more than offset by an increased sales growth rate of motors
for new customers and 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. &nbsp;It should be
noted that the unit passes its goodwill impairment test without the inclusion
of this additional &#147;enablement&#148; value.&nbsp; The computed reporting unit value
exceeds the carrying value of the unit by more than 13 percent as a standalone
business and 72 percent with the enabled value.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>For the Micro
Motors reporting unit&#146;s impairment test modeling, there was an assumption of
decreased sales of current products to current customers more than offset by
sales of a recently introduced product as well as by new customer sales of a new
product line introduced last quarter.&nbsp; The computed reporting unit value
exceeds the carrying value of the unit by more than 32 percent.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>NOTE 12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SUBSEQUENT EVENTS</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>We have evaluated events or transactions that
occurred after the balance sheet date of December 31, 2009 through February 4,
2010, which is the date the financial statements were issued.&nbsp; </p>

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

<div>

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

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

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

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

</div>

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

<font face="Times New Roman">

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style='page-break-before:always'>


</font>


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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:.25in;text-align:justify;text-indent:.5in'>On
January 11, 2010, the NASDAQ Staff notified us that our common stock was
subject to delisting for failing to comply with the minimum bid price
requirement.&nbsp; In accordance with the Listing Rules, we have requested an oral
hearing before a NASDAQ Listing Qualification Panel (&#147;Panel&#148;), which
automatically stays the delisting of our common stock pending the issuance of
the Panel&#146;s decision after the hearing.&nbsp; Under the Listing Rules, the Panel
may, in its discretion, determine to continue the listing of our common stock for
a maximum of 180 calendar days from the date of the Staff&#146;s notification to us,
which would be through July 9, 2010.&nbsp; However, there can be no assurances that
the Panel will do so or that our efforts to maintain the listing of our common
stock on NASDAQ will be successful.&nbsp; </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>On January 22, 2010 we issued a press release and 8K announcing that one
of our customers has elected to not bring to market a product developed by
Pro-Dex under a Development Agreement with such customer and, instead, will pay
a $250,000 fee pursuant to its agreement with Pro-Dex. &nbsp;The customer has
indicated they intend to make the payment in February, 2010 which we will
recognize as revenue in its fiscal 3<sup>rd</sup> quarter.&nbsp; </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>
<a name="Item_2._Managements_Discussion_and_Analysis_of_Financial_Condition_and_Results_of_Operations_">Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations</a></b></p>

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The following discussion and analysis provides information that our
management believes is relevant to an assessment and understanding of the results
of operations and financial condition of Pro-Dex, Inc. (&#147;Company&#148;, &#147;Pro-Dex&#148;,
&#147;we&#148;, &#147;our&#148; or &#147;us&#148;) &nbsp;for each of the three and six month periods ended
December 31, 2009 and 2008, respectively.&nbsp; This discussion should be read in
conjunction with the Consolidated Financial Statements and the Notes thereto
included elsewhere in this report. This report contains certain forward-looking
statements and information. The cautionary statements included herein should be
read as being applicable to all related forward-looking statements wherever
they may appear.&nbsp; Our actual future results could differ materially from those
discussed herein.&nbsp; Our critical accounting policies relate to revenue
recognition, inventory valuation for slow moving items, impairment of goodwill
and intangibles, warranty reserves, and recoverability of deferred income
taxes.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Except for the historical information contained herein, the matters
discussed in this report, including, but not limited to, discussions of our
product development plans, business strategies and market factors influencing
our results, are forward-looking statements that involve certain risks and
uncertainties. Actual results may differ from those anticipated by us as a
result of various factors, both foreseen and unforeseen, including, but not
limited to, our ability to continue to develop new products and increase
systems sales in markets characterized by rapid technological evolution,
consolidation within our target marketplace and among our competitors, and
competition from larger, better capitalized competitors.&nbsp; Many other economic,
competitive, governmental and technological factors could impact our ability to
achieve our goals.&nbsp; &nbsp;You are urged to review the risks, uncertainties and other
cautionary language described in this report, as well as in our other public
disclosures and reports filed with the Securities and Exchange Commission
(&#147;SEC&#148;) from time to time, including, but not limited to, the risks,
uncertainties and other cautionary language discussed in our Annual Report on
Form 10-K for our fiscal year ended June 30, 2009.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>With operations in Irvine, California, Beaverton, Oregon and Carson City, Nevada, we provide power and control products used in medical,
aerospace, military, research and industrial applications.&nbsp; Experience in multi-axis
motion control, fractional horsepower motors and rotary drive systems allows us
to develop products that require high precision in harsh environments.&nbsp;</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Our products are found in hospitals, dental
offices, medical engineering labs, commercial and military aircraft, scientific
research facilities and high-tech manufacturing operations around the world.
The names of Micro Motors, Oregon Micro Systems, and Astromec are used for
marketing purposes as brand names.</p>

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

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

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center id="table4">
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>18</p>
  </td>
 </tr>
</table>

</div>

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

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

</div>

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

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

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Our principal headquarters are located at 2361 McGaw Avenue, Irvine, California 92614 and our phone number is 949-769-3200.&nbsp; Our Internet address is  www.pro-dex.com .&nbsp; Our annual reports on Form
10-K quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to
those reports and other SEC filings, are available free of charge through our
website as soon as reasonably practicable after such reports are electronically
filed with, or furnished to, the SEC.&nbsp; In addition, our Code of Ethics and
other corporate governance documents may be found on our website at the
Internet address set forth above.&nbsp; Our filings with the SEC may also be read and copied at the SEC&#146;s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.&nbsp; You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330.&nbsp; The SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC at  www.sec.gov  and company specific information at<u> </u> www.sec.gov <u>/edgar/searchedgar/companysearch.html</u>. &nbsp;</p>

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Our consolidated
financial statements are prepared in accordance with accounting principles
generally accepted in the United States (&#147;GAAP&#148;).&nbsp; The preparation of our
financial statements requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues, expenses and
related disclosures.&nbsp; We base our estimates on historical experience and
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent
from other sources.&nbsp; Actual results may differ from these estimates.&nbsp;
The significant accounting policies that are believed to be the most critical
to fully understanding and evaluating our reported financial results include
revenue recognition, warranty reserve, inventory valuations for slow moving
items, impairment of goodwill, and the recovery of deferred income tax assets.</p>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 7.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'>Revenue on product sales is
recognized upon shipment to the customer based on its terms of FOB shipping
point, where the risk of loss and title transfer to the customer.&nbsp; We record
sales in accordance with SEC Staff Accounting Bulletin No. 104, <i>Revenue
Recognition</i>.&nbsp; Under these guidelines, revenue is recognized when all of the
following exist: persuasive evidence that a sale arrangement exists, delivery
of the product has occurred, the price is fixed or determinable, and payment is
reasonably assured.&nbsp; We sell some of our products with a warranty that provides
for repairs or replacement of any defective parts for a period after the sale.
At the time of the sale, the Company accrues an estimate of the cost of
providing the warranty based on prior experience, but does not accrue an
allowance for sales returns. &nbsp;The Company recognizes revenue under research and
development agreements as certain deliverables are met as specified in each
development contract. </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>There have been
minimal returns for credit, so no reserve for product returns has been
established.</p>

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We determine our
inventory value at the lower of cost (first-in, first-out method) or market
value.&nbsp;&nbsp; We determine a reduced market value of our inventory based on the aging
of inventory on hand.&nbsp; We define &#147;aging of inventory&#148; as inventory that exceeds
an estimated 12 months of usage and exceeds orders on hand.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>We determine the reserve for our accounts receivable by examining the
aging of the receivables.&nbsp; We define &#147;aging of receivables&#148; as time passed
since the sale was completed, revenue was recognized and the receivable was
established.&nbsp; If the receivable is aged over 90 days old, or has a known
collection risk, it is reserved from 10% of its value up to 100%.&nbsp; The actual
amount reserved may vary depending on account credit and collection history. &nbsp;</p>

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

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

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In accordance with Statement of Financial Accounting
Standards (&#147;SFAS&#148;), ASC 360 (formerly SFAS&nbsp;No.&nbsp;144), &#147;Accounting for
the Impairment or Disposal for Long-Lived Assets&#148; long-lived assets and
intangible assets with definite lives are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Impairment indicators include, among other
conditions, cash flow deficits, historic or anticipated declines in revenue or
operating profit and adverse legal or regulatory developments. If it is
determined that such indicators are present and the review indicates that the
assets will not be fully recoverable, based on undiscounted estimated cash flow
over the remaining amortization periods, their carrying values are reduced to
estimated fair market value. Estimated fair market value is determined
primarily using the anticipated cash flow discounted at a rate commensurate
with the risk involved. For the purposes of identifying and measuring
impairment, long-lived assets are grouped with other assets and liabilities at
the lowest level for which identifiable cash flow are largely independent of
the cash flow of other assets and liabilities.&#148;&nbsp; Our standard annual
impairment testing is done April 1 of each year.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We monitor
current market conditions and review for potential triggering events quarterly
to determine if there is a need for interim impairment testing. We determined
that a triggering event for the Astromec and Micro Motors goodwill occurred in
the past three months as a large current customer notified us they were
developing a product that would take the place of one that we currently sell
them and another customer chose not to enter into a production contract for a
product we developed for them.&nbsp; We also determined that a triggering event
occurred with the patent intangible asset because no distribution partner or
acquirer surfaced since the previous fiscal year end.&nbsp; </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In determining
if a triggering event has occurred, we consider not only expectations for
growth in the entire US economy, but also expectations for regional growth
specific to our sales markets and specific to our industry and product lines. &nbsp;While
our operating units are influenced by changes in the general economic outlook
of the United States, they are most heavily influenced by changes specific to
the medical device industry.&nbsp; Furthermore, the magnitude of economic changes
within the industry is viewed alongside the outlooks and forecasts specific to
the reporting units to obtain a better sense of the likelihood that goodwill
may be impaired.&nbsp; Declines within the industry&#146;s outlook are reflected in the
unit&#146;s revenue projections. &nbsp;</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We identify two
reporting units for purposes of our annual goodwill impairment testing arising
from its acquisitions of Micro Motors and Astromec. &nbsp;In accordance with ASC 350
(formerly SFAS No.&nbsp;142), goodwill is not amortized and is assessed
annually for impairment (as of April 1) or whenever events or changes in
circumstances indicate that the carrying value of such assets may not be
recoverable. &nbsp;Our Carson City reporting unit corresponds to the operations
resulting from the Astromec acquisition, while our Irvine reporting unit
corresponds to the operations resulting from the Micro Motors acquisition.&nbsp; Our
intangible asset is related to the interosseous patents associated with the
&#147;Intraflow&#148; acquisition.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Goodwill and
Intangible assets are tested for impairment using a discounted cash flow
analysis. The discounted cash flow analysis relies upon estimates of the
entity&#146;s future revenue and expenses to ultimately project the future cash
flows resulting from the business activity of each entity. The projected future
cash flows are discounted to present value at an appropriate discount rate.&nbsp; An
appropriate discount rate is reached by calculating the weighted average cost
of capital &#147;WACC,&#148; which is determined by the assumptions underlying the
Capital Asset Pricing Model &#147;CAPM&#148; and is considered to reflect the view of
&#147;Market Participants,&#148; as required under ASC 825 (formerly SFAS 157). The
inputs used in calculating the WACC are described below.&nbsp; </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>

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

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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>20</p>
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<ol type="a">
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>The assumed capital structure is based upon the Company&#146;s actual capital
structure and debt to equity ratio at the time of analysis.</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>The cost of debt is based on the Company&#146;s actual contracted rates.</p>
	</li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>The cost of equity is equal to the risk free rate represented by the 10
year Treasury note, plus the Company&#146;s historical correlation to market
movement &#147;beta&#148; times the historical equity risk premium, plus an additional
small stock premium.</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>In valuing the Company&#146;s patents, an additional risk premium is added to
reflect the increased risk inherent in intangible assets.</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>Also in valuing the patents, an expected value calculation was performed
that weighted the values of different scenarios based on their expected
probability of occurrence.</p></li>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We performed
separate calculations to determine the sensitivity of our intangible asset
impairment conclusions to increases in the assumed discount rates. In the case
of Astromec, the goodwill impairment test is not failed until the discount rate
is increased to over 27 percent.&nbsp; In the case of Micro Motors, the goodwill
impairment test is not failed until the discount rate is increased to over 23
percent. </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The material
assumptions relied upon in the discounted cash flow analysis used to value the
Company&#146;s Intraflow patents are shown below.</p>

<ol type="a">
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>The
patent was valued as an ongoing product line without any additional
distribution partner or &#147;Market Participant&#148; value.&nbsp; </p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>There
was no value determined for the patent from the perspective of &#147;Market
Participants,&#148; which are believed to possess sales and marketing expertise in
the dental and medical device field, as there were no market participants
likely.</p></li>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The material
assumptions relied upon in the discounted cash flow analysis used to value the
goodwill held in the Carson City reporting unit are shown below.</p>

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

<ol type="a">
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>As the ultimate timing, outcome and effect of the customer&#146;s decision is
unknown, three scenarios were valued representing a range of possibilities.&nbsp;
The resulting values were then weighted based on managements&#146; estimates of
probability of occurrence to derive a single estimated value.</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>Goodwill resulting from the Company&#146;s acquisition of Astromec is tested
for impairment under its Carson City motor manufacturing operations.</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>Motor sales of existing products are assumed to decline as products age,
but are more than replaced by revenue growth from new products and increased
intercompany sales for medical hand piece products. </p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>The existing fixed cost structure of the motor manufacturing operations
will be better absorbed by the higher forecasted volume of production,
resulting in increased profit margins. </p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>In addition to the value of the goodwill held in the Carson City
reporting unit as if it stands alone, an additional analysis is performed to
estimate a value to Pro-Dex of having an in-house motor manufacturer for the
medical device product line.&nbsp; This captive capability enables development speed
and focus, which produces revenue in other operating units.&nbsp; </p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>The value of the Carson City manufacturing operation is added to the
value of the additional capability provided to Pro-Dex for the total value of
the goodwill. </p></li>
</ol>

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

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  <td valign=top align=left style='padding-top:0in;padding-right:0in;
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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>21</p>
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<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;The material assumptions
relied upon in the discounted cash flow analysis used to value the goodwill
held in the Micro Motors reporting unit are shown below.</p>

<ol type="a">
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>Goodwill resulting from the Company&#146;s acquisition of Micro Motors is
tested for impairment under its Irvine reporting unit, which houses the
operations resulting from the base technology acquired from Micro Motors.</p>
	</li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>As the ultimate timing, outcome and effect of the customer&#146;s decision is
unknown, three scenarios were valued representing a range of possibilities.&nbsp;
The resulting values were then weighted based on managements&#146; estimates of
probability of occurrence to derive a single estimated value.</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;punctuation-wrap:simple;text-autospace:none;vertical-align:baseline; margin-right:0in; margin-top:0in'>Sales to existing customers are assumed to decline, but are more than
replaced by revenue growth from new customers.</p></li>
</ol>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Given the
company&#146;s lack of a direct dental distribution channel, in fiscal year 2009
third quarter, it stopped actively promoting the product that is 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 ASC 360 (formerly Statement
of Financial Accounting Standards No. 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 probabilities of
occurring) was that the asset&#146;s value was impaired and, accordingly a charge of
$997,000 was taken in the fiscal 2009 third quarter.&nbsp; As market conditions
have not improved and no distribution partner has been found as of December 31,
2009, management concluded that the asset&#146;s value was further impaired and,
accordingly a charge for the remaining value of $140,000 was taken in the
fiscal 2010 second 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.</p>

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

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=526
 style='width:75%;border-collapse:collapse'>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-left:1px solid #000000; border-right:medium none; border-bottom:1px solid #000000; border-top:1px solid windowtext; padding:1.1pt'>
  &nbsp;</td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:1px solid #000000; border-top:1px solid windowtext; padding:1.1pt'>
  &nbsp;</td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:1px solid #000000; border-top:1px solid windowtext; padding:1.1pt'>
  <p align="center"><b>Carrying&nbsp;Value</b></td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:1px solid #000000; border-top:1px solid windowtext; padding:1.1pt'>
  &nbsp;</td>
  <td valign=bottom style='border-top:1px solid windowtext;
  border-left:medium none;border-bottom:1px solid #000000;border-right:1px solid windowtext;
  padding:1.1pt'>
  &nbsp;</td>
 </tr>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-left:1px solid #000000; border-right:medium none; border-bottom:1px solid #000000; border-top:medium none windowtext; padding:1.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:1px solid #000000; border-top:medium none windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">6/30/2009</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:1px solid #000000; border-top:medium none windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">Amortization</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:1px solid #000000; border-top:medium none windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">Impairment</p>
  </td>
  <td valign=bottom style='border-top:medium none windowtext;
  border-left:medium none;border-bottom:1px solid #000000;border-right:1px solid windowtext;
  padding:1.1pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">12/31/2009</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-left:1px solid #000000; border-bottom:1px solid #000000; padding:1.1pt; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Intangibles&nbsp;-&nbsp;Patents</p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; padding:1.1pt; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="right">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;147,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; padding:1.1pt; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7,000)</p>
  </td>
  <td valign=bottom style='border-bottom:1px solid #000000; padding:1.1pt; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>$&nbsp;&nbsp;(140,000)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:1px solid #000000; border-right:1px solid windowtext; padding:1.1pt' align="right">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-&nbsp;</p>
  </td>
 </tr>
 </table>

</div>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>For the Astromec
reporting unit&#146;s impairment testing there was an assumption of decreased
external sales growth to current customers compared to 2009 and year to date
2010, which was more than offset by an increased sales growth rate of motors
for new customers and 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. &nbsp;It should be
noted that the unit passes its goodwill impairment test without the inclusion
of this additional &#147;enablement&#148; value.&nbsp; The computed reporting unit value
exceeds the carrying value of the unit by more than 13 percent as a standalone
business and 72 percent with the enabled value.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>For the Micro Motors reporting
unit&#146;s impairment testing, there was an assumption of decreased sales of
current products to current customers more than offset by sales of a recently
introduced product as well as by new customer sales of a new product line
introduced last quarter.&nbsp; The computed reporting unit value exceeds the
carrying value of the unit by more than 32 percent.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The warranty accrual is determined by reviewing the return rates and
warranty repair costs for warranty eligible products.&nbsp; We accrue an amount of
expected repair cost based on these factors projected for the future applicable
warranty period.&nbsp; If actual return rates or repair costs differ from our
estimates, actual results could vary from the projected accrual.&nbsp; The repair
return rates and cost assumptions are reviewed quarterly. </p>

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

<div>

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

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

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

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

</div>

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

<font face="Times New Roman">

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


</font>


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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in;text-autospace:none'><b>Property,
Plant, Equipment &amp; Leasehold Improvements, Net</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property, plant and equipment is recorded at
cost and consists of the following: </p>

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

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=495
 style='width:75%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-bottom:medium none; border-top:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>12/31/2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>6/30/2009</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Unaudited</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Audited</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Land</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>757,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>757,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Building</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,470,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,470,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Leasehold&nbsp;Improvements</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,284,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,283,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Equipment</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>6,709,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>6,620,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11,220,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11,130,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Accumulated&nbsp;Depreciation</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(5,514,000)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(5,149,000)</p>
  </td>
 </tr>
 <tr style='height:15.15pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;property,&nbsp;pland&nbsp;&amp;&nbsp;equipment,&nbsp;net</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,706,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,981,000&nbsp;</p>
  </td>
 </tr>
</table>

</div>

<h2 style='margin:0in;margin-bottom:.0001pt;text-align:center;page-break-after:avoid;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";font-weight:normal;text-decoration:underline;'>&nbsp;</h2>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Depreciation is provided using the straight-line method over the
estimated useful lives of the assets as follows: building - 39 years, equipment
- - 3 to10 years; and leasehold improvements are depreciated over the shorter of
the term of the lease or their estimated useful lives.</p>

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>We are subject to ASC 718 (formerly Statement
of Financial Accounting Standards (&#147;SFAS&#148;) No. 123 (R) <i>Accounting for
Stock-Based Compensation</i> as revised December 2004.)&nbsp; This standard
establishes the accounting standards for equity compensation, and applies to us
in the recognition of the cost of stock options awarded based on the grant-date
fair value of those awards. </p>

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of the process of preparing our consolidated financial statements, we
are required to estimate our income taxes in each of the jurisdictions in which
we operate.&nbsp; This process involves estimating the actual current tax
liabilities together with assessing temporary differences resulting from
differing treatment of items for tax and accounting purposes.&nbsp; These
differences result in deferred tax assets and liabilities, which are included
within the consolidated balance sheet.&nbsp; The most significant tax assets
are future deductions from the amortization of intangibles over the next ten
years, inventory reserves and net operating loss carry forwards.&nbsp; Tax
assets also result from net operating losses and research and development tax
credits.&nbsp; We must then assess the likelihood that the deferred tax assets
will be recovered from future taxable income and, to the extent we believe that
recovery is not likely, a valuation allowance must be established.&nbsp; To the
extent we establish a valuation allowance or increase or decrease this
allowance in a period, the impact will be included in the tax provision in the
statement of operations.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Significant
management judgment is required in determining our provision for income taxes
and the recoverability of our deferred tax asset.&nbsp; Such determination is based primarily
on our historical taxable income, with some consideration given to our
estimates of future taxable income by jurisdictions in which we operate and the
period over which our deferred tax assets will be recoverable.&nbsp; We carry a
valuation allowance against our deferred tax assets and changes in this
allowance are reflected through income tax expense.&nbsp;&nbsp; </p>

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

<div>

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

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

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

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

</div>

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

<font face="Times New Roman">

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


</font>


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

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

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The majority of our revenue is derived from designing, developing and
manufacturing rotary drive systems for the medical device and dental
industries, motion control software and hardware for industrial and scientific
applications and fractional horsepower DC motors for aerospace, medical and
military applications. A large part of our revenue has been driven by
developing and selling numerous types of private label rotary drive systems for
use in dental, cranial, spinal, arthroscopic and orthopedic surgery.&nbsp; Other
revenue sources include designing and manufacturing miniature pneumatic motors,
fractional horsepower DC motors and motion control systems for industrial
applications in the automotive and aerospace industries.&nbsp; </p>

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

<p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;text-autospace:none;font-size:12.0pt;font-family:"Times New Roman";text-autospace:ideograph-numeric ideograph-other'>The
Company&#146;s revenue is derived from five main customer types.&nbsp; The proportion of
total sales to each customer type and sales by location are noted in the tables
below (unaudited):</p>

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

<table class=MsoNormalTable border=0 cellpadding=0 width=778
 style='width:100%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.75pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=6 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Three&nbsp;months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=6 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Six&nbsp;months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
 </tr>
 <tr style='height:14.7pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Sales&nbsp;by&nbsp;customer&nbsp;type&nbsp;($'000)</p>
  </td>
  <td colspan=3 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=3 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=3 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=3 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:14.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Dental</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>446&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>8%&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>577&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11%&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,018&nbsp;</p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9%&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,308&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>12%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.7pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Medical</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,313&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>58%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,684&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>51%&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>6,775&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>60%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,357&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>49%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Industrial</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>667&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>12%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>865&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>17%&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,141&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>10%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,811&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>17%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Aerospace</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>826&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>15%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>659&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>13%&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,446&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>13%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,422&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>13%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.7pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Government&nbsp;and&nbsp;other</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>444&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>8%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>452&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9%&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>949&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>8%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>995&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>9%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;Sales</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,696&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,237&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11,329&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>10,893&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%&nbsp;</p>
  </td>
 </tr>
</table>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The majority of the Irvine-based sales include medical products that
utilize proprietary designs developed by us under exclusive design and supply
agreements.&nbsp; Our dental products are primarily sold to original equipment
manufacturers and dental product distributors.&nbsp; In Beaverton, we design and
manufacture embedded multi-axis motion controllers used to regulate the motion
of servo and stepper motors, predominantly for the factory automation,
scientific research, and medical analysis equipment industries.&nbsp; Our Carson City products include high reliability fractional horsepower DC motors designed for
harsh environments, primarily for the aerospace and medical markets.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>We hold the following three independently verified certifications: ISO
9001:2000, ISO 13485 revised 1998, and Medical Device Directive 93\42\EEC Annex
II company.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>At the present time, we are generally able to fill orders within 60
days.&nbsp; At December 31, 2009, we had a backlog, including orders for delivery
beyond 60 days, of $11.8 million compared with a backlog of $12.1 million at
December 31, 2008 and $9.9 million at June 30, 2009.&nbsp; We expect to ship most of
our backlog in fiscal year 2010 and the remainder in fiscal year 2011 and 2012.&nbsp;
The increased backlog compared to June 2009 is related to multiple orders totaling
$4.5 million placed by our two largest customers during the quarter ended
December 31, 2009. &nbsp;We experience some seasonal fluctuations in our new order
bookings as increases in our fiscal second quarter orders correspond to new
calendar year advance orders from our major customers. We may experience
variability in our new order bookings due to the timing of major new product
launches.&nbsp; However, we do not typically experience seasonal fluctuations in our
shipments and revenues.&nbsp; </p>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>For the Three-Month periods
ended December 31, 2009 and 2008</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b>The following table sets forth the
periods indicated and the percentage of net revenues represented by each item
in our Consolidated Statements of Operations. </p>

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

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center>
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>24</p>
  </td>
 </tr>
</table>

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

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

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

</div>

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

<font face="Times New Roman">

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


</font>


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

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

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=572
 style='width:80%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>(In&nbsp;Thousands)</p>
  </td>
  <td colspan=6 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Three&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=3 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=3 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;sales:</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,696&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,237&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cost&nbsp;of&nbsp;sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,696&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>65%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,305&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>63%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross&nbsp;Profit</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>35%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,932&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>37%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Selling,&nbsp;general&nbsp;and&nbsp;administrative&nbsp;expenses</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,152&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>20%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,162&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>22%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Impairment&nbsp;of&nbsp;intangible&nbsp;asset</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>140&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Research&nbsp;and&nbsp;development&nbsp;costs</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>576&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>10%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>677&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>13%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Income&nbsp;from&nbsp;Operations</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>132&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>93&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;interest&nbsp;and&nbsp;other&nbsp;expense</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(51)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-1%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(52)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-1%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Benefit&nbsp;for&nbsp;income&nbsp;taxes</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(499)</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-9%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(40)</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-1%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;income</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>580&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>10%&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>81&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2%&nbsp;</p>
  </td>
 </tr>
</table>

</div>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'><b>Net Sales.</b>&nbsp;
Consolidated sales increased $459,000 from $5,237,000 for the quarter ended
December 31, 2008 to $5,696,000 for the quarter ended December 31, 2009.&nbsp; The increase
was primarily due to the delivery of a single newly developed product to a major
medical customer during the second quarter of fiscal year 2009.&nbsp; This sales
increase was offset by a reduction in dental sales and a decrease in industrial
motion control sales from the quarter ended December 31, 2008 as that industry
has been severely negatively impacted by the current economic climate.&nbsp; </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Although
selective price increases and decreases were implemented in response to market
conditions, the majority of the sales changes for each product line are due
primarily to changes in sales volume, not the effect of price changes. </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Gross Profit and Gross Profit Percentage of Sales</b>.&nbsp; Our
consolidated gross profit for the quarter ended December 31, 2009 increased $68,000
or 4% over the same quarter in the previous year due to the higher sales volume.&nbsp;
Gross profit as a percentage of sales was 2% lower at 35% for the quarter ended
December 31, 2009 compared to 37% for the quarter ended December 31, 2008. &nbsp;Gross
profit margins were reduced from the same quarter in the previous year due to
an increased warranty expense ($221,000) as compared to the previous year.&nbsp; The
reduction in warranty expense during the quarter ended December 31, 2008 was
attributed to a cumulative adjustment related to systemic lower per unit-repair
costs and a reduced expected return rate. &nbsp;Gross profit and gross profit as a
percentage of sales were as follows (unaudited): </p>

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

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=568
 style='width:75%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-indent:.5in;
  text-autospace:none'><b>&nbsp;</b></p>
  </td>
  <td valign=top style='padding:1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  height:.05pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.85pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Three&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.8pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;height:14.8pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;height:14.8pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;height:14.8pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;height:14.8pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Increase</p>
  </td>
 </tr>
 <tr style='height:14.85pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross&nbsp;Profit</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,000,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,932,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>4%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.85pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross&nbsp;Profit&nbsp;Percentage&nbsp;of&nbsp;Sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>35%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>37%&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  height:14.85pt'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

</div>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'><b>&nbsp;</b></p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in'><b>Selling, General and Administrative Costs (S, G&amp;A)</b>.&nbsp;
Consolidated S, G&amp;A expenses increased to $1,292,000 for the quarter ended
December 31, 2009 from $1,162,000 for the quarter ended December 31, 2008.&nbsp; The
increase in total G &amp; A costs was due to the impairment determination of
the patent related intangible ($140,000).&nbsp; The impairment loss is more fully
described in Note 11 of the condensed consolidated financial statements accompanying
this report.&nbsp; The increase due to the impairment charge was offset by $10,000
lower labor costs as a $32,000 increase in G&amp;A labor expenses was balanced by
a $22,000 increase in selling labor cost.&nbsp; &nbsp;&nbsp;As a percentage of sales, S,
G&amp;A expenses increased to 23% of sales from 22% of sales for the quarter
ended December 31, 2009 and 2008 respectively with the impairment accounting
for 3% of sales in the quarter ended December 31, 2009.&nbsp; S, G&amp;A costs were
as follows (unaudited):</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>

<div>

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

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

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

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

</div>

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

<font face="Times New Roman">

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


</font>

<table class=MsoNormalTable border=0 cellpadding=0 width=677
 style='width:100%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Three&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Increase</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(Decrease)</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Selling</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>353,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>329,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>7%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Impairment&nbsp;of&nbsp;intangible&nbsp;asset</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>140,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>N/A&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>General&nbsp;and&nbsp;administrative</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>799,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>833,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-4%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;S,&nbsp;G&amp;A</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,292,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,162,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Selling,&nbsp;General&nbsp;&amp;&nbsp;Administrative&nbsp;Percentage&nbsp;of&nbsp;Sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>23%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>22%&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'><b>&nbsp;Research and
Development (R&amp;D) Costs</b>. &nbsp; Research and development cost decreased
$101,000 to $576,000 for the quarter ended December 31, 2009 from $677,000 for
the quarter ended December 31, 2008, a decrease of 15%.&nbsp; The decrease was due
to approximately $68,000 in decreased labor costs for medical and small motor
product development, improvement and validation.&nbsp; In addition, new development
related supplies were reduced by $36,000.&nbsp; Company-funded research and
development costs were as follows (unaudited):</p>

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

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=553
 style='width:75%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-indent:.5in'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.4pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=5 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";' align="center">Three&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
 </tr>
 <tr style='height:15.35pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Decrease</p>
  </td>
 </tr>
 <tr style='height:15.4pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Research&nbsp;and&nbsp;Development&nbsp;costs</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>576,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>677,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-15%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.4pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>R&nbsp;&amp;&nbsp;D&nbsp;Percentage&nbsp;of&nbsp;Sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>10%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>13%&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

</div>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'><b>Operating
Profit and Operating Profit Percentage of Sales</b>.&nbsp; Our resulting
consolidated operating profit for the quarter ended December 31, 2009 increased
to $132,000 compared to $93,000 for the same quarter in the previous year.&nbsp; Operating
profit as a percentage of sales remained flat at 2% for the quarter ended
December 31, 2009 compared to 2% for the quarter ended December 31, 2008.&nbsp;
Operating profit and margin were as follows (unaudited): </p>

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

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=601
 style='width:75%;border-collapse:collapse'>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:medium none windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt' width="47%">
  &nbsp;</td>
  <td colspan=4 valign=bottom style='border-top:1pt solid #000000;
  border-left:medium none;border-bottom:medium none windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt'>
  <p align="center">Three&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</td>
  <td valign=bottom style='border-top:1pt solid #000000;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt' width="10%" rowspan="2">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Increase</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;' width="47%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; ' width="47%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Operating&nbsp;Profit</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; ' width="1%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;' width="20%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>132,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; ' width="3%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;' width="17%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>93,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;' width="10%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>42%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; ' width="47%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Operating&nbsp;Profit&nbsp;Percentage&nbsp;of&nbsp;Sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2%&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  ' width="10%">
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

</div>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Royalties and Other Income. </b>&nbsp;We received $2,000 in royalty income
in the three months ended December 31, 2009, compared to $8,000 in the same
period during the prior year.&nbsp; We had no &#147;Other Income&#148; in either period.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Net Interest Expense. </b>&nbsp;Net interest expense for the quarter ended
December 31, 2009 was $53,000 compared to $60,000 in the quarter ended December
31, 2008 due to lower debt levels.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Income Tax (Benefit)</b>. Our estimated effective combined federal and
state tax rate on income from operations for the quarter ended December 31, 2009
resulted in a benefit of 616% to earnings before tax compared to a 98% benefit to
earnings before tax for the quarter ended December 31, 2008.&nbsp; The difference in
the 2009 rate is due primarily to the realization of a portion of the Company's
deferred tax asset for the federal net operating loss carryovers generated in
the year ended June 30, 2009.&nbsp; Federal legislation enacted on November 6, 2009
provided for a five year carry back of certain NOLs.&nbsp; The Company intends to
carry back the NOL from the year ended June 30, 2009 to earlier permissible
years under the new tax law.&nbsp; The benefit to earnings related to the 2008 rate
was due to the use of state tax credits and a $70,000 retroactive reinstatement
of the federal research and development credits.&nbsp; </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Net Income.</b>&nbsp; Our net income for the three months ended December 31,
2009 was $580,000 or $0.06 per share on a basic and diluted basis, as compared
to net income of $81,000 or $0.01 per share on a basic and diluted basis for
the three months ended December 31, 2008.</p>

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

<div>

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

</div>

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

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

</div>

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

<font face="Times New Roman">

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


</font>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><b>For the Six-Month periods
ended December 31, 2009 and 2008</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b>The following table sets forth the
periods indicated and the percentage of net revenues represented by each item
in our Consolidated Statements of Operations. </p>

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

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=617
 style='width:80%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>(In&nbsp;Thousands)</p>
  </td>
  <td colspan=6 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Six&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=3 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=3 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;sales:</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11,329&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>10,893&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>100%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cost&nbsp;of&nbsp;sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>7,455&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>66%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>7,206&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>66%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross&nbsp;Profit</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,874&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>34%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,687&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>34%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Selling,&nbsp;general&nbsp;and&nbsp;administrative&nbsp;expenses</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,168&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>19%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,354&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>22%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Impairment&nbsp;of&nbsp;intangible&nbsp;asset</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>140&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Research&nbsp;and&nbsp;development&nbsp;costs</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,197&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,396&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>13%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Income&nbsp;(Loss)&nbsp;from&nbsp;Operations</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>369&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(63)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-1%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;interest&nbsp;and&nbsp;other&nbsp;expense</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(101)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-1%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(112)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-1%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.15pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Benefit&nbsp;for&nbsp;income&nbsp;taxes</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(495)</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-4%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(138)</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-1%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.1pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;Income&nbsp;(loss)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-right:1.0pt solid windowtext; border-top:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-left:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>763&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>7%&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(37)</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0%&nbsp;</p>
  </td>
 </tr>
</table>

</div>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'><b>Net Sales.</b>&nbsp;
Consolidated net sales increased $436,000 from $10,893,000 for the six months
ended December 31, 2008 to $11,329,000 for the six months ended December 31,
2009.&nbsp; The increase was primarily due to the delivery of a single newly
developed product to a major medical customer during the second quarter of
fiscal year 2009.&nbsp; This sales increase was offset by a reduction in dental
sales and a substantial decrease in industrial motion control sales as that
industry has been severely negatively impacted by the current economic climate.&nbsp;
&nbsp;&nbsp;</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Although
selective price increases and decreases were implemented in response to market
conditions, the majority of the sales changes for each product line are due
primarily to changes in sales volume, not the effect of price changes. </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Gross Profit and Gross Profit Percentage of Sales</b>.&nbsp; Our
consolidated gross profit for the six months ended December 31, 2009 increased $187,000
or 5% over the same period in the previous year due to higher sales volume. &nbsp;Gross
profit as a percentage of sales was 34% for the six months ended December 31, 2009,
the same percentage as for the same period ended December 31, 2008.&nbsp; Gross
profit and gross profit as a percentage of sales were as follows (unaudited): &nbsp;</p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=568
 style='width:75%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-indent:.5in;
  text-autospace:none'><b>&nbsp;</b></p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.85pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Six&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.8pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Increase</p>
  </td>
 </tr>
 <tr style='height:14.85pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross&nbsp;Profit</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,874,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,687,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:14.85pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Gross&nbsp;Profit&nbsp;Percentage&nbsp;of&nbsp;Sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>34%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>34%&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

</div>

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

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

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

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center id="table6">
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>27</p>
  </td>
 </tr>
</table>

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

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

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

</div>

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

<font face="Times New Roman">

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


</font>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Selling, General and Administrative Costs (S, G&amp;A)</b>.&nbsp; Consolidated
S, G&amp;A expenses decreased to $2,307,000 for the six months ended December
31, 2009 from $2,354,000 for the six months ended December 31, 2008.&nbsp; S,
G&amp;A costs were lower in the first six months of 2009 compared to the first
six months of 2008 due to $64,000 in lower consulting expense related to
Sarbanes-Oxley compliance activities, $44,000 in reduced tax and auditing fees,
and offset by net $97,000 of increased patent amortization cost ($43,000 in
reduced periodic amortization due to lower asset value less $140,000 in asset
impairment). &nbsp;The impairment loss is more fully described in Note 11 of the condensed
consolidated financial statements accompanying this report. &nbsp;As a percentage of
sales, S, G&amp;A expenses decreased to 20% of sales from 22% of sales for the six
months ended December 31, 2009 and 2008, respectively with the impairment
accounting for 1% of sales for the six months ending December 31, 2009 &nbsp;.&nbsp; S,
G&amp;A costs were as follows (unaudited):</p>

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

<table class=MsoNormalTable border=0 cellpadding=0 width=717
 style='width:100%;border-collapse:collapse'>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Six&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Decrease</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Selling</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>641,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>673,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-5%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Impairment&nbsp;of&nbsp;intangible&nbsp;asset</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>140,000&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>N/A&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>General&nbsp;and&nbsp;administrative</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,526,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,681,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-9%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.25pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Total&nbsp;S,&nbsp;G&amp;A</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,307,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,354,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-2%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Selling,&nbsp;General&nbsp;&amp;&nbsp;Administrative&nbsp;Percentage&nbsp;of&nbsp;Sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>20%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>22%&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'><b>Research and
Development (R&amp;D) Costs</b>.&nbsp; Research and development expenses decreased $199,000
to $1,197,000 for the six months ended December 31, 2009 from $1,396,000 for
the six months ended December 31, 2008, a decrease of 14%.&nbsp; The decrease was primarily
due to $181,000 in decreased labor costs at and a $21,000 reduction in development
related supplies.&nbsp; Research and development costs were as follows (unaudited):</p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=511
 style='width:75%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-indent:.5in'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Six&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Decrease</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Research&nbsp;and&nbsp;Development&nbsp;costs</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,197,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,396,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-14%&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>R&nbsp;&amp;&nbsp;D&nbsp;Percentage&nbsp;of&nbsp;Sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>11%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>13%&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

</div>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'><b>Operating Profit
(loss) and Operating Profit (loss) Percentage of Sales</b>.&nbsp; Our
consolidated operating profit for the six months ended December 31, 2009 was $369,000
compared to an operating loss of $63,000 for the same period in the previous
year. &nbsp;The increase in operating profit was due to the higher sales and
company-wide cost saving measures resulting mainly from lower labor and
corporate support costs previously mentioned.&nbsp; Operating profit as a percentage
of sales was 3% operating profit for the six months ended December 31, 2009 compared
to an operating loss of (1%) for the six months ended December 31, 2008.&nbsp;
Operating profit and margin were as follows (unaudited): </p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp;</p>
<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0 width=547
 style='width:75%;border-collapse:collapse' id="table7">
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Six&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</p>
  </td>
  <td valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Increase</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Operating&nbsp;Profit&nbsp;(loss)</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>369,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>(63,000)</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>N/A&nbsp;</p>
  </td>
 </tr>
 <tr style='height:15.2pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Operating&nbsp;Profit&nbsp;Percentage&nbsp;of&nbsp;Sales</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3%&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>-1%&nbsp;</p>
  </td>
  <td valign=bottom style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
</table>

</div>

<div>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Royalties and Other Income. </b>&nbsp;We received $3,000 in royalty
payments in the six months ended December 31, 2009, compared to $9,000 in
royalty payments in the six months ended December 31, 2008.&nbsp; We had no &#147;Other
Income&#148; in either period.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Net Interest Income/Expense. </b>&nbsp;Net interest expense for the six
months ending December 31, 2009 was $104,000 compared to net interest expense of
$121,000 in the six months ended December 31, 2008, due to lower debt balances.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Income Tax (Benefit) Provision</b>. Our estimated effective combined
federal and state tax rate on income from operations for the six months ended
December 31, 2009 resulted in a benefit to earnings before tax of 185% compared
to a benefit of 79% to earnings before tax for the six months ended December
31, 2008.&nbsp; The difference in the 2009 rate is due primarily to the realization
of a portion of the Company's deferred tax asset for the federal net operating
loss carryover generated in the year ended June 30, 2009.&nbsp; Federal legislation
enacted on November 6, 2009 provided for a five year carry back of certain
NOLs.&nbsp; The Company intends to carry back the NOL from the year ended June 30,
2009 to earlier permissible years under the new tax law.&nbsp; The benefit to
earnings related to the 2008 rate was due to the use of state tax credits and a
$70,000 retroactive reinstatement of the federal research and development
credits.&nbsp; </p>

<p align="center">28</p>
<p align="center">&nbsp;</div>

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

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

</div>

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

<font face="Times New Roman">

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


</font>


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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'><b>Net Income/Loss.</b>&nbsp; Our net income for the six months ended December
31, 2009 was $763,000 or $0.08 per share, as compared to a loss of $37,000 or
$0.00 per share on a basic and diluted basis for the six months ended December
31, 2008.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>

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

<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in'><b>Liquidity and Capital
Resources&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>The following table presents selected financial information as of the end
of the second quarter of fiscal 2009 and 2008, respectively, as well as of the year
ended June 30, 2009:</p>

<table class=MsoNormalTable border=0 cellpadding=0 width=690
 style='width:100%;border-collapse:collapse'>
 <tr style='page-break-inside:avoid;height:.05pt'>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
  none'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td valign=top style='padding:1.1pt;
  '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:13.55pt'>
  <td valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=4 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>As&nbsp;of&nbsp;December&nbsp;31,</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:1.0pt solid windowtext;
  border-left:medium none;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>As&nbsp;of</p>
  </td>
 </tr>
 <tr style='height:13.6pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2009</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>2008</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>June&nbsp;30,&nbsp;2009</p>
  </td>
 </tr>
 <tr style='height:13.55pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Cash&nbsp;and&nbsp;cash&nbsp;equivalents</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,790,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>406,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,124,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:13.55pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Working&nbsp;Capital&#185;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>5,624,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>6,275,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>4,548,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:13.55pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Credit&nbsp;Line&nbsp;outstanding&nbsp;balance</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>400,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0&nbsp;</p>
  </td>
 </tr>
 <tr style='height:13.6pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Net&nbsp;Debt&#179;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>1,322,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>3,852,000&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>2,204,000&nbsp;</p>
  </td>
 </tr>
 <tr style='height:13.55pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Tangible&nbsp;book&nbsp;value/common&nbsp;share&#178;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.86&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.94&nbsp;</p>
  </td>
  <td valign=bottom style='border-left:medium none; border-right:medium none; border-top:medium none; border-bottom:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>$</p>
  </td>
  <td valign=bottom style='border-top:medium none;border-left:
  medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>0.76&nbsp;</p>
  </td>
 </tr>
 <tr style='height:16.75pt'>
  <td valign=bottom style='border-top:medium none;border-left:
  1.0pt solid windowtext;border-bottom:medium none;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Number&nbsp;of&nbsp;days&nbsp;of&nbsp;sales&nbsp;outstanding&nbsp;(DSO)&nbsp;in</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-left:medium none; border-top:medium none; border-bottom:medium none; border-right:1.0pt solid windowtext; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
  </td>
 </tr>
 <tr style='height:16.75pt'>
  <td valign=bottom style='border-left:1.0pt solid windowtext; border-right:1.0pt solid windowtext; border-bottom:1.0pt solid windowtext; border-top:medium none; padding:1.1pt; '>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>accounts&nbsp;receivable&nbsp;at&nbsp;end&nbsp;of&nbsp;quarter<sup><font size="2">4</font></sup>&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>37&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>47&nbsp;</p>
  </td>
  <td colspan=2 valign=bottom style='border-top:medium none;
  border-left:medium none;border-bottom:1.0pt solid windowtext;border-right:1.0pt solid windowtext;
  padding:1.1pt;'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>41&nbsp;</p>
  </td>
 </tr>
</table>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:.5in;text-align:justify;text-autospace:
none'><sup>1</sup> Working Capital = Ending Current Assets less Ending Current
Liabilities.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:.5in;text-align:justify;text-autospace:
none'><sup>2</sup> Tangible book value/common share<sup> </sup>= (Total
shareholders&#146; equity &#150; Net intangible asset (patents) - Goodwill) / (basic
outstanding shares).</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:.5in;text-align:justify;text-autospace:
none'><sup>3</sup> Net Debt = Total Ending Long Term plus Current Portion of
Debt plus Credit Line less Cash</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:.5in;text-align:justify;text-autospace:
none'><sup>4</sup> DSO = Ending Net Accounts Receivable balance / (Previous
Quarter Sales / 91).</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:.5in;text-align:justify;text-autospace:
none'>&nbsp;</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>Our working capital at December 31, 2009 decreased to $5.6 million compared
to $6.3 million at December 31, 2008 and was $1.1 million higher than the $4.5
million at June 30, 2009.&nbsp;&nbsp; Cash flow provided by operations was $971,000 during
the six months ended December 31, 2009 compared to cash flow used in operations
of $56,000 during the six months ended December 31, 2008.&nbsp; Fiscal year 2010 cash
increased mainly because of increased net income combined with decreases in trade
accounts receivable and inventory offset by an increase in income taxes receivable.
</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>During the quarter ended December 31, 2009 one of our largest
customers (the &#147;Customer&#148;) informed us that it is in the process of developing,
and plans to eventually manufacture its own surgical hand pieces which are
functionally comparable to the two products currently provided by the
Company.&nbsp;&nbsp;Aggregate sales of these two products to this Customer
during the 12-month period ending November 30, 2009 were $7.5 million,
representing 35% of the Company&#146;s revenues during the same
period.&nbsp;&nbsp;Pro-Dex has been the exclusive manufacturer of these
products since they were developed.&nbsp;&nbsp;The Customer&#146;s 5-year commitment
to exclusivity with the Company expired on January 6, 2010.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The Customer has not provided firm transition dates or
volumes due to the inherent uncertainty in the design, testing, and
qualification process.&nbsp;&nbsp;The Customer advised that it expects to
maintain its current level of purchases at least through August of 2010 for one
product (which represents 45% of its total purchases from the Company during
the 12-month period ended November 30, 2009), and at least through December of
2010 for the second product (which represents 43% of its total purchases from
the Company during the 12-month period ended November 30, 2009).</p>

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

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

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center id="table8">
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>29</p>
  </td>
 </tr>
</table>

</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

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

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

</div>

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

<font face="Times New Roman">

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


</font>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>On December 4, 2009, the Customer placed a $1.5 million
purchase order with the Company for delivery of the second product at
historical monthly quantities through September, 2010.&nbsp;&nbsp;The Customer
also stated that it expects to continue to buy some volume of these products
from the Company beyond those dates as its initial success is not assured,
certain markets may not adopt the Customer's design, and regulatory
registration&nbsp;in certain markets is a lengthy process.&nbsp;&nbsp;Further,
the Customer indicated that it will continue to rely on the Company for the
repair of Company manufactured units in the field.&nbsp;&nbsp;Such repairs
represented 12% (approximately $914,000) of its total purchases for the
12-month period ended November 30, 2009.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The design and production of these products is
technologically challenging, as such devices are exposed to extremely harsh
surgical and sterilization conditions.&nbsp;&nbsp;A different&nbsp;large
customer of the Company pursued a similar course of action several years ago
and ultimately canceled its in-sourcing project, continuing its purchases from
Pro-Dex.&nbsp;&nbsp;The Customer currently pursuing this
course&nbsp;has&nbsp;indicated a high commitment to proceeding
cautiously.&nbsp;&nbsp;Accordingly, the actual occurrence of, and certainly the
specific timing of any transition is very difficult to estimate.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>If the customer ultimately significantly reduces its
purchases from Pro-Dex, the reduced cash flows from this customer could be
offset by cost reductions as well as increases in purchases from new and
existing customers.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'><br>
We have a credit facility with Wells Fargo and a mortgage with Union
Bank.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'><i><u>Wells Fargo Credit Facility</u></i></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>As of December
31, 2009, the Wells Fargo credit facility had two components:&nbsp; </p>

<ul>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;margin-right:0in; margin-top:0in'>a revolving Credit Line Note (&#147;line of credit&#148;) of up to $1,000,000
in borrowing availability, and</p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;margin-right:0in; margin-top:0in'>a Five year Term Note (the &#147;TI Loan&#148;) with an initial balance of&nbsp;
$2,000,000, of which $1,566,667 was outstanding as of December 31, 2009. </p>
	</li>
</ul>


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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>If borrowings
under the line of credit exceed $500,000, the maximum amount of borrowing is limited
to the lesser of $1,000,000 or 70% of the eligible accounts receivable plus 40%
of the eligible inventory. &nbsp;Its terms require monthly interest payments at
either (i) the prime rate of interest (3.25% at December 31, 2009) plus 1.50%,
or (ii) three month LIBOR (0.253% at December 31, 2009) plus 2.50%, at our
discretion, based on outstanding borrowings.&nbsp; The line of credit expires
on November 1, 2010.&nbsp; We are charged an unused credit line fee of 1.5% per
annum payable quarterly on the average balance of the line of credit that is
not used. <font style="font-size: 10.0pt">&nbsp;</font>There was no outstanding
balance under the credit line as of December 31, 2009.&nbsp; Therefore, the
total eligible additional borrowing capacity under the line of credit as of December
31, 2009 was $1,000,000.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The TI Loan had
an initial balance of $2,000,000.&nbsp; The borrowings from this term
commitment were used for construction of tenant improvements for our Irvine, California facility.&nbsp; Its terms require monthly principal and interest
payments over the 60-month life of the loan, based on outstanding
borrowings.&nbsp; The interest rate is fixed at 5.72% over the life of the
loan.&nbsp; There was a $1,566,667 outstanding balance under the TI Loan as of December
31, 2009.&nbsp;</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>All assets of
the Company except our Carson City land and building secure the outstanding
borrowings under the Wells Fargo credit facility.</p>

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>In March 2006, we entered into a ten-year mortgage with Union Bank for
$1,650,000.&nbsp; The principal balance of the mortgage bears interest at a
fixed annual rate of 6.73%.&nbsp; Payments on the mortgage are $11,379 per
month (based on a 25 year amortization), with the balance of $1,291,666 in
principal due on April&nbsp;1, 2016.&nbsp; The mortgage is secured by our Carson City land and building.&nbsp; There was $1,544,265 in principal outstanding under
the mortgage as of December 31, 2009.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in;text-autospace:
none'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:0.35in;text-align:justify;margin-right:0in; margin-top:0in'>&nbsp;</p>

<div>

<table cellspacing=0 cellpadding=0 hspace=0 vspace=0 align=center id="table9">
 <tr>
  <td valign=top align=left style='padding-top:0in;padding-right:0in;
  padding-bottom:0in;padding-left:0in'>
  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>30</p>
  </td>
 </tr>
</table>

</div>

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

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

</div>

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

<font face="Times New Roman">

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


</font>


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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>There are
certain financial and non-financial covenants that the Company must meet to be
in compliance with the terms of the Wells Fargo credit facility and mortgage
with Union Bank.&nbsp; As of the quarter ended December 31, 2009, we were in
compliance with the Wells Fargo and Union Bank covenants.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>At December 31,
2009, we had cash and cash equivalents of $1,790,000.&nbsp; We believe that our
cash and cash equivalents on hand, together with cash flows from operations, if
any, and amounts available under the credit facilities will be sufficient to
meet our working capital and capital expenditure requirements for this and the
next year.&nbsp; </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>In September
2002, our Board of Directors authorized the repurchase on the open market of up
to 500,000 shares of our outstanding common stock at a share price no greater
than $1.25, subject to compliance with applicable laws and regulations.&nbsp; There
is no requirement that we repurchase all or any portion of such shares.&nbsp; The
maximum total value of the repurchase is not to exceed $500,000.&nbsp; Since the
initiation of the buyback program in 2002 through December 31, 2009, we have
repurchased 295,395 shares for $177,213 at an average price of $0.60 per share.
&nbsp;Our Board suspended the buyback authorization in May 2009 and has not set a
reinitiation date for the purchase of our shares pursuant to this program.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'><b><br clear=all>
<a name="Item_3.">Item 3.</a> Quantitative and Qualitative Disclosures About Market Risk</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'>Not
applicable.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-autospace:none'><b>Item 4T.
Controls and Procedures</b></p>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>&nbsp; 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, 2009, the Chief Executive Officer and Chief Financial Officer concluded
that the disclosure controls and procedures are effective to ensure that
information required to be disclosed by us 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.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>During the
quarter ended December 31, 2009, there were no changes in our internal controls
over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the
Exchange Act) that have materially affected, or are reasonably likely to
materially affect, our internal controls over financial reporting.&nbsp; </p>

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

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

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

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

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

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-autospace:none; margin-right:0in; margin-top:0in'>
<b><a name="Item_1.">Item 1.</a>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Legal Proceedings </b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-autospace:none'><font style="font-size: 10.0pt">&nbsp;</font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>On June 23,
2008, the Orange County Water District (&#147;OCWD&#148;) filed a complaint in the
Superior Court of the State of California in the County of Orange concerning
remediation of alleged ground water contamination in the Orange County
Groundwater South Basin; <u>Orange County Water District v. Sabic Innovative
Plastics U.S. LLC, et al.</u>, Case No. 00078246.&nbsp; The South Basin underlies parts of Santa Ana, California and adjacent cities.&nbsp; The complaint identifies
17 named defendants, including Pro-Dex, and also designates 400 unnamed Doe
defendants.&nbsp; We moved out of this Santa Ana site in April, 2008 and have no
remaining operations there.</p>

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>The complaint
alleges that the defendants contaminated the South Basin with volatile organic
chemicals (&#147;VOCs&#148;) and perchlorate through various activities at properties
each defendant now controls or has controlled in the past.&nbsp; Through its
lawsuit, the OCWD seeks compensatory relief for all its own remedial
activities, and injunctive relief to compel the defendants to undertake
remedial activities in general.&nbsp; The complaint does not, however, specify any
remedial activities that the OCWD has undertaken to date or any remedial
activities that it seeks any particular defendants to undertake.&nbsp; Moreover,
from our investigation of OCWD&#146;s remedial activities to date, we have
determined that the OCWD is in the early stages of its remedial investigation
for the South Basin groundwater contamination.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>As noted above,
16 other entities are named defendants in this case along with Pro-Dex.&nbsp; While
some are small businesses, others are larger corporations or their
subsidiaries.&nbsp; Further, as this case progresses, the OCWD is likely to add at
least a few more named defendants to the case from the 400 Doe defendants it
has designated in the current complaint.&nbsp; In the indeterminable event that we
would be held liable in the case, OCWD&#146;s total recovery probably would be
allocated among several defendants, each of which would pay only a
proportionate share of that total recovery.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>One of our past
insurers has committed to pay most of our defense costs for the lawsuit, while
reserving its rights as to whether it will cover any damages awarded against us,
or any settlement payment to which Pro-Dex agrees to resolve the lawsuit, under
past policies issued to us for a three-year period, March 31, 1983 to March 31,
1986.&nbsp; The policies of these years have&nbsp;occurrence payment limits of
$500,000.&nbsp; </p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>Overall, the
OCWD complaint remains vague, the OCWD is in an early stage of its remedial
activities in the South Basin, the lawsuit is in the early stages of discovery,
one of our insurers has committed to pay most defense costs and has reserved
rights under one&nbsp;three-year set of&nbsp;policies and is continuing to
consider extending coverage to us under other past policies, and any recovery
the OCWD may gain through the lawsuit is likely to be allocated among several
defendants.&nbsp; Therefore, our liabilities, as well as our costs of
defending, monitoring and concluding our involvement in this case are
uncertain, and those costs cannot now be estimated.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'><font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'><b>
<a name="Item_1A.">Item 1A.</a>&nbsp; Risk Factors.</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in'>Except as noted below, there have been no material changes
to the factors discussed in Part&nbsp;I, Item&nbsp;1A. &#147;Risk Factors&#148; in our
Annual Report on Form 10-K for our fiscal year ended June 30, 2009.&nbsp; In
addition to the information below and the other information set forth in this
report, you should carefully consider the factors discussed in Part&nbsp;I,
Item&nbsp;1A. &#147;Risk Factors&#148; in our Annual Report on Form 10-K, which could
materially affect our business, financial condition and future results. The
risks described in this report and in our Annual Report on Form&nbsp;10-K are
not the only risks facing us. Additional risks and uncertainties not currently
known to us or that we currently deem to be immaterial also may materially and
adversely affect our business, financial condition or operating results.</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify; text-indent:0.5in; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>

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<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:.25in;text-align:justify'><b>Our common stock could be delisted from NASDAQ, which could
have a material adverse effect on the price of our common stock.</b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:.25in;text-align:justify;text-indent:.5in'>We
have previously disclosed that our common stock would be subject to delisting
from the NASDAQ Capital Market after January 7, 2010 if our common stock did
not meet the $1.00 minimum bid price requirement set forth in NASDAQ&#146;s <font style="font-size: 11.5pt">Listing Rule 5550(a)(2)</font> by that date.&nbsp; On
January 11, 2010, the NASDAQ Staff notified us that our common stock was
subject to delisting for failing to comply with the minimum bid price
requirement.&nbsp; In accordance with the Listing Rules, we have requested an oral
hearing before a NASDAQ Listing Qualification Panel (&#147;Panel&#148;), which
automatically stays the delisting of our common stock pending the issuance of
the Panel&#146;s decision after the hearing.&nbsp; Under the Listing Rules, the Panel
may, in its discretion, determine to continue the listing of our common stock for
a maximum of 180 calendar days from the date of the Staff&#146;s notification to us,
which would be through July 9, 2010.&nbsp; However, there can be no assurances that
the Panel will do so or that our efforts to maintain the listing of our common
stock on NASDAQ will be successful.&nbsp; </p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:.25in;text-align:justify;text-indent:.5in'>If
our common stock is delisted from the NASDAQ Capital Market, then the market
liquidity for our common stock would likely be negatively affected, which would
likely have a material adverse effect on the price of our common stock.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:6.0pt;text-align:justify;text-indent:.5in'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify'><b>A substantial portion of our
revenue is derived from a small number of customers such that if we were to
lose one, it could have a material and adverse effect on our business,
financial condition and results of operations.</b></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>We have few
significant customers that contribute a significant portion of our revenue.&nbsp;
Our loss of one or more of such customers could severely impact us, including a
material adverse effect on our business, financial condition, cash flows,
revenue and results of operations.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.5in'>During the quarter ended December 31, 2009 one of our largest
customers (the &#147;Customer&#148;) informed us that it is in the process of developing,
and plans to eventually manufacture its own surgical hand pieces which are
functionally comparable to the two products currently provided by us.&nbsp;&nbsp;Aggregate
sales of these two products to this Customer during the 12-month period ending
November 30, 2009 were $7.5 million, representing 35% of our revenues during
the same period.&nbsp;&nbsp;We have been the exclusive manufacturer of these
products since they were developed.&nbsp;&nbsp;The Customer&#146;s 5-year commitment
to exclusivity with us expired on January 6, 2010.&nbsp; The Customer has not
provided firm transition dates or volumes due to the inherent uncertainty in
the design, testing, and qualification process associated with the products. As
a result, the actual occurrence and specific timing of any transition is very
difficult to estimate.&nbsp; If the Customer were to manufacture the two products
in-house, it would have a material adverse effect on our business,
financial condition, cash flows, revenue and results of operations.<b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b></p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:.25in;text-align:justify'><b>
<font size="3"><a name="Item_2">Item 2</a>. &nbsp;&nbsp; Unregistered Sales of Equity Securities and
Use of Proceeds. </font></b><font size="3">&nbsp;</font></p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:.5in;text-indent:.5in; margin-right:0in; margin-top:0in'>None.</p>


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

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><b>
<font size="3"><a name="Item_3">Item 3</a>. &nbsp;&nbsp; Defaults Upon
Senior Securities. </font></b><font size="3">&nbsp;</font></p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:.5in;text-indent:.5in; margin-right:0in; margin-top:0in'>None.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:.25in;text-align:justify'><b>
<font size="3"><a name="Item_4">Item 4</a>. &nbsp;&nbsp; Submissions of Matters to a Vote
of Securities Holders. </font></b><font size="3">&nbsp;</font></p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-top:.25in;text-align:justify; margin-left:0in; margin-right:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
December 4, 2009, we held our 2009 Annual Meeting of Shareholders. &nbsp;At the
meeting our shareholders (i) Elected George Isaac, Michael Berthelot, William
Healey, David Holder and Mark Murphy as directors; (ii) approved the authority
for the Board of Directors to effect a reverse stock split of all outstanding
shares of our common stock at any time between January&nbsp;1, 2010 and
December&nbsp;31, 2010, if and when deemed by the Board to be in the best
interests of the Company and our shareholders; and (iii) ratified the
appointment of Moss Adams, LLP as the Company's independent auditors for the
fiscal year ending June 30, 2010.</p>

<ul>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1in;margin-right:0in; margin-top:0in'>
	<font size="3">The proposal to elect the directors
received the following votes.&nbsp; </font></p></li>
</ul>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:1.0in; margin-right:0in; margin-top:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mr.
Isaac: For 6,894,816; and Withhold 177,623; &nbsp;</p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:1.0in; margin-right:0in; margin-top:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mr.
Berthelot: For 6,741,595; and Withhold 330,844; &nbsp;&nbsp;</p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:1.0in; margin-right:0in; margin-top:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mr.
Healey: For 6,850,642; and Withhold 221,797; </p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:1.0in; margin-right:0in; margin-top:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mr.
Holder: For 6,848,942; and Withhold 223,497;</p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-left:1.0in; margin-right:0in; margin-top:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mr.
Murphy:&nbsp; For 6,778,555; and Withhold 294,188. &nbsp;</p>

<div>

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  <p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><a name="prodex10q_htm_item_1___legal_proceedings"></a></p>
	<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>33</p>
	<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
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<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

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<ul>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1in;line-height:200%; margin-right:0in; margin-top:0in'>
	<font size="3">The proposal to authorize the
Board of Directors to effect a reverse stock split received the following
votes: For 6,571,555; Against 499,784, and Abstain 1,100.&nbsp; </font></p></li>
	<li>
	<p style='margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1in;line-height:200%; margin-right:0in; margin-top:0in'>
	<font size="3">The proposal to ratify the
appointment of Moss Adams, LLP received the following votes: For 6,881,674;
Against 70,295; and Abstain 119,469.&nbsp; </font></p></li>
</ul>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:.25in;text-align:justify'>
<b>
<font size="3"><a name="Item_5._">Item 5. </a>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Information. </font></b>
<font size="3">&nbsp;<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font>&nbsp; None.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:.25in;text-align:justify'>
<b>
<font size="3"><a name="Item_6._">Item 6. </a>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; Exhibits. </font></b>
<font size="3">&nbsp;<br>
&nbsp;</font></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:.25in;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;
<font size="3"><u>Exhibits</u></font><font size="3">:</font></p>

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

<table border="0" style="border-collapse: collapse" width="100%" id="table13">
	<tr>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">31.1</td>
		<td width="88%" valign="top">

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-right:0in; margin-top:0in'>Certifications of Chief Executive Officer
Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended,
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</p>

		</td>
	</tr>
	<tr>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="88%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">31.2</td>
		<td width="88%" valign="top">

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-right:0in; margin-top:0in'>Certifications of Chief Financial
Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as
amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</p>

		</td>
	</tr>
	<tr>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="88%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="6%" valign="top">&nbsp;</td>
		<td width="6%" valign="top">32</td>
		<td width="88%" valign="top">

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";margin-right:0in; margin-top:0in'>Certification of the Chief Executive
Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</p>

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

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

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

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

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

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-indent:.5in; margin-left:0in; margin-right:0in; margin-top:0in'>In
accordance with the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-indent:.5in'><font style="font-size: 10.0pt">&nbsp;</font></p>

<table class=MsoNormalTable border=0 cellpadding=0 width=684
 style='width:100%;border-collapse:collapse'>
 <tr>
  <td width=306 valign=top style='width:50%;padding:0in; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>Date:&nbsp; February 4, 2010</p>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>PRO-DEX INC. </p>
  </td>
  <td width=378 valign=top style='width:50%;padding:0in; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>Date:&nbsp; February 4, 2010</p>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>PRO-DEX INC. </p>
  </td>
 </tr>
 <tr>
  <td width=306 valign=top style='width:50%;padding:0in; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>By: / s / Mark Murphy </p>
  </td>
  <td width=378 valign=top style='width:50%;padding:0in; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>By: / s / Jeffrey J.
  Ritchey </p>
  </td>
 </tr>
 <tr>
  <td width=306 valign=top style='width:50%;padding:0in; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
  </td>
  <td width=378 valign=top style='width:50%;padding:0in; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width=306 valign=top style='width:50%;padding:0in; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>Mark Murphy</p>
  </td>
  <td width=378 valign=top style='width:50%;padding:0in; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>Jeffrey J. Ritchey </p>
  </td>
 </tr>
 <tr>
  <td width=306 valign=top style='width:50%;padding:0in; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>Chief Executive Officer</p>
  </td>
  <td width=378 valign=top style='width:50%;padding:0in; '>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>Secretary and Chief Financial
  Officer</p>
  <p style='margin-bottom:.0001pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in; margin-top:0in'>(Principal Financial and
  Accounting Officer)</p>
  </td>
 </tr>
</table>

<div>

&nbsp;</div>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center;text-autospace:none'><b><font style="font-size: 16.0pt">End of Filing</font></b></p>

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>34</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>&nbsp;</p>

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

&nbsp;</div>

</div>

</body>

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

<head>

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

<body>

<div style='page:Section1;'>

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

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

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

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

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

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

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

<table border="0" style="border-collapse: collapse" width="100%" id="table3">
	<tr>
		<td colspan="3" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">I, Mark Murphy, certify that:</font></td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		1.</font></td>
		<td width="95%" valign="top" colspan="2">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		2.</font></td>
		<td width="95%" valign="top" colspan="2">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">Based on my knowledge, this quarterly report
does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect
to the period covered by this quarterly report; </font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		3.</font></td>
		<td width="95%" valign="top" colspan="2">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">Based on my knowledge, the financial
statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this
report; </font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		4.</font></td>
		<td width="95%" valign="top" colspan="2">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">The small business issuer&#146;s other
certifying officer(s) and I am responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f)) for the small business issuer and have :</font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		a)</font></td>
		<td width="91%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this
report is being prepared;</font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		b)</font></td>
		<td width="91%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">Designed such internal
control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles;</font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		c)</font></td>
		<td width="91%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">Evaluated the
effectiveness of the registrant's disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and</font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		d) </font></td>
		<td width="91%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">Disclosed in this report
any change in the registrant&#146;s internal control over financial reporting that occurred
during the registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth
fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant&#146;s internal control
over financial reporting; and</font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		5.</font></td>
		<td width="95%" valign="top" colspan="2">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing the
equivalent functions):</font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		a)</font></td>
		<td width="91%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">all significant
deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting which are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and report
financial information; and </font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		b)</font></td>
		<td width="91%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">Any fraud, whether or not
material, that involves management or other employees who have a significant
role in the registrant's internal control over financial reporting.</font></p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in'><font style="font-size: 10.0pt">&nbsp;</font></p>

<table border="0" style="border-collapse: collapse" width="100%" id="table4" cellpadding="0">
	<tr>
		<td width="35%"><font style="font-size: 10.0pt">Date: February 4, 2010 </font>
		</td>
		<td width="65%">

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

		</td>
	</tr>
	<tr>
		<td width="35%">&nbsp;</td>
		<td width="65%">

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

		</td>
	</tr>
	<tr>
		<td width="35%">&nbsp;</td>
		<td width="65%">

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

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

<div>

&nbsp;</div>

</div>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>ex31-2.htm
<TEXT>
<html>

<head>

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

<body>

<div style='page:Section1;'>

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

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

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

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

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

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'><font style="font-size: 10.0pt">I, Jeffrey J. Ritchey,
certify that: </font></p>
<table border="0" style="border-collapse: collapse" width="100%" id="table5">
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		1.</font></td>
		<td width="95%" valign="top" colspan="2">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		2.</font></td>
		<td width="95%" valign="top" colspan="2">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">Based on my knowledge, this quarterly report
does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect
to the period covered by this quarterly report; </font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		3.</font></td>
		<td width="95%" valign="top" colspan="2">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">Based on my knowledge, the financial
statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this
report; </font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		4.</font></td>
		<td width="95%" valign="top" colspan="2">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">The small business issuer&#146;s other
certifying officer(s) and I am responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f)) for the small business issuer and have :</font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		a)</font></td>
		<td width="91%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this
report is being prepared;</font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		b)</font></td>
		<td width="91%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">Designed such internal
control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles;</font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		c)</font></td>
		<td width="91%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">Evaluated the
effectiveness of the registrant's disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and</font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		d) </font></td>
		<td width="91%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">Disclosed in this report
any change in the registrant&#146;s internal control over financial reporting that occurred
during the registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth
fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant&#146;s internal control
over financial reporting; and</font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		5.</font></td>
		<td width="95%" valign="top" colspan="2">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing the
equivalent functions):</font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		a)</font></td>
		<td width="91%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">all significant
deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting which are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and report
financial information; and </font></p>

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="91%" valign="top">

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

		</td>
	</tr>
	<tr>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;</td>
		<td width="4%" valign="top">
		<p align="justify" style="margin-top: 0; margin-bottom: 0"><font style="font-size: 10.0pt">
		b)</font></td>
		<td width="91%" valign="top">

<p style='margin-bottom:0;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;margin-top:0'>
<font style="font-size: 10.0pt">Any fraud, whether or not
material, that involves management or other employees who have a significant
role in the registrant's internal control over financial reporting.</font></p>

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

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-left:1.0in;text-align:justify;text-indent:
- -.5in'><font style="font-size: 10.0pt">&nbsp;</font></p>

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

<table border="0" style="border-collapse: collapse" width="100%" id="table4" cellpadding="0">
	<tr>
		<td width="35%"><font style="font-size: 10.0pt">Date: February 4, 2010 </font>
		</td>
		<td width="65%">

<u>/s/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; JEFFREY J. RITCHEY</u><font style="font-size: 10.0pt">
_______</font></td>
	</tr>
	<tr>
		<td width="35%">&nbsp;</td>
		<td width="65%">

<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Jeffrey J. Ritchey</font></td>
	</tr>
	<tr>
		<td width="35%">&nbsp;</td>
		<td width="65%">

<font style="font-size: 10.0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Chief Financial Officer</font></td>
	</tr>
</table>

<div>

&nbsp;</div>

<font face="Times New Roman">

<br clear=ALL>

</font>

</div>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>4
<FILENAME>ex32.htm
<TEXT>
<html>

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

<body>

<div style='page:Section1;'>

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

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

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

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

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-family:"Times New Roman"'><b>EXHIBIT 32</b></p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-size:11.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;margin-bottom:0in;
margin-left:3.0in;margin-bottom:.0001pt;text-indent:-3.0in'>&nbsp;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-size:11.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:0in;
margin-bottom:0in;margin-left:3.0in;margin-bottom:.0001pt;text-align:center;
text-indent:-3.0in'>&nbsp;</p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-family:"Times New Roman";margin-top:0in;text-align:center'><b>CERTIFICATIONS
OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER</b></p>

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-family:"Times New Roman";margin-top:0in;text-align:center'><b>PURSUANT
TO 18 U.S.C. SECTION 1350, <br>
AS ADOPTED PURSUANT TO <br>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</b></p>

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

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;font-family:"Times New Roman";margin-top:0in;text-align:center'><b>Certifications
of Chief Executive Officer and Chief Financial Officer</b></p>

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

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

<p style='margin-top:12.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-indent:.5in;font-family:"Times New Roman";margin-top:0in;text-align:justify'>In connection with the
quarterly report on Form 10-Q of Pro-Dex Inc. (the &#147;Company&#148;) for the quarterly
period ended December 31, 2009 (the &#147;Report&#148;), the undersigned hereby certify
in their capacities as Chief Executive Officer and Chief Financial Officer of
the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:</p>

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

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

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

<table border="0" style="border-collapse: collapse" width="100%" id="table3" cellpadding="0">
	<tr>
		<td width="50%">Dated: February 4, 2010</td>
		<td width="50%">

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

		</td>
	</tr>
	<tr>
		<td width="50%">&nbsp;</td>
		<td width="50%">

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

		</td>
	</tr>
	<tr>
		<td width="50%">&nbsp;</td>
		<td width="50%">

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

		</td>
	</tr>
	<tr>
		<td width="50%">&nbsp;</td>
		<td width="50%">

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

		</td>
	</tr>
	<tr>
		<td width="50%">Dated: February 4, 2010</td>
		<td width="50%">

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

		</td>
	</tr>
	<tr>
		<td width="50%">&nbsp;</td>
		<td width="50%">

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

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	</tr>
	<tr>
		<td width="50%">&nbsp;</td>
		<td width="50%">

<p style='margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in; margin-top:0in'>
<font size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Chief Financial Officer</font></p>

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</table>

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

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

<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:justify;text-autospace:none; margin-left:0in; margin-right:0in; margin-top:0in'>A signed original of this written statement required
by Section 906, or other document authenticating, acknowledging, or otherwise
adopting the signatures that appear in typed form within the electronic version
of this written statement required by Section 906, has been provided to the
Company and will be retained by the Company and Furnished to the Securities and
Exchange Commission or its staff upon request.</p>

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

<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:.25in;text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:.25in;text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-top:.25in;text-align:justify'>&nbsp;</p>

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