<SEC-DOCUMENT>0001534424-13-000401.txt : 20130925
<SEC-HEADER>0001534424-13-000401.hdr.sgml : 20130925
<ACCEPTANCE-DATETIME>20130925160628
ACCESSION NUMBER:		0001534424-13-000401
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20130925
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20130925
DATE AS OF CHANGE:		20130925

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:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-14942
		FILM NUMBER:		131114674

	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>8-K
<SEQUENCE>1
<FILENAME>f13-0732.htm
<DESCRIPTION>8-K FILING
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<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 3pt 0 0; text-align: center"><B>UNITED STATES </B></P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION </B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Washington, D.C. 20549 </B></P>

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<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><B>FORM 8-K </B></P>

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<P STYLE="font: 13.5pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: center"><B>CURRENT REPORT </B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><B>Pursuant to Section&nbsp;13 OR 15(d)
of the </B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Securities Exchange Act of 1934 </B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><B>Date of Report&nbsp;(Date of earliest
event reported) </B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>September 25, 2013 </B></P>

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<P STYLE="font: 24pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: center"><B>PRO-DEX, INC. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Exact name of registrant as specified in
its charter) </B></P>

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    <TD STYLE="width: 33%; font: 0.5pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt"><B>COLORADO</B></FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt"><B>0-14942</B></FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-size: 10pt"><B>84-1261240</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(State or other jurisdiction</B></P>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 0 0.75pt; text-align: center"><B>of incorporation)</B></P></TD>
    <TD>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Commission</B></P>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 0 0.75pt; text-align: center"><B>File Number)</B></P></TD>
    <TD>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(I.R.S. Employer</B></P>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 0 0.75pt; text-align: center"><B>Identification Number)</B></P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><B>2361 McGaw Avenue </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Irvine, Ca. 92614 </B></P>

<P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Address of principal executive offices,
zip code) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><B>(949) 769-3200 </B></P>

<P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Registrant&rsquo;s telephone number, including
area code) </B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.5pt 0 0">Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (<I>see</I>
General Instruction A.2. below):</P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 24.45pt"><FONT STYLE="font-family: Wingdings"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD><TD>Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 24.45pt"><FONT STYLE="font-family: Wingdings">&#168;</FONT></TD><TD>Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 24.45pt"><FONT STYLE="font-family: Wingdings">&#168;</FONT></TD><TD>Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 24.45pt"><FONT STYLE="font-family: Wingdings">&#168;</FONT></TD><TD>Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</TD></TR></TABLE>

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<P STYLE="font: 1pt Times New Roman, Times, Serif; margin: 13.5pt 0 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.85in; text-indent: -0.85in"><B>Item&nbsp;2.02. &#9;Results
of Operations and Financial Condition. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-indent: 24.5pt">The information in this Item&nbsp;2.02
of this Form 8-K, as well as Exhibit 99.1 attached hereto, shall not be deemed &ldquo;filed&rdquo; for purposes of Section&nbsp;18
of the Securities Exchange Act of 1934, as amended (the &ldquo;Exchange Act&rdquo;), nor shall it be deemed incorporated by reference
in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific
reference in such a filing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-indent: 24.5pt">On September 25, 2013, Pro-Dex, Inc.
(the &ldquo;Company&rdquo;) is issuing a press release announcing its financial performance for the fourth fiscal quarter and fiscal
year ended June&nbsp;30, 2013. On that same date, the Company is holding a conference call concerning its financial performance
for the fourth fiscal quarter and fiscal year ended June&nbsp;30, 2013. A copy of the press release is attached to this Form 8-K
as Exhibit 99.1, which is incorporated herein by this reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 13.5pt 0 0 55.05pt; text-indent: -55.1pt"><B>Item&nbsp; 9.01&#9;Financial
Statements and Exhibits. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.5pt 0 0">(d) Exhibits.</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

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    <TD STYLE="width: 88%; font: 0.5pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
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    <TD NOWRAP STYLE="font: 10pt Times New Roman, Times, Serif; padding-left: 0in"><FONT STYLE="font-size: 10pt">Exhibit&nbsp;99.1</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; padding-left: 12.4pt; text-indent: -4.05pt"><FONT STYLE="font-size: 10pt">Press Release dated September 25, 2013.</FONT></TD></TR>
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<P STYLE="font: 1pt Times New Roman, Times, Serif; margin: 0.25in 0 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: center">2</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>SIGNATURES </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-indent: 24.5pt">Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

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<TR>
    <TD STYLE="width: 49%; font-size: 0.5pt">&nbsp;</TD>
    <TD STYLE="width: 5%; font-size: 0.5pt">&nbsp;</TD>
    <TD STYLE="width: 46%; font-size: 0.5pt">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-size: 10pt"><FONT STYLE="font-size: 10pt">Date: September 25, 2013</FONT></TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; font-size: 12pt"><FONT STYLE="font-size: 10pt"><B>PRO-DEX, I</B></FONT><B><FONT STYLE="font-size: 7.5pt">NC</FONT><FONT STYLE="font-size: 10pt"> (R</FONT><FONT STYLE="font-size: 7.5pt">EGISTRANT</FONT><FONT STYLE="font-size: 10pt">).</FONT></B></TD></TR>
<TR>
    <TD STYLE="font-size: 12pt">&nbsp;</TD>
    <TD STYLE="font-size: 12pt">&nbsp;</TD>
    <TD STYLE="font-size: 12pt">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-left: 0.1in; font-size: 4pt; line-height: 2pt">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom;  font-size: 10pt"><FONT STYLE="font-size: 10pt">By:</FONT></TD>
    <TD STYLE="vertical-align: bottom">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">/s/ Harold A. Hurwitz</P>
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    <TD STYLE="vertical-align: top; padding-left: 0.1in; font-size: 4pt; line-height: 2pt">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding-left: 0.1in; font-size: 4pt; line-height: 2pt">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; font-size: 10pt"><FONT STYLE="font-size: 10pt">Harold A. Hurwitz</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-left: 0.1in; font-size: 4pt; line-height: 2pt">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding-left: 0.1in; font-size: 4pt; line-height: 2pt">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; font-size: 10pt"><FONT STYLE="font-size: 10pt">Chief Financial Officer</FONT></TD></TR>
</TABLE>
<P STYLE="font: 1pt Times New Roman, Times, Serif; margin: 0.25in 0 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: center">3</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>INDEX TO EXHIBITS </B></P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

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<TR>
    <TD STYLE="width: 12%; font-size: 0.5pt">&nbsp;</TD>
    <TD STYLE="width: 88%; font-size: 0.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0"><B>Exhibit<BR>
        Number</B></P>
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    <TD STYLE="padding-right: 5.75pt; padding-left: 0.1in">
        <P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0"><B>Description</B></P>
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<TR>
    <TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="padding-left: 0in; font-size: 10pt"><FONT STYLE="font-size: 10pt">Exhibit&nbsp;99.1</FONT></TD>
    <TD STYLE="padding-left: 5.65pt; font-size: 10pt"><FONT STYLE="font-size: 10pt">Press Release dated September 25, 2013.</FONT></TD></TR>
</TABLE>


<P STYLE="font: 1pt Times New Roman, Times, Serif; margin: 0.25in 0 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: center">4</P>

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<FILENAME>ex99-1.htm
<DESCRIPTION>EXHIBIT 99.1
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><B>Exhibit 99.1 </B></P>

<P STYLE="font: 9pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: left"><FONT STYLE="font-family: Sans-Serif"><IMG SRC="image1.jpg" ALT=""></FONT></P>

<P STYLE="font: 9pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 9pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 9pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 11pt/12pt Times New Roman, Times, Serif; margin: 0; text-align: right">Contact: Harold A. Hurwitz, Chief Executive
Officer</P>

<P STYLE="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: right">(949) 769-3200</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>For Immediate Release</I></B></P>

<P STYLE="font: bold 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">PRO-DEX, INC. ANNOUNCES FISCAL 2013 FOURTH
QUARTER</P>

<P STYLE="font: bold 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">AND FULL-YEAR RESULTS<BR>
Company Announces Share Repurchase Program</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="color: black"><B>IRVINE,
CA,</B> September 25, 2013 - PRO-DEX, INC. (NasdaqCM: PDEX) </FONT>t<FONT STYLE="color: black">oday announced financial results
for its fiscal 2013 fourth quarter and full-year ended June 30, 2013. </FONT></P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><U>Quarter Ended June 30, 2013</U></B></P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Sales for the quarter
ended June 30, 2013 decreased 26% to $2.7 million from $3.7 million for the corresponding quarter in 2012. This decrease was due
primarily to the previously disclosed reductions in purchases by the Company&rsquo;s former largest customer and to a deferral
in the timing of product orders from the Company&rsquo;s current largest powered surgical instrument customer, both of which were
partially offset by increases in surgical instrument sales to other customers.</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Gross profit for
the quarter ended June 30, 2013 decreased to $565,000, compared to gross profit of $858,000 for the year-ago period, primarily
as a result of the sales volume decrease between periods and the accrual in 2013 of anticipated losses from the development portion
of certain contracts. Gross profit as a percentage of sales was 21% for the quarter ended June 30, 2013, as compared to 23% for
the corresponding quarter in 2012. This decrease was due primarily to the effects of the accrual for estimated contract losses
and to unfavorable variances consistent with the lower sales and manufacturing volume, partially offset by the effects of improved
cost performance and lower warranty costs in 2013, relative to 2012.</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Operating expenses
(which include selling, general and administrative, and research and development expenses) for the quarter ended June 30, 2013
decreased 24% to $1.3 million from $1.7 million in the prior year&rsquo;s corresponding quarter. Included in operating expenses
for the quarter ended June 30, 2013 were severance costs amounting to $173,000, as compared to $36,000 of such costs in the corresponding
2012 quarter.</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Loss from continuing
operations for the quarter ended June 30, 2013 was $680,000, compared to a loss from continuing operations of $430,000 in the corresponding
quarter in 2012. Net loss for the quarter ended June 30, 2013 was $673,000, or $0.20 per diluted share, compared to a net loss
of $544,000, or $0.17 per diluted share, for the corresponding quarter in 2012. Of note is that the fiscal 2012 fourth quarter
results reflect a $276,000 benefit from the carry back of tax-basis net operating losses that offset taxable income from prior
years. Because the 2012 carry back fully offset such prior years&rsquo; taxable income, a comparable benefit was not available
in 2013.</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><U>Year Ended June 30, 2013</U></B></P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Sales for the year
ended June 30, 2013 decreased 29% to $12.2 million from $17.3 million in fiscal year 2012. Excluding product sales and repair services
to the Company&rsquo;s former largest customer, which represented a reduction of $6.0 million in fiscal 2013 from fiscal 2012,
sales and repair services of surgical instruments increased $1.4 million, or 16%, in fiscal 2013 when compared to fiscal 2012.</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">For the year ended
June 30, 2013, gross profit was $3.7 million, compared to $5.4 million in fiscal 2012. This decrease resulted primarily from the
reduced sales and manufacturing volume in fiscal 2013, and from the</P>
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<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0in">accrual in fiscal 2013 of anticipated losses from the development
portion of certain contracts, partially offset by a decrease in warranty costs from fiscal 2012 to fiscal 2013. As a percentage
of sales, gross margin was 30% for the year ended June 30, 2013, as compared to 31% in fiscal 2012. This decrease was due primarily
to the accrual in fiscal 2013 of the anticipated contract losses, partially offset by favorable changes in warranty costs.
</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Operating expenses
for the year ended June 30, 2013 decreased 17% to $5.6 million, from $6.8 million in fiscal 2012. Comprising this decrease were
planned, Company-wide expense reductions, and the deployment of engineering resources, normally charged to research and development
expense, to support revenue-producing development contracts with customers, the costs of which will be recorded as costs of sales
when the development projects are completed. Partially offsetting these expense decreases were costs of $190,000 incurred in fiscal
2013 that were associated with the contested election of directors at our January 2013 annual meeting of shareholders.</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">For the year ended
June 30, 2013, loss from continuing operations was $1.9 million, compared to a loss from continuing operations of $960,000 in fiscal
2012. Net loss for the year ended June 30, 2013 was $1.8 million, or $0.54 per diluted share, as compared to a net loss of $876,000,
or $0.27 per diluted share, for fiscal 2012. As described above, the fiscal 2012 results reflect a $276,000 tax benefit not available
in fiscal 2013.</P>

<P STYLE="font: 11pt/12.9pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">During the year ended June
30, 2013, the Company used $1.3 million of cash in operating activities. This use of cash reflects primarily an increase in inventories,
amounting to $1.0 million, resulting largely from a build-up of the Company&rsquo;s stock of components with the objective of shortening
lead times with respect to certain of the Company&rsquo;s products. In the fourth quarter of fiscal 2013, the Company&rsquo;s largest
customer began deferring the timing of its product orders, thus prolonging the effect of this inventory build-up with respect to
inventory unique to that customer&rsquo;s products.</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In addition, as announced
previously, in September 2012 the Company repaid the entire outstanding balance on its term loan from Union Bank amounting to $685,000,
and in June 2013 the Company made its first investments, amounting to $365,000, as part of its program to direct excess capital
into opportunities identified by a capital allocation committee established by the Company&rsquo;s Board of Directors.</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As a result of the foregoing,
cash on hand at June 30, 2013 was $1.7 million, compared to $4.1 million at June 30, 2012.</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><U>Share Repurchase Program</U></B></P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company also announced today that its Board of Directors has approved a share repurchase program authorizing
the Company to repurchase up to 750,000 shares of its common stock.  The share repurchase program has no stated expiration date.</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><U>CEO Comments</U></B></P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Harold A. (&ldquo;Hal&rdquo;)
Hurwitz, the Company&rsquo;s <FONT STYLE="color: black">President and Chief Executive Officer, commented, &ldquo;Pro-Dex&rsquo;s
plan for </FONT>fiscal year 2013 had a clear and challenging agenda -- to rebuild our revenue base and right-size our cost footprint.
A look beneath the surface of our reported results allows for an understanding of our progress in both areas.&rdquo;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&ldquo;In fiscal 2013,
we commenced engineering work on projects in which we are developing a next-generation platform for powered surgical instruments,
which, if our work is successful, are expected to begin generating manufacturing revenues from our customers in fiscal 2014 or 2015. In
addition, we started development efforts on a contract manufacturing project related to a device to be used in a potentially disruptive
new surgical system being developed by one of our customers, also with the expectation of generating manufacturing revenues commencing in fiscal 2014
or 2015. These projects arose from business development efforts through which we initiated contact with these customers two years
ago. And we currently are in either discussions or the proposal phase for additional next-generation or contract manufacturing
projects as a result of our continuing business development efforts. Our hard work to rebuild our revenue base is starting to show
results.&rdquo;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&ldquo;One note with respect
to our reported revenues: The close of fiscal 2013 marks the end of the year-over-year comparisons that have been affected by the
loss of our former largest customer. This disclosure has cast a shadow over our results since fiscal 2010. We are happy to close
this chapter, and look forward to focusing our comments on the revenue rebuilding effort, which we believe is the true measure
of our revenue performance.&rdquo;</P>

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<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&ldquo;As pleased as we
are with a 17% year-over-year reduction in operating expenses, this comparison does not fully reflect our progress in right-sizing
our expense footprint. During fiscal 2013 we reduced the composition of our senior management team from six to four members, and
our headcount from 74 to 67. As a result, our annualized base compensation was reduced from $4.6 million at June 30, 2012 to $3.7
million at June 30, 2013, a 20% decrease. In addition, we have renegotiated the rental rate for the remainder of the lease term
for our facility in Irvine, California that will result in a reduction of annualized expense of approximately $51,000, and annualized
compensation for non-employee members of our Board of Directors has been reduced by approximately $140,000 compared to recent years
based on a new compensation plan approved by our Board in May 2013. We enjoyed but a portion of the benefits of these, among many
other, cost savings measures in fiscal 2013, and we are looking forward to realizing the full-year effect of our efforts in the
current fiscal year 2014.&rdquo;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&ldquo;During fiscal 2013,
we invested $1.0 million in inventory growth, principally to accommodate delivery commitments to our largest customer based on
its anticipated delivery requirements. In the fiscal 2013 fourth quarter, we learned from this customer of its need to schedule
deliveries for later dates than originally anticipated. As a result, conversion to cash of the inventory related to this customer
will likely be weighted toward the second half of the current fiscal year 2014 and possibly the first half of fiscal year 2015.&rdquo;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&ldquo;Even with this unanticipated
prolonged investment in inventory, we continue to maintain liquidity in excess of our anticipated short-term requirements. As a
result, as of June 30, 2013, we had invested $365,000 in marketable equity securities under the investment framework approved by
our Board, as we have previously described.&rdquo;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&ldquo;Obviously, we are
not satisfied with the direction and magnitude of our fiscal 2013 loss from continuing operations and cash used in operations.
While proxy contest and severance costs, aggregating $560,000, constituted 30% of the loss and 44% of the cash usage, the point
remains that our goal is to restore Pro-Dex to profitability and positive cash flow from operations. Accomplishing this goal is
neither easy nor assured. Nonetheless, the examples of rebuilding the revenue base and right-sizing our cost footprint discussed
herein are evidence of our best efforts to accomplish this goal in the context of our new operating structure.&rdquo;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><U>Board Chairman Comments</U></B></P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&ldquo;To begin, we want
to thank the Pro-Dex team for their hard work and engagement. Tough circumstances required Hal and the new board to make difficult
decisions after assuming leadership earlier this year. It wasn&rsquo;t easy.&rdquo;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&ldquo;As is obvious from
the fiscal 2013 financial results, making a commitment to properly size the Pro-Dex staff resulted in an unavoidable drain on cash,
given the change in control agreements former leadership created that will expire in July 2014. We hope that reducing the fixed
cost embedded in the former, top-heavy staff structure will result in greater profitability in future quarters.&rdquo;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&ldquo;Notably, we are
seeing evidence that reducing over-staffing allows the Company&rsquo;s talented and motivated team members to maximize their capabilities.
As they have stepped up, we are hearing evidence that Pro-Dex is running more smoothly and efficiently with fewer people.&rdquo;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&ldquo;Hal and Rick Van
Kirk, the Company&rsquo;s Chief Operating Officer, are leading an important cultural shift toward thoughtful frugality. Intra-company communications, goals and intentions are
now more closely aligned with productivity and the efficient use of resources. We are thankful that this shift is being embraced
because we believe it is necessary to provide for the Company&rsquo;s financial health and stability. We believe the internal reforms
at Pro-Dex, however difficult, are extremely important and energizing.&rdquo;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&ldquo;Hal and his team
also have sights set on external goals and objectives. First and foremost they are working diligently to be exemplary and invaluable
partners to Pro-Dex customers. On any given day this might</P>
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<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0in">mean solving tough engineering problems, delivering flawless customer
service or increasing the incremental reliability of long-term products.&rdquo;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&ldquo;Pro-Dex&rsquo;s
team is also intently focused on its new business prospects. While these are unpredictable by their nature, they are more attainable
if we continue to pursue pleasing all of our customers all of the time. And, while longer-horizon development projects advance,
we are seeking to return to profitability at our current revenue run rate.&rdquo;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&ldquo;The obvious and
dramatic changes are likely behind us. As we move forward, we believe the health of the Company will flow from a steady, intelligent
pace. The team at Pro-Dex is focused on every-day results while developing opportunities and deploying company resources wisely.&rdquo;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0in"><B><U>Teleconference Information:</U></B></P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-size: 11pt">Investors
and analysts are invited to listen to <FONT STYLE="color: black">a broadcast review of the Company's fiscal 2013 fourth quarter
and full-year financial results</FONT> today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) that may be accessed by visiting
the Company's website at </FONT><FONT STYLE="font-size: 12pt">www.pro-dex.com</FONT><FONT STYLE="font-size: 11pt; color: black">.
The conference call </FONT><FONT STYLE="font-size: 11pt">may also be accessed at </FONT><FONT STYLE="font-size: 12pt">www.InvestorCalendar.com</FONT><FONT STYLE="font-size: 11pt">.<FONT STYLE="color: black">
Investors and analysts who would like to participate in the conference call may do so via telephone at </FONT>(877) 407-8033<FONT STYLE="color: black">,
or at </FONT>(201) 689-8033<FONT STYLE="color: black"> if calling from outside the U.S. or Canada.</FONT></FONT></P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="color: black">For those who cannot
access the live broadcast, a replay will be available approximately two hours after the completion of the call until midnight (Eastern
Time) on October 9, 2013 by calling </FONT>(877) 660-6853<FONT STYLE="color: black">, or </FONT>(201) 612-7415<FONT STYLE="color: black">
if calling from outside the U.S. or Canada, and then entering conference I.D. number </FONT>100319<FONT STYLE="color: black">.
&nbsp;An online archive of the broadcast will be available on the Company's website <U>www.pro-dex.com</U> for a period of 365
days.</FONT></P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0"><B><U>About Pro-Dex, Inc.:</U></B></P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-size: 11pt">Pro-Dex,
Inc., with operations in California and Oregon, specializes in the design, development and manufacture of powered rotary drive
surgical and dental instruments used primarily in the orthopedic, spine, maxocranial facial and dental markets. Its OMS division
designs and manufactures embedded motion control systems serving the medical, dental, semi-conductor and scientific research markets.
Pro-Dex's products are found in hospitals, dental offices, medical engineering labs, scientific research facilities and high tech
manufacturing operations around the world. For more information, visit the Company's website at </FONT><FONT STYLE="font-size: 12pt">www.pro-dex.com</FONT><FONT STYLE="font-size: 11pt">.</FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Statements herein concerning
the Company's plans, growth and strategies may include 'forward-looking statements' within the context of the federal securities
laws. Statements regarding the Company's future events, developments and future performance, as well as management's expectations,
beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws.
The Company's actual results may differ materially from those suggested as a result of various factors. Interested parties should
refer to the disclosure concerning the operational and business concerns of the Company set forth in the Company's filings with
the Securities and Exchange Commission.</P>

<P STYLE="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0in">(tables follow)</P>



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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 10pt"><B>PRO-DEX, INC. and SUBSIDIARIES
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>CONSOLIDATED BALANCE SHEETS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 4pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 10.1pt; text-align: center">June&nbsp;30,&nbsp;2013</P> <P STYLE="font: 4pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in; border-top: Black 1pt solid">&nbsp;</P></TD><TD>&nbsp;</TD>
    <TD COLSPAN="5" STYLE="text-align: center"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 10.1pt; text-align: center">June&nbsp;30,&nbsp;2012</P> <P STYLE="font: 4pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in; border-top: Black 1pt solid">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">ASSETS</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="font-size: 4pt">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD COLSPAN="5" STYLE="font-size: 4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Current assets:</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 56%; text-align: left; text-indent: -12pt; padding-left: 0.5in">Cash and cash equivalents&#9;</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,680,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">4,112,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 56%; text-align: left; text-indent: -12pt; padding-left: 0.5in">Accounts receivable, net of allowance for doubtful accounts of $24,000 and $16,000 at June 30, 2013 and 2012, respectively&#9;</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">1,339,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">1,581,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>

<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 0.5in">Unbilled receivables&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">244,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 0.5in">Other current receivables&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">123,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -12pt; padding-left: 0.5in">Inventories&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,834,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,791,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 0.5in">Prepaid expenses&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">157,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">172,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 0.5in">Income taxes receivable&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">609,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 0.5in">Deferred income taxes&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">59,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">109,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 60pt"><TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>
<B>&nbsp;</B></TD></TR>



<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 60pt">Total current assets&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;&nbsp;&nbsp;7, 347,000&#9;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,497,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt">Investments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">370,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Property, plant, equipment and leasehold improvements, net&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,065,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,539,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Real estate held for sale&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">733,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">733,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Other assets&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">80,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">53,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>

<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Total assets&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,595,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">12,822,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -12pt; padding-left: 12pt">LIABILITIES AND SHAREHOLDERS&rsquo; EQUITY</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Current liabilities:</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 0.5in">Accounts payable&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">844,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">633,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 0.5in">Accrued expenses&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,276,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,405,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 0.5in">Deferred revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">141,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 0.5in">Income taxes payable&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 0.5in">Bank term loan&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">774,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 0.5in">Capital lease obligations</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 1pt; padding-left: 0.1in">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD></TR>

<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 60pt">Total current liabilities&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,314,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,879,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt">Non-current liabilities:</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 0.5in">Deferred income taxes&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">59,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">109,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 0.5in">Deferred rent&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">270,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">284,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 0.5in">Capital lease obligations</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">15,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 60pt">Total non-current liabilities&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">344,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">393,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Total liabilities&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,658,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,272,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Commitments and contingencies</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Shareholders&rsquo; equity:</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 0.5in">Common shares; no par value; 50,000,000 shares authorized; 3,348,184 and 3,272,350 shares issued and outstanding at June&nbsp;30, 2013 and 2012, respectively&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,012,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,846,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 0.5in">Accumulated other comprehensive income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 0.5in">Accumulated deficit&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(9,080,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,296,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>

<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 60pt">Total shareholders&rsquo; equity&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,937,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,550,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>

<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Total liabilities and shareholders&rsquo; equity&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,595,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">12,822,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 10.1pt"><FONT STYLE="font-size: 1pt">&nbsp;</FONT><FONT STYLE="font-size: 10pt"><B>PRO-DEX,
INC. and SUBSIDIARIES </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS</B></P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 4pt">&nbsp;</TD><TD STYLE="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="7" STYLE="font-family: Times New Roman, Times, Serif; font-weight: bold; border-bottom: Black 0pt solid"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 10.1pt; text-align: center"><B>For The Years Ended June&nbsp;30,</B></P> <!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin: 1pt 5.05pt 1pt 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 4pt">&nbsp;</TD><TD STYLE="font-family: Times New Roman, Times, Serif; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="font-family: Times New Roman, Times, Serif; font-weight: bold"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 11pt; text-align: center"><B>2013</B></P> <!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin: 1pt 5.05pt 1pt 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD><TD STYLE="font-family: Times New Roman, Times, Serif; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="font-family: Times New Roman, Times, Serif; font-weight: bold"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 10.1pt; text-align: center"><B>2012</B></P> <!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin: 1pt 5.05pt 1pt 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="font-size: 6pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 56%; font-size: 10pt; text-align: left; text-indent: -12pt; padding-left: 12pt">Net sales&#9;</TD><TD STYLE="width: 8%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 12%; font-size: 10pt; text-align: right">12,249,000</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 12%; font-size: 10pt; text-align: right">17,257,000</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Cost of sales&#9;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">8,533,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">11,841,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>

<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Gross profit&#9;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">3,716,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">5,416,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -12pt; padding-left: 12pt">Operating expenses:</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -12pt; padding-left: 0.5in">Selling expenses&#9;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">1,255,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">1,531,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -12pt; padding-left: 0.5in">General and administrative expenses&#9;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">2,566,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">3,182,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 0.5in">Research and development costs&#9;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">1,790,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">2,068,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>

<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Total operating expenses&#9;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">5,611,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">6,781,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>

<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Loss from continuing operations before items below&#9;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">(1,895,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">(1,365,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 1pt; padding-left: 0.1in">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -12pt; padding-left: 12pt">Other income (expense):</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -12pt; padding-left: 0.5in">Interest income</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">3,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 0.5in">Interest expense&#9;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">(11,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">36,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>

<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Total other expense&#9;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">(8,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">(36,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">)</TD></TR>


<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -12pt; padding-left: 12pt">Loss from continuing operations before provision for income taxes&#9;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">(1,903,000</TD><TD STYLE="font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">(1,401,000</TD><TD STYLE="font-size: 10pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Benefit from income taxes&#9;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">(39,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">(441,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">)</TD></TR>


<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -12pt; padding-left: 12pt">Loss from continuing operations&#9;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">(1,864,000</TD><TD STYLE="font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">(960,000</TD><TD STYLE="font-size: 10pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Income from discontinued operations, net of income taxes of $51,000 in 2013 and&nbsp;&nbsp;net of benefit for income taxes of $146,000 in 2012&#9;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">80,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">84,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>

<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Net loss&#9;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">(1,784,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">(876,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">)</TD></TR>

<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -0.5in; padding-left: 0.5in">Other comprehensive income, net of tax</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1pt; text-indent: -33pt; padding-left: 60pt">Unrealized gain from marketable equity investments</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">5,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1pt; text-indent: -60pt; padding-left: 96pt">Total other comprehensive income</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">5,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; padding-bottom: 1pt; text-indent: -60pt; padding-left: 60pt">Comprehensive loss</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 3 double; font-size: 10pt; text-align: left">$</TD><TD STYLE="border-bottom: Black 3 double; font-size: 10pt; text-align: right">(1,779,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 3 double; font-size: 10pt; text-align: left">$</TD><TD STYLE="border-bottom: Black 3 double; font-size: 10pt; text-align: right">(876,000</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">)</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; font-weight: bold; text-align: left; text-indent: -60pt; padding-left: 60pt">Per share data (basic and diluted):</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -33pt; padding-left: 60pt">Loss from continuing operations</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">(0.56</TD><TD STYLE="font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">(0.29</TD><TD STYLE="font-size: 10pt; text-align: left">)</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -33pt; padding-left: 60pt">Income from discontinued operations&#9;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">0.02</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">0.02</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -33pt; padding-left: 60pt">Net loss&#9;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">(0.54</TD><TD STYLE="font-size: 10pt; text-align: left">)</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">(0.27</TD><TD STYLE="font-size: 10pt; text-align: left">)</TD></TR>

<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-indent: -12pt; padding-left: 12pt">Weighted average shares outstanding&#9;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">3,321,732</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">3,272,350</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>PRO-DEX, INC. and SUBSIDIARIES </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF SHAREHOLDERS&rsquo;
EQUITY </B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>For The Years
Ended June&nbsp;30, 2013 and 2012 </B></FONT><FONT STYLE="font-size: 9pt">&nbsp;</FONT></P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 4pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="7" STYLE="border-bottom: Black 1pt solid"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 17.3pt; text-align: center">Common Shares</P> <!-- Field: Rule-Page --><DIV STYLE="font-size: 1pt; border-top: Black 0pt solid; width: 100%">&nbsp;</DIV><!-- Field: /Rule-Page --></TD><TD STYLE="font-size: 4pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="font-size: 4pt">&nbsp;</TD><TD STYLE="font-size: 4pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="font-size: 4pt">&nbsp;</TD><TD STYLE="font-size: 4pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="font-size: 4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 4pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="3"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 4.3pt 0 10.1pt; text-align: center">Number&nbsp;of<BR> Shares</P> <!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin: 1pt 5.05pt 1pt 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD><TD>&nbsp;</TD>
    <TD COLSPAN="3"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 10.1pt; text-align: center">Amount</P> <!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin: 1pt 5.05pt 1pt 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD><TD>&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 0; text-align: center">Accumulated Other Comprehensive Income</P>  <!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin: 1pt 5.05pt 1pt 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD><TD>&nbsp;</TD>
    <TD COLSPAN="3"><P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 9.35pt; text-align: center"><FONT STYLE="font-size: 7.5pt">Accumulated</FONT><BR> <FONT STYLE="font-size: 7.5pt">Deficit</FONT></P>  <!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin: 1pt 5.05pt 1pt 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD><TD>&nbsp;</TD>
    <TD COLSPAN="3"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 10.1pt; text-align: center">Total</P>  <!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin: 1pt 5.05pt 1pt 1pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page --></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="width: 35%; text-indent: -12pt; padding-left: 12pt">Balances, June&nbsp;30, 2011&#9;</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">3,272,350</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">16,744,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(6,420,000</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">10,324,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Repurchase of stock options&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Stock-based compensation plan activity&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">108,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">108,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Net loss&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(876,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(876,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt">Balances, June&nbsp;30, 2012&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,272,350</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,846,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(7,296,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,550,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt">Exercise of stock options&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43,334</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Stock-based compensation plan activity&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: bottom">32,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: bottom">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: bottom">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: bottom">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: bottom">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Net loss&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,784,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,784,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Unrealized gain from marketable equity investments</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right; vertical-align: bottom">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right; vertical-align: bottom">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left; vertical-align: bottom">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right; vertical-align: bottom">5,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right; vertical-align: bottom">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right; vertical-align: bottom">5,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 1pt; padding-left: 0.1in">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Balances, June&nbsp;30, 2013&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,348,184</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">17,012,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(9,080,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,937,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 1pt; padding-bottom: 1pt; padding-left: 0.1in">&nbsp;</TD><TD STYLE="font-size: 0.75pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 0pt solid; font-size: 0.75pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 0pt solid; font-size: 0.75pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-size: 0.75pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 0.75pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 0pt solid; font-size: 0.75pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 0pt solid; font-size: 0.75pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-size: 0.75pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 0.75pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 0pt solid; font-size: 0.75pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 0pt solid; font-size: 0.75pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-size: 0.75pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 0.75pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 0pt solid; font-size: 0.75pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 0pt solid; font-size: 0.75pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-size: 0.75pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 0.75pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 0pt solid; font-size: 0.75pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 0pt solid; font-size: 0.75pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-size: 0.75pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>PRO-DEX, INC. and SUBSIDIARIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS </B></P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 4pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="7" STYLE="font-weight: bold; border-bottom: Black 0pt solid"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 10.1pt; text-align: center"><B>For The Years Ended June&nbsp;30,</B></P> <DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 4pt">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="font-weight: bold"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 10.1pt; text-align: center"><B>2013</B></P> <!-- Field: Rule-Page --><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV><!-- Field: /Rule-Page --></TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="font-weight: bold"><P STYLE="font: 7.5pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 10.1pt; text-align: center"><B>2012</B></P> <!-- Field: Rule-Page --><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV><!-- Field: /Rule-Page --></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -12pt; padding-left: 12pt">Cash flows from operating activities:</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 56%; text-align: left; text-indent: -12pt; padding-left: 12pt">Net loss&#9;</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(1,784,000</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(876,000</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Adjustments to reconcile net loss to net cash provided by (used in) operating activities:</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 60pt">Depreciation and amortization&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">582,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">647,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 60pt">Allowance for doubtful accounts&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -12pt; padding-left: 60pt">Share-based compensation&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">108,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 60pt">Changes in:</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 84pt">Accounts receivable and other receivables&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">325,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,428,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 84pt">Unbilled receivables</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(244,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -12pt; padding-left: 84pt">Inventories&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,043,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">912,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 84pt">Prepaid expenses&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(26,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 84pt">Other assets&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(27,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD NOWRAP STYLE="text-align: left; text-indent: -12pt; padding-left: 84pt">Accounts payable, accrued expenses and deferred rent&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: bottom">69,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: bottom">(1,503,000</TD><TD STYLE="text-align: left; vertical-align: bottom">)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 84pt">Deferred revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">121,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 84pt">Income taxes receivable and payable&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">608,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(641,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 1pt; padding-left: 0.1in">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Net cash provided by (used in) operating activities&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,271,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">45,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -12pt; padding-left: 12pt">Cash flows from investing activities:</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -12pt; padding-left: 60pt">Purchase of equipment&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(86,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(341,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 60pt">Proceeds from sale of equipment&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">82,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 60pt">Purchase in investments</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(366,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Net cash used in investing activities&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(452,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(259,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 1pt; padding-left: 0.1in">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -12pt; padding-left: 12pt">Cash flows from financing activities:</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 60pt">Principal payments on bank term loan&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(775,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(357,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 60pt">Repurchase of stock options&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 60pt">Proceeds from exercise of stock options&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">66,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 1pt; padding-left: 0.1in">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Net cash used in financing activities&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(709,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(363,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Net decrease in cash&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,432,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(577,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Cash, beginning of year&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,112,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,689,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>

<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Cash and cash equivalents, end of year&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,680,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,112,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-style: italic; text-align: center">Supplemental Information</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt">&nbsp;</TD>
    <TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 4pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Cash paid for interest&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">37,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Cash paid for income taxes&#9;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">56,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>

<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 6pt">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt">&nbsp;</TD>
    <TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 6pt; text-align: left">&nbsp;</TD></TR>


<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><I>Supplemental Non-Cash Information</I></P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>

<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>



<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="9" STYLE="text-align: left">In February 2013, the Company entered into a capital lease agreement for the acquisition of equipment having a cost of $22,000.</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>

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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
