Patrick Johnson, President & CEO (714) 241-4411 Matthew Hayden, Investor Relations Hayden Communications, Inc. (858) 456 - 4533 For Immediate Release PRO-DEX, INC. ANNOUNCES THIRD FISCAL QUARTER AND NINE-MONTH R

Year-to-date earnings increase 35% as Company's order

backlog reaches record level of $8.3 million;

Management reiterates guidance of $0.18 to $0.22 per share

for the 2005 fiscal year

SANTA ANA, CA, May 12,

2005 - PRO-DEX, INC. (NASDAQ: PDEX), a provider of embedded motion control and

miniature rotary drive systems, serving the medical, dental, factory automation,

and scientific research markets, today

announced financial results for the third quarter and nine-month period ending March

net sales for the third quarter were $3.2 million compared to $3.3 million for

the three months ended March 31, 2005. Gross

profit for the third quarter was $1.6 million, up slightly compared to the $1.6

million reported for the third quarter of last year. Gross

profit as a percentage of sales increased to 50.7 percent for the quarter

compared to 48.5 percent for the third fiscal quarter of last year and 55.9

percent for the first fiscal half of this year. The gross profit percentage for

the third quarter was impacted by multiple new product launches which impacted

manufacturing efficiency and a revenue mix which had a lower proportion of factory

automation sales. Operating expenses increased by

$98,000 to $1.3 million compared to the third quarter last year, driven by

one-time severance expenses. Net income for the quarter was $275,000, or

$0.03 per diluted share, as compared to a net income of $261,000 or $0.03 per diluted

share, for the three months ended March 31, 2004. Backlog at the end of the third

quarter was $8.3 million, up 77 percent from $4.7 million at the end of the

second quarter of this year and up 152 percent from $3.3 million at the end the

third quarter of last year.

Commenting on the Company's financial performance,

Pro-Dex's President and Chief Executive Officer, Patrick Johnson said, "We're

pleased with the accelerated rate of new order bookings seen during the third

quarter of the year. The new orders came from every segment of our business,

but were dominated by orders from existing and new medical device customers. We

believe that the increase in order backlog is further evidence that our focused

model of rapidly developing and launching innovative products is both

successful and represents meaningful evidence of positive business momentum. We

transitioned a number of projects from development into production during the

third quarter, enabling growth in our current quarter and serving to increase

sales and visibility in the coming quarters."

Pro-Dex previously announced the signing of a new

Development Agreement at the end of the second quarter this fiscal year. During

the third quarter, the design services related to that Development Agreement

were successfully completed. As a result of completing this project, the

Company booked orders for a new product from a new medical device customer

totaling $1.2 million with shipments scheduled to begin in the fourth quarter

of this fiscal year.

For the nine months ended March 31, 2005, consolidated net

sales were $9.5 million compared to $10.5 million for the same period in the

prior year. The decrease is partially related to the Company's

previously announced shift to a royalty agreement with its HealOzone product. Gross

profit was $5.1 million compared to $4.9 million for the same period in the

prior year. For the nine months, gross profit as a percent of sales increased

to 54.2 percent compared to 46.0 percent in the same period in the prior year.

Operating expense increased $56,000 to $3.8 million compared to the same nine

months in the prior year. Despite the decrease in revenue, the Company reported

net income for the nine months ended March 31, 2005 of $921,000 or $0.10 per

diluted share, as compared to a net income of $683,000 or $0.07 per diluted

share, for the nine months ended March 31, 2004. This represents an increase of

$238,000 or 35 percent over the previous year.

"In addition to booking orders for recently developed

products, we received several large follow-on orders for products developed during

the last two years," commented Mr. Johnson, "Our new product development

projects remain at a record level with 11 total projects, seven of those

projects being funded by our customers and representing a potential first year

revenue of $7.6 million. We closed the third quarter with the signing of

another Development Agreement with an existing customer. This development

project will take us between nine and 12 months to complete and if successful could

result in an estimated first-year revenue of $2.2 to $4.5 million. Also during

the third quarter, we moved several current development projects toward

completion and provided a number of Development Services Proposals to new and

existing customers, activities that should drive order bookings and shipped sales

through fiscal 2006 and beyond."

Highlights from the fiscal third quarter included:

During the third quarter, the

Company launched three new products for customers in the dental market. These

products were originally scheduled for launch during the Company's fiscal

second quarter. Gross margin percentages were unfavorably impacted during

the quarter given manufacturing inefficiencies related to initial launch

of these new products. With the ramp up complete, margins are now

consistent with the overall blended Company margins.

The Company's new product

development portfolio includes 11 total projects, seven of which are being

funded by customers, and totaling $7.6 million in potential first year

The Company's order backlog

increased to $8.3 million at the end of the third quarter, compared to

$4.7 million at the end of the second quarter this year and $3.3 million

at the end of the third quarter last year.

Year to date, gross margin as a

percentage of sales has increased to 54.2 percent, up from 46.0 percent in

the same period last year. As a result, gross margin dollars have

increased $271,000 for the first nine months of the year, despite a $1.0

million decrease in sales.

"We view our third quarter results as the inflection

point to take Pro-Dex to the next level," Mr. Johnson continued. "We have established

a solid core business with high profile customers who are succeeding

commercially with the products we have developed and manufactured for them.

Based on that success, we are earning the opportunity to bid on new projects

that are larger in size, and in some cases, outside our traditional vertical markets.

This increase in bidding activities has increased our portfolio of new

development projects to record levels and the ongoing completion of these projects