PRO-DEX, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS 30-Jun-08 30-Jun-07 ASSETS Current assets: Cash and cash equivalents $ 517,000 $ 403,000 Accounts receivable, net of allowance for doubtful accounts of $144,000

PRO-DEX, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS 30-Jun-08 30-Jun-07 ASSETS Current assets: Cash and cash equivalents $ 517,000 $ 403,000 Accounts receivable, net of allowance for doubtful accounts of $144,000 at June 30, 2008 and $153,000 at June 30, 2007 2,842,000 3,436,000 Other Current Receivables 205,000 - Inventories, net 5,101,000 4,622,000 Prepaid expenses 214,000 205,000 Prepaid income taxes 860,000 - Deferred income taxes 1,176,000 1,091,000 Total current assets 10,915,000 9,757,000 Property, plant, equipment and leasehold improvements, net 6,470,000 3,778,000 Other assets: Goodwill 2,997,000 2,997,000 Intangibles - Patents, net 1,221,000 1,321,000 Deferred income taxes - 229,000 Other 68,000 25,000 Total other assets 4,286,000 4,572,000 Total assets $ 21,671,000 $ 18,107,000 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Line of credit $ 2,000,000 $ 300,000 Accounts payable 1,736,000 1,110,000 Accrued expenses 2,053,000 1,183,000 Income taxes payable 114,000 158,000 Current portion of term note 396,000 250,000 Current portion of real estate loan 30,000 26,000 Current portion of patent deferred payable - 82,000 Total current liabilities 6,329,000 3,109,000 Long-term liabilities: Term note - 396,000 Real estate loan 1,560,000 1,593,000 Patent deferred payable 44,000 158,000 Deferred income taxes 290,000 - Deferred rent 150,000 - Total long-term liabilities 2,044,000 2,147,000 Total liabilities 8,373,000 5,256,000 Commitments and contingencies Shareholders' equity: Common shares; no par value; 50,000,000 shares authorized; 9,803,366 shares issued and outstanding June 30, 2008 9,718,366 shares issued and outstanding June 30, 2007 16,545,000 16,340,000 Accumulated deficit (3,247,000) (3,489,000) Total shareholders' equity 13,298,000 12,851,000 Total liabilities and shareholders' equity $ 21,671,000 $ 18,107,000 1 PRO-DEX, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Years ended June 30 2008 2007 Net sales $ 25,126,000 $ 21,563,000 Cost of sales 16,917,000 14,196,000 Gross profit 8,209,000 7,367,000 Operating expenses: Selling 1,482,000 1,353,000 General and administrative expenses 3,265,000 2,698,000 Irvine facility move related general and administrative expenses 274,000 - Research and development costs 2,732,000 2,474,000 Total operating expenses 7,753,000 6,525,000 Income from operations 456,000 842,000 Other: Other (expense), net (9,000) (4,000) Royalty income 35,000 38,000 Interest income 17,000 18,000 Interest (expense) (181,000) (319,000) Total (138,000) (267,000) Income before provision for income taxes 318,000 575,000 Provision for Income taxes (1,000) (69,000) Net income $ 317,000 $ 506,000 Net Income per share: Basic $ 0.03 $ 0.05 Diluted $ 0.03 $ 0.05 Weighted average shares outstanding - basic 9,736,249 9,579,055 Weighted average shares outstanding - diluted 9,924,350 9,739,041 2 PRO-DEX, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended June 30 2008 2007 Cash Flows from Operating Activities: Net Income $ 317,000 $ 506,000 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 538,000 487,000 Loss on disposal - 4,000 (Recovery of) Provision for doubtful accounts (9,000) 113,000 Reserve for obsolete inventory (18,000) 198,000 Stock based compensation 204,000 242,000 Retained earnings adjustment for prior years due to accounting standard change (75,000) - Deferred taxes 434,000 (177,000) Changes in: Decrease in accounts receivable 397,000 292,000 (Increase) in inventories (460,000) (840,000) (Increase) in prepaid expenses (9,000) (114,000) (Increase) Decrease in other assets (43,000) 19,000 Increase in accounts payable and accrued expenses 1,645,000 371,000 Increase (Decrease) in income taxes payable (903,000) 379,000 Net Cash provided by Operating Activities 2,018,000 1,480,000 Cash Flows From Investing Activities: Acquisition of Astromec, net of cash acquired - (66,000) Purchase of equipment and leasehold improvements (3,130,000) (447,000) Purchase of Intangible Assets - Patents related to Intraflow - (2,000) Net Cash used in Investing Activities (3,130,000) (515,000) Cash Flows from Financing Activities: Principal payments of patent deferred payable (196,000) (76,000) Net (Payments) Borrowing on Line of Credit 1,700,000 (600,000) Principal payments on Term Note (250,000) (250,000) Principal payments on Real Estate Loan (28,000) (27,000) Proceeds from option and warrant exercise - 33,000 Net Cash provided by (used in) Financing Activities 1,226,000 (920,000) Net (decrease) increase in Cash and Cash Equivalents 114,000 45,000 Cash and Cash Equivalents, beginning of year 403,000 358,000 Cash and Cash Equivalents, end of year $ 517,000 $ 403,000 Supplemental Information Cash paid for interest $ 181,000 $ 229,000 Cash paid for income taxes $ 560,000 $ - 3