Welcome to today’s Pro-Dex call to discuss the company’s fiscal 2008 fourth quarter financial results and a review of current corporate developments. Your speakers today are Mr. Mark Murphy, Chief Executive Officer, and Mr. Jeff Ritchey, Chief Financial Officer. (Operator Instructions) Before I turn the call over to Mr. Murphy and Mr. Ritchey, I want to read a statement concerning forward-looking statements. Listeners are cautioned that statements made in this presentation are not historical in nature or that state our management’s intentions, hopes, beliefs, expectations or predictions of the future may constitute forward-looking statements within the meaning of Section 21(e) of the Securities and Exchange Act of 1934 as amended. Forward-looking statements involve risks, uncertainties and assumptions. It is important to note that any such performance and actual results, financial condition or business could differ materially from those expressed in such forward-looking statements. Factors that could cause or contribute to such differences include but are not limited to those discussed in this presentation as well as those discussed elsewhere in reports filed with the Securities and Exchange Commission. Other unforeseen factors not identified in this presentation could also have such an effect. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial condition or business over time. With that said I’d like to turn the call over to Mr. Murphy.

Thank you all for joining us to review Pro-Dex’s fourth quarter and year-end results for the fiscal year ended June 30, 2008. We’re going to try a different format this afternoon. Given our current trading level I think it’s best to just cut right to the chase and talk about what’s going on, hopefully providing some missing information about Pro-Dex’s value. As always we want both the comments and the Q&A to be direct, specific and open so as to ensure that we’re all on the same page. So instead of having Jeff Ritchey, our Chief Financial Officer, provide a thorough recap of all of the numbers in the 10K I have asked him to provide only the basic highlights of the fourth quarter and year. And instead of me commenting on all of the detailed operating functions during the last 90 days I will focus on the specific value of our company. I suspect that upon hearing everything you will agree with me that we hold far greater value than the current market indicates. So let’s get started with Jeff providing a brief summary of the numbers.

Revenue for fiscal year 2008 grew by 17% to $25.1 million from $21.6 million the previous year. As expected we had reduced revenue in the fourth quarter of fiscal 2008 as sales for the quarter were $5.4 million down from $5.8 million in the fourth quarter of fiscal 2007. Sales growth continued to be driven by medical product sales which increased 37% over the prior year. The gross profit for the year increased by 11% to $8.2 million compared to $7.4 million last year. Gross profit in the fourth quarter decreased 21% to $1.5 million compared to the $1.9 million in the same quarter last year primarily due to one-time move costs. Operating expenses increased to $7,753,000 million in fiscal 2008 from $6,525,000 in the previous year. As a percentage of sales operating expenses were relatively flat at 31% of sales in 2008 and 30% of sales in 2007. For the fourth quarter operating expenses increased to $2.250 million in fiscal 2008 from $1.489 million in fiscal 2007. The increase in operating expense for the prior year and for the quarter was primarily due to higher labor costs and move expenses. Operating income for fiscal year 2008 was $456,000 or 2% of sales. That’s compared to operating income of $842,000 or 4% of sales in fiscal year 2007. Without the inventory reserve adjustment and the cost associated with the move, operating income would have increased to 5% of sales on a year-to-year basis. The effective tax rate for fiscal 2008 was 0%. The statutory rate of 34% was reversed by reversal of our FIN 48 estimated tax liability booked last year and the continued use of research and development and investment tax credits. Our net income for fiscal year 2008 was $317,000 or $0.03 per share compared to $506,000 or $0.05 per share for fiscal year 2007. For the fourth quarter fiscal 2008 we showed a net loss of $412,000 or $0.04 per share compared to net income of $187,000 or $0.02 per share for the previous fourth quarter. We had cash flow from operations of $2,018,000 for fiscal year 2008 compared to $1,480,000 in the prior fiscal year primarily due to increased levels of accounts payable and accruals. Cash on hand grew slightly. At June 30, 2008 we had $517,000 in cash on hand compared to $403,000 at June 30, 2007. We ended the year with $2 million borrowed from our $4 million total credit line availability, up from $300,000 borrowed at June 30, 2007. Net debt was $3.5 million at June 30, 2008 compared to $2.4 million at June 30, 2007. As of June 30, 2008 our backlog stood at $10.4 million compared to $10.1 million of backlog at the same time last year. And with that I’ll turn the call back over to Mark for his review and outlook comments.

I’ve organized my comments into the following areas. One, some perspective on our historical financials. Two, what we are doing to enhance profitability. Three, growth. Four, remaining unknowns. Five, future opportunities. Six, stock price. First let me illuminate some perspective on our historical financials. One. We indicated in our Q3 conference call that we believed we had recurring revenues of approximately $6 million per quarter and that Q4 was going to be less than that due to move-in efficiencies in April and May. It turned out that we had and have sufficient manufacturing capability to recover to a strong top line but the major customer who built their inventory in Q3 last year driving that record $7.6 million quarter is in the process of correcting that inventory build. Accordingly, this $5.4 million quarter was disappointing but not unexpected. These quarter-to-quarter fluctuations in no way reflect a decline in demand for our products or expertise. And in fact, with speaking with our customers, the underlying demand for our products by our customers’ customer continues to expand. Two. Operating expenses are up $1.2 million year-over-year from $6.5 million to $7.7 million. Nearly $400,000 of this is related to one-time move costs and double rent. Another $125,000 is related to increased SOX and audit compliance work. The balance of $675,000 reflects the investments we have made to restore the company to robust health. Building strength in our business development, engineering and project management functions were all necessary to get us back in the game. Thos investments are now reflected in our P&L but we are still developing the new products and revenues which have resulted from those efforts. We are not hoping that investments will yield results; they already have by increasing the number and the value of projects in our pipeline. We…

(Operator Instructions) Our first question comes from Michael Potter - Monarch Capital.

I appreciate the new format. I think it’s much more efficient and very, very helpful. You gave a lot of information. With that information, how much visibility do you have going forward into 2009 on our base business right now?

Can you explain what you mean about how much visibility?

As far as how comfortable are customers with their programs moving forward and their ordering patterns and timing of their orders?

I would say we have good fundamental visibility in terms of we’ve got no information or any conversations that suggest that there’s a material fundamental shift like their product is dying in their market place or they have plans to replace it with a new product or anything like that. We have the continuing inventory adjustments that are occurring in the one particular customer that appears that is now about now over the next I’d say 30 to 45 days starting to correct itself, and that customer is now talking about “We don’t want to get too low here,” and “What could you do if we did this?” so we’re starting to have those wonderful conversations we were having back in Q2 and Q3 last year. So the visibility of that what I’ll call timing as opposed to fundamental change is just starting to come up and obviously the softness in Q4 that we’re describing now, we have pretty good visibility of it in Q1 and it’s just starting to come up. I don’t know that they’re going to come out of the gates in Q2 gun-slinging and huge but it feels like we’re going to at least get back to a level that represents their sales.

So with this one customer still I guess adjusting their inventory levels, do you expect that other business should more than make up for it for Q1? Do you expect that we’ll have a growth quarter?

Yes.

So Q1 will be affected on the top line. Will there be any residual moving expenses in Q1?

No.

So we took all those in Q4?

Correct.

Overall, what’s our target for I guess operating profitability on an EBITDA basis and on a gross margin basis for this company? Where do you think we can get to or what’s the next target from here?

I think we’ve said in the past that our target for our margins is about 40% consolidated and we still believe that’s possible. We’ve had some one-times and some softness that has prevented us from getting there sooner rather than later, but I think that is the answer. You can look at our operating expenses and derive EBITDA, pre-tax, EPS, pretty much everything from that. I’d rather just keep it at that if I could.

With the tight credit markets are we seeing any increased activity on the potential for acquisitions?

For us to buy?

For us to buy, that’s correct.

I think it’s fair to say that given the value of our currency right now -

Not using our currency. Using the strong free cash generation that we have.

We are in conversations with potential targets but nothing serious at this point; just exploratory “Would you be interested?” but nothing that is on the horizon.

Our next question comes from [Alex Black - York Capital]. [Alex Black - York Capital]: I was wondering if you could just go over your debt. I think you said you’ve drawn about $2 million on that line. Could you just go over how the interest rate resets? What do you expect your interest expense to be next year? Is it LIBOR tied?

We have the option of prime or LIBOR plus the margin. So the effective rate’s actually been a little bit below prime, around 4.25% where prime’s at 5%. The TI line the margin’s a little bit higher so that’s right around prime. Our blended effect of interest rate’s pretty good right now. And the mortgage is fixed at 6.7% so that stays flat for the next eight years.

Our next question comes from Gary Simon - UVE Partners.

Other than the $499,000 for the move in the fourth quarter were there any one-time costs in that fourth quarter and would you have what they were for the fiscal year so we could start seeing how this operation would run without any of the moves and the inventory adjustments and so on that’s taken place?

There are move costs, some move-in efficiencies so that’s built into the move costs. We had some double rent in there as we had to take rent charges even for the time we weren’t in the building in the first quarter. That was a little over $100,000 there. Some SOX compliance costs where those will ramp down as we move into testing phase. That’s $100,000 or so in the year that may or may not repeat.

I would say if you use the $499,000 plus $110,000 for the rent you would have the hard tangible and then you want to take $20,000 off the SOX those would be your big hard numbers that really were not associated with shipments in Q4.

For the year we had that inventory reserve adjustment in Q3 so that was there for $300,000.

And then we had $160,000 charge earlier in the year for a warranty accrual catch up for previously shipped products. So those are all the numbers that I used when I got to the $1.3 million operating profit and $0.084. I kind of did that math for you.

That’s the important piece and I appreciate you putting that together.

There are no further questions at this time.

First of all we want to thank you all for taking the time to listen to this call whether it be live or in the future. Believe me I think your leadership team is as frustrated as you are with our stock performance and we’ll do anything we can to ethically and professionally drag it up and get the recognition for it. So we’re on that. And I think we also know we’re in a market that’s kind of big right now in terms of what’s impacting us because of the market and what’s impacting us because of our own performance. I also want to make a comment that I apologize the 10K did not get filed prior to this conference call so you would be able to have that at your fingertips. We’ve got a couple signatures floating to be able to file that. If not today, then tomorrow. If not tomorrow, for sure on Monday at the absolute latest. But it is forthcoming. Thank you again for your time and attention, and have a great day and weekend.