Pro-Dex, Inc. Reports Fiscal 2002 Second Quarter and First Half Operating Results; Company Settles Certain Disputes With EPA and Young Innovations, Inc

Business Wire, March 7, 2002

Business Editors

SANTA ANA, Calif.--(BUSINESS WIRE)--March 7, 2002

Pro-Dex, Inc. (Nasdaq:PDEX) on February 23rd reported financial results for the second quarter and first half period ended December 31, 2001.

Revenue for the second quarter was $2.2 million compared to $4.6 million for the second quarter of fiscal 2001. During the second quarter the Company experienced a net loss of ($509,000) or ($0.06) per share compared to net income of $36,000 or $0.00 per share in the like period a year ago.

Fiscal 2002 first half revenue was $5.3 million compared to $8.9 million during the first half of 2001. The net loss for the first half of 2002 was (518,000) or ($0.06) compared to net income of $462,000 or $0.05 per share in the same period of 2001. The first half net loss includes, among others, a non-operating charge of $260,000 effectively increasing the escrow reserve in connection with the sale of assets to Young Innovations, Inc. by the Company's Challenge Products, Inc. and Biotrol International, Inc. subsidiaries. In addition, charges relating to the moving, consolidation, severance and restructuring of the Company from Denver, Colorado to the Micro Motors facility in Santa Ana, California were expensed in the first half.

On June 12, 2001, the Company sold substantially all of the assets of its two wholly owned subsidiaries, Biotrol, International, Inc., and Challenge Products, Inc. to Young, LLC, a newly formed subsidiary of Young Innovations, Inc., for a purchase price of $9 million. The Company received $6.6 million of the purchase price at the closing. Originally, the balance of the purchase price of $2.4 million was held in escrow to secure various warranties under the sale agreement. During the current third quarter, Pro-Dex resolved certain of the escrow issues, including the EPA issue previously disclosed, and subsequently was able to partially release funds. Efforts continue between Pro-Dex and Young Innovation to resolve all remaining issues under the Purchase Agreement.

In review operations Frank Zagar, President and CEO of Pro-Dex stated, "Pro-Dex felt the effects of the slow economy and 9/11 as did most businesses. Pro-Dex continues to incur one-time charges and unusual expenses related to its overall business consolidation; execution of the Purchase Agreement with Young Innovation; general effects of the current economy; and, delayed deliveries imposed by some of its customers suffering from the lethargic economy and 9/11. The consolidation will be completed in the third quarter and the Company is now turning its attention from internal affairs to focusing on customers and increased sales. The Company's Micro Motors subsidiary is making new and exciting in-roads with its medical and dental systems. The Company's OMS subsidiary is readying new products and markets for its motion controls products. In addition, Pro-Dex continues to reduce its debt obligation by conserving and managing cash."

Pro-Dex, Inc., is a holding company with the following wholly-owned subsidiaries: Micro Motors, Inc., located in Santa Ana, California, designs, develops and manufactures electric and pneumatic (air) powered drive systems for applications in the medical, dental and industrial markets; Oregon Micro Systems, Inc., located in Beaverton, Oregon, designs and manufactures motion control products for applications in factory automation, semi conductor manufacturing and medical devices.

To learn more, please visit our Website at www.pro-dex.com

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.