Pro-Dex, Inc. Reports Significant Improvement In Fiscal 1998 First Quarter Operating Results.

BOULDER, Colo.--(BUSINESS WIRE)--Oct. 21, 1997--Kent Searl, Chairman and Chief Executive Officer of Pro-Dex, Inc. (NASDAQ: PDEX) today announced a significant improvement in operating results for the first quarter ended Sept. 30, 1997.

Revenues for the first quarter increased to $5,818,000 as compared to fiscal 1997 first quarter revenues of $4,432,000, net of sales from discontinued operations (dental centers and Pnu-Light). During the first quarter of fiscal 1998 the Company had net income of $352,000 or $.04 per share, compared to a loss of $340,000 or $(.04) per share in the like period a year ago.

In reviewing operations, Searl stated that the Company's significantly improved first quarter results were a result of strong growth in the semiconductor market and an expanding customer base; the backlog at Oregon Micro Systems increased substantially during the first quarter and this trend is continuing. Micro Motors has increased its revenue from its OEM business and is now shipping its branded handpiece line through Biotrol. In addition, new products scheduled for introduction during fiscal 1998 at Biotrol and Challenge, as well as a 50% expansion of the Biotrol salesforce should contribute to both revenue and earnings growth for the balance of this year and beyond.

Pro-Dex, Inc., is a Colorado-based holding company with the following wholly-owned subsidiaries: Micro Motors, Inc., located in Santa Ana, Calif., is the manufacturer of miniature pneumatic (air) motors and handpieces used in dental, medical and industrial applications; Oregon Micro Systems, Inc., located in Beaverton, Ore., manufactures motion control circuit boards; Biotrol International, Inc., located in Louisville, Colo., is a manufacturer and marketer of a full line of infection control and preventative products specifically designed for the dental care provider; Challenge Products, Inc., manufactures preventative care products including a complete line of fluoride gels and polishing pastes that are marketed through Biotrol and other private label distributors.

Except for the historical information contained herein, the matters discussed in this release are forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These include the timely development and acceptance of new products, the impact of competitive products and pricing, and other risks detailed frequently in Pro-Dex's SEC reports, including the report on Form 10-KSB for the year ended June 30, 1996.

Note: For further information about Pro-Dex, Inc. you are

invited to visit our web site, http://www.ProDex.com . -0-

                  PRO-DEX INC. AND SUBSIDIARIES
                Consolidated Statements of Income
                           (Unaudited)

                                       Quarter ended Sept. 30,
                                         1997         1996

Net sales (net of sales from
 discontinued operations of $0
  and $604,406)                      $ 5,817,919  $ 4,432,125
Cost of sales                          2,254,531    1,816,958
Gross profits                          3,563,388    2,615,167
Operating expenses:
  Selling                                981,463    1,028,882
  General and Administrative           1,181,003    1,183,328
  Research and development               352,095      194,235
  Amortization                           225,246      235,228
    Total operating expenses           2,739,807    2,641,673

Income (loss) from operations            823,581      (26,506)

Other income (expense):
  Interest expense                      (257,555)    (258,822)
  Other income, net                        2,077       14,176
    Total                               (255,478)    (244,646)

Income (loss) before income taxes
 (benefit) and loss from
  discontinued operation                 568,103     (271,152)
Income taxes (benefit)                   215,812      (68,000)

Income (loss) before loss from dis-
 continued operation                     352,291     (203,152)
(Loss) from discontinued operation
 (net of tax benefit)                                (136,894)
Net income (loss)                        352,291     (340,046)

Earnings per common and common
 equivalent share:
  Income (loss) from continuing
    operations                           4 cents     (2 cents)
(Loss) from discontinued operations                  (2 cents)
  Net income (loss) per share            4 cents     (4 cents)

Weighted average number of common
and common equivalent shares
 outstanding                           8,842,000    9,050,000

CONTACT: Pro-Dex Inc.

Kent Searl, 303/443-6136

or

Kehoe, White, Savage & Co. Inc.

James K. White, 562/437-0655