UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





____________________




Form
10-Q


_____________________




Quarterly
      report pursuant to Section 13 or 15(d) of the Securities Exchange Act
      of 1934For
      the quarterly period ended July 31, 2010


Commission
file number:  0-13301




_______________________





RF
INDUSTRIES, LTD.


(Exact name of registrant as specified
in its charter)




Nevada
            88-0168936(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)7610
      Miramar Road, Building 6000
              San
      Diego, California
            92126(Address
      of principal executive offices)
            (Zip
      Code)(858) 549-6340(Registrant’s
      telephone number, including area
code)







Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x  No o




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes o No o




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
(Check one):




Large
      accelerated filer o
            Accelerated
      filer o
            Non-accelerated
      filer o
            Smaller
      reporting company x




Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act): Yes o  No x




The
number of shares of the issuer’s Common Stock, par value $0.01 per share,
outstanding as of September 1, 2010 was 2,850,928.









1





Part
I. FINANCIAL INFORMATION





Item
1: Financial Statements




RF
INDUSTRIES, LTD.


CONDENSED
BALANCE SHEETS


(UNAUDITED)





July
      31,
              2010
            
            
            October
      31,
              2009(Note
      1)ASSETSCURRENT
      ASSETSCash
      and cash equivalents
            
            $
            1,580,511
            
            
            $
            1,225,927Certificates
      of deposit
            
            
            7,328,138
            
            
            
            6,476,981Trade
      accounts receivable, net of allowance for doubtful accounts of $62,475 and
      $52,892
            
            
            1,981,975
            
            
            
            2,263,265Inventories
            
            
            4,481,907
            
            
            
            4,984,921Other
      current assets
            
            
            487,946
            
            
            
            340,362Deferred
      tax assets
            
            
            478,200
            
            
            
            478,200TOTAL
      CURRENT ASSETS
            
            
            16,338,677
            
            
            
            15,769,656Equipment
      and furnishings:Equipment
      and tooling
            
            
            2,415,336
            
            
            
            2,365,160Furniture
      and office equipment
            
            
            501,588
            
            
            
            425,3892,916,924
            
            
            
            2,790,549Less
      accumulated depreciation
            
            
            2,362,999
            
            
            
            2,224,745TOTALS
            
            
            553,925
            
            
            
            565,804Long-term
      certificates of deposit
            
            
            746,624
            
            
            
            -Goodwill
            
            
            -
            
            
            
            137,328Amortizable
      intangible asset, net
            
            
            6,789
            
            
            
            27,156Note
      receivable from stockholder
            
            
            66,980
            
            
            
            66,980Other
      assets
            
            
            32,158
            
            
            
            31,276TOTAL
      ASSETS
            
            $
            17,745,153
            
            
            $
            16,598,200





2





Item 1: Financial Statements
(continued)




RF
INDUSTRIES, LTD.


CONDENSED
BALANCE SHEETS


(UNAUDITED)





July
      31,2010
            
            
            October
      31, 2009(Note
      1)LIABILITIES AND STOCKHOLDERS’
      EQUITYCURRENT
      LIABILITIESAccounts
      payable
            
            $
            352,825
            
            
            $
            224,974Accrued
      expenses
            
            
            832,979
            
            
            
            673,080Income
      taxes payable
            
            
            -
            
            
            
            75,134TOTAL
      CURRENT LIABILITIES
            
            
            1,185,804
            
            
            
            973,188Deferred
      tax liabilities
            
            
            50,500
            
            
            
            50,500Other
      long-term liabilities
            
            
            302,564
            
            
            
            321,030TOTAL
      LIABILITIES
            
            
            1,538,868
            
            
            
            1,344,718COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS’
      EQUITYCommon
      stock - authorized 10,000,000 shares of $0.01 par value; 2,850,928 and
      2,848,313 shares issued and outstanding
            
            
            28,509
            
            
            
            28,483Additional
      paid-in capital
            
            
            6,669,942
            
            
            
            6,502,447Retained
      earnings
            
            
            9,507,834
            
            
            
            8,722,552TOTAL
      STOCKHOLDERS’ EQUITY
            
            
            16,206,285
            
            
            
            15,253,482TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            17,745,153
            
            
            $
            16,598,200




See Notes
to Condensed Unaudited Financial Statements.




3





Item 1: Financial Statements
(continued)




RF
INDUSTRIES, LTD.


CONDENSED
STATEMENTS OF INCOME


(UNAUDITED)





Three
      Months Ended July 31,
            
            
            Nine
      Months Ended July 31,2010
            
            
            2009
            
            
            2010
            
            
            2009Net
      sales
            
            $
            4,230,032
            
            
            $
            3,294,290
            
            
            $
            11,321,062
            
            
            $
            10,401,589Cost
      of sales
            
            
            2,213,128
            
            
            
            1,670,358
            
            
            
            5,717,611
            
            
            
            5,409,304Gross
      profit
            
            
            2,016,904
            
            
            
            1,623,932
            
            
            
            5,603,451
            
            
            
            4,992,285Operating
      expenses:Engineering
            
            
            218,975
            
            
            
            255,682
            
            
            
            624,586
            
            
            
            805,921Selling
      and general
            
            
            1,354,395
            
            
            
            1,339,847
            
            
            
            3,738,085
            
            
            
            3,736,126Totals
            
            
            1,573,370
            
            
            
            1,595,529
            
            
            
            4,362,671
            
            
            
            4,542,047Operating
      income
            
            
            443,534
            
            
            
            28,403
            
            
            
            1,240,780
            
            
            
            450,238Other
      income - interest
            
            
            28,062
            
            
            
            22,764
            
            
            
            67,856
            
            
            
            148,877Income
      before provision for income taxes
            
            
            471,596
            
            
            
            51,167
            
            
            
            1,308,636
            
            
            
            599,115Provision
      for income taxes
            
            
            159,326
            
            
            
            40,590
            
            
            
            523,299
            
            
            
            211,485Net
      income
            
            $
            312,270
            
            
            $
            10,577
            
            
            $
            785,337
            
            
            $
            387,630Basic
      earnings per share
            
            $
            0.11
            
            
            $
            0.00
            
            
            $
            0.28
            
            
            $
            0.13Diluted
      earnings per share
            
            $
            0.10
            
            
            $
            0.00
            
            
            $
            0.25
            
            
            $
            0.12Basic
      weighted average shares outstanding
            
            
            2,850,928
            
            
            
            2,869,928
            
            
            
            2,850,210
            
            
            
            2,985,083Diluted
      weighted average shares outstanding
            
            
            3,218,376
            
            
            
            3,161,904
            
            
            
            3,202,701
            
            
            
            3,278,509Dividends
      paid
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            94,780




See Notes
to Condensed Unaudited Financial Statements.




4





Item 1: Financial Statements
(continued)




RF
INDUSTRIES, LTD.


CONDENSED
STATEMENTS OF CASH FLOWS


NINE
MONTHS ENDED JULY 31


(UNAUDITED)




2010
            
            
            2009OPERATING
      ACTIVITIES:Net
      income
            
            $
            785,337
            
            
            $
            387,630Adjustments
      to reconcile net income to net cash provided by operating
      activities:Bad
      debt expense
            
            
            2,020
            
            
            
            13,722Depreciation
      and amortization
            
            
            158,404
            
            
            
            194,171Goodwill
      impairment
            
            
            137,328
            
            
            
            209,763Inventory
      write-off
            
            
            247,539Loss
      on disposal of equipment
            
            
            
            
            
            
            4,827Stock-based
      compensation expense
            
            
            157,522
            
            
            
            124,786Changes
      in operating assets and liabilities:Trade
      accounts receivable
            
            
            279,269
            
            
            
            190,374Inventories
            
            
            255,475
            
            
            
            650,628Other
      current assets
            
            
            (147,584
            )
            
            
            (291,605
            )Other
      long-term assets
            
            
            (882
            )
            
            
            (394
            )Accounts
      payable
            
            
            127,851
            
            
            
            (95,329
            )Accrued
      expenses
            
            
            170,060
            
            
            
            (183,983
            )Income
      taxes payable
            
            
            (75,134
            )
            
            
            (329,733
            )Other
      long-term liabilities
            
            
            (18,466
            )
            
            
            57,046Net
      cash provided by operating activities
            
            
            2,078,739
            
            
            
            931,903INVESTING
      ACTIVITIES:Purchases
      of certificates of deposit
            
            
            (3,411,107
            )
            
            
            (2,117,184
            )Sale
      of certificates of deposit
            
            
            1,813,327
            
            
            
            4,478,821Capital
      expenditures
            
            
            (126,375
            )
            
            
            (158,403
            )Net
      cash provided by (used in) investing activities
            
            
            (1,724,155
            )
            
            
            2,203,234FINANCING
      ACTIVITIES:Purchases
      of treasury stock
            
            
            -
            
            
            
            (1,609,150
            )Dividends
      paid
            
            
            -
            
            
            
            (94,780
            )Net
      cash used in financing activities
            
            
            -
            
            
            
            (1,703,930
            )Net
      increase in cash and cash equivalents
            
            
            354,584
            
            
            
            1,431,207Cash
      and cash equivalents, beginning of period
            
            
            1,225,927
            
            
            
            1,060,838Cash
      and cash equivalents, end of period
            
            $
            1,580,511
            
            
            $
            2,492,045Supplemental
      cash flow information – income taxes paid
            
            $
            633,000
            
            
            $
            550,000Supplemental
      noncash investing and financing activities:Retirement
      of treasury stock
            
            $
            -
            
            
            $
            1,609,151Stock
      issuance related to contingent liability
            
            $
            10,000
            
            
            $
            30,000




See Notes
to Condensed Unaudited Financial Statements.




5





RF
INDUSTRIES, LTD.


NOTES
TO CONDENSED UNAUDITED FINANCIAL STATEMENTS




Note
1 - Unaudited interim financial statements




The
accompanying unaudited condensed financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form
10-Q. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of management, all
adjustments, which are normal and recurring, have been included in order to make
the information not misleading. Information included in the balance sheet as of
October 31, 2009 has been derived from, and certain terms used herein are
defined in, the audited financial statements of the Company as of October 31,
2009 included in the Company’s Annual Report on Form 10-K (“Form 10-K”) for the
year ended October 31, 2009 that was previously filed with the Securities and
Exchange Commission (“SEC”). Operating results for the three and nine months
period ended July 31, 2010 are not necessarily indicative of the results that
may be expected for the year ending October 31, 2010. The unaudited condensed
financial statements should be read in conjunction with the financial statements
and footnotes thereto included in the Company’s Annual Report on Form 10-K for
the year ended October 31, 2009.




Revenue
recognition




Four
basic criteria must be met before revenue can be recognized: (1) persuasive
evidence of an arrangement exists; (2) delivery has occurred or services
rendered; (3) the fee is fixed and determinable; and (4) collectability is
reasonably assured. The Company recognizes revenue from product sales after
purchase orders are received, which contain a fixed price and the products are
shipped. Most of the Company’s products are sold to continuing customers with
established credit histories.




Note 2 - Components of
inventories




Inventories,
consisting of materials, labor and manufacturing overhead, are stated at the
lower of cost or market. Cost has been determined using the weighted average
cost method.




July
      31,
              2010
            
            
            October
      31,
              2009Raw
      materials and supplies
            
            $
            1,280,765
            
            
            $
            1,355,504Work
      in process
            
            
            46,031
            
            
            
            8,105Finished
      goods
            
            
            3,198,519
            
            
            
            3,685,950Inventory
      reserve
            
            
            (43,408
            )
            
            
            (64,638
            )Totals
            
            $
            4,481,907
            
            
            $
            4,984,921





Purchases
of connector products from three major vendors in the nine month period ended
July 31, 2010 represented 22%, 15%, and 13% compared to one major vendor who
represented 23% of total inventory purchases for the same period in 2009. The
Company has arrangements with these vendors to purchase product based on
purchase orders periodically issued by the Company.   The
decrease in inventories is also attributable to a write-off of $247,539 of
obsolete inventory at the Neulink division, which is a significant portion of
the decrease in inventories compared to prior comparable nine month
period.





Note
3 - Earnings per share




Basic
earnings per share is computed by dividing net income by the weighted average
number of common shares outstanding during the period. Diluted earnings per
share is computed by dividing net income by the weighted average number of
common shares outstanding increased by the effects of assuming that other
potentially dilutive securities (such as stock options) outstanding during the
period had been exercised and the treasury stock method had been applied. For
the three months ended July 31, 2010, the effects of the assumed exercise of
options to purchase 271,539 shares of the Company’s common stock, at a price
range of $5.12 to $7.56 per share, were not included in the computation of
diluted per share amounts because they were anti-dilutive for that purpose. For
both the three and nine months ended July 31, 2009, the effects of the assumed
exercise of options to purchase 391,439 shares of the Company’s common stock, at
a price of $3.95 to $7.56 per share, were not included in the computation of
diluted per share amounts because they were anti-dilutive for that purpose. For the
nine months ended July 31, 2010, the effects of the assumed exercise of options
to purchase 270,039 shares of the Company’s common stock, at a price range of
$5.42 to $7.56 per share, were not included in the computation of diluted per
share amounts because they were anti-dilutive for that purpose.




6





The
following table summarizes the computation of basic and diluted weighted average
shares outstanding:






Three
      Months Ended July 31
            
            
            Nine
      Months Ended July 312010
            
            
            2009
            
            
            2010
            
            
            2009Weighted
      average shares outstanding for basic net earnings per
share
            
            
            2,850,928
            
            
            
            2,869,928
            
            
            
            2,850,210
            
            
            
            2,985,083Add
      effects of potentially dilutive securities-assumed exercise of stock
      options
            
            
            367,448
            
            
            
            291,976
            
            
            
            352,491
            
            
            
            293,426Weighted
      average shares for diluted net earnings per share
            
            
            3,218,376
            
            
            
            3,161,904
            
            
            
            3,202,701
            
            
            
            3,278,509





Note
4 - Stock-based compensation and equity transactions





The
stock incentive plans provide for the granting of qualified and nonqualified
options to the Company’s officers, directors and employees. Non-qualified stock
options granted during the nine months ended July 31, 2010 vest and are
exercisable immediately and expire in five years from date of grant. There were
no stock options granted during the quarter ended July 31, 2010. The Company
satisfies the exercise of options by issuing previously unissued common
shares.




The
weighted average fair value of employee stock options granted by the Company in
the nine months ended July 31, 2010 and 2009 was estimated to be $1.63 and $1.51
per share, respectively, using the Black-Scholes option pricing model with the
following assumptions:




2010
            
            
            2009Risk-free
      interest rate
            
            
            1.41
            %
            
            
            1.01
            %Dividend
      yield
            
            
            0.00
            %
            
            
            2.96
            %Expected
      life of the option
            
            2.5
      years
            
            2.5
      yearsVolatility
      factor
            
            
            57.67
            %
            
            
            60.37
            %




Expected
volatilities are based on historical volatility of the Company’s stock and other
factors. The Company used the simplified method to calculate the expected life
of the 2010 option grants. The expected life represents the period of time that
options granted are expected to be outstanding. The risk-free rate is based on
the U.S. Treasury rate with a maturity date corresponding to the options’
expected life. The dividend yield is based upon the historical dividend
yield.




Issuances
of common stock by the Company




During
the nine months ended July 31, 2010, the Company issued 2,615 shares of common
stock valued at approximately $10,000 to the former owner of RadioMobile to
fully satisfy the earn-out contingency accrual. The RadioMobile Purchase
Agreement earn-out contingency is more fully described in Note 11 of the
Company’s Annual Report 10-K for the year ended October 31, 2009.





Company
Stock Option Plans




Descriptions
of the Company’s stock option plans are included in Note 7 of the Company’s
Annual Report on Form 10-K for the year ended October 31, 2009. A summary of the
status of the options granted under the Company’s stock option plans as of July
31, 2010 and the changes in options outstanding during the nine months then
ended is presented in the table that follows:





7




Shares
            
            Weighted
              Average
      Exercise PriceOutstanding
      at November 1, 2009
            1,243,306
            
            $
            3.74Options
      granted
            16,000
            
            $
            4.49Options
      exercised
            -
            
            $
            -Options
      canceled or expired
            (19,882)
            
            $
            4.73Options
      outstanding at July 31, 2010
            1,239,424
            
            $
            3.74Options
      exercisable at July 31, 2010
            922,242
            
            $
            3.70Options
      vested and expected to vest at July 31, 2010
            1,232,414
            
            
            3.74





Weighted
average remaining contractual life of options outstanding as of July 31, 2010:
4.41 years





Weighted
average remaining contractual life of options exercisable as of July 31, 2010:
4.18 years





Weighted
average remaining contractual life of options vested and expected to vest as of
July 31, 2010: 4.39 years





Aggregate
intrinsic value of options outstanding at July 31, 2010: $2,542,844





Aggregate
intrinsic value of options exercisable at July 31, 2010: $2,051,198





Aggregate
intrinsic value of options vested and expected to vest at July 31, 2010:
$2,528,462





As of
July 31, 2010, $461,434 of expense with respect to non-vested stock-based
arrangements has yet to be recognized which is expected to be recognized over a
weighted average period of 4.75 years.





Stock
Option Expense





During
the nine-months ended July 31, 2010 and 2009, stock-based compensation expense
totaled $157,522 and $124,786, respectively. For the three-months ended July 31,
2010 and July 31, 2009, stock-based compensation expense totaled $43,605 and
$47,576, respectively. For the nine months ended July, 2010 and 2009,
stock-based compensation classified in cost of sales amounted to $26,247 and
$9,898 and stock-based compensation classified in selling and general expense
amounted to $131,275 and $114,888, respectively. For the
three months ended July 31, 2010 and 2009, stock-based compensation classified
in cost of sales amounted to $9,004 and $3,283 and stock-based compensation
classified in selling and general expense amounted to $34,806 and $44,293,
respectively.




Note
5 - Concentration of Credit Risk





One
customer accounted for approximately 24% and 23% of the Company’s net sales for
the three and nine month periods ended July 31, 2010, respectively. One customer
accounted for approximately 21% and 14% of the Company’s net sales for the three
and nine month periods ended July 31, 2009, respectively.  Although
this customer has been an on-going major customer of the Company continuously
during the past thirteen years, the written agreements with this customer do not
have any minimum purchase obligations and the customer could stop buying the
Company’s products at any time and for any reason. A reduction, delay or
cancellation of orders from this customer or the loss of this customer could
significantly reduce the Company’s revenues and profits.





Note
6 - Segment Information




The
Company aggregates operating divisions into operating segments which have
similar economic characteristics and are similar in the majority of the
following areas: (1) the nature of the product and services; (2) the nature of
the production process; (3) the type or class of customer for their products and
services; (4) the methods used to distribute their products or services; and (5)
if applicable, the nature of the regulatory environment. The Company has three
segments - RF Connector and Cable Assembly, Medical Cabling and Interconnector,
and RF Wireless based upon this evaluation.





The RF
Connector and Cable Assembly segment is comprised of three divisions, the
Medical Cabling and Interconnector is comprised of one division while the RF
Wireless segment is comprised of two. The three divisions that meet the
quantitative thresholds for segment reporting are Connector / Cable Assembly,
Bioconnect and RF Neulink. Each of the other divisions aggregated into these
segments have similar products that are marketed to their respective customer
base; production and product development processes are similar in nature. The
specific customers are different for each division; however, there is some
overlapping of product sales to them. The methods used to distribute products
are similar within each division aggregated.





8


Management
identifies the Company’s segments based on strategic business units that are, in
turn, based along market lines. These strategic business units offer products
and services to different markets in accordance with their customer base and
product usage. For segment reporting purposes, the Company aggregates the
Connector and Cable Assembly, Aviel Electronics, and Oddcables.com (formerly
known as Worswick) divisions into the RF Connector and Cable Assembly segment
while RF Neulink and RadioMobile are part of the RF Wireless segment. The
Bioconnect division makes up the Company’s Medical Cabling and Interconnector
segment.





As
reviewed by the Company’s chief operating decision maker, the Company evaluates
the performance of each segment based on income or loss before income taxes. The
Company charges depreciation and amortization directly to each division within
the segment. All stock based compensation is attributed to the RF Connector and
Cable Assembly segment. Inventory, fixed assets, goodwill and intangible assets
are the only assets identified by segment. Except as discussed above, the
accounting  policies for segment reporting are the same as for the
Company as a whole.





Substantially
all of the Company’s operations are conducted in the United States; however, the
Company derives a portion of its revenue from export sales. The Company
attributes sales to geographic areas based on the location of the customers. The
following table presents the sales of the Company by geographic area for the
three and nine month periods ended July 31, 2010 and 2009:




Three
      Months Ended July 31,
            
            Nine
      Months Ended July 31,2010
            
            2009
            
            2010
            
            2009United
      States
            
            $
            3,654,004
            
            
            $
            2,890,715
            
            
            $
            9,767,347
            
            
            $
            8,622,873Foreign
      countries:Israel
            
            
            289,061
            
            
            
            179,455
            
            
            
            637,076
            
            
            
            865,173All
      other
            
            
            286,967
            
            
            
            224,120
            
            
            
            916,639
            
            
            
            913,543$
            4,230,032
            
            
            $
            3,294,290
            
            
            $
            11,321,062
            
            
            $
            10,401,589




Net
sales, income (loss) before provision for income taxes and other related segment
information for the three months ended July 31, 2010 and 2009 are as
follows:







2010
            
            RF
      Connectors and Cable Assembly
            
            
            Medical
      Cabling and Interconnector
            
            
            RF
      Wireless
            
            
            Corporate
            
            
            TotalNet
      sales
            
            $
            3,546,233
            
            
            $
            563,419
            
            
            $
            120,380
            
            
            
            
            
            $
            4,230,032Income
      (loss) before provision for income taxes
            
            
            682,620
            
            
            
            153,104
            
            
            
            (392,190)
            
            
            $
            28,062
            
            
            
            471,596Depreciation,
      amortization and impairment
            
            
            179,687
            
            
            
            6,881
            
            
            
            5,505
            
            
            
            
            
            
            
            192,073207
      2009Net
      sales
            
            $
            2,765,914
            
            
            $
            347,473
            
            
            $
            180,903
            
            
            
            
            
            
            $
            3,294,290Income
      (loss) before provision for income taxes
            
            
            313,462
            
            
            
            46,528
            
            
            
            (331,586)
            
            
            $
            22,763
            
            
            
            51,167Depreciation,
      amortization and impairment
            
            
            114,571
            
            
            
            3,388
            
            
            
            153,215
            
            
            
            
            
            
            
            271,174




Net
sales, income (loss) before provision for income taxes and other related segment
information for the nine months ended July 31, 2010 and 2009 are as
follows:




9





2010
            
            RF
      Connectors and Cable Assembly
            
            
            Medical
      Cabling and Interconnector
            
            
            RF
      Wireless
            
            
            Corporate
            
            
            TotalNet
      sales
            
            $
            9,719,162
            
            
            $
            1,346,225
            
            
            $
            255,675
            
            
            
            
            
            $
            11,321,062Income
      (loss) before provision for income taxes
            
            
            1,699,925
            
            
            
            296,544
            
            
            
            (755,689)
            
            
            
            67,856
            
            
            
            1,308,636Depreciation,
      amortization and impairment
            
            
            259,523
            
            
            
            16,566
            
            
            
            19,643
            
            
            
            
            
            
            
            295,732207
      2009Net
      sales
            
            $
            8,831,013
            
            
            $
            924,044
            
            
            $
            646,532
            
            
            
            
            
            
            $
            10,401,589Income
      (loss) before provision for income taxes
            
            
            1,057,046
            
            
            
            12,772
            
            
            
            (619,579)
            
            
            $
            148,876
            
            
            
            599,115Depreciation,
      amortization and impairment
            
            
            221,320
            
            
            
            10,683
            
            
            
            171,931
            
            
            
            
            
            
            
            403,934





Note 7 - Income tax
provision




The
income tax provision reflected in the accompanying unaudited condensed
statements of income for the three and nine months ended July 31, 2010 is
different than the expected tax provision computed based on the pre-tax income
and the applicable statutory Federal income tax rate of 34% and the state
income tax rate, net of Federal tax effects, of 6%. Interim tax provisions
are determined using an estimate of the annual effective tax rate. As of July
31, 2010, the Company estimated that its effective annual tax rate for the year
ending October 31, 2010 will be approximately 40% which is above the expected
statutory rate primarily due to state income taxes, net of Federal
benefit.





The
provision for income taxes during the nine month period ended July 31, 2010 was
$523,299 (or an effective tax rate of approximately 40%), compared to $211,485
in the nine month period ended July 31, 2009 (or an effective tax rate of
approximately 35%). The increase in the tax rate in the nine month period ended
July 31, 2010 is primarily due to the Company’s recognition of a one-time tax
benefit of approximately $39,000 in the prior comparable period that related to
a domestic production activity adjustment. Without this adjustment, the
effective tax rate for the nine month period ended July 31, 2009 would have been
higher and comparable to the 2010 rate.





Note 8 - Amortizable intangible assets





Amortizable
intangible assets are comprised of the following:







July
      31,
              2010
            
            
            October
      31,
              2009Intangible
      assetsSoftware
            
            $
            47,522
            
            
            $
            47,522Accumulated
      amortization
            
            
            (43,561
            )
            
            
            (31,681
            )3,961
            
            
            
            15,841Customer
      list
            
            
            33,945
            
            
            
            33,945Accumulated
      amortization
            
            
            (31,117
            )
            
            
            (22,630
            )2,828
            
            
            
            11,315Totals
            
            $
            6,789
            
            
            $
            27,156





Note
9 - Goodwill impairment




We review
our goodwill for impairment annually in the fourth quarter at the reporting unit
level. We also analyze whether any indicators of impairment exist each quarter.
A significant amount of judgment is involved in determining if an indicator of
impairment has occurred. Such indicators may include a sustained, significant
decline in our share price and market capitalization, a decline in our expected
future cash flows, a significant adverse change in legal factors or in the
business climate, unanticipated competition, the testing for recoverability of
our long-lived assets, and/or slower growth rates, among others.




We
estimate the fair value of our reporting units using discounted expected future
cash flows. If the fair value of the reporting unit exceeds its net book value,
goodwill is not impaired, and no further testing is necessary. If the net book
value of our reporting units exceeds their fair value, we perform a second test
to measure the amount of impairment loss, if any.




10


We
performed a valuation analysis, utilizing an income approach in our goodwill
assessment process. The following describes the valuation methodologies used to
derive the fair value of our reporting units.




•
              Income Approach: To
      determine each reporting unit’s estimated fair value, we discount the
      expected cash flows of our reporting units. We estimate our future cash
      flows after considering current economic conditions and trends; estimated
      future operating results, growth rates, anticipated future economic and
      regulatory conditions; and the availability of necessary technology. The
      discount rate used represents the estimated weighted average cost of
      capital, which reflects the overall level of inherent risk involved in our
      operations and the rate of return an outside investor would expect to
      earn. To estimate cash flows beyond the final year of our model, we use a
      terminal value approach. Under this approach, we use estimated operating
      income before depreciation and amortization in the final year of our
      model, adjust it to estimate a normalized cash flow, apply a perpetuity
      growth assumption and discount by a perpetuity discount factor to
      determine the terminal value. We incorporate the present value of the
      resulting terminal value into our estimate of fair
      value.




Due to
the ongoing negative effects of the global recession and related triggers, (due
to Aviel division revenues not meeting forecasts), during the third quarter of
2010, the Company performed an impairment analysis of the Aviel goodwill
balance. The sales generated by this division were significantly lower than
expected and the forecasted improvements from prior periods did not
occur.  As such, triggers were evident at this division in the third
quarter of 2010 and we performed a goodwill impairment analysis. Prior to
management’s analysis, the Company had a total of $137,328 of goodwill allocated
to the acquisition of the Aviel division. As a result of its analysis,
management recorded a goodwill impairment charge of $137,328 for the third
quarter of fiscal 2010, which is included in selling and general expense in the
statement of income.




Note
10 – Related party transactions:





The note
receivable from stockholder of $66,980 at July 31, 2010 and October 31, 2009 is
due from the President of the Company, bears interest at 6%, payable annually,
and has no specific due date. The note is collateralized by a lien on certain
personal property.  Interest income relating to the note receivable
was approximately $3,000 for each of the nine month periods ended July 31, 2010
and 2009 and was approximately $1,000 for each of the three month periods ended
July 31, 2010 and 2009.





Note
11- Accrued expenses and other long-term liabilities




Accrued
expenses consist of the following:




July
      31, 2010
            
            
            October
      31, 2009Wages
      payable
            
            $
            461,465
            
            
            $
            426,596Accrued
      receipts
            
            
            333,647
            
            
            
            183,212Other
      current liabilities
            
            
            37,867
            
            
            
            63,272Totals
            
            $
            832,979
            
            
            $
            673,080





Accrued
receipts represent purchased inventory for which invoices have not been
received.




Other
long-term liabilities consist of the following:




July
      31, 2010
            
            
            October
      31, 2009Tax
      related liabilities
            
            $
            216,170
            
            
            $
            241,344Deferred
      lease liability
            
            
            86,394
            
            
            
            79,686Totals
            
            $
            302,564
            
            
            $
            321,030





Deferred
lease liabilities represent the excess of recognized rent expense over scheduled
lease payments.




Note 12 – Subsequent Event




On
September 3, 2010, the Board of Directors of the Company declared a quarterly
cash dividend of $0.03 per share.  The dividend date of record is
September 30, 2010 and the payment date to stockholders will be October 15,
2010.  Based on the Company’s current financial condition and its
current operations, the foregoing dividend payment is not expected to have a
material impact on the Company’s liquidity or capital resources.




11




Item 2:   Management’s Discussion and Analysis
of Financial Condition and Results of Operations




This
report contains forward-looking statements. These statements relate to future
events or the future financial performance of RF Industries, Ltd. (herein
referred to as “we” or the “Company”).  In some cases, you can
identify forward-looking statements by terminology such as “may,” “will,”
“should,” “except,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”
“potential” or “continue,” the negative of such terms or other comparable
terminology. These statements are only predictions. Actual events or results may
differ materially.




Although
the Company believes that the expectations reflected in the forward-looking
statements are reasonable, the Company cannot guarantee future results, levels
of activity, performance or achievements. Moreover, neither the Company, nor any
other person, assumes responsibility for the accuracy and completeness of the
forward-looking statements. The Company is under no obligation to update any of
the forward-looking statements after the filing of this Quarterly Report on Form
10-Q to conform such statements to actual results or to changes in its
expectations.




The
following discussion should be read in conjunction with the Company’s financial
statements and the related notes and other financial information appearing
elsewhere in this Form 10-Q. Readers are also urged to carefully review and
consider the various disclosures made by the Company which attempt to advise
interested parties of the factors which affect the Company’s business, including
without limitation the disclosures made under the caption “Management’s
Discussion and Analysis and Plan of Operation,” under the caption “Risk
Factors,” and the audited financial statements and related notes included in the
Company’s Annual Report filed on Form 10-K for the year ended October 31, 2009
and other reports and filings made with the Securities and Exchange
Commission.




Critical
Accounting Policies




The
condensed financial statements of the Company are prepared in conformity with
accounting principles generally accepted in the United States of America
(“GAAP”). One of the accounting policies that involves significant judgments and
estimates concerns our inventory valuation. Inventories are valued at the
weighted average cost value. Certain items in the inventory may be considered
obsolete or excess and, as such, we establish an allowance to reduce the
carrying value of these items to their net realizable value. Based on estimates,
assumptions and judgments made from the information available at the time, we
determine the amounts of these allowances. Because inventories have, during the
past few years, represented approximately one-third of our total assets, any
reduction in the value of our inventories would require us to take write-offs
that would affect our net worth and future earnings.  Consistent with
the foregoing policy, during the fiscal quarter ended July 31, 2010, we wrote
off $247,539 of inventory held in our Neulink wireless division.





Another
accounting policy that involves significant judgments and estimates is our
accounts receivable allowance valuation. The Company routinely assesses the
financial strength of its customers and maintains an allowance for doubtful
accounts that management believes will adequately provide for credit
losses.





Another
critical accounting policy that involves significant judgments and estimates is
management’s assessment of goodwill for impairments. We review our goodwill for
impairment annually in the fourth quarter at the reporting unit level. We also
analyze each quarter whether any indicators of impairment
exist.  Consistent with this policy, we recorded a goodwill impairment
charge of $137,328 during the third quarter of fiscal 2010 to reflect the
decrease in the goodwill attributable to our Aviel cable division.





The
Company uses the Black-Scholes model to value the stock option grants which
involves significant judgments and estimates.




Executive
Overview




The
Company markets connectors and cables to numerous industries for use in
thousands of products, primarily for the wireless marketplace. In addition, to a
limited extent, the Company also markets wireless products that incorporate
connectors and cables. Since sales of RF connectors and cable assemblies
represented 84% and 86% of the Company’s net sales during the three and nine
month periods ended July 31, 2010, respectively, the Company’s results of
operations and liquidity are principally dependent upon the results of its RF
connector and cable operations.




Liquidity
and Capital Resources




Management
believes that existing current assets and the amount of cash it anticipates it
will generate from current operations will be sufficient to fund the anticipated
liquidity and capital resource needs of the Company for at least twelve months.
The Company does not, however, currently have any commercial banking
arrangements providing for loans, credit facilities or similar matters should
the Company need to obtain additional capital. Management believes that its
existing assets and the cash expected to be generated from operations will be
sufficient during the current fiscal year are based on the
following:




12
 
  ·
                As
      of July 31, 2010, the amount of cash and cash equivalents was equal to
      $1,581,000 in the aggregate and the Company had $8,075,000 of investments
      in certificates of deposit.
  ·
                  As
      of July 31, 2010, the Company had $16,339,000 in current assets, and
      $1,186,000 in current
liabilities.
  ·
                    As
      of July 31, 2010, the Company had no outstanding indebtedness (other than
      accounts payable, accrued expenses and income taxes
      payable).


In the
past, the Company has financed some of its equipment and furnishings
requirements through capital leases. No additional capital equipment purchases
have been currently identified that would require significant additional leasing
or capital expenditures during the next twelve months. Management also believes
that based on the Company’s current financial condition, the absence of
outstanding bank debt and recent operating results, the Company would be able to
obtain bank loans to finance its expansion, if necessary, although there can be
no assurance any bank loan would be obtainable or, if obtained, would be on
favorable terms or conditions.




The
Company recognized net income of $785,337 for the nine months ended July 31,
2010. The Company generated $2,078,739 of net cash from its operating
activities.  Our cash balances increased as a result of increased
collections of accounts receivable of $279,269 and a decrease in inventory of
$255,475.  In addition, net income was reduced as a result of a number
of non-cash charges, including depreciation and amortization ($158,404),
goodwill impairment ($137,328), inventory write-off ($247,539), and stock-based
compensation charges ($157,522).  The increase in cash was partially
offset by the use of $147,584 for prepaid expenses and deposits.





The
Company used $1,724,155 in investment activities during the nine months ended
July 31, 2010.  However, only $126,375 of this amount represented cash
outlays for capital expenditures.  Most of the investment activities
reflected allocation of the Company’s cash funds to various accounts as the
Company sought to preserve its cash resources and maximize the returns on its
cash.  As a result, the Company liquidated $1,813,327 of short-term
investments, which consisted entirely of certificates of deposit, during the
nine months ended July 31, 2010 and invested those funds, plus some of its other
cash resources, into $3,411,107 of new certificates of deposit.  The
Company’s overall cash position increased by $354,584 during the nine months
ended July 31, 2010.





Trade
accounts receivable (net of allowances for doubtful accounts) at July 31, 2010
decreased approximately 12%, or $281,290 to $1,981,975 compared to $2,263,265 at
October 31, 2009. The decrease in accounts receivable is due to improved
receivables management, tighter credit policies, and increased collection
efforts by the Company.




Inventories
at July 31, 2010 decreased by 10%, or $503,014 to $4,481,907 compared to
$4,984,921 at October 31, 2009.  In order to obtain better
pricing on our inventories, we make larger, less frequent inventory
purchases.  Accordingly, inventory fluctuations reflect, in part, the
timing of our inventory purchases.  In addition, we also adjust our
inventory balances and our inventory purchases to reflect changes in actual and
anticipated sales.  The decrease in inventories is also attributable
to a write-off of $247,539 of obsolete inventory at the Neulink division, which
is a significant portion of the decrease in inventories compared to the prior
comparable nine month period.




Other
current assets, including prepaid expenses and deposits, increased $147,584 to
$487,946 as of July 31, 2010, from $340,362 on October 31, 2009 mainly as a
result of the renewal of certain insurance contracts as well as the addition of
prepaid inventory purchases.




Accounts
payable at July 31, 2010 increased $127,851 to $352,825 from $224,974 on October
31, 2009. The change in accounts payable is related to the timing of payments
for the purchase of inventories during the current period.




As of July 31, 2010, we had a total of
$1,580,511 of cash and cash equivalents compared to a total of $1,225,927 of
cash and cash equivalents as of October 31, 2009. However, the amount of
investments in certificates of deposit increased by $1,597,781 to $8,074,762
from $6,476,981 on October 31, 2009 due to an increase in investments of
certificates of deposit. Collectively, the amount of cash and certificates of
deposit that we held on July 31, 2010 increased by $1,952,365 from the amount
held on October 31, 2009 due to the cash flows from operations and cash flows
from investing activities during the fiscal quarter ended July 31,
2010.The Company had working capital of
$15,152,873 and a current ratio of approximately 14:1.





13


Results
Of Operations




Three
Months Ended July 31, 2010 vs. Three Months Ended July 31, 2009




Net sales
in the current fiscal quarter ended July 31, 2010, increased by 28%, or
$935,742, to $4,230,032 from $3,294,290 in the comparable fiscal quarter of
prior year, due to increased sales at both the Connector and Cable and in the
Medical Cabling and Interconnector segments. Sales of connectors and cable
assemblies increased from the prior year’s three month period due to improved
economic conditions and an overall demand for our cable
products.  Sales of our Medical Cabling and Interconnector segment
also increased by $215,946, or by over 62% compared to last
year.  Sales in the Medical Cabling and Interconnector segment
increased due to the addition of new clients and the introduction of new
products.  The increases in sales in both the Connector and Cable and
the Medical Cabling segments were partially offset by a $60,523 decrease in
sales in our RF Wireless segment.  Our RF Neulink division of the RF
Wireless segment has been developing a new wireless radio modem that it
anticipates will be released later this year, which product is expected to
increase sales of the RF Wireless division. Our RadioMobile division further
negatively impacted the results of the RF Wireless segment due to lack of sales
of its systems to its target market (mostly municipalities and government
agencies) due in part to the effects of the economic downturn on the budgets of
governmental entities.





Foreign
sales during the fiscal quarter ended July 31, 2010 increased by $172,453 to
$576,028 compared to foreign sales of $403,575 during the fiscal quarter ended
July 31, 2009.  Foreign sales represented approximately 14% and 12% of
the Company’s net sales during the fiscal quarters ended July 31, 2010 and 2009,
respectively. The increase in foreign sales is primarily due to an increase in
cable assembly sales to one major international customer in Israel.




The
Company’s gross profit as a percentage of sales decreased 1% to 48% during the
current fiscal quarter compared to 49% in the comparable fiscal quarter of prior
year. This decrease was due to the Neulink division inventory write-off of
$247,539. The Company operates in three segments.  Although the gross
profit margins of the RF Connector and Cable Assembly and the Medical Cabling
and Interconnector segments increased by 3% and 11% respectively, the gross
margin of the RF Wireless segment decreased significantly due to the inventory
write-off of $247,539.  This negative gross margin was due to a
decrease in sales of wireless radio modems, which caused net sales to decrease
by $60,523 to $120,380 from $180,903 in the prior comparable period coupled with
the effects of the Neulink division inventory write-off of
$247,539.  The Company was unable to reduce its fixed cost of goods in
the RF Wireless segment to match the decrease in sales in that
segment.  The gross profit margin of the Medical Cabling and
Interconnector segment increased by 11% to 42% compared with 31% in the prior
comparable quarter.  This was due to an increase in sales of $215,947
from the prior comparable quarter offset by an increase of $85,904 in cost of
goods sold from the prior comparable quarter. During the third quarter of fiscal
2010, the Company’s fixed component cost of labor was lower than in the prior
comparable quarter of fiscal 2009, which caused an increase in gross margins in
its Connector and Cable Assembly and the Medical Cabling and Interconnector
segments.  Sales at the Connector and Cable assembly segment accounted
for approximately 84% of the Company’s total sales and 70% of the total cost of
goods sold in the current three month period, compared to 84% of the Company’s
total sales and 78% of the total cost of goods sold in the comparable quarter of
prior year.




Engineering
expenses decreased 14%, or $36,707, to $218,975 from $255,682 in the comparable
quarter of the prior year due to certain projects nearing completion at the RF
Wireless division and related decreases in contract labor expense.




Selling
and general expenses increased by $14,548 to $1,354,395 from $1,339,847 in the
comparable quarter of the prior fiscal year.  However, selling and
general expenses for the third quarter of 2010 would have been significantly
less if not for a goodwill impairment charge of $137,328 recorded due to the
goodwill balance of the Aviel division being impaired.





Other
income for the third quarter of 2010 increased slightly by $5,298 to $28,062
from $22,764 in the comparable quarter of the prior fiscal year due to a larger
overall investment in certificates of deposit.




As a
result of the significant increase in revenues, increase in gross profits, and
decrease in engineering and slight increase in selling and general expenses,
income before the provision for income taxes during the fiscal quarter ended
July 31, 2010 increased to $471,596 compared to income before provision for
income taxes for the fiscal quarter ended July 31, 2009 of $51,167.





The provision for income taxes during
the third fiscal quarter of 2010 was $159,326 (or a combined estimated Federal
and state income tax rate of approximately 34%), compared to $40,590 in the
fiscal quarter ended July 31, 2009 (or a combined estimated Federal and state
income tax rate of approximately 79%). The 45%  decrease in the
combined statutory Federal and state tax rate in the third fiscal quarter of
2010 compared with the rate of 79% of the prior comparable quarter of 2009 is
the result of the difference between income before taxes for financial reporting
purposes and income for tax reporting purposes. The 79% tax rate for the third
quarter of prior year was as a result of recording our expected annual tax rate
of approximately 38% (before the effects of a $39,000 expense reduction related
to a domestic product activity). The rate was unusually high as pretax income
was low for the quarter. Without this adjustment, the effective
tax rate for the three month period ended July 31, 2009 would have been
comparable to the 2010 rate.




Net sales
increased in the third fiscal 2010 quarter by $935,742 compared to prior year’s
fiscal period, and gross profit increased by $392,972. The Company’s ability to
decrease its engineering expenses by $36,707 and keep its selling and general
expenses approximately consistent with the prior comparable quarter resulted in
an increase in the Company’s operating income for the third fiscal quarter of
2010 (operating income increased by $415,131 to $443,534 compared to $28,403 in
the prior comparable quarter). The increase in operating income was offset by
higher income taxes. Accordingly, net income for the fiscal quarter ended July
31, 2010 was $312,270, compared to $10,577 in the same period of prior
year.





14


Nine
Months Ended July 31, 2010 vs. Nine Months Ended July 31, 2009




Net sales
in the nine months ended July 31, 2010, increased by 9%, or $919,473 to
$11,321,062 from $10,401,589 in the comparable fiscal quarter of prior year, due
to increased sales of both the Company’s RF connectors and cables assemblies and
of medical cables and connectors.  Sales in both the Connector and
Cable and Medical Cabling and Interconnector segments increased during the 2010
nine month period compared to the 2009 nine month period as the economy improved
and demand of RF products increased.  The increases in those two
segments were offset by a significant decrease in sales in 2010 in the third
segment, the RF Wireless division.  Sales at the RF Wireless segment
decreased from the prior year’s period due to a decrease in the sale of RF
Neulink’s radio modems and minimal sales generated by the RadioMobile division
of that segment.   In the 2009 period, RF Neulink completed a
large sale of its radio transponders to the U.S. military.  No such
sale was completed this year.  However, the U.S. military did not
purchase all of the radio transponders that RF Neulink was expecting, as a
result of which the Company has to record an inventory write-off of $247,539 in
the period ended July 31, 2010 primarily for the unsold
transponders.  In order to attract increased interest in its radio
modems, the RF Wireless division has been developing a new radio modem that it
expects to release later this year.




The
increase in domestic sales was partially offset by a decrease in foreign sales
during the first six months of the fiscal year ending October 31,
2010.  Foreign sales during the nine month period ended July 31, 2010
decreased by $225,001 to $1,553,715, despite an increase in sales during the
most recent quarter ended July 31, 2010.  Foreign sales represented
approximately 14% and 17% of the Company’s net sales during the nine month
period ended July 31, 2010 and 2009, respectively. The fluctuations in foreign
sales is primarily due to fluctuating sales of cable assemblies to one major
international customer in Israel.





The
Company’s gross profit as a percentage of sales increased 1% to 49% during the
nine month period ended July 31, 2010 compared to 48% in the comparable nine
month period of prior year.  The Company operates in three
segments.  Although the gross profit margins of the RF Connector and
Cable Assembly and the Medical Cabling and Interconnector segments increased by
3% and 17%, respectively, from the prior comparable nine month period ended July
31, 2009, the gross margin of the RF Wireless segment decreased significantly
due to the inventory write-off of $247,539. Additionally, sales of wireless
radio modems decreased by 60% to $255,675 from $646,532 in the prior comparable
nine month period ended.  The Company was unable to reduce its fixed
cost of goods in the RF Wireless segment to match the decrease in sales in that
segment.  The gross profit margin of the Medical Cabling
and Interconnector segment increased by 17% to 38% compared with 21% in the
prior comparable nine month period ended July 31, 2009.  This was due
to an increase in sales of $422,181 from the prior comparable quarter offset by
an increase of $103,523 in cost of goods sold from the prior comparable quarter.
During the nine month period ended July 31, 2010, the Company’s fixed component
cost of labor was lower than in the prior comparable period of fiscal 2009,
which caused an increase in gross margins in its segments. Sales of the RF
Connector and Cable assembly segment accounted for approximately 86% of the
Company’s total sales and 77% of the total cost of goods sold in the current
nine month period, compared to 85% of the Company’s total sales and 79% of the
total cost of goods sold in the comparable nine month period of prior
year.





Engineering
expenses decreased 23% or $181,335 to $624,586 from $805,921 in the comparable
nine month period of the prior year due to certain projects nearing completion
at the RF Wireless division and related decreases in contract labor
expense.




Selling
and general expenses remained substantially unchanged, increasing by $1,959 to
$3,738,085 from $3,736,126 in the comparable nine month period of the prior
year.   We have actively monitored our selling and general
expenses, which is reflected in the insignificant change in these expenses
despite the increase in sales.




Other
income for the nine months ended July 31, 2010 decreased $81,021 to $67,856 from
$148,877 in the prior comparable nine month period due to lower investment
interest income reflecting a decrease in interest rates on the Company’s
investments in certificates of deposit.




As a
result of the increase in revenues, the increase in gross profit as a percentage
of sales and the decrease in engineering expenses, income before provision for
income taxes during the nine months ended July 31, 2010 increased by 118% or
$709,481 to $1,308,636 from $599,155 in the comparable nine month period of the
prior year.





The
provision for income taxes during the nine months ended July 31, 2010 was
$523,299 (or a combined estimated Federal and state income tax rate of
approximately 40%), compared to $211,485 in the nine months ended July 31, 2009
(or a combined estimated Federal and state income tax rate of approximately
35%). The increase in the tax rate in the nine month period ended July 31, 2010
compared to prior comparable period is primarily due to the Company’s
recognition of a one-time tax benefit of approximately $39,000 in the prior
comparable period that related to a domestic production activity adjustment.
Without this adjustment, the effective tax rate for the nine month period ended
July 31, 2009 would have been comparable to the 2010 rate.





The
combination of an overall increase in sales compared to prior period and an
increase in gross margins resulted in a $611,166 increase in gross profits.
Because selling and general expenses remained unchanged, the Company’s operating
income for the nine months ended July 31, 2010 increased by $790,542 to
$1,240,780 compared to $450,238 in the prior comparable nine month
period.  The increase in operating income was partially offset by
higher income taxes. Accordingly, net income for the nine month period ended
July 31, 2010 was $785,337 for an increase of $397,707 compared to $387,630 in
the same period of prior year.





15


Item
3.  Quantitative and Qualitative Disclosures about Market
Risk





Not applicable




Item 4.   Controls and
Procedures




The
Company maintains disclosure controls and procedures that are designed to ensure
that information required to be disclosed in the Company’s Exchange Act reports
is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission’s rules and forms and that
such information is accumulated and communicated to this Company’s management,
including the Company’s Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow for timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.




As
required by Securities and Exchange Commission Rule 13a-15(b), the Company
carried out an evaluation, under the supervision and with the participation of
the Company’s management, including the Company’s Chief Executive Officer and
the Company’s Chief Financial Officer, of the effectiveness of the design and
operation of the Company’s disclosure controls and procedures as of the end of
the fiscal quarter covered by this report. Based on the foregoing, the Company’s
Chief Executive Officer and Chief Financial Officer concluded that the Company’s
disclosure controls and procedures were effective as of July 31,
2010.





There has
been no change in the Company’s internal control over financial reporting during
the quarter ended July 31, 2010 that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.




Part II. OTHER
INFORMATION




Item
1.  Legal Proceedings




Nothing
to report.




Item
1A.  Risk Factors




The
discussion of our business and operations should be read together with the risk
factors contained in Item 1A of our Annual Report on Form 10-K for the
fiscal year ended October 31, 2009 filed with the SEC, which describe
various risks and uncertainties to which we are or may become subject. These
risks and uncertainties have the potential to affect our business, financial
condition, results of operations, cash flows, strategies or prospects in a
material and adverse manner.





Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.





Unregistered Sales of Equity
Securities. In January 2010, the Company issued 2,615 shares of its
common stock to RadioMobile, Inc. as additional consideration under an earn-out
provision for the RadioMobile assets that the Company acquired in August 2007.
The foregoing securities were issued without the use of a placement agent or
underwriter and were exempt from registration under the Securities Act of 1933
pursuant to Section 4(2) thereof.





Item
3.  Defaults upon Senior Securities




Nothing
to report.




Item
4.  Reserved




Item
5.  Other Information




Nothing
to report.




16




Item
6. Exhibits






ExhibitNumber31.1:
            Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.31.2:
            Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.32.1:
            Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.32.2:
            Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.99.1
            Press
      Release dated September 13, 2010 announcing the financial results for the
      fiscal quarter ended July 31, 2010




17




SIGNATURES




In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




RF
      INDUSTRIES, LTD.Dated:
      September 13, 2010
            By:
            /s/
      Howard F. HillHoward
      F. Hill, PresidentChief
      Executive Officer




Dated:
      September 13, 2010
            By:
            /s/
      James DossJames
      DossChief
      Financial Officer




18