Table of Contents

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|                                   |           | 
|---------------------------------- | --------- | 
|UNITED STATES                     
|SECURITIES AND EXCHANGE COMMISSION
|Washington,
 D.C. 20549           
|                                   |           | 
|                                   |           | 
|                                   |           | 
|                                   | FORM 10-Q | 
|                                   |           | 
|                                   |           | 

|  |                                                                                          
|- | -----------------------------------------------------------------------------------------
|x | QUARTERLY REPORT
 PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|  |                                                                                          
|  | for the quarterly period ended April 30, 2011.                                           
|  |                                                                                          
|  | OR                                                                                       
|  |                                                                                          
|o | TRANSITION REPORT
 PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from ___________________ to ____________________.

|                                                       |  | 
|------------------------------------------------------ |  | 
|Commission File Number 001-13543                      
|                                                      
|                                                       |  | 
|                                                      
|ANGEION CORPORATION                                   
|(Exact name of registrant as specified in its charter)

|                                |                    
|------------------------------- | -------------------
|Minnesota                       | 41-1579150         
|(State or other jurisdiction of | (IRS Employer      
|incorporation or organization)  | Identification No.)

350 Oak Grove Parkway, Saint Paul, Minnesota
55127-8599(Address of principal executive offices)

|                                                                   |  | 
|------------------------------------------------------------------ |  | 
|Registrants telephone number, including area code: (651) 484-4874
|                                                                   |  | 

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 xNo o

Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer or a smaller reporting company. See definition
of accelerated filer and large accelerated filer in Rule 12b-2 of the
Exchange Act:
          Large Accelerated
Filer oAccelerated Filer oNon-Accelerated Filer oSmaller Reporting Company x

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 (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
          Yes oNo o

Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).
          Yes oNo x

As of June 6,
2011, the Company had outstanding 3,800,406 shares of Common Stock, $0.10 par
value.

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TABLE OF CONTENTS

|                               |                                                                                        |    |   
|------------------------------ | -------------------------------------------------------------------------------------- | -- | --
|PART I  FINANCIAL INFORMATION |                                                                                        |   
|                               |                                                                                        |    |   
|Item 1.                        | Financial
 Statements                                                                  |    | 3 
|Item 2.                        | Managements
 Discussion and Analysis of Financial Condition and Results of Operations |    | 13
|Item 3.                        | Quantitative
 and Qualitative Disclosures about Market Risk                            |    | 17
|Item 4.                        | Controls and
 Procedures                                                               |    | 18
|                               |                                                                                        |   
|PART II -
 OTHER INFORMATION   |                                                                                        |   
|                               |                                                                                        |   
|Item 1.                        | Legal
 Proceedings                                                                     |    | 19
|Item 1A.                       | Risk Factors                                                                           |    | 19
|Item 2.                        | Unregistered
 Sales of Equity Securities and Use of Proceeds                           |    | 19
|Item 3.                        | Defaults Upon
 Senior Securities                                                       |    | 19
|Item 4.                        | Reserved                                                                               |    | 19
|Item 5.                        | Other
 Information                                                                     |    | 19
|Item 6.                        | Exhibits                                                                               |    | 20
|                               |                                                                                        |    |   
|SIGNATURES                     |                                                                                        | 21

2

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Table of Contents

PART I  FINANCIAL INFORMATION

Item 1. Financial Statements.

ANGEION CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
April 30, 2011 and October 31, 2010(In thousands except share and per share data)

|                                                                                                                                                                                   |  |                 |        |                   |   |        |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | ------ | ----------------- | - | ------ | -
|                                                                                                                                                                                   |  | April 30,
 2011 |        | October 31,
 2010 |  
|                                                                                                                                                                                   |  | (Unaudited)     |        |                   |   |       
|ASSETS                                                                                                                                                                             |  |                 |        |                   |   |        |  
|Current Assets:                                                                                                                                                                    |  |                 |        |                   |   |        |  
|Cash and cash equivalents                                                                                                                                                          |  | $               | 7,792  |                   | $ | 6,943  |  
|Short-term investments                                                                                                                                                             |  |                 | 1,721  |                   |   | 2,721  |  
|Accounts receivable, net of allowance for doubtful accounts of $66
 and $100 respectively                                                                                          |  |                 | 4,907  |                   |   | 5,221  |  
|Inventories, net of obsolescence reserve of $529 and $599,
 respectively                                                                                                           |  |                 | 4,047  |                   |   | 3,697  |  
|Prepaid expenses and other current assets                                                                                                                                          |  |                 | 216    |                   |   | 270    |  
|Total Current Assets                                                                                                                                                               |  |                 | 18,683 |                   |   | 18,852 |  
|                                                                                                                                                                                   |  |                 |        |                   |   |        |  
|Noncurrent investments                                                                                                                                                             |  |                 | 484    |                   |   | 722    |  
|Property and equipment, net of accumulated depreciation of $3,638 and
 $3,649, respectively                                                                                        |  |                 | 548    |                   |   | 528    |  
|Intangible assets, net                                                                                                                                                             |  |                 | 1,227  |                   |   | 1,279  |  
|Total Assets                                                                                                                                                                       |  | $               | 20,942 |                   | $ | 21,381 |  
|                                                                                                                                                                                   |  |                 |        |                   |   |        |  
|LIABILITIES
 AND SHAREHOLDERS EQUITY                                                                                                                                              |  |                 |        |                   |   |        |  
|Current Liabilities:                                                                                                                                                               |  |                 |        |                   |   |        |  
|Accounts payable                                                                                                                                                                   |  | $               | 2,152  |                   | $ | 1,951  |  
|Employee compensation                                                                                                                                                              |  |                 | 1,784  |                   |   | 2,115  |  
|Deferred income                                                                                                                                                                    |  |                 | 1,670  |                   |   | 1,522  |  
|Warranty reserve                                                                                                                                                                   |  |                 | 126    |                   |   | 175    |  
|Other current liabilities and accrued expenses                                                                                                                                     |  |                 | 367    |                   |   | 408    |  
|Total Current Liabilities                                                                                                                                                          |  |                 | 6,099  |                   |   | 6,171  |  
|                                                                                                                                                                                   |  |                 |        |                   |   |        |  
|Long-term Liabilities:                                                                                                                                                             |  |                 |        |                   |   |        |  
|Long-term deferred income and other                                                                                                                                                |  |                 | 808    |                   |   | 873    |  
|Total Liabilities                                                                                                                                                                  |  |                 | 6,907  |                   |   | 7,044  |  
|Commitments and Contingencies                                                                                                                                                      |  |                 |       |                   |   |       |  
|Shareholders Equity:                                                                                                                                                              |  |                 |        |                   |   |        |  
|Common Stock, $0.10 par value, authorized 25,000,000 shares,
 3,899,621 and 3,862,113 shares issued and 3,780,160 and 3,747,454 shares
 outstanding at 2011 and 2010, respectively |  |                 | 378    |                   |   | 375    |  
|Additional paid-in capital                                                                                                                                                         |  |                 | 20,642 |                   |   | 20,486 |  
|Accumulated deficit                                                                                                                                                                |  |                 | (6,993 | )                 |   | (6,531 | )
|Accumulated other comprehensive income                                                                                                                                             |  |                 | 8      |                   |   | 7      |  
|Total Shareholders Equity                                                                                                                                                         |  |                 | 14,035 |                   |   | 14,337 |  
|Total Liabilities and Shareholders Equity                                                                                                                                         |  | $               | 20,942 |                   | $ | 21,381 |  

See accompanying notes to
consolidated financial statements.

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Table of Contents

ANGEION CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations(Unaudited, in thousands except per share data)

|                                             |  |                               |       |                             |   |       |   |      |        |   |   |        |  
|-------------------------------------------- |  | ----------------------------- | ----- | --------------------------- | - | ----- | - | ---- | ------ | - | - | ------ | -
|                                             |  | Three Months Ended
 April 30, |       | Six Months Ended
 April 30, |  
|                                             |  | 2011                          |       | 2010                        |   | 2011  |   | 2010 |       
|Revenues                                     |  |                               |       |                             |   |       |   |      |        |   |   |        |  
|Equipment and supply sales                   |  | $                             | 5,813 |                             | $ | 5,961 |   | $    | 11,957 |   | $ | 11,751 |  
|Service revenues                             |  |                               | 987   |                             |   | 893   |   |      | 1,896  |   |   | 1,718  |  
|                                             |  |                               | 6,800 |                             |   | 6,854 |   |      | 13,853 |   |   | 13,469 |  
|Cost of
 revenues                            |  |                               |       |                             |   |       |   |      |        |   |   |        |  
|Cost of equipment and supplies               |  |                               | 2,515 |                             |   | 2,879 |   |      | 5,231  |   |   | 5,776  |  
|Cost of service revenue                      |  |                               | 392   |                             |   | 412   |   |      | 748    |   |   | 763    |  
|                                             |  |                               | 2,907 |                             |   | 3,291 |   |      | 5,979  |   |   | 6,539  |  
|                                             |  |                               |       |                             |   |       |   |      |        |   |   |        |  
|Gross
 margin                                |  |                               | 3,893 |                             |   | 3,563 |   |      | 7,874  |   |   | 6,930  |  
|                                             |  |                               |       |                             |   |       |   |      |        |   |   |        |  
|Operating
 expenses:                         |  |                               |       |                             |   |       |   |      |        |   |   |        |  
|Selling and marketing                        |  |                               | 2,079 |                             |   | 1,901 |   |      | 4,126  |   |   | 3,843  |  
|General and administrative                   |  |                               | 937   |                             |   | 1,051 |   |      | 2,305  |   |   | 2,153  |  
|Research and development                     |  |                               | 902   |                             |   | 1,060 |   |      | 1,663  |   |   | 2,099  |  
|Amortization of intangibles                  |  |                               | 105   |                             |   | 105   |   |      | 210    |   |   | 210    |  
|                                             |  |                               | 4,023 |                             |   | 4,117 |   |      | 8,304  |   |   | 8,305  |  
|                                             |  |                               |       |                             |   |       |   |      |        |   |   |        |  
|Operating
 loss                              |  |                               | (130  | )                           |   | (554  | ) |      | (430   | ) |   | (1,375 | )
|Other expense                                |  |                               |      |                             |   |      |   |      | 22     |   |   |       |  
|Interest income, net                         |  |                               | (2    | )                           |   | (3    | ) |      | (10    | ) |   | (6     | )
|                                             |  |                               |       |                             |   |       |   |      |        |   |   |        |  
|Loss
 before income taxes                    |  |                               | (128  | )                           |   | (551  | ) |      | (442   | ) |   | (1,369 | )
|Provision for income taxes                   |  |                               | 10    |                             |   | 8     |   |      | 20     |   |   | 16     |  
|                                             |  |                               |       |                             |   |       |   |      |        |   |   |        |  
|Net loss                                     |  | $                             | (138  | )                           | $ | (559  | ) | $    | (462   | ) | $ | (1,385 | )
|                                             |  |                               |       |                             |   |       |   |      |        |   |   |        |  
|Loss per
 share:                             |  |                               |       |                             |   |       |   |      |        |   |   |        |  
|Basic                                        |  | $                             | (0.04 | )                           | $ | (0.13 | ) | $    | (0.12  | ) | $ | (0.33  | )
|Diluted                                      |  | $                             | (0.04 | )                           | $ | (0.13 | ) | $    | (0.12  | ) | $ | (0.33  | )
|                                             |  |                               |       |                             |   |       |   |      |        |   |   |        |  
|Weighted
 average common shares outstanding: |  |                               |       |                             |   |       |   |      |        |   |   |        |  
|Basic                                        |  |                               | 3,772 |                             |   | 4,151 |   |      | 3,763  |   |   | 4,152  |  
|Diluted                                      |  |                               | 3,772 |                             |   | 4,151 |   |      | 3,763  |   |   | 4,152  |  

See accompanying notes to
consolidated financial statements.

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ANGEION CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows(Unaudited, in thousands)

|                                                                                 |  |                             |       |      |   |        |  
|-------------------------------------------------------------------------------- |  | --------------------------- | ----- | ---- | - | ------ | -
|                                                                                 |  | Six Months Ended
 April 30, |      
|                                                                                 |  | 2011                        |       | 2010 |  
|Cash
 flows from operating activities:                                           |  |                             |       |      |   |        |  
|Net loss                                                                         |  | $                           | (462  | )    | $ | (1,385 | )
|Adjustments to reconcile net loss to net cash provided by operating
 activities: |  |                             |       |      |   |        |  
|Depreciation and amortization                                                    |  |                             | 339   |      |   | 392    |  
|Stock-based compensation                                                         |  |                             | 107   |      |   | 424    |  
|(Decrease) increase in allowance for doubtful accounts                           |  |                             | (34   | )    |   | 22     |  
|(Decrease) increase in inventory obsolescence reserve                            |  |                             | (70   | )    |   | 124    |  
|Loss on disposal of equipment                                                    |  |                             | 22    |      |   |       |  
|Change in operating assets and liabilities:                                      |  |                             |       |      |   |        |  
|Accounts receivable                                                              |  |                             | 348   |      |   | (72    | )
|Inventories                                                                      |  |                             | (280  | )    |   | 381    |  
|Prepaid expenses and other current assets                                        |  |                             | 54    |      |   | 24     |  
|Accounts payable                                                                 |  |                             | 201   |      |   | 165    |  
|Employee compensation                                                            |  |                             | (331  | )    |   | 145    |  
|Deferred income                                                                  |  |                             | 83    |      |   | 87     |  
|Warranty reserve                                                                 |  |                             | (49   | )    |   | (2     | )
|Other current liabilities and accrued expenses                                   |  |                             | (41   | )    |   | 70     |  
|Net cash (used in) provided by operating activities                              |  |                             | (113  | )    |   | 375    |  
|                                                                                 |  |                             |       |      |   |        |  
|Cash flows from investing activities:                                            |  |                             |       |      |   |        |  
|Sales (purchases) of investments                                                 |  |                             | 1,239 |      |   | (1,724 | )
|Purchases of property and equipment and intangible assets                        |  |                             | (329  | )    |   | (124   | )
|Net cash provided by (used in) investing activities                              |  |                             | 910   |      |   | (1,848 | )
|                                                                                 |  |                             |       |      |   |        |  
|Cash flows from financing activities:                                            |  |                             |       |      |   |        |  
|Proceeds from issuance of common stock under employee stock purchase
 plan       |  |                             | 12    |      |   | 10     |  
|Proceeds from the exercise of stock options                                      |  |                             | 48    |      |   | 7      |  
|Repurchase of common stock                                                       |  |                             | (8    | )    |   | (135   | )
|Net cash provided by (used in) financing activities                              |  |                             | 52    |      |   | (118   | )
|                                                                                 |  |                             |       |      |   |        |  
|Net increase (decrease) in cash and cash equivalents                             |  |                             | 849   |      |   | (1,591 | )
|                                                                                 |  |                             |       |      |   |        |  
|Cash and cash equivalents at beginning of period                                 |  |                             | 6,943 |      |   | 11,219 |  
|                                                                                 |  |                             |       |      |   |        |  
|Cash and cash equivalents at end of period                                       |  | $                           | 7,792 |      | $ | 9,628  |  

See accompanying notes to consolidated
financial statements.

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Table of Contents

|                                          
|------------------------------------------
|ANGEION CORPORATION                       
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(Unaudited)                               

|   |                                                  
|-- | -------------------------------------------------
|1. | Basis of Presentation and Description of Business

Angeion
Corporation (the Company), through its Medical Graphics Corporation
subsidiary, designs and markets non-invasive cardiorespiratory diagnostic
systems that are sold under the MedGraphics and New Leaf brand and trade names.
These cardiorespiratory diagnostic systems have a wide range of applications in
healthcare, wellness, and health and fitness.

The
consolidated balance sheet as of April 30, 2011, the consolidated statements of
operations for the three and six months ended April 30, 2011 and 2010, and
consolidated statements of cash flows for the six months ended April 30, 2011
and 2010, and the related information presented in these notes have been
prepared by management in accordance with U.S. generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X, without audit. Accordingly, they do not
include all of the information and notes required by U.S. generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation of
results have been included. The consolidated balance sheet at October 31, 2010
was derived from the audited consolidated financial statements as of that date.
Operating results for the three and six months ended April 30, 2011 are not
necessarily indicative of the results that may be expected for the year ending
October 31, 2011. For further information, refer to the consolidated financial
statements and notes thereto included in Angeion Corporations Annual Report on
Form 10-K for the year ended October 31, 2010.

Comprehensive
loss is a measure of all non-owner changes in shareholders equity and includes
items such as net loss, certain foreign currency translation items, minimum
pension liability adjustments and changes in the value of available-for-sale
securities. Comprehensive loss for Angeion Corporation was $138,000 and
$559,000 for the three months ended April 30, 2011 and 2010, respectively, and
$461,000 and $1,385,000 for the six months ended April 30, 2011 and 2010,
respectively.

Preparation
of the consolidated financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities made in the consolidated
financial statements and accompanying notes. Actual results could differ from
those estimates. Estimates include accounts receivable, product warranty and
inventory reserves, and depreciable lives of property, equipment and intangible
assets.

The
Company determined there were no events subsequent to April 30, 2011, that
required recognition or disclosure in these consolidated financial statements,
except as disclosed in Notes 3 and 11.

Certain reclassifications of prior
year presentations of costs of revenues between the cost of equipment and supplies and the cost of service revenues have been
made to conform with current period presentation. The reclassification had no impact on gross margin, net loss or
shareholder’s equity.

|   |                    
|-- | -------------------
|2. | Revenue Recognition

The
Company recognizes revenue when persuasive evidence of an arrangement exists,
transfer of title has occurred or services have been rendered, the selling
price is fixed or determinable and collectability is reasonably assured. The
Companys products are sold for cash or on unsecured credit terms requiring
payment based on the shipment date. Credit terms can vary between customers due
to many factors, but are generally, on average, 30-60 days. Revenue, net of
discounts, is generally recognized upon shipment or delivery to customers in
accordance with written sales terms. Standard sales terms do not include
customer acceptance conditions, future credits, rebates, price protection or
general rights of return. Although the terms of sales to both domestic
customers and international distributors are identical, adherence to these
terms is more pervasive with domestic customers than with international
customers. In instances when a customer order specifies final acceptance of the
system, revenue is deferred until all customer acceptance criteria have been
met. Estimated warranty obligations are recorded upon shipment.

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Table of Contents

Service
contract revenue is based on a stated contractual rate and is deferred and
recognized ratably over the service period, which is typically from one to four
years. Deferred income associated with service contracts and supplies was
$2,324,000 and $2,232,000 at April 30, 2011 and October 31, 2010, respectively.
Revenue from installation and training services provided to customers is
deferred until the service has been performed. The amount of deferred
installation and training revenue was $97,000 and $125,000 at April 30, 2011
and October 31, 2010, respectively.

When
a sale involves multiple deliverables, such as equipment, installation services
and training, the amount of the consideration from an arrangement is allocated
to each respective element based on the residual method and recognized as
revenue when revenue recognition criteria for each element is met.
Consideration allocated to delivered equipment is equal to the total arrangement
consideration less the fair value of installation and training. The fair value
of installation and training services is based on specific objective evidence,
including third-party invoices.

No
customer accounted for more than 10% of revenues for any of the three- or
six-month periods ended April 30, 2011 and 2010.

Advance
Payments from Customers

The
Company typically does not receive advance payments from its customers in
connection with the sale of its products. The Company occasionally enters into
an arrangement under which a customer agrees to purchase a large quantity of
product that is to be delivered over a period of time. Depending on the size of
these arrangements, the Company may negotiate an advance payment from these
customers. At April 30, 2011, advance payments from customers aggregated
$42,000 and at October 31, 2010, advance payments from customers aggregated
$16,000. Revenue recognition for customer orders that include advance payments
is consistent with the Companys revenue recognition policy described above.

|   |                                           
|-- | ------------------------------------------
|3. | Stock-Based Compensation and Stock Options

The
Angeion Corporation 2007 Stock Incentive Plan (the 2007 Plan) and the Angeion
Corporation 2002 Stock Option Plan (the 2002 Plan) both provide that
incentive stock options and nonqualified stock options to purchase shares of
common stock may be granted at prices determined by the Compensation Committee,
except that the purchase price of incentive stock options may not be less than
the fair market value of the stock at date of grant. Under the 2007 Plan, all
options expire no later than seven years from the grant date while under the
2002 Plan, all options expire no later than ten years from the grant date.
Options under both plans are subject to various vesting schedules. In addition,
the 2007 Plan allows the granting of restricted stock awards, stock
appreciation rights and performance stock.

Total
share-based compensation expense included in the Companys statement of operations
for the three months ended April 30, 2011 and 2010 was $72,000 and $202,000,
respectively and for the six months ended April 30, 2011 and 2010 was $107,000
and $424,000, respectively.

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Table of Contents

Stock Options

A
summary of our option activity for the six-month period ended April 30, 2011
and 2010 follows:

|                                  |  |                          |          |                                    |   |        |  |                                    |         |   |   |      | 
|--------------------------------- |  | ------------------------ | -------- | ---------------------------------- | - | ------ |  | ---------------------------------- | ------- | - | - | ---- | 
|                                  |  | For the six months ended |         
|                                  |  | April 30, 2011           |          | April 30, 2010                     |  
|                                  |  | Shares                   |          | Weighted
 Average
 Exercise
 Price |   | Shares |  | Weighted
 Average
 Exercise
 Price |        
|Outstanding
 at beginning of year |  |                          | 600,573  |                                    | $ | 6.12   |  |                                    | 695,787 |   | $ | 6.13 | 
|Exercised                         |  |                          | (49,500  | )                                  |   | 2.76   |  |                                    | (3,000  | ) |   | 2.00 | 
|Expired or cancelled              |  |                          | (124,500 | )                                  |   | 7.05   |  |                                    | (25,382 | ) |   | 7.22 | 
|Outstanding
 at end of period     |  |                          | 426,573  |                                    | $ | 6.24   |  |                                    | 667,405 |   | $ | 6.11 | 

The following table summarizes information concerning stock options outstanding
as of April 30, 2011:

|                 |       |                     |  |                                                 |  |                              |      |  |  |         | 
|---------------- | ----- | ------------------- |  | ----------------------------------------------- |  | ---------------------------- | ---- |  |  | ------- | 
|Exercise
 Prices |       | Number
 Outstanding |  | Weighted
 Average
 Remaining
 Contractual
 Life |  | Number
 Subject to
 Exercise |     
|$                | 2.00  |                     |  | 8,650                                           |  |                              | 2.44 |  |  | 8,650   | 
|                 | 2.53  |                     |  | 17,000                                          |  |                              | 4.38 |  |  | 17,000  | 
|                 | 5.08  |                     |  | 67,500                                          |  |                              | 3.97 |  |  | 67,500  | 
|                 | 5.16  |                     |  | 38,584                                          |  |                              | 4.33 |  |  | 26,176  | 
|                 | 5.66  |                     |  | 46,668                                          |  |                              | 4.05 |  |  | 40,002  | 
|                 | 6.23  |                     |  | 38,500                                          |  |                              | 1.97 |  |  | 38,500  | 
|                 | 6.60  |                     |  | 70,980                                          |  |                              | 3.16 |  |  | 70,980  | 
|                 | 7.79  |                     |  | 41,500                                          |  |                              | 2.44 |  |  | 41,500  | 
|                 | 7.86  |                     |  | 97,191                                          |  |                              | 3.50 |  |  | 97,191  | 
|                 | Total |                     |  | 426,573                                         |  |                              | 3.43 |  |  | 407,499 | 

The
total intrinsic value of options exercised during the three months ended April
30, 2011 and 2010 was $83,000 and $0, respectively. The total intrinsic value
of options exercised during the six months ended April 30, 2011 and 2010 was
$105,000 and $5,400, respectively. The total intrinsic value of options
outstanding and exercisable at April 30, 2011 was $63,000, which was calculated
using the closing stock price as of April 30, 2011 less the exercise price of
in-the-money options. The Company issues new shares when stock options are
exercised. Cash received from the exercise of stock options was $48,000 and
$7,000 for the six months ended April 30, 2011 and 2010, respectively and there
was no related tax benefit realized due to the Companys current tax loss
position. Unrecognized compensation expense related to outstanding stock
options as of April 30, 2011 was $27,000, is expected to be recognized over a
weighted average period of 0.28 years, and will be adjusted for any future changes in estimated forfeitures.

Valuation Assumptions

The
Company uses the Black-Scholes option-pricing model (Black-Scholes model) to
determine the fair value of stock options as of the grant date. The fair value
of stock options under the Black-Scholes model requires management to make
assumptions regarding projected employee stock option exercise behaviors,
risk-free interest rates, volatility of the Companys stock price and expected
dividends. The Company did not grant any options during the six months ended
April 30, 2011 or 2010.

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Restricted Stock Awards

Restricted
stock awards are awards of common stock that are subject to restrictions on
transfer and to a risk of forfeiture if the awardee leaves the Company before
the restrictions lapse. The holder of a restricted stock award is generally
entitled at all times on and after the date of issuance of the restricted
shares to exercise the rights of a shareholder of the Company, including the
right to vote the shares. The value of stock awards is established by the
market price on the date of its grant.

The
following table summarizes the Companys Board of Directors authorized
issuance of restricted stock awards and the awards unvested and outstanding at
April 30, 2011:

|                   |  |              |         |                |                                                          |                                |  |         | 
|------------------ |  | ------------ | ------- | -------------- | -------------------------------------------------------- | ------------------------------ |  | ------- | 
|Award Date         |  | Award Shares |         | Vesting Period |                                                          | Outstanding at
 April 30, 2011 | 
|August 28,
 2008   |  |              | 74,667  |                | Over three-year
 period                                  |                                |  | 10,664  | 
|June 3, 2009       |  |              | 180,668 |                | Over
 three-year period                                  |                                |  | 59,552  | 
|December 15,
 2010 |  |              | 25,000  |                | Over
 three-year period                                  |                                |  | 25,000  | 
|March 16,
 2011    |  |              | 10,000  |                | Performance shares, for period through
 October 31, 2011 |                                |  | 10,000  | 
|April 11,
 2011    |  |              | 14,245  |                | Through
 October 31, 2011                                |                                |  | 14,245  | 
|                   |  |              | 304,580 |                |                                                          |                                |  | 119,461 | 

As of April 30,2011, 98,677 of the 304,580
shares awarded have vested, 86,442 were forfeited and 119,461 are outstanding and subject to future vesting. The award issued
on March 16, 2011 is a performance share award that would have vested if operating performance criteria for the fiscal year
ended October 31, 2011 were achieved. Subsequent to April 30, 2011, the employee recipient of that performance share award
terminated employment  and (i) that award, (ii) 4,444 of a June 3, 2009 award and (iii) the December 15, 2010 25,000 share
award were forfeited. The Company did not grant any restricted stock awards during the six months ended April 30, 2010.

Unrecognized
compensation expense related to outstanding restricted stock awards as of April
30, 2011 was $175,000. The Company expects to recognize this over a weighted
average period of 1.82 years.

Employee Stock Purchase Plan

The
Angeion Corporation 2003 Employee Stock Purchase Plan (Stock Plan) allows
participating employees to purchase shares of the Companys common stock at a
discount through payroll deductions. The Stock Plan is available to all
employees subject to certain eligibility requirements. Terms of the Stock Plan
provide that participating employees may purchase the Companys common stock on
a voluntary after-tax basis. Employees may purchase the Companys common stock
at a price that is no less than the lower of 95% (increased effective January
1, 2007) of the fair market value of one share of common stock at the beginning
or end of each stock purchase period or phase. The Stock Plan is carried out in
six-month phases, with phases beginning on January 1 and July 1 of each
calendar year. For the phase that ended on December 31, 2010, employees
purchased 2,972 shares at a price of $3.78 per share. As of April 30, 2011, the
Company has withheld approximately $6,000 from employees participating in the
phase that began on January 1, 2011. At April 30, 2011, 51,705 shares of common
stock were available for future purchase under the Stock Plan.

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The
following table presents the statement of operations classification of pre-tax
stock-based compensation expense recognized for the three and six months ended
April 30, 2011 and 2010:

|                                  |  |                             |    |                           |   |      |  |      |     |  |   |     | 
|--------------------------------- |  | --------------------------- | -- | ------------------------- | - | ---- |  | ---- | --- |  | - | --- | 
|                                  |  | Three months ended April 30 |    | Six months ended April 30 |  
|(In
 thousands)                   |  | 2011                        |    | 2010                      |   | 2011 |  | 2010 |    
|Cost of
 revenues                 |  | $                           | 1  |                           | $ | 16   |  | $    | 3   |  | $ | 31  | 
|Selling and
 marketing            |  |                             | 22 |                           |   | 42   |  |      | 46  |  |   | 88  | 
|General and
 administrative       |  |                             | 39 |                           |   | 122  |  |      | 38  |  |   | 259 | 
|Research and
 development         |  |                             | 10 |                           |   | 22   |  |      | 20  |  |   | 46  | 
|Stock-based
 compensation expense |  |                             | 72 |                           | $ | 202  |  |      | 107 |  | $ | 424 | 

|   |            
|-- | -----------
|4. | Inventories

Inventories
consisted of the following at April 30, 2011 and October 31, 2010:

|                |  |      |       |      |   |       | 
|--------------- |  | ---- | ----- | ---- | - | ----- | 
|(In
 thousands) |  | 2011 |       | 2010 |  
|Raw
 materials  |  | $    | 986   |      | $ | 977   | 
|Work-in-Process |  |      | 203   |      |   | 233   | 
|Finished goods  |  |      | 2,858 |      |   | 2,487 | 
|                |  | $    | 4,047 |      | $ | 3,697 | 

|   |                  
|-- | -----------------
|5. | Intangible Assets

Intangible
assets consisted of the following at April 30, 2011 and October 31, 2010:

|                                 |  |      |        |      |   |        |  
|-------------------------------- |  | ---- | ------ | ---- | - | ------ | -
|(In
 thousands)                  |  | 2011 |        | 2010 |  
|Intangible
 assets:              |  |      |        |      |   |        |  
|Developed technology             |  | $    | 6,835  |      | $ | 6,820  |  
|Trademarks (unamortized)         |  |      | 67     |      |   | 62     |  
|Capitalized software in progress |  |      | 357    |      |   | 219    |  
|                                 |  |      | 7,259  |      |   | 7,101  |  
|                                 |  |      |        |      |   |        |  
|Amortization                     |  |      | (6,032 | )    |   | (5,822 | )
|                                 |  | $    | 1,227  |      | $ | 1,279  |  

The
intangible assets are being amortized using the straight-line method over the
estimated useful lives of the assets that range from seven to ten years.
Amortization expense was $210,000 and $210,000 for the six months ended April
30, 2011 and 2010, respectively. Estimated amortization expense for each of the
succeeding fiscal years based on the intangible assets as of April 30, 2011 is
as follows:

|                                    |  |              |     | 
|----------------------------------- |  | ------------ | --- | 
|(In
 thousands)                     |  | Amortization |    
|Six months
 ending October 31, 2011 |  | $            | 211 | 
|2012                                |  |              | 420 | 
|                                    |  | $            | 631 | 

The
above table does not include estimated amortization expense for patents and
capitalized software of $529,000, included in developed technology, that are
not yet placed in service.

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|   |                 
|-- | ----------------
|6. | Warranty Reserve

Sales
of the Companys equipment are subject to a warranty obligation. Equipment
warranties typically extend for a period of twelve months from the date of
installation. Standard warranty terms are included in customer contracts. Under
the terms of these warranties, the Company
is obligated to repair or replace any components or assemblies that it deems
defective in workmanship or materials. The Company reserves the right to reject
warranty claims where it determines that failure is due to normal wear,
customer modifications, improper maintenance or misuse. The Company maintains a
warranty reserve that reflects the estimated expenses that it will incur to
honor the warranties on its products. The Company adjusts the warranty reserve based
on the number and type of equipment that is subject to warranty, adjusted for
the remaining months of warranty coverage. The warranty reserve adjustment
reflects the Companys historical warranty experience based on type of
equipment. Warranty provisions and claims for the six months ended April
30, 2011 and 2010 were as follows:

|                                        |  |      |     |      |   |      |  
|--------------------------------------- |  | ---- | --- | ---- | - | ---- | -
|(In
 thousands)                         |  | 2011 |     | 2010 |  
|Balance,
 beginning of period           |  | $    | 175 |      | $ | 143  |  
|Warranty provisions based on units sold |  |      | 84  |      |   | 118  |  
|Periodic reserve adjustments            |  |      | (35 | )    |   | (4   | )
|Warranty claims                         |  |      | (98 | )    |   | (116 | )
|Balance, end
 of period                 |  | $    | 126 |      | $ | 141  |  

|   |                   
|-- | ------------------
|7. | Net Loss per Share

Basic
income (loss) per share is computed by dividing net income (loss) by the
weighted average shares outstanding during the reporting period. Diluted income
(loss) per share is computed similarly to basic income (loss) per share except
that in computing income per share the weighted average shares outstanding are
increased to include additional shares from the assumed exercise of stock
options or warrants and vesting of restricted stock awards, if these events are
dilutive. The number of additional shares is calculated by assuming that shares
are issued from the exercise of outstanding stock options or warrants and the
vesting of outstanding restricted share grants and that the cash proceeds from
the exercise and the employment value represented by the unamortized
stock-based compensation were used to acquire shares of common stock at the
average market price during the reporting period.

Shares
used in the loss per share computations are as follows:

|                                                              |  |                              |       |                             |  |       |  |      |       |  |  |       | 
|------------------------------------------------------------- |  | ---------------------------- | ----- | --------------------------- |  | ----- |  | ---- | ----- |  |  | ----- | 
|                                                              |  | Three months Ended
 April 30 |       | Six months Ended
 April 30, | 
|(In
 thousands)                                               |  | 2011                         |       | 2010                        |  | 2011  |  | 2010 |      
|Weighted
 average common shares outstanding  basic           |  |                              | 3,772 |                             |  | 4,151 |  |      | 3,763 |  |  | 4,152 | 
|Dilutive effect of stock options and
 restricted stock awards |  |                              |      |                             |  |      |  |      |      |  |  |      | 
|Weighted
 average common shares outstanding  diluted         |  |                              | 3,772 |                             |  | 4,151 |  |      | 3,763 |  |  | 4,152 | 

|   |             
|-- | ------------
|8. | Income Taxes

The
Company has recorded a provision for taxes from operations of $10,000 and
$8,000 for the three months ended April 30, 2011 and 2010, respectively. For
the six-month periods ended April 30, 2011 and 2010, the provision for taxes
from operations was $20,000 and $16,000, respectively.

At
October 31, 2010, the reserve for uncertain tax positions was $39,000 and did
not change during the first two quarters of fiscal 2011. The entire amount of
the reserve related to uncertainties regarding income tax nexus with various
states in which the Company operates. Included in the reserve is $14,000 of
estimated interest and penalties. The total amount of the reserve has increased
the Companys effective tax rate, and would therefore decrease the effective
tax rate if removed.

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Estimated
interest and penalties related to potential underpayment of income taxes are
classified as a component of tax expense in the consolidated statement of
operations. The Company does not expect the amount of reserves for uncertain
tax positions to change significantly in the next twelve months. Similarly, the
Company does not anticipate that the total reserve for uncertain tax positions
will significantly change due to the settlement of audits and the expiration of
statutes of limitations within the next twelve months.

The
Company files a consolidated federal income tax return in the United States
Federal jurisdiction and files various combined and separate tax returns in
several state and local jurisdictions. With limited exceptions, the Company is
no longer subject to United States federal, state and local tax examinations by
tax authorities for fiscal years ending prior to November 1, 2008. There is no
statute of limitations for assessments related to jurisdictions where the
Company may have a nexus but has chosen not to file an income tax return.

The
Company had a federal net operating loss (NOL) carry forward at October 31,
2010 of approximately $16.3 million. This amount is the remaining utilizable
NOL carry forward following the application of a limit due to an ownership
change under Internal Revenue Code Section 382 that occurred during the fourth
quarter of fiscal year 2006. This NOL carry forward is available to offset a
portion of taxes payable in future years. If not used, this NOL carry forward
will expire in the years 2010 through 2029. The Company also has $109,000 of
alternative minimum tax credit carry forwards that do not have expiration
dates. Even though the Company has substantial NOL carry forwards, any income
may still be subject to U.S. and State alternative minimum taxes.

The
Company has recorded a full valuation allowance against its net deferred tax
asset based on its belief that it was more likely than not that the asset would
not be realized in the future. Although this determination was made in a prior
fiscal year, it is still applicable as of April 30, 2011, and the Company will
continue to assess the need for a full valuation allowance in future quarters.
Any reduction of the valuation allowance related to post-bankruptcy net
operating losses and other deferred tax assets would (i) first affect earnings
as a reduction in the provision for taxes and (ii) thereafter, the remaining
$0.9 million would increase additional paid-in capital as these deferred tax
assets represent employee stock-based compensation tax deductions included in
the Companys net operating losses.

|   |           
|-- | ----------
|9. | Litigation

From
time to time, the Company is also subject to claims and lawsuits that have been
filed in the ordinary course of business. From time to time, the Company
initiates lawsuits against others to enforce patents or to seek collection of
debts in the ordinary course of business. There is no material pending or
outstanding litigation at the current time.

|    |                   
|--- | ------------------
|10. | Separation Accrual

During the first quarter of fiscal 2011,
 the Company incurred a charge of $418,000 included in general and administrative expenses, consisting of an accrual of separation
 payments for the former chief executive officer (CEO) of $451,000 reduced by the effect of forfeitures of previously expensed
 unvested option and restricted stock award costs.

The following table reconciles 2011 second
quarter activity for accrued separation expenses.

|(In
    thousands)                                                                        |  | 2011 |     
|----------------------------------------------------------------------------------------- |  | ---- | ----
|Balance, beginning of period                                                              |  | $    | 417 
|Separation payments                                                                       |  |      | (99 
|Balance, end of period                                                                    |  | $    | 318 
|                                                                                          |  |      |     
|The following table reconciles 2011 year-to-date activity for accrued separation expenses
|                                                                                          |  |      |     
|(In
    thousands)                                                                        |  | 2011 |     
|Balance, beginning of period                                                              |  | $    | ―   
|Separation accrual                                                                        |  |      | 451 
|Separation payments                                                                       |  |      | (133
|Balance, end of period                                                                    |  | $    | 318 



|    |           
|--- | ----------
|11. | Commitment

On
April 15, 2011, the Companys Board of Directors authorized the repurchase of
up to $2,000,000 of its outstanding shares of common stock in the open market
or privately negotiated transactions in the period until April 30, 2012.
Subsequent to the quarter end, the Board increased this authorization to
$3,000,000 for the same period. No repurchases have been made within this
authorization at April 30, 2011.

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Table of Contents

Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations Overview

The
Company, through its Medical Graphics Corporation subsidiary, designs and
markets non-invasive cardiorespiratory diagnostic systems that are sold under
the MedGraphics and New Leaf brand and trade names. These cardiorespiratory
diagnostic systems have a wide range of applications in healthcare, wellness
and health and fitness. Revenues consist of equipment and supply sales as well
as service revenues. Equipment and supply sales reflect sales of non-invasive
cardiorespiratory diagnostic equipment and aftermarket sales of peripherals and
supplies. Service revenues consist of revenues from extended service contracts,
non-warranty service visits and additional training.

During
the first quarter of 2010, Angeion strengthened its marketing and sales teams
by adding two new experienced professionals with backgrounds in the medical
device market. The Company also initiated a sales and marketing program to
establish a network of independent sales representatives and distributors that
will market both MedGraphics supplies such as filters and low-cost MedGraphics
equipment such as table-top and hand-held spirometers. Angeion also is in the
process of establishing an online web store to offer MedGraphics and New Leaf
products over the internet.

Total
revenues for the second quarter of 2011 were $6.8 million, a decrease of 0.8%
from $6.9 million in 2010. Operating expenses for the second quarter of 2011
were $4.0 million, a decrease of 2.3% from the same period in 2010. Net loss
for the three months ended April 30, 2011 was $138,000, or $0.04 per share,
compared to a net loss of $559,000, or $0.13 per share, for the same period in
2010.

Total
revenues for the six months ended April 30, 2011 were $13.9 million, an
increase of 2.9% from $13.5 million in 2010. Operating expenses for the six
months ended April 30, 2011 were $8.3 million, unchanged from the same period
in 2010. Net loss for the six months ended April 30, 2011 was $462,000, or
$0.12 per share, compared to a net loss of $1.4 million, or $0.33 per share,
for the same period in 2010.

Results of Operations

The
following table contains selected information from the Companys consolidated
statements of operations, expressed as a percentage of revenues:

|                            |  |                              |       |                            |  |       |    |      |       |    |  |       |   
|--------------------------- |  | ---------------------------- | ----- | -------------------------- |  | ----- | -- | ---- | ----- | -- |  | ----- | --
|                            |  | Three Months Ended April 30, |       | Six Months Ended April 30, | 
|                            |  | 2011                         |       | 2010                       |  | 2011  |    | 2010 |      
|Revenues                    |  |                              | 100.0 | %                          |  | 100.0 | %  |      | 100.0 | %  |  | 100.0 | % 
|Cost of revenues            |  |                              | 42.7  |                            |  | 48.0  |    |      | 43.2  |    |  | 48.5  |   
|Gross margin                |  |                              | 57.3  |                            |  | 52.0  |    |      | 56.8  |    |  | 51.5  |   
|                            |  |                              |       |                            |  |       |    |      |       |    |  |       |   
|Operating expenses:         |  |                              |       |                            |  |       |    |      |       |    |  |       |   
|Selling and marketing       |  |                              | 30.6  |                            |  | 27.7  |    |      | 29.8  |    |  | 28.5  |   
|General and administrative  |  |                              | 13.8  |                            |  | 15.3  |    |      | 16.6  |    |  | 16.0  |   
|Research and development    |  |                              | 13.3  |                            |  | 15.5  |    |      | 12.0  |    |  | 15.6  |   
|Amortization of intangibles |  |                              | 1.5   |                            |  | 1.6   |    |      | 1.5   |    |  | 1.6   |   
|                            |  |                              | 59.2  |                            |  | 60.1  |    |      | 59.9  |    |  | 61.7  |   
|Operating income (loss)     |  |                              | (1.9  | )                          |  | (8.1  | )  |      | (3.1  | )  |  | (10.2 | ) 
|Other expense               |  |                              |      |                            |  |      |    |      | 0.2   |    |  |      |   
|Interest income             |  |                              | 0.0   |                            |  | 0.0   |    |      | (0.1  | )  |  | 0.0   |   
|Income (loss) before taxes  |  |                              | (1.9  | )                          |  | (8.1  | )  |      | (3.2  | )  |  | (10.2 | ) 
|Provision for taxes         |  |                              | 0.1   |                            |  | 0.1   |    |      | 0.1   |    |  | 0.1   |   
|Net income (loss)           |  |                              | (2.0  | %)                         |  | (8.2  | %) |      | (3.3  | %) |  | (10.3 | %)

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Table of Contents

The
following paragraphs discuss the Companys performance for the three- and
six-month periods ended April 30, 2011 and 2010.

Revenue

Total
revenue for the three and six months ended April 30, 2011, increased
(decreased) by (0.8%) and 2.9%, respectively, compared to the same periods in
2010. Domestic revenue for the three months ended April 30, 2011 increased by
1.4% and international revenue decreased by 9.0% from prior year period levels,
with decreases in international revenues broadly based across all geographic
regions, except the Americas, which accounted for modest increases.

The
increase in revenue of $0.4 million for the six-month period ended April 30,
2011 was primarily due to domestic performance offset by reduced second quarter
international sales due to the general economic conditions therein.

Gross Margin

Gross
margin percentage for the three and six months ended April 30, 2011 increased
to 57.3% and 56.8% of revenue, respectively, compared to 52.0% and 51.5%,
respectively, for the same periods in 2010. Gross margin percentage for the
three- and six-month periods increased as a result of continuing manufacturing
efficiencies following right sizing actions taken in the third quarter of
fiscal 2010. We expect that the effects of manufacturing efficiencies at these
sales levels will continue in the remaining fiscal 2011 quarters.

Selling and Marketing

Selling
and marketing expenses increased to $2.1 million and $4.1 million,
respectively, for the three- and six-month periods ended April 30, 2011 from
$1.9 million and $3.8 million for the same periods in 2010. Expenses for the
three-month period ended April 30, 2011 increased from personnel transfers from
research and development to sales and marketing roles by $98,000 and decreased
from incentive programs by $30,000. Expenses for the six-month period ended
April 30, 2011 increased from personnel additions and transfers from research
and development roles by $73,000 and $178,000, respectively and decreased from
incentive programs by $30,000. Stock-based compensation expenses decreased by
$20,000 and $42,000 for the three and six months ended April 30, 2011,
respectively, compared to the prior year periods.

General and Administrative

For
the three months ended April 30, 2011, general and administrative expenses
decreased by $114,000, or 10.8%, compared to the same period in 2010, due
primarily to $39,000 in decreased compensation related costs resulting from
administrative staff changes in fiscal 2010 and 2011 and $83,000 in reduced
stock-based compensation related to employee and board of director changes
occurring in the second half of fiscal 2010.

For
the six months ended April 30, 2011, general and administrative expenses
increased $152,000 compared to the same period in 2010. This increase included
a  charge of $418,000 (net of a $33,000 offset for reduction in
stock-based compensation) related to the separation of our former chief
executive officer in the 2011 first fiscal quarter. The general and
administrative costs without this charge decreased $266,000, due primarily to
$106,000 in decreased compensation related costs resulting from administrative
staff changes in fiscal 2010 and 2011 and $188,000 in reduced stock-based
compensation related to other employee and board of director changes occurring in the
second half of fiscal 2010. Certain of these cost reductions are not expected
to be ongoing as additional hires to refill open positions have occurred
following the close of the 2011 fiscal second quarter.

14

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Table of Contents

Research and Development

Research
and development expenses for the three and six months ended April 30, 2011 were
$0.9 and $1.7 million, respectively, compared to $1.1 and $2.1 million,
respectively, for the same periods in 2010.

Expense
reductions in the three and six months ended April 30, 2011 compared to the
same periods in 2010 were primarily for roles transferred to selling and
marketing and the effects of the product development expense cycle. In the 2010
fiscal first and second quarter, the Company expensed all expenditures related
to its ongoing research and development project to migrate the MedGraphics and New
Leaf products operating software platform to next-generation technologies,
given the planning and development nature of these expenditures. Staff
personnel and consulting time related to planning and development expenses were
reduced by $98,000 and $189,000 in the three and six months ended April 30,
2011, respectively, offset by $55,000 of recruiting costs in the second quarter
of fiscal 2011 related to the addition of a vice president of engineering who
was hired after quarter end. In addition, approximately $48,000 and $138,000 of
incurred costs were capitalized in fiscal 2011 as software-in-progress for the
three and six months ended April 30, 2011, respectively, since these projects
have achieved technological feasibility. As we have discussed previously,
while this capitalized cost spending affects our cash flows and to a lesser
extent our net loss, we believe that these investments provide the foundation
for a future product pipeline of new integrated patient care and consumer
health programs that will deliver sustained growth. The majority of these
software projects will be ongoing until late fiscal 2011, with a portion
continuing into fiscal 2012, when we expect the benefits of this effort will
become available for use in our product offerings.

Amortization of Intangibles

Amortization
of developed technology was $105,000 and $210,000, respectively, for the three
and six months ended April 30, 2011 and 2010, respectively.

Interest Income

Interest
income for the three- and six-month periods ended April 30, 2011
(decreased)/increased to ($1,000) and $4,000, respectively, compared to the
same periods in 2010. The Company maintains the highest degree of safety in its
investments, while avoiding the investment risk of other forms of available
investments, and has purchased short and medium term bank certificates of
deposit and United States Treasury Bills to improve its interest return as
rates have declined to historic low rates in the past several quarters.

Provision for Income Taxes

The
Company is required to present the provision for taxes as if it were fully
taxable in accordance with Financial Accountings Standards Board (FASB)
Accounting Standards Codification 852-740. In prior years, the Company utilized
its pre-emergence bankruptcy NOLs in the calculation of its income taxes
payable but is still required to pay U.S. and State alternative minimum taxes
(AMT) in certain jurisdictions, even though it has substantial federal and
state NOL carry forwards available. During the three and six month periods
ended April 30, 2011 and 2010, the Company did not use any tax benefits related
to pre-emergence bankruptcy NOLs. See note 8 to the consolidated financial
statements, Income Taxes, in this Form 10-Q for additional discussion of the
accounting for income taxes.

15

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Table of Contents

Liquidity and Capital Resources

The
Company has financed its liquidity needs over the last several years through
revenue generated by its operations.

The
Company had cash, cash equivalents and investments of $10.0 million and working
capital of $12.6 million as of April 30, 2011. During the first half of fiscal
2011, the Company reported a net loss of $462,000. However, cash flows used in
operating activities were $113,000, primarily due to reductions of $348,000 in
accounts receivables, increases in inventory of $280,000, decreases of $47,000
in accounts payable, accrued employee compensation and deferred income,
collectively resulting from working capital management and seasonal payments,
together with the add-back of non-cash expenses totaling $446,000 for
depreciation, amortization and stock-based compensation.

For
the six months ended April 30, 2011, the Company used $329,000 in cash for the
purchase of property and equipment and intangible assets and generated
$1,239,000 from the sale of investments.

The
Company generated cash from financing activities of $52,000 during the six
months ended April 30, 2011, which primarily consisted of $60,000 proceeds from
(i) the exercise of stock options and (ii) the issuance of shares under the
Employee Stock Purchase Plan.

During
the second quarter of fiscal 2011, the Company announced its Board of
Directors authorization to repurchase up to $2,000,000 worth of its
outstanding shares in the open market or in privately negotiated transactions,
from time to time, in the period until April 30, 2012. Subsequent to the
quarter end, the Board increased this authorization to $3,000,000 for the same
period.

The
Company believes that its liquidity and capital resource needs for fiscal 2011
and the next twelve months will be met through its current cash, cash
equivalents and investments, as well as cash flows resulting from operations.
In addition, as previously announced, the Company has developed a
market-focused approach to strategically leverage the strength of its
MedGraphics brand and worldwide selling and distribution capability. The
Company may also use some of its cash and capital resources in the acquisition
of new businesses, technologies or products that complement its existing
products. Specifically, from time to time, the Company engages in discussions
with other companies concerning the development or acquisition of new or
complementary products. Although the Company is continuing to look at a number
of these opportunities, it currently has no agreements or understandings with
any of these third parties.

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Forward Looking Statements.

The
discussion above contains forward-looking statements about Angeions future
financial results and business prospects that by their nature involve
substantial risks and uncertainties. You can identify these statements by the
use of words such as anticipate, believe, estimate, expect, project,
intend, plan, will, target, and other words and terms of similar
meaning in connection with any discussion of future operating or financial
performance or business plans or prospects. Our actual results may differ
materially depending on a variety of factors including: (1) national and
worldwide economic and capital market conditions; (2) continuing
cost-containment efforts in our hospital, clinic, and office market; (3) any
changes in the patterns of medical reimbursement that may result from national
healthcare reform; (4) our ability to successfully operate our business,
including successfully converting our increasing research and development
expenditures into new and improved cardiorespiratory diagnostic products and
services and selling these products and services under the MedGraphics and New
Leaf brand names into existing and new markets; (5) our ability to complete our
software development initiatives and migrate our MedGraphics and New Leaf
platforms to a next generation technology; (6) our ability to maintain our cost
structure at a level that is appropriate to our near-to mid-term revenue
expectations and that will enable us to increase revenues and profitability as
opportunities develop; (7) our ability to achieve constant margins for our
products and consistent and predictable operating expenses in light of variable
revenues from our clinical research customers; (8) our ability to expand our
international revenue through our distribution partners and our Milan, Italy
representative branch office; (9) our ability to successfully defend ourselves
from product liability claims related to our cardiorespiratory diagnostic
products and claims associated with our prior cardiac stimulation products;
(10) our ability to defend our existing intellectual property and obtain
protection for intellectual property we develop in the future; (11) our ability
to develop and maintain an effective system of internal controls and procedures
and disclosure controls and procedures; (12) our dependence on third-party
vendors; and (13) the ability of new members of our senior management to make a
successful transition into their new roles and for all members of senior
management to ultimately develop and implement a strategic plan. Additional
information with respect to the risks and uncertainties faced by the Company
may be found in, and the above discussion is qualified in its entirety by, the
other risk factors that are described from time to time in the Companys
Securities and Exchange Commission reports, including the Annual Report on Form
10-K for the year ended October 31, 2010.

Item 3. Quantitative and Qualitative Disclosures About
Market Risk

None.

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Table of Contents

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and
Procedures

Management,
with the participation of the Companys interim chief executive officer, Gregg
O. Lehman, and chief financial officer, Robert M. Wolf, has evaluated the
effectiveness of the design and operation of the disclosure controls and
procedures, as defined in Rules 13a-15(e) under the Securities Exchange Act of
1934, as of the end of the period covered by this report. Management has
concluded that the Companys disclosure controls and procedures are effective
to ensure that information required to be disclosed in the reports that the
Company files under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC
and that the disclosure controls are also effective to ensure that information
required to be disclosed in the Companys Exchange Act reports is accumulated
and communicated to management, including the chief executive officer and
principal accounting officer, to allow timely decisions regarding required
disclosure.

(b) Changes in Internal Controls

There
have been no changes in internal control over financial reporting that
occurred during the second fiscal quarter of 2011 that have materially
affected, or are reasonably likely to materially affect, the registrants
internal control over financial reporting.

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Table of Contents

PART II  OTHER INFORMATION

Item 1. Legal Proceedings.

From
time to time, the Company is also subject to claims and lawsuits that have been
filed in the ordinary course of business. From time to time, the Company
initiates lawsuits against others to enforce patents or to seek collection of
debts in the ordinary course of business. There is no material pending or
outstanding litigation at the current time.

Item 1A. Risk Factors

We
described the most significant risk factors applicable to the Company in Part
I, Item 1A Risk Factors of our Annual Report on Form 10-K for the year ended
October 31, 2010. We believe there have been no material changes from the risk
factors disclosed in that Annual Report on Form 10-K.

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

In
the three months ended April 30, 2011, the Company repurchased shares of its
common stock, as follows:

|                                         |  |                                        |       |                                   |   |                                                                                 |  |                                                                                         |   |  |   |           | 
|---------------------------------------- |  | -------------------------------------- | ----- | --------------------------------- | - | ------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------- | - |  | - | --------- | 
|Issuer Purchases of Equity Securities(1)
|Period                                   |  | (a) Total Number
 of Shares
 Purchased |       | (b) Average Price
 Paid per Share |   | (c) Total Number
 of Shares
 Purchased as
 Part of Publicly
 Announced
 Program |  | (d) Approximate
 Dollar Value of
 Shares that May
 Yet Be Purchased
 Under the
 Program |  
|February
 1-28, 2011                     |  |                                        |      |                                   |   |                                                                                |  |                                                                                         |  |  |   |          | 
|March 1-31, 2011(2)                      |  |                                        | 1,658 |                                   | $ | 4.89                                                                            |  |                                                                                         |  |  |   |          | 
|April 1-30,
 2011                        |  |                                        |      |                                   |   |                                                                                |  |                                                                                         |  |  |   |          | 
|Total                                    |  |                                        | 1,658 |                                   | $ | 4.89                                                                            |  |                                                                                         |  |  | $ | 3,000,000 | 

(1)On
April 15, 2011, the Company announced that its Board of Directors had
authorized an extension to its stock repurchase program under which Angeion may
repurchase up to and additional $2,000,000 of its outstanding shares of common
stock in the open market or in privately negotiated transactions, over a
twelve-month period ending April 30, 2012. On May 26, 2011, the Company
announced this amount had been increased to $3,000,000.

(2)The
Company withheld 1,658 shares for the payment of required payroll withholding
taxes in connection with the March 22, 2011 exercise of 10,500 outstanding
stock options originally granted September 15, 2005 to an employee. The value
of these shares on March 22, 2011 was $4.89 per share.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Reserved

Item 5. Other Information.

None.

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Item 6.Exhibits.

|    |                                                                         
|--- | ------------------------------------------------------------------------
|31. | Certifications
 pursuant to Rules 13a-14 and 15d-14 of the Exchange Act.
|   
|32. | Certifications
 pursuant to 18 U.S.C. § 1350.                           

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SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) 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.

|               |                                  |                     
|-------------- | -------------------------------- | --------------------
|               | ANGEION
 CORPORATION            
|               | (Registrant)                    
|               |                                 
|June 14,
 2011 | By:                              | /s/ Gregg O.
 Lehman
|               | Gregg O.
 Lehman                
|               | Interim
 Chief Executive Officer
|               |                                 
|June 14,
 2011 | By:                              | /s/ Robert
 M. Wolf 
|               | Robert M.
 Wolf                 
|               | Chief
 Financial Officer        

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