Table of Contents





|                                                       |                                                                                          
|------------------------------------------------------ | -----------------------------------------------------------------------------------------
|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 July 31, 2010.                                           
|                                                       |                                                                                          
|                                                       | 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
 x     No
 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 o | Accelerated Filer o | Non-Accelerated Filer o | Smaller 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
 o     No
 o                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                           
|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                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                           
|As of September 8, 2010, the
 Company had outstanding 4,148,254 shares of Common Stock, $0.10 par value.                                                                                                                                                                                                                                                                                   







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 4T.                       | Controls and Procedures                                                                |    | 17
|                               |                                                                                        |    |   
|PART II - OTHER INFORMATION    |                                                                                        |   
|                               |                                                                                        |    |   
|Item 1.                        | Legal Proceedings                                                                      |    | 18
|Item 1A.                       | Risk Factors                                                                           |    | 18
|Item 2.                        | Unregistered Sales of Equity Securities and Use of Proceeds                            |    | 18
|Item 3.                        | Defaults Upon Senior Securities                                                        |    | 18
|Item 4.                        | Reserved                                                                               |    | 18
|Item 5.                        | Other Information                                                                      |    | 18
|Item 6.                        | Exhibits                                                                               |    | 18
|                               |                                                                                        |    |   
|SIGNATURES                     |                                                                                        | 19

2

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Table of Contents

|                                               
|-----------------------------------------------
|PART I  FINANCIAL INFORMATION                 
|                                               
|Item 1. Financial Statements.                  
|                                               
|ANGEION CORPORATION AND SUBSIDIARIES           
|Consolidated Balance Sheets                    
|July 31, 2010 and October 31, 2009             
|(In
 thousands except share and per share data)

|                                                                                                                                                                                   |  |                |        |                   |   |        |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------ | ----------------- | - | ------ | -
|                                                                                                                                                                                   |  | July 31,
 2010 |        | October 31,
 2009 |  
|                                                                                                                                                                                   |  | (Unaudited)    |        |                   |   |       
|ASSETS                                                                                                                                                                             |  |                |        |                   |   |        |  
|Current Assets:                                                                                                                                                                    |  |                |        |                   |   |        |  
|Cash and cash equivalents                                                                                                                                                          |  | $              | 7,274  |                   | $ | 11,219 |  
|Short-term investments                                                                                                                                                             |  |                | 2,478  |                   |   |       |  
|Accounts receivable, net of allowance for doubtful accounts of $97
 and $110, respectively                                                                                         |  |                | 4,842  |                   |   | 4,510  |  
|Inventories, net of obsolescence reserve of $665 and $645,
 respectively                                                                                                           |  |                | 4,061  |                   |   | 4,371  |  
|Prepaid expenses and other current assets                                                                                                                                          |  |                | 190    |                   |   | 243    |  
|Total Current Assets                                                                                                                                                               |  |                | 18,845 |                   |   | 20,343 |  
|                                                                                                                                                                                   |  |                |        |                   |   |        |  
|Noncurrent investments                                                                                                                                                             |  |                | 961    |                   |   |       |  
|Property and equipment, net of accumulated depreciation of $3,570 and
 $3,305, respectively                                                                                        |  |                | 521    |                   |   | 698    |  
|Intangible assets, net                                                                                                                                                             |  |                | 1,255  |                   |   | 1,422  |  
|Total Assets                                                                                                                                                                       |  | $              | 21,582 |                   | $ | 22,463 |  
|                                                                                                                                                                                   |  |                |        |                   |   |        |  
|LIABILITIES
 AND SHAREHOLDERS EQUITY                                                                                                                                              |  |                |        |                   |   |        |  
|Current Liabilities:                                                                                                                                                               |  |                |        |                   |   |        |  
|Accounts payable                                                                                                                                                                   |  | $              | 1,792  |                   | $ | 1,771  |  
|Employee compensation                                                                                                                                                              |  |                | 1,421  |                   |   | 1,375  |  
|Deferred income                                                                                                                                                                    |  |                | 1,534  |                   |   | 1,579  |  
|Warranty reserve                                                                                                                                                                   |  |                | 135    |                   |   | 143    |  
|Other current liabilities and accrued expenses                                                                                                                                     |  |                | 419    |                   |   | 323    |  
|Total Current Liabilities                                                                                                                                                          |  |                | 5,301  |                   |   | 5,191  |  
|                                                                                                                                                                                   |  |                |        |                   |   |        |  
|Long-term Liabilities:                                                                                                                                                             |  |                |        |                   |   |        |  
|Long-term deferred income and other                                                                                                                                                |  |                | 741    |                   |   | 718    |  
|Total Liabilities                                                                                                                                                                  |  |                | 6,042  |                   |   | 5,909  |  
|Commitments and Contingencies                                                                                                                                                      |  |                |        |                   |   |        |  
|Shareholders Equity:                                                                                                                                                              |  |                |        |                   |   |        |  
|Common Stock, $0.10 par value, authorized 25,000,000 shares,
 4,269,225 and 4,380,817 shares issued and 4,135,009 and 4,150,371 shares
 outstanding in 2010 and 2009, respectively |  |                | 414    |                   |   | 415    |  
|Additional paid-in capital                                                                                                                                                         |  |                | 22,064 |                   |   | 21,821 |  
|Accumulated deficit                                                                                                                                                                |  |                | (6,941 | )                 |   | (5,682 | )
|Accumulated other comprehensive income                                                                                                                                             |  |                | 3      |                   |   |       |  
|Total Shareholders Equity                                                                                                                                                         |  |                | 15,540 |                   |   | 16,554 |  
|Total Liabilities and Shareholders Equity                                                                                                                                         |  | $              | 21,582 |                   | $ | 22,463 |  

See accompanying notes to
consolidated financial statements.

3

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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
 July 31, |       | Nine Months Ended
 July 31, |  
|                                            |  | 2010                         |       | 2009                        |   | 2010  |   | 2009 |       
|Revenues                                    |  |                              |       |                             |   |       |   |      |        |   |   |        |  
|Equipment and supply sales                  |  | $                            | 6,207 |                             | $ | 5,416 |   | $    | 17,958 |   | $ | 16,381 |  
|Service revenues                            |  |                              | 913   |                             |   | 816   |   |      | 2,631  |   |   | 2,489  |  
|                                            |  |                              | 7,120 |                             |   | 6,232 |   |      | 20,589 |   |   | 18,870 |  
|Cost of revenues                            |  |                              |       |                             |   |       |   |      |        |   |   |        |  
|Cost of equipment and supplies              |  |                              | 2,848 |                             |   | 2,751 |   |      | 9,119  |   |   | 8,610  |  
|Cost of service revenue                     |  |                              | 156   |                             |   | 92    |   |      | 424    |   |   | 264    |  
|                                            |  |                              | 3,004 |                             |   | 2,843 |   |      | 9,543  |   |   | 8,874  |  
|                                            |  |                              |       |                             |   |       |   |      |        |   |   |        |  
|Gross margin                                |  |                              | 4,116 |                             |   | 3,389 |   |      | 11,046 |   |   | 9,996  |  
|                                            |  |                              |       |                             |   |       |   |      |        |   |   |        |  
|Operating expenses:                         |  |                              |       |                             |   |       |   |      |        |   |   |        |  
|Selling and marketing                       |  |                              | 1,967 |                             |   | 1,688 |   |      | 5,810  |   |   | 5,101  |  
|General and administrative                  |  |                              | 1,142 |                             |   | 979   |   |      | 3,295  |   |   | 3,131  |  
|Research and development                    |  |                              | 768   |                             |   | 710   |   |      | 2,867  |   |   | 2,226  |  
|Amortization of intangibles                 |  |                              | 105   |                             |   | 182   |   |      | 315    |   |   | 546    |  
|                                            |  |                              | 3,982 |                             |   | 3,559 |   |      | 12,287 |   |   | 11,004 |  
|                                            |  |                              |       |                             |   |       |   |      |        |   |   |        |  
|Operating income (loss)                     |  |                              | 134   |                             |   | (170  | ) |      | (1,241 | ) |   | (1,008 | )
|Interest income                             |  |                              |      |                             |   | 6     |   |      | 6      |   |   | 10     |  
|                                            |  |                              |       |                             |   |       |   |      |        |   |   |        |  
|Income (loss) before taxes                  |  |                              | 134   |                             |   | (164  | ) |      | (1,235 | ) |   | (998   | )
|Provision for taxes                         |  |                              | 8     |                             |   | 9     |   |      | 24     |   |   | 22     |  
|                                            |  |                              |       |                             |   |       |   |      |        |   |   |        |  
|Net income (loss)                           |  | $                            | 126   |                             | $ | (173  | ) | $    | (1,259 | ) | $ | (1,020 | )
|                                            |  |                              |       |                             |   |       |   |      |        |   |   |        |  
|Income (loss) per share  basic             |  |                              |       |                             |   |       |   |      |        |   |   |        |  
|Net income (loss) per share                 |  | $                            | 0.03  |                             | $ | (0.04 | ) | $    | (0.30  | ) | $ | (0.25  | )
|                                            |  |                              |       |                             |   |       |   |      |        |   |   |        |  
|Income (loss) per share  diluted           |  |                              |       |                             |   |       |   |      |        |   |   |        |  
|Net income (loss) per share                 |  | $                            | 0.03  |                             | $ | (0.04 | ) | $    | (0.30  | ) | $ | (0.25  | )
|                                            |  |                              |       |                             |   |       |   |      |        |   |   |        |  
|Weighted average common shares outstanding: |  |                              |       |                             |   |       |   |      |        |   |   |        |  
|Basic                                       |  |                              | 4,131 |                             |   | 4,121 |   |      | 4,145  |   |   | 4,114  |  
|Diluted                                     |  |                              | 4,241 |                             |   | 4,121 |   |      | 4,145  |   |   | 4,114  |  

See accompanying notes to
consolidated financial statements.

4

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

|                                                                                 |  |                              |        |      |   |        |  
|-------------------------------------------------------------------------------- |  | ---------------------------- | ------ | ---- | - | ------ | -
|                                                                                 |  | Nine Months Ended 
 July 31, |       
|                                                                                 |  | 2010                         |        | 2009 |  
|Cash flows from operating activities:                                            |  |                              |        |      |   |        |  
|Net loss                                                                         |  | $                            | (1,259 | )    | $ | (1,020 | )
|Adjustments to reconcile net loss to net cash provided by operating
 activities: |  |                              |        |      |   |        |  
|Depreciation and amortization                                                    |  |                              | 584    |      |   | 859    |  
|Stock-based compensation                                                         |  |                              | 576    |      |   | 564    |  
|Decrease in allowance for doubtful accounts                                      |  |                              | (13    | )    |   | (110   | )
|Increase in inventory obsolescence reserve                                       |  |                              | 20     |      |   | 49     |  
|Change in operating assets and liabilities:                                      |  |                              |        |      |   |        |  
|Accounts
 receivable                                                             |  |                              | (319   | )    |   | 1,362  |  
|Inventories                                                                      |  |                              | 327    |      |   | 389    |  
|Prepaid
 expenses and other current assets                                       |  |                              | 53     |      |   | 73     |  
|Accounts
 payable                                                                |  |                              | 21     |      |   | (179   | )
|Employee
 compensation                                                           |  |                              | 46     |      |   | (217   | )
|Deferred
 income                                                                 |  |                              | (36    | )    |   | (142   | )
|Warranty
 reserve                                                                |  |                              | (8     | )    |   | (4     | )
|Other
 current liabilities and accrued expenses                                  |  |                              | 84     |      |   | (36    | )
|Net cash provided by operating activities                                        |  |                              | 76     |      |   | 1,588  |  
|                                                                                 |  |                              |        |      |   |        |  
|Cash flows from investing activities:                                            |  |                              |        |      |   |        |  
|Purchase of investments                                                          |  |                              | (3,436 | )    |   |       |  
|Purchase of property and equipment and intangible assets                         |  |                              | (251   | )    |   | (159   | )
|Net cash used in investing activities                                            |  |                              | (3,687 | )    |   | (159   | )
|                                                                                 |  |                              |        |      |   |        |  
|Cash flows from financing activities:                                            |  |                              |        |      |   |        |  
|Proceeds from issuance of common stock under employee stock purchase
 plan       |  |                              | 18     |      |   | 20     |  
|Proceeds from the exercise of stock options                                      |  |                              | 7      |      |   | 63     |  
|Repurchase of common stock                                                       |  |                              | (299   | )    |   |       |  
|Repurchase of common stock upon vesting of restricted stock grants               |  |                              | (60    | )    |   |       |  
|Net cash (used in) provided by financing activities                              |  |                              | (334   | )    |   | 83     |  
|                                                                                 |  |                              |        |      |   |        |  
|Net (decrease) increase in cash and cash equivalents                             |  |                              | (3,945 | )    |   | 1,512  |  
|                                                                                 |  |                              |        |      |   |        |  
|Cash and cash equivalents at beginning of period                                 |  |                              | 11,219 |      |   | 9,047  |  
|                                                                                 |  |                              |        |      |   |        |  
|Cash and cash equivalents at end of period                                       |  | $                            | 7,274  |      | $ | 10,559 |  

See accompanying notes to
consolidated financial statements.

5

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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 July 31, 2010, the consolidated statements of
operations for the three and nine months ended July 31, 2010 and 2009, and
consolidated statements of cash flows for the nine months ended July 31, 2010
and 2009, 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, 2009
was derived from the audited consolidated financial statements as of that date.
Operating results for the three and nine months ended July 31, 2010 are not
necessarily indicative of the results that may be expected for the year ending
October 31, 2010. 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, 2009.

Comprehensive
income (loss) is a measure of all non-owner changes in shareholders equity and
includes items such as net income (loss), certain foreign currency translation
items, minimum pension liability adjustments and changes in the value of
available-for-sale securities. For the three and nine months ended July 31,
2010, comprehensive income (loss) for Angeion Corporation was $129,000 and
($1,256,000), respectively. For the three and nine months ended July 31, 2009,
comprehensive loss for Angeion Corporation was equivalent to net loss as
reported.

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 July 31, 2010, that
required recognition or disclosure in these consolidated financial statements.

|   |                     
|-- | --------------------
|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. The terms of sales to both domestic customers and
international distributors are identical, although 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.

6

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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
$2,059,000 and $2,022,000 at July 31, 2010 and October 31, 2009, 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 $111,000 and $131,000 at July 31, 2010
and October 31, 2009, respectively.

When
a sales arrangement involves multiple deliverables, such as equipment,
installation services and training, the amount of the consideration from the
sale is allocated to each respective element based on the residual method and
is 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 either the three or nine
months ended July 31, 2010 and 2009.

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 July 31, 2010, advance payments from customers aggregated
$100,000, of which $53,000 was from a single customer, while at October 31,
2009, advance payments from customers aggregated $144,000, of which $81,000 was
from a single customer. 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 July 31, 2010 and 2009 was $152,000 and
$199,000, respectively and the nine months ended July 31, 2010 and 2009 was
$576,000 and $564,000, respectively.

7

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Table of Contents

Stock
Options

A
summary of our option activity for the nine-month period ended July 31, 2010
and 2009 follows:

|                                 |  |                           |         |                                    |   |        |  |                                    |         |   |   |      | 
|-------------------------------- |  | ------------------------- | ------- | ---------------------------------- | - | ------ |  | ---------------------------------- | ------- | - | - | ---- | 
|                                 |  | For the nine months ended |        
|                                 |  | July 31, 2010             |         | July 31, 2009                      |  
|                                 |  | Shares                    |         | Weighted
 Average
 Exercise
 Price |   | Shares |  | Weighted
 Average
 Exercise
 Price |        
|Outstanding at beginning of year |  |                           | 695,787 |                                    | $ | 6.13   |  |                                    | 730,953 |   | $ | 5.96 | 
|Exercised                        |  |                           | (3,000  | )                                  |   | 2.00   |  |                                    | (25,000 | ) |   | 2.53 | 
|Expired or cancelled             |  |                           | (48,380 | )                                  |   | 6.64   |  |                                    |        |   |   |     | 
|Outstanding at end of period     |  |                           | 644,407 |                                    | $ | 6.11   |  |                                    | 705,953 |   | $ | 6.08 | 

On
May 25, 2010, the shareholders of the Company approved an amendment to the 2007
Plan to increase by 100,000 the shares authorized for issuance under the Plan.
The total shares authorized for issuance under the Plan is now increased to
750,000.

The
following table summarizes information concerning stock options outstanding as
of July 31, 2010:

|                 |       |                     |  |                                                 |  |                              |      |  |  |         | 
|---------------- | ----- | ------------------- |  | ----------------------------------------------- |  | ---------------------------- | ---- |  |  | ------- | 
|Exercise
 Prices |       | Number
 Outstanding |  | Weighted
 Average
 Remaining
 Contractual
 Life |  | Number
 Subject to
 Exercise |     
|$                | 2.00  |                     |  | 8,650                                           |  |                              | 3.19 |  |  | 8,650   | 
|                 | 2.53  |                     |  | 62,000                                          |  |                              | 4.38 |  |  | 62,000  | 
|                 | 5.08  |                     |  | 84,000                                          |  |                              | 4.65 |  |  | 84,000  | 
|                 | 5.16  |                     |  | 41,418                                          |  |                              | 5.08 |  |  | 15,596  | 
|                 | 5.66  |                     |  | 80,000                                          |  |                              | 4.80 |  |  | 60,002  | 
|                 | 6.23  |                     |  | 76,500                                          |  |                              | 3.06 |  |  | 76,500  | 
|                 | 6.60  |                     |  | 71,122                                          |  |                              | 3.91 |  |  | 68,743  | 
|                 | 7.08  |                     |  | 6,667                                           |  |                              | 4.67 |  |  | 6,667   | 
|                 | 7.79  |                     |  | 74,500                                          |  |                              | 3.19 |  |  | 74,500  | 
|                 | 7.81  |                     |  | 1,334                                           |  |                              | 4.27 |  |  | 1,334   | 
|                 | 7.86  |                     |  | 138,216                                         |  |                              | 4.25 |  |  | 95,053  | 
|                 |       |                     |  |                                                 |  |                              |      |  |  |         | 
|                 | Total |                     |  | 644,407                                         |  |                              | 4.07 |  |  | 553,045 | 

There
were no options exercised during the three months ended July 31, 2010 and 2009.
The total intrinsic value of options exercised during the nine months ended
July 31, 2010 and 2009 was $5,400 and $15,000, respectively. The total
intrinsic value of options outstanding and exercisable at July 31, 2010 was
$116,212, which was calculated using the closing stock price as of July 31,
2010 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 $7,000 and $63,000 for the nine months ended July 31, 2010
and 2009, 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 July 31, 2010 was $214,000, is expected to
be recognized over a weighted average period of 0.70 years, and will be
adjusted for any future changes in estimated forfeitures.

8

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Table of Contents

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 three and nine
month periods ended July 31, 2010.

Restricted
Stock Awards

On
August 28, 2008 and June 3, 2009, the Board of Directors authorized the
issuance of 74,667 and 180,668 restricted shares, respectively, of the
Companys common stock. 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
was established by the market price on the date of grant. The restricted stock
awards vest over a three-year period and are included in common stock issued as
of the grant date. The Company did not grant any restricted stock awards during
the three and nine month periods ended July 31, 2010.

Unrecognized
compensation expense related to outstanding restricted stock awards as of July
31, 2010 was $429,000. The Company expects to recognize this over a weighted
average period of 1.62 years.

The following table presents
the statement of operations classification of pre-tax stock-based compensation
expense recognized for the three and nine months ended July 31, 2010 and 2009:

|                                 |  |                             |     |                            |   |      |  |      |     |  |   |     | 
|-------------------------------- |  | --------------------------- | --- | -------------------------- | - | ---- |  | ---- | --- |  | - | --- | 
|                                 |  | Three months ended July 31, |     | Nine months ended July 31, |  
|                                 |  | 2010                        |     | 2009                       |   | 2010 |  | 2009 |    
|Cost of revenues                 |  | $                           | (6  | )                          | $ | 14   |  | $    | 25  |  | $ | 40  | 
|Selling and marketing            |  |                             | 44  |                            |   | 49   |  |      | 132 |  |   | 135 | 
|General and administrative       |  |                             | 93  |                            |   | 124  |  |      | 352 |  |   | 353 | 
|Research and development         |  |                             | 21  |                            |   | 12   |  |      | 67  |  |   | 36  | 
|Stock-based compensation expense |  | $                           | 152 |                            | $ | 199  |  | $    | 576 |  | $ | 564 | 

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 85% of the fair market value of
one share of common stock at the beginning or end of each stock purchase period
or phase. The Company increased the price at which common stock may be
purchased to 95% of the market value effective January 1, 2007. 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, 2009 and June
30, 2010, employees purchased 3,695 and 1,978 shares at a price of $2.80 and
$3.65 per share, respectively. As of July 31, 2010, the Company has withheld
approximately $3,000 from employees participating in the phase that began on
July 1, 2010. At July 31, 2010, 54,677 shares of common stock were available
for future purchase under the Stock Plan.

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

Inventories
consisted of the following at July 31, 2010 and October 31, 2009:

|                |  |      |       |      |   |       | 
|--------------- |  | ---- | ----- | ---- | - | ----- | 
|(In
 thousands) |  | 2010 |       | 2009 |  
|Raw materials   |  | $    | 1,334 |      | $ | 1,602 | 
|Work-in-Process |  |      | 196   |      |   | 163   | 
|Finished goods  |  |      | 2,531 |      |   | 2,606 | 
|                |  | $    | 4,061 |      | $ | 4,371 | 

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

Intangible
assets consisted of the following at July 31, 2010 and October 31, 2009:

|                         |  |      |        |      |   |        |  
|------------------------ |  | ---- | ------ | ---- | - | ------ | -
|(In
 thousands)          |  | 2010 |        | 2009 |  
|Intangible assets:       |  |      |        |      |   |        |  
|Developed technology     |  | $    | 6,910  |      | $ | 6,764  |  
|Trademarks (unamortized) |  |      | 62     |      |   | 59     |  
|                         |  | $    | 6,972  |      | $ | 6,823  |  
|                         |  |      |        |      |   |        |  
|Accumulated Amortization |  |      | (5,717 | )    |   | (5,401 | )
|                         |  | $    | 1,255  |      | $ | 1,422  |  

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 $315,000 and $546,000 for the nine months ended July
31, 2010 and 2009, respectively. Estimated amortization expense for each of the
succeeding fiscal years based on the intangible assets as of July 31, 2010 is
as follows:

|                                      |  |              |     | 
|------------------------------------- |  | ------------ | --- | 
|(In
 thousands)                       |  | Amortization |    
|Three months ending
 October 31, 2010 |  | $            | 105 | 
|2011                                  |  |              | 421 | 
|2012                                  |  |              | 420 | 
|                                      |  | $            | 946 | 

The
above table does not include estimated amortization expense for patents and
capitalized software of $247,000, included in developed technology, that are
not yet placed in service. During the three months ended July 31, 2010,
$101,000 of software development costs were capitalized as the project reached
technological feasibility. Upon completion of this development project, the
software is expected to be amortized over seven years.

|   |                  
|-- | -----------------
|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 if 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 three and nine months ended July 31, 2010 and 2009 were as
follows:

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|                              |  |                             |     |                            |   |      |   |      |      |   |   |      |  
|----------------------------- |  | --------------------------- | --- | -------------------------- | - | ---- | - | ---- | ---- | - | - | ---- | -
|                              |  | Three months ended July 31, |     | Nine months ended July 31, |  
|(In
 thousands)               |  | 2010                        |     | 2009                       |   | 2010 |   | 2009 |     
|Balance, beginning of
 period |  | $                           | 141 |                            | $ | 158  |   | $    | 143  |   | $ | 157  |  
|Warranty provisions           |  |                             | 56  |                            |   | 59   |   |      | 174  |   |   | 179  |  
|Warranty claims               |  |                             | (62 | )                          |   | (64  | ) |      | (182 | ) |   | (183 | )
|Balance, end of period        |  | $                           | 135 |                            | $ | 153  |   | $    | 135  |   | $ | 153  |  

|   |                             
|-- | ----------------------------
|7. | Net
 Income (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 issuable 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 together with the assumed employment value
represented by the unamortized stock-based compensation were used to reacquire
shares of common stock at the average market price during the reporting period.

The
Company had options to purchase shares and unvested restricted stock awards
outstanding at July 31, 2010 and 2009 for 778,623 and 961,288 shares of its
common stock, respectively.

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

|                                                             |  |                              |       |                             |  |       |  |      |       |  |  |       | 
|------------------------------------------------------------ |  | ---------------------------- | ----- | --------------------------- |  | ----- |  | ---- | ----- |  |  | ----- | 
|                                                             |  | Three Months Ended
 July 31, |       | Nine Months Ended
 July 31, | 
|(In
 thousands)                                              |  | 2010                         |       | 2009                        |  | 2010  |  | 2009 |      
|Weighted average common shares outstanding  basic           |  |                              | 4,131 |                             |  | 4,121 |  |      | 4,145 |  |  | 4,114 | 
|Dilutive effect of stock options and restricted stock awards |  |                              | 110   |                             |  |      |  |      |      |  |  |      | 
|Weighted average common shares outstanding  diluted         |  |                              | 4,241 |                             |  | 4,121 |  |      | 4,145 |  |  | 4,114 | 

The
dilutive effect of stock options in the above table excludes all options for
which the exercise price was higher than the average market price for the
period. For the three months ended July 31, 2010, a total of 593,313 stock
options and restricted stock awards were excluded from the calculation. As a
result of the net loss in the three months ended July 31, 2009 and the nine
months ended July 31 of both 2010 and 2009, the outstanding stock options and
unvested restricted stock shares were considered antidilutive and, therefore,
were excluded from diluted loss per share of those periods.

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

The
Company has recorded a provision for taxes from operations of $8,000 and $9,000
for the three months ended July 31, 2010 and 2009, respectively. For the nine
months ended July 31, 2010 and 2009, the provision for taxes from operations
was $24,000 and $22,000, respectively.

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Table of Contents

The
Company adopted the provisions of ASC 740-10, Income
Taxes Related to Accounting For Uncertainties in Income Taxes, on
November 1, 2007. At October 31, 2009, the reserve was $35,200 and has not
changed during the first three quarters of fiscal 2010. 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 $10,300 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.

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. For United States federal tax, the Company is no
longer subject to examinations by the authorities for fiscal years ending prior
to November 1, 2009. With limited exceptions, the Company is no longer subject
to state and local tax examinations by tax authorities for fiscal years ending
prior to November 1, 2005. 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 carry forward at October 31, 2009 of
approximately $17.8 million. This amount is the remaining utilizable 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 carry forward is available to offset a portion of taxes
payable in future years. If not used, this carry forward will expire in the
years 2010 through 2025. 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 federal net operating loss 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 July 31, 2010, 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
$0.8 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.

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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
fiscal 2010, Angeion strengthened its marketing and sales team by adding a new experienced professional with a background in the medical
device market. Angeion has also
established an online web store to offer MedGraphics and New Leaf products over
the internet.

Total
revenues for the third quarter of 2010 were $7.1 million, an increase of 14.3%
from $6.2 million in 2009. Operating expenses for the third quarter of 2010
were $4.0 million, an increase of 11.9% from the same period in 2009. Net
income for the three months ended July 31, 2010 was $126,000, or $0.03 per
basic and diluted share, compared to a net (loss) of ($173,000), or ($0.04) per
basic and diluted share, for the same period in 2009.

Total
revenues for the nine months ended July 31, 2010 were $20.6 million, an
increase of 9.1% from $18.9 million in 2009. Operating expenses for the nine
months ended July 31, 2010 were $12.3 million, an increase of 11.7% from the
same period in 2009. Net loss for the nine months ended July 31, 2010 was $1.3
million, or $0.30 per basic and diluted share, compared to a net loss of $1.0
million, or $0.25 per basic and diluted share, for the same period in 2009.

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 July 31, |       | Nine Months Ended July 31, | 
|                            |  | 2010                        |       | 2009                       |  | 2010  |    | 2009 |      
|Revenues                    |  |                             | 100.0 | %                          |  | 100.0 | %  |      | 100.0 | %  |  | 100.0 | % 
|Cost of revenues            |  |                             | 42.2  |                            |  | 45.6  |    |      | 46.3  |    |  | 47.0  |   
|Gross margin                |  |                             | 57.8  |                            |  | 54.4  |    |      | 53.7  |    |  | 53.0  |   
|                            |  |                             |       |                            |  |       |    |      |       |    |  |       |   
|Operating expenses:         |  |                             |       |                            |  |       |    |      |       |    |  |       |   
|Selling and marketing       |  |                             | 27.6  |                            |  | 27.1  |    |      | 28.2  |    |  | 27.0  |   
|General and administrative  |  |                             | 16.0  |                            |  | 15.7  |    |      | 16.0  |    |  | 16.6  |   
|Research and development    |  |                             | 10.8  |                            |  | 11.4  |    |      | 14.0  |    |  | 11.8  |   
|Amortization of intangibles |  |                             | 1.5   |                            |  | 2.9   |    |      | 1.5   |    |  | 2.9   |   
|                            |  |                             | 55.9  |                            |  | 57.1  |    |      | 59.7  |    |  | 58.3  |   
|Operating income (loss)     |  |                             | 1.9   |                            |  | (2.7  | )  |      | (6.0  | )  |  | (5.3  | ) 
|Interest income             |  |                             | 0.0   |                            |  | 0.1   |    |      | 0.0   |    |  | 0.0   |   
|Income (loss) before taxes  |  |                             | 1.9   |                            |  | (2.6  | )  |      | (6.0  | )  |  | (5.3  | ) 
|Provision for taxes         |  |                             | 0.1   |                            |  | 0.2   |    |      | 0.1   |    |  | 0.1   |   
|Net income (loss)           |  |                             | 1.8   | %                          |  | (2.8  | %) |      | (6.1  | %) |  | (5.4  | %)

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Table of Contents

The
following paragraphs discuss the Companys performance for the three and
nine-month periods ending July 31, 2010 and 2009:

Revenue

Total
revenue for the three and nine months ended July 31, 2010, increased by 14.3%
and 9.1%, respectively, compared to the same periods in 2009. Domestic revenue
for the three months ended July 31, 2010 increased by 10.6% and international
revenue increased by 28.0% from prior year period levels, with increases in
international revenues primarily from the strong performance in Europe and
Latin America regions. The increase in revenue of $1.7 million for the
nine-month period ended July 31, 2010 was primarily due to international
performance of Europe and Latin America.

Gross Margin

Gross
margin percentage for the three and nine months ended July 31, 2010 increased
to 57.8% and 53.7% of revenue, respectively, compared to 54.4% and 53.0%,
respectively, for the same periods in 2009. Gross margin percentage for the
three-month period increased as a result of increased manufacturing
efficiencies from the higher sales volume and right sizing activities earlier
in the year, as well as higher gross margins on sales of MedGraphics CertifiedTM units, which were promoted in the quarter, and reduced provisions for
obsolete inventory due to improved materials management. We expect that the
effect of manufacturing efficiencies at the higher sales levels will continue
in the fourth fiscal quarter, but expect sales of higher margin MedGraphics
CertifiedTM product to be reduced in the fourth fiscal quarter due to the
expected decrease in the number of units we are able to acquire, recondition
and resell. The increase in gross margin percentage for the nine-month period
was positively affected by the same factors as the third quarter.

Selling and Marketing

Selling
and marketing expenses increased to $2.0 million and $5.8 million for the three
and nine months ended July 31, 2010, respectively, from $1.7 million and $5.1
million for the comparable periods of 2009. Expenses for the three and nine
months ended July 31, 2010 increased from personnel additions by $84,000 and
$247,000, respectively, and incentive programs by $133,000 and $319,000,
respectively, as the Company increased sales volume and invested to improve its
market position.

General and Administrative

For
the three months ended July 31, 2010, general and administrative expenses
increased by $163,000, or 16.7%, compared to the same period in 2009, due
primarily to $245,000 of one-time charges related to a financial executive
transition, offset by $42,000 of reductions to management bonus incentives and
stock-based compensation costs related primarily to this same financial
executive transition.

For
the nine months ended July 31, 2010, general and administrative expenses
remained flat compared to the same periods in 2009 when excluding the one- time
charges from the third quarter, as noted above, offset by reduced consulting
expenses of $51,000 compared to the prior period.

14

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Table of Contents

Research and Development

Research
and development expenses for the three and nine months ended July 31, 2010 were
$0.8 and $2.9 million, respectively, compared to $0.7 and $2.2 million,
respectively, for the same periods in 2009. Cost increases in the three months
ended July 31, 2010 compared to the same period in 2009 were primarily for
increased materials consumed in the development process. The Company is
maintaining its commitment to research and development. In the three months
ended July 31, 2010, the Company also capitalized $101,000 in its ongoing
research and development project to migrate the software platform on which our
MedGraphics products operate to next-generation technologies, as this project
achieved technological feasibility. As we have discussed previously, while
this spending affects our cash flow and to a lesser extent our bottom line, we
believe these investments provide the foundation for a future product pipeline
of new integrated patient care and consumer health programs that will deliver
sustained growth. This project will be ongoing well into fiscal 2011 when we
expect the benefits of this effort will become available for use in product
offerings.

For
the nine months ended July 31, 2010, payroll, benefit costs and accrued
incentives increased by $119,000 and project expenses increased $501,000 as
part of the Companys investment in the development of new product initiatives.

Amortization of Intangibles

Amortization
of developed technology was $105,000 and $315,000, respectively, for the three
and nine months ended July 31, 2010, reduced from $182,000 and $546,000,
respectively, for the comparable periods in 2009 as a portion of the Companys
developed technology was fully amortized as of October 31, 2009. We expect
these costs to increase when capitalized projects in process are placed in
service sometime in fiscal 2011.

Interest Income

Interest
income for the three and nine-month periods ended July 31, 2010 were reduced to
negligible amounts and $6,000, respectively, compared to the same periods in
2009. This is partially related to the Companys move to invest a portion of
cash balances in short and medium term bank certificates of deposit and United
State Treasury Bills to improve its interest return, while avoiding the
investment risk of other forms of available investment instruments. These
investments are carried at fair market value, with changes in value included as
accumulated comprehensive income in the balance sheet, and reflected as
interest income only at maturity. In addition, since the start of the latest
economic recession, interest income and secure investment returns have decreased
as a result of the significantly lower market interest rates.

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 nine month periods ended July
31, 2010 and 2009, 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.

Liquidity and Capital Resources

The
Company has financed its liquidity needs over the last several years through
revenue generated by the operations of its wholly owned subsidiary, Medical
Graphics Corporation.

The
Company had cash, cash equivalents and investments of $10.7 million and working
capital of $13.5 million as of July 31, 2010. Working capital was $15.2 million
at October 31, 2009 and the decrease to July 31, 2010 was principally a result
of approximately $1.0 million investment in non-current investments, $300,000
in property and equipment additions and the repurchase of common stock of approximately
$300,000.

15

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Table of Contents

During
the first three quarters of fiscal 2010, the Company reported a net loss of
$1,259,000. However, cash flows from operating activities for the nine months
were $76,000, primarily due to reductions in inventory of $327,000, increases
of $151,000 in accounts payable, accrued employee compensation and other
liabilities and the add-back of non-cash expenses totaling $1,160,000 for
depreciation, amortization and stock-based compensation expense, offset by
increases in accounts receivable of $319,000.

For
the nine months ended July 31, 2010, the Company used $251,000 in cash for the
purchase of property and equipment and intangible assets and $3,436,000 to
purchase investment grade debt instruments described above.

The
Company used cash in financing activities of $334,000 during the nine months
ended July 31, 2010, which primarily consisted of the $299,000 used to
repurchase Company shares under the Stock Repurchase Program begun in March
2010 and the $60,000 used to repurchase shares to cover taxes for vested
restricted stock awards in the period, offset by proceeds from the exercise of
stock options and the issuance of shares under the Employee Stock Purchase
Plan. The Company amended its program after July 31, 2010 and now intends 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, as conditions
allow, during the period ended April 30, 2011.

The
Company believes that its liquidity and capital resource needs for fiscal 2010
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.
Specifically, the Company has held discussions with various potential strategic
product and technology partners. If the Company is successful in concluding
these negotiations, it may use some of its cash and capital resources in the
acquisition of new technologies or businesses. 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.

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, clinics, and office market; (3) any
changes in the pattern of medical reimbursement that may result from national
health care reform; (4) our ability to complete our software development
initiative and migrate our MedGraphics software platform to a next generation
technology; (5) 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; (6) 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; (7) our ability to expand our worldwide international
revenue through our distribution partners; (8) 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; (9) our ability to defend our existing intellectual property and to
obtain protection for intellectual property we develop in the future; (10) our
ability to develop and maintain an effective system of internal controls and
procedures and disclosure controls and procedures; and (11) our dependence on
third-party vendors. 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, 2009.

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Item 3. Quantitative and
Qualitative Disclosures About Market Risk

None.

Item 4T. Controls and
Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Management,
with the participation of the Companys chief executive officer, Rodney A.
Young, and interim chief financial officer, Larry R. Degen, 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 significant changes in internal control over financial reporting
that occurred during the third fiscal quarter of 2010 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, 2009. 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 July 31, 2010, the Company repurchased shares of its
common stock, as
follows.

|                                         |  |                                    |        |                                 |   |                                                                                 |  |                                                                                         |        |  |   |           | 
|---------------------------------------- |  | ---------------------------------- | ------ | ------------------------------- | - | ------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------- | ------ |  | - | --------- | 
|Issuer Purchases of Equity Securities(1) | 
|Period                                   |  | (a) Total Numberof SharesPurchased |        | (b) Average PricePaid 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 |       
|May 1-31, 2010                           |  |                                    | 18,732 |                                 | $ | 4.59                                                                            |  |                                                                                         | 18,732 |  |   |           | 
|June 1-30, 2010(2)                       |  |                                    | 29,654 |                                 | $ | 4.42                                                                            |  |                                                                                         | 16,639 |  |   |           | 
|July 1-31, 2010                          |  |                                    | 1,300  |                                 | $ | 4.04                                                                            |  |                                                                                         | 1,300  |  |   |           | 
|Total                                    |  |                                    | 49,686 |                                 | $ | 4.48                                                                            |  |                                                                                         | 36,671 |  |   |           | 
|Program to date                          |  |                                    |        |                                 | $ | 4.56                                                                            |  |                                                                                         | 65,249 |  | $ | 1,700,000 | 

(1)On March 16, 2010, the Company announced that
its Board of Directors had authorized a stock repurchase program under which
Angeion may repurchase up to $1,000,000 of common stock in the open market or
in privately negotiated transactions, over a nine month period of time. On
September 13, 2010, the Company announced that its Board of Directors had
authorized an increase in the repurchase program authorizing Angeion to
purchase up to $2,000,000 of common stock in the open market or in privately
negotiated transactions during the period ended April 30, 2011.

(2)In June 2010,
Angeion purchased a total of 16,639 shares of common stock at an average price
of $4.29 per share under its repurchase program.  In addition, during that
month, Angeion withheld a total of 13,015 shares for the payment of taxes upon the vesting of 43,114
shares of restricted stock that were originally issued in June 2009 to employees.  The value of these shares on June 3, 2010 was $4.59
per share.

Item 3. Defaults Upon Senior
Securities.

None.

Item 4. Reserved

Item 5. Other Information.

None.

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.                                
|     |                                                                              
|99.1 | Press Release dated
 September 13, 2010 regarding Angeion repurchase program.

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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)                           |                    
|                   |  |                                        |                     | 
|September 14, 2010 |  |                                        |                     | 
|                   |  | By:                                    | /s/ Rodney A. Young | 
|                   |  | Rodney A. Young                        |                    
|                   |  | President and Chief
 Executive Officer |                    
|                   |  |                                        |                     | 
|September 14, 2010 |  |                                        |                     | 
|                   |  | By:                                    | /s/ Larry R. Degen  | 
|                   |  | Larry R. Degen                         |                    
|                   |  | Interim Chief Financial
 Officer       |                    

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