UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
  Form 10-K/A
 (Amendment No. 1)
  [x]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the fiscal year ended June 30, 2009
  [ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 COMMISSION FILE NUMBER 001-34269
  SHARPS COMPLIANCE CORP.
 (Exact name of registrant as specified in its charter)
 
 Delaware

74-2657168(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)9220 Kirby Drive, Suite 500, Houston, Texas

(Address of principal executive offices)

77054

(Zip Code)
 
 Registrant’s telephone number, including area code (713) 432-0300
 Securities registered pursuant to Section 12(b) of the Act:
 
 Title of Each Class

Name of Each Exchange on Which RegisteredCommon Shares, $1.00 Par Value

The NASDAQ Capital Market
 
 Securities registered pursuant to Section 12(g) of the Act:
 None
 
 Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes [ ]      No [x]
  Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  Yes [ ]      No [x]
  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 [ ]
  Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes [ ]    No [ ]
  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [ ]
  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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
  Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer [ ]
Smaller reporting company [x]
  Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [ ]      No [x]
  As of December 31, 2008 and September 17, 2009, the aggregate market value of the Registrant’s Common Stock held by non-affiliates was approximately $9,213,328 million (based on the closing price of $1.60 on December 31, 2008 as reported by The NASDAQ Capital Market) and approximately $ 61,556,789 million (based upon the closing price of $9.72 on September 17, 2009, as reported by THE NASDAQ Capital Market).
 
 
 The number of common shares outstanding of the Registrant was 13,445,105 as of September 17, 2009.
 
 
 
 DOCUMENTS INCORPORATED BY REFERENCE:
 
 (1)

Portions of the Registrant’s Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A for the Annual Meeting of Shareholders to be held on November 19, 2009 are incorporated by reference into Part III.
 
 
 
 
 
 
  
 SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
 TABLE OF CONTENTS *
 ANNUAL REPORT ON FORM 10-K/A
 ________________________________________________________________________________
 
 PagePART IItem 1
Description of Business
3Item 1.A
Risk Factors
8PART IIItem 7
Management’s Discussion and Analysis of Financial Condition andResults of Operations
10Item 9A
Controls and Procedures
18PART IVItem 15
Exhibits and Financial Statement Schedules
20Signatures
23
 
 ____________
 *
This Table of Contents is inserted for convenience of reference only and is not a part of this Report as filed.
 
 
  
 Explanatory Note
 
 In this Amendment No. 1 to Annual Report on Form 10-K/A for the year ended June 30, 2009 ("Amendment No. 1”) as originally filed with the Securities and Exchange Commission (the “SEC”) on October 23, 2009 (the “Original Filing”), we refer to Sharps Compliance, Corp. and its subsidiaries, as “we,” “us,” “our” or the “Company.”
 
 We are filing this Amendment No. 1 to:
 
 ·
expand our Item 1. Description of Business to include the following sections: Suppliers, Government Regulation and Compliance with Environmental Laws ;
 ·
revise our disclosure of intellectual property rights to include trademark names and expiration date of patent;
 ·
add a risk factor to Item 1A. Risk Factors regarding the Company's ability to maintain existing government contracts or win additional government contracts over an extended period;
 ·
expand our disclosure regarding the U.S. Government Contract in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations; and
 ·
remove the section entitled “Limitations on the Effectiveness of Controls.”
  In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), each item of the Original Filing that is amended by this Amendment No. 1 is superceded in its entirety, and this Amendment No. 1 is accompanied by currently dated certifications on Exhibit 31.1, Exhibit 31.2, Exhibit 32.1 and Exhibit 32.2.
 
 Except as expressly set forth in this Amendment No. 1, we are not amending any other part of the Original Filing.  This Amendment No. 1 continues to speak as of the date of the Original Filing, except as such disclosure is amended by this Amendment No. 1, and does not reflect events occurring after the filing of the Original Filing, or modify or update any related or other disclosures, including forward-looking statements, unless expressly noted otherwise.  Accordingly, this Amendment No. 1 should be read in conjunction with the Original Filing and with our other filings made with the SEC subsequent to the filing of the Original Filing.  The filing of this Amendment No. 1 shall not be deemed an admission that the Original Filing when made included any untrue statement of a material fact or omitted to state a material fact necessary to make a statement not misleading.
  2
 INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
 
 This annual report on Form 10-K contains certain forward-looking statements and information relating to the Company and its subsidiaries that are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to the Company’s management. When used in this report, the words “anticipate”, “believe”, “expect”, “estimate”, “project” and “intend” and words or phrases of similar import, as they relate to the Company or its subsidiaries or Company management, are intended to identify forward-looking statements.  Such statements reflect the current risks, uncertainties and assumptions related to certain factors, including without limitations, competitive factors, general economic conditions, customer relations, relationships with vendors, governmental regulation and supervision, seasonality, distribution networks, product introductions and acceptance, technological change, changes in industry practices, onetime events and other factors described herein.  Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended.  The Company does not intend to update these forward-looking statements.
 
 PART I
 
 ITEM 1.  DESCRIPTION OF BUSINESS
 
 Sharps Compliance Corp. was formed in November 1992 as a Delaware corporation. The information presented herein is for Sharps Compliance Corp. and its wholly owned subsidiaries, Sharps Compliance, Inc. of Texas (dba Sharps Compliance, Inc.), Sharps e-Tools.com, Inc. (“Sharps e-Tools”), Sharps Manufacturing, Inc., Sharps Environmental Services, Inc. (dba Sharps Environmental Services of Texas, Inc.) and Sharps Safety, Inc. (collectively, “Sharps” or the “Company”).  Unless the context otherwise requires, “Company”, “we”, “us”, and “our” refer to Sharps Compliance Corp. and its subsidiaries. Sharps’ principal office is located at 9220 Kirby Drive, Suite 500, Houston, Texas 77054. Sharps’ treatment facility is located at 1544 NE Loop Carthage, Texas 75633.  Sharps’ has additional operation and warehouse space in Houston, Texas and College Park, Georgia.
 
 The Company provides access to all of its filings with the Securities and Exchange Commission (“SEC”) through its website www.sharpsinc.com, as soon as reasonably practicable after the reports are filed with the SEC.  The filings are also available via the SEC’s website at www.sec.gov/edgar/searchedgar/companysearch.html.
 
 PRODUCTS AND SERVICES
 
 Sharps is a leading provider of cost-effective disposal solutions for medical and pharmaceutical waste generated outside the hospital and large healthcare setting.  These solutions include Sharps Disposal by Mail System®, RxTakeAwayTM, Sharps®MWMSTM, Pitch-ItTM IV Poles, Trip LesSystem®, Sharps Pump Return Box, Sharps Enteral Pump Return Box, Sharps Secure®, Sharps SureTemp Tote®, IsoWash® Linen Recovery System, Biohazard Spill Clean-Up Kit and Disposal System, Sharps e-Tools, Sharps Environmental Services and Sharps Consulting.  Some products and services facilitate compliance with state and federal regulations by tracking, incinerating and documenting the disposal of medical waste.  Additionally, some products and services facilitate compliance with educational and training requirements required by federal, state, and local regulatory agencies.
 
 The Sharps Disposal by Mail System® is a comprehensive solution for the containment, transportation, destruction and tracking of medical waste generated outside the hospital and large healthcare setting.  The Sharps Disposal by Mail System® contains a securely sealed, leak and puncture resistant sharps container in several sizes ranging from one quart to eighteen gallons; United States Postal Service (“USPS”) approved shipping carton with priority mail (pre-paid) postage; absorbent material inside the container that can safely hold up to 150 milliliters of fluids; a red bag for additional containment and complete documentation and tracking manifest.  The Sharps Disposal by Mail System® is transported to the Company’s treatment facility for disposal (i.e. Sharps Environmental Services) in a pre-paid USPS approved shipping carton.  Upon destruction, Sharps provides electronic proof of destruction documentation to the customer through its proprietary Sharps TracerTM system.
 Demand for the Company’s flagship Sharps Disposal by Mail System®, which facilitates the proper and cost-effective disposal of medical waste including hypodermic needles, lancets and other devices or objects used to puncture or lacerate the skin (referred to as “sharps”), has been growing rapidly because of its cost-effective and convenient mail-back component and unique data tracking feature.  In addition, targeted opportunities continue to expand as a result of, (i) legislation mandating the proper disposal of sharps, (ii) the growing awareness of the need to properly handle sharps medical waste for safety and environmental concerns, (iii) the significant increase in self-injectable medications and (iv) the changing paradigm in the healthcare industry.
 
 The RxTakeAwayTM line of products, introduced in fiscal year 2009, facilitates the proper disposal of unused pharmaceuticals and medications.  The product line is designed for individual consumers and community facilities, such as assisted living, long-term care, mail-order pharmacy and correctional operations, to dispose of unused medications other than controlled substances and consists of a variety of sizes of containers and return packaging with pre-paid postage to the Company’s treatment facility.  Approximately four billion prescriptions are filled in the United States annually, and it has been estimated that as much as 40% of the dispensed medication goes unused, resulting in over 200 million pounds of pharmaceuticals which can adversely affect the environment if disposed of improperly.  Improperly disposed or diverted
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 unused medications have also been shown to increase the risk of accidental poisoning of citizens including children and teenagers.  The Company also introduced its proprietary tracking system, DrugTracerTM, designed for the unused patient medications products in fiscal year 2009.
 
 The Sharps®MWMSTM, a Medical Waste Management System, is a comprehensive medical and pharmaceutical waste solution which includes an array of services and products necessary to effectively collect, store and dispose of medical and pharmaceutical waste outside the hospital setting. Sharps®MWMSTM, which is designed for rapid deployment, features the Sharps Disposal By Mail System® and RxTakeAwayTM products combined with warehousing, inventory management, training, data and other services necessary to provide a comprehensive solution. The Sharps®MWMSTM is designed to be an integral part of governmental and commercial emergency preparedness programs.
  Also available with the Sharps®MWMSTM is the Sharps® Rx Recovery and Reporting System ("System"). This System delivers a turn-key approach to the collection, storage, audit, treatment and documentation of unused medications. The following Sharps® RxTakeAwayTM products are an integral component of this System:
  ·
RxTakeAwayTM Envelopes (8" x 11")
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RxTakeAwayTM 10 Gallon Box System (14.125" x 14.0625" x 12.50")
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RxTakeAwayTM 20 Gallon Box System (14.125" x 14.0625" x 24")
  ·
RxTakeAwayTM Rx 100 Recovery System (27" x 26" x 24")
  ·
RxTakeAwayTM Rx 200 Recovery System (34" x 18" x 24")
  ·
RxTakeAwayTM Rx 300 Recovery System (48" x 42" x 48") – Facilitates Pallet Sized Disposal Needs
  The Pitch-ItTM IV Poles are designed as a cost effective, portable, lightweight and disposable alternative to traditional IV poles used for gravity-fed or pump-administered infusions.  The innovative pole design provides opportunities for the home healthcare industry to improve logistical efficiencies by eliminating the costs and inconvenience of retrieving, cleaning, bagging, tagging and storing of traditional IV poles.  The Pitch-ItTM IV Poles are available in three models: (i) tabletop, (ii) floor and (iii) full-size with wheels.
 
 The Trip LesSystem® is a solution for the commercial home healthcare industry that eliminates costly trips by healthcare providers to the patient’s home after therapy has been completed.  The Trip LesSystem® has combined three complete programs for return and/or disposal.  All systems contain the Sharps Disposal by Mail System® along with either (i) a prepaid pump return box or (ii) a Pitch-ItTM IV Pole, depending on the patient’s therapy.
 
 Sharps’ asset return boxes (i.e., the Sharps Pump Return Box and Sharps Enteral Pump Return Box) are marketed to home healthcare providers, primarily for use with home infusion patients.  These products provide for the delivery and retrieval of expensive equipment, such as infusion and enteral pumps, phototherapy and TENS units, between the healthcare provider and the patient.
 
 The Sharps Secure® Needle Disposal System is the first commercially available wall mounted needle collection and disposal by mail system specifically designed for the retail and industrial markets. The system is mounted on the wall inside of public restrooms to provide a visible collection point for self-injectors to safely and privately dispose of used needles, which are often discarded in the public waste at commercial and office buildings. The system consists of a Sharps Disposal by Mail System® needle collection container, housed in the newly designed (patent pending) Sharps Secure® metal collection cabinet. The wall-mounted cabinet, which is manufactured from heavy gauge metal, has been designed with numerous safety features to ensure that needles properly disposed of will not present a hazard.
 
 The Sharps SureTemp Tote® is a disposable cooler that maintains a safe range for temperature-sensitive materials.  Sharps primarily markets the product to home healthcare providers to protect IV medications used in home infusion.  Its disposable nature relieves the home healthcare provider of tracking, cleaning and maintaining reusable coolers.
 
 The IsoWash® Linen Recovery System is designed to address the safe handling of linens contaminated with blood, bodily
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 fluids and other biohazards in the hospitality market. Historically, contaminated linens are discarded at most domestic hotels. IsoWash®, however, provides an alternative for safely handling and de-contaminating at a significant cost savings to linen replacement. Contaminated linens are isolated from human contact by being placed into the IsoWash® water-soluble bag, which is clear to reveal the bag’s contents and is marked with a biohazard warning. The isolated linens are placed in industrial laundry equipment for recovery. Once the wash cycle begins, the bag dissolves within two minutes allowing chemicals in the wash to safely clean the contaminated laundry with minimal handling. Sharps is the exclusive distributor for the patented product.
 
 The Biohazard Spill Clean-Up Kit and Disposal System is a complete solution for both cleanup and disposal by mail of bio-hazardous spill waste and materials. This convenient system comes complete with everything necessary for the clean up of potentially bio-hazardous materials such as blood and bodily fluids.  The Sharps system provides a means to safely, easily and legally remove these materials from your location and transport them to a destruction facility via the USPS.  Sharps Bio-Hazard Clean-Up Kit has the capacity to contain spills of up to one liter of contaminant.  Spill clean-up equipment, transportation and proper disposal are all included in the price of the system.
 
 The Sharps e-Tools online services include SharpsTracerTM and AssetTracerTM.  SharpsTracerTM is a manifest imaging and tracking program for registered customers for the purpose of tracking and certifying the transportation and disposal of regulated medical waste.  SharpsTracerTM eliminates the need for traditional paper-based methods of manifest tracking and is designed to enhance customer efficiencies with an automatic evidence of proof of destruction, market data collection abilities and return to store programs capabilities.  AssetTracerTM allows its registered subscribers to effectively manage all types of capital assets through a single, organized database.  The program can be used in conjunction with other Company products or independently and includes management reporting for regulatory compliance, preventative maintenance and asset status and/or location.
 
 Sharps Environmental Services provides environmental solutions for customers with a wide variety of waste disposal needs.  Primary services include the destruction and disposal of (i) medical sharps waste, (ii) legal/confidential documents, (iii) pharmaceutical products and (iv) non-hazardous industrial waste.  This service allows the Company to directly oversee the proper disposal of its Sharps Disposal by Mail Systems® and RxTakeAwayTM products.
 
 Sharps Consulting provides a broad range of services including (i) analysis of legal and regulatory implications of present waste handling practices, (ii) communicating new legislation and industry best practices minimizing employee exposure and liability, (iii) serving as intermediary with regulatory agencies and (iv) educating employees on infection control practices and the dangers of improperly handled medical waste.
 
 MARKETS
 
 The Company’s key markets for its products and services are as follows:
 
 -
Healthcare
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Government
 -
Retail
 -
Pharmaceutical Manufacturer
 -
Professional
 -
Hospitality
 -
Commercial / Industrial
 -
Agriculture
  Healthcare: The Company markets its Sharps Disposal by Mail System®, Pitch-ItTM IV Poles, Trip LesSystem®, Sharps Pump Return Box, Sharps Enteral Pump Return Box and Sharps SureTemp Tote® products to the Healthcare segment. This market consists primarily of home healthcare companies and generated 36% of the Company’s billings for the fiscal year ended June 30, 2009.
 
 Government:  The Company markets its Sharps®MWMSTM, Sharps Disposal by Mail System®, and RxTakeAwayTM systems to the Government segment. This market consists of government agencies (federal, state and local) that purchase products and services for (i) emergency preparedness and public and environmental safety and (ii) proper disposal of patient
  5
 syringes and unused pharmaceuticals.On February 2, 2009, the Company announced a $40 million contract award (the “U.S. Government Contract”) award to provide its Sharps®MWMSTM to an agency of the United States Government. The total contract is valued at approximately $40 million and is expected to be executed over a five year period (one year plus four option years). The Company has received a purchase order for $28.5 million which represents products and services to be provided during the first contract year of which $3.0 million was billed in the quarter ended March 31, 2009 and $3 million in the quarter ended June 30, 2009. The following four option years represent payment for program maintenance (see description of Services below). The U.S. Government Contract is, as with all contracts or subcontracts involving the federal government, terminable, or subject to renegotiation, by the applicable governmental agency on 30 days notice, at the option of the governmental agency.The Government market generated 30% of the Company’s billings for the fiscal year ended June 30, 2009.
 
 Retail: The Company markets its Sharps Disposal by Mail System® products to the Retail segment. This market consists of, (i) companies that purchase products to properly dispose of syringes utilized to administer year-round as well as seasonal flu shots, and (ii) non-emergency clinics located in the retail setting.  The Retail market generated 9.4% of the Company’s billings for the fiscal year ended June 30, 2009.
 
 Pharmaceutical Manufacturer: The Company markets its Sharps Disposal by Mail System® products to pharmaceutical manufacturers who purchase the Sharps Disposal By Mail Systems® for their self-injecting patients and as an integral component to their patient support programs.  The Pharmaceutical segment generated 7.5% of the Company’s billings for the fiscal year ended June 30, 2009.
 
 Professional: The Company markets its Sharps Disposal by Mail System® products to the Professional segment. This market includes physician, dental, veterinarian and other service-related entities. The Professional segment generated 5.1% of the Company’s billings for the fiscal year ended June 30, 2009.
 
 Hospitality:The Company markets its Sharps Disposal by Mail System®, IsoWash® Linen Recovery System, Biohazard Spill Clean-Up Kit and Disposal System products to the Hospitality segment. This market includes hotel, retirement and assisted living and contract food service provider companies. The Hospitality segment generated 4.4% of the Company’s billings for the fiscal year ended June 30, 2009.
 
 Commercial:The Company markets its Sharps Disposal by Mail System®, Sharps Secure®,and Biohazard Spill Clean-Up Kit products to the Commercial / Industrial market. This market includes a wide variety of customers including those with safety, industrial and other facilities. The Commercial / Industrial segment generated 2.3% of the Company’s billings for the fiscal year ended June 30, 2009.
 
 Agriculture: The Company markets its Sharps Disposal by Mail System® products to the Agriculture segment. This market consists of companies that purchase the products to properly dispose of syringes used to inject farm animals (for example, dairy cattle) and generated 2% of the Company’s billings for the fiscal year ended June 30, 2009.
  RESEARCH AND DEVELOPMENT
 
 The Company continues to develop new applications for the Sharps Disposal by Mail System® and RxTAkeAwayTM products and services in many different markets throughout the country to address the proper disposal of the estimated two to three billion syringes generated outside the hospital and healthcare setting and the estimated 200 million pounds of unused dispensed medications.
 
 MARKET RISKS
 
 Although Sharps has experienced growth in revenues over the past few years, there is an inherent concentration of credit risk associated with accounts receivable arising from sales to its major customers. For the fiscal year ended June 30, 2009, four customers represented approximately 48% of revenues. Those same four customers represented approximately 28%, or $503,735 of the total accounts receivable balance at June 30, 2009.  For the fiscal year ended June 30, 2008, four customers represented approximately 38% of revenues.  Those same four customers represented approximately 34%, or $402,723 of the total accounts receivable balance at June 30, 2008.   The Company may be adversely affected by its dependence on a limited number of high volume customers.  Management believes that the risks are mitigated by, (i) the contractual
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 relationships with key customers, (ii) the reputation of the Company and its high quality products and (iii) the continued diversification of the Company’s products and services into additional markets outside of its traditional Healthcare customer base.
 
 Currently, the majority of Sharps transportation is sourced with the United States Postal Service (“USPS”), which consists of delivering the Sharps Disposal by Mail System® from the end user to the Company’s incineration facility.  The Company also has an arrangement with United Parcel Service Inc. (“UPS”) whereby UPS transports the Company’s Sharps Disposal by Mail System® products from the non-healthcare facility end user to the Company’s incineration facility. The Company began selling a UPS product to select customers in fiscal year 2007. Management believes the risk of dependence on the USPS is mitigated by (i) the arrangement with UPS and (ii) the long-standing business relationship with and successful performance by USPS.
 
 INTELLECTUAL PROPERTY
 
 The Company has a portfolio of trademarks and patents, both granted and pending. The Company considers its trademarks important in the marketing of its products and services, including Sharps Disposal by Mail System®, RxTakeAwayTM, Sharps®MWMSTM, Pitch-ItTM IV Poles and Trip LesSystem®, among others.  With respect to their registered marks, the Company will continue using such marks and will file all necessary documentation to maintain their registrations for the foreseeable future. The Company maintains patents on its Pitch-ItTM IV Poles which are scheduled to expire in 2012. The Company has a number of patents pending, including those applicable to the Company’s Sharps Secure® Needle Disposal System and the Sharps® Medical Waste Management SystemTM, and is in the process of applying for other trademarks and patents.
 
 COMPETITION
 
 There are several competitors who offer similar or identical products and services that facilitate the disposal of medical waste outside the hospital and large healthcare setting. There are also a number of companies that focus specifically on the marketing of products and services which facilitate disposal through transport by the USPS (similar to the Company’s products).  These companies are typically smaller organizations or divisions of larger medical or solid waste companies. While Sharps does not believe it currently faces significant competition in the sharps disposal by mail business, it is likely that this could change as the Company continues its success and the country becomes more aware of the need for the proper disposal of medical and pharmaceutical waste. The Company believes its first mover advantages and excellent industry reputation, quality solutions and products, as well as its capabilities as a vertically integrated producer of products and services, differentiates it from most competition.   It is possible that future competition may also arise from companies that are larger and better capitalized than the Company.
 
 SUPPLIERS
 
 The Company maintains relationships with multiple raw materials suppliers and vendors in order to meet customer demands and assure availability of our products and solutions. With respect to the Sharps Disposal By Mail System® solutions, the Company owns all proprietary molds and dies and utilizes three contract manufacturers for the production of the primary raw materials. The Company believes that alternative suitable contract manufacturers are readily available to meet the production specifications of the Company’s products and solutions.  With respect to the Company’s Pitch-ItTM IV Poles, the Company maintains an exclusive manufacturing relationship with Drive Medical Design & Manufacturing. The Company utilizes national suppliers such as Southern Container, Uline and W. W. Grainger, Inc. for the majority of the raw materials used in the Company’s other products and solutions.
 
 GOVERNMENT REGULATION
 
 Sharps is subject to extensive federal, state, and/or local laws, rules and regulations. The Company is required to obtain permits, authorizations, approvals, certificates and other types of governmental permission from the EPA, the State of Texas and the local governments in Carthage, Texas with respect to our treatment facility. Such laws, rules and regulations have been established to promote occupational safety and health standards and certain standards have been established in
  7
 connection with the handling, transportation and disposal of certain types of medical and solid wastes, including mailed sharps. Our estimated annual costs of complying with these laws, regulations and guidelines is currently less than $100,000 per year. In the event additional laws, rules or regulations are adopted which affect our business, additional expenditures may be required in order for Sharps to be in compliance with such changing laws, rules and regulations.
 
 COMPLIANCE WITH ENVIORNMENTAL LAWS
 
 In November 2005 and September 2009, the EPA and the Texas Commission on Environmental Quality promulgated new regulations under the Clean Air Act and associated state statutes which will affect the operations of the incineration facility located in Carthage, Texas.  These regulations modify the emission limits and monitoring procedures required to operate an incineration facility.  The new rules will necessitate changes to the Company’s owned incinerator and pollution control equipment at the facility or require installation of an alternative treatment method to ensure compliance.  These regulations will also require the Company to obtain a Title V permit and conduct additional monitoring.The Company is required to comply with these new standards by the end of 2012.Such changes will require the Company to incur significant capital expenditures in order to meet the requirements of the regulations.  The Company has studied these amended regulations and their options, and decided in the interim to move forward with the process of adding alternative technology, autoclaving, which meets the EPA Clean Air Act requirements, for medical waste disposal which became fully operational in February 2009 at its current facility in Carthage, Texas.  Autoclaving is a process that treats regulated waste with steam at high temperature and pressure to kill pathogens.  Combining the autoclaving with a shredding or grinder process allows the waste to be disposed in a landfill operation.  The Company believes autoclaving is environmentally cleaner and a less costly method of treating medical waste than incineration. Due to its continued growth, the Company anticipates that it will incur additional capital expenditures needed in order to meet the new air emission regulations. The additional capital expenditures are estimated to range from approximately $1.0 million to $2.5 million.The Company expects capital expenditures related to these new regulations to be made by the end of the first half of fiscal year 2013.These expenditures may allow the Company to increase the facility’s permitted incineration capacity from eleven tons per day to forty tons per day.  The amount of medical waste which can be treated through the incinerator is capped at 10% of the permitted capacity.  As a result, the amount of medical waste we treat could potentially increase from 1.1 tons per day to 4 tons per day.
 
 EMPLOYEES
 
 As of June 30, 2009 Sharps employed 43 individuals, of which 42 were full-time employees.
 
 ITEM 1A.  RISK FACTORS
 
 Aggressive pricing by existing competitors and the entrance of new competitors could drive down the Company’s profits and slow its growth.
 
 Although the Company currently has limited competition in its core Sharps Disposal By Mail Systems® business, it is possible that other companies may enter into or expand into the business. Potential competitors could include large medical waste organizations, solid waste companies or reverse distributors. These potential competitors could have greater levels of capital, broader infrastructure and significantly more personnel.
 
 The loss of the Company’s senior executives could affect the Company’s ability to manage the business profitability.
 
 Sharps’ growth and development to date has been largely dependent on the active participation and leadership of its senior management team consisting of the Company’s Chairman and CEO, Executive VP & CFO, Sr. VP of Sales and Sr. VP of Operations. The Company believes that the continued success of the business is largely dependent upon the continued employment of the senior management team and has, therefore, (i) entered into individual employment agreements with key personnel and (ii) granted equity-based stock compensation to senior management members in order to provide incentive for their continued employment with the Company. The unplanned loss of one or more of the senior management team could disrupt and adversely impact the Company’s ability to execute its business plan.
  8
 The lack of customer long-term volume commitments could adversely affect the Company’s profits and future growth.
 
 Although the Company does enter into exclusive contracts with the majority of its enterprise customers and including volume purchase incentives, these contracts do not have provisions for firm long-term volume commitments. In general, customer purchase orders may be canceled and order volume levels can be changed or delayed with limited or no penalties. Sharps cannot assure the replacement of canceled, delayed or reduced purchase orders which could significantly affect the financial performance of the Company.
 
 An inability to maintain existing government contracts or win additional government contracts over an extended period could have a material adverse effect on our operations and adversely affect our future revenue.
 
 A material amount of our revenues are generated through the contract with an agency of the U.S. government. Our revenues for the first year of the five year contract (one year plus four option years) are approximately $28.5 million ($6 million of which was recognized in fiscal year 2009, $11.1 million of which is expected to be recognized in the quarter ending September 30, 2009 and $11.5 million of which is expected to be recognized in the quarter ending December 31, 2009). The annual revenue attributable to this contract for years two through five is expected to be approximately $2.9 million. All contracts with, or subcontracts involving, the federal government are terminable, or subject to renegotiation, by the applicable governmental agency on 30 days notice, at the option of the governmental agency. If we fail to maintain or replace these relationships, or if a material contract is terminated or renegotiated in a manner that is materially adverse to us, our revenues and future operations could be materially adversely affected.
  The Company is subject to federal, state and local laws regarding the operation of its incinerator and autoclaving facility and existing or future regulations may restrict the Company’s operations, increase its costs of operations or require the Company to make additional capital expenditures.
 
 The Company’s business utilizes an incinerator facility for the proper disposal of sharps and pharmaceutical waste. The Company’s owned treatment facility is located in Carthage, Texas (Panola County). Prior to the purchase of the facility in January 2008, the Company operated the treatment facility since 1999. The Company believes it operates and maintains the facility in compliance with all federal, state and local laws and/or any other regulatory agency involving solid waste disposal. The cost of such compliance for the year ended June 30, 2009 was $9,225. Although the Company has an agreement with a secondary burn facility to provide services in the event the incinerator is unavailable, any disruption in the availability of a disposal facility or increased governmental regulation could have an adverse impact on the Company. The Company can make no assurances that no such disruption or burdensome regulation will occur in the future.
 
 The Company believes the facility is in compliance with all applicable federal, state, local and/or regulatory agency requirements, air pollution and TCEQ (“Texas Commission on Environmental Quality”) regulations. See Change in Government Regulation below which discusses the future requirement to install additional equipment to the Company’s incinerator (estimated to range from $1.0 to $2.5 million) and the Company’s installation of autoclave technology during fiscal year 2009 which is not impacted by the change in Government regulations.
 
 In February 2009, the Company installed a state-of-the-art autoclave system and technology capable of treating up to seven tons per day of medical waste at the same facility.  Autoclaving is a process that treats medical waste with steam at high temperature and pressure to kill pathogens.  An autoclave is environmentally cleaner and is a less costly method of treating most medical waste versus traditional incineration.  The addition of the autoclave is not impacted by the amended EPA Clean Air Act.
 
 The Company is subject to federal, state and local laws and existing or future regulations may restrict the Company’s operations, and increase its costs of operations in connection with handling and transportation of mailed sharps.
 
 Sharps is required to operate within guidelines established by federal, state, and/or local regulatory agencies. Such guidelines have been established to promote occupational safety and health standards and certain standards have been established in connection with the handling, transportation and disposal of certain types of medical and solid wastes, including mailed sharps. Sharps believes that it is currently in compliance in all material respects with all applicable laws and regulations governing its business. However, in the event additional guidelines are established to more specifically control the business
  9
 of Sharps, including the environmental services subsidiary, additional expenditures may be required in order for Sharps to be in compliance with such changing regulations. Furthermore, any material relaxation of any existing regulatory requirements governing the transportation and disposal of medical sharps products could result in a reduced demand for Sharps’ products and services and could have a material adverse effect on Sharps’ revenues and financial condition. The scope and duration of existing and future regulations affecting the medical and solid waste disposal industry cannot be anticipated and are subject to change due to political and economic pressures.
 
 In November of 2005 and September of 2009, the EPA amended the Clean Air Act which will affect the operations of the incineration facility located in Carthage, Texas.  The regulation modifies the emission limits and monitoring procedures required to operate an incineration facility.  The new rules will necessitate changes to the Company’s owned incinerator and pollution control equipment at the facility or require installation of an alternative treatment method to ensure compliance.  Such change would require the Company to incur significant capital expenditures in order to meet the requirements of the regulations.  The regulation allows a minimum period of three years and a maximum of five years to comply after the date the final rule was published.  The Company has studied the current amended EPA Clean Air Act and its options, and decided in the interim to move forward with the process of adding alternative technology, autoclaving, which meets the EPA Clean Air Act requirements (see above), for medical waste disposal which became fully operational in February 2009 at its current facility in Carthage, Texas.  Autoclaving is a process that treats regulated waste with steam at high temperature and pressure to kill pathogens.  Combining the autoclaving with a shredding or grinder process allows the waste to be disposed in a landfill operation.  The Company believes autoclaving is environmentally cleaner and a less costly method of treating medical waste than incineration. Due to its continued growth, the Company has decided that it will incur additional capital expenditures needed in order to meet the new regulations. The additional capital expenditures are estimated to range from approximately $1.0 to approximately $2.5 million and would increase its permitted incineration capacity from eleven tons per day to forty tons per day (limited to four tons per day, or 10% of permitted capacity, of medical waste treatment).
 
 The possibility of postal work interruptions would adversely affect the disposal element of the Company’s business.
 
 Sharps currently transports (from the patient or user to the Company’s treatment facility) the majority of its disposal products using the USPS, therefore, any long-term interruption in USPS delivery services would disrupt the disposal element of the Company’s business. Postal delivery interruptions are rare. Additionally, since USPS employees are federal employees, such employees may be prohibited from engaging in or continuing a postal work stoppage, although there can be no assurance that such work stoppage can be avoided. As noted above, the Company entered into an arrangement with UPS whereby UPS transports the Company’s Sharps Disposal by Mail System® products from the non-healthcare facility end user to the Company’s owned treatment facility. The Company began selling a UPS product to select markets in fiscal year 2007. Additionally, the Company is studying the feasibility of the use of a consolidator to transport the Sharps Disposal By Mail System® products from the patient or user to the Company’s treatment facility.
 
 The Company’s stock has experienced, and may continue to experience, price volatility and low trading volume.
 
 The Company’s common stock has been listed on the The NASDAQ Capital Market (“NASDAQ”) under the symbol “SMED” since May 6, 2009.  The daily trading volumes for the Company’s common stock are, and may continue to be relatively small compared to many other publicly traded securities.  Since trading on the NASDAQ, the Company’s average daily trading volume has been approximately 70,000 shares.  It may be difficult for you to sell your shares in the public market at any given time at prevailing prices, and the price of the Company’s common stock may, therefore, be volatile.
 
 The discussion and analysis presented below should be read in conjunction with the consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.  See “Information Regarding Forward Looking Statements.”
 
 ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 The discussion and analysis presented below should be read in conjunction with the consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.  See “Information Regarding Forward Looking Statements.”
 
  10
 RESULTS OF OPERATIONS
 
 The following table sets forth, for the periods indicated, certain items from the Company’s Consolidated Statements of Income, expressed as a percentage of revenue:
 
 Year Ended June 30,2009


2008Net revenues


100
%


100
%Costs and expensesCost of revenues


(48
%)


(60
%)Selling, general and administrative


(33
%)


(37
%)Depreciation and amortization


(2
%)


(3
%)Total costs and  expenses


(83
%)


(100
%)Income from operations


17
%


0
%Total other income


0
%


1
%Income tax expense (benefit)


(4
%)


0
%Net income


21
%


1
%
 
 YEAR ENDED JUNE 30, 2009 COMPARED TO YEAR ENDED JUNE 30, 2008
 
 Total revenues for the fiscal year ended June 30, 2009 of $20,297,207 increased by $7,456,296, or 58%, over the total revenues for the fiscal year ended June 30, 2008, of $12,840,911.  Billings by market are as follows:
  Year Ended June 30,2009


2008


Variance(Unaudited)


(Unaudited)


(Unaudited)BILLINGS BY MARKET:Health Care

$
7,454,100


$
7,293,267


$
160,833Government


6,254,346



204,403



6,049,943Retail


1,932,951



1,124,040



808,911Pharmaceutical


1,558,211



889,766



668,445Professional


1,058,759



748,919



309,840Hospitality


916,850



1,202,330



(285,480
)Non-Mailable


517,227



457,788



59,439Commercial


479,255



617,390



(138,135
)Agriculture


360,115



502,878



(142,763
)Other


143,300



144,120



(820
)Subtotal


20,675,114



13,184,901



7,490,213GAAP Adjustment *


(377,907
)


(343,990
)


(33,917
)Revenue Reported

$
20,297,207


$
12,840,911


$
7,456,296
  *Represents the net impact of the revenue recognition adjustment required to arrive at reported GAAP revenue.  Customer billings include all invoiced amounts associated with products shipped during the period reported.  GAAP revenue includes customer billings as well as numerous adjustments necessary to reflect, (i) the deferral of a portion of current period sales and (ii) recognition of certain revenue associated with products returned for treatment and destruction.  The difference between customer billings and GAAP revenue is reflected in the Company’s balance sheet as deferred revenue.  See Note 2 “Revenue Recognition” in “Notes to Consolidated Financial Statements”.
 
 The increase in revenues is primarily attributable to increased billings in the Government ($6,049,943), Retail ($808,911),
  11
 Pharmaceutical ($668,445), Professional ($309,840), Health Care ($160,833) and Non-Mailable ($59,439) markets. These increases were partially offset by decreased billings in the Hospitality ($285,480), Agriculture ($142,763) and Commercial ($138,135) markets. The increase in the Government market is a result of $6.0 million in billings recorded in the third and fourth quarters of fiscal year 2009 related to the sale of the Company’s Sharps®MWMSTM to an agency of the United States Government under the contract announced in February 2009. The increase in the billings in the Retail market is a result of, (i) increased market and customer penetration, (ii) a strong and early start to the 2009 flu shot season (i.e., purchases of the Sharps Disposal By Mail Systems® by retail clinics who use the products to collect, store and properly dispose of syringes used to administer flu and year-round shots) and (iii) increased purchases of the Sharps Disposal By Mail Systems® by community support programs, primarily in California.  The increase in Pharmaceutical market billings is due to the continued sale of the Company’s Sharps Disposal By Mail System® products to pharmaceutical manufacturers for use in their patient support and compliance programs.  The increase in the Health Care market billings is related to the growing number of patients in the healthcare industry and the success of the Company’s recent expansion of its distributor network in the home infusion market. The increase in the Professional market billings is being driven by higher demand for the Company’s products as professional offices (doctors, dentists, veterinarians, etc.) are made aware of the Company’s Sharps Disposal By Mail System® products as cost-effective and convenient alternatives to the traditional medical waste pick up service.  The decrease in the Hospitality market billings is a result of a large order of Biohazard Spill Clean-Up Kits fulfilled during the first and second quarters of fiscal year 2008.  The decrease in the Agriculture market is primarily attributable to decreased demand of the Sharps Disposal by Mail System by a customer who provides the product to facilitate the disposal of syringes used to inject dairy cattle due to growing public concern over the use of hormones.  The decrease in the Commercial market is a result of several large orders in fiscal year 2008.
 
 Cost of revenues for the year ended June 30, 2009 of $9,840,965 was 48.5% of revenues. Cost of revenues for the year ended June 30, 2008 of $7,770,366 was 60% of revenues.  The higher gross margin for the fiscal year ended June 30, 2009 of 51.5% (versus 39.5% for the prior fiscal year) was a result of (i) the higher revenue (i.e. higher coverage of fixed cost components in cost of goods sold, or operating leverage) and (ii) the mix of products and services sold in fiscal year 2009 versus fiscal year 2008.
 
 Selling, general and administrative (“S, G & A”) expenses for the twelve months ended June 30, 2009 of $6,092,308, increased by $1,309,776, or 27%, over the S, G & A expenses for the twelve months ended June 30, 2008.  The increase in S, G & A expense is primarily due to higher, (i) non-cash 123(R) stock based compensation expense of $332,073, (ii) accrual for management incentive compensation of $329,000, (iii) compensation and benefit expense of $285,971, (iv) professional fees of $162,988, (v) investor relations expenses of $59,378, (vi) expenses related to the offsite server hosted facility which facilitates security and disaster recovery, server backup services and enhanced internet service of $59,806, (vii) NASDAQ listing-related expenses of $55,000, (viii) housing-related costs for the Company’s former President and Chief Opearting Officer (“COO”) of $50,860, (ix) payroll taxes of $33,591, (x) costs related to software post-implementation support of $27,300, (xi) property and casualty insurance expenses of $19,801, (xii) facility expenses of $18,209 and (xiii) general office expenses of $17,734. The increase in non-cash 123(R) stock-based award expense was primarily due to the expense associated with the award of restricted stock in October 2008 to the Company’s former President and COO and the award of options in November 2008 to the Chief Financial Officer and the Senior Vice President of Sales. The increase in compensation expense is due primarily to the hiring of the former President and COO in October 2008 (departed in April 2009), increased headcount to support the growth experienced by the Company and increased sales and marketing-related activities.  The increase in professional fees was a result of expenses associated with, (i) various regulatory filings, (ii) outside consultation related to the recent U.S. Government contract award, (iii) Form S-8 (Sharps Compliance Corp. 1993 Stock Plan) preparation and related filing expenses, and (iv) legal fees associated with the Ronald Pierce arbitration and general corporate matters. Payroll taxes increased resulting from (i) increased compensation expense and corresponding Company paid portion of payroll tax, (ii) the Company portion of payroll taxes generated from the imputed income related to the October 2008 restricted stock award to the Company’s former President and COO (83(b) election) and (iii) the Company portion of payroll taxes generated by the imputed income related to the exercise of employee stock options.
 
 During the fourth quarter of fiscal year 2009, the Company recorded a special charge of $512,372, or $0.02 per diluted share, which represents expenses incurred with the resignation and corresponding termination of employment of the Company’s former President and COO.  The special charge consists of (i) non-cash 123(R) expense of $300,909 (resulting from accelerated vesting of restricted stock awards), (ii) severance-related items totaling $143,720 (including severance pay and insurance coverage) and (iii) a cash payment of $67,743. During the fiscal year ended June 30, 2008, the Company recorded a special charge of $67,541, $0.00 per diluted share, for severance related costs incurred in conjunction with the termination of a sales person (former Senior Vice President of Sales and Marketing).
  12
 The Company generated operating income of $3,464,007 for the year ended June 30, 2009 compared to an operating loss of $696 for the year ended June 30, 2008.  The operating margin was 17.1% for the year ended June 30, 2009 compared to 0.0% for the year ended June 30, 2008. The increase in operating income and operating margin is a result of the above mentioned increase in revenue and operating leverage inherent in the Company’s business model.
 
 The Company generated income before tax of $3,497,239  (17.2% of revenue) for the year ended June 30, 2009 versus a pre-tax income of $85,019 (1% of revenue) for the year ended June 30, 2008.  The increase in pre-tax income is a result of higher operating income (discussed above).
 
 The Company generated net income of $4,197,090 for the year ended June 30, 2009 compared to net income of $81,573 for the year ended June 30, 2008.  The increase in net income is a result of higher operating income (discussed above) and the reduction in the deferred tax valuation allowance of $1,806,292 and corresponding credit to tax expense recorded in the quarter ending December 31, 2008 which was a result of the Company’s evaluation of the future realization of deferred tax assets and related valuation allowance.
 
 The Company reported diluted earnings per share of $0.30 for the year ended June 30, 2009 versus diluted earnings per share of $0.01 for the year ended June 30, 2008.  The increase in diluted earnings per share is a result of higher net income (discussed above).
 
 PROSPECTS FOR THE FUTURE
 
 The Company continues to take advantage of the many opportunities in the markets served as communities, consumers, government and industriesbecome more aware of the proper disposal of medical sharps (syringes, lancets, etc.) and unused dispensed medications. This education process was enhanced in March 2004 when the U. S. Environmental Protection Agency (“EPA”) issued its new guidelines for the proper disposal of medical sharps (see www.epa.gov/epaoswer/other/medical/sharps.htm).  Additionally, in July 2006 both the states of California and Massachusetts passed legislation designed to mandate appropriate disposal of sharps waste necessary to protect the general public and workers from potential exposure to contagious diseases and health and safety risks. Currently there are a total of seven states with legislation banning the disposal of used syringes in the trash, five states considering similar legislation, while the remaining states operate under the EPA guidance noted above.   In August 2008, the U.S. House of Representatives and U.S. Senate introduced bills 3251 and 1909, respectively, which would provide for Medicare reimbursement, under part D, for the safe and effective disposal of used needles and syringes. Among the methods of disposal recommended as part of the above noted regulatory actions are mail-back programs such as those marketed by the Company.  The Company estimates that there are an estimated two to three billion used syringes disposed of in the United States outside of the hospital setting. Additionally, the Company estimates that it would require 30 to 40 million Sharps Disposal by Mail System® products to properly dispose of all such syringes, which would equate to a $1 billion small quantity generator market opportunity. Based upon the current level of sales, the Company estimates that this $1 billion market has only been penetrated by approximately 1% or less.
 
 The Company continues to develop new products and services including the Sharps® MWMSTM, the RxTakeAwayTM line of products and 18 gallon Medical Professional Sharps Disposal by Mail System®. The Company continues to develop products and services designed to facilitate the proper and cost effective disposal of medical waste generated outside the hospital and large healthcare facilities and of unused dispensed medications. The Company believes its future growth will be driven by, among other items, (i) the positive impact and awareness created by the existing and above noted regulatory actions as well as additional potential future legislation, (ii) the effects of the Company’s extensive direct marketing efforts and (iii) the Company’s leadership position in the development and sale of products and services designed to properly and cost effectively dispose of medical waste generated outside the hospital and large healthcare setting and unused dispensed medications..
 Demand for the Company’s primary product, the Sharps Disposal by Mail System®, which facilitates the proper and cost-effective disposal of medical waste including hypodermic needles, lancets and other devices or objects used to puncture or lacerate the skin (referred to as “sharps”), has been growing rapidly because of its cost-effective and convenient mail-back component and unique data tracking feature.  In addition, targeted opportunities continue to expand as a result of, (i) legislation mandating the proper disposal of sharps, (ii) the growing awareness of the need to properly handle sharps medical waste for safety and environmental concerns, (iii) the significant increase in self-injectable medications and (iv) the changing paradigm in the healthcare industry.
  13
 The Company anticipates a strong flu shot business (included in the Retail market billings) in light of the global concern over the H1N1 flu virus.  While the flu shot business traditionally positively impacts the quarter ended September 30, the Company believes that both the September 30, 2009 and December 31, 2009 quarters could be positively impacted by the flu shot season.  Additionally, the Company recorded higher flu shot related billings in the quarter ended June 30, 2009 in conjunction with the early start of the flu shot season related orders.
 
 The Company is actively marketing its Sharps®MWMSTM to federal, state and local agencies as well as to large corporations.  On February 2, 2009, the Company announced a $40 million contract award (the “U.S. Government Contract”) to provide its Sharps®MWMSTM to an agency of the United States Government. The total contract is valued at approximately $40 million and is expected to be executed over a five year period (one year plus four option years). The Company has received a purchase order for $28.5 million which represents products and services to be provided during the first contract year of which $3.0 million was billed in the quarter ended March 31, 2009 and $3 million in the quarter ended June 30, 2009. The following four option years represent payment for program maintenance (see description of Services below). The U.S. Government Contract is, as with all contracts or subcontracts involving the federal government, terminable, or subject to renegotiation, by the applicable governmental agency on 30 days notice, at the option of the governmental agency.
 
 The Sharps®MWMSTM, a Medical Waste Management System, is a comprehensive medical waste solution which includes an array of products and services necessary to effectively collect, store and dispose of medical waste in the alternate site market (i.e., outside of the hospital or large healthcare facility setting) . The System, which is designed for rapid deployment, features the Sharps Disposal By Mail System® products (the “Products”) combined with warehousing, inventory management, training, data and other services (the “Services”) necessary to provide a comprehensive solution. The Sharps®MWMSTM is designed to be an integral part of governmental and commercial emergency preparedness programs.
 
 The Company recognizes revenue for the Product portion of the contract in accordance with the revenue recognition policy for the Sharps Disposal By Mail System® products. The Services portion of the contract, described above, is recognized as revenue as services are performed.
 
 The Company recognized $3 million from the above mentioned contract in the quarter ended March 31, 2009 and $3 million in the quarter ended June 30, 2009.  Based upon the current production schedule, the Company expects to recognize revenue of about $11.1 million in the first fiscal year 2010 quarter ending September 30, 2009 and an additional $11.5 million of revenue in the second fiscal year 2010 quarter ending December 31, 2009.  The remaining $11.5 million is expected to be earned over the fiscal years 2011 through 2014.
 
 The Company serves many markets including, but not limited to, Healthcare, Government, Professional, Pharmaceutical, Industrial, Agriculture and Hospitality. As shown in the results for the fiscal year ended June 30, 2009, the Company has not experienced any downturn in its overall business, rather an increase in the majority of markets in which it serves. Order activity and purchase trends remain positive. Additionally, the Company (i) expects a very strong flu shot business for the 2009 flu season as a result of the recent concerns regarding the H1N1 virus (as discussed above) and (ii) believes it will experience significant growth over the next two quarters (ending September 30, 2009 and December 31, 2009) as it continues to execute on its recently announced $40 million U.S. Government project. While the Company’s current earnings, cash flows and liquidity are strong, they are expected to increase significantly over the next two quarters. The Company currently has no debt, an undrawn $2.5 million line of credit and does not expect to raise funds (debt or equity) for the foreseeable future.
 
 The above amounts are estimates only and are subject to change. Although the Company believes the amounts above to be reasonable based upon its current project plan, it makes no assurances regarding the actual recognition of revenue by fiscal year, which could vary significantly from that noted above.
 
 LIQUIDITY AND CAPITAL RESOURCES
 
 Cash and cash equivalents increased by $2,756,651 to $4,791,870 at June 30, 2009 from $2,035,219 at June 30, 2008.The increase in cash is due to cash generated by operating activities of $4,795,918 plus proceeds from the exercise of stock options of $451,470 and excess tax benefits from stock-based award activity of $15,036 partially offset by additions to
  14
 property and equipment (i.e. capital expenditures) and intangible assets of $2,505,773.
  Accounts receivable increased by $422,440 to $1,606,415 at June 30, 2009 from $1,183,975 at June 30, 2008. The increase is primarily due to a $426,000 billing in the fourth quarter of the 2009 fiscal year related to the launch of the Company’s latest patient support and compliance program for a major pharmaceutical manufacturer.
 
 Inventory increased by $1,701,643 to $2,282,504 at June 30, 2009 from $580,861 at June 30, 2008.  The increase in inventory is attributable to (i) the production of products in conjunction with the U.S. Government Contract (ii) the build up of inventory in advance of the anticipated growth in the 2009 flu season and (iii) bulk purchases of Sharps Secure® and Pitch-ItTM IV Poles which are manufactured overseas (six to eight weeks of product sales ordered at a time).
 
 Deferred income tax benefits of $3,123,742 were recorded in the quarter ended December 31, 2008 due to the Company’s decision to reduce the deferred tax valuation allowance to zero. The decision was made after evaluation of the following circumstances (i) recent $40 million U.S. Government contract award to the Company and the corresponding anticipated taxable income, (ii) the anticipated taxable income for third and fourth quarters of fiscal 2009 and the full fiscal year 2010 and (iii) the expected utilization in fiscal 2009 and 2010 of the remaining net operating loss carry forward.  At the fiscal year ended June 30, 2009 the deferred income tax benefit balance was $2,138,007.
 
 Property and equipment increased by $2,069,396 to $3,445,053 at June 30, 2009 from $1,375,657 at June 30, 2008 due to capital expenditures of $2,461,085 partially offset by depreciation expense of $391,689. The capital expenditures are attributable primarily to, (i) warehouse racking, warehouse equipment and assembly equipment of $973,668 related to the expansion of the Company’s warehouse facilities and corresponding growth, (ii) autoclave installation of $494,085, (iii) new operating and accounting system software implementation and enhancement fees of $389,945, (iv) treatment facility improvements of $371,873, (v) molds, dies and printing plates for production of $98,231, (vi) computer and phone equipment of $51,533, (vii) office furniture and equipment of $44,352 and (viii) other capital expenditures of $37,398.
 
 Accounts payable increased by $1,720,723 to $2,499,146 at June 30, 2009 from $778,423 at June 30, 2008.  The increase is a result of additional raw materials purchases and equipment needed to facilitate growth in the Company’s fourth quarter of fiscal year 2009.
 
 Accrued liabilities increased by $755,618 to $1,188,589 at June 30, 2009 from $432,971 at June 30, 2008.  The increase is a result of (i) accrual for management incentive compensation of $329,000 recorded in June 2009, (ii) accrual for customer rebates of approximately $140,000, (iii) accrual for special charge related costs of $78,000, (iv) accrued federal (AMT) and Georgia state income taxes of $58,143, (v) increase in year-end payroll accrual of $41,034 and (vi) accrued sales-related commissions of $36,894.
 
 Stockholder’s equity increased by $6,684,852 from $2,885,536 to $9,570,388.  This increase is attributable to, (i) net income for the year ended June 30, 2009 of $4,197,090, (ii) the increase in additional paid-in capital of $1,317,450  resulting from the reduction of the deferred tax  valuation allowance from tax benefits of stock compensation was recorded in the quarter ended December 31, 2008 (iii) the effect of the exercise of stock options to purchase 435,100 common stock with proceeds of $451,470 (average exercise price of $1.04) to the Company, (iv) the effect on equity of SFAS 123R non-cash stock-based compensation expense of $703,806 and (v) the excess tax benefits from stock-based award activity of $15,036.
 
 Management believes that the Company’s current cash resources (cash on hand and cash generated from operations) along with its $2.5 million line of credit with JPMorgan Chase Bank, N.A. will be sufficient to fund operations for the twelve months  ending  June 30, 2010.  Terms of the line of credit are expected to be renewed in March 2010 under similar terms currently in place.
 
 Disposal Facility
 
 In January 2008, the Company purchased its previously leased disposal facility in Carthage, Texas.  The purchase included an incinerator with a maximum capacity of thirty tons per day, a 12,000 square foot building and 4.5 acres of land. The Company incinerator is currently permitted at a capacity of eleven tons per day.
 
 In February 2009, the Company installed an autoclave system and technology capable of treating up to seven tons per day of medical waste at the same facility.  Autoclaving is a process that treats medical waste with steam at high temperature and
  15
 pressure to kill pathogens.The autoclave is a technology that is a cost-effective alternative to traditional incineration.  It also supplements the disposal treatment capacity of the Company and is an integral part of the disposal operations as the Company utilizes both incineration and autoclave technology in its day-to-day operations. The autoclave system is not impacted by the EPA amended Clean Air Act (discussed below).
 
 With the addition of the autoclave, the Company believes it owns one of only approximately ten permitted commercial disposal facilities in the country capable of treating all types of medical waste.
 
 In November of 2005 and September of 2009, the EPA amended the Clean Air Act which will affect the operations of the incineration facility located in Carthage, Texas.  The regulation modifies the emission limits and monitoring procedures required to operate an incineration facility.  The new rules will necessitate changes to the Company’s owned incinerator and pollution control equipment at the facility or require installation of an alternative treatment method to ensure compliance.  Such change would require the Company to incur significant capital expenditures in order to meet the requirements of the regulations.  The regulation allows a minimum period of three years and a maximum of five years to comply after the date the final rule was published.  The Company has studied the current amended EPA Clean Air Act and its options, and decided in the interim to move forward with the process of adding alternative technology, autoclaving, which meets the EPA Clean Air Act requirements (see above), for medical waste disposal which became fully operational in February 2009 at its current facility in Carthage, Texas.  Autoclaving is a process that treats regulated waste with steam at high temperature and pressure to kill pathogens.  Combining the autoclaving with a shredding or grinder process allows the waste to be disposed in a landfill operation.  The Company believes autoclaving is environmentally cleaner and a less costly method of treating medical waste than incineration. Due to its continued growth, the Company has decided that it will incur additional capital expenditures needed in order to meet the new regulations. The additional capital expenditures are estimated to range from approximately $1.0 to approximately $2.5 million and would increase its permitted incineration capacity from eleven tons per day to forty tons per day (limited to four tons per day, or 10% of permitted capacity, of medical waste treatment).
 
 INFLATION
 
 The Company does not believe that inflation has had a material effect on the results of operations during the past three years.  However, there can be no assurance that the Company’s business will not be affected by inflation in fiscal year 2010 and beyond.
 
 QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
 
 The following tables set forth selected quarterly information for fiscal years 2009 and 2008.  We believe that all necessary adjustments have been included in the amounts below to present fairly the results of such periods.
  16
 Quarter EndedSeptember 30,

2007


December 31,

2007


March 31,

2008


June 30,

2008Total revenues

$
3,391,112


$
3,750,802


$
2,927,700


$
2,771,297Cost of revenues

$
1,966,318


$
2,154,672


$
1,799,514


$
1,849,862Operating income (loss)

$
220,299


$
354,368


$
(103,325
)

$
(472,038
)Net income (loss)

$
241,604


$
379,904


$
(83,589
)

$
(456,346
)Net income (loss) per share - diluted

$
0.02


$
0.03


$
(0.01
)

$
(0.04
)Weighted average shares-diluted


13,535,520



13,494,251



12,478,315



12,561,337
  Quarter EndedSeptember 30,

2008


December 31,

2008


March 31,

2009


June 30,

2009Total revenues

$
4,269,536


$
3,369,646


$
5,970,534


$
6,687,491Cost of revenues

$
2,420,360


$
2,081,422


$
2,436,131


$
2,903,052Operating income (loss)

$
609,842


$
(232,646
)

$
1,984,260


$
1,102,551Net income

$
605,341


$
1,584,872


$
1,330,349


$
676,528Net income per share - diluted

$
0.04


$
0.11


$
0.09


$
0.05Weighted average shares-diluted


13,703,683



13,839,779



14,083,630



14,355,354
  The quarter ended December 31, 2008 includes a $1.8 million benefit from the reduction in the deferred tax valuation allowance and corresponding credit to tax expense. See Note 5 of the Notes to Consolidated Financial Statements for further information regarding this item.
 CRITICAL ACCOUNTING POLICIES
 
 Revenue Recognition:  The Companycomplies with the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition”, which provides guidance related to revenue recognition based on interpretations and practices followed by the SEC.  Under SAB No. 101, certain products offered by the Company haverevenue producing components that are recognized over multiple delivery points (Sharps Disposal by Mail Systems®, referred to as “Mailback” and Sharps Pump Return Boxes, referred to as “Pump Returns”) and can consist of up to three separate elements as follows: (1) the sale of the container system, (2) the transportation of the container system and (3) the treatment and disposal (incineration) of the container system.  The individual fair value of the transportation and incineration services are determined by the sales price of the service offered by third parties, with the fair value of the container being the residual value.  Revenue for the sale of the container is recognized upon delivery to the customer, at which time the customer takes title and assumes risk of ownership.  Transportation revenue on Mailbacks is recognized when the customer returns the mailback container system and the container has been received at the Company’s treatment facility.  The Mailback container system is mailed to the incineration facility using the USPS.  Incineration revenue is recognized upon the destruction and certification of destruction having been prepared on the container.  Since the transportation element and the incineration elements are undelivered services at the point of initial sale of the container, the Mailback and incinerator revenue is deferred until the services are performed.  The current and long-term portions of deferred revenues are determined through regression analysis and historical trends.  Furthermore, through regression analysis of historical data, the Company has determined that a certain percentage of all container systems sold may not be returned.  Accordingly, a portion of the transportation and incineration elements are recognized at the point of sale.
 
 Uncertain Tax Positions:The Company adopted the provisions of FASB issued Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income Taxes, - an interpretation of FASB Statement No. 109, effective  July 1, 2007.  The adoption of FIN 48 did not have a material effect on the Company’s consolidated financial statements. The Company classifies interest and penalties associated with the payment of income taxes in the Other Income (Expense) section of its consolidated statements of income.  At June 30, 2009 and 2008, the Company did not have any FIN48 liability or gross recognized tax benefit. Tax return filings which are subject to review by local tax authorities by major jurisdiction are as
  17
 follows:
 
 ·
United States – fiscal years ended June 30, 2006 , 2007, 2008 and 2009
 ·
State of Texas – fiscal years ended June 30, 2005, 2006, 2007, 2008 and 2009
  Stock-Based Compensation: The Company accounts for share-based compensation under the provisions of Statement of Financial Accounting Standards No. 123R, (“SFAS 123R”) Share-Based Payment, which establishes accounting for equity instruments exchanged for employee services.  Under the provisions of SFAS 123R, share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant).  Share-based compensation expense, included in general and administrative expenses in the Company’s consolidated statement of operations for the fiscal years ended June 30, 2009 and June 30, 2008, was $703,806 and $70,823, respectively.  SFAS 123R requires any reduction in taxes payable resulting from tax deductions that exceed the recognized tax benefit associated with compensation expense (excess tax benefits) to be classified as financing cash flows.  The Company included $15,036 and $9,626 of excess tax benefits in our cash flows from financing activities for the fiscal years ended June 30, 2009 and June 30, 2008, respectively.
 
 RECENTLY ISSUED ACCOUNTING STANDARDS
 
 In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157 (“SFAS 157”), Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements; SFAS 157 is effective for fiscal years beginning after November 15, 2007 and for interim periods within those years.  In February, 2008, the FASB issued FASB Staff Position (“FSP”) No. FAS 157-2.  This FSP defers the effective date of SFAS 157 for non-financial assets and liabilities on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope of this FSP.  The Company adopted SFAS 157 effective July 1, 2008, except for non financial assets and liabilities as permitted by FSP SFAS 157-2, and the adoption of such statement did not have a significant impact on our consolidated results of operations or financial position.
 
 In February 2007, the FASB issued SFAS No. 159 (“SFAS 159”), “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115.” This statement permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company adopted SFAS 159 effective July 1, 2008. The Company elected to not fair value any additional financial instruments and thus the adoption of the standard did not have a material impact on its consolidated financial position and consolidated results of operations.
 
 In May 2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS 165”), which establishes principles and requirements for subsequent events.  This statement defines the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, and the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements. SFAS 165 also sets forth the disclosures that an entity should make about events or transactions that occurred after the balance sheet date.  SFAS 165 is effective for the interim or annual periods ending after June 15, 2009.  The adoption of SFAS 165 did not have an impact on the Company’s consolidated financial position, results of operations or cash flows. We evaluate events and transactions that occur after the balance date but before the financial statements are issued.  We evaluated such events and transactions through September 22, 2009, when the consolidated financial statements were electronically filed with the SEC.
 
 ITEM 9A.  CONTROLS AND PROCEDURES
  Evaluation of Disclosure Controls and Procedures
 
 The Company maintains "disclosure controls and procedures," as such term is defined in Rule 13a-15(e) under the  Exchange Act, that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is
  18
 accumulated and communicated to management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. The Company conducted an evaluation (the "Evaluation"), under the supervision and with the participation of the CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures ("Disclosure Controls") as June 30, 2009 pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on this Evaluation, the CEO and CFO concluded that our Disclosure Controls were effective as of June 30, 2009.
 
 Changes in Internal Controls
 
 During the quarter ended June 30, 2009, there were no changes in the Company’s internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act), that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.
 
 CEO and CFO Certifications
 
 Appearing immediately following the Signatures section of this report are certifications of the CEO and the CFO. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this Annual Report on Form 10-K, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information, should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
 
 Management's Report on Internal Control over Financial Reporting
 
 The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The Company's internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States.
 
 The internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.
 
 Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
 The Company’s management assessed the effectiveness of the internal control over financial reporting as of June 30, 2009. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control-Integrated Framework. Based on the assessment, the Company’s management concluded that, as of June 30, 2009, the Company's internal control over financial reporting was effective based on those criteria.
 
 This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.
  19
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  (a)
Financial Statements
 None.
 
 (b)
Exhibits
 Exhibit

Number

Description of Exhibit2.1

Agreement and Plan of Reorganization between U.S. Medical Systems, Inc., Sharps Compliance, Inc. and its Stockholders, dated February 27, 1998 (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K, filed March 5, 1998).3.1

Bylaws of Company (incorporated by reference from Exhibit 3.4 to Form 10-KSB, dated June 30, 1994).3.2

Amended and Restated Certificate of Incorporation of U.S. Medical Systems, Inc. (incorporated by reference from Exhibit 3.5 to the Registrant’s Transition Report on Form 10KSB40 filed on September 29, 1998).3.3

Certificate of Elimination of the Series A 10% Voting Convertible Preferred Stock of Sharps Compliance Corp. (incorporated by reference from Exhibit 3.6 to Form 10-KSB, filed September 29, 1998).4.1

Specimen Stock Certificate (incorporated by reference from Exhibit 4.4 to Form-10-KSB, filed September 29, 1998).4.2

See Exhibits 3.1, 3.2 and 3.3 for provisions of the Bylaws of the Company, the Articles of Incorporation of the Company and the Certificate of Elimination defining the rights of holders of common shares.10.1

Employment Agreement by and between Sharps Compliance Corp. and Dr. Burt Kunik effective January 1, 2003 (incorporated by reference from Exhibit 10.35 to Form 10-QSB, filed February 13, 2003).*10.2

Executive Employment Agreement by and between Sharps Compliance Corp. and Ronald E. Pierce dated July 14, 2003 (incorporated by reference to Exhibit 10.2 to the Registrant’s Annual Report on Form 10-KSB, filed September 26, 2003).*10.3

Executive Employment Agreement by and between Sharps Compliance Corp. and David P. Tusa dated July 14, 2003 (incorporated by reference to Exhibit 10.4 to the Registrant’s Annual Report on Form 10-KSB, filed September 26, 2003).*10.4

Executive Employment Agreement by and between Sharps Compliance Corp. and Michael D. Archer dated July 14, 2003 (incorporated by reference to Exhibit 10.2 to the Registrant’s Annual Report on Form 10-KSB, filed September 26, 2003).*10.5

Exclusive Distributorship Agreement between Pro-Tec Containers, Inc. and Sharps Compliance, Inc., dated April 1, 1998 (incorporated by reference from Exhibit 10.31 to Form 10-KSB, filed September 29, 1998).10.6

Purchase Agreement between Ivy Green Corporation and Sharps Compliance, Inc., dated June 19, 1998 (incorporated by reference from Exhibit 10.32 to Form 10-KSB, filed September 29, 1998).10.7

Lease Agreement between Lakes Technology Center, Ltd. and Sharps Compliance, Inc., dated August 1, 1998 (incorporated by reference from Exhibit 10.33 to Form 10-KSB, filed September 29, 1998).10.8

Severance Agreement between C. Lee Cooke, Jr. and Sharps Compliance Corp. (formerly known as U.S. Medical Systems, Inc.), dated September 2, 1998 (incorporated by reference from Exhibit 10.34 to Form 10-KSB, filed September 29, 1998).10.9

Employment Agreement Amendment by and between Sharps Compliance Corp. and David P. Tusa dated June 21, 2004 (incorporated by reference from Exhibit 991 to Form 10-QSB, filed November 12, 2004).*10.10

Employment Agreement Amendment by and between Sharps Compliance Corp. and David P. Tusa dated August 19, 2005 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed August 24, 2005).*10.11

Credit Agreement dated March 27,2006, by and between Sharps Compliance Corp. and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed March 28, 2006).10.12

Line of Credit Note dated March 27, 2006, by and between Sharps Compliance Corp. and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed March 28, 2006).10.13

Security Agreement dated March 27, 2006, by and between Sharps Compliance Corp. and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed March 28, 2006).  20
 10.14

Lease Agreement dated as of July 13, 2006, between Sharps Compliance, Inc. and Warehouse Associates Corporate Centre Kirby II, Ltd. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed July 14, 2006).10.15

Lease Termination Agreement dated as of July 13, 2006, between Sharps Compliance, Inc., Warehouse Associates Corporate Centre Kirby, Ltd. and Warehouse Associates Corporate Centre Kirby II, Ltd. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed July 14, 2006).10.16

Amendment to Credit Agreement dated February 5, 2007, by and between Sharps Compliance Corp. and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed February 5, 2007).10.17

Note Modification Agreement dated February 5, 2007, by and between Sharps Compliance Corp. and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed February 5, 2007).10.18

Restricted Stock Award Agreement dated July 2, 2007, by and between Sharps Compliance Corp. and Ramsay Gillman (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed July 2, 2007).10.19

Letter Agreement by and between Sharps Compliance Corp. and David C. Mayfield dated April 10, 2007 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed April 10, 2007).*10.20

Letter Agreement by and between Sharps Compliance Corp. and Claude A. Dance dated December 26, 2007 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed December 26, 2007).*10.21

Letter Agreement by and between Sharps Compliance Corp. and Al Aladwani dated March 24, 2008 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed March 12, 2008).*10.22

Form of Restricted Stock Award Agreement dated June 9, 2008 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed June 9, 2008).10.23

Employment Agreement by and between Sharps Compliance Corp. and John Grow dated October 27, 2008 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed October 31, 2008).*10.24

Lease Agreement dated as of January 30, 2009, between Sharps Compliance, Inc. and Investors, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed February 3, 2009).10.25

Lease Agreement dated as of January 30, 2009, between Sharps Compliance, Inc. and Park 288 Industrial, LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed February 3, 2009).10.26

Separation Agreement and Mutual Release of all Claims dated as of April 27, 2009 between Sharps Compliance, Inc. and John Grow (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed May 1, 2009).*10.27

Amended Lease Agreement dated as of May 27, 2009, between Sharps Compliance, Inc. and Park 288 Industrial, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed June 2, 2009).10.28

Sharps Compliance Corp. 1993 Stock Plan, as amended (incorporated by reference from Annex A of the Registrant’s Proxy Statement on Schedule 14A, filed October 21, 2008).10.29

Contract No. V797P-DSNS-9005 dated January 29, 2009 by and between the Department of Veterans Affairs and Sharps Compliance Corp. (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed June 25, 2010).**14.10

Sharps Compliance Corp. Code of Ethics (incorporated by reference to Exhibit 14.1 to the Registrant’s Current report on Form 10-KSB, filed September 20, 2004.21.1

Subsidiaries of Sharps Compliance Corp. (incorporated by reference to Exhibit 21.1 to the Registrant's Annual Report on Form 10-K, filed September 22, 2009).23.10

Consent of UHY LLP (incorporated by reference to Exhibit 23.10 to the Registrant's Annual Report on Form 10-K, filed September 22, 2009).31.1

Certification of Chief Executive Officer in accordance with Section 302 of the Sarbanes-Oxley Act (filed herewith).31.2

Certification of Chief Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act (filed herewith).  21
 32.1

Certification of Chief Executive Officer in accordance with Section 906 of the Sarbanes-Oxley Act (filed herewith).32.2

Certification of Chief Financial Officer in accordance with Section 906 of the Sarbanes-Oxley Act (filed herewith).
 
 
 * This exhibit is a management contract or a compensatory plan or arrangement.
 ** Portions of this exhibit have been omitted pursuant to a request for confidential treatment.
  22
 SIGNATURES
 
 Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 SHARPS COMPLIANCE CORP.
 
 
 Dated: June 25, 2010                                                                                             By: /s/ DAVID P. TUSA
 David P. Tusa
 President
 
    23