##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 Annual report pursuant to section 13 or 15(d)
of the Securities Exchange Act of 1934
 For fiscal year ended September 30, 2005
 Commission File Number: 0-18933
 Rochester Medical Corporation
 Minnesota
State of Incorporation
    
    41-1613227
IRS Employer Identification No.
 One Rochester Medical Drive
Stewartville, Minnesota 55976
    Common Stock without par value
 
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   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



Table of Contents
 PART I
    
    
    3ITEM 1. Business
    
    
    3ITEM 2. Properties
    
    
    10ITEM 3. Legal Proceedings
    
    
    10ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    10PART II
    
    
    10ITEM 5. Market for Registrants Common Equity and Related Stockholder Matters
    
    
    10ITEM 6. Selected Financial Data
    
    
    11ITEM 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk.
    
    
    21ITEM 8. Financial Statements
    
    
    21ITEM
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    35ITEM 9A. Controls and Procedures
    
    
    35ITEM 9B. Other Information
    
    
    35PART III
    
    
    35ITEM 10. Directors and Executive Officers of the Registrant
    
    
    35ITEM 11. Executive Compensation
    
    
    35ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
    
    
    36ITEM 13. Certain Relationships and Related Transactions
    
    
    36ITEM 14. Principal Accountant Fees and Services
    
    
    36ITEM 15. Exhibits and Financial Statement Schedules
    
    
    36SIGNATURES
    
    
    38INDEX TO EXHIBITS
    
    
    39Consent of McGladrey & Pullen LLPConsent of Ernst & Young LLPPower of AttorneyCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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PART I
 
 ITEM 1. Business
 Overview
 FemSoft® Insert RELEASE-NF® Catheter
 Rochester Medical®
  Extended Care Products
 Male External Catheters UltraFlex® Pop-On® Wide Band® Natural® UltraFlex Pop-On Wide Band Wide Band Natural
   Intermittent Catheters Personal Catheters® Personal Catheters Personal Catheter Personal Catheter Personal Catheter, Personal Catheter HydroPersonal Catheter Personal Catheter Personal Catheter HydroPersonal
Catheter Personal Catheter
 3




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FemSoft Insert FemSoft Insert
 FemSoft Insert FemSoft Insert
 FemSoft Insert FemSoft Insert
 Acute Care Products
 Foley Catheters RELEASE-NF Catheter RELEASE-NF Catheter
  Rochester Medical
 Technology
 FemSoft Insert
  4




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Marketing and Sales
  Rochester Medical
 Rochester Medical
 Manufacturing
 FemSoft Insert
 FemSoft Insert
  Sources of Supply
  Research and Development
   Competition
  5




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Patents and Proprietary Rights
      6




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Government Regulation
     7




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Third Party Reimbursement
 RELEASE-NF Catheter FemSoft Insert
   Private Label Distribution Agreements
  Release-NF
 Environmental Matters
  8




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##### Table of Contents



Employees
  Executive Officers of the Registrant
  Name
    
    Age
    
    PositionAnthony J. Conway
    
    
    61
    
    
    Chairman of the Board, Chief Executive Officer, President and SecretaryDavid A. Jonas
    
    
    41
    
    
    Chief Financial Officer and TreasurerPhilip J. Conway
    
    
    49
    
    
    Vice President, Production TechnologiesDara Lynn Horner
    
    
    47
    
    
    Vice President, MarketingMartyn R. Sholtis
    
    
    46
    
    
    Corporate Vice President
 Anthony J. Conway
 David A. Jonas
 Philip J. Conway
 Dara Lynn Horner FemSoft Insert
 Martyn R. Sholtis
 9




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ITEM 2. Properties
  
 ITEM 3. Legal Proceedings
    
 ITEM 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
  ITEM 5.
    Market for Registrants Common Equity and Related
    Stockholder Matters  High
    
    LowFiscal 2004First Quarter
    
    $
    12.58
    
    
    $
    8.85Second Quarter
    
    
    10.42
    
    
    
    9.13Third Quarter
    
    
    10.00
    
    
    
    7.64Fourth Quarter
    
    
    9.76
    
    
    
    7.90Fiscal 2005First Quarter
    
    $
    9.78
    
    
    
    8.52Second Quarter
    
    
    13.30
    
    
    
    8.57Third Quarter
    
    
    12.28
    
    
    
    9.50Fourth Quarter
    
    
    9.60
    
    
    
    8.50 Holders
  Dividends
  10




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|        |                        
|------- | -----------------------
|ITEM 6. | Selected Financial Data



|                                                                   |                            |                                           |        |        |       |   |        |       |       |   |        |       |       |      |        |       |       |   |        |       |       | 
|------------------------------------------------------------------ | -------------------------- | ----------------------------------------- | ------ | ------ | ----- | - | ------ | ----- | ----- | - | ------ | ----- | ----- | ---- | ------ | ----- | ----- | - | ------ | ----- | ----- | 
|                                                                   |                            | Fiscal Years Ended September 30,          |       
|                                                                   |                            |                                           |       
|                                                                   |                            | 2005                                      |        |        | 2004  |   |        | 2003  |       |   | 2002   |       |       | 2001 |       
|                                                                   |                            |                                           |        |        |       |   |        |       |       |   |        |       |       |      |       
|                                                                   |                            | (In thousands, except for per share data) |       
|Net sales                                                          |                            | $                                         | 15,942 |        |       | $ | 15,011 |       |       | $ | 14,655 |       |       | $    | 11,076 |       |       | $ | 8,302  |      
|                                                                   | Cost of sales              |                                           |        | 10,330 |       |   |        | 9,615 |       |   |        | 9,574 |       |      |        | 7,888 |       |   |        | 6,304 |      
|                                                                   |                            |                                           |        |        |       |   |        |       |       |   |        |       |       |      |       
|                                                                   |                            | Gross profit                              |        |        | 5,612 |   |        |       | 5,396 |   |        |       | 5,081 |      |        |       | 3,188 |   |        |       | 1,998 | 
|Operating expenses:                                                |                            |                                           |        |        |       |   |        |       |       |   |        |       |       |      |        |       |       |   |        |      
|                                                                   | Marketing and selling      |                                           |        | 2,398  |       |   |        | 2,176 |       |   |        | 2,225 |       |      |        | 2,196 |       |   |        | 2,545 |      
|                                                                   | Research and development   |                                           |        | 730    |       |   |        | 706   |       |   |        | 875   |       |      |        | 835   |       |   |        | 1,062 |      
|                                                                   | General and administrative |                                           |        | 2,127  |       |   |        | 1,857 |       |   |        | 1,809 |       |      |        | 1,763 |       |   |        | 1,730 |      
|                                                                   |                            |                                           |        |        |       |   |        |       |       |   |        |       |       |      |       
|                                                                   |                            | Total operating expenses                  |        |        | 5,255 |   |        |       | 4,739 |   |        |       | 4,909 |      |        |       | 4,794 |   |        |       | 5,337 | 
|                                                                   |                            |                                           |        |        |       |   |        |       |       |   |        |       |       |      |       
|Income (Loss) from operations                                      |                            |                                           | 357    |        |       |   | 657    |       |       |   | 172    |       |       |      | (1,606 | )     |       |   | (3,339 | )    
|Interest income, net                                               |                            |                                           | 124    |        |       |   | 90     |       |       |   | 158    |       |       |      | 212    |       |       |   | 384    |      
|                                                                   |                            |                                           |        |        |       |   |        |       |       |   |        |       |       |      |       
|Net income (Loss) before income tax                                |                            |                                           | 481    |        |       |   | 747    |       |       |   | 330    |       |       |      | (1,394 | )     |       |   | (2,955 | )    
|Income tax benefit                                                 |                            |                                           | 454    |        |       |   |       |       |       |   |       |       |       |      |       |       |       |   |       |      
|                                                                   |                            |                                           |        |        |       |   |        |       |       |   |        |       |       |      |       
|Net income (Loss)                                                  |                            | $                                         | 935    |        |       | $ | 747    |       |       | $ | 330    |       |       | $    | (1,394 | )     |       | $ | (2,955 | )    
|                                                                   |                            |                                           |        |        |       |   |        |       |       |   |        |       |       |      |       
|Net income (Loss) per common share  basic                         |                            | $                                         | .17    |        |       | $ | .14    |       |       | $ | .06    |       |       | $    | (.26   | )     |       | $ | (.55   | )    
|Net income (Loss) per common share  diluted                       |                            | $                                         | .16    |        |       | $ | .13    |       |       | $ | .06    |       |       | $    | (.26   | )     |       | $ | (.55   | )    
|Weighted average number of common shares outstanding 
    basic   |                            |                                           | 5,466  |        |       |   | 5,434  |       |       |   | 5,380  |       |       |      | 5,329  |       |       |   | 5,339  |      
|Weighted average number of common shares outstanding 
    diluted |                            |                                           | 5,715  |        |       |   | 5,687  |       |       |   | 5,654  |       |       |      | 5,329  |       |       |   | 5,339  |      

|                    |                                                  |                                       |   |         |      |  |   |         |   |  |      |         |   |      |   |         |   |  |   |         |  
|------------------- | ------------------------------------------------ | ------------------------------------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - | ---- | - | ------- | - |  | - | ------- | -
|                    |                                                  | As of September 30,                   |  
|                    |                                                  |                                       |  
|                    |                                                  | 2005                                  |   |         | 2004 |  |   | 2003    |   |  | 2002 |         |   | 2001 |  
|                    |                                                  |                                       |   |         |      |  |   |         |   |  |      |         |   |      |  
|                    |                                                  | (In thousands, except per share data) |  
|Balance Sheet Data: |                                                  |                                       |   |         |      |  |   |         |   |  |      |         |   |      |   |         |   |  |   |        
|                    | Cash, cash equivalents and marketable securities |                                       | $ | 6,416   |      |  | $ | 5,872   |   |  | $    | 5,966   |   |      | $ | 4,464   |   |  | $ | 5,748   |  
|                    | Working capital                                  |                                       |   | 12,671  |      |  |   | 11,119  |   |  |      | 10,398  |   |      |   | 8,523   |   |  |   | 8,319   |  
|                    | Total assets                                     |                                       |   | 22,209  |      |  |   | 21,384  |   |  |      | 21,125  |   |      |   | 19,636  |   |  |   | 19,659  |  
|                    | Long-term debt and capital lease obligations     |                                       |   | 98      |      |  |   | 172     |   |  |      | 267     |   |      |   |        |   |  |   |        |  
|                    | Accumulated deficit                              |                                       |   | (22,045 | )    |  |   | (22,979 | ) |  |      | (23,726 | ) |      |   | (24,056 | ) |  |   | (22,661 | )
|                    | Total shareholders equity                       |                                       | $ | 20,288  |      |  | $ | 18,888  |   |  | $    | 18,142  |   |      | $ | 17,144  |   |  | $ | 18,455  |  

11



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



Overview


FemSoft
Insert. Rochester Medical


Application of Critical Accounting Policies








| |            
| | -----------
| | Inventories





| |                    
| | -------------------
| | Accounts Receivable





| |                    
| | -------------------
| | Revenue Recognition



12



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| |             
| | ------------
| | Income Taxes



Results of Operations




|                               |                            |                    |     |    |      |  |     |      |  |  |     |    | 
|------------------------------ | -------------------------- | ------------------ | --- | -- | ---- |  | --- | ---- |  |  | --- | -- | 
|                               |                            | Fiscal Years Ended |    
|                               |                            | September 30,      |    
|                               |                            |                    |    
|                               |                            | 2005               |     |    | 2004 |  |     | 2003 | 
|                               |                            |                    |     |    |      |  |     |      | 
|Total net sales                |                            |                    | 100 | %  |      |  | 100 | %    |  |  | 100 | % 
|Cost of sales                  |                            |                    | 65  |    |      |  | 64  |      |  |  | 65  |   
|                               |                            |                    |     |    |      |  |     |      | 
|Gross margin                   |                            |                    | 35  |    |      |  | 36  |      |  |  | 35  |   
|Operating expenses:            |                            |                    |     |    |      |  |     |      |  |  |     |   
|                               | Marketing and selling      |                    |     | 15 |      |  |     | 15   |  |  |     | 15 | 
|                               | Research and development   |                    |     | 5  |      |  |     | 5    |  |  |     | 6  | 
|                               | General and administrative |                    |     | 13 |      |  |     | 12   |  |  |     | 13 | 
|                               |                            |                    |     |    |      |  |     |      | 
|Total operating expenses       |                            |                    | 33  |    |      |  | 32  |      |  |  | 34  |   
|Income (loss) from operations  |                            |                    | 2   |    |      |  | 4   |      |  |  | 1   |   
|Interest income, net           |                            |                    | 1   |    |      |  | 1   |      |  |  | 1   |   
|                               |                            |                    |     |    |      |  |     |      | 
|Net income before income taxes |                            |                    | 3   | %  |      |  | 5   | %    |  |  | 2   | % 
|                               |                            |                    |     |    |      |  |     |      | 





|                          |  |                                  |       |      |               |   |       |       |      |   |          |  |  |               |       |  |       |   |       |          |  |   |               |  |  |       |       |  |  |   |       |  |  |   |        | 
|------------------------- |  | -------------------------------- | ----- | ---- | ------------- | - | ----- | ----- | ---- | - | -------- |  |  | ------------- | ----- |  | ----- | - | ----- | -------- |  | - | ------------- |  |  | ----- | ----- |  |  | - | ----- |  |  | - | ------ | 
|                          |  | Fiscal Years Ended September 30, |      
|                          |  |                                  |      
|                          |  |                                  |       | 2005 |               |   |       |       | 2004 |   |          |  |  | 2003          |       |  |      
|                          |  |                                  |       |      |               |   |       |       |      |   |          |  |  |               |       |  |      
|                          |  | Domestic                         |       |      | International |   |       | Total |      |   | Domestic |  |  | International |       |  | Total |   |       | Domestic |  |   | International |  |  | Total |      
|                          |  |                                  |       |      |               |   |       |       |      |   |          |  |  |               |       |  |       |   |       |          |  |   |               |  |  |       |      
|Private label sales:      |  |                                  |       |      |               |   |       |       |      |   |          |  |  |               |       |  |       |   |       |          |  |   |               |  |  |       |       |  |  |   |       |  |  |   |        | 
|Base products             |  | $                                | 4,100 |      |               | $ | 4,156 |       |      | $ | 8,256    |  |  | $             | 3,660 |  |       | $ | 3,900 |          |  | $ | 7,560         |  |  | $     | 4,136 |  |  | $ | 4,074 |  |  | $ | 8,210  | 
|Advanced products         |  |                                  | 250   |      |               |   | 139   |       |      |   | 389      |  |  |               | 725   |  |       |   | 154   |          |  |   | 879           |  |  |       |      |  |  |   | 135   |  |  |   | 135    | 
|                          |  |                                  |       |      |               |   |       |       |      |   |          |  |  |               |       |  |       |   |       |          |  |   |               |  |  |       |      
|Total private label sales |  |                                  | 4,350 |      |               |   | 4,295 |       |      |   | 8,645    |  |  | $             | 4,385 |  |       | $ | 4,054 |          |  | $ | 8,439         |  |  | $     | 4,136 |  |  | $ | 4,209 |  |  | $ | 8,345  | 
|Branded sales:            |  |                                  |       |      |               |   |       |       |      |   |          |  |  |               |       |  |       |   |       |          |  |   |               |  |  |       |       |  |  |   |       |  |  |   |        | 
|Base products             |  | $                                | 3,208 |      |               |   | 2,893 |       |      |   | 6,101    |  |  | $             | 3,027 |  |       | $ | 2,618 |          |  | $ | 5,645         |  |  | $     | 2,910 |  |  | $ | 2,695 |  |  | $ | 5,605  | 
|Advanced products         |  |                                  | 884   |      |               |   | 312   |       |      |   | 1,196    |  |  |               | 575   |  |       |   | 352   |          |  |   | 927           |  |  |       | 417   |  |  |   | 288   |  |  |   | 705    | 
|                          |  |                                  |       |      |               |   |       |       |      |   |          |  |  |               |       |  |       |   |       |          |  |   |               |  |  |       |      
|Total branded sales       |  | $                                | 4,092 |      |               | $ | 3,205 |       |      | $ | 7,297    |  |  | $             | 3,602 |  |       | $ | 2,970 |          |  | $ | 6,572         |  |  | $     | 3,327 |  |  | $ | 2,983 |  |  | $ | 6,310  | 
|Total net sales:          |  | $                                | 8,442 |      |               | $ | 7,500 |       |      | $ | 15,942   |  |  | $             | 7,987 |  |       | $ | 7,024 |          |  | $ | 15,011        |  |  | $     | 7,463 |  |  | $ | 7,192 |  |  | $ | 14,655 | 



| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | Fiscal Year Ended September 30, 2005 Compared to
    Fiscal Year Ended September 30, 2004

Net Sales.


13



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Gross Margin.


Marketing and Selling.


Research and Development.


General and Administrative.


Interest Income, Net.


Income Taxes.






Net Income.




| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | Fiscal Year Ended September 30, 2004 Compared to
    Fiscal Year Ended September 30, 2003

Net Sales.


Gross Margin.


14



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Marketing and Selling.


Research and Development.


General and Administrative.


Interest Income, Net.


Income Taxes.






Liquidity and Capital Resources














Release-NF


15



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|                                         |                                    |                        |         |           |        |   |         |           |       |   |           |         |         |   |   |   |  |   |   |   | 
|---------------------------------------- | ---------------------------------- | ---------------------- | ------- | --------- | ------ | - | ------- | --------- | ----- | - | --------- | ------- | ------- | - | - | - |  | - | - | - | 
|                                         |                                    | Payments Due by Period
|                                         |                                    |                       
|                                         |                                    |                        |         | Less than |        |   |         |           | After
|Contractual Obligations                  |                                    | Total                  |         |           | 1 Year |   |         | 1-3 Years |       |   | 4-5 Years |         | 5 Years
|                                         |                                    |                        |         |           |        |   |         |           |       |   |           |         |        
|Long Term Debt, including interest       |                                    | $                      | 75,140  |           |        | $ | 38,760  |           |       | $ | 36,380    |         |         | $ |  |   |  | $ |  |  
|Capital Lease Obligations                |                                    |                        | 112,215 |           |        |   | 44,615  |           |       |   | 67,600    |         |         |   |  |   |  |   |  |  
|Purchase Obligations (general operating) |                                    |                        | 347,769 |           |        |   | 347,769 |           |       |   |          |         |         |   |  |   |  |   |  |  
|                                         |                                    |                        |         |           |        |   |         |           |       |   |           |         |         |   |  
|                                         | Total Contractual Cash Obligations |                        | $       | 535,124   |        |   | $       | 431,144   |       |   | $         | 103,980 |         |   | $ |  |  |   | $ |  | 
|                                         |                                    |                        |         |           |        |   |         |           |       |   |           |         |         |   |  



New Accounting Pronouncements


Share-Based Payment.


16



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Inventory Costs Accounting Changes
and Error Corrections


Accounting for Asset Retirement
Obligations.


17



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RISK FACTORS
 Limited Revenues; History of Losses and Potential Future Losses
 RELEASE-NF Catheter
 Dependence on a Small Number of Customers
   Dependence on Distribution Arrangements
  Dependence Upon Key Personnel
  18




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Uncertainty of Market Acceptance of Products
 RELEASE-NF Catheter FemSoft Insert
 Risks Associated with Marketing and Sales of Rochester Medical Brand Products
 Rochester Medical
  Highly Competitive Markets; Alternative Treatments; Technological Advancements
   Possible Need for Additional Capital
 RELEASE-NF Catheter FemSoft Insert
 19




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Effects of Government Regulation
   Dependence on Patents and Proprietary Rights
   20




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Possibility of Product Liability Litigation; Possible Inadequacy of Insurance
  
 ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk.
  
 ITEM 8. Financial Statements
 Rochester Medical Corporation
 Financial Statements
 Years Ended September 30, 2005, 2004 and 2003
 PageReport of Independent Registered Public Accounting Firm
    
    
    22Audited Financial Statements
    
    
    24Balance Sheets
    
    
    24Statements of Operations
    
    
    25Statement of Shareholders Equity
    
    
    26Statements of Cash Flows
    
    
    27Notes to Financial Statements
    
    
    28
 21




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Report of Independent Registered Public Accounting Firm














| |                               
| | ------------------------------
| | /s/ McGladrey &
    Pullen LLP





22



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Report of Independent Registered Public Accounting Firm














| |                          
| | -------------------------
| | /s/ Ernst & Young
    LLP





23



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ROCHESTER MEDICAL CORPORATION


BALANCE SHEETS


|                                                                              |                                                                                                |                           |             |             |           |  |             |            |         | 
|----------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------- | ----------- | ----------- | --------- |  | ----------- | ---------- | ------- | 
|                                                                              |                                                                                                | September 30,             |            
|                                                                              |                                                                                                |                           |            
|                                                                              |                                                                                                | 2005                      |             |             | 2004      | 
|                                                                              |                                                                                                |                           |             |             |           | 
|Assets:                                                                       |                                                                                                |                           |             |             |           |  |             |           
|Current assets:                                                               |                                                                                                |                           |             |             |           |  |             |           
|                                                                              |                                                                                                | Cash and cash equivalents |             | $           | 1,129,876 |  |             | $          | 620,441 | 
|                                                                              | Marketable securities                                                                          |                           |             | 5,286,553   |           |  |             | 5,251,763  |        
|                                                                              | Accounts receivable, less allowance for doubtful accounts
    ($93,549  2005; $73,445  2004) |                           |             | 3,204,824   |           |  |             | 2,631,188  |        
|                                                                              | Inventories, net                                                                               |                           |             | 3,936,243   |           |  |             | 3,945,313  |        
|                                                                              | Prepaid expenses and other current assets                                                      |                           |             | 351,027     |           |  |             | 273,229    |        
|                                                                              | Deferred income tax asset                                                                      |                           |             | 21,000      |           |  |             |           |        
|                                                                              |                                                                                                |                           |             |             |           | 
|                                                                              |                                                                                                |                           | 13,929,523  |             |           |  | 12,721,934  |           
|Property, plant and equipment:                                                |                                                                                                |                           |             |             |           |  |             |           
|                                                                              | Land                                                                                           |                           |             | 365,951     |           |  |             | 365,951    |        
|                                                                              | Buildings                                                                                      |                           |             | 5,994,496   |           |  |             | 5,881,435  |        
|                                                                              | Equipment and fixtures                                                                         |                           |             | 11,783,213  |           |  |             | 11,568,452 |        
|                                                                              |                                                                                                |                           |             |             |           | 
|                                                                              |                                                                                                |                           | 18,143,660  |             |           |  | 17,815,838  |           
|                                                                              | Less accumulated depreciation                                                                  |                           |             | (10,582,357 | )         |  |             | (9,373,411 | )      
|                                                                              |                                                                                                |                           |             |             |           | 
|Total property, plant and equipment                                           |                                                                                                |                           | 7,561,303   |             |           |  | 8,442,427   |           
|Deferred income tax asset                                                     |                                                                                                |                           | 433,000     |             |           |  |            |           
|Patents, less accumulated amortization ($965,013 
    2005; $906,698  2004) |                                                                                                |                           | 285,194     |             |           |  | 219,296     |           
|                                                                              |                                                                                                |                           |             |             |           | 
|                                                                              | Total assets                                                                                   |                           | $           | 22,209,020  |           |  | $           | 21,383,657 |        
|                                                                              |                                                                                                |                           |             |             |           | 
|                                                                             
|Liabilities and Shareholders Equity:                                         |                                                                                                |                           |             |             |           |  |             |           
|Current liabilities:                                                          |                                                                                                |                           |             |             |           |  |             |           
|                                                                              | Accounts payable                                                                               |                           | $           | 283,332     |           |  | $           | 778,766    |        
|                                                                              | Accrued compensation                                                                           |                           |             | 414,990     |           |  |             | 350,753    |        
|                                                                              | Accrued professional fees                                                                      |                           |             | 150,321     |           |  |             | 137,797    |        
|                                                                              | Accrued expenses                                                                               |                           |             | 178,945     |           |  |             | 106,595    |        
|                                                                              | Deferred revenue                                                                               |                           |             | 157,143     |           |  |             | 157,143    |        
|                                                                              | Current maturities of debt                                                                     |                           |             | 34,000      |           |  |             | 34,000     |        
|                                                                              | Current maturities of capital leases                                                           |                           |             | 39,785      |           |  |             | 37,611     |        
|                                                                              |                                                                                                |                           |             |             |           | 
|Total current liabilities                                                     |                                                                                                |                           | 1,258,516   |             |           |  | 1,602,665   |           
|Long-term liabilities:                                                        |                                                                                                |                           |             |             |           |  |             |           
|                                                                              | Deferred revenue                                                                               |                           |             | 564,286     |           |  |             | 721,429    |        
|                                                                              | Long-term debt, less current maturities                                                        |                           |             | 34,000      |           |  |             | 68,000     |        
|                                                                              | Capital leases, less current maturities                                                        |                           |             | 64,030      |           |  |             | 103,814    |        
|                                                                              |                                                                                                |                           |             |             |           | 
|Total long-term liabilities                                                   |                                                                                                |                           | 662,316     |             |           |  | 893,243     |           
|Shareholders equity:                                                         |                                                                                                |                           |             |             |           |  |             |           
|                                                                              | Common Stock, no par value:                                                                    |                           |             |             |           |  |             |            |        
|                                                                              | Authorized Shares  20,000,000                                                                 |                           |             |             |           |  |             |            |        
|                                                                              | Issued and outstanding shares; (5,523,500  2005;
    5,441,131  2004)                        |                           |             | 42,407,912  |           |  |             | 41,940,700 |        
|Accumulated deficit                                                           |                                                                                                |                           | (22,044,650 | )           |           |  | (22,979,077 | )         
|Unrealized loss on available-for-sale securities                              |                                                                                                |                           | (75,074     | )           |           |  | (73,874     | )         
|                                                                              |                                                                                                |                           |             |             |           | 
|Total shareholders equity                                                    |                                                                                                |                           | 20,288,188  |             |           |  | 18,887,749  |           
|                                                                              |                                                                                                |                           |             |             |           | 
|                                                                              | Total liabilities and shareholders equity                                                     |                           | $           | 22,209,020  |           |  | $           | 21,383,657 |        
|                                                                              |                                                                                                |                           |             |             |           | 

See accompanying notes.


24



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##### Table of Contents



ROCHESTER MEDICAL CORPORATION


STATEMENTS OF OPERATIONS


|                                                                   |                            |                                  |            |           |      |   |            |           |   |   |            |           |  
|------------------------------------------------------------------ | -------------------------- | -------------------------------- | ---------- | --------- | ---- | - | ---------- | --------- | - | - | ---------- | --------- | -
|                                                                   |                            | Fiscal Years Ended September 30, |           
|                                                                   |                            |                                  |           
|                                                                   |                            | 2005                             |            |           | 2004 |   |            | 2003      |  
|                                                                   |                            |                                  |            |           |      |   |            |           |  
|Net sales                                                          |                            | $                                | 15,941,649 |           |      | $ | 15,011,419 |           |   | $ | 14,655,372 |          
|Cost of sales                                                      |                            |                                  | 10,330,113 |           |      |   | 9,615,427  |           |   |   | 9,574,414  |          
|                                                                   |                            |                                  |            |           |      |   |            |           |  
|Gross profit                                                       |                            |                                  | 5,611,536  |           |      |   | 5,395,992  |           |   |   | 5,080,958  |          
|Operating expenses:                                                |                            |                                  |            |           |      |   |            |           |   |   |            |          
|                                                                   | Marketing and selling      |                                  |            | 2,397,816 |      |   |            | 2,175,665 |   |   |            | 2,225,376 |  
|                                                                   | Research and development   |                                  |            | 730,105   |      |   |            | 706,157   |   |   |            | 874,715   |  
|                                                                   | General and administrative |                                  |            | 2,126,813 |      |   |            | 1,856,858 |   |   |            | 1,808,838 |  
|                                                                   |                            |                                  |            |           |      |   |            |           |  
|Total operating expenses                                           |                            |                                  | 5,254,734  |           |      |   | 4,738,680  |           |   |   | 4,908,929  |          
|Income from operations                                             |                            |                                  | 356,802    |           |      |   | 657,312    |           |   |   | 172,029    |          
|Other income (expense):                                            |                            |                                  |            |           |      |   |            |           |   |   |            |          
|                                                                   | Interest income            |                                  |            | 138,692   |      |   |            | 114,982   |   |   |            | 169,603   |  
|                                                                   | Interest expense           |                                  |            | (15,067   | )    |   |            | (25,481   | ) |   |            | (11,729   | )
|                                                                   |                            |                                  |            |           |      |   |            |           |  
|                                                                   |                            |                                  | 123,625    |           |      |   | 89,501     |           |   |   | 157,874    |          
|Income before income taxes                                         |                            |                                  | 480,427    |           |      |   | 746,813    |           |   |   | 329,903    |          
|Income tax benefit                                                 |                            |                                  | 454,000    |           |      |   |           |           |   |   |           |          
|                                                                   |                            |                                  |            |           |      |   |            |           |  
|Net income                                                         |                            | $                                | 934,427    |           |      | $ | 746,813    |           |   | $ | 329,903    |          
|                                                                   |                            |                                  |            |           |      |   |            |           |  
|Net income per common share  basic                                |                            | $                                | .17        |           |      | $ | .14        |           |   | $ | .06        |          
|Net income per common share  diluted                              |                            | $                                | .16        |           |      | $ | .13        |           |   | $ | .06        |          
|                                                                   |                            |                                  |            |           |      |   |            |           |  
|Weighted average number of common shares outstanding 
    basic   |                            |                                  | 5,466,123  |           |      |   | 5,434,338  |           |   |   | 5,379,954  |          
|                                                                   |                            |                                  |            |           |      |   |            |           |  
|Weighted average number of common shares outstanding 
    diluted |                            |                                  | 5,714,615  |           |      |   | 5,686,594  |           |   |   | 5,653,859  |          
|                                                                   |                            |                                  |            |           |      |   |            |           |  

See accompanying notes.


25



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ROCHESTER MEDICAL CORPORATION


STATEMENT OF SHAREHOLDERS EQUITY


|                              |                                                  |              |           |        |             |             |               |            |  |   |             |         |  |       |         |         |   |   |            |         |  
|----------------------------- | ------------------------------------------------ | ------------ | --------- | ------ | ----------- | ----------- | ------------- | ---------- |  | - | ----------- | ------- |  | ----- | ------- | ------- | - | - | ---------- | ------- | -
|                              |                                                  |              |           |        |             |             |               | Unrealized |  |   |            
|                              |                                                  |              |           |        |             | Gain (Loss) |               |            | 
|                              |                                                  | Common Stock |           |        |             |             | on Available- |            |  |  
|                              |                                                  |              |           |        | Accumulated |             |               | for-Sale   |  |   |            
|                              |                                                  | Shares       |           |        | Amount      |             |               | Deficit    |  |   | Securities  |         |  | Total |        
|                              |                                                  |              |           |        |             |             |               |            |  |   |             |         |  |       |        
|Balance at September 30, 2002 |                                                  |              | 5,329,250 |        |             | $           | 41,253,128    |            |  | $ | (24,055,793 | )       |  | $     | (53,404 | )       |   | $ | 17,143,931 |        
|                              | Net income for the year                          |              |           |       |             |             |               |           |  |   |             | 329,903 |  |       |         |        |   |   |            | 329,903 |  
|                              | Unrealized gain on available-for-sale securities |              |           |       |             |             |               |           |  |   |             |        |  |       |         | 63,877  |   |   |            | 63,877  |  
|                              |                                                  |              |           |        |             |             |               |            |  |   |             |         |  |       |        
|                              | Subtotal  comprehensive income                  |              |           |       |             |             |               |           |  |   |             |        |  |       |         |        |   |   |            | 393,780 |  
|                              | Stock option exercise                            |              |           | 95,450 |             |             |               | 604,016    |  |   |             |        |  |       |         |        |   |   |            | 604,016 |  
|                              |                                                  |              |           |        |             |             |               |            |  |   |             |         |  |       |        
|Balance at September 30, 2003 |                                                  |              | 5,424,700 |        |             |             | 41,857,144    |            |  |   | (23,725,890 | )       |  |       | 10,473  |         |   |   | 18,141,727 |        
|                              | Net income for the year                          |              |           |       |             |             |               |           |  |   |             | 746,813 |  |       |         |        |   |   |            | 746,813 |  
|                              | Unrealized loss on available-for-sale securities |              |           |       |             |             |               |           |  |   |             |        |  |       |         | (84,347 | ) |   |            | (84,347 | )
|                              |                                                  |              |           |        |             |             |               |            |  |   |             |         |  |       |        
|                              | Subtotal-comprehensive income                    |              |           |       |             |             |               |           |  |   |             |        |  |       |         |        |   |   |            | 662,466 |  
|                              | Stock option exercise                            |              |           | 16,431 |             |             |               | 83,556     |  |   |             |        |  |       |         |        |   |   |            | 83,556  |  
|                              |                                                  |              |           |        |             |             |               |            |  |   |             |         |  |       |        
|Balance at September 30, 2004 |                                                  |              | 5,441,131 |        |             |             | 41,940,700    |            |  |   | (22,979,077 | )       |  |       | (73,874 | )       |   |   | 18,887,749 |        
|                              | Net income for the year                          |              |           |       |             |             |               |           |  |   |             | 934,427 |  |       |         |        |   |   |            | 934,427 |  
|                              | Unrealized loss on available-for-sale securities |              |           |       |             |             |               |           |  |   |             |        |  |       |         | (1,200  | ) |   |            | (1,200  | )
|                              |                                                  |              |           |        |             |             |               |            |  |   |             |         |  |       |        
|                              | Subtotal-comprehensive income                    |              |           |       |             |             |               |           |  |   |             |        |  |       |         |        |   |   |            | 933,227 |  
|                              | Stock option exercise                            |              |           | 82,369 |             |             |               | 467,212    |  |   |             |        |  |       |         |        |   |   |            | 467,212 |  
|                              |                                                  |              |           |        |             |             |               |            |  |   |             |         |  |       |        
|Balance at September 30, 2005 |                                                  |              | 5,523,500 |        |             | $           | 42,407,912    |            |  | $ | (22,044,650 | )       |  | $     | (75,074 | )       |   | $ | 20,288,188 |        
|                              |                                                  |              |           |        |             |             |               |            |  |   |             |         |  |       |        

See accompanying notes.


26



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ROCHESTER MEDICAL CORPORATION


STATEMENTS OF CASH FLOWS


|                                                                                      |                                              |                                  |            |           |          |   |            |           |          |   |            |           |          |  
|------------------------------------------------------------------------------------- | -------------------------------------------- | -------------------------------- | ---------- | --------- | -------- | - | ---------- | --------- | -------- | - | ---------- | --------- | -------- | -
|                                                                                      |                                              | Fiscal Years Ended September 30, |           
|                                                                                      |                                              |                                  |           
|                                                                                      |                                              | 2005                             |            |           | 2004     |   |            | 2003      |         
|                                                                                      |                                              |                                  |            |           |          |   |            |           |         
|Operating Activities:                                                                 |                                              |                                  |            |           |          |   |            |           |          |   |            |          
|Net income                                                                            |                                              | $                                | 934,427    |           |          | $ | 746,813    |           |          | $ | 329,903    |          
|Adjustments to reconcile net income to net cash provided by
    operating activities: |                                              |                                  |            |           |          |   |            |           |          |   |            |          
|                                                                                      | Depreciation                                 |                                  |            | 1,208,945 |          |   |            | 1,238,694 |          |   |            | 1,206,666 |         
|                                                                                      | Amortization                                 |                                  |            | 58,315    |          |   |            | 56,383    |          |   |            | 54,051    |         
|                                                                                      | Deferred revenue                             |                                  |            | (157,142  | )        |   |            | (157,142  | )        |   |            | 85,714    |         
|                                                                                      | Deferred income taxes                        |                                  |            | (454,000  | )        |   |            |          |          |   |            |          |         
|                                                                                      | Changes in operating assets and liabilities: |                                  |            |           |          |   |            |           |          |   |            |           |         
|                                                                                      |                                              | Accounts receivable              |            |           | (573,635 | ) |            |           | (176,878 | ) |            |           | (548,868 | )
|                                                                                      |                                              | Inventories                      |            |           | 9,071    |   |            |           | (402,694 | ) |            |           | 35,312   |  
|                                                                                      |                                              | Other current assets             |            |           | (77,799  | ) |            |           | (984     | ) |            |           | (54,062  | )
|                                                                                      |                                              | Accounts payable                 |            |           | (495,434 | ) |            |           | 271,186  |   |            |           | (126,354 | )
|                                                                                      |                                              | Other current liabilities        |            |           | 149,112  |   |            |           | (503,433 | ) |            |           | 190,277  |  
|                                                                                      |                                              |                                  |            |           |          |   |            |           |         
|Net cash provided by operating activities                                             |                                              |                                  | 601,860    |           |          |   | 1,071,945  |           |          |   | 1,172,639  |          
|Investing Activities:                                                                 |                                              |                                  |            |           |          |   |            |           |          |   |            |          
|Capital expenditures                                                                  |                                              |                                  | (327,822   | )         |          |   | (1,017,459 | )         |          |   | (244,357   | )        
|Patents                                                                               |                                              |                                  | (124,213   | )         |          |   | (50,082    | )         |          |   | (70,570    | )        
|Purchase of marketable securities                                                     |                                              |                                  | (1,133,075 | )         |          |   | (3,474,519 | )         |          |   | (4,093,145 | )        
|Sales and maturities of marketable securities                                         |                                              |                                  | 1,097,084  |           |          |   | 2,340,145  |           |          |   | 4,007,676  |          
|                                                                                      |                                              |                                  |            |           |          |   |            |           |         
|Net cash used in investing activities                                                 |                                              |                                  | (488,026   | )         |          |   | (2,201,915 | )         |          |   | (400,396   | )        
|Financing Activities:                                                                 |                                              |                                  |            |           |          |   |            |           |          |   |            |          
|Payments on capital leases                                                            |                                              |                                  | (37,611    | )         |          |   | (63,644    | )         |          |   | (23,378    | )        
|Payments on long-term debt                                                            |                                              |                                  | (34,000    | )         |          |   | (34,000    | )         |          |   |           |          
|Sale of common stock upon exercise of options                                         |                                              |                                  | 467,212    |           |          |   | 83,556     |           |          |   | 604,016    |          
|                                                                                      |                                              |                                  |            |           |          |   |            |           |         
|Net cash provided by (used in) financing activities                                   |                                              |                                  | 395,601    |           |          |   | (14,088    | )         |          |   | 580,638    |          
|                                                                                      |                                              |                                  |            |           |          |   |            |           |         
|Increase (decrease) in cash and cash equivalents                                      |                                              |                                  | 509,435    |           |          |   | (1,144,058 | )         |          |   | 1,352,881  |          
|Cash and cash equivalents at beginning of year                                        |                                              |                                  | 620,441    |           |          |   | 1,764,499  |           |          |   | 411,618    |          
|                                                                                      |                                              |                                  |            |           |          |   |            |           |         
|Cash and cash equivalents at end of year                                              |                                              | $                                | 1,129,876  |           |          | $ | 620,441    |           |          | $ | 1,764,499  |          
|                                                                                      |                                              |                                  |            |           |          |   |            |           |         
|Supplemental Cash Flow Information:                                                   |                                              |                                  |            |           |          |   |            |           |          |   |            |          
|Interest Paid                                                                         |                                              | $                                | 15,665     |           |          | $ | 22,903     |           |          | $ | 8,109      |          
|Non-Cash Investing and Financing Activities:                                          |                                              |                                  |            |           |          |   |            |           |          |   |            |          
|Capital lease arrangements                                                            |                                              | $                                |           |           |          | $ |           |           |          | $ | 222,622    |          
|Land purchased with debt                                                              |                                              |                                  |           |           |          |   |           |           |          |   | 136,000    |          

See accompanying notes.


27



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##### Table of Contents






ROCHESTER MEDICAL CORPORATION


NOTES TO FINANCIAL STATEMENTS


September 30, 2005




|   |                  
|-- | -----------------
|1. | Business Activity

FemSoft Insert,
Release-NF




|   |                                           
|-- | ------------------------------------------
|2. | Summary of Significant Accounting Policies



| |                 
| | ----------------
| | Cash Equivalents





| |                      
| | ---------------------
| | Marketable Securities



|                   |  |           |           |  |             |   |         |              |  |   |           | 
|------------------ |  | --------- | --------- |  | ----------- | - | ------- | ------------ |  | - | --------- | 
|                   |  | Amortized |           |  | Unrealized  |   |         | Estimated    | 
|                   |  | Cost      |           |  | Gain (Loss) |   |         | Market Value | 
|                   |  |           |           |  |             |   |         |              | 
|September 30, 2005 |  | $         | 5,361,627 |  |             | $ | (75,074 | )            |  | $ | 5,286,553 | 
|September 30, 2004 |  |           | 5,325,637 |  |             |   | (73,874 | )            |  |   | 5,251,763 | 



| |                        
| | -----------------------
| | Concentration of Credit





| |            
| | -----------
| | Inventories





| |                       
| | ----------------------
| | Property and Equipment



28



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##### Table of Contents





ROCHESTER MEDICAL CORPORATION


NOTES TO
FINANCIAL STATEMENTS  (Continued)




| |        
| | -------
| | Patents





| |                               
| | ------------------------------
| | Research and Development Costs





| |                    
| | -------------------
| | Revenue Recognition





| |             
| | ------------
| | Income Taxes





| |                         
| | ------------------------
| | Stock-Based Compensation





Share-Based Payment






|                                                                                                   |                               |                          |          |     |      |   |          |      |  |   |          |      |  
|-------------------------------------------------------------------------------------------------- | ----------------------------- | ------------------------ | -------- | --- | ---- | - | -------- | ---- |  | - | -------- | ---- | -
|                                                                                                   |                               | Year Ended September 30, |         
|                                                                                                   |                               |                          |         
|                                                                                                   |                               | 2005                     |          |     | 2004 |   |          | 2003 | 
|                                                                                                   |                               |                          |          |     |      |   |          |      | 
|Net income, as reported                                                                            |                               | $                        | 934,427  |     |      | $ | 746,813  |      |  | $ | 329,903  |     
|Deduct: total stock-based employee compensation expense under
    fair value method for all awards |                               |                          | (439,130 | )   |      |   | (462,276 | )    |  |   | (537,847 | )   
|                                                                                                   |                               |                          |          |     |      |   |          |      | 
|Pro forma net income (loss)                                                                        |                               | $                        | 495,297  |     |      | $ | 284,537  |      |  | $ | (207,944 | )   
|                                                                                                   |                               |                          |          |     |      |   |          |      | 
|Net income (loss) per common share:                                                                |                               |                          |          |     |      |   |          |      |  |   |          |     
|                                                                                                   | Basic  as reported           |                          | $        | .17 |      |   | $        | .14  |  |   | $        | .06  |  
|                                                                                                   | Diluted  as reported         |                          | $        | .16 |      |   | $        | .13  |  |   | $        | .06  |  
|                                                                                                   |                               |                          |          |     |      |   |          |      | 
|                                                                                                   | Basic and diluted  pro forma |                          | $        | .09 |      |   | $        | .05  |  |   | $        | (.04 | )
|                                                                                                   |                               |                          |          |     |      |   |          |      | 



| |                 
| | ----------------
| | Use of Estimates



29



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##### Table of Contents





ROCHESTER MEDICAL CORPORATION


NOTES TO
FINANCIAL STATEMENTS  (Continued)




| |                                
| | -------------------------------
| | Impairment of Long-Lived Assets





| |                     
| | --------------------
| | Net Income Per Share



|                                      |                                                                                               |                          |     |           |      |   |      |           |  |   |      |           | 
|------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------ | --- | --------- | ---- | - | ---- | --------- |  | - | ---- | --------- | 
|                                      |                                                                                               | Year Ended September 30, |    
|                                      |                                                                                               |                          |    
|                                      |                                                                                               | 2005                     |     |           | 2004 |   |      | 2003      | 
|                                      |                                                                                               |                          |     |           |      |   |      |           | 
|Numerator:                            |                                                                                               |                          |     |           |      |   |      |           |  |   |      |          
|                                      | Net income                                                                                    |                          | $   | 934,427   |      |   | $    | 746,813   |  |   | $    | 329,903   | 
|Denominator:                          |                                                                                               |                          |     |           |      |   |      |           |  |   |      |          
|                                      | Denominator for basic net income per common share 
    weighted average shares outstanding   |                          |     | 5,466,123 |      |   |      | 5,434,338 |  |   |      | 5,379,954 | 
|                                      | Effect of dilutive stock options                                                              |                          |     | 248,492   |      |   |      | 252,256   |  |   |      | 273,905   | 
|                                      |                                                                                               |                          |     |           |      |   |      |           | 
|                                      | Denominator for diluted net income per common share 
    weighted average shares outstanding |                          |     | 5,714,615 |      |   |      | 5,686,594 |  |   |      | 5,653,859 | 
|Net income per common share  basic   |                                                                                               | $                        | .17 |           |      | $ | 0.14 |           |  | $ | 0.06 |          
|Net income per common share  diluted |                                                                                               | $                        | .16 |           |      | $ | 0.13 |           |  | $ | 0.06 |          
|                                      |                                                                                               |                          |     |           |      |   |      |           | 





|   |                  
|-- | -----------------
|3. | Advertising Costs





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



|                                   |  |               |           |   |      |   |           |  
|---------------------------------- |  | ------------- | --------- | - | ---- | - | --------- | -
|                                   |  | September 30, |          
|                                   |  |               |          
|                                   |  | 2005          |           |   | 2004 |  
|                                   |  |               |           |   |      |  
|Raw materials                      |  | $             | 1,076,839 |   |      | $ | 686,492   |  
|Work-in-process                    |  |               | 1,637,694 |   |      |   | 1,890,860 |  
|Finished goods                     |  |               | 1,321,710 |   |      |   | 1,467,961 |  
|Reserve for inventory obsolescence |  |               | (100,000  | ) |      |   | (100,000  | )
|                                   |  |               |           |   |      |  
|                                   |  | $             | 3,936,243 |   |      | $ | 3,945,313 |  
|                                   |  |               |           |   |      |  



|   |                     
|-- | --------------------
|5. | Shareholders Equity



| |              
| | -------------
| | Stock Options



30



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##### Table of Contents





ROCHESTER MEDICAL CORPORATION


NOTES TO
FINANCIAL STATEMENTS  (Continued)








|                                                |  |           |          |   |             |          |           |           |  |   |       | 
|----------------------------------------------- |  | --------- | -------- | - | ----------- | -------- | --------- | --------- |  | - | ----- | 
|                                                |  |           |          |   |             | Weighted |          
|                                                |  |           |          |   |             | Average  |          
|                                                |  | Shares    |          |   |             |          | Exercise  |          
|                                                |  | Reserved  |          |   | Options     |          |           | Price Per | 
|                                                |  | For Grant |          |   | Outstanding |          |           | Share     | 
|                                                |  |           |          |   |             |          |           |           | 
|Balance as of September 30, 2002                |  |           | 287,250  |   |             |          | 1,041,000 |           |  | $ | 8.29  | 
|Options granted                                 |  |           | (73,000  | ) |             |          | 73,000    |           |  |   | 8.36  | 
|Options exercised                               |  |           |         |   |             |          | (95,450   | )         |  |   | 6.33  | 
|Options canceled                                |  |           | 47,250   |   |             |          | (47,250   | )         |  |   | 8.18  | 
|1991 Plan  options canceled and not reissuable |  |           | (33,250  | ) |             |          |          |           |  |   |      | 
|                                                |  |           |          |   |             |          |           |           | 
|Balance as of September 30, 2003                |  |           | 227,250  |   |             |          | 971,300   |           |  |   | 8.48  | 
|Options granted                                 |  |           | (66,000  | ) |             |          | 66,000    |           |  |   | 9.25  | 
|Options exercised                               |  |           |         |   |             |          | (16,431   | )         |  |   | 5.09  | 
|Options canceled                                |  |           | 2,250    |   |             |          | (2,250    | )         |  |   | 8.25  | 
|1991 Plan  options canceled and not reissuable |  |           |         |   |             |          |          |           |  |   |      | 
|                                                |  |           |          |   |             |          |           |           | 
|Balance as of September 30, 2004                |  |           | 163,500  |   |             |          | 1,018,619 |           |  |   | 8.59  | 
|Options granted                                 |  |           | (105,000 | ) |             |          | 105,000   |           |  |   | 9.40  | 
|Options exercised                               |  |           |         |   |             |          | (82,369   | )         |  |   | 5.67  | 
|Options canceled                                |  |           | 18,250   |   |             |          | (18,250   | )         |  |   | 12.51 | 
|1991 Plan  options canceled and not reissuable |  |           | (1,500   | ) |             |          |          |           |  |   | 4.69  | 
|                                                |  |           |          |   |             |          |           |           | 
|Balance as of September 30, 2005                |  |           | 75,250   |   |             |          | 1,023,000 |           |  | $ | 8.84  | 
|                                                |  |           |          |   |             |          |           |           | 



31



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ROCHESTER MEDICAL CORPORATION


NOTES TO
FINANCIAL STATEMENTS  (Continued)




|                         |               |        |             |          |           |                  |                |             |               |  |          |                |       |             |             |  |         |  |  |   |       | 
|------------------------ | ------------- | ------ | ----------- | -------- | --------- | ---------------- | -------------- | ----------- | ------------- |  | -------- | -------------- | ----- | ----------- | ----------- |  | ------- |  |  | - | ----- | 
|                         |               |        |             |          |           | Weighted         |                |             |               |  | Weighted |               
|                         |               |        |             |          |           | Average          |                |             |               |  | Average  |               
|                         |               |        |             | Weighted |           |                  | Exercise Price |             |               |  |          | Exercise Price |      
|                         |               | Number |             |          | Average   |                  |                | Per Share  |               |  | Number   |                |       | Per Share  |            
|                         |               |        | Outstanding |          |           | Remaining        |                |             | Total Options |  |          | Exercisable    |       |             | Options     | 
|Range of Exercise Prices |               |        | at 9/30/05  |          |           | Contractual Life |                |             | Outstanding   |  |          | at 9/30/05     |       |             | Exercisable | 
|                         |               |        |             |          |           |                  |                |             |               |  |          |                |       |             |             | 
|$                        | 4.33  $5.00  |        |             |          | 297,500   |                  |                |             | 5.7 years     |  |          | $              | 4.54  |             |             |  | 261,000 |  |  | $ | 4.57  | 
|                         | 5.01  10.00  |        |             |          | 440,500   |                  |                |             | 6.5 years     |  |          |                | 8.10  |             |             |  | 292,500 |  |  |   | 7.57  | 
|                         | 10.01  15.00 |        |             |          | 187,000   |                  |                |             | 1.8 years     |  |          |                | 13.44 |             |             |  | 185,500 |  |  |   | 13.46 | 
|                         | 15.01  20.00 |        |             |          | 98,000    |                  |                |             | 1.7 years     |  |          |                | 16.45 |             |             |  | 98,000  |  |  |   | 16.45 | 
|                         |               |        |             |          |           |                  |                |             |               |  |          |                |       |             |             | 
|                         |               |        |             |          | 1,023,000 |                  |                |             | 4.9 years     |  |          | $              | 8.84  |             |             |  | 837,000 |  |  | $ | 8.98  | 
|                         |               |        |             |          |           |                  |                |             |               |  |          |                |       |             |             |  |        



|   |             
|-- | ------------
|6. | Income Taxes



|                                 |                                               |               |   |            |      |  |   |            |  
|-------------------------------- | --------------------------------------------- | ------------- | - | ---------- | ---- |  | - | ---------- | -
|                                 |                                               | September 30, |  
|                                 |                                               |               |  
|                                 |                                               | 2005          |   |            | 2004 | 
|                                 |                                               |               |   |            |      | 
|Deferred income tax assets:      |                                               |               |   |            |      |  |   |           
|                                 | Net operating loss carryforwards              |               | $ | 8,661,000  |      |  | $ | 8,698,000  |  
|                                 | Research and development credit carryforwards |               |   | 306,000    |      |  |   | 311,000    |  
|                                 | Allowance for doubtful accounts               |               |   | 34,000     |      |  |   | 27,000     |  
|                                 | Inventory reserves                            |               |   | 36,000     |      |  |   | 37,000     |  
|                                 | Inventory capitalization                      |               |   | 108,000    |      |  |   | 133,000    |  
|                                 | Accrued expenses                              |               |   | 54,000     |      |  |   | 50,000     |  
|                                 | Deferred revenue                              |               |   | 262,000    |      |  |   | 325,000    |  
|                                 | Valuation allowance                           |               |   | (8,593,000 | )    |  |   | (9,119,000 | )
|                                 |                                               |               |   |            |      | 
|                                 | Total deferred income tax assets              |               |   | 868,000    |      |  |   | 462,000    |  
|Deferred income tax liabilities: |                                               |               |   |            |      |  |   |           
|                                 | Depreciation and amortization                 |               |   | 414,000    |      |  |   | 462,000    |  
|                                 |                                               |               |   |            |      | 
|                                 | Net deferred income tax assets                |               | $ | 454,000    |      |  | $ |           |  
|                                 |                                               |               |   |            |      | 



32



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ROCHESTER MEDICAL CORPORATION


NOTES TO
FINANCIAL STATEMENTS  (Continued)




|                                             |                                                 |      |     |      |      |  |    |      |   |  |    |     |  
|-------------------------------------------- | ----------------------------------------------- | ---- | --- | ---- | ---- |  | -- | ---- | - |  | -- | --- | -
|                                             |                                                 | 2005 |     |      | 2004 |  |    | 2003 |  
|                                             |                                                 |      |     |      |      |  |    |      |  
|Statutory federal income tax rate            |                                                 |      | 34  | %    |      |  | 34 | %    |   |  | 34 | %  
|Increase (decrease) in taxes resulting from: |                                                 |      |     |      |      |  |    |      |   |  |    |    
|                                             | State taxes                                     |      |     | 3    |      |  |    | 3    |   |  |    | 3   |  
|                                             | Utilization of net operating loss carryforwards |      |     | (23  | )    |  |    | (36  | ) |  |    | (21 | )
|                                             | Change in valuation allowance                   |      |     | (109 | )    |  |    | (1   | ) |  |    | (16 | )
|                                             |                                                 |      |     |      |      |  |    |      |  
|Effective income tax rate                    |                                                 |      | (95 | )%   |      |  | 0  | %    |   |  | 0  | %  
|                                             |                                                 |      |     |      |      |  |    |      |  



|   |                           
|-- | --------------------------
|7. | Related Party Transactions





|   |                                                    
|-- | ---------------------------------------------------
|8. | Significant Customers and Sales by Product Category



|                       |                                                                   |               |    |    |      |  |    |      |  |  |    |    | 
|---------------------- | ----------------------------------------------------------------- | ------------- | -- | -- | ---- |  | -- | ---- |  |  | -- | -- | 
|                       |                                                                   | September 30, |   
|                       |                                                                   |               |   
|                       |                                                                   | 2005          |    |    | 2004 |  |    | 2003 | 
|                       |                                                                   |               |    |    |      |  |    |      | 
|Significant customers: |                                                                   |               |    |    |      |  |    |      |  |  |    |   
|                       | Hollister                                                         |               |    | 16 |      |  |    | 16   |  |  |    | 13 | 
|                       | Mentor                                                            |               |    | 11 |      |  |    | 13   |  |  |    | 14 | 
|                       | Porges (a subsidiary of Mentor)                                   |               |    | 6  |      |  |    | 9    |  |  |    | 6  | 
|                       | Mentor Medical (formerly Sims Portex, now a subsidiary of Mentor) |               |    | 4  |      |  |    | 3    |  |  |    | 5  | 
|                       |                                                                   |               |    |    |      |  |    |      | 
|Total                  |                                                                   |               | 37 | %  |      |  | 41 | %    |  |  | 38 | % 
|                       |                                                                   |               |    |    |      |  |    |      | 







|                          |  |                                  |       |      |               |   |       |       |      |   |          |  |  |               |       |  |       |   |       |          |  |   |               |  |  |       |       |  |  |   |       |  |  |   |        | 
|------------------------- |  | -------------------------------- | ----- | ---- | ------------- | - | ----- | ----- | ---- | - | -------- |  |  | ------------- | ----- |  | ----- | - | ----- | -------- |  | - | ------------- |  |  | ----- | ----- |  |  | - | ----- |  |  | - | ------ | 
|                          |  | Fiscal Years Ended September 30, |      
|                          |  |                                  |      
|                          |  |                                  |       | 2005 |               |   |       |       | 2004 |   |          |  |  | 2003          |       |  |      
|                          |  |                                  |       |      |               |   |       |       |      |   |          |  |  |               |       |  |      
|                          |  | Domestic                         |       |      | International |   |       | Total |      |   | Domestic |  |  | International |       |  | Total |   |       | Domestic |  |   | International |  |  | Total |      
|                          |  |                                  |       |      |               |   |       |       |      |   |          |  |  |               |       |  |       |   |       |          |  |   |               |  |  |       |      
|Private label sales:      |  |                                  |       |      |               |   |       |       |      |   |          |  |  |               |       |  |       |   |       |          |  |   |               |  |  |       |       |  |  |   |       |  |  |   |        | 
|Base products             |  | $                                | 4,100 |      |               | $ | 4,156 |       |      | $ | 8,256    |  |  | $             | 3,660 |  |       | $ | 3,900 |          |  | $ | 7,560         |  |  | $     | 4,136 |  |  | $ | 4,074 |  |  | $ | 8,210  | 
|Advanced products         |  |                                  | 250   |      |               |   | 139   |       |      |   | 389      |  |  |               | 725   |  |       |   | 154   |          |  |   | 879           |  |  |       |      |  |  |   | 135   |  |  |   | 135    | 
|                          |  |                                  |       |      |               |   |       |       |      |   |          |  |  |               |       |  |       |   |       |          |  |   |               |  |  |       |      
|Total private label sales |  |                                  | 4,350 |      |               |   | 4,295 |       |      |   | 8,645    |  |  | $             | 4,385 |  |       | $ | 4,054 |          |  | $ | 8,439         |  |  | $     | 4,136 |  |  | $ | 4,209 |  |  | $ | 8,345  | 
|Branded sales:            |  |                                  |       |      |               |   |       |       |      |   |          |  |  |               |       |  |       |   |       |          |  |   |               |  |  |       |       |  |  |   |       |  |  |   |        | 
|Base products             |  | $                                | 3,208 |      |               |   | 2,893 |       |      |   | 6,101    |  |  | $             | 3,027 |  |       | $ | 2,618 |          |  | $ | 5,645         |  |  | $     | 2,910 |  |  | $ | 2,695 |  |  | $ | 5,605  | 
|Advanced products         |  |                                  | 884   |      |               |   | 312   |       |      |   | 1,196    |  |  |               | 575   |  |       |   | 352   |          |  |   | 927           |  |  |       | 417   |  |  |   | 288   |  |  |   | 705    | 
|                          |  |                                  |       |      |               |   |       |       |      |   |          |  |  |               |       |  |       |   |       |          |  |   |               |  |  |       |      
|Total branded sales       |  | $                                | 4,092 |      |               | $ | 3,205 |       |      | $ | 7,297    |  |  | $             | 3,602 |  |       | $ | 2,970 |          |  | $ | 6,572         |  |  | $     | 3,327 |  |  | $ | 2,983 |  |  | $ | 6,310  | 
|Total net sales:          |  | $                                | 8,442 |      |               | $ | 7,500 |       |      | $ | 15,942   |  |  | $             | 7,987 |  |       | $ | 7,024 |          |  | $ | 15,011        |  |  | $     | 7,463 |  |  | $ | 7,192 |  |  | $ | 14,655 | 

|  
|--
|  
|9.







|    |                     
|--- | --------------------
|10. | Geographic Area Data



|      |               |               |            |           |      |   |            |           |  |   |            |           | 
|----- | ------------- | ------------- | ---------- | --------- | ---- | - | ---------- | --------- |  | - | ---------- | --------- | 
|      |               | September 30, |           
|      |               |               |           
|      |               | 2005          |            |           | 2004 |   |            | 2003      | 
|      |               |               |            |           |      |   |            |           | 
|      | United States |               | $          | 8,441,565 |      |   | $          | 7,990,527 |  |   | $          | 7,476,812 | 
|      | Europe        |               |            | 5,164,633 |      |   |            | 4,769,601 |  |   |            | 4,631,470 | 
|      | Rest of world |               |            | 2,335,451 |      |   |            | 2,251,291 |  |   |            | 2,547,090 | 
|      |               |               |            |           |      |   |            |           | 
|Total |               | $             | 15,941,649 |           |      | $ | 15,011,419 |           |  | $ | 14,655,372 |          
|      |               |               |            |           |      |   |            |           | 





|    |               
|--- | --------------
|11. | Long-Term Debt



33



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##### Table of Contents





ROCHESTER MEDICAL CORPORATION


NOTES TO
FINANCIAL STATEMENTS  (Continued)




|    |               
|--- | --------------
|12. | Capital Leases



|                                            |  |   |         |  
|------------------------------------------- |  | - | ------- | -
|Fiscal Year                                 |  |   |         |  
|2006                                        |  |   | 44,615  |  
|2007                                        |  |   | 44,615  |  
|2008                                        |  |   | 22,985  |  
|                                            |  |   |        
|Total future minimum lease payments         |  |   | 112,215 |  
|Less amount representing interest at 5.6%   |  |   | (8,400  | )
|                                            |  |   |        
|Present value of net minimum lease payments |  |   | 103,815 |  
|Less current portion                        |  |   | (39,785 | )
|                                            |  |   |        
|Long-term capital lease obligation          |  | $ | 64,030  |  
|                                            |  |   |        



|                    |                               |               |         |         |      |   |         |         |  
|------------------- | ----------------------------- | ------------- | ------- | ------- | ---- | - | ------- | ------- | -
|                    |                               | September 30, |        
|                    |                               |               |        
|                    |                               | 2005          |         |         | 2004 |  
|                    |                               |               |         |         |      |  
|Packaging equipment |                               | $             | 194,024 |         |      | $ | 194,024 |        
|                    | Less accumulated amortization |               |         | (54,281 | )    |   |         | (26,563 | )
|                    |                               |               |         |         |      |  
|                    |                               | $             | 139,743 |         |      | $ | 167,461 |        
|                    |                               |               |         |         |      |  





|    |               
|--- | --------------
|13. | Line of Credit





|    |                              
|--- | -----------------------------
|14. | Quarterly Results (Unaudited)



|                       |                                       |                    |       |     |          |   |       |         |  |   |              |     |  |   |       |     | 
|---------------------- | ------------------------------------- | ------------------ | ----- | --- | -------- | - | ----- | ------- |  | - | ------------ | --- |  | - | ----- | --- | 
|                       |                                       | Three Months Ended |      
|                       |                                       |                    |      
|                       |                                       | December 31        |       |     | March 31 |   |       | June 30 |  |   | September 30 |    
|                       |                                       |                    |       |     |          |   |       |         |  |   |              |    
|Fiscal year 2005:      |                                       |                    |       |     |          |   |       |         |  |   |              |     |  |   |       |    
|Net sales              |                                       | $                  | 3,665 |     |          | $ | 4,147 |         |  | $ | 3,815        |     |  | $ | 4,314 |    
|Gross profit           |                                       |                    | 1,398 |     |          |   | 1,514 |         |  |   | 1,303        |     |  |   | 1,396 |    
|Income from operations |                                       |                    | 94    |     |          |   | 113   |         |  |   | 31           |     |  |   | 118   |    
|Net income             |                                       |                    | 122   |     |          |   | 141   |         |  |   | 60           |     |  |   | 611   |    
|                       | Net income per common share  basic   |                    | $     | .02 |          |   | $     | .03     |  |   | $            | .01 |  |   | $     | .11 | 
|                       |                                       |                    |       |     |          |   |       |         |  |   |              |    
|                       | Net income per common share  diluted |                    | $     | .02 |          |   | $     | .02     |  |   | $            | .01 |  |   | $     | .11 | 
|                       |                                       |                    |       |     |          |   |       |         |  |   |              |    
|Fiscal year 2004:      |                                       |                    |       |     |          |   |       |         |  |   |              |     |  |   |       |    
|Net sales              |                                       | $                  | 3,348 |     |          | $ | 3,811 |         |  | $ | 4,257        |     |  | $ | 3,594 |    
|Gross profit           |                                       |                    | 1,195 |     |          |   | 1,345 |         |  |   | 1,605        |     |  |   | 1,251 |    
|Income from operations |                                       |                    | 51    |     |          |   | 119   |         |  |   | 358          |     |  |   | 130   |    
|Net income             |                                       |                    | 64    |     |          |   | 139   |         |  |   | 387          |     |  |   | 157   |    
|                       | Net income per common share  basic   |                    | $     | .01 |          |   | $     | .03     |  |   | $            | .07 |  |   | $     | .03 | 
|                       |                                       |                    |       |     |          |   |       |         |  |   |              |    
|                       | Net income per common share  diluted |                    | $     | .01 |          |   | $     | .02     |  |   | $            | .07 |  |   | $     | .03 | 
|                       |                                       |                    |       |     |          |   |       |         |  |   |              |    

34



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##### Table of Contents



ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
       
 ITEM 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
 Changes in Internal Controls
 
 ITEM 9B. Other Information
  
 PART III
 
 ITEM 10. Directors and Executive Officers of the Registrant
   
 ITEM 11. Executive Compensation
  35




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##### Table of Contents



ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 ITEM 13. Certain Relationships and Related Transactions
  
 ITEM 14. Principal Accountant Fees and Services
  
 ITEM 15. Exhibits and Financial Statement Schedules
 (a)
    
    (1) The following financial statements are filed herewith in Item 8.
 (i)
    
    Balance Sheets as of September 30, 2005 and 2004.(ii)
    
    Statements of Operations for the years ended September 30, 2005, 2004 and 2003.(iii)
    
    Statement of Shareholders Equity for the years ended September 30, 2005 and 2004.(iv)
    
    Statements of Cash Flows for the years ended September 30, 2005, 2004 and 2003.(v)
    
    Notes to financial statements at September 30, 2005.
 (a)
    
    (2) Financial Statement Schedules.Schedule II  Valuation and Qualifying AccountsFinancial statement schedules other than listed here have been omitted since they are
not required or are not applicable or the required information is shown in the financial
statements or related notes.
 36




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##### Table of Contents



3.1
    
    Articles of Incorporation of the Company, as amended. (Incorporated by reference to Exhibit 4.1 of
Registrants Registration Statement on Form S-2, Registration Number 33-97788).3.2
    
    Amended and Restated Bylaws of the Company (Incorporated by reference to Exhibit 3.2 of Registrants
Annual Report on Form 10-K for fiscal year ended September 30, 2003).4.1
    
    Specimen of Common Stock Certificate. (Incorporated by reference to Exhibit 4.4 of Registrants Annual
Report on Form 10-KSB for fiscal year ended September 30, 1995).4.2
    
    The Companys 1991 Stock Option Plan as amended (Incorporated by reference to Exhibit 4.5 of
Registrants Registration Statement on Form S-8, Registration Number 333-10261).4.3
    
    Amendment to the Companys 1991 Stock Option Plan as amended (Incorporated by reference to Exhibit 4.3
of Registrants Annual Report on Form 10-K for fiscal year ended September 30, 1998).10.1
    
    Employment Agreement, dated August 31, 1990 between the Company and Anthony J. Conway. (Incorporated by
reference to Exhibit 10.13 of Registrants Registration Statement on Form S-18, Registration Number
33-36362-C).10.2
    
    Employment Agreement, dated August 31, 1990 between the Company and Philip J. Conway. (Incorporated by
reference to Exhibit 10.14 of Registrants Registration Statement on Form S-18, Registration Number
33-36362-C).10.3
    
    Change of Control Agreement dated December 4, 1998, between the Company and Philip J. Conway
(Incorporated by reference to Exhibit 10.3 of Registrants Annual Report on Form 10-K for fiscal year
ended September 30, 1998).10.4
    
    Employment Agreement, dated August 31, 1990 between the Company and Richard D. Fryar. (Incorporated by
reference to Exhibit 10.15 of Registrants Registration Statement on Form S-18, Registration Number
33-36362-C).10.5
    
    Change of Control Agreement dated December 4, 1998, between the Company and Richard D. Fryar
(Incorporated by reference to Exhibit 10.5 of Registrants Annual Report on Form 10-K for fiscal year
ended September 30, 1998).10.6
    
    Change of Control Agreement dated November 21, 2000, between the Company and Anthony J. Conway.
(Incorporated by reference to Exhibit 10.6 of the Registrants Annual Report on Form 10-K for fiscal
year ended September 30, 2000).10.7
    
    Change of Control Agreement dated November 21, 2000, between the Company and Dara Lynn Horner.
(Incorporated by reference to Exhibit 10.7 of the Registrants Annual Report on Form 10-K for fiscal
year ended September 30, 2000).10.8
    
    Employment Agreement, dated November 16, 1998 between the Company and Dara Lynn Horner. (Incorporated
by reference to Exhibit 10.8 of Registrants Annual Report on Form 10-K for fiscal year ended September
30, 1999).10.9
    
    Change of Control Agreement dated November 21, 2000, between the Company and Martyn R. Sholtis.
(Incorporated by reference to Exhibit 10.9 of the Registrants Annual Report on Form 10-K for fiscal
year ended September 30, 2000).10.10
    
    Change of Control Agreement dated November 21, 2000, between the Company and David A. Jonas.
(Incorporated by reference to Exhibit 10.10 of the Registrants Annual Report on Form 10-K for fiscal
year ended September 30, 2000).10.11
    
    The Companys 2001 Stock Incentive Plan. (Incorporated by reference to Exhibit 4.1 of Registrants
Registration Statement on Form S-8, Registration Number 333-62592).10.12
    
    The Companys Fiscal 2005 Executive Compensation Plan. (Incorporated by reference to Exhibit 10.12 of
the Registrants Annual Report on Form 10-K for fiscal year ended September 30, 2004)10.13
    
    The Companys Fiscal 2006 Executive Compensation Plan. (Incorporated by reference to Exhibit 10.1 of
the Registrants Current Report on Form 8-K filed on December 12, 2005)16.1
    
    Letter from Ernst & Young LLP to the Securities and Exchange Commission dated June 23, 2005
(Incorporated by reference to Exhibit 16.1 of the Registrants Current Report on Form 8-K filed on June
23, 2005)23.1
    
    Consent of McGladrey & Pullen LLP.*23.2
    
    Consent of Ernst & Young LLP.*24
    
    Power of Attorney.*31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*32.2
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 
 *
    
    Filed herewith. 37




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##### Table of Contents



SIGNATURES
  Rochester Medical CorporationDated:
  
December 22, 2005
    
    By:
    
    /s/ Anthony J. ConwayAnthony J. ConwayChairman of the Board, President,Chief Executive Officer and Secretary
  Signature
    
    Title/s/ Anthony J. Conway
    
    Chairman of the Board, President, Chief Executive Officer, and Secretary
(principalAnthony J. Conway
    
    executive officer)/s/ David A. Jonas
    
    Chief Financial Officer and Treasurer (principal financial and accounting officer)David A. Jonas*
    
    DirectorDarnell L. Boehm*
    
    DirectorPeter R. Conway*
    
    DirectorRoger W. Schnobrich*
    
    DirectorBenson Smith*By David A. Jonas
    
    Dated: December 22, 2005David A. JonasAttorney-in-Fact
 38




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##### Table of Contents



ROCHESTER MEDICAL CORPORATION
 SCHEDULE II  VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES
 COL. A
    
    COL. B
    
    COL. C
    
    COL. D
    
    COL. EAdditionsBalance at
    
    Charged to
    
    Charged to
    
    
    
    Balance atBeginning
    
    Costs and
    
    Other Accounts
    
    Deductions
    
    End ofDescription
    
    of Period
    
    Expenses
    
     Describe
    
     Describe
    
    PeriodYear ended September 30, 2005:Reserves and allowances deducted from asset accounts:Allowance for doubtful accounts
    
    $
    73,445
    
    
    $
    29,387
    
    
    
    
    
    
    $
    9,283
    
    
    $
    93,549Allowance for inventory obsolescence
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000Allowance for inventory valuation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Year ended September 30, 2004:Reserves and allowances deducted from asset accounts:Allowance for doubtful accounts
    
    $
    69,948
    
    
    $
    18,996
    
    
    
    
    
    
    $
    15,499
    
    
    $
    73,445Allowance for inventory obsolescence
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000Allowance for inventory valuation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Year ended September 30, 2003:Reserves and allowances deducted from asset accounts:Allowance for doubtful accounts
    
    $
    64,629
    
    
    $
    6,000
    
    
    
    
    
    
    $
    681
    (1)
    
    $
    69,948Allowance for inventory obsolescence
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000Allowance for inventory valuation
    
    
    61,439
    
    
    
    
    
    
    
    
    
    
    
    61,439
    (2)
    
    
     
  (1)
    Uncollectible accounts written off net of recoveries(2)
    Valuation of inventory at lower of cost or market 
 INDEX TO EXHIBITS
 Exhibit23.1
    
    Consent of McGladrey & Pullen LLP23.2
    
    Consent of Ernst & Young LLP24
    
    Power of Attorney31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 39