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 the fiscal year ended June 30, 2010
Commission File Number 0-20127
 
 Escalon Medical Corp.
 (Exact name of registrant as specified in its charter)
 
 Pennsylvania
    
    33-0272839(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 435 Devon Park Drive, Building 100, Wayne, PA 19087
(Address of principal executive offices, including zip code)
 (610) 688-6830
(Registrants telephone number, including area code)
 
 Securities Registered Pursuant to Section 12(b) of the Act:
 Common Stock, par value $0.001
    
    NASDAQ Capital Market(Title of class)
    
    (Name of each exchange
on which registered)
 Securities Registered Pursuant to Section 12(g) of the Act: NONE
 
 o þ
 o þ
 þ o
 o o
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
   Documents Incorporated by Reference:




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Escalon Medical Corp.
Annual Report on Form 10-K
For the Fiscal Year Ended June 30, 2010
 TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    6Item 1B.
    
    Unresolved Staff Comments
    
    
    14Item 2.
    
    Properties
    
    
    14Item 3.
    
    Legal Proceedings
    
    
    15Item 4.
    
    (Removed and Reserved)
    
    
    15PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    15Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 8.
    
    Financial Statements and Supplementary Data
    
    
    36Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    69Item 9A.
    
    Controls and Procedures
    
    
    69Item 9B.
    
    Other Information
    
    
    70PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    70Item 11.
    
    Executive Compensation
    
    
    70Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    70Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    70Item 14.
    
    Principal Accounting Fees and Services
    
    
    71PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    71
  ii




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PART 1
 
 ITEM 1. BUSINESS
 Company Overview
  www.escalonmed.com.
 Drew Business
  Diabetes Testing
 in vitro
 Hematology
  1




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Sonomed Business
  A-Scans
  B-Scans
  UBM
  Pachymeters
  EMI Business
  Medical/Trek Business
  Ispan Intraocular Gases
 3 8 6
 2




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Viscous Fluid Transfer Systems
  Fiber Optic Light Sources
  Research and Development
  Manufacturing and Distribution
    3




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Governmental Regulations
     Marketing and Sales
    Service and Support
  4




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Patents, Trademarks and Licenses
      Competition
    5




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Human Resources
  
 ITEM 1A. RISK FACTORS
 Cautionary Factors That May Affect Future Results
   6




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Due to the Companys history of operating losses, the Companys auditors are uncertain that
the Company will be able to continue as a going concern.
   Because the Companys auditors have expressed a going concern qualification, the Companys
ability to obtain additional financing could be adversely affected.
  Any acquisitions, strategic alliances, joint ventures and divestitures that the Company
effects could result in financial results that differ from market expectations.
  7




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The Company continues to have recurring losses from prior acquisitions
  The Companys results fluctuate from quarter to quarter.
  
    
    Acquisitions, such as Drew, JAS and certain assets of Biocode and subsequent
integration of the acquired business;
    
    The timing and expense of new product introductions by the Company or its competitors,
although the Company might not successfully develop new products and any such new products
may not gain market acceptance;
    
    The cancellation or delays in the purchase of the Companys products;
    
    Fluctuations in customer demand for the Companys products;
    
    Fluctuations in royalty income;
    
    The gain or loss of significant customers;
    
    Changes in the mix of products sold by the Company;
    
    Competitive pressures on prices at which the Company can sell its products;
    
    Announcements of new strategic relationships by the Company or its competitors;
    
    Litigation costs and settlements; and
    
    General economic conditions and other external factors such as energy costs.
  8




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The Companys ost saving initiatives may not be effective and the Companys ability to
develop products could be adversely affected by reduced research and development.
 .
 Failure of the market to accept the Companys products could adversely impact the
Companys business and financial condition.
  
    
    The price of the products;
    
    The continued receipt of regulatory approvals for multiple indications;
    
    The establishment and demonstration of the clinical safety and efficacy of the
Companys products; and
    
    The advantages of the Companys products over those marketed by the Companys
competitors.
  The Companys products are subject to stringent ongoing regulation by the FDA and similar
health care regulatory authorities, and if the FDAs approvals or clearances of the Companys
products are restricted or revoked, the Company could face delays that would impair the Companys
ability to generate funds from operations.
     9




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The success of products with which the Companys products compete could have an adverse impact
on the Companys business.
  
    
    Properly identify customer needs;
    
    Innovate and develop new technologies, services and applications;
    
    Establish adequate product distribution coverage;
    
    Obtain and maintain required regulatory approvals from the FDA and other regulatory
agencies;
    
    Protect the Companys intellectual property;
    
    Successfully commercialize new technologies in a timely manner;
    
    Manufacture and deliver the Companys products in sufficient volumes on time;
    
    Differentiate the Companys offerings from the offerings of the Companys competitors;
    
    Price the Companys products competitively;
    
    Anticipate competitors announcements of new products, services or technological
innovations; and
    
    Anticipate general market and economic conditions.
  The Companys products employ proprietary technology, and this technology may infringe on the
intellectual property rights of third parties.
  10




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Lack of availability of key system components could result in delays, increased costs or
costly redesign of the Companys products.
  The Companys ability to market or sell the Companys products may be adversely impacted by
limitations on reimbursements by government programs, private insurance plans and other third party
payors.
  Future legislation or changes in government programs may adversely impact the market for the
Companys products.
  The Company may become involved in product liability litigation, which may subject the Company
to liability and divert management attention.
  11




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The Companys international operations could be adversely impacted by changes in laws or
policies of foreign governmental agencies and social and economic conditions in the countries in
which the Company operates.
  The Company is dependent on its management and key personnel to succeed.
  The market price of the Companys stock has historically been volatile, and the Company has
not paid cash dividends.
  
    
    Acquisitions, strategic alliances, joint ventures and divestitures that the Company
effects, if any;
    
    Announcements of technological innovations;
    
    Changes in marketing, product pricing and sales strategies or new products by the
Companys competitors;
    
    Changes in domestic or foreign governmental regulations or regulatory requirements; and
    
    Developments or disputes relating to patent or proprietary rights and public concern as
to the safety and efficacy of the procedures for which the Companys products are used.
   The impact of terrorism or acts of war could have a material adverse impact on the Companys
business.
 12




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The Companys charter documents and Pennsylvania law may inhibit a takeover.
  There are inherent uncertainties involved in estimates, judgments and assumptions used in the
preparation of financial statements in accordance with United States GAAP. Any changes in
estimates, judgments and assumptions used could have a material adverse effect on the Companys
business, financial position and operating results.
   
    
    product returns;
    
    allowances for doubtful accounts;
    
    inventories and related reserves;
    
    intangible assets and goodwill;
    
    income and other tax accruals;
    
    deferred tax asset valuation allowances;
    
    discounts and allowances;
    
    warranty obligations; and
    
    contingencies and litigation.
  13




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Substantially all of the Companys cash and cash equivalents are held at a single financial
institution.
  Healthcare policy changes, including pending proposals to reform the U.S. healthcare system, may
have a material adverse effect on the Company.
    
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  14




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ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. (Removed and Reserved)
 
 PART II.
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
  High
    
    LowFiscal year ended June 30, 2010Quarter ended September 30, 2009
    
    $
    2.35
    
    
    $
    1.73Quarter ended December 31, 2009
    
    $
    2.20
    
    
    $
    1.45Quarter ended March 31, 2010
    
    $
    1.90
    
    
    $
    1.43Quarter ended June 30, 2010
    
    $
    1.97
    
    
    $
    1.43Fiscal year ended June 30, 2009Quarter ended September 30, 2008
    
    $
    3.12
    
    
    $
    2.00Quarter ended December 31, 2008
    
    $
    2.00
    
    
    $
    0.88Quarter ended March 31, 2009
    
    $
    2.30
    
    
    $
    1.40Quarter ended June 30, 2009
    
    $
    2.35
    
    
    $
    1.60
   15




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
        Executive Overview  Fiscal Years Ended June 30, 2010 and 2009
  
    
    Product revenue from continuing operations increased approximately $57,000 or 0.2%
during fiscal year ended June 30, 2010 as compared to the prior fiscal year. The increase
is primarily related to decreased sales in the Companys Sonomed, and EMI business units
which decreased approximately 12.2%, and 8.5% respectively, offset by sales increases in
the Drew and Medical/Trek business units of 7.3% and 2.8%, respectively.
    
    Other revenue from continuing operations increased approximately $852,000 or 640.6%
during the fiscal year ended June 30, 2010, as compared to the prior fiscal year. The
increase is due to the licensing of certain Biocode technology to TECOM for $888,000 in
fiscal year 2010 (see footnote 12).
    
    Cost of goods sold as a percentage of product revenue from continuing operations
decreased to approximately 56.9% of product revenues during the fiscal year ended June 30,
2010, as compared to approximately 59.1% of product revenue for the prior fiscal year.
Cost of goods sold in the Drew business segment was approximately 57.4% of product revenue
during the fiscal year ended June 30, 2010, as compared to approximately 62.0% in the
prior fiscal year. The aggregate cost
 16




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of goods sold as a percentage of product revenue of the Sonomed, EMI and Medical/Trek
business units during fiscal year ended June 30, 2010 increased to approximately 56.0% of
product revenue from approximately 55.1% in the prior fiscal year.
    
    Operating expenses increased approximately 7.8% during the fiscal year ended June 30,
2010 as compared to the prior fiscal year. This was due to increased marketing, general
and administrative expenses of 20.2% offset by a 41.8% decrease in research and
development expenses related to the decision to drastically reduce Sonomeds and Drews
research and development department.
 Results of Operations
 Fiscal Years Ended June 30, 2010 and 2009
  Fiscal Years Ended June 30,2010
    
    
    2009
    
    
    % ChangeProduct Revenue:Drew
    
    $
    19,403
    
    
    $
    18,085
    
    
    
    7.3
    %Sonomed
    
    
    8,055
    
    
    
    9,175
    
    
    
    -12.2
    %EMI
    
    
    1,902
    
    
    
    2,078
    
    
    
    -8.5
    %Medical/Trek
    
    
    1,297
    
    
    
    1,262
    
    
    
    2.8
    %Total
    
    $
    30,657
    
    
    $
    30,600
    
    
    
    0.2
    %
      17




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Fiscal Years Ended June 30,2010
    
    
    2009
    
    
    % ChangeOther Revenue:Drew
    
    $
    985
    
    
    $
    133
    
    
    
    640.6
    %Sonomed
    
    
    
    
    
    
    
    
    
    
    0.0
    %EMI
    
    
    
    
    
    
    
    
    
    
    0.0
    %Medical/Trek
    
    
    
    
    
    
    
    
    
    
    0.0
    %Total
    
    $
    985
    
    
    $
    133
    
    
    
    640.6
    %
   Fiscal Years Ended June 30,2010
    
    
    %
    
    
    2009
    
    
    %Cost of Goods Sold:Drew
    
    $
    11,137
    
    
    
    57.4
    %
    
    $
    11,207
    
    
    
    62.0
    %Sonomed
    
    
    4,558
    
    
    
    56.6
    %
    
    
    4,974
    
    
    
    54.2
    %EMI
    
    
    866
    
    
    
    45.5
    %
    
    
    1,069
    
    
    
    51.4
    %Medical/Trek
    
    
    881
    
    
    
    67.9
    %
    
    
    848
    
    
    
    67.2
    %Total
    
    $
    17,442
    
    
    
    56.9
    %
    
    $
    18,098
    
    
    
    59.1
    %
   18




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Fiscal Years Ended June 30,2010
    
    
    2009
    
    
    % ChangeMarketing, General and Administrative:Drew
    
    $
    10,285
    
    
    $
    7,090
    
    
    
    45.1
    %Sonomed
    
    
    1,834
    
    
    
    2,485
    
    
    
    -26.2
    %EMI
    
    
    614
    
    
    
    601
    
    
    
    2.2
    %Medical/Trek
    
    
    2,959
    
    
    
    2,885
    
    
    
    2.5
    %Total
    
    $
    15,692
    
    
    $
    13,061
    
    
    
    20.2
    %
    19




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Fiscal Years Ended June 30,2010
    
    
    2009
    
    
    % ChangeResearch and Development:Drew
    
    $
    957
    
    
    $
    1,800
    
    
    
    -46.8
    %Sonomed
    
    
    560
    
    
    
    1,085
    
    
    
    -48.4
    %EMI
    
    
    361
    
    
    
    362
    
    
    
    -0.3
    %Medical/Trek
    
    
    16
    
    
    
    9
    
    
    
    77.8
    %Total
    
    $
    1,894
    
    
    $
    3,256
    
    
    
    -41.8
    %
       20




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Results of Operations
 Fiscal Years Ended June 30, 2009 and 2008
  Fiscal Years Ended June 30,2009
    
    
    2008
    
    
    % ChangeProduct Revenue:Drew
    
    $
    18,085
    
    
    $
    13,332
    
    
    
    35.7
    %Sonomed
    
    
    9,175
    
    
    
    9,367
    
    
    
    -2.1
    %EMI
    
    
    2,078
    
    
    
    1,762
    
    
    
    17.9
    %Medical/Trek
    
    
    1,262
    
    
    
    1,410
    
    
    
    -10.5
    %Total
    
    $
    30,600
    
    
    $
    25,871
    
    
    
    18.3
    %
      21




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Fiscal Years Ended June 30,2009
    
    
    2008
    
    
    % ChangeOther Revenue:Drew
    
    $
    133
    
    
    $
    222
    
    
    
    -40.1
    %Sonomed
    
    
    0
    
    
    
    0
    
    
    
    0.0
    %EMI
    
    
    0
    
    
    
    0
    
    
    
    0.0
    %Medical/Trek
    
    
    0
    
    
    
    0
    
    
    
    0.0
    %Total
    
    $
    133
    
    
    $
    222
    
    
    
    -40.1
    %
   Fiscal Years Ended June 30,2009
    
    
    %
    
    
    2008
    
    
    %Cost of Goods Sold:Drew
    
    $
    11,207
    
    
    
    62.0
    %
    
    $
    8,928
    
    
    
    67.0
    %Sonomed
    
    
    4,974
    
    
    
    54.2
    %
    
    
    5,029
    
    
    
    53.7
    %EMI
    
    
    1,069
    
    
    
    51.4
    %
    
    
    820
    
    
    
    46.5
    %Medical/Trek
    
    
    848
    
    
    
    67.2
    %
    
    
    995
    
    
    
    70.6
    %Total
    
    $
    18,098
    
    
    
    59.1
    %
    
    $
    15,772
    
    
    
    61.0
    %
    22




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Fiscal Years Ended June 30,2009
    
    
    2008
    
    
    % ChangeMarketing, General and Administrative:Drew
    
    $
    7,090
    
    
    $
    5,287
    
    
    
    34.1
    %Sonomed
    
    
    2,485
    
    
    
    2,219
    
    
    
    12.0
    %EMI
    
    
    601
    
    
    
    605
    
    
    
    -0.7
    %Medical/Trek
    
    
    2,885
    
    
    
    4,298
    
    
    
    -32.9
    %Total
    
    $
    13,061
    
    
    $
    12,409
    
    
    
    5.3
    %
      23




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Fiscal Years Ended June 30,2009
    
    
    2008
    
    
    % ChangeResearch and Development:Drew
    
    $
    1,800
    
    
    $
    2,745
    
    
    
    -34.4
    %Sonomed
    
    
    1,085
    
    
    
    779
    
    
    
    39.3
    %EMI
    
    
    362
    
    
    
    268
    
    
    
    35.1
    %Medical/Trek
    
    
    9
    
    
    
    6
    
    
    
    50.0
    %Total
    
    $
    3,256
    
    
    $
    3,798
    
    
    
    -14.3
    %
        24




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Goodwill Impairment-Sonomed
      Goodwill Impairment-Drew
   25




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26




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Liquidity and Capital Resources
  June 30,2010
    
    
    2009Current Ratio:Current assets
    
    $
    16,748
    
    
    $
    17,561Less: Current liabilities
    
    
    5,998
    
    
    
    6,848Working capital
    
    $
    10,750
    
    
    $
    10,713Current ratio
    
    2.8 to 1
    
    
    2.6 to 1Debt to Total Capital Ratio:Notes payable and current maturities
    
    $
    1,254
    
    
    $
    1,375Long-term debt
    
    
    2,916
    
    
    
    4,741Total debt
    
    
    4,170
    
    
    
    6,116Total equity
    
    
    12,065
    
    
    
    12,439Total capital
    
    $
    16,235
    
    
    $
    18,555Total debt to total capital
    
    
    25.7
    %
    
    
    33.0
    %
 Working Capital Position
   Cash Used In or Provided By Operating Activities
   27




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Cash Flows Used In Investing and Financing Activities
        Debt History
  
    
    the first interest-only payment was due in December 2009 at an annual interest rate of
7%; this payment was paid on June 30, 2010 pursuant to an agreement reached with the
seller;
    
    thereafter, every nine months after June 30, 2010, an interest payment is due at an
annual interest rate of 7%;
    
    June 30, 2010 the principal payment of Euro 800,000 was made;
    
    June 30, 2011 a principal payment of Euro 1,000,000 is due;
 28




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
    
    December 31, 2011 a principal payment of Euro 1,000,000 is due; and
    
    December 31, 2012 a principal payment of Euro 1,375,000 is due.
   Off-Balance Sheet Arrangements and Contractual Obligations
  Less than
    
    
    
    
    
    
    3-5
    
    
    More thanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    Years
    
    
    5 YearsLong-term debt
    
    $
    4,170,738
    
    
    $
    1,254,492
    
    
    $
    2,916,246
    
    
    $
    0
    
    
    $
    0Operating lease agreements
    
    
    4,464,925
    
    
    
    862,654
    
    
    
    1,657,158
    
    
    
    1,153,944
    
    
    
    791,169Total
    
    $
    8,635,663
    
    
    $
    2,117,146
    
    
    $
    4,573,404
    
    
    $
    1,153,944
    
    
    $
    791,169
 Forward-Looking Statement About Significant Items Likely To Impact Liquidity
   29




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Common Stock
  
    
    Shareholders equity of $2,500,000 or market value of listed securities of $35,000,000
or net income from continuing operations (in the latest fiscal year or two of the last
three fiscal years) of $500,000;
    
    500,000 publicly held shares;
    
    $1,000,000 market value of publicly held shares;
    
    A minimum bid price of $1;
    
    300 round lot shareholders;
    
    Two market makers; and
    
    Compliance with corporate governance standards.
  Critical Accounting Policies
  30




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Revenue Recognition
   
    
    Persuasive evidence that an arrangement (purchase order and sales invoice) exists
between a willing buyer (distributor) and the Company that outlines the terms of the sale
(company information, quantity of goods, purchase price and payment terms). The buyer
(distributor) does not have a right of return.
    
    Shipping terms are ex-factory shipping point. At this point the buyer (distributor)
takes title to the goods and is responsible for all risks and rewards of ownership,
including insuring the goods as necessary.
    
    The Companys price to the buyer (distributor) is fixed and determinable as
specifically outlined on the sales invoice. The sales arrangement does not have customer
cancellation or termination clauses.
    
    The buyer (distributor) places a purchase order with the Company; the terms of the sale
are cash, COD or credit. Customer credit is determined based on the Companys policies
and procedures related to the buyers (distributors) creditworthiness. Based on this
determination, the Company believes that collectibility is reasonably assured.
  Valuation of Intangible Assets
  31




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Income/(Loss) Per Share
   Taxes
      32




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##### 



Stock-Based Compensation
   .
 Recently Issued Accounting Standards
     33




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ITEM 7A. QUANTITATIVE AND QUALIITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
  InterestRate
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    TotalNotes Payable  Former JAS Shareholders
    
    
    7
    %
    
    $
    33,692
    
    
    $
    
    
    
    $
    
    
    
    $
    33,692Notes Payable  Bio Code
    
    
    7
    %
    
    $
    1,220,800
    
    
    $
    1,220,800
    
    
    $
    1,695,446
    
    
    $
    4,137,046
 34




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Currency Fluctuations
    2010
    
    2009


2008Total
    
    $
    16,186,116
    
    
    $
    15,414,655
    

    $
    12,661,554Total Net Revenue
    
    $
    31,641,579
    
    
    $
    30,732,984
    

    $
    26,091,615Foreign revenue as a percent of total revenue
    
    
    51.2
    %
    
    
    50.2
    %

    
    48.5
    %
 35




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##### 



ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Escalon Medical Corp.
Index to Consolidated Financial Statements
 PageReport of Independent Registered Public Accounting Firm
    
    
    37Consolidated Balance Sheets at June 30, 2010 and 2009
    
    
    38Consolidated Statements of Operations for the Years Ended June 30, 2010, 2009 and 2008
    
    
    39Consolidated Statements of Shareholders Equity and Comprehensive Loss
for the Years Ended June 30, 2010, 2009 and 2008
    
    
    40Consolidated Statements of Cash Flows for the Years Ended June 30, 2010, 2009 and 2008
    
    
    41Notes to Consolidated Financial Statements
    
    
    42
 36




---



##### 



37




---



##### 



ESCALON MEDICAL CORP. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    June 30,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,342,422
    
    
    $
    1,810,045Accounts receivable, net
    
    
    4,481,249
    
    
    
    4,853,856Inventory, net
    
    
    6,978,714
    
    
    
    9,830,922Other current assets
    
    
    521,341
    
    
    
    1,065,823Assets of discontinued operations
    
    
    1,424,183
    
    
    
    Total current assets
    
    
    16,747,909
    
    
    
    17,560,646Furniture and equipment, net
    
    
    672,490
    
    
    
    892,966Goodwill
    
    
    1,124,018
    
    
    
    2,065,236Trademarks and trade names
    
    
    694,006
    
    
    
    694,006Patents, net
    
    
    1,284,109
    
    
    
    1,824,172Covenant not to compete and customer list, net
    
    
    1,480,264
    
    
    
    1,880,639Other assets
    
    
    4,140
    
    
    
    137,737Total assets
    
    $
    22,006,936
    
    
    $
    25,055,402LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    1,254,492
    
    
    $
    1,374,711Accounts payable
    
    
    1,537,860
    
    
    
    2,553,481Accrued expenses
    
    
    2,499,879
    
    
    
    2,919,540Liabilities of discontinued operations
    
    
    705,635
    
    
    
    0Total current liabilities
    
    
    5,997,866
    
    
    
    6,847,732Long-term debt, net of current portion
    
    
    2,916,246
    
    
    
    4,741,207Accrued post-retirement benefits
    
    
    1,027,821
    
    
    
    1,027,821Total long-term liabilities
    
    
    3,944,067
    
    
    
    5,769,028Total liabilities
    
    
    9,941,932
    
    
    
    12,616,760Shareholders equity:Preferred stock, $0.001 par value; 2,000,000
shares authorized; no shares issuedCommon stock, $0.001 par value; 35,000,000
share authorized; 7,526,430
issued and outstanding at June 30,
2010 and June 30, 2009
    
    
    7,526
    
    
    
    7,526Common stock warrants
    
    
    1,733,460
    
    
    
    1,733,460Additional paid-in capital
    
    
    67,583,905
    
    
    
    67,458,745Accumulated deficit
    
    
    (56,646,366
    )
    
    
    (56,232,503
    )Accumulated other comprehensive loss
    
    
    (613,521
    )
    
    
    (528,586
    )Total shareholders equity
    
    
    12,065,004
    
    
    
    12,438,642Total liabilities and shareholders equity
    
    $
    22,006,936
    
    
    $
    25,055,402
  38




---



##### 



ESCALON MEDICAL CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Years Ended June 30,
    
    2010
    
    
    2009
    
    
    2008Net revenues:Product revenue
    
    $
    30,656,518
    
    
    $
    30,600,177
    
    
    $
    25,869,540Other revenue
    
    
    985,061
    
    
    
    132,807
    
    
    
    222,075Revenues, net
    
    
    31,641,579
    
    
    
    30,732,984
    
    
    
    26,091,615Costs and expenses:Cost of goods sold
    
    
    17,442,816
    
    
    
    18,097,777
    
    
    
    15,771,685Marketing, general and administrative
    
    
    15,692,087
    
    
    
    13,060,528
    
    
    
    12,408,561Research and development
    
    
    1,893,182
    
    
    
    3,255,634
    
    
    
    3,798,374Goodwill impairment
    
    
    0
    
    
    
    9,525,550
    
    
    
    9,574,655Total costs and expenses
    
    
    35,028,085
    
    
    
    43,939,489
    
    
    
    41,553,275Income (loss) from operations
    
    
    (3,386,506
    )
    
    
    (13,206,505
    )
    
    
    (15,461,660
    )Other (expense) incomeGain on sale of assets
    
    
    0
    
    
    
    91,871
    
    
    
    0Equity in Ocular Telehealth Management, LLC
    
    
    (74,911
    )
    
    
    (65,387
    )
    
    
    (88,206
    )Interest income
    
    
    285
    
    
    
    18,562
    
    
    
    299,538Interest expense
    
    
    (427,083
    )
    
    
    (216,274
    )
    
    
    (11,827
    )Total other income (expense)
    
    
    (501,709
    )
    
    
    (171,228
    )
    
    
    199,505Net loss from continuing operations before
taxes
    
    
    (3,888,215
    )
    
    
    (13,377,733
    )
    
    
    (15,262,155
    )Provision for income taxes
    
    
    0
    
    
    
    0
    
    
    
    134,990Net income (loss) from continuing operations
    
    
    (3,888,215
    )
    
    
    (13,377,733
    )
    
    
    (15,397,145
    )Net income from discontinued operations,
including gain on disposal of $3,493,311 during 2010
    
    
    3,474,351
    
    
    
    412,697
    
    
    
    337,502Net loss
    
    $
    (413,864
    )
    
    $
    (12,965,036
    )
    
    $
    (15,059,643
    )Net income (loss) per shareBasic:Continuing operations
    
    $
    (0.52
    )
    
    $
    (1.87
    )
    
    $
    (2.41
    )Discontinued operations
    
    
    0.46
    
    
    
    0.06
    
    
    
    0.05Net income (loss)
    
    $
    (0.06
    )
    
    $
    (1.81
    )
    
    $
    (2.36
    )Diluted:Continuing operations
    
    $
    (0.52
    )
    
    $
    (1.87
    )
    
    $
    (2.41
    )Discontinued operations
    
    
    0.46
    
    
    
    0.06
    
    
    
    0.05Net income (loss)
    
    $
    (0.06
    )
    
    $
    (1.81
    )
    
    $
    (2.36
    )Weighted average shares  basic
    
    
    7,526,430
    
    
    
    7,137,541
    
    
    
    6,389,008Weighted average shares  diluted
    
    
    7,526,430
    
    
    
    7,137,541
    
    
    
    6,389,008
  39




---



##### 



ESCALON
MEDICAL CORP AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF
SHAREHOLDERS EQUITY
 AND COMPREHENSIVE LOSS FOR THE YEARS ENDED
JUNE 30, 2010, 2009 and 2008
 AccumulatedCommon
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    TotalCommon Stock
    
    
    Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    Comprehensive
    
    
    ShareholdersShares
    
    
    Amount
    
    
    Warrants
    
    
    Capital
    
    
    Deficit
    
    
    Income (Loss)
    
    
    EquityBALANCE AT JUNE 30, 2007
    
    
    6,499,357
    
    
    $
    6,499
    
    
    $
    1,601,346
    
    
    $
    66,044,938
    
    
    $
    (28,207,824
    )
    
    $
    (39,353
    )
    
    $
    39,405,606Comprehensive Income (Loss):Net loss
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (15,059,643
    )
    
    
    0
    
    
    
    (15,059,643
    )Foreign currency translation
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (67,710
    )
    
    
    (67,710
    )Total comprehensive income(loss)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (15,059,643
    )
    
    
    (67,710
    )
    
    
    (15,127,353
    )Exercise of stock options
    
    
    27,073
    
    
    
    27
    
    
    
    0
    
    
    
    7,435
    
    
    
    0
    
    
    
    0
    
    
    
    7,462Compensation expense
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    246,757
    
    
    
    0
    
    
    
    0
    
    
    
    246,757BALANCE AT JUNE 30, 2008
    
    
    6,526,430
    
    
    
    6,526
    
    
    
    1,601,346
    
    
    
    66,299,130
    
    
    
    (43,267,467
    )
    
    
    (107,063
    )
    
    
    24,532,472Issuance of common stock
    
    
    1,000,000
    
    
    
    1,000
    
    
    
    0
    
    
    
    895,886
    
    
    
    0
    
    
    
    0
    
    
    
    896,886Issuance of warrants
    
    
    0
    
    
    
    0
    
    
    
    132,114
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    132,114Comprehensive Income (loss):Net loss
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (12,965,036
    )
    
    
    0
    
    
    
    (12,965,036
    )Foreign currency translation
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (421,523
    )
    
    
    (421,523
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,965,036
    )
    
    
    (421,523
    )
    
    
    (13,386,559
    )Compensation expense
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    263,729
    
    
    
    0
    
    
    
    0
    
    
    
    263,729BALANCE AT JUNE 30, 2009
    
    
    7,526,430
    
    
    
    7,526
    
    
    
    1,733,460
    
    
    
    67,458,745
    
    
    
    (56,232,503
    )
    
    
    (528,586
    )
    
    
    12,438,642Comprehensive Income (loss):Net loss
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (413,864
    )
    
    
    0
    
    
    
    (413,864
    )Foreign currency translation
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (84,935
    )
    
    
    (84,935
    )Total comprehensive income (loss)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (413,864
    )
    
    
    (84,935
    )
    
    
    (498,798
    )Compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125,160
    
    
    
    
    
    
    
    
    
    
    
    125,160BALANCE AT JUNE 30, 2010
    
    
    7,526,430
    
    
    $
    7,526
    
    
    $
    1,733,460
    
    
    $
    67,583,905
    
    
    $
    (56,646,366
    )
    
    $
    (613,521
    )
    
    $
    12,065,004
  40




---



##### 



ESCALON MEDICAL CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended June 30,
    
    2010
    
    
    2009
    
    
    2008Cash Flows from Operating Activities:Net (loss) before discontinued operations
    
    $
    (3,888,215
    )
    
    $
    (13,377,733
    )
    
    $
    (15,397,145
    )Adjustments
to reconcile net (loss) before discontinued
operations to net cash (used in) operating activities:Depreciation and amortization
    
    
    1,147,050
    
    
    
    742,460
    
    
    
    535,059Goodwill Impairment
    
    
    
    
    
    
    9,525,550
    
    
    
    9,574,655Compensation expense related to stock options
    
    
    125,160
    
    
    
    263,729
    
    
    
    246,757Change in accrued post-retirement benefits
    
    
    
    
    
    
    (59,179
    )
    
    
    Gain on sale of assets
    
    
    
    
    
    
    (91,871
    )
    
    
    28,421Loss of Ocular Telehealth Management, LLC
    
    
    74,911
    
    
    
    65,387
    
    
    
    88,206Change in operating assets and liabilities:Accounts receivable, net
    
    
    12,246
    
    
    
    123,220
    
    
    
    1,006,811Inventory, net
    
    
    2,394,907
    
    
    
    1,044,131
    
    
    
    (555,939
    )Other current and long-term assets
    
    
    672,610
    
    
    
    (727,306
    )
    
    
    207,680Accounts payable, accrued and other liabilities
    
    
    (1,296,456
    )
    
    
    177,109
    
    
    
    1,204,368Net cash (used in) operating activities from continuing
operations
    
    
    (757,787
    )
    
    
    (2,314,503
    )
    
    
    (3,061,127
    )Net cash provided by operating activities from
discontinued operations
    
    
    290,029
    
    
    
    626,167
    
    
    
    124,636Net cash (used in) operating activities
    
    
    (467,758
    )
    
    
    (1,688,336
    )
    
    
    (2,936,491
    )Cash Flows from Investing Activities:Collection on note receivable
    
    
    
    
    
    
    100,000
    
    
    
    Investment in Ocular Telehealth Management, LLC
    
    
    (39,400
    )
    
    
    (42,000
    )
    
    
    (69,000
    )Purchase of fixed assets
    
    
    (190,351
    )
    
    
    (217,834
    )
    
    
    (536,506
    )Purchase of Biocode Hycel France, S.A.
    
    
    
    
    
    
    (323,975
    )
    
    
    Purchase of JAS Diagnostics, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    (1,324,706
    )Net cash (used in) investing activities from continuing
operations
    
    
    (229,751
    )
    
    
    (483,809
    )
    
    
    (1,930,212
    )Net cash (used in)/provided by investing activities from
discontinued operations
inlcuding proceeds from sale of vascular assets
    
    
    4,337,680
    
    
    
    (5,352
    )
    
    
    (76,652
    )Net cash (used in)/provided by investing activities
    
    
    4,107,929
    
    
    
    (489,161
    )
    
    
    (2,006,864
    )Cash Flows from Financing Activities:Principal payments on long-term debt
    
    
    (1,176,980
    )
    
    
    (501,745
    )
    
    
    (150,200
    )Issuance of common stock  private placement
    
    
    
    
    
    
    1,029,000
    
    
    
    Issuance of common stock  stock options
    
    
    
    
    
    
    
    
    
    
    7,462Net cash provided by/(used in) financing activities
    
    
    (1,176,980
    )
    
    
    527,255
    
    
    
    (142,738
    )Effect of exchange rate changes on cash & cash equivalents
    
    
    (930,815
    )
    
    
    (248,170
    )
    
    
    (84,913
    )Net increase (decrease) in cash and cash equivalents
    
    
    1,532,377
    
    
    
    (1,898,412
    )
    
    
    (5,171,006
    )Cash and cash equivalents, beginning of period
    
    
    1,810,045
    
    
    
    3,708,456
    
    
    
    8,879,462Cash and cash equivalents, end of period
    
    $
    3,342,422
    
    
    $
    1,810,045
    
    
    $
    3,708,456Interest paid
    
    $
    618,032
    
    
    $
    25,325
    
    
    $
    11,827Income taxes refund (paid)
    
    $
    0
    
    
    $
    0
    
    
    $
    (114,174
    )Issuance of long-term debt for JAS acquisition
    
    
    
    
    
    $
    0
    
    
    $
    752,623Sale of EquipmentNote receivable for equipment
    
    
    
    
    
    $
    100,000Net book value of equipment sold
    
    
    
    
    
    
    (8,129
    )Gain of sale of equipment
    
    
    
    
    
    
    (91,871
    )Cash received for equipment
    
    
    
    
    
    $
    Acquistion of Bio Code Hycel France, S.A.Working capital other than cash
    
    
    
    
    
    $
    3,944,102Fixed assets
    
    
    
    
    
    
    50,442Intangibles and other assets
    
    
    
    
    
    
    2,194,471Long term debt
    
    
    
    
    
    
    (5,865,040
    )Cash paid to acquire Biocode-Hycel France S.A
    
    
    
    
    
    $
    323,975
  41




---



##### 



Escalon Medical Corp. and Subsidiaries
 
 Notes to Consolidated Financial Statements
 1. Going Concern
    2. Organization and Description of Business and Business Conditions
  www.escalonmed.com
 42




---



##### 



3. Significant Accounting Policies
 Principles of Consolidation
  Use of Estimates
  Cash and Cash Equivalents
  Fair Value of Financial Instruments
  Revenue Recognition
   
    
    Persuasive evidence that an arrangement (purchase order and sales invoice) exists
between a willing buyer (distributor) and the Company that outlines the terms of the sale
(company information, quantity of goods, purchase price and payment terms). The buyer
(distributor) does not have a right of return.
 
    
    Shipping terms are ex-factory shipping point. At this point the buyer (distributor)
takes title to the goods and is responsible for all risks and rewards of ownership,
including insuring the goods as necessary.
    
    The Companys price to the buyer (distributor) is fixed and determinable as
specifically outlined on the sales invoice. The sales arrangement does not have customer
cancellation or termination clauses.
    
    The buyer (distributor) places a purchase order with the Company; the terms of the sale
are cash, COD or credit. Customer credit is determined based on the Companys policy and
procedures related to the buyers (distributors) creditworthiness. Based on this
determination, the Company believes that collectibility is reasonably assured.
 43




---



##### 



Shipping and Handling Revenues and Costs
  Inventories
  June 30,2010
    
    
    2009Raw materials
    
    $
    6,914,502
    
    
    $
    7,222,070Work in process
    
    
    446,966
    
    
    
    822,446Finished goods
    
    
    1,044,242
    
    
    
    2,512,2028,405,710
    
    
    
    10,556,718Valuation allowance
    
    
    (1,426,996
    )
    
    
    (725,796
    )Total inventory
    
    $
    6,978,714
    
    
    $
    9,830,922
  June 30,2010
    
    
    2009Balance, July 1
    
    $
    725,796
    
    
    $
    467,824Provision for valuation allowance
    
    
    919,250
    
    
    
    267,832Write-offs
    
    
    (218,050
    )
    
    
    (9,860
    )Balance, June 30
    
    $
    1,426,996
    
    
    $
    725,796
 44




---



##### 



Accounts Receivable
  June 30,2010
    
    
    2009Balance, July 1
    
    $
    641,309
    
    
    $
    473,187Provision for bad debts
    
    
    551,295
    
    
    
    178,255Write-offs
    
    
    (222,489
    )
    
    
    (10,133
    )Balance, June 30
    
    $
    970,115
    
    
    $
    641,309
 Property and Equipment
   June 30,2010
    
    
    2009Equipment
    
    $
    2,391,504
    
    
    $
    2,946,677Furniture and Fixtures
    
    
    91,963
    
    
    
    62,846Leasehold Improvements
    
    
    76,645
    
    
    
    33,9222,560,112
    
    
    
    3,043,445Less: Accumulated depreciation and amortization
    
    
    (1,887,622
    )
    
    
    (2,150,479
    )$
    672,490
    
    
    $
    892,966
 Long-lived Assets
  45




---



##### 



Intangible Assets
   Accrued Warranties
  Business Combinations
  Stock-Based Compensation
      46




---



##### 



Research and Development
  Advertising Costs
  Net Income (loss) Per Share
   2010
    
    2009
    
    2008Basic Weighted average shares outstanding
    
    
    7,526,430
    
    
    
    7,137,541
    
    
    
    6,389,008Effect of dilutive securities  Stock
options and warrants
    
    
    0
    
    
    
    0
    
    
    
    0Diluted weighted average shares outstanding
    
    
    7,526,430
    
    
    
    7,137,541
    
    
    
    6,389,008
  Income Taxes
   47




---



##### 



Comprehensive Income (Loss)
  Foreign Currency Translation
  Subsequent Events
  Reclassification
  New Accounting Pronouncements
 Recently Issued Accounting Standards
   48




---



##### 



4. Intangible Assets
 Goodwill, Trademarks and Trade Names
    49




---



##### 



Goodwill Impairment-Sonomed
      50




---



##### 



Goodwill Impairment-Drew
         51




---



##### 



2010
    
    
    2009Net
    
    
    NetCarrying
    
    
    CarryingAmount
    
    
    AmountGoodwillJAS
    
    $
    93,181
    
    
    $
    93,181Vascular
    
    
    0
    
    
    
    941,218Medical/Trek/EMI
    
    
    1,030,837
    
    
    
    1,030,837Total
    
    $
    1,124,018
    
    
    $
    2,065,236
 2010
    
    
    2009Net
    
    
    NetCarrying
    
    
    CarryingAmount
    
    
    AmountTrademarks and tradenamesSonomed
    
    $
    601,806
    
    
    $
    601,806JAS
    
    
    89,000
    
    
    
    89,000Medical/Trek/EMI
    
    
    3,200
    
    
    
    3,200Total
    
    $
    694,006
    
    
    $
    694,006
 Patents
   Covenant Not to Compete and Customer Lists
   52




---



##### 



AdjustedGross
    
    
    
    
    
    GrossCarrying
    
    
    
    
    
    Carrying
    
    Accumulated
    
    Net CarryingAmount
    
    Impairment
    
    Amount
    
    Amortization
    
    ValueAmortized Intangible Assets
PatentsMedical/Trek/EMI/Drew
    
    $
    251,361
    
    
    $
    
    
    
    $
    251,361
    
    
    $
    (165,186
    )
    
    $
    86,175Biocode
    
    
    1,582,225
    
    
    
    
    
    
    
    1,582,225
    
    
    
    (384,291
    )
    
    
    1,197,934Total
    
    $
    1,833,586
    
    
    $
    0
    
    
    $
    1,833,586
    
    
    $
    (549,477
    )
    
    $
    1,284,109Covenant Not To Compete/
Customer ListJAS
    
    $
    1,461,397
    
    
    $
    
    
    
    $
    1,461,397
    
    
    $
    (375,092
    )
    
    $
    1,086,305Biocode
    
    
    464,676
    
    
    
    
    
    
    
    464,676
    
    
    
    (107,635
    )
    
    
    357,041EMI
    
    
    442,969
    
    
    
    
    
    
    
    442,969
    
    
    
    (406,051
    )
    
    
    36,918Total
    
    $
    2,369,042
    
    
    $
    0
    
    
    $
    2,369,042
    
    
    $
    (888,778
    )
    
    $
    1,480,264
  AdjustedGross
    
    
    
    
    
    GrossCarrying
    
    
    
    
    
    Carrying
    
    Accumulated
    
    Net CarryingAmount
    
    Impairment
    
    Amount
    
    Amortization
    
    ValueAmortized Intangible
Assets PatentsMedical/Trek/EMI/Drew
    
    $
    254,851
    
    
    $
    
    
    
    $
    254,851
    
    
    $
    (133,333
    )
    
    $
    121,518Biocode
    
    
    1,772,928
    
    
    
    
    
    
    
    1,772,928
    
    
    
    (70,274
    )
    
    
    1,702,654Total
    
    $
    2,027,779
    
    
    $
    
    
    
    $
    2,027,779
    
    
    $
    (203,607
    )
    
    $
    1,824,172Covenant Not To Compete/
Customer ListJAS
    
    $
    1,461,397
    
    
    $
    
    
    
    $
    1,461,397
    
    
    $
    (97,426
    )
    
    $
    1,363,971Biocode
    
    
    425,668
    
    
    
    
    
    
    
    425,668
    
    
    
    (42,566
    )
    
    
    383,102EMI
    
    
    442,969
    
    
    
    
    
    
    
    442,969
    
    
    
    (309,403
    )
    
    
    133,566Total
    
    $
    2,330,034
    
    
    $
    
    
    
    $
    2,330,034
    
    
    $
    (449,395
    )
    
    $
    1,880,639
 53




---



##### 



5. Accrued Expenses
  June 30, 2010
    
    
    June 30, 2009Accrued compensation
    
    $
    1,167,113
    
    
    $
    953,390Warranty accruals
    
    
    168,714
    
    
    
    164,820Other accruals
    
    
    1,164,052
    
    
    
    1,801,330Total accrued expenses
    
    $
    2,499,879
    
    
    $
    2,919,540
  6. Long-Term Debt
  
    
    the first interest-only payment was due in December of 2009 at an annual interest rate
of 7%; this payment was paid on June 30, 2010 pursuant to an agreement reached with the
seller;
    
    thereafter, every nine months after June 30, 2010, an interest payment is due at an
annual interest rate of 7%;
    
    June 30, 2010 the principal payment of Euro 800,000 was made;
    
    June 30, 2011 a principal payment of Euro 1,000,000 is due;
    
    December 31, 2011 a principal payment of Euro 1,000,000 is due; and
    
    December 31, 2012 a principal payment of Euro 1,375,000 is due.
  54




---



##### 



YearEndingJune 30,
    
    Total2011
    
    $
    1,254,4922012
    
    
    1,220,8002013
    
    
    1,695,446Total
    
    
    4,170,738Current portion of long-term debt
    
    
    1,254,492Long-term portion
    
    $
    2,916,246
 7. Capital Stock Transactions
 Stock Option Plans
 .
  55




---



##### 



2010
    
    
    
    
    
    2009
    
    2008Common
    
    Weighted
    
    Common
    
    Weighted
    
    Common
    WeightedStock
    
    Average
    
    Stock
    
    Average
    
    Stock
    AverageOptions
    
    Exercise Price
    
    Options
    
    Exercise Price
    
    Options
    Exercise PriceOutstanding at the beginning of the year
    
    
    1,039,077
    
    
    $
    4.70
    
    
    
    884,577
    
    
    $
    5.27
    
    
    
    752,535
    
    
    $
    5.53Granted
    
    
    
    
    
    $
    
    
    
    
    154,500
    
    
    $
    2.21
    
    
    
    135,500
    
    
    $
    3.05Exercised
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    (2,458
    )
    
    $
    3.02Forfeited
    
    
    (73,389
    )
    
    $
    2.10
    
    
    
    
    
    
    $
    
    
    
    
    (1,000
    )
    
    $
    3.05Outstanding at the end of the year
    
    
    965,688
    
    
    $
    4.65
    
    
    
    1,039,077
    
    
    $
    4.70
    
    
    
    884,577
    
    
    $
    5.27Exercisable at the end of the year
    
    
    849,438
    
    
    
    
    
    
    
    886,944
    
    
    
    
    
    
    
    779,519Weighted average fair value of options
granted during the year
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    2.21
    
    
    
    
    
    
    $
    3.05The following table summarizes information about stock options outstanding as of June 30,
2010:
 WeightedNumber
    
    Average
    
    
    
    
    
    NumberOutstanding
    
    Remaining
    
    Weighted
    
    Exercisable
    
    
    Weightedat
    
    Contractual
    
    Average
    
    at
    
    
    AverageJune, 30
    
    Life
    
    Exercise
    
    June, 30
    
    
    Exercise2010
    
    (Years)
    
    Price
    
    2010
    
    
    PriceRange of Exercise Prices$1.45 to $2.12
    
    
    46,817
    
    
    
    1.55
    
    
    $
    1.55
    
    
    
    46,817
    
    
    
    $
    1.55$2.37 to $2.77
    
    
    419,492
    
    
    
    7.33
    
    
    $
    2.65
    
    
    
    303,242
    
    
    
    $
    2.65$4.97 to $5.59
    
    
    73,000
    
    
    
    5.28
    
    
    $
    5.05
    
    
    
    73,000
    
    
    
    $
    5.05$6.19 to $6.19
    
    
    168,250
    
    
    
    4.08
    
    
    $
    6.19
    
    
    
    168,250
    
    
    
    $
    6.19$6.94 to $8.06
    
    
    258,129
    
    
    
    4.47
    
    
    $
    7.41
    
    
    
    258,129
    
    
    
    $
    7.41Total
    
    
    965,688
    
    
    
    
    
    
    
    
    
    
    
    849,438
  56




---



##### 



Sale of Common Stock and Warrants
     57




---



##### 



8. Income Taxes
  2010
    
    2009
    
    2008Current income tax provisionFederal
    
    $
    
    
    
    $
    
    
    
    $
    State
    
    
    
    
    
    
    
    
    
    
    134,990
    
    
    
    
    
    
    
    134,990Deferred income tax provisionFederal
    
    
    324,169
    
    
    
    (2,328,920
    )
    
    
    130,565State
    
    
    76,040
    
    
    
    (546,290
    )
    
    
    30,626Change in valuation allowance
    
    
    (400,208
    )
    
    
    2,875,210
    
    
    
    (161,191
    )
    
    
    
    
    
    
    
    Income tax expense
    
    $
    
    
    
    $
    
    
    
    $
    134,990
  2010
    
    2009
    
    2008Statutory federal income tax rate
    
    
    -34.0
    %
    
    
    -34.0
    %
    
    
    -34.0
    %Change in valuation allowance
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State income taxes, net of federal tax impact
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    Effective income tax rate
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
   58




---



##### 



2010
    
    2009Deferred income tax assets:Net operating loss carryforward
    
    $
    10,447,391
    
    
    $
    10,872,291Executive post retirement costs
    
    
    349,459
    
    
    
    349,459General business credit
    
    
    207,698
    
    
    
    450,199Allowance for doubtful accounts
    
    
    313,963
    
    
    
    218,045Accrued vacation
    
    
    159,054
    
    
    
    167,154Inventory reserve
    
    
    401,457
    
    
    
    236,219Accelerated depreciation
    
    
    
    
    
    
    808Accelerated amortization on goodwill
and other intangible assets
    
    
    998,707
    
    
    
    971,335Warranty reserve
    
    
    57,848
    
    
    
    56,039Total deferred income tax assets
    
    
    12,935,577
    
    
    
    13,321,549Valuation allowance
    
    
    (12,921,341
    )
    
    
    (13,321,549
    )14,236
    
    
    
    Deferred income tax liabilities:Accelerated depreciation
    
    
    (14,236
    )
    
    
    Total deferred income tax liabilities
    
    
    (14,236
    )
    
    
    $
    0
    
    
    $
    
   59




---



##### 



9. Commitments and Contingencies
 Commitments
  LeaseYear Ending
    
    
    Obligations2011
    
    
    $
    862,6542012
    
    
    
    819,9402013
    
    
    
    837,2182014
    
    
    
    638,7332015
    
    
    
    515,211Thereafter
    
    
    
    791,169Total
    
    
    $
    4,464,925
  Contingencies
 Legal Proceedings
  60




---



##### 



10. Retirement and Post-Retirement Plans
     
    
    If the covered executive retires, the Company would be obligated to pay the executive
$8,000 per month for life, with payments commencing the month after retirement. If the
covered executive were to die within a period of three years after such retirement, the
Company would be obligated to continue making such payments until a minimum of 36 monthly
payments have been made to the covered executive and his beneficiaries in the aggregate.
    
    If the covered executive dies before his retirement while employed by the Company, the
Company would be obligated to make 36 monthly payments to his beneficiaries of $8,000 per
month commencing in the month after his death.
    
    If the covered executive were to become disabled while employed by the Company, the
Company would be obligated to pay the executive $8,000 per month for life, with payments
commencing the month after he suffers such disability. If the covered executive were to
die within three years after suffering such disability, the Company would be obligated to
continue making such payments until a minimum of 36 monthly payments have been made to the
covered executive and his beneficiaries in the aggregate.
    
    If the covered executives employment with the Company is terminated by the Company, or
if the executive terminates his employment with the Company for good reason, as defined in
the agreement, the Company would be obligated to pay the executive $8,000 per month for
life. If the covered executive were to die within a period of three years after such
termination, the Company would be obligated to continue making such payments until a
minimum of 36 monthly payments have been made to the covered executive and his
beneficiaries in the aggregate.$1,028,000 was accrued at June 30, 2010 and 2009, which represents the approximate present
value of the supplemental retirement benefits awarded.
 61




---



##### 



11. Other Revenue
 Bio-Rad Laboratories, Inc. Royalty
   
    
    Drew receives an agreed royalty per test;
    
    Royalty payments will be made depending on the volume of tests provided by Bio-Rad. If
less than 3,750 tests per month are provided by Bio-Rad, Bio-Rad will calculate the number
of tests used on a quarterly basis in arrears and pay Drew within 45 days of the end of
the quarter. If more than 3,750 tests per month are provided by Bio-Rad, Bio-Rad will pay an estimated monthly
royalty and within 45 days of the end of the quarter will make final settlement upon the
actual number of tests.
  12. TECOM Agreement
   2010
    
    
    2009
    
    
    2008Bio-Rad royalty
    
    $
    48,215
    
    
    $
    132,807
    
    
    $
    222,075Other income-JAS
    
    
    49,236
    
    
    
    0
    
    
    
    0TECOM royalty-BHH
    
    
    887,610
    
    
    
    0
    
    
    
    0Total
    
    $
    985,061
    
    
    $
    132,807
    
    
    $
    222,075
 62




---



##### 



13. Discontinued Operations
   2010
    
    2009
    
    2008Revenue, net
    
    $
    3,427
    
    
    $
    3,868
    
    
    $
    4,119Cost of Goods Sold
    
    
    1,574
    
    
    
    1,450
    
    
    
    1,538Market, general and administrative
    
    
    1,612
    
    
    
    1,786
    
    
    
    1,984Research & Development
    
    
    260
    
    
    
    219
    
    
    
    260Total Costs
    
    
    3,446
    
    
    
    3,455
    
    
    
    3,782Net income (loss) from operations
    
    
    (19
    )
    
    
    413
    
    
    
    337Gain on sale of assets
    
    
    3,493
    
    
    
    
    
    
    
    Net income
    
    $
    3,474
    
    
    $
    413
    
    
    $
    337
  2010AssetsAccounts receivable, trade
    
    $
    325Inventory
    
    
    342Other assets
    
    
    7Receivable from sale of vascular assets
    
    
    750Total Assets
    
    $
    1,424LiabilitiesPayable related to sale of vascular assets
    
    
    500Accrued expenses and other liabilities
    
    $
    206Net assets of discontinued operations
    
    $
    718
 63




---



##### 



14. Acquisition of Biocode Hycel and JAS Diagnostics, Inc.
 Biocode Hycel Acquisition
  
    
    the first interest-only payment was due in December of 2009 at an annual interest rate of 7%;
this payment has not yet paid due to an agreement reached with the seller;
    
    thereafter, every nine months after June 30, 2010, an interest payment is due at an annual
interest rate of 7%;
    
    June 30, 2010 a principal payment of Euro 800,000 was made;
    
    June 30, 2011 a principal payment of Euro 1,000,000 is due;
    
    December 31, 2011 a principal payment of Euro 1,000,000 is due; and
    
    December 31, 2012 a principal payment of Euro 1,375,000 is due.
       64




---



##### 



Current Assets
    
    $
    3,961,564Fixed Assets
    
    
    50,619Patents and other intangible assets
    
    
    2,198,596Total
    
    $
    6,210,779
 JAS Diagnostics, Inc. Acquisition
    Current assets
    
    $
    420,981Furniture and equipment
    
    
    35,441Trade Name
    
    
    89,000Customer list
    
    
    1,461,397Goodwill
    
    
    93,181Total assets acquired
    
    
    2,100,000Current liabilities
    
    
    127,975Net assets acquired
    
    $
    1,972,025
 65




---



##### 



15. Segment Reporting
   Segment Statements of Operations (in thousands)  Year ended June 30,
 Drew
    
    Sonomed2010
    
    2009
    
    2008
    
    2010
    
    2009
    
    2008Revenues, net:Product revenue
    
    $
    19,403
    
    
    $
    18,085
    
    
    $
    13,332
    
    
    $
    8,055
    
    
    $
    9,175
    
    
    $
    9,367Other revenue
    
    
    985
    
    
    
    133
    
    
    
    222
    
    
    
    
    
    
    
    
    
    
    
    Total revenue, net
    
    
    20,388
    
    
    
    18,218
    
    
    
    13,554
    
    
    
    8,055
    
    
    
    9,175
    
    
    
    9,367Costs and expenses:Cost of goods sold
    
    
    11,137
    
    
    
    11,207
    
    
    
    8,928
    
    
    
    4,558
    
    
    
    4,974
    
    
    
    5,029Marketing, General & Admin
    
    
    11,843
    
    
    
    7,090
    
    
    
    5,287
    
    
    
    2,384
    
    
    
    3,247
    
    
    
    3,824Research & Development
    
    
    957
    
    
    
    1,800
    
    
    
    2,745
    
    
    
    560
    
    
    
    1,085
    
    
    
    779Goodwill Impairment
    
    
    
    
    
    
    
    
    
    
    9,575
    
    
    
    
    
    
    
    9,526
    
    
    
    Total costs and expenses
    
    
    23,937
    
    
    
    20,097
    
    
    
    26,535
    
    
    
    7,502
    
    
    
    18,832
    
    
    
    9,632(Loss) income from
operations
    
    
    (3,549
    )
    
    
    (1,879
    )
    
    
    (12,981
    )
    
    
    553
    
    
    
    (9,657
    )
    
    
    (265
    )Other (expense) and
income:Gain (loss) on sale of assets
    
    
    
    
    
    
    92
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity in OTM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    (416
    )
    
    
    (216
    )
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    Total other (expense) and
income
    
    
    (416
    )
    
    
    (124
    )
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    Income from continuing operations
    
    
    (3,965
    )
    
    
    (2,003
    )
    
    
    (12,993
    )
    
    
    553
    
    
    
    (9,657
    )
    
    
    (265
    )Net gain from discontinued operation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26Net (loss) income
    
    $
    (3,965
    )
    
    $
    (2,003
    )
    
    $
    (12,993
    )
    
    $
    553
    
    
    $
    (9,657
    )
    
    $
    (291
    )
 66




---



##### 



Segment Statements of Operations (in thousands)  Year ended June 30,EMI
    
    Medical/Trek
    
    Total2010
    
    2009
    
    2008
    
    2010
    
    2009
    
    2008
    
    2010
    
    2009
    
    2008Revenues, net:Product revenue
    
    $
    1,902
    
    
    $
    2,078
    
    
    $
    1,762
    
    
    $
    1,297
    
    
    $
    1,262
    
    
    $
    1,410
    
    
    $
    30,657
    
    
    $
    30,600
    
    
    $
    25,871Other revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    985
    
    
    
    133
    
    
    
    222Total revenue, net
    
    
    1,902
    
    
    
    2,078
    
    
    
    1,762
    
    
    
    1,297
    
    
    
    1,262
    
    
    
    1,410
    
    
    
    31,642
    
    
    
    30,733
    
    
    
    26,093Costs and expenses:Cost of goods sold
    
    
    866
    
    
    
    1,069
    
    
    
    820
    
    
    
    881
    
    
    
    848
    
    
    
    995
    
    
    
    17,442
    
    
    
    18,098
    
    
    
    15,772Marketing, General & Admin
    
    
    744
    
    
    
    774
    
    
    
    605
    
    
    
    721
    
    
    
    1,957
    
    
    
    2,699
    
    
    
    15,692
    
    
    
    13,061
    
    
    
    12,415Research & Development
    
    
    361
    
    
    
    362
    
    
    
    268
    
    
    
    16
    
    
    
    9
    
    
    
    6
    
    
    
    1,894
    
    
    
    3,256
    
    
    
    3,798Goodwill Impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,526
    
    
    
    9,575Total costs and expenses
    
    
    1,971
    
    
    
    2,205
    
    
    
    1,693
    
    
    
    1,618
    
    
    
    2,814
    
    
    
    3,700
    
    
    
    35,028
    
    
    
    43,941
    
    
    
    41,560(Loss) income from operations
    
    
    (69
    )
    
    
    (127
    )
    
    
    69
    
    
    
    (321
    )
    
    
    (1,552
    )
    
    
    (2,290
    )
    
    
    (3,386
    )
    
    
    (13,208
    )
    
    
    (15,467
    )Other (expense) and
income:Gain on sale of assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92
    
    
    
    Equity in OTM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75
    )
    
    
    (65
    )
    
    
    (88
    )
    
    
    (75
    )
    
    
    (65
    )
    
    
    (88
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    299
    
    
    
    
    
    
    
    19
    
    
    
    299Interest expense
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (426
    )
    
    
    (216
    )
    
    
    (12
    )Total other
(expense) and income
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    (75
    )
    
    
    (46
    )
    
    
    211
    
    
    
    (501
    )
    
    
    (170
    )
    
    
    199Income from continuing operations
    
    
    (79
    )
    
    
    (127
    )
    
    
    69
    
    
    
    (396
    )
    
    
    (1,598
    )
    
    
    (2,079
    )
    
    
    (3,887
    )
    
    
    (13,385
    )
    
    
    (15,268
    )Net gain from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,474
    
    
    
    413
    
    
    
    344Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109
    
    
    
    
    
    
    
    
    
    
    
    135Net (loss) income
    
    $
    (79
    )
    
    $
    (127
    )
    
    $
    69
    
    
    $
    (396
    )
    
    $
    (1,598
    )
    
    $
    (2,188
    )
    
    $
    (413
    )
    
    $
    (12,965
    )
    
    $
    (15,059
    )
    67




---



##### 



2010
    
    
    2009
    
    
    2008Drew
    
    $
    11,787,155
    
    
    $
    9,417,050
    
    
    $
    6,587,050Sonomed
    
    
    4,398,961
    
    
    
    5,931,351
    
    
    
    5,858,763EMI
    
    
    
    
    
    
    42,300
    
    
    
    53,700Medical/Trek
    
    
    0
    
    
    
    23,954
    
    
    
    31,864$
    16,186,116
    
    
    $
    15,414,655
    
    
    $
    12,531,377
 16. Related-Party Transactions
   17. Fair Value Measurements
       68




---



##### 



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
 None
 
 ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
  
    
    Pertain to the
maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the
Companys assets;
    
    Provide reasonable
assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP,
and that the Companys receipts and expenditures are being made
only in accordance with authorizations of the Companys
management and directors; and
    
    Provide reasonable
assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Companys
assets that could have a material affect on our financial
statements.
   69




---



##### 



Changes in Internal Control Over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION
 None
 
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
  70




---



##### 



ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  
 PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 (a) Documents Filed as Part of This Annual Report on Form 10-K:
 (1) Financial Statements
        (2) Financial Statement Schedules
  3) EXHIBITS
  3.1
    
    (a)
    
    Restated Articles of Incorporation of Registrant. (8)(b)
    
    Agreement and Plan of Merger dated as of September 28, 2001 between Escalon
Pennsylvania, Inc. and Escalon Medical Corp. (8)3.2
    
    
    
    Bylaws of Registrant. (8)4.5
    
    (a)
    
    Warrant Agreement between Registrant and U.S. Stock Transfer Corporation. (1)(b)
    
    Amendment to Warrant Agreement between the Registrant and U.S. Stock Transfer
Corporation. (2)
 71




---



##### 



(c)
    
    Amendment to Warrant Agreement between the Registrant and American Stock
Transfer Corporation. (3)4.6
    
    
    
    Securities Purchase Agreement, dated as of December 31, 1997 by and among the Registrant and
Combination. (4)4.7
    
    
    
    Registration Rights Agreement, dated as of December 31, 1997 by and among the Registrant and
Combination. (4)4.8
    
    
    
    Warrant to Purchase Common Stock issued December 31, 1997 to David Stefansky. (4)4.9
    
    
    
    Warrant to Purchase Common Stock issued December 31, 1997 to Combination. (4)4.10
    
    
    
    Warrant to Purchase Common Stock issued December 31, 1997 to Richard Rosenblum. (4)4.11
    
    
    
    Warrant to Purchase Common Stock issued December 31, 1997 to Trautman, Kramer & Company. (4)10.6
    
    
    
    Employment Agreement between the Registrant and Richard J. DePiano dated May 12, 1998. (6)**10.7
    
    
    
    Non-Exclusive Distributorship Agreement between Registrant and Scott Medical Products dated
October 12, 2000. (9)10.9
    
    
    
    Assets Sale and Purchase Agreement between the Registrant and Endologix, Inc. dated January
21, 1999. (5)10.13
    
    
    
    Supply Agreement between the Registrant and Bausch & Lomb Surgical, Inc. dated August 13,
1999. (5)10.15
    
    
    
    Registrants Amendment and Supplement Agreement and Release between the Registrant and
Endologix, Inc. dated February 28, 2001. (10)10.29
    
    
    
    Registrants amended and restated 1999 Equity Incentive Plan. (13) **10.30
    
    
    
    Securities Purchase Agreement dated as of March 16, 2004 (the Securities Purchase
Agreement) between the Company and the Purchasers signatory thereto. (14)10.31
    
    
    
    Registration Rights Agreement dated as of March 16, 2004 between the Company and the
Purchasers signatory thereto. (14)10.32
    
    
    
    Form of Warrant to Purchase Common Stock issued to each Purchaser under the Securities
Purchase Agreement. (14)10.33
    
    
    
    Manufacturing Supply and Distribution Agreement between Sonomed, Inc. and Ophthalmic
Technologies, Inc. dated as of March 11, 2004. (15)10.34
    
    
    
    Supplemental Executive Retirement Benefit Agreement for Richard DePiano dated June 23, 2005.
(16)**10.36
    
    
    
    Vascular Access Sales Agreement
dated April 30, 2010. (17)21
    
    
    
    Subsidiaries. (11)23.1
    
    
    
    Consent of Independent Registered Public Accounting Firm (*).31.1
    
    
    
    Certification of the Chief Executive Officer
pursuant to Section 302 of the Sarbanes Oxley Act of 2002
(*).31.2
    
    
    
    Certification of the Chief Financial Officer
pursuant to Section 302 of the Sarbanes Oxley Act of
2002 (*).32.1
    
    
    
    Certification of the Chief Executive Officer
pursuant to Section 906 of the Sarbanes Oxley Act of
2002 (*).32.2
    
    
    
    Certification of the Chief Financial Officer
pursuant to Section 906 of the Sarbanes Oxley Act of 2002
(*).
 
 *
    
    Filed herewith.**
    
    Management contract of compensatory plan. 72




---



##### 



(1)
    
    Filed as an exhibit to Pre-Effective Amendment No. 2 to the Companys Registration Statement
on Form S-1 dated November 9, 1993 (Registration No. 33-69360).(2)
    
    Filed as an exhibit to the Companys Form 10-KSB for the year ended June 30, 1994.(3)
    
    Filed as an exhibit to the Companys Form 10-KSB for the year ended June 30, 1995.(4)
    
    Filed as an exhibit to the Companys Registration Statement on Form S-3 dated January 20,
1998 (Registration No. 333-44513).(5)
    
    Filed as an exhibit to the Companys Form 10-KSB for the year ended June 30, 1999.(6)
    
    Filed as an exhibit to the Companys Form 8-K/A, dated March 31, 2000.(7)
    
    Filed as an exhibit to the Companys Registration Statement on Form s-* dated February 25,
2000 (Registration No. 333-31138).(8)
    
    Filed as an exhibit to the Companys Proxy Statement on Schedule 14A, as filed by the Company
with the SEC on September 21, 2001.(9)
    
    Filed as an exhibit to the Companys Form 10-KSB for the year ended June 30, 2001.(10)
    
    Filed as an exhibit to the Companys Form 10-Q for the quarter ended March 31, 2001.(11)
    
    Filed as an exhibit to the Companys Form 10-KSB/A for the year ended June 30, 2002.(12)
    
    Filed as an exhibit to the Companys Form 10-Q for the quarter ended December 31, 2002.(13)
    
    Filed as an exhibit to the Companys Form 10-Q for the quarter ended December 31, 2003.(14)
    
    Filed as an exhibit to the Companys Registration
Statement on Form S-3 dated April 8, 2004
(Registration No. 333-114332).(15)
    
    Filed as an exhibit to the Companys Form 10-Q for the quarter ended March 31, 2004.(16)
    
    Filed as an exhibit to the Companys Form 8-K, dated June 23, 2005.(17)
    
    Filed as an exhibit to the Companys Form 8-K, dated
May 6, 2010. Signatures
  Escalon Medical Corp.
(Registrant)By:
    /s/  Richard J. DePianoRichard J. DePianoChairman and Chief Executive Officer   By:
    
    /s/ Richard J. DePiano

     Richard J. DePiano
    
    
    
    Chairman and Chief Executive  Officer
(Principal Executive
Officer) and Director
    
    October 12, 2010By:
    
    /s/ Robert M. OConnor

     Robert M. OConnor
    
    
    
    Chief Financial Officer (Principal
Financial and Accounting Officer)
    
    October 12, 2010By:
    
    /s/ Anthony Coppola

     Anthony Coppola
    
    
    
    Director
    
    October 12, 2010
 73




---



##### 



By:
    
    /s/ Jay L. Federman

     Jay L. Federman
    
    
    
    Director
    
    October 12, 2010By:
    
    /s/ William L.G. Kwan

     William L.G. Kwan
    
    
    
    Director
    
    October 12, 2010By:
    
    /s/ Lisa Napolitano

     Lisa Napolitano
    
    
    
    Director
    
    October 12, 2010By:
    
    /s/ Fred Choate

     Fred Choate
    
    
    
    Director
    
    October 12, 2010
 74