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| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

| Delaware                                                       | 87-0475073                        |
|----------------------------------------------------------------|-----------------------------------|
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |

|   | Large accelerated filer o                                             | Accelerated filer o         |
|--------|-----------------------------------------------------------------------|-----------------------------|
|   | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company x |

|   |
|--------|

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| ITEM 1. | FINANCIAL STATEMENTS                                                                                                                                 | 3      |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|    |                                                                                                                                                 |   |
|    | Condensed Consolidated Balance Sheets as of September 30, 2010 (Unaudited) and June 30, 2010                                                         | 3      |
|    |                                                                                                                                                 |   |
|    | Condensed Consolidated Statements of Operations for the Three Months  Ended September 30, 2010 and 2009 (Unaudited)                        | 4      |
|    |                                                                                                                                                 |   |
|    | Condensed Consolidated Statement of Changes in Shareholders' Equity and Comprehensive Loss for the Three Months Ended September 30, 2010 (Unaudited) | 5      |
|    |                                                                                                                                                 |   |
|    | Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2010 and 2009 (Unaudited)                                   | 6      |
|    |                                                                                                                                                 |   |
|    | Notes to Condensed Consolidated Financial Statements                                                                                                 | 7      |
|    |                                                                                                                                                 |   |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                                          | 18     |
|    |                                                                                                                                                 |   |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                                                           | 22     |
|    |                                                                                                                                                 |   |
| ITEM 4. | CONTROLS AND PROCEDURES                                                                                                                              | 22     |

| ITEM 1.    | LEGAL PROCEEDINGS                                           | 23     |
|------------|-------------------------------------------------------------|--------|
|       |                                                        |   |
| ITEM 1A.   | RISK FACTORS                                                | 23     |
|       |                                                        |   |
| ITEM 2.    | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 23     |
|       |                                                        |   |
| ITEM 3.    | DEFAULTS UPON SENIOR SECURITIES                             | 23     |
|       |                                                        |   |
| ITEM 4.    | (REMOVED AND RESERVED)                                      | 23     |
|       |                                                        |   |
| ITEM 5.    | OTHER INFORMATION                                           | 23     |
|       |                                                        |   |
| ITEM 6.    | EXHIBITS                                                    | 23     |
|       |                                                        |   |
| SIGNATURES |                                                        | 24     |

----

|                                                                                                                                                                                                                                     |   | September 30, 2010 |       |   | June 30, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|--------|----------|--------|
| ASSETS                                                                                                                                                                                                                                   |   | (Unaudited)        |       |   | 2010     |   |
| CURRENT ASSETS:                                                                                                                                                                                                                          |   |               |       |   |     |   |
|     Cash and cash equivalents                                                                                                                                                                                        |   | $                  | 311,079    |   |     | $      | 317,611 |   |
|     Accounts receivable, net                                                                                                                                                                                         |   |               | 2,308,792  |   |     |   | 2,674,918 |   |
|     Inventories, net                                                                                                                                                                                                 |   |               | 5,684,677  |   |     |   | 5,476,041 |   |
|     Taxes receivable                                                                                                                                                                                                 |   |               | 6,006      |   |     |   | 50,506 |   |
|     Prepaid expenses and other current assets                                                                                                                                                                        |   |               | 224,569    |   |     |   | 244,841 |   |
|         Total Current Assets                                                                                                                                                                     |   |               | 8,535,123  |   |     |   | 8,763,917 |   |
|                                                                                                                                                                                                                                     |   |               |       |   |     |   |   |   |
| PROPERTY AND EQUIPMENT, NET                                                                                                                                                                                                              |   |               | 1,894,642  |   |     |   | 1,852,131 |   |
|                                                                                                                                                                                                                                     |   |               |       |   |     |   |   |   |
| OTHER ASSETS:                                                                                                                                                                                                                            |   |               |       |   |     |   |   |   |
|     Goodwill and other intangible assets, net                                                                                                                                                                        |   |               | 3,590,457  |   |     |   | 3,584,231 |   |
|     Other assets                                                                                                                                                                                                     |   |               | 81,244     |   |     |   | 85,984 |   |
|         Total Other Assets                                                                                                                                                                       |   |               | 3,671,701  |   |     |   | 3,670,215 |   |
|                                                                                                                                                                                                                                     |   |               |       |   |     |   |   |   |
| TOTAL ASSETS                                                                                                                                                                                                                             |   | $                  | 14,101,466 |   |     | $      | 14,286,263 |   |
|                                                                                                                                                                                                                                     |   |               |       |   |     |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                                                                                                     |   |               |       |   |     |   |   |   |
|                                                                                                                                                                                                                                     |   |               |       |   |     |   |   |   |
| CURRENT LIABILITIES:                                                                                                                                                                                                                     |   |               |       |   |     |   |   |   |
|     Accounts payable                                                                                                                                                                                                 |   |               | 1,703,069  |   |     |   | 1,201,154 |   |
|     Accrued compensation and benefits                                                                                                                                                                                |   |               | 734,556    |   |     |   | 555,136 |   |
|     Other accrued expenses and current liabilities                                                                                                                                                                   |   |               | 639,853    |   |     |   | 443,641 |   |
|     Accrued product warranty costs                                                                                                                                                                                   |   |               | 365,548    |   |     |   | 432,548 |   |
|     Deferred rent liability                                                                                                                                                                                          |   |               | 50,444     |   |     |   | 28,493 |   |
|     10% subordinated debt, net of discount of $211,523 at September 30, 2010                                                                                                                                         |   |               | 1,038,477  |   |     |   | – |   |
|     Deferred revenue                                                                                                                                                                                                 |   |               | 7,103      |   |     |   | 20,097 |   |
|         Total Current Liabilities                                                                                                                                                                |   |               | 4,539,050  |   |     |   | 2,681,069 |   |
|                                                                                                                                                                                                                                     |   |               |       |   |     |   |   |   |
| OTHER LIABILITIES:                                                                                                                                                                                                                       |   |               |       |   |     |   |   |   |
|     Long-term debt                                                                                                                                                                                                   |   |               | 1,885,130  |   |     |   | 2,340,863 |   |
|     Deferred rent liability                                                                                                                                                                                          |   |               | –    |   |     |   | 29,517 |   |
|     10% subordinated debt, net of discount of $255,376 at June 30, 2010                                                                                                                                              |   |               | –    |   |     |   | 994,624 |   |
|     Deferred tax liabilities                                                                                                                                                                                         |   |               | 944,922    |   |     |   | 904,922 |   |
|         Total Other Liabilities                                                                                                                                                                  |   |               | 2,830,052  |   |     |   | 4,269,926 |   |
|                                                                                                                                                                                                                                     |   |               |       |   |     |   |   |   |
| TOTAL LIABILITIES                                                                                                                                                                                                                        |   |               | 7,369,102  |   |     |   | 6,950,995 |   |
|                                                                                                                                                                                                                                     |   |               |       |   |     |   |   |   |
| COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                            |   |               |       |   |     |   |   |   |
|                                                                                                                                                                                                                                     |   |               |       |   |     |   |   |   |
| SHAREHOLDERS' EQUITY:                                                                                                                                                                                                                    |   |               |       |   |     |   |   |   |
|     Preferred Stock, $.001 par value                                                                                                                                                                                 |   |               |       |   |     |   |   |   |
|        Authorized 5,000,000 shares; none issued                                                                                                                                                       |   |               | –    |   |     |   | – |   |
|     Common Stock, $.001 par value 25,000,000 shares authorized;                                                                                                                                                      |   |               |       |   |     |   |   |   |
|         issued and outstanding, respectively, 13,342,374 and 12,739,372        shares at September 30, 2010 and 13,292,374 and 12,699,914 shares at June |   |               | 12,739     |   |     |   | 12,700 |   |
|     Additional paid-in capital                                                                                                                                                                                       |   |               | 13,361,215 |   |     |   | 13,277,405 |   |
|     Accumulated other comprehensive income (loss)                                                                                                                                                                    |   |               | (412       | )      |     |   | 1,402 |   |
|     Accumulated deficit                                                                                                                                                                                              |   |               | (6,641,178 | )      |     |   | (5,956,239 | ) |
|         Total Shareholders' Equity                                                                                                                                                               |   |               | 6,732,364  |   |     |   | 7,335,268 |   |
|                                                                                                                                                                                                                                     |   |               |       |   |     |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                                                                                               |   | $                  | 14,101,466 |   |     | $      | 14,286,263 |   |

----

|                                                                                                                                                                       |   | Three Months EndedSeptember 30, |       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|------------|
|                                                                                                                                                                       |   | 2010                            |       |   | 2009 |   |
|                                                                                                                                                                       |   |                            |       |   |   |   |
| NET REVENUES                                                                                                                                                               |   | $                               | 4,703,657  |   |   | $ | 5,506,750 |   |
|                                                                                                                                                                       |   |                            |       |   |   |   |   |   |
| COST OF GOODS SOLD:                                                                                                                                                        |   |                            |       |   |   |   |   |   |
|     Cost of goods sold, excluding depreciation and        amortization, product warranty, shipping and freight |   |                            | 2,531,412  |   |   |   | 2,613,778 |   |
|     Depreciation and amortization                                                                                                                      |   |                            | 85,210     |   |   |   | 136,601 |   |
|     Product warranty                                                                                                                                   |   |                            | 263,183    |   |   |   | 468,372 |   |
|     Shipping and freight                                                                                                                               |   |                            | 140,386    |   |   |   | 158,554 |   |
|         Total cost of goods sold                                                                                                   |   |                            | 3,020,191  |   |   |   | 3,377,305 |   |
|                                                                                                                                                                       |   |                            |       |   |   |   |   |   |
| GROSS PROFIT                                                                                                                                                               |   |                            | 1,683,466  |   |   |   | 2,129,445 |   |
|                                                                                                                                                                       |   |                            |       |   |   |   |   |   |
| OTHER COSTS AND EXPENSES:                                                                                                                                                  |   |                            |       |   |   |   |   |   |
|     Research and development                                                                                                                           |   |                            | 239,150    |   |   |   | 340,880 |   |
|     Selling, general and administrative, excluding        depreciation and amortization                        |   |                            | 1,927,389  |   |   |   | 1,916,690 |   |
|     Depreciation and amortization                                                                                                                      |   |                            | 42,583     |   |   |   | 74,842 |   |
|         Total other costs and expenses                                                                                             |   |                            | 2,209,122  |   |   |   | 2,332,412 |   |
|                                                                                                                                                                       |   |                            |       |   |   |   |   |   |
| LOSS FROM OPERATIONS                                                                                                                                                       |   |                            | (525,656   | ) |   |   | (202,967 | ) |
|                                                                                                                                                                       |   |                            |       |   |   |   |   |   |
| Interest expense                                                                                                                                                           |   |                            | (75,455    | ) |   |   | (86,855 | ) |
| Interest income                                                                                                                                                            |   |                            | 24         |   |   |   | 20 |   |
| Loss on change in fair value of warrant liabilities                                                                                                                        |   |                            | –    |   |   |   | (19,167 | ) |
| Amortization of debt discount on convertible debt                                                                                                                          |   |                            | (43,852    | ) |   |   | (32,679 | ) |
|                                                                                                                                                                       |   |                            |       |   |   |   |   |   |
| LOSS BEFORE INCOME TAXES                                                                                                                                                   |   |                            | (644,939   | ) |   |   | (341,648 | ) |
| Benefit (Provision) for income taxes                                                                                                                                       |   |                            | (40,000    | ) |   |   | 82,419 |   |
|                                                                                                                                                                       |   |                            |       |   |   |   |   |   |
| NET LOSS                                                                                                                                                                   |   | $                               | (684,939   | ) |   | $ | (259,229 | ) |
|                                                                                                                                                                       |   |                            |       |   |   |   |   |   |
|                                                                                                                                                                       |   |                            |       |   |   |   |   |   |
| LOSS PER SHARE                                                                                                                                                             |   |                            |       |   |   |   |   |   |
|     Basic and diluted                                                                                                                                  |   | $                               | (0.05      | ) |   | $ | (0.02 | ) |
|                                                                                                                                                                       |   |                            |       |   |   |   |   |   |
|                                                                                                                                                                       |   |                            |       |   |   |   |   |   |
| WEIGHTED AVERAGE SHARES USED TO COMPUTE LOSS PER SHARE                                                                                                                     |   |                            |       |   |   |   |   |   |
|     Basic and diluted                                                                                                                                  |   |                            | 12,735,865 |   |   |   | 11,837,427 |   |

----

|                                                               |   |         |       |   |       |   |    | Accumulated   |   |   |          |   |   |          |    |
|--------------------------------------------------------------------|--------|--------------|------------|--------|------------|--------|---------|---------------|--------|--------|---------------|--------|--------|---------------|---------|
|                                                               |   |         |       |   | Additional |   |    | Other         |   |   |          |   |   | Total         |    |
|                                                               |   | Common Stock |       |   | Paid-in    |   |    | Comprehensive |   |   | Accumulated   |   |   | Shareholders' |    |
|                                                               |   | Shares       |       |   | Amount     |   |    | Capital       |   |   | Income (loss) |   |   | Deficit       |    |   | Equity |   |
| BALANCES, JUNE 30, 2010                                            |   |         | 12,699,914 |   |       | $      | 12,700  |          |   | $      | 13,277,405    |   |   | $             | 1,402   |   |   | $ | (5,956,239 | ) |   | $ | 7,335,268 |   |
| Components of comprehensive loss:                                  |   |         |       |   |       |   |    |          |   |   |          |   |   |          |    |   |   |   |   |   |   |   |   |   |
|    Net loss                                         |   |         | –    |   |       |   | – |          |   |   | –       |   |   |          | – |   |   |   | (684,939 | ) |   |   | (684,939 | ) |
|    Cumulative translation adjustment                |   |         | –    |   |       |   | – |          |   |   | –       |   |   |          | (1,814  | ) |   |   | – |   |   |   | (1,814 | ) |
|        Total comprehensive loss |   |         | –    |   |       |   | – |          |   |   | –       |   |   |          | – |   |   |   | – |   |   |   | (686,753 | ) |
|   Vested restricted stock units                          |   |         | 39,458     |   |       |   | 39      |          |   |   | (39           | )      |   |          | – |   |   |   | – |   |   |   | – |   |
|   Stock-based compensation expense                       |   |         | –    |   |       |   | – |          |   |   | 83,849        |   |   |          | – |   |   |   | – |   |   |   | 83,849 |   |
| BALANCES, SEPTEMBER 30, 2010                                       |   |         | 12,739,372 |   |       | $      | 12,739  |          |   | $      | 13,361,215    |   |   | $             | (412    | ) |   | $ | (6,641,178 | ) |   | $ | 6,732,364 |   |

----

|                                                                                                                                                   |   | Three Months EndedSeptember 30, |     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|----------|
|                                                                                                                                                   |   | 2010                            |     |   | 2009 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                                                                                                   |   |                            |     |   |   |   |
|     Net loss                                                                                                                       |   | $                               | (684,939 | ) |   | $ | (259,229 | ) |
|     Adjustments to reconcile net loss to net cash provided (used) by operating    activities:                  |   |                            |     |   |   |   |   |   |
|             Depreciation and amortization                                                  |   |                            | 138,409  |   |   |   | 230,711 |   |
|             Stock-based compensation expense                                               |   |                            | 82,757   |   |   |   | 186,805 |   |
|             Deferred income taxes                                                          |   |                            | 40,000   |   |   |   | (82,419 | ) |
|             Impairment charge                                                              |   |                            | –  |   |   |   | (20,059 | ) |
|             Provision for (reduction of) inventory obsolescence reserves                   |   |                            | 21,634   |   |   |   | (26,929 | ) |
|             Provision for returns and doubtful accounts allowance                          |   |                            | 53,163   |   |   |   | 3,809 |   |
|             Amortization of debt discount on convertible debt                              |   |                            | 43,852   |   |   |   | 32,679 |   |
|             Loss on change in fair value of warrant liabilities                            |   |                            | –  |   |   |   | 19,167 |   |
|          Changes in operating assets and liabilities:                                                     |   |                            |     |   |   |   |   |   |
|              Accounts receivable                                                      |   |                            | 336,272  |   |   |   | (99,719 | ) |
|              Inventories                                                              |   |                            | (229,179 | ) |   |   | (19,927 | ) |
|              Income taxes                                                             |   |                            | 44,500   |   |   |   | 3,253 |   |
|              Prepaid expenses and other current assets                                |   |                            | (62,811  | ) |   |   | 138,598 |   |
|              Accounts payable                                                         |   |                            | 486,108  |   |   |   | 83,734 |   |
|              Accrued compensation and benefits                                        |   |                            | 173,427  |   |   |   | (251,589 | ) |
|              Other accrued expenses and current liabilities                           |   |                            | 225,522  |   |   |   | (65,930 | ) |
|              Accrued product warranty costs                                           |   |                            | (67,000  | ) |   |   | – |   |
|              Deferred rent liability                                                  |   |                            | (7,566   | ) |   |   | (19,332 | ) |
|              Deferred revenue                                                         |   |                            | (12,994  | ) |   |   | (97,718 | ) |
|                  Net cash provided (used) by operating activities |   |                            | 581,156  |   |   |   | (244,095 | ) |
|                                                                                                                                                   |   |                            |     |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                                                                                   |   |                            |     |   |   |   |   |   |
|     Purchases of property and equipment                                                                                            |   |                            | (187,146 | ) |   |   | (27,789 | ) |
|                  Net cash used in investing activities            |   |                            | (187,146 | ) |   |   | (27,789 | ) |
|                                                                                                                                                   |   |                            |     |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                                                                                   |   |                            |     |   |   |   |   |   |
|      Decrease in restricted cash                                                                                              |   |                            | 87,843   |   |   |   | 10,907 |   |
|      Bank credit line proceeds (repayments), net                                                                              |   |                            | (455,733 | ) |   |   | 232,115 |   |
|      Capital lease obligation repayments                                                                                      |   |                            | –  |   |   |   | (69,815 | ) |
|                  Net cash provided (used) by financing activities |   |                            | (367,890 | ) |   |   | 173,207 |   |
|     Effect of exchange rate changes on cash and cash equivalents                                                                   |   |                            | (32,651  | ) |   |   | (8,677 | ) |
| NET DECREASE IN CASH AND CASH EQUIVALENTS                                                                                                              |   |                            | (6,532   | ) |   |   | (107,354 | ) |
|                                                                                                                                                   |   |                            |     |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                                                                         |   |                            | 317,611  |   |   |   | 550,602 |   |
|                                                                                                                                                   |   |                            |     |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS, END OF PERIOD                                                                                                               |   | $                               | 311,079  |   |   | $ | 443,248 |   |
|                                                                                                                                                   |   |                            |     |   |   |   |   |   |
| SUPPLEMENTAL CASH FLOW INFORMATION                                                                                                                     |   |                            |     |   |   |   |   |   |
|     Interest paid                                                                                                                  |   | $                               | 69,430   |   |   | $ | 77,683 |   |
|     Income taxes paid (refunded)                                                                                                   |   | $                               | (44,500  | ) |   | $ | – |   |
|                                                                                                                                                   |   |                            |     |   |   |   |   |   |

----

----

| ·   | Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 2 – inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 3 – unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                |               |   | September 30,2010 |      |   |          |   |
|-------------------------------------------------------------------------------------|--------------------|--------|-------------------|-----------|--------|---------------|--------|
|                                                                                |               |   | (Unaudited)       |      |   | June 30, 2010 |   |
| Accounts receivable, net                                                            |               |   |              |      |   |          |   |
|       Accounts receivable, gross                      |               |   | $                 | 2,444,309 |   |          | $      | 2,863,598 |   |
|       Allowance for doubtful accounts                 |               |   |              | (20,000   | )      |          |   | (20,000 | ) |
|       Allowance for returns                           |               |   |              | (115,517  | )      |          |   | (168,680 | ) |
|                                                                                |               |   | $                 | 2,308,792 |   |          | $      | 2,674,918 |   |
|                                                                                |               |   |              |      |   |          |   |   |   |
| Inventories, net of reserves                                                        |               |   |              |      |   |          |   |   |   |
|       Raw materials                                   |               |   | $                 | 1,782,759 |   |          | $      | 1,578,321 |   |
|       Finished goods                                  |               |   |              | 4,219,313 |   |          |   | 4,193,480 |   |
|       Less:  reserves for obsolescence      |               |   |              | (317,394  | )      |          |   | (295,760 | ) |
|                                                                                |               |   | $                 | 5,684,677 |   |          | $      | 5,476,041 |   |
|                                                                                |               |   |              |      |   |          |   |   |   |
| Property and Equipment, net                                                         | Useful Lives       |   |              |      |   |          |   |   |   |
|       Equipment                                       | 3 – 7 years  |   | $                 | 3,052,104 |   |          | $      | 3,036,193 |   |
|       Furniture and fixtures                          | 7 years            |   |              | 578,672   |   |          |   | 578,672 |   |
|       Automobiles                                     | 5 years            |   |              | 30,434    |   |          |   | 30,434 |   |
|       Leasehold improvements                          | 5 – 10 years |   |              | 921,157   |   |          |   | 921,157 |   |
|       Tooling and molds                               | 3 years            |   |              | 3,047,964 |   |          |   | 3,018,087 |   |
|       Construction-in-progress                        |               |   |              | 505,274   |   |          |   | 370,196 |   |
|                                                                                |               |   |              | 8,135,605 |   |          |   | 7,954,739 |   |
|       Less: Accumulated depreciation and amortization |               |   |              | 6,240,963 |   |          |   | 6,102,608 |   |
|                                                                                |               |   | $                 | 1,894,642 |   |          | $      | 1,852,131 |   |
|                                                                                |               |   |              |      |   |          |   |   |   |
|  Goodwill and other intangible assets, net                                     |               |   |              |      |   |          |   |   |   |
|       Goodwill                                        |               |   | $                 | 3,965,977 |   |          | $      | 3,965,977 |   |
|       Other                                           | 1-15 years         |   |              | 52,280    |   |          |   | 46,000 |   |
|                                                                                |               |   |              | 4,018,257 |   |          |   | 4,011,977 |   |
|       Less: Accumulated amortization                  |               |   |              | 427,800   |   |          |   | 427,746 |   |
|                                                                                |               |   | $                 | 3,590,457 |   |          | $      | 3,584,231 |   |

|   |                |   | September 30, 2010 |      |   |          |   |
|--------|---------------------|--------|--------------------|-----------|--------|---------------|--------|
|   |                |   | (Unaudited)        |      |   | June 30, 2010 |   |
|   |                |   |               |      |   |          |   |
|   | Bank term notes     |   | $                  | 1,500,000 |   |          | $      | 1,500,000 |   |
|   | Bank line of credit |   |               | 385,130   |   |          |   | 840,863 |   |
|   | Long-term debt      |   | $                  | 1,885,130 |   |          | $      | 2,340,863 |   |
|   | Total bank debt     |   | $                  | 1,885,130 |   |          | $      | 2,340,863 |   |

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|                                                                                                                                                                               |   | Three Months EndedSeptember 30, |       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|------------|
|                                                                                                                                                                               |   | 2010                            |       |   | 2009 |   |
| Numerator for basic and diluted:                                                                                                                                                   |   |                            |       |   |   |   |
|     Net loss                                                                                                                                                   |   | $                               | (684,939   | ) |   | $ | (259,229 | ) |
|                                                                                                                                                                               |   |                            |       |   |   |   |   |   |
| Denominator :                                                                                                                                                                      |   |                            |       |   |   |   |   |   |
|     For basic loss per common share –    weighted average shares outstanding                                                         |   |                            | 12,735,865 |   |   |   | 11,837,427 |   |
|     Effect of dilutive securities -  stock options,    unvested restricted stock units and warrants                              |   |                            | –    |   |   |   | – |   |
|     For diluted loss per common share –    weighted average shares outstanding adjusted    for assumed exercises |   |                            | 12,735,865 |   |   |   | 11,837,427 |   |
|                                                                                                                                                                               |   |                            |       |   |   |   |   |   |
| Basic loss per share                                                                                                                                                               |   | $                               | (0.05      | ) |   | $ | (0.02 | ) |
|                                                                                                                                                                               |   |                            |       |   |   |   |   |   |
| Diluted loss per share                                                                                                                                                             |   | $                               | (0.05      | ) |   | $ | (0.02 | ) |

|                 |   | Three Months EndedSeptember 30, |    |
|----------------------|--------|---------------------------------|---------|
|                 |   | 2010                            |    |   | 2009 |   |
| Options and warrants |   |                            | 904,392 |   |   |   | 1,091,062 |   |

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|                                                                                                           |   | Three Months EndedSeptember 30, |    |
|----------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---------|
|                                                                                                           |   | 2010                            |    |   | 2009 |   |
| Stock-based compensation expense by type of award:                                                             |   |                            |    |   |   |   |
|            Employee stock options                       |   | $                               | 40,451  |   |   | $ | 71,145 |   |
|            Employee restricted stock units              |   |                            | 27,690  |   |   |   | 69,052 |   |
|            Non-employee director restricted stock units |   |                            | 15,708  |   |   |   | 48,501 |   |
| Amounts capitalized as inventory                                                                               |   |                            | (1,092  | ) |   |   | (1,893 | ) |
| Total stock-based compensation expense                                                                         |   | $                               | 82,757  |   |   | $ | 186,805 |   |
| Tax effect of stock-based compensation recognized                                                              |   |                            | (26,815 | ) |   |   | (62,656 | ) |
| Net effect on net loss                                                                                         |   | $                               | 55,942  |   |   | $ | 124,149 |   |

|                                                                                           | Three Months EndedSeptember 30, |   |     |
|------------------------------------------------------------------------------------------------|---------------------------------|--------|----------|
|                                                                                           | 2010                            |   | 2009 (a) |   |   |
| Risk-free interest rate                                                                        | 1.7%                            |   | –  |   |   |
| Dividend yield                                                                                 | 0.0%                            |   | –  |   |   |
| Expected stock price volatility                                                                | 64%                             |   | –  |   |   |
| Average expected life of options                                                               | 4.8 years                       |   | –  |   |   |
|                                                                                           |                            |   |     |   |   |
| (a)  No stock options were granted during the three months ended September 30, 2009. |                            |

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|   |                                              |   | Number ofShares |      |   | WeightedAverageExercise Price |   |
|--------|---------------------------------------------------|--------|-----------------|-----------|--------|-------------------------------|--------|
|   | Balance outstanding at June 30, 2010              |   |            | 1,077,128 |   |                          | $      | 3.25 |   |
|   | Three  months ended September 30, 2010: |   |            |      |   |                          |   |   |   |
|   | Options granted                                   |   |            | 100,002   |   |                          |   | 0.34 |   |
|   | Options exercised                                 |   |            | –   |   |                          |   | – |   |
|   | Options cancelled/expired/forfeited               |   |            | (58,934   | )      |                          |   | 3.54 |   |
|   | Balance outstanding at March 31, 2010             |   |            | 1,118,196 |   |                          | $      | 2.98 |   |

|   |                   | Options Outstanding |                                          | Options Exercisable          |
|--------|------------------------|---------------------|-----------------------------------------------|------------------------------|
|   | Range ofExercisePrices | NumberOutstanding   | WeightedAverageRemainingContractualLife-Years | WeightedAverageExercisePrice |   | NumberVested andExercisable | WeightedAverageExercisePrice |
|   |                   |                |                                          |                         |   |   |   |
|   | $0.34 to $0.85         | 171,602             | 6.1                                           | $0.40                        |   | 26,600 | $0.59 |
|   | $1.00 to $2.00         | 407,915             | 2.8                                           | 1.96                         |   | 407,915 | 1.96 |
|   | $2.01 to $6.33         | 538,679             | 4.2                                           | 4.57                         |   | 469,877 | 4.46 |
|   |                   | 1,118,196           | 3.4                                           | $2.95                        |   | 904,392 | $3.21 |

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|   |                                       |   | Number ofShares |    |   | Grant DateFair Value |   |    | WeightedAverage GrantDate Fair ValuePer Share |   |
|--------|--------------------------------------------|--------|-----------------|---------|--------|----------------------|--------|---------|-----------------------------------------------|--------|
|   | Balance unvested at June 30, 2010          |   |            | 592,460 |   |                 | $      | 456,330 |                                          |   | $ | 0.77 |   |
|   |                                       |   |            |    |   |                 |   |    |                                          |   |   |   |   |
|   | Three months ended September 30, 2010:     |   |            |    |   |                 |   |    |                                          |   |   |   |   |
|   | Restricted stock units granted             |   |            | 50,000  |   |                 |   | 17,025  |                                          |   |   | 0.34 |   |
|   | Restricted stock units vested              |   |            | (39,458 | )      |                 |   | (78,913 | )                                             |   |   | 2.00 |   |
|   | Restricted stock units cancelled/forfeited |   |            | – |   |                 |   | – |                                          |   |   | – |   |
|   | Balance unvested at March 31, 2010         |   |            | 603,002 |   |                 | $      | 394,442 |                                          |   | $ | 0.65 |   |

|   |                                                                           |   | Three Months EndedSeptember 30, |     |
|--------|--------------------------------------------------------------------------------|--------|---------------------------------|----------|
|   |                                                                           |   | 2010                            |     |   | 2009 |   |
|   | Accrued product warranty costsat the beginning of the period                   |   | $                               | 432,548  |   |   | $ | 436,578 |   |
|   |                                                                           |   |                            |     |   |   |   |   |   |
|   |        Warranties accrued during the period |   |                            | 263,183  |   |   |   | 468,372 |   |
|   |        Warranties settled during the period |   |                            | (330,183 | ) |   |   | (468,372 | ) |
|   | Net change in accrued warranty costs                                           |   |                            | (67,000  | ) |   |   | – |   |
|   |                                                                           |   |                            |     |   |   |   |   |   |
|   | Accrued product warranty costsat the end of the period                         |   | $                               | 365,548  |   |   | $ | 436,578 |   |

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| Exhibit No. |   | Description                                                                                           |
|-------------|--------|-------------------------------------------------------------------------------------------------------|
| 31.1*       |   | Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a) |
| 31.2*       |   | Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a) |
| 32.1*       |   | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350                           |
| 32.2*       |   | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350                           |

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|                     | MEDIA SCIENCES INTERNATIONAL, INC. |
|--------------------------|------------------------------------|
|                     |                               |   |
| Dated: November 15, 2010 | By:                                | /s/ Marc D. Durand |   |
|                     |                               | Marc D, Durand |   |
|                     |                               | Chief Executive Officer |   |
|                     |                               |   |   |
| Dated: November 15, 2010 | By:                                | /s/ Marc P. Applebaum |   |
|                     |                               | Marc Applebaum |   |
|                     |                               | Chief Financial Officer |   |
|                     |                               |   |   |

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