|   | x |   | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010. |
|--------|---|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | o |   | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________. |
|--------|---|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Delaware              |   | 04-2869857        |
|-----------------------|--------|-------------------|
| State of Organization |   | IRS Employer I.D. |

| 9033 Red Branch Road, Columbia, Maryland  21045-2105 |
|----------------------------------------------------------------|
| (Address of principal executive offices)                       |

| (443) 367-5500                                             |
|------------------------------------------------------------|
| (Registrant’s telephone number, including area code) |

----

|                      |                         |                                                                                                  |   PageNumber |
|---------------------------|------------------------------|-------------------------------------------------------------------------------------------------------|-------------------|
|   PART I.  |   FINANCIAL INFORMATION |                                                                                                  |
|                      |                         |                                                                                                  |
|                      | Item 1.                      | Financial Statements                                                                                  |              |
|                      |                         |                                                                                                  |              |
|                      |                         | Consolidated Balance Sheets; March 31, 2010 (unaudited) and September 30, 2009                        |  3           |   |
|                      |                         |                                                                                                  |              |
|                      |                         | Consolidated Statements of Operations; Three and Six Months Ended March 31, 2010 and 2009 (unaudited) |  5           |   |
|                      |                         |                                                                                                  |              |
|                      |                         | Consolidated Statements of Cash Flows; Six Months Ended March 31, 2010 and 2009 (unaudited)      |  6           |   |
|                      |                         |                                                                                                  |              |
|                      |                         | Notes to Consolidated Financial Statements (unaudited)                                                |  7           |   |
|                      |                         |                                                                                                  |              |
|                      | Item 2.                      | Management’s Discussion and Analysis of Financial Condition and Results of Operation       |  11          |   |
|                      |                         |                                                                                                  |              |
|                      | Item 3.                      | Quantitative and Qualitative Disclosures About Market Risk                                            |  14          |         |
|                      |                         |                                                                                                  |              |
|                      | Item 4.                      | Controls and Procedures                                                                               |  14          |   |
|                      |                         |                                                                                                  |
| PART II.                  | OTHER INFORMATION            |                                                                                                  |
|                      |                         |                                                                                                  |              |
|                      | Item 2.                      | Unregistered Sales of Equity Securities and Use Of Proceeds                                           |  14          |   |
|                      |                         |                                                                                                  |              |
|                      | Item 5                       | Other Information                                                                                     |  14          |                 |
|                      |                         |                                                                                                  |              |
|                      | Item 6.                      | Exhibits                                                                                              |  15          |   |
|                      |                         |                                                                                                  |              |
|   SIGNATURES         |  16                     |                                                                                                  |
|                      |                         |
|   CERTIFICATIONS     |                         |

----

| PART I   -  Financial Information |
|------------------------------------------------------------|
|                                                       |   |
| Item 1.  -  Financial Statements       |
|                                                       |   |

|                                                                                                                                                                    |   | March 31,2010 |          |   | September 30,2009 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------------|--------|-------------------|--------|
|                                                                                                                                                                    |   | (unaudited)   |          |   |              |   |
| ASSETS                                                                                                                                                                  |   |          |          |   |              |   |
|                                                                                                                                                                    |   |          |          |   |              |   |
| CURRENT ASSETS:                                                                                                                                                         |   |          |          |   |              |   |
| Cash                                                                                                                                                                    |   | $             | 143,621       |   |              | $      | 156,314 |   |
| Accounts receivable, less allowance for doubtful accounts  of  $56,603 and $69,973  at March 31, 2010 and September 30, 2009, respectively     |   |          | 699,410  |   |              |   | 630,020  |   |
| Inventories, net                                                                                                                                                        |   |          | 1,567,550     |   |              |   | 1,703,226 |   |
| Current portion of note receivable                                                                                                                                      |   |          | 210,000       |   |              |   | 210,000 |   |
| Prepaid expenses and other current assets                                                                                                                               |   |          | 109,723       |   |              |   | 120,464 |   |
|                                                                                                                                                                    |   |          |          |   |              |   |   |   |
|     Total current assets                                                                                                                            |   |          | 2,730,304     |   |              |   | 2,820,024 |   |
|                                                                                                                                                                    |   |          |          |   |              |   |   |   |
| PROPERTY AND EQUIPMENT; net of accumulated depreciation and amortization  of $6,199,381 and $6,143,356 at March 31, 2010 and September 30, 2009, respectively |   |          | 503,487  |   |              |   | 599,008  |   |
|                                                                                                                                                                    |   |          |          |   |              |   |   |   |
| OTHER ASSETS:                                                                                                                                                           |   |          |          |   |              |   |   |   |
|                                                                                                                                                                    |   |          |          |   |              |   |   |   |
| Long term portion of note receivable                                                                                                                                    |   |          | 140,000       |   |              |   | 245,000 |   |
| Other assets                                                                                                                                                            |   |          | 47,144        |   |              |   | 54,300 |   |
|     Total other assets                                                                                                                              |   |          | 187,144       |   |              |   | 299,300 |   |
|                                                                                                                                                                    |   |          |          |   |              |   |   |   |
| Total Assets                                                                                                                                                            |   | $             | 3,420,935     |   |              | $      | 3,718,332 |   |

----

|                                                                                                                                                                                      |   | March 31,2010 |        |    | September 30,2009 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-------------|---------|-------------------|--------|
|                                                                                                                                                                                           |   | (unaudited)   |        |    |              |   |
|  LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                                                              |   |          |        |    |              |   |
|                                                                                                                                                                                           |   |          |        |    |              |   |
| CURRENT LIABILITIES:                                                                                                                                                                           |   |          |        |    |              |   |
| Accounts payable and accrued liabilities                                                                                                                                                       |   | $             | 773,194     |    |              | $      | 969,135 |   |
| Revolving line of credit                                                                                                                                                                       |   |          | 398,000     |    |              |   | 400.000 |   |
| Deferred revenue                                                                                                                                                                               |   |          | 33,270      |    |              |   | 51,830 |   |
| Note Payable – Itau Bank                                                                                                                                                                 |   |          | 1,802       |    |              |   | 28,859 |   |
| Total Current Liabilities                                                                                                                                                                      |   |          | 1,206,266   |    |              |   | 1,449,824 |   |
|                                                                                                                                                                                           |   |          |        |    |              |   |   |   |
| LONG TERM LIABILITIES:                                                                                                                                                                         |   |          |        |    |              |   |   |   |
| Senior subordinated secured convertible notes                                                                                                                                                  |   |          | 4,049,858   |    |              |   | 4,049,858 |   |
|                 Total Long Term Liabilities                                                                    |   |          | 4,049,858   |    |              |   | 4,049,858 |   |
|         Total liabilities                                                                                                                              |   |          | 5,256,124   |    |              |   | 5,499,682 |   |
|                                                                                                                                                                                           |   |          |        |    |              |   |   |   |
|  STOCKHOLDERS’ DEFICIT                                                                                                                                                              |   |          |        |    |              |   |   |   |
|                                                                                                                                                                                           |   |          |        |    |              |   |   |   |
| Preferred stock, $0.01 par value - 1,000,000 shares authorized; none issued                                                                                                                    |   |          | --          |    |              |   | -- |   |
| Common stock, $.01 par value - 30,000,000 shares authorized; 15,555,281 and   15,345,281 issued and outstanding  as of March 31, 2010 and September 30, 2009, respectively |   |          | 155,552     |    |              |   | 153,452 |   |
| Additional paid-in capital                                                                                                                                                                     |   |          | 22,935,292  |    |              |   | 22,919,932 |   |
| Accumulated deficit                                                                                                                                                                            |   |          | (24,805,303 | )       |              |   | (24,734,125 | ) |
| Accumulated other comprehensive loss-currency translation loss                                                                                                                                 |   |          | (31,093     | )  |              |   | (30,972 | ) |
| Less treasury stock at cost; 100,000 shares at March 31, 2010 and September 30, 2009, respectively.                                                                                       |   |          | (89,637     | )       |              |   | (89,637 | ) |
|                                                                                                                                                                                           |   |          |        |    |              |   |   |   |
| Total Stockholders’ Deficit                                                                                                                                                              |   |          | (1,835,189  | )       |              |   | (1,781,350 | ) |
| Total Liabilities and Stockholders’ Deficit                                                                                                                                              |   | $             | 3,420,935   |    |              | $      | 3,718,332 |   |
|                                                                                                                                                                                           |   |          |        |    |              |   |   |   |

----

|                                                                                                                                                                                                                                 |   | Three Months Ended |       |   | Six Months Ended |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|--------|------------------|--------|
|                                                                                                                                                                                                                                 |   | March 31,          |       |   | March 31,        |   |   | March 31, |   |   | March 31, |   |
|                                                                                                                                                                                                                                 |   | 2010               |       |   | 2009             |   |   | 2010 |   |   | 2009 |   |
| Net Sales                                                                                                                                                                                                                            |   | $                  | 1,421,374  |   |             | $      | 1,300,624 |   |   | $ | 2,573,167 |   |   | $ | 2,686,974 |   |
| Cost of Sales                                                                                                                                                                                                                        |   |               | 766,426    |   |             |   | 775,903 |   |   |   | 1,409,095 |   |   |   | 1,653,549 |   |
| Gross Profit                                                                                                                                                                                                                         |   |               | 654,948    |   |             |   | 524,721 |   |   |   | 1,164,072 |   |   |   | 1,033,425 |   |
| Operating Expenses:                                                                                                                                                                                                                  |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
|   Selling, general and administrative                                                                                                                                                                                      |   |               | 495,700    |   |             |   | 572,963 |   |   |   | 1,026,921 |   |   |   | 1,194,184 |   |
|   Research and development                                                                                                                                                                                                 |   |               | 5,232      |   |             |   | 16,437 |   |   |   | 22,112 |   |   |   | 39,394 |   |
|     Total operating expenses                                                                                                                                                                                     |   |               | 500,932    |   |             |   | 589,400 |   |   |   | 1,049,033 |   |   |   | 1,233,578 |   |
|     Total operating income (loss)                                                                                                                                                                                |   |               | 154,016    |   |             |   | (64,679 | ) |   |   | 115,039 |   |   |   | (200,153 | ) |
| Other income (expenses):                                                                                                                                                                                                             |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
|   Interest expense (net),  including $19,517 and $38,719 for the    three and six months periods ended March 31, 2009,     of debt discount amortization. |   |               | (83,146    | )      |             |   | (98,418 | ) |   |   | (167,824 | ) |   |   | (198,264 | ) |
|   Other income                                                                                                                                                                                                             |   |               | 3,230      |   |             |   | 449 |   |   |   | 3,144 |   |   |   | 400 |   |
|   Gain on sale of assets                                                                                                                                                                                                   |   |               | 25,291     |   |             |   | -- |   |   |   | 25,291 |   |   |   | 43,117 |   |
|     Total other expense                                                                                                                                                                                          |   |               | (54,625    | )      |             |   | (97,969 | ) |   |   | (139,389 | ) |   |   | (154,747 | ) |
|                                                                                                                                                                                                                                 |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
|   Net income (loss), before income taxes                                                                                                                                                                                   |   |               | 99,391     |   |             |   | (162,648 | ) |   |   | (24,350 | ) |   |   | (354,900 | ) |
|                                                                                                                                                                                                                                 |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
|   Income Tax expense                                                                                                                                                                                                       |   |               | 36,552     |   |             |   | 223 |   |   |   | 46,828 |   |   |   | 16,471 |   |
|                                                                                                                                                                                                                                 |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss):                                                                                                                                                                                                                   |   | $                  | 62,839     |   |             | $      | (162,871 | ) |   | $ | (71,178 | ) |   | $ | (371,371 | ) |
| Other comprehensive income (loss), net of tax:                                                                                                                                                                                       |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustments                                                                                                                                                                                             |   |               | (27,297    | )      |             |   | 19,849 |   |   |   | (121 | ) |   |   | (166,745 | ) |
| Comprehensive income (loss):                                                                                                                                                                                                         |   | $                  | 35,542     |   |             | $      | (143,022 | ) |   | $ | (71,299 | ) |   | $ | (538,116 | ) |
|                                                                                                                                                                                                                                 |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per share - Basic                                                                                                                                                                                                    |   | $                  | 0.00       |   |             | $      | (0.01 | ) |   | $ | (0.00 | ) |   | $ | (0.02 | ) |
| Earnings (loss) per share - Diluted                                                                                                                                                                                                  |   | $                  | 0.00       |   |             | $      | (0.01 | ) |   | $ | (0.00 | ) |   | $ | (0.02 | ) |
| Weighed average common shares used in calculation  of earnings (loss) per share - Basic                                                                                                                                    |   |               | 15,455,003 |   |             |   | 15,234,039 |   |   |   | 15,445,885 |   |   |   | 15,233,344 |   |
| Weighed average common shares used in calculation  of earnings (loss) per share – Diluted                                                                                                                            |   |               | 15,455,003 |   |             |   | 15,234,039 |   |   |   | 15,445,885 |   |   |   | 15,233,344 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                               |   | Six Months Ended |     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|----------|
|                                                                                                                                                                                                                                                                                                                                                                                               |   | March 31,        |     |
| Cash flows from operating activities:                                                                                                                                                                                                                                                                                                                                                              |   | 2010             |     |   | 2009 |   |
| Net Loss                                                                |   | $                | (71,178  | ) |   | $ | (371,371 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities:                                                                                                                                                                                                                                                                                                                    |   |             |     |   |   |   |   |   |
|     Depreciation                                                                                                                                                                                                                                                                                                                                                               |   |             | 83,615   |   |   |   | 74,066 |   |
|     Amortization of debt discount                                                                                                                                                                                                                                                                                                                                              |   |             | --       |   |   |   | 38,719 |   |
|     (Gain) on sale of assets                                                                                                                                                                                                                                                                                                                                                   |   |             | (25,291  | ) |   |   | (43,117 | ) |
|     Provision for Bad Debts                                                                                                                                                                                                                                                                                                                                                    |   |             | (10,512  | ) |   |   | 30,841 |   |
|     Stock Based Compensation                                                                                                                                                                                                                                                                                                                                                   |   |             | 17,460   |   |   |   | 6,690 |   |
| Changes in operating assets and liabilities:                                                                                                                                                                                                                                                                                                                                                       |   |             |     |   |   |   |   |   |
|     Accounts receivable                                                                                                                                                                                                                                                                                                                                                        |   |             | (58,878  | ) |   |   | 157,033 |   |
|     Prepaid expenses and other current assets                                                                                                                                                                                                                                                                                                                                  |   |             | 10,741   |   |   |   | 169,036 |   |
|     Inventories                                                                                                                                                                                                                                                                                                                                                                |   |             | 135,676  |   |   |   | 159,173 |   |
|     Accounts payable and accrued expenses                                                                                                                                                                                                                                                                                                                                      |   |             | (195,941 | ) |   |   | (200,011 | ) |
|     Other assets                                                                                                                                                                                                                                                                                                                                                               |   |             | 7,156    |   |   |   | 38,233 |   |
|     Deferred revenue                                                                                                                                                                                                                                                                                                                                                           |   |             | (18,559  | ) |   |   | 17,342 |   |
|        Net cash provided by (used in) operating activities                                                                                                                                                                                                                                                                                                      |   |             | (125,711 | ) |   |   | 76,634 |   |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |             |     |   |   |   |   |   |
| Cash flows from investing activities:                                                                                                                                                                                                                                                                                                                                                              |   |             |     |   |   |   |   |   |
| Purchase of property and equipment                                                                                                                                                                                                                                                                                                                                                                 |   |             | (3,336   | ) |   |   | (111,848 | ) |
| Proceeds from sale of assets                                                                                                                                                                                                                                                                                                                                                                       |   |             | 39,912   |   |   |   | 51,805 |   |
| Payments Received on Notes Receivable                                                                                                                                                                                                                                                                                                                                                              |   |             | 105,000  |   |   |   | 105,000 |   |
|       Net cash provided by investing activities                                                                                                                                                                                                                                                                                                                      |   |             | 141,576  |   |   |   | 44,957 |   |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |             |     |   |   |   |   |   |
| Cash flows from financing activities:                                                                                                                                                                                                                                                                                                                                                              |   |             |     |   |   |   |   |   |
| Payments on Line of Credit                                                                                                                                                                                                                                                                                                                                                                         |   |             | (2,000   | ) |   |   | (25,000 | ) |
| Payments on Notes – Itau Bank                                                                                                                                                                                                                                                                                                                                                                |   |             | (27,057  | ) |   |   | (80,534 | ) |
|       Net cash used in financing activities                                                                                                                                                                                                                                                                                                                          |   |             | (29,057  | ) |   |   | (105,534 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |             |     |   |   |   |   |   |
| Effects of foreign exchange rate                                                                                                                                                                                                                                                                                                                                                                   |   |             | 499      |   |   |   | (24,418 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |             |     |   |   |   |   |   |
|             Net decrease in cash and cash equivalents                                                                                                                                                                                                                                                                                  |   |             | (12,693  | ) |   |   | (8,361 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |             |     |   |   |   |   |   |
| Cash and cash equivalents at beginning of period                                                                                                                                                                                                                                                                                                                                                   |   |             | 156,314  |   |   |   | 98,799 |   |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |             |     |   |   |   |   |   |
| Cash and cash equivalents at end of period                                                                                                                                                                                    |   | $                | 143,621  |   |   | $ | 90,438 |   |
| Supplemental disclosure of cash flow information:                                                                                                                                                                                                                                                                                                                                                  |   |             |     |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |             |     |   |   |   |   |   |
| Cash paid during the period for interest                                                                                                                                                   |   | $                | 185,745  |   |   | $ | 185,805 |   |

----

----

|                                                                                       |   | Three Months EndedMarch 31, |       |   | Six Months EndedMarch 31, |   |
|--------------------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|---------------------------|--------|
|                                                                                       |   | 2010                        |       |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
|                                                                                       |   |                        |       |   |                      |   |   |   |   |   |   |   |
| Numerator:                                                                                 |   |                        |       |   |                      |   |   |   |   |   |   |   |
|         Net income (loss)                          |   | $                           | 62,839     |   |                      | $      | (162,871 | ) |   | $ | (71,178 | ) |   | $ | (371,371 | ) |
|                                                                                       |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Denominator:                                                                               |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|         Weighted –average shares outstanding |   |                        | 15,455,003 |   |                      |   | 15,234,039 |   |   |   | 15,445,885 |   |   |   | 15,233,344 |   |
|         Effect of dilutive shares                  |   |                        | --         |   |                      |   | -- |   |   |   | -- |   |   |   | -- |   |
|         Denominator for diluted earnings per share |   |                        | 15,455,003 |   |                      |   | 15,234,039 |   |   |   | 15,445,885 |   |   |   | 15,233,344 |   |
|                                                                                       |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Basic Earnings per share                                                                   |   | $                           | 0.00       |   |                      | $      | (0.01 | ) |   | $ | (0.00 | ) |   | $ | (0.02 | ) |
| Diluted Earnings per share                                                                 |   | $                           | 0.00       |   |                      | $      | (0.01 | ) |   | $ | (0.00 | ) |   | $ | (0.02 | ) |

|                             |   | Three Months EndedMarch 31, |       |   | Six Months EndedMarch 31, |   |
|----------------------------------|--------|-----------------------------|------------|--------|---------------------------|--------|
|                             |   | 2010                        |       |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
|                             |   |                        |       |   |                      |   |   |   |   |   |   |   |
| Convertible notes                |   |                        | 11,571,000 |   |                      |   | 5,399,800 |   |   |   | 11,571,000 |   |   |   | 5,399,800 |   |
| Options to purchase common stock |   |                        | 1,007,208  |   |                      |   | 2,465,903 |   |   |   | 1,007,208 |   |   |   | 2,465,294 |   |
| Total antidilutive instruments   |   |                        | 12,578,208 |   |                      |   | 7,865,703 |   |   |   | 12,578,208 |   |   |   | 7,865,094 |   |

----

|                                                                      |   |  Shares |      |   | Weighted average exercise price |   |   | Weighted averagelife |   |
|---------------------------------------------------------------------------|--------|--------------|-----------|--------|---------------------------------|--------|--------|----------------------|--------|
|                                                                      |   |         |      |   |                            |   |   |                 |   |
| Options outstanding – October 1, 2009                               |   |         | 1,007,208 |   |                            | $      | 0.23   |                 |   |   | 6.71 |   |
|        Granted                         |   |         | --        |   |                            |   | --     |                 |   |   | -- |   |
|        Exercised                       |   |         | --        |   |                            |   | --     |                 |   |   | -- |   |
|        Forfeited, cancelled or expired |   |         | --        |   |                            |   | --     |                 |   |   | -- |   |
| Options outstanding – March 31, 2010                                |   |         | 1,007,208 |   |                            | $      | 0.23   |                 |   |   | 6.71 |   |
| Options exercisable – March 31, 2010                                |   |         | 934,208   |   |                            | $      | 0.24   |                 |   |   | 7.00 |   |
|                                                                      |   |         |      |   |                            |   |   |                 |   |   |   |   |

|                    |   | Three Months EndedMarch 31, |   |   | Six Months EndedMarch 31, |   |
|-------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
|                    |   | 2010                        |   |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
| Dividend yield          |   |                        | --     |   |                      |   | -- |   |   |   | -- |   |   |   | -- |   |
| Expected volatility     |   |                        | --     |   |                      |   | 105.2 | % |   |   | -- |   |   |   | 95.1% - 105.25 | % |
| Risk-free interest rate |   |                        | --     |   |                      |   | 1.67 | % |   |   | -- |   |   |   | 1.67% - 2.45 | % |
| Expected life in years  |   |                        | --     |   |                      |   | 1.5 |   |   |   | -- |   |   |   | 1.5 |   |

|                                                                                                                               |   | March 31, |      |   | September 30, |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|-----------|--------|---------------|--------|
|                                                                                                                               |   | 2010      |      |   | 2009          |   |
|                    Raw Materials    |   | $         | 1,225,194 |   |          | $      | 1,350,828 |   |
|                    Work-in-process  |   |      | 63,032    |   |          |   | 164,183 |   |
|                    Finished goods   |   |      | 975,616   |   |          |   | 938,703 |   |
|                                                                                                                               |   |      | 2,263,842 |   |          |   | 2,453,714 |   |
|                    Less reserves    |   |      | (696,292  | )      |          |   | (750,488 | ) |
|                    Inventories, net |   | $         | 1,567,550 |   |          | $      | 1,703,226 |   |

----

|                                            |   | United*States |      |   | Brazil |   |      | Consolidated |   |
|-------------------------------------------------|--------|---------------|-----------|--------|--------|--------|-----------|--------------|--------|
| March 31, 2010:                                 |   |          |      |   |   |   |      |         |   |
|      Revenues          |   | $             | 1,327,625 |   |   | $      | 1,245,542 |         |   | $ | 2,573,167 |   |
|      Long-lived assets |   | $             | 313,000   |   |   | $      | 377,631   |         |   | $ | 690,631 |   |
|                                            |   |          |      |   |   |   |      |         |   |   |   |   |
| March 31, 2009:                                 |   |          |      |   |   |   |      |         |   |   |   |   |
|      Revenues          |   | $             | 1,634,437 |   |   | $      | 1,052,537 |         |   | $ | 2,686,974 |   |
|      Long-lived assets |   | $             | 590,458   |   |   | $      | 403,206   |         |   | $ | 993,664 |   |

----

| · | Taking steps related to upgrading the Analyst instrument and product offerings such as evaluating and developing complimentary products for Hemagen’s Analyst product line to distribute to the veterinary market and alternative tests utilizing the Analysts’ rotor technology; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Developing new ELISA kits and enhancing existing ELISA kits; and |
|--------|------------------------------------------------------------------|

| · | Developing and enhancing IFA kits. |
|--------|------------------------------------|

----

----

----

| Period              |   | (a)Total Number of Shares Purchased |   |   | (b)AveragePrice Paid per Share |   |   | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) |   |   | (d)Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2) |   |
|---------------------|--------|-------------------------------------|--------|--------|--------------------------------|--------|--------|----------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------|--------|
| January 1-31, 2010  |   |                                | 19,500 |   |                           | $      | 0.097  |                                                                                         |   |   | 19,500                                                                                                              |   |   |   | - |   |
| February 1-28, 2010 |   |                                | 9,750  |   |                           | $      | 0.090  |                                                                                         |   |   | 9,750                                                                                                               |   |   |   | - |   |
| March 1-31, 2010    |   |                                | 15,800 |   |                           | $      | 0.090  |                                                                                         |   |   | 15,800                                                                                                              |   |   |   | - |   |
| Total               |   |                                | 45,050 |   |                           | $      | 0.093  |                                                                                         |   |   | 45,050                                                                                                              |   |   |   | - |   |

|   | (1) | Represents shares of Company’s Common Stock purchased pursuant to the Company’s Employee Stock Ownership Plan (ESOP) that was established October 1, 2003 with no expiration.  The purpose of the plan is not to repurchase, but rather it is an employee benefit plan. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | There is no maximum number of shares that may be purchased under the Company’s Employee Stock Ownership Plan. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------|

----

| Exhibit 31.1 | Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a)                                    |
|--------------|---------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                      |
| Exhibit 31.2 | Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a)                                    |
|         |                                                                                                                      |
| Exhibit 32.1 | Certification of Principal Executive Officer pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code |
|         |                                                                                                                      |
| Exhibit 32.2 | Certification of Principal Financial Officer pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code |

|         | Hemagen Diagnostics, Inc.(Registrant) |                                  |
|--------------|---------------------------------------|---------------------------------------|
|         |                                  |                                  |   |
| May 14, 2010 | By:                                   | /s/ William P. Hales             |   |
|         |                                  | William P. Hales                      |   |
|         |                                  | President and Chief Executive Officer |   |
|         |                                  |                                  |   |

|         |   |                           |   |
|--------------|--------|--------------------------------|--------|
| May 14, 2010 | By:    | /s/ Catherine M. Davidson |   |
|         |   | Catherine M. Davidson          |   |
|         |   | Principal Financial Officer    |   |