UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





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





OR




 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the
transition period from ________________________________ to
___________________________




Commission
File Number          000-20175




NYER MEDICAL GROUP,
INC.


(Exact
Name of Registrant as Specified in Its Charter)




Florida
                      
                      01-0469607(State
      or Other Jurisdiction of Incorporation
                      
                      (I.R.S.
      Employer Identification No.)or
      Organization)13 Water Street, Holliston, Massachusetts
                      
                      01746(Address
      of Principal Executive Offices)
                      
                      (Zip
      Code)




(508)
429-8506


(Registrant’s
Telephone Number, Including Area Code)




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes x No  ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such
files).          Yes  ̈ No    ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer  ̈
            Accelerated
      filer  ̈Non-accelerated
      filer  ̈
            Smaller
      reporting company x


(do not
check if a smaller reporting company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes  ̈ No x




The
number of the registrant’s shares of common stock outstanding as of May 3,
2010:   5,651,419.







INDEX




Page No.PART
      I – FINANCIAL INFORMATIONItem
      1.
                                  Financial
      Statements
                                  3Consolidated
      Statement of Net Assets (unaudited) as of March 31, 2010 (liquidation
      basis)
                                  3Consolidated
      Statement of Changes in Net Assets (unaudited) for the period February 1,
      2010, to March 31, 2010 (liquidation basis)
                                  4Consolidated
      Balance Sheets (unaudited) as of January 31, 2010, and June 30, 2009
      (going concern basis)
                                  5Consolidated
      Statements of Operations (unaudited) for the one and seven months ended
      January 31, 2010, and for the three and nine months ended March 31,
      2009  (going concern basis)
                                  6Consolidated
      Statements of Cash Flows (unaudited) for the seven months ended January
      31, 2010, and for the nine months ended March 31, 2009 (going concern
      basis)
                                  7Selected
      Notes to Consolidated Financial Statements (unaudited)
                                  8Item
      2.
                                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                  17Item
      4T.
                                  Controls
      and Procedures
                                  20PART
      II – OTHER INFORMATIONItem
      2.
                                  Unregistered
      Sales of Equity Securities and Use of Proceeds
                                  21Item
      5.
                                  Other
      Information
                                  21Item
      6.
                                  Exhibits
                                  21Signatures
                                  22




2





PART
I—Financial Information


Item
1.  Financial Statements


NYER
MEDICAL GROUP, INC.


Consolidated
Statement of Net Assets as of March 31, 2010 (unaudited) (liquidation
basis)





AssetsCurrent
      assets:Cash
                
                $
                12,480,546Prepaid
      expenses and other current assets
                
                
                3,186Total
      assets
                
                
                12,483,732LiabilitiesCurrent
      liabilities:Income
      taxes payable
                
                
                (1,539,636
                )Accrued
      expenses and other current liabilities
                
                
                (239,138
                )Total
      current liabilities
                
                
                (1,778,774
                )Net
      assets in liquidation
                
                $
                10,704,958





See
accompanying notes to consolidated financial statements.


3





NYER
MEDICAL GROUP, INC.


Consolidated
Statement of Changes in Net Assets (unaudited) (liquidation basis)


For
the period February 1, 2010, through March 31, 2010





Shareholders'
      equity as of January 31, 2010
                  
                  $
                  13,808,185Liquidation
      basis adjustments:Conversion
      of convertible debt
                  
                  
                  1,500,000Loss
      on disposition of remaining subsidiaries
                  
                  
                  (3,559,986
                  )Adjust
      deferred assets to fair value
                  
                  
                  (79,537
                  )Costs
      incurred from February 1, 2010 to March 31, 2010
                  
                  
                  (829,284
                  )Accrued
      costs of liquidation
                  
                  
                  (134,420
                  )Net
      assets in Liquidation as of March 31, 2010
                  
                  $
                  10,704,958





See
accompanying notes to consolidated financial statements.


4





NYER MEDICAL GROUP, INC.


Consolidated
Balance Sheet (unaudited) (going concern basis)





January 31, 2010
                      
                      
                      June 30, 2009AssetsCurrent
      assets:Cash
                      
                      $
                      20,636,511
                      
                      
                      $
                      62,752Accounts
      receivable, net of allowance for doubtful accounts of $18,200 at January
      31, 2010 and June 30, 2009
                      
                      
                      4,939,423
                      
                      
                      
                      5,348,256Inventories,
      net
                      
                      
                      1,886,401
                      
                      
                      
                      6,966,107Prepaid
      expenses and other current assets
                      
                      
                      397,108
                      
                      
                      
                      979,226Current
      portion of deferred tax assets
                      
                      
                      361,300
                      
                      
                      
                      361,300Assets
      to be disposed of from discontinued operations
                      
                      
                      105,200
                      
                      
                      
                      219,476Total
      current assets
                      
                      
                      28,325,943
                      
                      
                      
                      13,937,117Property
      and equipment, net
                      
                      
                      868,168
                      
                      
                      
                      1,393,844Goodwill
                      
                      
                      -
                      
                      
                      
                      2,593,616Other
      intangible assets, net
                      
                      
                      -
                      
                      
                      
                      625,959Long-term
      portion of deferred tax assets
                      
                      
                      353,200
                      
                      
                      
                      353,200Other
      assets
                      
                      
                      10,006
                      
                      
                      
                      36,067Total
      assets
                      
                      $
                      29,557,317
                      
                      
                      $
                      18,939,803Liabilities
      and shareholders' equityCurrent
      liabilities:Current
      portion of long-term debt and lease financing obligations
                      
                      $
                      70,000
                      
                      
                      $
                      106,058Current
      portion of long-term debt due related parties
                      
                      
                      1,580,004
                      
                      
                      
                      80,004Accounts
      payable
                      
                      
                      6,595,048
                      
                      
                      
                      6,495,687Accrued
      expenses and other current liabilities
                      
                      
                      7,191,585
                      
                      
                      
                      1,128,376Liabilities
      to be disposed of from discontinued operations
                      
                      
                      -
                      
                      
                      
                      310,771Total
      current liabilities
                      
                      
                      15,436,637
                      
                      
                      
                      8,120,896Long-term
      debt and lease financing obligations, net of current
    portion
                      
                      
                      145,833
                      
                      
                      
                      315,876Long-term
      debt, net of current portion, due related parties
                      
                      
                      166,662
                      
                      
                      
                      1,713,329Total
      liabilities
                      
                      
                      15,749,132
                      
                      
                      
                      10,150,101Commitments
      and contingenciesShareholders'
      equity:Preferred
      stock, Class A, $0.001 par value, 5,000 shares; none
      outstanding
                      
                      
                      -
                      
                      
                      
                      -Preferred
      stock, Class B, $0.001 par value, 2,500,000 shares
    authorized;2,500
      shares designated Series 1 Class B; none outstanding
                      
                      
                      -
                      
                      
                      
                      -2,000
      shares designated convertible Series 2 Class B; 2,000 shares issued and
      outstanding at January 31, 2010 and June 30, 2009
                      
                      
                      400,000
                      
                      
                      
                      400,000Common
      stock, $0.0001 par value, 25,000,000 shares authorized; 3,978,199 shares
      issued and outstanding at January 31, 2010 and June 30,
    2009
                      
                      
                      398
                      
                      
                      
                      398Additional
      paid-in capital
                      
                      
                      17,832,887
                      
                      
                      
                      17,824,763Accumulated
      deficit
                      
                      
                      (4,425,100
                      )
                      
                      
                      (9,435,459
                      )Total
      shareholders' equity
                      
                      
                      13,808,185
                      
                      
                      
                      8,789,702Total
      liabilities and shareholders' equity
                      
                      $
                      29,557,317
                      
                      
                      $
                      18,939,803





See
accompanying notes to consolidated financial statements.


5





NYER
MEDICAL GROUP, INC.


Consolidated
Statements of Operations (unaudited) (going concern basis)





For
      the one
                        
                        
                        For
      the three
                        
                        
                        For
      the seven
                        
                        
                        For
      the ninemonth
      ended
                        
                        
                        months
      ended
                        
                        
                        months
      ended
                        
                        
                        months
      endedJanuary 31, 2010
                        
                        
                        March 31, 2009
                        
                        
                        January 31, 2010
                        
                        
                        March 31, 2009Net
      revenues:Sales
                        
                        $
                        5,609,784
                        
                        
                        $
                        17,072,020
                        
                        
                        $
                        40,791,607
                        
                        
                        $
                        51,237,155Dispensing
      fees
                        
                        
                        571,849
                        
                        
                        
                        1,527,465
                        
                        
                        
                        4,083,743
                        
                        
                        
                        3,973,607Total
      net revenues
                        
                        
                        6,181,633
                        
                        
                        
                        18,599,485
                        
                        
                        
                        44,875,350
                        
                        
                        
                        55,210,762Cost
      and expenses:Cost
      of sales
                        
                        
                        4,093,151
                        
                        
                        
                        13,485,181
                        
                        
                        
                        31,810,983
                        
                        
                        
                        40,449,925Selling,
      general, and administrative expenses
                        
                        
                        4,134,094
                        
                        
                        
                        5,309,134
                        
                        
                        
                        15,079,090
                        
                        
                        
                        14,615,316Depreciation
      and amortization
                        
                        
                        44,474
                        
                        
                        
                        136,401
                        
                        
                        
                        319,767
                        
                        
                        
                        415,728Total
      costs and expenses
                        
                        
                        8,271,719
                        
                        
                        
                        18,930,716
                        
                        
                        
                        47,209,840
                        
                        
                        
                        55,480,969Loss
      from operations
                        
                        
                        (2,090,086
                        )
                        
                        
                        (331,231
                        )
                        
                        
                        (2,334,490
                        )
                        
                        
                        (270,207
                        )Other
      income (expense), net:Interest
      expense
                        
                        
                        (14,534
                        )
                        
                        
                        (43,546
                        )
                        
                        
                        (101,097
                        )
                        
                        
                        (135,715
                        )Interest
      income
                        
                        
                        1,018
                        
                        
                        
                        2,552
                        
                        
                        
                        7,638
                        
                        
                        
                        6,956Gain
      on sale of pharmacies
                        
                        
                        8,663,185
                        
                        
                        
                        -
                        
                        
                        
                        8,663,185
                        
                        
                        
                        -Other
      income (expense)
                        
                        
                        (33,401
                        )
                        
                        
                        2,645
                        
                        
                        
                        (41,405
                        )
                        
                        
                        9,434Total
      other income (expense), net
                        
                        
                        8,616,268
                        
                        
                        
                        (38,349
                        )
                        
                        
                        8,528,321
                        
                        
                        
                        (119,325
                        )Income
      (loss) from continuing operations before  provision for income
      taxes
                        
                        
                        6,526,182
                        
                        
                        
                        (369,580
                        )
                        
                        
                        6,193,831
                        
                        
                        
                        (389,532
                        )Provision
      (benefit) for income taxes
                        
                        
                        1,705,514
                        
                        
                        
                        (160,901
                        )
                        
                        
                        1,577,694
                        
                        
                        
                        (169,480
                        )Income
      (loss) from continuing operations
                        
                        
                        4,820,668
                        
                        
                        
                        (208,679
                        )
                        
                        
                        4,616,137
                        
                        
                        
                        (220,052
                        )Discontinued
      operations:Loss
      from discontinued operations, net of $2,652 income tax benefit, for the
      nine months ended March 31, 2009
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (11,231
                        )Gain
      (loss) on disposal, net of $0, ($33,104), $262,814, and $157,104 income
      tax (benefit), for the one and seven months ended January 31, 2010, and
      for the three and nine months ended March 31, 2009,
      respectively
                        
                        
                        -
                        
                        
                        
                        (66,113
                        )
                        
                        
                        394,222
                        
                        
                        
                        170,761Net
      gain (loss) from discontinued operations
                        
                        
                        -
                        
                        
                        
                        (66,113
                        )
                        
                        
                        394,222
                        
                        
                        
                        159,530Net
      income (loss)
                        
                        $
                        4,820,668
                        
                        
                        $
                        (274,792
                        )
                        
                        $
                        5,010,359
                        
                        
                        $
                        (60,522
                        )Basic
      earnings (loss) per share:Earnings
      (loss) per share, continuing operations
                        
                        $
                        1.21
                        
                        
                        $
                        (0.05
                        )
                        
                        $
                        1.16
                        
                        
                        $
                        (0.06
                        )Earnings
      (loss) per share, discontinued operations
                        
                        
                        0.00
                        
                        
                        
                        (0.02
                        )
                        
                        
                        0.10
                        
                        
                        
                        0.04Basic
      earnings (loss) per share
                        
                        $
                        1.21
                        
                        
                        $
                        (0.07
                        )
                        
                        $
                        1.26
                        
                        
                        $
                        (0.02
                        )Diluted
      earnings (loss) per share:Earnings
      (loss) per share, continuing operations
                        
                        $
                        0.96
                        
                        
                        $
                        (0.05
                        )
                        
                        $
                        0.93
                        
                        
                        $
                        (0.06
                        )Earnings
      (loss) per share, discontinued operations
                        
                        
                        0.00
                        
                        
                        
                        (0.02
                        )
                        
                        
                        0.08
                        
                        
                        
                        0.04Diluted
      earnings (loss) per share
                        
                        $
                        0.96
                        
                        
                        $
                        (0.07
                        )
                        
                        $
                        1.01
                        
                        
                        $
                        (0.02
                        )Shares
      used in computing earnings (loss) per share:Basic
                        
                        
                        3,978,199
                        
                        
                        
                        3,978,199
                        
                        
                        
                        3,978,199
                        
                        
                        
                        3,978,199Diluted
                        
                        
                        5,053,337
                        
                        
                        
                        3,978,199
                        
                        
                        
                        5,025,392
                        
                        
                        
                        3,978,199





See
accompanying notes to consolidated financial statements.


6





NYER
MEDICAL GROUP, INC. AND SUBSIDIARIES


Consolidated
Statements of Cash Flows(unaudited) (going concern basis)





For
      the seven
                    
                    
                    For
      the ninemonths
      ended
                    
                    
                    months
      endedJanuary 31, 2010
                    
                    
                    March 31, 2009Operating
      activities:Net
      income (loss)
                    
                    $
                    5,010,359
                    
                    
                    $
                    (60,522
                    )Less
      gain from discontinued operations
                    
                    
                    394,222
                    
                    
                    
                    159,530Income
      (loss) from continuing operations
                    
                    
                    4,616,137
                    
                    
                    
                    (220,052
                    )Adjustments
      to reconcile income (loss) from continuing operations  to cash
      provided by operating activities:Depreciation
                    
                    
                    266,526
                    
                    
                    
                    349,193Amortization
                    
                    
                    53,242
                    
                    
                    
                    77,203Stock-based
      compensation expense
                    
                    
                    8,124
                    
                    
                    
                    51,244Deferred
      income taxes
                    
                    
                    -
                    
                    
                    
                    37,000Gain
      on sale of pharmacies
                    
                    
                    (8,663,185
                    )
                    
                    
                    -Changes
      in operating assets and liabilities:Accounts
      receivable
                    
                    
                    408,833
                    
                    
                    
                    (356,549
                    )Inventories
                    
                    
                    711,274
                    
                    
                    
                    (866,588
                    )Prepaid
      expenses and other current assets
                    
                    
                    468,014
                    
                    
                    
                    63,582Accounts
      payable
                    
                    
                    50,322
                    
                    
                    
                    417,945Accrued
      expenses and other current liabililties
                    
                    
                    3,942,504
                    
                    
                    
                    (234,030
                    )Cash
      provided by (used in) operating activities, continuing
      operations
                    
                    
                    1,861,791
                    
                    
                    
                    (681,052
                    )Cash
      (used in) provided by operating activities, discontinued
      operations
                    
                    
                    (332,273
                    )
                    
                    
                    246,919Cash
      provided by (used in) operating activities
                    
                    
                    1,529,518
                    
                    
                    
                    (434,133
                    )Investing
      activities:Proceeds
      from the sale of pharmacies, net
                    
                    
                    18,666,705
                    
                    
                    
                    -Purchase
      of property and equipment
                    
                    
                    (43,929
                    )
                    
                    
                    (382,536
                    )Cash
      provided by (used in) investing activities, continuing
      operations
                    
                    
                    18,622,776
                    
                    
                    
                    (382,536
                    )Cash
      provided by investing activities, discontinued operations
                    
                    
                    830,000
                    
                    
                    
                    933,360Cash
      provided by investing activities
                    
                    
                    19,452,776
                    
                    
                    
                    550,824Financing
      activities:Principal
      payments on capital lease obligations
                    
                    
                    (21,028
                    )
                    
                    
                    -Payments
      on long-term debt
                    
                    
                    (87,507
                    )
                    
                    
                    (215,062
                    )Cash
      used in financing activities, continuing operations
                    
                    
                    (108,535
                    )
                    
                    
                    (215,062
                    )Cash
      used in investing activities, discontinued operations
                    
                    
                    (300,000
                    )
                    
                    
                    -Cash
      used in financing activities
                    
                    
                    (408,535
                    )
                    
                    
                    (215,062
                    )Net
      increase (decrease) in cash
                    
                    
                    20,573,759
                    
                    
                    
                    (98,371
                    )Cash
      at beginning of period
                    
                    
                    62,752
                    
                    
                    
                    140,688Cash
      at end of period
                    
                    $
                    20,636,511
                    
                    
                    $
                    42,317Supplemental
      disclosure of cash flow information:Cash
      paid for interest
                    
                    $
                    102,037
                    
                    
                    $
                    135,910Cash
      paid (received) for income taxes (refunds), net
                    
                    $
                    358,597
                    
                    
                    $
                    (20,120
                    )





See
accompanying notes to consolidated financial statements.


7


NYER
MEDICAL GROUP, INC.





SELECTED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)





1.
            Accounting
      policies




Basis
of presentation




In
connection with the approval of the Plan of Dissolution of Nyer Medical Group,
Inc, (the “Company” or “Nyer”) the Company adopted a liquidation basis of
accounting effective February 1, 2010. As of this date, the Company’s net assets
are stated at their estimated net realizable value and its liabilities are
stated at their estimated settlement amounts. The Company’s Statement of Net
Assets in Liquidation and Statement of Changes in Net Assets in Liquidation are
the principal financial statements presented under liquidation basis accounting.
Under the liquidation basis of accounting, the Company’s assets are stated at
their estimated net realizable value, which is the non-discounted amount of
cash, or its equivalent, into which an asset is expected to be converted in the
due course of business less direct costs, while the Company’s liabilities are
reported at their estimated settlement amount, which is the non-discounted
amount of cash, or its equivalent, expected to be paid to liquidate an
obligation in the due course of business, including direct costs. Additionally,
under the liquidation basis of accounting, the Company is required to establish
a reserve for all future estimated general and administrative expenses and other
costs expected to be incurred during the liquidation process. The reserve for
these estimated expenses includes primarily accruals including professional
services and corporate expenses (directors’ fees and statutory fees). These
estimates will be periodically reviewed and adjusted as appropriate. There can
be no assurance that these estimated values will be realized.




The
Company was required to make significant estimates and exercise judgment in
determining the accrued costs of liquidation as of March 31, 2010. Upon
transition to the liquidation basis of accounting, the Company accrued the costs
expected to be incurred in liquidation and $26,000 for directors’ and officers’
liability insurance.




The
consolidated financial statements included herein have been prepared by Nyer
Medical Group, Inc., without audit, in accordance with generally accepted
accounting principles in the United States of America (“GAAP”) and pursuant to
the rules and regulations of the Securities and Exchange Commission (“SEC”).
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with GAAP have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not to be misleading.
In the opinion of management, the amounts shown reflect all adjustments
necessary to present fairly the net assets in liquidation as of March 31, 2010,
and the changes in net assets presented herein and the financial position at
June 30, 2009, and the operating results and cash flows for the periods ended
January 31, 2010, and March 31, 2009. The consolidated financial statements
include the accounts of the Company and its subsidiaries, and all intercompany
transactions have been eliminated.




These
consolidated interim financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company’s Form 10-K for
the year ended June 30, 2009. The results shown for the interim period are not
necessarily indicative of the results to be expected for any other interim
period or for the full fiscal year ending June 30, 2010, especially in light of
the Company’s liquidation process.




Special Shareholders’
Meeting




At the
special shareholders’ meeting of the Company, held on January 20, 2010, the
shareholders of the Company approved: (a) the Asset Purchase Agreement, dated as
of October 22, 2009, among Walgreen Eastern Co., Inc. (“Walgreens”), DAW, Inc.,
then a subsidiary of the Company (“DAW”), and the Company and the transactions
contemplated thereby (the “WAG Transaction”), (b) the Transaction Agreement,
dated October 23, 2009, among DAW, certain members of management of DAW (the
“Management Team”) and the Company and the transactions contemplated thereby (“
the DAW Transaction”), and (c) the Plan of Dissolution of the Company and the
transactions contemplated thereby ( the “ Plan of Dissolution”), and together
with the WAG Transaction and the DAW Transaction (the “Transactions”), each as
described in the Company’s Proxy Statement dated December 17, 2009.




Asset
Purchase Agreement




On
January 29, 2010, the Company closed the transactions contemplated by the WAG
Transaction, whereby DAW sold to Walgreens a substantial portion of its
operating assets, including prescription files and inventory of a total of 12
neighborhood pharmacies, which included the assignment of nine leases, for a
cash purchase price of $12.0 million plus $6.6 million of qualifying inventory,
$1.1 million of operating equipment, and $71,980 for prepaid rent amounts. The
Company recognized a gain of $8,663,185 on the WAG Transaction.




8


Stock
Purchase Agreement




On
February 3, 2010, the Company closed the DAW Transaction, with an effective date
of February 1, 2010, whereby the Management Team purchased the stock of DAW in
exchange for $300,000 in cash and the assumption of $1.2 million of liabilities.
The Management Team included certain officers and directors of the Company and
DAW, who owned all of the then outstanding preferred stock of the Company and
also owned convertible and other notes, options, and common stock of the
Company. Because of the relationships between the Management Team and the
Company, the DAW Transaction was approved by a special committee of the Board of
Directors (the “Board”) of the Company comprised of independent directors (the
“Special Committee”), in addition to the full Board.




Dissolution
and Liquidation of the Company’s Business




Upon the
closing of the WAG Transaction and the DAW Transaction, the Company has no
remaining assets other than the cash received from the Transactions. It is
currently in the process of an orderly liquidation and dissolution of Nyer in
accordance with the Plan of Dissolution, which is expected to be completed on of
before May 31, 2010. The Plan of Dissolution is described more fully in the
Company’s Proxy Statement dated December 17, 2009.




The Board
authorized the Company to cause the common stock of the Company to be delisted
from the NASDAQ Stock Market (“NASDAQ”) following the closing of the WAG
Transaction. The Company notified the NASDAQ of its intent to voluntarily delist
its securities by filing a Form 25, which it filed with the SEC on February 9,
2010. In connection with the delisting, Nyer requested that NASDAQ suspend
trading effective at the close of business on February 1, 2010. Upon delisting
from NASDAQ, Nyer’s securities were added to the over-the-counter
market.




The
Company closed its stock record books on May 3, 2010, and as previously
disclosed, the Board fixed May 3, 2010, as the record date for determining the
Company shareholders who are entitled to receive any distribution of available
assets. On May 12, 2010, the Board declared a liquidating distribution of $2.08
per share of the Company’s common stock, or $11,774,000 in the aggregate. The
Company will make this distribution on May 20, 2010, previously disclosed as May
14, 2010, to all shareholders as of the record date.




Reclassifications




Prior
year information is reclassified whenever necessary to conform to the current
year’s presentation.




Use
of estimates




The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.




Fair
value of financial instruments




The
carrying values of accounts receivable, accounts payables, and debt approximate
their fair values. The carrying values and estimated fair values for long-term
debt based on quoted market rates of financial instruments were approximately
the same.




Recent
Accounting Pronouncements




In June
2009, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards (“SFAS”) No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
PrinciplesTM, (codified within ASC Topic 105, Generally Accepted Accounting
Principles), which establishes the FASB Accounting Standards Codification
(“ASC”) as the single source of authoritative GAAP (the “Codification”). The
Codification supersedes all previous non-SEC accounting and reporting standards.
The Company adopted SFAS No. 168 for its first quarter ended September 30, 2009,
and has conformed all references to accounting literature in the Quarterly
Report to the appropriate reference within the Codification. All new
authoritative guidance is issued in the form of ASC Updates. The Company has
provided dual-referencing for those standards that it adopted prior to the
issuance of the Codification. The adoption of this standard did not have any
impact on the Company’s financial position or results of
operations.




Effective
July 1, 2009, the Company adopted Emerging Issues Task Force Issue No. 07-5,
Determining Whether an
Instrument (or an Embedded Feature) Is Indexed to an Entity's Own Stock ,
as codified in ASC Topic 815 (“ASC 815”). ASC 815 provides that an entity should
use a two-step approach to evaluate whether an equity-linked financial
instrument (or embedded feature) is indexed to its own stock, including
evaluating the instrument's contingent exercise and settlement provisions. The
consensus must be applied to outstanding instruments as of the beginning of the
fiscal year in which the consensus is adopted and should be treated as a
cumulative-effect adjustment to the opening balance of retained earnings. The
adoption of ASC 815 did not have a material impact on the Company’s consolidated
financial statements.




9


Effective
July 1, 2009, the Company adopted FSP FAS No. 142-3, Determination of the Useful Life of
Intangible Assets, which amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible
Assets, as codified in ASC Topic 350, Intangibles – Goodwill and
Other (“ASC 350”). The adoption of ASC 350 did not have a material impact
on the Company’s consolidated financial statements.




Effective July 1, 2009, the Company adopted FSP Accounting
Principles Board 14-1, Accounting for Convertible Debt
Instruments That May be Settled in Cash upon Conversion (Including Partial
Settlement), as codified in ASC Topic 470 (“ASC 470”).  ASC 470
requires the issuer of certain convertible debt instruments that may be settled
in cash (or other assets) on conversion to separately account for the liability
(debt) and equity (conversion option) components of the instrument in a manner
that reflects the issuer’s nonconvertible debt borrowing rate.  The
adoption of ASC 470 did not have a material impact on the Company’s consolidated
financial statements.





Effective
July 1, 2009, the Company adopted FASB SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement
No. 133, as codified in ASC 815.   ASC 815
requires enhanced disclosures regarding an entity’s derivative instruments and
related hedging activities.  These enhanced disclosures include information
regarding how and why an entity uses derivative instruments; how derivative
instruments and related hedge items are accounted for under SFAS No. 133,
Accounting for Derivative
Instruments and Hedging Activities, and its related interpretations;
and how derivative instruments and related hedge items affect an entity’s
financial position, financial performance, and cash flows.  The adoption of
this pronouncement did not have a material impact on the Company’s consolidated
financial statements.





Effective
July 1, 2009, the Company adopted FASB SFAS No. 141(R), Business Combinations, as
codified in ASC 805, Business
Combinations(“ASC 805”).  ASC Topic 805 broadens the guidance
applicability to all transactions and other events in which one entity obtains
control over one or more other businesses.  It broadens the fair value
measurement and recognition of assets acquired, liabilities assumed, and
interests transferred as a result of business combinations.  ASC 805
expands on required disclosures to improve the statement users’ abilities to
evaluate the nature and financial effects of business combinations. The adoption
of ASC 805 did not have a material impact on the Company’s consolidated
financial statements.





In August
2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05, Fair Value Measurements and
Disclosures. ASU 2009-05 amends Subtopic 820-10, Fair Value Measurements and
Disclosures, to provide guidance on the fair value measurement of
liabilities. ASU 2009-05 provides clarification for circumstances in which a
quoted price in an active market for the identical liability is not available.
ASU 2009-05 is effective for interim and annual periods beginning after August
26, 2009. The adoption of ASU 2009-05 did not have a material impact on the
Company’s consolidated financial statements.





2.
              Prepaid expenses and
      other current assets





Prepaid expenses and other current
assets consisted of the following:





March 31, 2010
                  
                  
                  January 31, 2010
                  
                  
                  June 30, 2009Vendor
      rebates receivable
                  
                  $
                  -
                  
                  
                  $
                  240,495
                  
                  
                  $
                  906,372Refundable
      income taxes
                  
                  
                  -
                  
                  
                  
                  103,745
                  
                  
                  
                  -Prepaid
      other
                  
                  
                  3,186
                  
                  
                  
                  52,868
                  
                  
                  
                  72,854Total
      prepaid expenses and other current assets
                  
                  $
                  3,186
                  
                  
                  $
                  397,108
                  
                  
                  $
                  979,226





3.
            Goodwill
      and other intangible assets





Goodwill





Goodwill
represents the amount of consideration paid in connection with business
acquisitions in excess of the fair value of assets acquired and liabilities
assumed.  The Company evaluates the balance of the carrying value of
goodwill based on a single reporting unit annually during the fourth quarter and
more frequently if certain indicators are present or changes in circumstances
suggest that impairment may exist.  The first step of its goodwill
impairment test, used to identify potential impairment, compares the fair value
of our reporting unit with its carrying amount, including
goodwill.  If the fair value of its reporting unit exceeds its
carrying amount, the goodwill of the reporting unit is considered not impaired,
and the second step of the impairment test, used to measure the amount of the
impairment loss, is unnecessary.  If the carrying amount of its
reporting unit exceeds its fair value, the second step of the goodwill
impairment test is performed to measure the amount of impairment loss, if
any.  The second step of the goodwill impairment test, used to measure
the amount of impairment loss, compares the implied fair value of the reporting
unit goodwill as of the date of the impairment review with the carrying amount
of that goodwill.  The implied fair value of goodwill is determined on
the same basis as the amount of goodwill recognized in connection with a
business combination.  Specifically, the fair value of a reporting
unit is allocated to all of the assets and liabilities (including any
unrecognized intangible assets) as if the reporting unit had been acquired in a
business combination as of the date of the impairment review and as if the fair
value of the reporting unit was the price paid to acquire the reporting
unit.  The excess of the fair value of a reporting unit over the
amounts assigned to its assets and liabilities is the implied fair value of
goodwill.  If the carrying amount of the reporting unit goodwill
exceeds the implied fair value of that goodwill, an impairment loss is
recognized in an amount equal to that excess.  On
January 31, 2010 in conjunction with the Asset Purchase Agreement, the net asset
value of goodwill was written off.




10


Other intangible assets





There
were no intangible assets as of January 31, 2010, or March 31, 2010, as they
were sold pursuant to the Asset Purchase Agreement.  The following is
a summary of other intangible assets as of June 30, 2009:





June 30, 2009GrossCarrying
                      
                      Accumulated
                      
                      
                      CarryingValue
                      
                      Amortization
                      
                      
                      Value$
                      1,011,555
                      
                      $
                      (385,596
                      )
                      
                      $
                      625,959





Amortization expense was $9,331 and $21,958 for
the one month ended January 31, 2010, and three months ended March 31, 2009,
respectively, and $53,242 and $77,203 for the seven months ended January 31,
2010, and the nine months ended March 31, 2009, respectively.





4.
            Indebtedness and
      related parties





Indebtedness





January 31, 2010
                  
                  
                  June 30, 2009Related
      parties:Convertible
      notes
                  
                  $
                  1,500,000
                  
                  
                  $
                  1,500,000Note
      payable, shareholder
                  
                  
                  246,666
                  
                  
                  
                  293,3331,746,666
                  
                  
                  
                  1,793,333Less
      current portion of debt due related parties
                  
                  
                  1,580,004
                  
                  
                  
                  80,004Long-term
      portion of debt due related parties
                  
                  $
                  166,662
                  
                  
                  $
                  1,713,329Other
      debt:Note
      payable, former shareholder
                  
                  
                  215,833
                  
                  
                  $
                  256,668Obligations
      under capital leases
                  
                  
                  -
                  
                  
                  
                  165,266215,833
                  
                  
                  
                  421,934Less
      current portion of debt
                  
                  
                  70,000
                  
                  
                  
                  106,058Long-term
      portion of debt
                  
                  $
                  145,833
                  
                  
                  $
                  315,876





The
Company’s discontinued operations, ADCO Surgical Supply, Inc., (“ADCO”) had a
line of credit (the “line”), which was secured by land and a building owned by
ADCO (not sold with the rest of ADCO’s assets) and guaranteed by the
Company.  Repayment of the line was in monthly payments of interest
only, with the principal being due at maturity, unless
renewed.   Prior to the maturity date, ADCO would have had to
repay the amounts outstanding under the line upon the demand of the
bank.   The interest rate was two percentage points over the Wall Street Journal Prime
Rate.  The building that was used as collateral for the line was sold
on September 21, 2009; and a portion of the proceeds from the sale was used to
pay off the line.  The line was terminated as of September 21,
2009.





The former minority shareholders (the
“Minority Shareholders”) of DAW can convert all or any portion of their
allocable payment of the convertible notes they own into shares of the Company’s
common stock or they can redeem them for cash.  In February 2010 in
conjunction with the WAG Transaction, the Minority Shareholders converted all of
their convertible notes into 815,217 shares of common stock.   In
addition, a portion of the proceeds from the WAG Transaction was used to pay off
the capital lease.  The balance of notes payable was assumed by the
Management Team in conjunction with the DAW Agreement on February 1,
2010.   As of March 31, 2010, the Company had no remaining
outstanding indebtedness.




11


Other
related party transactions





The
Company leases a drug store facility owned by the mother of the Company’s
president, chief executive officer, and director and another
director.  The Company paid rental payments of $6,792 and $20,375 for
the one month ended January 31, 2010, and the three months ended March 31, 2009,
respectively, and $47,542 and $61,125 for the seven months ended January 31,
2010, and the nine months ended March 31, 2009,
respectively.




5.
            Accrued
      expenses and other current
liabilities





Accrued
expenses and other current liabilities consisted of the following:





March 31, 2010
                      
                      
                      January 31, 2010
                      
                      
                      June 30, 2009Accrued
      salaries and wages
                      
                      $
                      -
                      
                      
                      $
                      4,845,883
                      
                      
                      $
                      732,989Accrued
      income taxes
                      
                      
                      -
                      
                      
                      
                      1,793,618
                      
                      
                      
                      198,139Accrued
      other
                      
                      
                      239,138
                      
                      
                      
                      552,084
                      
                      
                      
                      197,248Total
      accrued expenses andother
      current liabilities
                      
                      $
                      239,138
                      
                      
                      $
                      7,191,585
                      
                      
                      $
                      1,128,376





6.
            Discontinued
      operations




On
September 21, 2009, ADCO sold its building in Bangor, Maine, to Dovesco, LLC,
for $830,000 and recognized a gain of $657,036 on the sale.




In December 2008, the Company sold the inventory and prescription
lists of its Topsfield pharmacy to CVS Pharmacy L.L.C. (“CVS”).  In
conjunction with this sale, the Company also entered into a non-compete
agreement with CVS, whereby it has agreed not to compete for three years within
a 10-mile radius of the CVS store located in Danvers, Massachusetts, excluding
two currently operating Eaton Apothecary
pharmacies.




In
September 2008, the Company sold certain assets and liabilities of ADCO, a
medical and surgical equipment and supplies company, and recognized a loss on
disposal at September 30, 2008 of $61,078 on the sale.   In connection
with this sale, the Company received a $50,000 note receivable that was payable
January 31, 2009.





The
Company’s consolidated financial statements have been reclassified to reflect
these businesses as discontinued operations.  The following table shows the
assets and liabilities for the discontinued operations as of June 30,
2009:





June 30, 2009Assets:Cash
                          
                          $
                          2,275Property
      and equipment, net
                          
                          
                          112,001Current
      portion of deferred tax assets
                          
                          
                          105,200Total
      assets
                          
                          $
                          219,476Liabilities:Line
      of credit
                          
                          $
                          300,000Accrued
      expenses and other liabilities
                          
                          
                          10,771Total
      current liabilities
                          
                          $
                          310,771




12


The
following table shows a summary of revenues and pre-tax operating results from
the discontinued operations:





For
      the one
                  
                  
                  For
      the three
                  
                  
                  For
      the seven
                  
                  
                  For
      the ninemonth
      ended
                  
                  
                  months
      ended
                  
                  
                  months
      ended
                  
                  
                  months
      endedJanuary 31, 2010
                  
                  
                  March 31, 2009
                  
                  
                  January 31, 2010
                  
                  
                  March 31, 2009Sales
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  1,664,872Pre-tax
      income from discontinued operations
                  
                  $
                  -
                  
                  
                  $
                  (99,217
                  )
                  
                  $
                  657,036
                  
                  
                  $
                  313,982





7.
            Shareholders’
      equity




Class
A preferred stock




Total
authorized shares are 5,000, par value $.001; no shares are outstanding. Each
share has voting rights equal to 1,000 shares of common stock.




Class
B preferred stock




Total
authorized shares are 2,500,000, par value $.001; 2,500 shares have been
designated as Series 1 Class B Preferred Stock of which none are outstanding.
Each share has voting rights equal to 2,000 shares of common stock.




Series
2 Class B preferred stock




In
February 2008, 2,000 shares of Series 2 Class B Preferred Stock (“Series 2
Stock”), a newly-created series of convertible preferred stock of the Company,
were issued to the Minority Shareholders. Each share had voting rights equal to
2,000 shares of common stock for an aggregate of 4,000,000 votes. The shares
were initially convertible into 218,000 shares of the Company’s common stock,
based upon an initial conversion price of $1.84, which is subject to adjustment
(the “Conversion Price”).




At any
time, the holders of the Series 2 Stock may convert their shares into common
stock upon the Company’s (i) consolidation with or merger into any other person
or (ii) transfer of all or substantially all of its properties or assets to any
other person under any plan or arrangement contemplating the dissolution of the
Company subject to certain conditions described below, which may be waived by
the holders of at least a majority of the Series 2 Stock then
outstanding.   In February 2010 in conjunction with the WAG
Transaction, the Minority Shareholders converted all of their Series 2 Stock
into 218,000 shares of common stock.




8.
            Warrants
      and share-based compensation




Stock
option plans





The
Company had two stock option plans under which employees, consultants, and
directors have been granted options to purchase shares of the Company’s common
stock. The 1993 Stock Option Plan (the “1993 Plan”) was amended in fiscal year
2003 to, among other things, (a) cease grants under such plan upon the
effectiveness of the 2002 Stock Option Plan of the Company (the “2002 Plan”) and
(b) increase the maximum aggregate number of shares available for award under
such plan to 1,000,000. The maximum aggregate number of shares of common stock
available for award under the 2002 Plan is 3,000,000, and is subject to
adjustment as set forth therein. Under the 2002 Plan, automatic options vest
semi-annually to all directors and certain officers and expire 10 years from the
date of grant. Except with respect to certain incentive stock options (“ISOs”),
options under the 1993 Plan expire 10 years from the date of grant. Under the
1993 Plan, except for ISOs and non-qualified options, which are not
non-discretionary options (as such term is used in the 1993 Plan), the exercise
price for options is the fair market value of the common stock of the Company at
the date of grant, as such fair market value is determined under the 1993 Plan.
Under the 2002 Plan, except for certain ISOs and certain non-qualified options,
the exercise price is not to be less than the Market Price (as defined in the
2002 Plan) of the common stock of the Company on the date of the grant. On May
3, 2010, 640,000 stock options were exercised for total proceeds of $1,069,000.
All stock options that were not exercised on or before May 3, 2010, were
canceled on May 3, 2010.




Stock
options and warrants




The
Company’s share-based compensation consists of stock option awards, which are
accounted for as compensation expense at the fair value on the grant date, using
the Black-Scholes valuation model. The Company recorded share-based compensation
of $0 and $8,122 for the one month ended January 31, 2010, and for the three
months ended March 31, 2009, respectively, $8,124 and $51,244 for the seven
months ended January 31, 2010, and the nine months ended December 31, 2009,
respectively. The Company did not grant any stock options for the seven months
ended January 31, 2010. For the nine months ended March 31, 2009, the Company
granted 24,000 stock options. The fair value of each option was estimated on the
date of grant using the Black-Scholes option-pricing model with the following
assumptions:


13


2009Expected
      stock price volatility
                    
                    
                    89
                    %Expected
      dividend yield
                    
                    
                    0
                    %Risk-free
      interest rate
                    
                    
                    1.9
                    %Expected
      option life
                    
                    5
      yearsWeighted-average
      fair value of options granted
                    
                    $
                    0.61





In April
2005, the Company granted to investors warrants to purchase 53,320 common shares
over a five-year period at an exercise price of $2.60 per share that were not
exercised and expired in April 2010.   In addition, the Company had
150,000 stock options that were granted in 1999 to a third party in connection
with consulting services that were not exercised and expired in January
2009.





9.
            Earnings
      per share




Below is
reconciliation of weighted average common shares outstanding for purposes of
calculating basic and diluted earnings (loss) per share:




14





For the one
                        
                        
                        For the three
                        
                        
                        For the seven
                        
                        
                        For the ninemonth ended
                        
                        
                        months ended
                        
                        
                        months ended
                        
                        
                        months endedJanuary 31, 2010
                        
                        
                        March 31, 2009
                        
                        
                        January 31, 2010
                        
                        
                        March 31, 2009Numerator
      for basic and diluted earnings per common share
    calculation:Basic:Income
      (loss) from continuing operations
                        
                        $
                        4,820,668
                        
                        
                        $
                        (208,679
                        )
                        
                        $
                        4,616,137
                        
                        
                        $
                        (220,052
                        )Gain
      (loss) from discontinued operations, net income taxes
                        
                        
                        -
                        
                        
                        
                        (66,113
                        )
                        
                        
                        394,222
                        
                        
                        
                        159,530Net
      income (loss)—basic
                        
                        $
                        4,820,668
                        
                        
                        $
                        (274,792
                        )
                        
                        $
                        5,010,359
                        
                        
                        $
                        (60,522
                        )Diluted:Income
      (loss) from continuing operations
                        
                        $
                        4,820,668
                        
                        
                        $
                        (208,679
                        )
                        
                        $
                        4,616,137
                        
                        
                        $
                        (220,052
                        )Add
      back interest expense on convertible debt, net of income
    taxes
                        
                        
                        5,800
                        
                        
                        
                        -
                        
                        
                        
                        40,600
                        
                        
                        
                        -Income
      (loss) from continuing operations, adjusted
                        
                        
                        4,826,468
                        
                        
                        
                        (208,679
                        )
                        
                        
                        4,656,737
                        
                        
                        
                        (220,052
                        )Gain
      (loss) from discontinued operations, net of income taxes
                        
                        
                        -
                        
                        
                        
                        (66,113
                        )
                        
                        
                        394,222
                        
                        
                        
                        159,530Net
      income (loss)—diluted
                        
                        $
                        4,826,468
                        
                        
                        $
                        (274,792
                        )
                        
                        $
                        5,050,959
                        
                        
                        $
                        (60,522
                        )Denominator
      for basic and diluted earnings per common share
    calculation:Basic:Weighted
      average common shares outstanding
                        
                        
                        3,978,199
                        
                        
                        
                        3,978,199
                        
                        
                        
                        3,978,199
                        
                        
                        
                        3,978,199Diluted:Weighted
      average common shares outstanding
                        
                        
                        3,978,199
                        
                        
                        
                        3,978,199
                        
                        
                        
                        3,978,199
                        
                        
                        
                        3,978,199Dilutive
      effect of employee share-based compensation plans
                        
                        
                        41,918
                        
                        
                        
                        -
                        
                        
                        
                        13,973
                        
                        
                        
                        -Dilutive
      effect of convertible debt
                        
                        
                        815,220
                        
                        
                        
                        -
                        
                        
                        
                        815,220
                        
                        
                        
                        -Dilutive
      effect of convertible preferred stock
                        
                        
                        218,000
                        
                        
                        
                        -
                        
                        
                        
                        218,000
                        
                        
                        
                        -Diluted
      weighted average common shares outstanding
                        
                        
                        5,053,337
                        
                        
                        
                        3,978,199
                        
                        
                        
                        5,025,392
                        
                        
                        
                        3,978,199Basic
      earnings (loss) per common share:Income
      (loss) from continuing operations
                        
                        $
                        1.21
                        
                        
                        $
                        (0.05
                        )
                        
                        $
                        1.16
                        
                        
                        $
                        (0.06
                        )Gain
      (loss) from discontinued operations
                        
                        
                        0.00
                        
                        
                        
                        (0.02
                        )
                        
                        
                        0.10
                        
                        
                        
                        0.05Basic
      earnings (loss) per common share
                        
                        $
                        1.21
                        
                        
                        $
                        (0.07
                        )
                        
                        $
                        1.26
                        
                        
                        $
                        (0.01
                        )Diluted
      earnings (loss) per common share:Income
      (loss) from continuing operations
                        
                        $
                        0.96
                        
                        
                        $
                        (0.05
                        )
                        
                        $
                        0.93
                        
                        
                        $
                        (0.06
                        )Gain
      (loss) from discontinued operations
                        
                        
                        0.00
                        
                        
                        
                        (0.02
                        )
                        
                        
                        0.08
                        
                        
                        
                        0.05Diluted
      earnings (loss) per common share
                        
                        $
                        0.96
                        
                        
                        $
                        (0.07
                        )
                        
                        $
                        1.01
                        
                        
                        $
                        (0.01
                        )


15


Due to
their anti-dilutive effect, the following potential common shares have been
excluded from the computation of diluted earnings (loss) per share:





For the one
                      
                      
                      For the three
                      
                      
                      For the seven
                      
                      
                      For the ninemonth ended
                      
                      
                      months ended
                      
                      
                      months ended
                      
                      
                      months endedJanuary 31, 2010
                      
                      
                      March 31, 2009
                      
                      
                      January 31, 2010
                      
                      
                      March 31, 2009Stock
      options
                      
                      
                      702,000
                      
                      
                      
                      1,488,000
                      
                      
                      
                      702,000
                      
                      
                      
                      1,488,000Warrants
                      
                      
                      53,320
                      
                      
                      
                      53,320
                      
                      
                      
                      53,320
                      
                      
                      
                      53,320Convertible
      notes
                      
                      
                      -
                      
                      
                      
                      815,217
                      
                      
                      
                      -
                      
                      
                      
                      815,217Convertible
      preferred stock
                      
                      
                      -
                      
                      
                      
                      218,000
                      
                      
                      
                      -
                      
                      
                      
                      218,000755,320
                      
                      
                      
                      2,574,537
                      
                      
                      
                      755,320
                      
                      
                      
                      2,574,537


16




Item 2.
            Management’s Discussion and Analysis of
      Financial Condition and Results of
  Operations




This
Quarterly Report on Form 10-Q contains statements which constitute forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995 and other federal securities laws.  Forward looking
information includes statements that include or are preceded by the words
“expects,” “estimates,” “believes,” “plans,” “anticipates,” or similar
language.  For example:  This report states that the
liquidating distribution will be made on May 20, 2010; however, the distribution
may be delayed.   In addition, the closing of the Plan of
Dissolution is expected to be completed on or about May 31, 2010.  In
fact, the closing of the Plan of Dissolution is subject to various conditions
and contingencies as are customary in plans of dissolution in the United
States.   If these conditions are not satisfied or the specified
contingencies occur, the Plan of Dissolution may be delayed or may not be
completed.  Forward looking statements may involve risks and
uncertainties, known or unknown to us that could cause results to differ
materially from management’s expectations as projected in such forward-looking
statements, including the risk that we may fail to complete the Plan of
Dissolution.  You should not place undue reliance upon on these
forward-looking statements or rely upon them as predictions of future events
because we cannot assure you that the events or circumstances reflected in these
statements will be achieved or will occur.  The completion of the Plan
of Dissolution is subject to certain conditions, these conditions may be delayed
or may not occur, causing our liquidation  to occur at a later date
than expected or not at all.  Except as required by law, Nyer
undertakes no obligation to release publicly the result of any revision to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated
events.  These risks and uncertainties are discussed in Item 1A in our
most recent Annual Report on Form 10-K as filed with the SEC as well as our
other filings with the SEC.  Unless otherwise required by applicable
securities laws, we assume no obligation to update our forward-looking
statements to reflect subsequent events or circumstances.





The
following discussion provides information with respect to our results of
operations, liquidity, and capital resources on a comparative basis for the one
and seven months ended March 31, 2010, and three and nine months ended March 31,
2009.  The following discussion should be read in conjunction with our
consolidated financial statements and selected notes thereto for the one and
seven months ended March 31, 2010, and three and nine months ended March 31,
2009, included herein, and our audited consolidated financial statements and
notes thereto contained in our Annual Report on Form 10-K for the year ended
June 30, 2009, as filed with the SEC.  Due to the shortened time
period during 2010 as a result of the adoption of the liquidation basis of
accounting effective February 1, 2010, the results for 2010 are not comparable
to the results for 2009.




Overview




During
the one and seven months ended January 31, 2010, we operated a chain of
pharmacies and provided pharmacy management services to various not-for-profit
entities.   The majority of our business was conducted pursuant to
contracts with pharmacy benefit management companies and the Commonwealth of
Massachusetts Medicaid Department.  Each applied consistent downward
pressure on our margins.   The current recessionary economic
environment did not significantly adversely affect the number of prescriptions
dispensed at our pharmacies, as our business was generally recession
resistant.




Recent
Developments





Special
shareholders’ meeting





At the
our special shareholders’ meeting,  held on January 20, 2010, our
shareholders approved the Transactions, each as described in the Company’s Proxy
Statement dated December 17, 2009.





Asset
purchase agreement





On
January 29, 2010, we closed the transactions contemplated by the WAG
Transaction, whereby DAW sold to Walgreens a substantial portion of its
operating assets, including prescription files and inventory of a total of 12
neighborhood pharmacies, which included the assignment of nine leases, for a
cash purchase price of $12.0 million plus $6.6 million of qualifying inventory,
$1.1 million of operating equipment, and $71,980 for prepaid rent
amounts.   We recognized a gain of $8,663,185 on the WAG
Transaction.





Stock
purchase agreement





On
February 3, 2010, we closed the DAW Transaction, with an effective date of
February 1, 2010, whereby the Management Team purchased the stock of DAW in
exchange for $300,000 in cash and the assumption of $1.2 million of
liabilities.  The Management Team included certain officers and
directors of the Company and DAW, who owned all of our outstanding preferred
stock and also owned our convertible and other notes, options, and common
stock.  Because of the relationships between the Management Team and
us, the DAW Transaction was approved by the Special Committee, in addition to
the full Board.


17


Liquidation
and dissolution of Nyer





Upon the closing of the WAG Transaction
and the DAW Transaction, we have substantially no remaining assets other than
the cash received from the Transactions.  We are currently in the
process of an orderly liquidation and dissolution of Nyer in accordance with the
Plan of Dissolution, which is expected to be completed on or about May 31,
2010.  The Plan of Dissolution is described more fully in the
Company’s Proxy Statement dated December 17, 2009.





The Board
also authorized us to cause our common stock to be delisted from the NASDAQ
following the closing of the WAG Transaction.  We notified the NASDAQ
of our intent to voluntarily delist our securities by filing a Form 25, which we
filed with the SEC on February 9, 2010.  In connection with the
delisting, we requested that NASDAQ suspend trading effective at the close of
business on February 1, 2010.   Upon delisting from NASDAQ, our
securities were added to the over-the-counter market.





We closed
our stock record books on May 3, 2010, and as previously disclosed, the Board
fixed May 3, 2010, as the record date for determining our shareholders who are
entitled to receive any distribution of available assets.  On May 12,
2010, the Board declared a liquidating distribution of $2.08 per share of our
common stock, or $11,774,000 in the aggregate.  We will make this
distribution on May 20, 2010, previously disclosed as May 14, 2010, to all
shareholders of record as of the close of business on May 3, 2010.





Liquidation
Basis of Accounting





In
connection with the approval of the Plan of Liquidation, we adopted a
liquidation basis of accounting effective February 1, 2010.  As of
this date, our net assets are stated at their estimated net realizable value and
our liabilities are stated at their estimated settlement amounts.  Our
Statement of Net Assets in Liquidation and Statement of Changes in Net Assets in
Liquidation are the principal financial statements presented under liquidation
basis accounting.  Under the liquidation basis of accounting, our
assets are stated at their estimated net realizable value, which is the
non-discounted amount of cash, or its equivalent, into which an asset is
expected to be converted in the due course of business less direct costs, while
our liabilities are reported at their estimated settlement amount, which is the
non-discounted amount of cash, or its equivalent, expected to be paid to
liquidate an obligation in the due course of business, including direct
costs.  Additionally, under the liquidation basis of accounting, we
are required to establish a reserve for all future estimated general and
administrative expenses and other costs expected to be incurred during the
liquidation process.  The reserve for these estimated expenses
includes primarily accruals including professional services and corporate
expenses (directors’ fees and statutory fees).  These estimates will
be periodically reviewed and adjusted as appropriate.  There can be no
assurance that these estimated values will be realized.





We were
required to make significant estimates and exercise judgment in determining the
accrued costs of liquidation as of March 31, 2010.  Upon transition to
the liquidation basis of accounting, we accrued the following costs expected to
be incurred in liquidation:  $213,138 of outside services and other
wind down expenses and $26,000 for directors’ and officers’ liability
insurance.





Results
of Operations




Net
revenues.   We recognized revenue both from the sale of
prescription medications and other products as well as through dispensing fee
revenue derived through dispensing of prescriptions with inventory owned by
Federally Qualified Health centers (“FQHCs”) pursuant to pharmacy management
services contracts entered into between us and various
FQHCs.





Net revenues were $6,181,633 and $44,875,350 for
the one and seven months ended January 31, 2010, respectively.  Net
revenues were $18,599,485 and $55,210,762 for the three and nine months ended
March 31, 2009.




The
pharmacy sales (revenues other than dispensing fees) were $5,609,784 and
$40,791,607 for the one and seven months ended January 31, 2010,
respectively.  Pharmacy sales were $17,072,020 and $51,237,155 for the
three and nine months ended March 31, 2009.




The
pharmacies managed five pharmacies owned by FQHCs and additionally had contracts
to provide pharmacy services to patients of five other FQHCs.  The
pharmacies maintained a segregated inventory owned by the FQHCs for the purpose
of dispensing prescriptions to health center patients.




Dispensing
fee revenue was $571,849 and $4,083,743 for the one and seven months ended
January 31, 2010, respectively.  Dispensing fee revenue was $1,527,465
and $3,973,607 for the three and nine months ended March 31, 2009,
respectively.




Cost of
sales. Cost of sales was $4,093,151 and $31,810,983 for the
one and seven months ended January 31, 2010, respectively.  Cost of
sales was $13,485,181 and $40,449,925 for the three and nine months ended March
31, 2009, respectively.  Cost of goods sold includes the
following:  the cost of inventory sold during the period, net of
related vendor rebates, allowances and purchase discounts, costs incurred to
return merchandise to vendors, inventory shrinkage costs, and inbound freight
charges.


18


Gross profit
margins.  Pharmacy gross profit was 27% and 22% for the one and
seven months ended January 31, 2010.  Pharmacy gross profit was 21%
and 21%for the three and nine months ended March 31, 2009.  Dispensing
fee revenue is excluded from the calculation as there is no correlating
inventory cost associated with the services provided.




Selling, general, and administrative
expenses (“SG&A”).  SG&A was $4,134,094 and $15,079,090
for the one and seven months ended January 31, 2010,
respectively.  SG&A was $5,309,134 and $14,615,316, for the three
and nine months ended March 31, 2009, respectively.  SG&A,
primarily payroll and professional fees, has increased from the prior
year.  Included in SG&A in 2010 are the costs incurred with the
WAG Transaction and DAW Transaction.




Other income (expense),
net. Total other income
(expense), net, was $8,616,268 and $8,528,321 for the one and seven months ended
January 31, 2010, respectively.  Other income (expense), net, was
($38,349) and ($119,325), for the three and nine months ended March 31, 2009,
respectively.   Included in other income (expense), net, in 2010
is the gain of $8,663,185 on the WAG Transaction.





Income taxes.  We
recorded income tax expense $1,705,514 and $1,577,694 from continuing operations
for the one and seven months ended January 31, 2010, respectively, primarily due
to the gain on the WAG Transaction and recorded income tax expense from
discontinued operations of $262,814 due to the gain on the sale of the ADCO
building.  In addition, we recorded income tax benefit of $169,480
from continuing operations for the nine months ended March 31, 2009, primarily
due to the losses from operations and recorded income tax benefit of $2,652 from
discontinued operations and income tax benefit of $33,104 and income tax expense
of $157,104 for the three and nine months ended March 31, 2009, respectively,
due to the disposal of discontinued operations.





Discontinued
operations. On September 21, 2009, ADCO sold its
building in Bangor, Maine, to Dovesco, LLC, for $830,000 and recognized a gain
of $657,036 (previously preliminarily reported as $519,199).   In
December 2008, we sold the inventory and prescription lists of our Topsfield
pharmacy to CVS Pharmacy L.L.C. (“CVS”) and recognized a gain of
$500,000.  In conjunction with this sale, we also entered into a
non-compete agreement with CVS, whereby it has agreed not to compete for three
years within a 10-mile radius of the CVS store located in Danvers,
Massachusetts, excluding two currently operating Eaton Apothecary
pharmacies.  In September 2008, we sold certain assets and liabilities
of ADCO, a medical and surgical equipment and supplies company and recognized a
loss on disposal of $61,078 on the sale.   In connection with this
sale, we received a $50,000 note receivable that was payable January 31,
2009.




Liquidity and Capital
Resources




As of
January 31, 2010, we had $20,636,511 of cash as compared to $62,752 at June 30,
2009, primarily due to the net proceeds from the WAG
Transaction.    Our primary use of cash is funding wind-down
expenses.  We also have and continue to incur additional liquidation
costs and professional fees in connection with the wind-down of our
business.  We intend to fund such cash requirements through the
current cash balance and the $1,069,000 of proceeds related to the 640,000 stock
options that were exercised on May 3, 2010.





On May
12, 2010, the Board declared a liquidating distribution of $2.08 per share of
our common stock, or $11,774,000 in the aggregate.  We will make this
distribution on May 20, 2010 (previously disclosed as May 14, 2010), to all
shareholders of record as of the close of business on May 3, 2010, including the
Depository Trust Company, which is the entity that holds our common stock for
shareholders who own shares through a broker.  We closed our stock
record books on May 3, 2010; and as previously disclosed, the Board fixed May 3,
2010, as the record date for determining our shareholders who are entitled to
receive any distribution of available assets.




Net cash provided by operating
activities from continuing operations.  Net cash provided by
operating activities from continuing operations was $1,861,791 for the seven
months ended January 31, 2010, and consisted of our net income from continuing
operations, adjusted for non-cash items of $8,335,293 (including depreciation of
$266,526, amortization of $53,242, stock-based compensation expenses of $8,124,
and the gain on the sale of the pharmacies of $8,663,185), and net cash provided
by changes in working capital of $5,580,947.  The net cash provided by
changes in working capital was principally the result of decreases in accounts
receivable, inventories, and prepaid expenses and increases in accounts payable
and accrued expenses and other current
liabilities.




Net cash used in investing activities
from continuing operations.   Net cash used in investing
activities from continuing operations was $18,622,776 for the seven months ended
January 31, 2010, consisted primarily of the proceeds from the sale of the
pharmacies of $18,666,705 slightly offset by the purchase of equipment of
$43,929.




Net cash used in financing activities
from continuing operations.   Net cash used in financing
activities from continuing operations was $108,535for seven months ended January
31, 2010, and consisted of long-term debt repayments of $87,507 and principal
payments on the capital lease obligation of $21,028.


19




Item
      4(T).
            Controls and
      Procedures




Evaluation
of Disclosure Controls and Procedures.




We
maintain a system of disclosure controls and procedures that are designed for
the purposes of ensuring that information required to be disclosed in our SEC
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosures.   As of the end of the period covered by
this report, we carried out an evaluation, under the supervision and with the
participation of our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of our disclosure controls and procedures as defined in Rule
13a-15(e) of the Securities Exchange Act of 1934, as amended.  Based
on that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are
effective.




Changes
in Internal Control over Financial Reporting.




There has
been no change in our internal control over financial reporting during the
quarter ended March 31, 2010, that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.


20


PART II - Other Information




Item 2.
            Unregistered Sales of Equity
      Securities and Use of Proceeds





On May
12, 2003, we announced that our Board of Directors had authorized the repurchase
of up to 150,000 shares of our outstanding common stock from time-to-time in
open market transactions at prevailing market prices. There was no expiration
date established for this repurchase plan.  As of the date of this
report, the plan has not been terminated, of which there remains 148,000 shares
authorized for repurchase.  There was no common stock repurchased or
sales of unregistered securities for the nine months ended March 31,
2010.





Item
      5.
            Other
      Information





Submission of Matters to a Vote of
Security Holders:





At our special shareholders’ meeting,
held on January 20, 2010, our shareholders approved the following
actions:





1.
            The
      shareholders of the Company voted to approve the Asset Purchase Agreement,
      dated as of October 22, 2009, among Walgreen Eastern Co., Inc., D.A.W.,
      Inc., or DAW, and the Company and the transactions contemplated
      thereby:





For
                            
                            Against
                            
                            Withheld
                            
                            Broker Non-votes6,460,736
                            
                            271,491
                            
                            9,150
                            
                            1,517,463





2.
            The
      shareholders of the Company voted to approve theTransaction
      Agreement, dated October 23, 2009, among DAW, certain members of
      management of DAW and the Company and the transactions contemplated
      thereby:





For
                            
                            Against
                            
                            Withheld
                            
                            Broker Non-votes6,298,232
                            
                            394,215
                            
                            48,930
                            
                            1,679,967





3.
            The
      shareholders of the Company voted to approve the Plan of Dissolution of
      the Company and the transactions contemplated
  thereby:





For
                            
                            Against
                            
                            Withheld
                            
                            Broker Non-votes6,311,699
                            
                            286,041
                            
                            2,550
                            
                            1,525,413





Other:





We closed
our stock record books on May 3, 2010, and as previously disclosed, the Board
fixed May 3, 2010, as the record date for determining our shareholders who are
entitled to receive any distribution of available assets.  On May 12,
2010, the Board declared a liquidating distribution of $2.08 per share of our
common stock, or $11,774,000 in the aggregate.  We will make this
distribution on May 20, 2010, previously disclosed as May 14, 2010, to all
shareholders of record as of the close of business on May 3,
2010.




Item
      6.
            Exhibits




Exhibit
      31.1
                
                Certification
      Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act
      of 1934 (filed herewith).Exhibit
      31.2
                
                Certification
      Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act
      of 1934 (filed herewith).Exhibit
      32.1
                
                Certification
      Pursuant to 18 U.S.C. Section 1350 (furnished
herewith).Exhibit
      32.2
                
                Certification
      Pursuant to 18 U.S.C. Section 1350 (furnished
  herewith).


21


SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.




NYER
      MEDICAL GROUP, INC.RegistrantDate:  May
      17, 2010
              By:
              /s/  Mark DumouchelName:
              Mark
      DumouchelTitle:
              President
      and Chief  Executive Officer(Principal
      Executive Officer)Date:  May
      17, 2010
              By:
              /s/ Sandra M. ZimmermanName:
              Sandra
      M. ZimmermanTitle:
              Chief
      Financial Officer(Principal
      Financial Officer)


22