Item 1. Financial Statements.

See Notes to Consolidated Financial Statements

Note: Amounts derived from audited financial statements previously filed with the Securities and Exchange Commission

See Notes to Consolidated Financial Statements

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month and six month periods ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ended September 30, 2011. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended September 30, 2010.

Inventories are valued at the lower of cost or market and consist of the following:

The above amounts are net of reserve for obsolete inventory in the amount of $476,181 $380,000 and $532,790 for the periods ended March 31, 2011, September 30, 2010 and March 31, 2010 respectively.

3. Notes receivable

The Company has notes receivable with certain employees at an interest rate of three percent per annum. The Company does not anticipate repayment within the next twelve months.

4. Short-term Financing

On April 13, 2011, subsequent to the balance sheet date, the Company obtained a $250,000 credit agreement with one of its major shareholders. The agreement expires in April 2012 and provides for a revolving credit facility of $250,000 with interest generally equal to three percent per annum plus prime and is unsecured. In addition the agreement generally allows for borrowing based on an amount equal to eighty percent of eligible accounts receivables or $250,000. In addition, the Company is currently evaluating other short-term financing alternatives.

5. Capital Stock, Treasury Stock, Contributed Capital and Stock Options

Under the Company's Key Employees Stock Option Plans (collectively the "Employee Plans"), incentive stock options, in general, are exercisable for up to ten years, at an exercise price of not less than the market price on the date the option is granted. Non-qualified stock options may be granted at such exercise price and such other terms and conditions as the Compensation Committee of the Board of Directors may determine. No options may be granted at a price less than $2.925. Options for 27,650 Class A shares were outstanding at March 31, 2011 (41,500 shares at September 30, 2010 and 41,500 shares at March 31, 2010) at prices ranging from $3.125 to $3.55 Options for 13,850 shares at prices ranging from $3.125 to $5.00 per share expired during the three month period ended December 31, 2010. In addition, options for 17,900 shares at a prices ranging from $3.125 to $5.00 expired during the three month period ended December 31, 2009. No other options were granted, exercised or canceled or expired during the three or six month periods presented under the Employee Plans. All options granted under the Employee Plans are exercisable at March 31, 2011.

The following is a summary of the range of exercise prices for stock options outstanding and exercisable under the Employee Plans and the Directors Plans at March 31, 2011:

The Company accounts for Share-Based Payments under the modified prospective method for its stock options for both employees and non-employee Directors. Compensation cost for fixed based awards are measured at the grant date, and the Company uses the Black-Scholes option pricing model to determine the fair value estimates for recognizing the cost of employee and director services received in exchange for an award of equity instruments. The Black-Scholes option pricing model requires the use of subjective assumptions which can materially affect the fair value estimates. Employee stock options are immediately exercisable while Director's stock options are exercisable over a three year period. The fair value of stock option grants to Directors is amortized over the three year vesting period. During the three and the six month periods ended March 31, 2011 and 2010 respectively $2,865 and $6,885; $4,020 and $8,005 was expensed as share-based compensation. The following weighted-average assumptions were used in the option pricing model for the three and six month periods ended March 31, 2011 and 2010 respectively: a risk free interest rate of 5.5% and 5.5%; an expected life of 10 and 10 years; an expected dividend yield of 0.0% and 0.0%; and a volatility factor of .75 and .75.

Unissued shares of Class A common stock (528,516 shares) are reserved for the share-for-share conversion rights of the Class B common stock and stock options under the Employee Plans and the Directors Plans.

6. Recently Issued Accounting Pronouncements

The Company did not incur any material impact to its financial condition or results of operations due to the adoption of any new accounting standards during the periods reported.

7. Earnings per Common Share

Earnings per common share information is computed on the weighted average number of shares outstanding during each period based on the provisions of FASB Codification ASC Topic 260, "Earnings per Share." The required reconciliations are as follows

During the second quarter and the first six month period of fiscal 2011 and the second quarter and the first six month period of fiscal 2010, options to purchase 73,650 and 85,500 shares of common stock, respectively, at prices ranging from $2.925 to $11.00 per share were outstanding but were not included in the computation of diluted earnings per share because the option's effect was antidilutive or the exercise price was greater than the average market price of the common shares.

8. Segment and Related Information

The Company's four business units have a common management team and infrastructure that offer different products and services. The business units have been aggregated into two reportable segments: 1.) indicators and gauges and 2.) automotive related diagnostic tools and equipment.

Indicators and Gauges
This segment consists of products manufactured and sold primarily to companies in the aircraft and locomotive industry. Within the aircraft market, the primary customers are those companies that manufacture or service business, military and pleasure aircraft. Within the locomotive market, indicators and gauges are sold to both original equipment manufacturers and to operators of railroad equipment.

Automotive Diagnostic Tools and Equipment
This segment consists primarily of products designed and manufactured to support the testing or servicing of automotive systems using electronic means to measure vehicle parameters. These products are sold to OEM's and to the aftermarket using several brand names and a variety of distribution methods. Included in this segment are products used for state required testing of vehicle emissions.

Information by industry segment is set forth below:

All export sales to Australia, Canada, Mexico and other foreign countries are made in United States of America Dollars.

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

The Company has determined that it has two reportable segments: 1) indicators and gauges and 2) automotive related diagnostic tools and equipment. The indicators and gauges segment consists of products manufactured and sold primarily to companies in the aircraft and locomotive industry. Within the aircraft market, the primary customers are those companies that manufacture or service business, military and pleasure aircraft. Within the locomotive market, indicators and gauges are sold to original equipment manufacturers, servicers of locomotives and operators of railroad equipment. Revenue in this segment was $290,966 and $433,789 for the second quarter of fiscal 2011 and fiscal 2010, respectively and $534,772 and $741,459 for the first six months of fiscal 2011 and fiscal 2010, respectively. The reduced sales volume was primarily caused by lower orders for locomotive replacement items for distributor inventories due to tight credit, a slowing of business aircraft conversion activity and delays in government funding of programs for the military.

The automotive diagnostic tools and equipment segment consists primarily of products designed and manufactured to support the testing or servicing of automotive systems using electronic means to measure vehicle parameters. These products are sold to OEM's and to the aftermarket using several brand names and a variety of distribution methods. Included in this segment are products used for state required testing of vehicle emissions. Revenue in this segment was $1,021,930 and $960,271 for the second quarter of fiscal 2011 and fiscal 2010, respectively, and $1,890,767 and $2,289,318 for the first six months of fiscal 2011 and fiscal 2010, respectively. The prior year increase was due primarily to the completion of an order for automotive diagnostic testing equipment for an OEM.

Product sales for the six months ended March 31, 2011 were $2,207,009 versus $2,825,701 for the same period in fiscal 2010. The decrease in product sales during the first six months of the current fiscal year of approximately $619,000 was volume related due primarily to decreased sales of automotive diagnostic products, primarily, testing products to OEM's of approximately $391,000. Sales of emission aftermarket products increased by approximately $172,000 and diagnostic products declined by approximately $185,000. In addition, sales of indicator products decreased by approximately $215,000. Management anticipates product sales for the third and fourth quarter to increase slightly.

Service sales for the six months ended March 31, 2011 were $218,530 compared with $205,076 for the same period in fiscal 2010. The increase was volume related and due primarily to a higher sales volume for chargeable repairs. The current level of service sales related to product repair sales is expected to continue for the balance of the fiscal year.

Cost of product sold was $1,296,734 or (58.8% of product sales) compared to $1,500,955 (53.1% of product sales) for the six months ended March 31, 2010. The percentage increase in the cost of product sold was due primarily to a lower sales volume, lower plant utilization and a change in product mix. The dollar decrease was due primarily to a lower sales volume. The current cost of product sold percentage is expected to decrease slightly for the balance of the fiscal year due to product mix and the additional cost cutting measures implemented in March 2011.

Cost of service sold was $153,462 (70.2% of service sales) compared with $125,034 (61.0% of service sales) for the six months ended March 31, 2010. The dollar and percentage increase was due primarily to a lower plant utilization. The cost of services sold percentage is expected to decrease slightly for the balance of the fiscal year due to the cost cutting measures effective in March 2011.

Product development expenses were $522,002 (23.7% of product sales) compared to $537,897 (19.0% of product sales) for the six months ended March 31, 2010. The percentage increase was due primarily to lower product sales during the current period. The dollar decrease was due primarily to lower engineering expenses. During the current six month period research and experimental material and travel expenses declined by approximately $14,000 and $2,000 respectively. The current level of product development expenditures is expected to decrease moderately for the balance of the fiscal year due to the cost reductions implemented in March 2011. Management believes the current resources will be sufficient to continue to develop identified new products for both OEM and Aftermarket customers.

Marketing and administrative expenses were $989,006 for the six months ended March 31, 2011 (40.8% of total sales) versus $1,149,794 (37.9% of total sales) for the six months ended March 31, 2010. The percentage increase was primarily due to the lower level of total sales during the first six months of the current fiscal year. Marketing expenses were approximately $416,000 during the first six months of the current fiscal year as compared to $555,000 for the same period a year ago. Within marketing expenses, decreases were primarily in outside consulting, commissions, labor costs and advertising expense of approximately $57,000, $47,000, $44,000 and $13,000 respectively. These decreases were offset in part by increases in royalties, travel expense, promotion expense and collection expense of approximately $13,000, $7,000, $3,000 and $3,000 respectively. Administrative expenses were approximately $573,000 during the first six months of the current fiscal year as compared to $595,000 for the same period a year ago. The dollar decrease was due primarily to decreases in labor costs and directors fees of approximately $11,000 and $10,000 respectively. The current level of marketing and administrative expenses are expected to decrease moderately for the remainder of the fiscal year due to the cost cutting measures implemented in March and April 2011.

Interest expense was $0 for the six months ended March 31, 2011, and $542 for the same period in 2010. The decrease in interest charges in the current six month period compared to a year ago was due to no loan facility during the current year. The prior year interest was an interest charge on the unused portion of a $1,000,000 loan facility. The current level of interest expense is expected to increase for the third and fourth quarters of the year due to possible financing requirements of booked orders.

Other income of $4,002 for the six months ended March 31, 2011 compares with other income of $12,612 in the same period last year. Other income consists primarily of interest income on cash and cash equivalents invested and the proceeds from the sale of scrap metal shavings. The decrease is due primarily to a lower level of scarp metal sales and a lower level of cash available for investment during the current period. The current level of other income is expected to decrease for the remainder of fiscal 2011 due to a lower level of cash and cash equivalents invested in interest bearing accounts.

Income taxes during the first six months of fiscal 2011 was $0 which compares with income taxes of $0 in the first six months of fiscal 2010. In fiscal 2011 and 2010 a recovery of income taxes was calculated at an effective tax rate of 37% offset by an increase in the valuation allowance netting to $0. During fiscal 2011 management continues to record a valuation allowance on the recovery of income taxes calculated due to continued losses, the current economic uncertainties, the negative effects of the current economic crisis on all of the Company's markets and concern that a more likely than not expiration of the Company's net operating loss and research and development credit carryforwards could occur before they can be used.

The net loss for the six months ended March 31, 2011 was $561,663 compared with a net loss of $270,833 for the six months ended March 31, 2010. The net loss for the first half of fiscal 2011 was primarily the result of a lower sales volume.

In March and April 2011 management implemented cost reductions in the form of personnel reductions and a wage decrease in response to the continued uncertainty in the markets the Company serves. These reductions are expected to achieve savings of approximately $46,000 per month. Over the past several years the Company has implemented several cost reductions. In December of 2008 management took steps to reduce direct and non-direct product related expenses throughout the Company in response to the economic downturn and the uncertainty in the markets the Company served. The steps included a substantial reduction in personnel, wage reductions for all personnel and expenditure restrictions in most aspects of the Company's operations. Management took additional steps in April 2009 and made additional reductions in personnel due to the continued decline in sales. The expected annual cost savings of approximately $3,000,000 took into consideration possible increases in other expenses that could have occured. The savings were expected to be realized in equal amounts per month with similar impact on both future earnings and cash flows. The Company achieved the projected savings from previous reductions and fully expects to achieve the savings expected from the recent reductions.

Total current assets were $2,916,634, $3,312,428 and $3,912,662 at March 31, 2011, September 30, 2010 and March 31, 2010, respectively. The decrease of approximately $996,000 from March to March was due primarily to the decrease in cash and cash equivalents, accounts receivable and prepaid expenses of approximately $784,000, $240,000 and $32,000 respectively, offset in part by an increase in inventory of approximately $60,000. Cash and cash equivalents and accounts receivable decreased due to the lower sales volume during the period. Inventory increased due to an increase in orders during the current period. The decrease from September to March of approximately $396,000 was due primarily to the decrease in cash and cash equivalents of approximately $503,000, offset in part by an increase in accounts receivable of approximately $105,000. The increase in accounts receivable was due to an increase in sales during the month of March 2011.

Working capital as of March 31, 2011 amounted to $2,273,599 as compared with $3,388,206 a year earlier. Current assets were 4.5 times current liabilities compared to 7.5 a year ago. The quick ratio was 1.1 compared to 3.3 a year ago.

Internally generated funds during the six months ended March 31, 2011 were a negative $462,130. Capital expenditures during the period were $1,295. The primary reason for the negative cash flow from operations was the net loss during the period. The Company does not anticipate any material capital expenditures during fiscal 2011. In addition, the Company believes that cash and cash equivalents, together with funds anticipated to be generated by operations in addition to available short-term financing will provide adequate funding of the Company's working capital needs through the end of fiscal 2011.

Shareholders' equity during the six months ended March 31, 2011 decreased by $524,778 which was the net loss during the period of $531,663 and $6,885 of share-based compensation expense.

During fiscal 2011 the Company's business may require a short-term increase in inventory and accounts receivables. Whenever there may be a requirement to increase inventory in fiscal 2011 there will be a negative but temporary impact on liquidity. As previously noted, management implemented expense reductions during fiscal 2009 in response to the economic downturn and uncertainty in the markets the Company serves and implemented additional personnel reductions March and April 2011. The Company has reduced headcount, product development, and marketing, administrative and sales related expenses in order to appropriately manage its working capital. On April 13, 2011, subsequent to the balance sheet date, the Company obtained a $250,000 credit agreement with one of its major shareholders. The agreement expires in April 2012 and provides for a revolving credit facility of $250,000 with interest generally equal to three percent per annum plus prime and is unsecured. The Company believes that internally generated funds and available short-term financing will provide sufficient liquidity to meet ongoing working capital requirements. In addition, the Company is currently evaluating other short-term financing alternatives but there can be no assurance that such arrangements will be available.

Our critical accounting policies are as presented in Notes to Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the year ended September 30, 2010.

Market Risk

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is the plaintiff in a suit pursuing patent infringement against a competitor in the emissions market. On March 29, 2011 The United States District Court Northern District of Ohio Eastern Division published a Case Management Schedule that calls for a number of steps to be implemented between that date and September 15, 2011 culminating in a scheduled Settlement Conference September 20, 2011. Management believes that it is not currently possible to estimate the impact, if any, that the ultimate resolution of the patent infringement matter will have on the Company's results of operations, financial position or cash flows.

Item 6. Exhibits.

>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.