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, 2013 are not necessarily indicative of the results that may be expected for the year ended September 30, 2013. 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, 2012.

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 $916,903, $851,000 and $810,000 for the periods ended March 31, 2013, September 30, 2012 and March 31, 2012 respectively.

3. Notes receivable

The Company has notes receivable with a current and former employee at an interest rate of three percent per annum. The Company does not anticipate repayment within the next twelve months.

4. Convertible Notes Payable

5. Short-term Financing

In partial consideration for the extension of the revolving credit facility the Company and Bauman entered into a Warrant Agreement, dated December 30, 2012 whereby the Company issued a warrant to Bauman to purchase, at his option, up to 100,000 shares of Class A Common Stock of the Company at an exercise price of $2.50 per share, subject to certain anti-dilution and other adjustments. If not exercised, this warrant will expire on December 30, 2015.

The Company used the Black-Scholes option pricing model to determine the fair value estimate for recognizing the cost of 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. The warrants are immediately exercisable and expire in December 2015. The fair value of the warrants issued is amortized over the one year credit agreement period. During the three and six month periods ended March 31, 2013, $11,375 and $22,750 was expensed as non-cash interest expense. The following weighted-average assumptions were used in the option pricing model for the three and six month month periods ended March 31, 2013: a risk free interest rate of 0.42%; an expected life of 3 years; an expected dividend yield of 0.0%; and a volatility factor of .84.

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

On February 27, 2013, the Company's 2013 Omnibus Equity Plan was approved and adopted by an affirmative vote of a majority of the Company's Class A and Class B Shareholders.

The 2013 Omnibus Plan will provide the Company with the flexibility to grant a variety of share-based awards for covered employees, consultants and Directors. The 2013 Omnibus Plan provides for the grant of the following types of incentive awards: stock options, stock appreciation rights, restricted shares, restricted share units, performance shares and Class A Common Shares. Those who will be eligible for awards under the 2013 Omnibus Plan include employees who provide services to the Company and its affiliates, executive officers, non-employee Directors and consultants designated by the Compensation Committee. The Plan has 150,000 Class A Common Shares reserved for issuance. The Class A Common Shares may be either authorized, but unissued, common shares or treasury shares. No share-based awards have been granted under the 2013 Omnibus Equity Plan as of March 31, 2013.

Under the Company's expired Key Employees Stock Option Plans (collectively the "Employee Plans"), incentive stock options, in general, were 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. Under the expired Employee Plans there are no options currently available for grant and there are no options outstanding at March 31, 2013. Options for 26,850 shares at $3.55 per share expired during the three month period ended March 31, 2012.

The following is a summary of the range of exercise prices for stock options outstanding and exercisable under the expired Directors Plans at March 31, 2013:

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, 2013 and 2012 respectively $1,208 and $3,283; $4,049 and $6,148 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, 2013 and 2012 respectively: a risk free interest rate of 5.0% 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 .87 and .75.

On October 11, 2012, the Company's Amended Articles of Incorporation and the Amended Code of Regulations were adopted by an affirmative vote of more than two-thirds of the Company's Class A and Class B Shareholders.

The Amended Articles amend and restate the Current Articles in a number of significant ways and are primarily as follows: increased the number of Class A Shares and Class B Shares from 3,750,000 and 1,000,000 to 10,000,000 and 2,500,000 respectively, and added a class of 1,000,000 Serial Preferred Shares; eliminated par value for for Class A Shares and Class B Shares; updated certain provisions relating to the payment of dividends; removed restrictions on the issuance of additional Class A Shares; clarified the method by which the Company may repurchase its shares; reduced the percentage of shareholder vote required to authorize corporate actions from two-thirds of the voting power to a majority of the voting power; and made other technical or conforming changes.

The Amended Regulations amend and restate the Current Regulations in a number of significant ways and are primarily as follows: updated certain provisions relating to the Company's meetings of shareholders in order to provide more consistency in the regulations regarding the Company's practices in this area; further clarifying the roles of the Company's officers and directors in conducting the Company's business; updated the Company's policy regarding the indemnification of its directors, officers, employees, and others; revised provisions allowing for the Board of Directors to adopt amendments to the Amended Regulations to the extent permitted by Ohio law; and made other technical or conforming changes.

Unissued shares of Class A common stock (958,233 shares) are reserved for the share-for-share conversion rights of the Class B common stock, stock options under the Directors Plans, conversion rights of the Convertible Promissory Note and available warrants.

7. 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.

8. 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:

Options and warrants to purchase 31,000 and 200,000 shares of common stock respectively during the second quarter and the first six months of fiscal 2013 at prices ranging from $2.50 to $11.00 per share were outstanding but were not included in the computation of diluted earnings per share because the option's and warrant's effect was antidilutive or the exercise price was greater than the average market price of the common share.

Options to purchase 42,000 shares of common stock during the second quarter and the first six months of fiscal 2012 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 share.

In addition, conversion rights to purchase 491,304 shares of common stock during the second quarter and the first six months of fiscal 2012 at a price of $1.85 per share were not included in the computation of diluted earnings per share because the conversion rights of the Convertible Promissory Notes effect was antidilutive or the exercise price was greater than the average market price of the common share.

9. 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, Taiwan and other foreign countries are made in United States of America Dollars.

The Company is a named defendant along with numerous other companies in a suit in the State of Michigan regarding asbestos harm to the plaintiff. The Company has engaged a Michigan attorney to provide representation. The Company believes the suit is without merit and is pursuing dismissal of the case.

The ability of the Company to continue as a going concern is dependent on improving the Company's profitability and cash flow and securing additional financing if needed. Management continues to review and revise its strategic plan and believes in the viability of its strategy to increase revenues and profitability through increased sales of existing products and the introduction of new products to the market place. Management believes that the actions presently being taken by the Company will provide the stimulus for it to continue as a going concern, however, because of the inherent uncertainties there can be no assurances to that effect. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Additionally, the Company has net operating loss carryforwards, currently valued at $0, that offset taxable income.

Management took steps to reduce expenses throughout the Company in fiscal 2009, 2010 and 2011 in the form of substantial reductions in personnel, wage reductions for all personnel and expenditure restrictions in most aspects of the Company’s operations. Anticipated cost savings were achieved during the past four years and management expects these measures to continue through fiscal 2013. During the first quarter of fiscal 2012 management entered into two unsecured convertible loan agreements that have provided approximately $675,000 of cash to date. One of the convertible loan agreements was fully converted during fiscal 2012 and the other on December 28, 2012.

In addition, on December 30, 2012 management entered into an amended unsecured convertible loan agreement and an additional revolving line of credit which may provide approximately $717,000 of liquidity to meet on going working capital requirements. One agreement is an unsecured revolving line of credit with a major shareholder who is also an employee and the other is an unsecured convertible loan agreement with a major shareholder who is also a Director as discussed in Notes 4 and 5. These facilities are available through December 2013.

The above available financing resources together with management’s revised strategic plan to increase revenues and profitability through increased sales of existing products, the introduction of new products to the market place and the revenues generated from the large order from a Tier 1 Supplier should provide the Company with the needed working capital for the foreseeable future.

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 $417,607 and $352,372 for the second quarter of fiscal 2013 and fiscal 2012, respectively and $827,833 and $730,375 for the first six months of fiscal 2013 and fiscal 2012, respectively.

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 $1,546,731 and $826,166 for the second quarter of fiscal 2013 and fiscal 2012, respectively, and $2,875,408 and $1,629,664 for the first six months of fiscal 2013 and fiscal 2012, respectively. The increased sales volume was primarily due to the large order from a Tier 1 OEM supplier.

Product sales for the six months ended March 31, 2013 were $3,538,687 versus $2,180,691 for the same period in fiscal 2012. The increase in product sales during the first six months of the current fiscal year of approximately $1,358,000 was volume related due primarily to increased sales of automotive diagnostic testing products, primarily, automotive diagnostic testing products to OEM's of approximately $1,370,000. Sales of emission products increased by approximately $31,000, offset in part by a decrease in aftermarket sales of approximately $143,000. In addition, sales of indicator products increased by approximately $101,000. The increase in product sales to OEM's is due to the large order completed during the current year for a Tier 1 OEM supplier. Management anticipates product sales for the third and fourth quarter will decrease slightly.

Service sales for the six months ended March 31, 2013 were $164,554 compared with $179,348 for the same period in fiscal 2012. The decrease was volume related and due primarily to a lower 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 $1,956,903 or (55.3% of product sales) compared to $1,439,946 (66.0% of product sales) for the six months ended March 31, 2012. The percentage decrease in the cost of product sold was due primarily to a higher sales volume, higher plant utilization and a change in product mix. The change in mix was largely increased sales of automotive diagnostic testing products to OEM's. The dollar increase is due to the volume increase of product sales during the current quarter. The current cost of product sold percentage is expected to increase slightly for the balance of the fiscal year due to an anticipated change in product mix.

Cost of service sold was $77,660 (47.2% of service sales) compared with $124,700 (69.5% of service sales) for the six months ended March 31, 2012. The dollar and percentage decrease was due primarily to a lower sales volume and product specifics of chargeable repairs. The cost of services sold percentage is expected to increase moderately for the balance of the fiscal year.

Product development expenses were $477,245 (13.5% of product sales) compared to $473,230 (21.7% of product sales) for the six months ended March 31, 2012. The percentage decrease was due primarily to higher product sales during the current six months of fiscal 2013. The current level of product development expenditures is expected to continue for the balance of the fiscal year. Management believes the existing and planned resources will be sufficient to continue to develop identified new products for both OEM and Aftermarket customers.

Marketing and administrative expenses were $885,998 for the six months ended March 31, 2013 (23.9% of total sales) versus $735,276 (31.2% of total sales) for the six months ended March 31, 2012. The percentage decrease was due primarily to the higher level of total sales for the current six months of fiscal 2013. Marketing expenses were approximately $362,000 during the first six months of the current fiscal year as compared to $282,000 for the same period a year ago. Within marketing expenses, increases were primarily in royalties, labor costs, commissions and advertising expense of approximately $47,000, $28,000, $8,000 and $3,000 respectively. These increases were offset in part by decreases in credit and collection expense and travel expenses of approximately $4,000, and $1,000 respectively. Administrative expenses were approximately $524,000 during the first six months of the current fiscal year as compared to $454,000 for the same period a year ago. The dollar increase was due primarily to increases in professional fees, labor costs and travel expenses of approximately $78,000, $3,000 and $2,000 respectively, offset in part by a decrease in repairs and maintenance computer equipment of approximately $13,000. The current level of marketing and administrative expenses are expected to decrease slightly for the remainder of the fiscal year.

Interest expense was $45,678 for the six months ended March 31, 2013, and $5,561 for the same period in 2012. The increase in interest charges in the current six month period compared to a year ago was due primarily to recording as non-cash interest expense a portion of the present value of the warrants issued in December 2012. Interest on the line of credit and convertible notes payable declined by approximately $5,264 and $119 respectively. The current level of interest expense is expected to continue for the third and fourth quarters of the year due to the remaining present value to be recorded as interest expense on the warrants issued in 2012.

Other income of $3,478 for the six months ended March 31, 2013 compares with other income of $10,753 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 the gain on the sale of a company vehicle and an increase in the sale of scrap metal shavings of approximately $3,500 and $3,000 respectively during the prior year six month period with no similar sales in the current year. The current level of other income is expected to decrease for the remainder of fiscal 2013.

Income taxes during the first six months of fiscal 2013 was $0 which compares with income taxes of $0 in the first six months of fiscal 2012. In the first six months of fiscal 2013 income taxes were recorded at an effective tax rate of 37% offset by deferred taxes, specifically net operating loss carryforwards. In the first six months of fiscal 2012 recovery of income taxes was calculated at an effective tax rate of 37% offset by a increase in the valuation allowance netting to $0.

Net income for the six months ended March 31, 2013 was $263,235 compared with a net loss of $407,921 for the six months ended March 31, 2012. The net income for the first half of fiscal 2013 was primarily the result of a higher sales volume.

Total current assets were $3,178,786, $2,823,971 and $3,063,976 at March 31, 2013, September 30, 2012 and March 31, 2012, respectively. The increase of approximately $115,000 from March to March was due primarily to the increase in cash and cash equivalents, accounts receivable and prepaid expenses of approximately $229,000, $215,000 and $15,000 respectively, offset by a decrease in inventory of approximately $345,000. The increase in cash and cash equivalents and accounts receivable combined with the decrease in inventory was due primarily to the increase in the sales volume during the period. The decrease in inventory was due partially to a higher obsolescence reserve level, and in addition management's actions to reduce inventory levels during the period. The increase from September to March of approximately $355,000 was due primarily to the increase in cash and cash equivalents of approximately $625,000, offset in part by a decrease in inventory of approximately $255,000. The increase in cash and cash equivalents was due primarily to the higher level of sales and the subsequent collection of accounts receivable during the period. The decrease in inventory was due partially to a higher obsolescence reserve level, and in addition management's actions to reduce inventory levels during the period.

Working capital as of March 31, 2013 amounted to $2,491,294 as compared with $2,073,066 a year earlier. Current assets were 4.6 times current liabilities compared to 3.1 a year ago. The quick ratio was 2.3 compared to 1.2 a year ago.

Internally generated funds during the six months ended March 31, 2013 were $648,968. Capital expenditures during the period were $4,000. The primary reason for the positive cash flow from operations was the net income generated from the large order from a Tier 1 Supplier to an OEM and the decrease in inventory during the period. The Company does not anticipate any material capital expenditures during fiscal 2013. 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 2013.

Shareholders' equity during the six months ended March 31, 2013 increased by $506,450 which was the net income during the period of $263,235, sale of Class A Conversion shares of $208,591, issuance of Class A Common shares for consulting services of $7,000, share-based compensation expense of $4,049, non-cash interest expense on warrants issued of $45,500 and filing fees for the additional authorized common shares of $21,925.

During fiscal 2013 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 2013 there will be a negative but temporary impact on liquidity. The Company has reduced wages, headcount, product development, and marketing, administrative and sales related expenses in order to appropriately manage its working capital. The Company believes that internally generated funds and available short-term financing will provide sufficient liquidity to meet ongoing working capital requirements.

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, 2012.

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. There has been no material developments in this legal proceeding since the filing of Form 10-K for fiscal 2012. 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.