UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2009

¨	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: 001-31578


	MTS Medication Technologies, Inc.

	(Exact name of registrant as specified in its charter)

	Delaware		59-2740462

	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

	2003 Gandy Boulevard North, St. Petersburg, Florida 33702

	(Address of principal executive offices) (Zip Code)


	727-576-6311

	(Registrant's telephone number, including area code)


	N/A

	(Former name, former address and former fiscal year, if changed since last report)

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 (§232.405 of this chapter) 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	¨ (Do not check if smaller reporting company.)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Class		Outstanding at August 10, 2009

	Common Stock, $.01 par value per share		6,473,065

MTS MEDICATION TECHNOLOGIES, INC. AND SUBSIDIARIES

Index

			Page

Part I - Financial Information

	Item 1.	Financial Statements

		Consolidated Balance Sheets – June 30, 2009 and March 31, 2009 (Unaudited)	1

		Consolidated Statements of Operations – Three Months Ended June 30, 2009 and 2008 (Unaudited)	2

		Consolidated Statement of Changes in Stockholders’ Equity and Comprehensive Income – Three Months Ended June 30, 2009 (Unaudited)	3

		Consolidated Statements of Cash Flows – Three Months Ended June 30, 2009 and 2008 (Unaudited)	4

		Notes to Consolidated Financial Statements (Unaudited)	5 - 16

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17 - 23

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

	Item 4.	Controls and Procedures	23

Part II - Other Information

	Item 1.	Legal Proceedings	25

	Item 1A.	Risk Factors	25

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

	Item 3.	Default Upon Senior Securities	26

	Item 4.	Submission of Matters to a Vote of Security Holders	26

	Item 5.	Other Information	26

	Item 6.	Exhibits	27

	Signatures		28

	Index to Exhibits		29

	Certifications		30 - 34




•		fluctuations in foreign currency;
•		our ability to compete in a very competitive market;
•		the limited number of customers that we depend on for our net sales;
•		the additional risks inherent in our international operations;
•		the small number of suppliers that we depend on for raw materials;
•		our reliance on a single facility in which we manufacture a majority of our products;
•		our reliance on short-term contracts with most of our clients;
•		intellectual property rights and litigation;
•		risks in product and technology development;
•		the potential adverse effect of governmental regulation on our business, as well as our customers’ businesses;
•		the changing U.S. healthcare environment; and
•		other factors that we may not have currently identified or quantified.

	June 30, 2009		March 31, 2009


Current Assets:
Cash	$	830	$	493
Restricted Cash		37		79
Accounts Receivable, Net		8,596		8,567
Inventories, Net		9,487		10,001
Prepaids and Other		827		708
Deferred Tax Asset		393		393

Total Current Assets		20,170		20,241
Property and Equipment, Net		7,877		8,127

Goodwill		1,324		1,196
Other Intangible Assets, Net		580		531
Other Assets, Net		1,719		1,831

Total Assets	$	31,670	$	31,926


Current Liabilities:
Accounts Payable and Accrued Liabilities	$	6,022		$	6,170
Current Maturities of Long-Term Debt		9			19
Customer Deposits		273			1,330
Total Current Liabilities		6,304			7,519

Long-Term Debt, Less Current Maturities		8,666			8,196
Other Liabilities		1,174			1,211
Deferred Tax Liability, Net		654			612

Total Liabilities		16,798			17,538

Stockholders' Equity:
Common Stock		65			65
Capital In Excess of Par Value		10,622			10,500
Accumulated Other Comprehensive Loss		(279	)		(674	)
Retained Earnings		4,792			4,825
Treasury Stock		(328	)		(328	)

Total Stockholders' Equity		14,872			14,388

Total Liabilities and Stockholders' Equity	$	31,670		$	31,926

	Three Months Ended June 30,

	2009			2008


Net Sales	$	17,359		$	19,366

Costs and Expenses:
Cost of Sales		11,179			13,333
Selling, General and Administrative		5,133			4,525
Depreciation and Amortization		787			795

Total Costs and Expenses		17,099			18,653

Operating Income		260			713

Interest Expense		90			126

Income Before Taxes		170			587

Income Tax Expense		203			213

Net (Loss) Income	$	(33	)	$	374

Net (Loss) Income Per Common Share - Basic	$	(0.01	)	$	0.06

Net Income Per Common Share - Diluted	$	(0.01	)	$	0.06

Weighted Average Shares Outstanding - Basic		6,473			6,449

Weighted Average Shares Outstanding - Diluted		6,473			6,778

	Common Stock					Accumulated
	$.01 Par Value			Capital In		Other											Total
				Excess of		Comprehensive			Retained			Treasury		Treasury			Stockholders'
	Shares	Amount		Par Value		(Loss) Income			Earnings			Shares		Stock			Equity


Balance March 31, 2009	6,454,065	$	65	$	10,500	$	(674	)	$	4,825		(60	)	$	(328	)	$	14,388
Stock Grants Issued	19,000		–		67													67
Share-Based Compensation					55													55
Comprehensive Income:
Net Loss										(33	)							(33	)
Interest Rate Swaps, Net of Tax of $15							25											25
Foreign Currency Translation Adjustment							370											370

Total Comprehensive Income																		362

Balance June 30, 2009	6,473,065	$	65	$	10,622	$	(279	)	$	4,792		(60	)	$	(328	)	$	14,872

	Three Months Ended June 30,

	2009			2008


Operating Activities
Net (Loss) Income	$	(33	)	$	374
Adjustments to Reconcile Net (Loss) Income to Net Cash Provided By Operating Activities:
Depreciation and Amortization		779			786
Write-off of deferred financing costs		–			62
Tax Benefit of Options Exercised		–			(37	)
Deferred Income Taxes		2			20
Share-Based Compensation		122			82
Changes In Operating Assets and Liabilities:
Restricted Cash		42			(262	)
Accounts Receivable		182			(91	)
Inventories		763			1,501
Prepaids and Other		(236	)		(408	)
Accounts Payable and Other Accrued Liabilities		(27	)		(958	)
Customer Deposits		(1,057	)		11

Total Adjustments		570			706

Net Cash Provided By Operating Activities		537			1,080

Investing Activities
Expended For Property and Equipment		(339	)		(1,157	)
Expended For Product Development		(13	)		(86	)
Expended For Additional Consideration of Business Acquisition		(304	)		–

Net Cash Used By Investing Activities		(656	)		(1,243	)

Financing Activities
Payments On Notes Payable and Term Loans		(13	)		(26	)
Payments On Related Party Note Payable		–			(85	)
Paydowns on Revolving Line of Credit		(5,946	)		(5,504	)
Advances on Revolving Line of Credit		6,416			5,578
Tax Benefit of Options Exercised		–			37

Net Cash Provided By Financing Activities		457			–

Effect of Exchange Rate Changes On Cash		(1	)		32

Net Increase (Decrease) In Cash		337			(131	)
Cash at Beginning of Period		493			662

Cash at End of Period	$	830		$	531

Supplemental Disclosure of Cash Flow Information
Cash Paid for Interest	$	91		$	133
Cash Paid for Taxes	$	151		$	24

	June 30, 2009			March 31, 2009

	(In Thousands)
Raw Material	$	4,057		$	4,328
Work in Process		1,378			1,282
Finished Goods		4,638			5,003
Less: Inventory Valuation Allowance		(586	)		(612	)

	$	9,487		$	10,001

	Three Months Ended June 30,

	2009			2008

	(In Thousands, Except Per Share Amounts)
Numerator:

Net (Loss) Income	$	(33	)	$	374

Denominator:

Weighted Average Shares Outstanding - Basic		6,473			6,449

Add: Effect of Dilutive Warrants and Options		–			329

Weighted Average Shares Outstanding - Diluted		6,473			6,778

Net Income Per Common Share - Basic	$	(0.01	)		0.06

Net Income Per Common Share - Diluted	$	(0.01	)	$	0.06

								Weighted Average
	Number of		Range of					Exercise Price
	Shares		Exercise Prices					Per Share


Outstanding at March 31, 2009	835,496		$	1.45	-	$	13.70	$	5.24
Options Exercised	–				-				–
Options Expired	(1,000	)				$	2.00	$	2.00

Outstanding at June 30, 2009	834,496		$	1.45	-	$	13.70	$	5.24

		Weighted Average
Range of	Number	Remaining Contractual	Weighted Average
Exercise Prices	Outstanding	Life (Years)	Exercise Price

$1.45 - $2.30	232,000	1.7	$1.54
$2.50 - $4.47	79,500	4.4	$3.82
$5.60 - $13.70	522,996	7.5	$7.10

	834,496

	June 30, 2009			March 31, 2009

	(In Thousands)

Reducing revolving line of credit due in November 2010 with interest payable monthly at LIBOR plus 1.75% (2.07% at June 30, 2009) for approximately $1.7 million and 4.7% for approximately $7.0 million.	$	8,666		$	8,196

Capital leases expiring at various times through fiscal year 2010 at interest rates ranging from 6.29% to 9.5%.		9			19

Total Long-Term Debt		8,675			8,215

Less Current Portion		(9	)		(19	)

Long-Term Debt Due After One Year	$	8,666		$	8,196

	Three Months Ended June 30,

	2009			2008

	(In Thousands, Except Percentages)
Net Sales
Consumables	$	13,421		$	13,092
Packaging Automation		3,911			6,191
Medication Administration Systems		27			83

Net Sales	$	17,359		$	19,366

Operating Income (Loss) and Operating Margins
Consumables	$	2,388		$	1,615
		17.8	%		12.3	%
Packaging Automation	$	(1,171	)	$	(246	)
		(29.9	%)		(4.0	%)
Medication Administration Systems	$	(316	)	$	(480	)
		(1170.4	%)		(578.3	%)
Corporate Expenses Not Allowed to Other Segments	$	(641	)	$	(176	)

Operating Income	$	260		$	713

Operating Margin		1.5	%		3.7	%

Deductions from Operating Income
Interest Expense	$	90		$	126
Income Before Taxes	$	170		$	587

	June 30, 2009

		Quoted Market Prices	Significant Other	Significant
		in Active Markets	Observable Inputs	Unobservable Inputs
	Total	(Level 1)	(Level 2)	(Level 3)

	(In Thousands)

Interest Rate Swaps	$ (196)	–	$ (196)	–

	June 30, 2009

	Balance Sheet Location	Fair Value

	(In Thousands)

Assets
Derivatives designated as hedging instruments under Statement 133
None	N/A	$	–
Derivatives not designed as hedging instruments under Statement 133
None	N/A		–

Liabilities
Derivatives designated as hedging instruments under Statement 133
Interest rate contracts	Other Liabilities	$	(196	)
Derivatives not designated as hedging instruments under Statement 133
None	N/A		–

Total Derivatives		$	(196	)

	Amortization Period	June 30,			March 31,
	(Years)	2009			2009

		(In Thousands)

Product Development	3	$	4,383		$	4,366
Less: Accumulated Amortization			(3,211	)		(3,098	)

		$	1,172		$	1,268


Patents	5 – 17	$	1,761		$	1,747
Less: Accumulated Amortization			(1,272	)		(1,263	)

		$	489		$	484


Financing Costs	3 – 5	$	42		$	102
Less: Accumulated Amortization			(9	)		(67	)

		$	33		$	35


Other		$	25		$	44

Total Other Assets, Net		$	1,719		$	1,831

	As of June 30, 2009		As of March 31, 2009

	(In Thousands)
Net Sales
U.S.	$	27,364	$	26,341
Non-U.S.		4,306		5,585

	$	31,670	$	31,926

				Location of Gain or	Amount of Gain or
				(Loss) Recognized in	(Loss) Recognized in
		Location of Loss	Amount of Gain or (Loss)	Income on Derivative	Income on Derivative
	Amount of Gain	Reclassified from Accumulated	Reclassified from Accumulated	(Ineffective Portion and	(Ineffective Portion and
Derivatives in Statement 133	Recognized in OCI on Derivative	OCI into Income	OCI into Income	Amount Excluded From	Amount Excluded From
Cash Flow Hedging Relationships	(Effective Portion)	(Effective Portion)	(Effective Portion)	Effectiveness Testing	Effectiveness Testing)

Interest Rate
Contracts	$ 121	Interest Expense	–	N/A	N/A

Exhibit Index		Description

3.1		Certificate of Incorporation and Amendments thereto. (1)
3.2		Certificate of Amendment of Certificate of Incorporation. (2)
3.3		Certificate of Amendment of Certificate of Incorporation. (3)
3.4		Amended and Restated Bylaws (4)
4.1		Specimen Stock Certificate (3)
31.1		Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (*)
31.2		Certification of the Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (*)
32.1		Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. §1350. (*)
32.2		Certification of the Vice President and Chief Financial Officer pursuant to 18 U.S.C. §1350. (*)
(*)		Filed herein.
(1)		Incorporated herein by reference to same Exhibit(s), respectively, Registration Statement on Form S-1 (File No. 33-17852) filed October 9, 1987.
(2)		Incorporated herein by reference to same Exhibit(s), respectively, Registration Statement on Form S-1 (File No. 33-40678) filed May 17, 1991.
(3)		Incorporated herein by reference to same Exhibit(s), respectively, Registration Statement on Form S-3 (File No. 333-112212) filed January 26, 2004.
(4)		Incorporated herein by reference to Form 8-K filed June 15, 2007.


	MTS MEDICATION TECHNOLOGIES, INC.

Date: August 14, 2009	By:	/s/ Todd E. Siegel

		Todd E. Siegel
		President and Chief Executive Officer

Date: August 14, 2009	By:	/s/ Michael P. Conroy

		Michael P. Conroy
		Vice President and Chief Financial Officer


Dated: August 14, 2009

/s/ Todd E. Siegel
Todd E. Siegel
President and Chief Executive Officer

UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-Q

MTS MEDICATION TECHNOLOGIES, INC. AND SUBSIDIARIES

Index

Forward Looking Statement

MTS MEDICATION TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (In Thousands) (Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY

MTS MEDICATION TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands; Except Earnings Per Share Amounts) (Unaudited)

MTS MEDICATION TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME THREE MONTHS ENDED JUNE 30, 2009 (In Thousands; Except Shares)(Unaudited)

MTS MEDICATION TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited)

MTS MEDICATION TECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2009 (Unaudited)

NOTE 1 – BASIS OF PRESENTATION

NOTE 2 – RESTRICTED CASH

NOTE 3 – INVENTORIES

NOTE 4 – EARNINGS PER SHARE

NOTE 5 – SHARE-BASED COMPENSATION

Exercisable Options

NOTE 6 – LONG-TERM DEBT

NOTE 7 – OTHER ASSETS

NOTE 8 – RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 9 – SEGMENT INFORMATION

NOTE 10 – FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 11 – DERIVATIVE INSTRUMENTS

Fair Values of Derivative Instruments

NOTE 12 – AGREEMENT AND PLAN OF MERGER

MTS MEDICATION TECHNOLOGIES, INC. AND SUBSIDIARIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSFOR THE THREE MONTHS ENDED JUNE 30, 2009

Overview

RESULTS OF OPERATIONS

Segments

Segment Results of Operations

Consumables

Packaging Automation

Medication Administration Systems

LIQUIDITY AND CAPITAL RESOURCES

ESTIMATES AND CRITICAL ACCOUNTING POLICIES

Off-Balance Sheet Arrangements

Contractual Obligations

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Item 4. Controls and Procedures

Plan for Remediation of Material Weakness

Changes in Internal Control Over Financial Reporting

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

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

Item 3. Defaults Upon Senior Securities

Item 4. Submission of Matters to a Vote of Security Holders

Item 5. Other Information

Item 6. Exhibits

SIGNATURES

Exhibit Index

CERTIFICATIONS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

MTS MEDICATION TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)

MTS MEDICATION TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands; Except Earnings Per Share Amounts)
(Unaudited)

MTS MEDICATION TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME THREE MONTHS ENDED JUNE 30, 2009
(In Thousands; Except Shares)
(Unaudited)

MTS MEDICATION TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)

MTS MEDICATION TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2009
(Unaudited)

MTS MEDICATION TECHNOLOGIES, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2009

MTS MEDICATION TECHNOLOGIES, INC /DE/ 10-Q