UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

R QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

R		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended March 25, 2012

		or

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

For the quarterly period ended September 25, 2011

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

Commission file number 000-51645

GLENROSE INSTRUMENTS INC.

(Exact name of Registrant as specified in its charter)

Delaware	20-3521719
(State of incorporation or organization)	(IRS Employer Identification No.)
45 First Avenue
Waltham, Massachusetts	02451
(Address of Principal Executive Offices)	(Zip Code)

45 First Avenue
Waltham, Massachusetts	02451
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (781) 622-1120

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 x 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. (Check One):

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

~~Title of each class~~	Title of each class	~~Outstanding at September 25, 2011~~	Outstanding at March 25, 2012
~~Common Stock, $0.01 par value~~	Common Stock, $0.01 par value	~~3,112,647~~	3,112,647

GLENROSE INSTRUMENTS INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDING ~~SEPTEMBER~~MARCH 25, ~~2011~~2012

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Item 1:	Financial Statements	3

	Condensed Consolidated Balance Sheets –
	March 25, 2012 (unaudited) and December 25, 2011	3

	Condensed Consolidated Statement of Income –
	Three Months Ended March 25, 2012 and March 27, 2011 (unaudited)	5

	Condensed Consolidated Statement of Cash Flows –
	Three Months Ended March 25, 2012 and March 27, 2011 (unaudited)	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3:	Quantitative and Qualitative Disclosures about Market Risk	18

Item 4T:	Controls and Procedures	18

PART II - OTHER INFORMATION

Item 1A:	Risk Factors	19

Item 6:	Exhibits	19

Signatures		20

Item 1:	Financial Statements	3
	Condensed Consolidated Balance Sheets – September 25, 2011 (unaudited) and December 26, 2010	3
	Condensed Consolidated Statement of Operations – Three Months Ended September 25, 2011 and September 26, 2010 (unaudited)	5
	Condensed Consolidated Statement of Operations – Nine Months Ended September 25, 2011 and September 26, 2010 (unaudited)	6
	Condensed Consolidated Statement of Cash Flows – Nine Months Ended September 25, 2011 and September 26, 2010 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3:	Quantitative and Qualitative Disclosures about Market Risk	21
Item 4T:	Controls and Procedures	21
PART II - OTHER INFORMATION
Item 1A:	Risk Factors	22
Item 6:	Exhibits	22
Signatures		23

References in this Form 10-Q to “we”, “us”, “our”, the “Company” “GlenRose Instruments” and “GlenRose” refers to GlenRose Instruments Inc. and its consolidated subsidiaries, unless otherwise noted.

References in this Form 10-Q to “we”, “us”, “our”, the “company” “GlenRose Instruments” and “GlenRose” refers to GlenRose Instruments Inc. and its consolidated subsidiaries, unless otherwise noted.

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

GLENROSE INSTRUMENTS INC.

CONSOLIDATED BALANCE SHEETS

As of ~~September~~March 25, ~~2011~~2012 and December 2625, ~~2010~~2011

	September 25,		December 26,
	March 25,		December 25,
	2011		2010
	2012		2011
	(unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	152,~~653~~553	$	1831,~~669,868~~516
Short-term investments		12,305		12,305
Accounts receivable (net of allowances of $24,320 and $26,120 for 2011 and 2010, respectively)		5,336,701		4,376,929
Accounts receivable (net of allowances of $24,320 for 2012 and 2011, respectively)		5,106,774		3,932,918
Unbilled contract receivables		~~237~~810,~~575~~959		~~370~~1,~~887~~110,193
Due from related party		42,858		42,858
Supply inventory		7063,~~785~~482		6061,~~271~~758
Prepaid expenses		~~210~~235,~~009~~368		97163,~~450~~559
Other receivables		3723,~~714~~246		586,~~464~~561
Income tax receivable		-		161,356
Deferred tax asset, current portion		292,060		290,281
Deferred tax asset		484,167		474,235
Assets held for sale		1,185,941		1,178,306
Assets held for sale		1,047,367		1,045,367
Total current assets		7,775,546		7,630,255
Total current assets		7,495,134		8,369,990
Property, plant and equipment, net		1,394,416		1,527,206
Property, plant and equipment, net		1,510,165		1,557,088
Other assets
Restricted cash		451,000		450,000
Restricted assets		451,381		451,406
Deposits		53,065		53,065
Deferred financing costs		87,346		104,499
Deferred tax asset, net of current portion		207,926		207,926
Deferred financing costs		79,253		83,451
Goodwill		2,740,913		2,740,913
Total other assets		3,~~332~~532,~~324~~538		3,~~348~~536,~~477~~761
TOTAL ASSETS	$	12,~~337~~702,~~623~~500	$	1312,~~275~~694,~~555~~222

The accompanying notes are integral part of these consolidated financial statements

GLENROSE INSTRUMENTS INC.

CONSOLIDATED BALANCE SHEETS (CONTINUED)

As of ~~September~~March 25, ~~2011~~2012 and December 2625, ~~2010~~2011

	September 25,			December 26,
	March 25,			December 25,
	2011			2010
	2012			2011
	(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	1,~~181~~705,~~159~~759		$	~~653~~2,~~130~~228,321
Deferred revenue		~~426~~172,~~835~~697			-172,697
Accrued expenses		~~296~~418,~~229~~540			~~363~~342,~~327~~736
Accrued employee-related costs		1,~~724~~785,~~150~~375			12,~~972~~000,~~581~~903
Accrued interest, related party		5,254			48,750
Line of credit payable		558,964			-
Line of credit payable		696,570			-
Term note payable, current portion		142,857			142,857
Term note payable, current portion		142,857			-
Notes payable, current portion		49,064			52,116
Notes payable, current portion		52,578			13,978
Due to related party		52,988			22,078
Due to related party		22,286			8,002
Capital lease obligations, current portion		12,225			11,915
Capital lease obligations, current portion		11,612			10,752
Income taxes payable		197,722			283,635
Income taxes payable		351,979			18,130
Total current liabilities		5,096,191			5,257,258
Total current liabilities		4,911,509			3,088,650
Long-term liabilities
Convertible debentures due to related parties		-			4,875,000
Term note payable, net of current portion		785,714			821,429
Term note payable, net of current portion		857,143			-
Note payable, net of current portion		14,629			24,619
Notes payable, net of current portion		36,998			13,634
Capital lease obligations, net of current portion		23,438			26,613
Capital lease obligations, net of current portion		29,707			38,527
Deferred tax liability		551,500			524,269
Deferred tax liability		394,599			427,198
Other long-term liabilities		21,048			24,037
Other long-term liabilities		27,025			134,552
Total liabilities		6,492,520			6,678,225
Total liabilities		6,256,981			8,577,561
Stockholders' equity
Common stock ($0.01 par value; 10,000,000 shares authorized; 3,117,647 shares issued and outstanding at September 25, 2011 and December 26, 2010)		31,176			31,176
Common stock ($0.01 par value; 10,000,000 shares authorized; 3,112,647 shares issued and outstanding at March 25, 2012 and December 25, 2011, respectively)		31,126			31,126
Additional paid-in-capital		8,~~001~~009,~~338~~275			78,~~972~~004,~~098~~229
Accumulated deficit		(1,~~951~~830,~~872~~421	)		(32,~~305~~019,~~280~~358	)
Total stockholders' equity		6,~~080~~209,~~642~~980			46,~~697~~015,~~994~~997
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	12,~~337~~702,~~623~~500		$	1312,~~275~~694,~~555~~222

The accompanying notes are integral part of these consolidated financial statements

GLENROSE INSTRUMENTS INC.

CONSOLIDATED ~~STATEMENTS~~STATEMENT OF ~~OPERATIONS~~INCOME

For the Three Months Ended ~~September~~March 25, ~~2011~~ 2012 and ~~September~~March 2627, ~~2010~~2011

	Three Months Ended
	September 25,			September 26,
	March 25,			March 27,
	2011			2010
	2012			2011
	(unaudited)			(unaudited)
Revenues	$	1110,~~016~~158,~~348~~534		$	910,~~898~~856,~~694~~322
Cost of sales		9,~~926~~337,~~112~~232			89,~~894~~551,~~138~~585
Gross profit from operations		1821,~~090,236~~302			1,~~004~~304,~~556~~737
General and administrative expenses		~~579~~475,~~154~~780			~~487~~573,~~391~~828
Operating income		~~511~~345,~~082~~522			~~517~~730,~~165~~909
Other income (expense)
Interest and other income		~~1,122~~670			~~5,357~~876
Interest expense		(9743,~~102~~716	)		(~~352~~69,~~102~~433	)
Total other expense		(9543,~~980~~046	)		(~~346~~68,~~745~~557	)
Income from operations, before income taxes		~~415~~302,~~102~~476			~~170~~662,~~420~~352
Provision for income taxes		(~~185~~113,~~388~~539	)		-(255,817	)
Net income	$	~~229~~188,~~714~~937		$	~~170~~406,~~420~~535
Net income per share - basic and diluted	$	0.0706		$	0.0513
Weighted average shares outstanding -
Weighted average shares outstanding - basic and diluted		3,102,647			3,102,647
basic and diluted		3,102,647			3,102,647

The accompanying notes are integral part of these consolidated financial statements

GLENROSE INSTRUMENTS INC.

CONSOLIDATED ~~STATEMENTS~~STATEMENT OF ~~OPERATIONS~~CASH FLOWS

For the ~~Nine~~Three Months Ended ~~September~~March 25, ~~2011~~ 2012 and ~~September~~March 2627, ~~2010~~2011

	Nine Months Ended
	March 25,			March 27,
	September 25,			September 26,
	2012			2011
	2011			2010
	(unaudited)			(unaudited)
Revenues	$	32,850,589		$	29,917,021
CASH FLOWS FROM OPERATING ACTIVITIES:
Cost of sales		28,963,445			26,973,094
Net income	$	188,937		$	406,535
Gross profit from operations		3,887,144			2,943,927
Adjustments to reconcile net income to net cash provided by operating activities:
General and administrative expenses		1,673,867			1,515,061
Depreciation and amortization		143,298			122,441
Operating income		2,213,277			1,428,866
Provision for deferred income taxes		25,452			(13,921	)
Other income (expense)
Amortization of deferred financing costs		4,198			21,245
Interest and other income		2,669			10,745
Stock-based compensation		5,046			11,154
Interest expense		(222,833	)		(710,714	)
Changes in operating assets and liabilities
Total other expense		(220,164	)		(699,969	)
(Increase) decrease in:
Income from operations, before income taxes		1,993,113			728,897
Accounts receivable		(1,173,856	)		182,155
Provision for income taxes		(639,705	)		-
Unbilled contract receivables		299,234			70,271
Net income	$	1,353,408		$	728,897
Supply inventory		(1,724	)		1,500
Net income per share - basic and diluted	$	0.44		$	0.23
Prepaid expenses		(71,809	)		(64,192	)
Weighted average shares outstanding -
Other receivables		(16,685	)		(2,307	)
basic and diluted		3,102,647			3,102,647
Assets held for sale		(7,635	)		-
Restricted assets		25			-
Increase (decrease) in:
Accounts payable		(522,562	)		(142,465	)
Accrued interest, related party		-			(11,960	)
Due to related party		30,910			(8,002	)
Other long-term liabilities		(2,989	)		5,539
Other accrued liabilities		(225,637	)		13,424
Net cash (used in) provided by operating activities		(1,325,797	)		591,417
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(10,508	)		(155,747	)
Net cash used in investing activities		(10,508	)		(155,747	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of convertible debentures		-			(575,000	)
Advances on line of credit		5,509,590			-
Payments on line of credit		(4,950,626	)		-
Payments on term note payable		(35,715	)		-
Payments on notes payable		(13,042	)		(3,410	)
Principal payments on capital lease obligations		(2,865	)		(2,585	)
Net cash provided by (used in) financing activities		507,342			(580,995	)
Net decrease in cash and cash equivalents		(828,963	)		(145,325	)
Cash and cash equivalents, beginning of the period		831,516			1,669,868
Cash and cash equivalents, end of the period	$	2,553		$	1,524,543

The accompanying notes are integral part of these consolidated financial statements

GLENROSE INSTRUMENTS INC.

~~CONSOLIDATED~~Notes ~~STATEMENTS~~to OFInterim ~~CASH~~Financial ~~FLOWS~~Statements (Unaudited) for the period ending March 25, 2012

For the Nine Months Ended September 25, 2011 and September 26, 2010

	September 25,			September 26,
	2011			2010
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,353,408		$	728,897
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		362,359			315,189
Provision for deferred income taxes		(42,531	)		-
Amortization of deferred financing costs		17,153			315,388
Stock-based compensation		29,240			59,694
Bad debt expense		(1,800	)		-
Loss on disposal of fixed assets		-			(3,132	)
Changes in operating assets and liabilities
(Increase) decrease in:
Accounts receivable		(957,972	)		(989,050	)
Restricted cash		(1,000	)		(35,000	)
Due from related party		-			(42,858	)
Other receivables		20,750			993
Unbilled contract receivables		133,312			307,600
Prepaid expenses		(112,559	)		(66,843	)
Inventory		(10,514	)		4,888
Assets held for sale		(2,000	)		-
Income tax receivable		161,356			-
Increase (decrease) in:
Accounts payable		528,029			(328,419	)
Accrued interest, related party		(43,496	)		(235,096	)
Due to related party		14,284			(16,545	)
Deferred revenue		426,835			77,477
Other long-term liabilities		(107,527	)		70,193
Other accrued liabilities		18,320			12,032
Net cash provided by operating activities		1,785,647			175,408
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(315,436	)		(125,778	)
Proceeds from the sale of short-term investments		-			10,048,611
Net cash (used in) provided by investing activities		(315,436	)		9,922,833
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of convertible debentures		(4,875,000	)		(10,000,000	)
Proceeds from term note payable		1,000,000			-
Advance on line of credit		6,389,617			-
Proceeds from notes payable		77,502
Payments on line of credit		(5,693,047	)		-
Payments on notes payable		(15,538	)		-
Principal payments on capital lease obligations		(7,960	)		(11,067	)
Net cash used in financing activities		(3,124,426	)		(10,011,067	)
Net increase in cash and cash equivalents		(1,654,215	)		87,174
Cash and cash equivalents, beginning of the period		1,669,868			1,012,250
Cash and cash equivalents, end of the period	$	15,653		$	1,099,424

The accompanying notes are integral part of these consolidated financial statements

GLENROSE INSTRUMENTS INC.

Notes to Interim Financial Statements (Unaudited) for the period ending September 25, 2011

Note 1 – Organization and Significant Accounting Policies:

Organization

GlenRose Instruments Inc., a Delaware corporation, or the ~~company~~Company, ~~we, our, or us,~~ was incorporated in September 2005 by the GlenRose Partnership L.P., or the GlenRose Partnership, a private-equity partnership with its headquarters in Waltham, Massachusetts. The ~~company~~Company was organized to serve as a holding company through which the GlenRose Partnership’s partners would hold the shares of Eberline Services, Inc. or Eberline Services or ESI (all of which had previously been held by the GlenRose Partnership). In order to effect such change in structure, the GlenRose Partnership entered into a stock exchange agreement with the ~~company~~Company in September 2005 pursuant to which all outstanding shares of Eberline Services owned by the GlenRose Partnership were exchanged for 3,000,000 shares of common stock of GlenRose Instruments. As a result of this exchange, the GlenRose Partnership owned all of the outstanding stock of the ~~company~~Company, and the ~~company~~Company owned all of the outstanding stock of its subsidiary, ESI.

GlenRose Instruments, through Eberline Services and its subsidiaries, provides radiological services and operates a radiochemistry laboratory network, as well as provides radiological characterization and analysis, hazardous, radioactive and mixed waste management, and facility, environmental, safety and health management. The subsidiaries of Eberline Services are Eberline Services Hanford, Inc. or ESHI, Eberline Analytical Corporation, Benchmark Environmental Corp., or Benchmark, and Lionville Laboratory Inc., or Lionville.

InAs of March ~~2011~~25, 2012, the ~~company~~Company ~~retained~~has three segments – the ~~services~~Environmental ofServices ~~Raymond~~segment, ~~James~~the &Analytical ~~Associates,~~Laboratories ~~Inc~~segment and the Instruments segment. toThe ~~act~~Environmental Services asoperating ~~its~~segment ~~sole,~~provides ~~external~~radiological ~~investment~~and ~~banking~~waste ~~advisor~~management inservices ~~helping~~primarily to the ~~company~~federal ~~evaluate~~government ~~strategic~~in ~~alternatives,~~connection with ~~including~~the clean-up of the ~~possible~~former ~~sale~~and ofpresent ~~all~~atomic orweapons aand ~~material~~energy ~~portion~~sites ofoperated by the ~~assets~~federal orgovernment. ~~securities~~The ofAnalytical Laboratories ~~the~~operating ~~company~~segment ~~to,~~provides oranalytical ~~merger~~radiological ofservices and involves the ~~company~~operation ~~with,~~of ~~various~~a ~~third~~radiochemistry ~~parties~~laboratory network and a radioactive check source manufacturing facility. OnThe ~~October~~Instruments ~~14,~~segment ~~2011,~~was ~~the~~formed ~~company~~in ~~terminated~~2006 with the ~~engagement~~intent ~~with~~to ~~Raymond~~acquire instrument ~~James~~companies, &which ~~Associates~~have well-established and proven technology. ~~Starting~~This insegment also includes the ~~fourth~~research ~~quarter~~and ~~the~~development of ~~company~~a ~~will~~new ~~increase~~line ~~its~~of ~~efforts~~instruments inthat the ~~development~~Company ~~and~~expects to begin manufacturing later this year. As of athe ~~line~~date of ~~radiation~~this ~~monitoring~~report ~~instruments~~the Company has not made any commitments, nor has it acquired any instrument businesses.

As of September 25, 2011, the company has three segments – the Environmental Services segment, the Analytical Laboratories segment and the Instruments segment. The Environmental Services operating segment provides radiological and waste management services primarily to the federal government in connection with the clean-up of the former and present atomic weapons and energy sites operated by the federal government. The Analytical Laboratories operating segment provides analytical radiological services and involves the operation of a radiochemistry laboratory network and a radioactive check source manufacturing facility. The Instruments segment was formed in 2006 with the intent to acquire instrument companies, which have well-established and proven technology. This segment also includes the research and development of a new line of instruments that the company expects to begin manufacturing later this year. As of the date of this report the company has not made any commitments, nor has it acquired any instrument businesses.

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the ~~company~~Company and its subsidiaries. All significant intercompany transactions have been eliminated. In the opinion of management, the unaudited financial statements contain all adjustments (all of which were considered normal and recurring) necessary to present fairly the ~~company~~Company's financial position at ~~September~~March 25, ~~2011~~2012, and the results of operations and cash flows for the three ~~and nine~~ months ended ~~September~~March 25, ~~2011~~2012 and ~~September~~March 2627, ~~2010~~2011. The unaudited financial statements included herein should be read in conjunction with the audited financial statements and notes thereto included in the ~~company~~Company’s Form 10-K for the year ended December 2625, ~~2010~~ 2011.

Reclassifications

Certain prior period balances have been reclassified to conform with current period presentation.

Fiscal Year

The ~~company~~Company’s fiscal year-end is the last Sunday of each calendar year. Each quarter is comprised of two four-week and one five-week period to ensure consistency in prior-year comparative analysis. The ~~company~~Company changed the fiscal year-end to the current format in 2006. The previous fiscal year-end was December 2625, ~~2010~~2011.

GLENROSE INSTRUMENTS INC.

Use of Estimates in Preparation of Statements

The preparation of financial statements in conformity with generally accepted accounting principles, or GAAP, requires management to make estimates and underlying assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

GLENROSE INSTRUMENTS INC.

Concentration of Credit Risk

Financial instruments, which potentially subject the ~~company~~Company to concentrations of credit risk, consist of highly liquid cash equivalents and trade receivables. The ~~company~~Company’s cash equivalents are placed with certain financial institutions and issuers. At ~~September~~March 25, ~~2011~~2012, the ~~company~~Company ~~did~~had ~~not have any cash and cash equivalents~~$201,381 ~~short-term~~of ~~investments and~~ restricted cash that exceeded the Federal Deposit Insurance Corporation limit of $250,000.

The ~~company~~Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. The ~~company~~Company provides for an allowance for doubtful accounts on receivable balances based upon the expected collectability of such receivables. Federal and state governments collectively account for more than 90% of all revenues for the three month periods ended ~~September~~March 25, ~~2011~~2012 and ~~September~~March 2627, ~~2010~~2011. Two of the ~~company~~Company’s customers account for more than 10% of revenue and trade accounts receivable. One customer represented approximately 73 71% and 7081% of revenue and 3927% and 7458% of trade accounts receivable for the three months ended ~~September~~March 25, ~~2011~~2012 and ~~September~~March 2627, ~~2010, respectively and approximately 77% and 70% of revenue and 39% and 74% of trade accounts receivable for the nine month periods ended September 25,~~ 2011 ~~and September 26~~, ~~2010,~~ respectively. The other customer represented approximately 98% and 40% of revenue and 2032% and 54% of trade accounts receivable for the three months ended ~~September~~March 25, ~~2011~~2012 and ~~September~~March 2627, ~~2010, respectively and approximately 3% and 10% of revenue and 20% and 5% of trade accounts receivable for the nine month period ended September 25,~~ 2011 ~~and September 26~~, ~~2010,~~ respectively.

Revenue Recognition

Revenue for laboratory services is recognized upon completion of the services and the shipment of the related data packages to the ~~company~~Company’s customers. Revenue for government service contracts is recognized as the services are performed. Revenues are recognized based upon actual costs incurred plus specified fees or actual time and materials as required. The ~~company~~Company performs certain contracts that are audited by either the Defense Contract Audit Agency, or the DCAA, or Los Alamos National Laboratories Internal Audit. Such contracts may be subject to adjustment dependent upon such factors as provisional billing rates or other contract terminology. The ~~company~~Company records as revenue what it considers to be allowable costs under government service contracts. Calculations of allowable overhead and profit may also change after audits by the DCAA for cost reimbursable type contracts. Contracts are normally settled during the audit year the contract terminates performance and is submitted for closure. The ~~company~~Company is currently audited and settled through December 2005 for all contracts subject to review by DCAA and audited through December 2002 for contracts subject to review by the Los Alamos Internal Audit. Contracts performed after 2005 for DCAA purposes, or after 2002 for the Los Alamos Internal Audit, and are either active or have not been submitted for closure may be subject to adjustment during subsequent audits during the year they are closed and audited.

The ~~company~~Company is engaged principally in three types of service contracts with the federal government and its contractors:

Cost Reimbursable Contracts. Revenue from “cost-plus-fixed-fee” contracts is recognized on the basis of reimbursable contract costs incurred during the period plus an earned fee. Costs incurred for services which have been authorized and performed, but may not have been billed, are allocated with operational fringe, overhead, general and administrative expenses and fees, and are presented as Unbilled Contract Receivables on the accompanying consolidated balance sheets contained herein.

Time-and-Materials Contracts. Revenue from “time and material” contracts is recognized on the basis of man-hours utilized plus other reimbursable contract costs incurred during the period.

Fixed-Price Contracts. Revenue from “fixed-price” contracts is recognized on the percentage-of-completion method. For fixed-price contracts, the amount of revenues recognized is that portion of the total contract amount that the actual cost expended bears to the anticipated final total cost based on current estimates of cost to complete the project (cost-to-cost method). However, when it becomes known that the anticipated final total cost will exceed the contract amount, the excess of cost over the contract amount is immediately recognized as a loss on the contract. Recognition of profit commences on an individual project only when cost to complete the project can reasonably be estimated and after there has been some meaningful performance achieved on the project (greater than 10% complete). Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions (when applicable) and final contract settlements, may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Claims and change orders are not recorded and recognized until such time as they have been accepted.

9Direct costs of contracts include direct labor, subcontractors and consultants, materials and travel. The treatment of direct costs is outlined in the Federal Acquisition Regulations. The balance of costs, including facilities costs, insurance, administrative costs, overhead labor and fringe costs, are classified as either indirect costs or general and administrative expense and are allocated to jobs as a percentage of each division’s total cost base consistent with the Company’s approved cost structure. Direct materials, direct travel, other direct costs, and minor subcontract costs are passed through to the customer at cost, with or without fee depending on contract type and/or direct cost element and are burdened with general and administrative expenses. Major subcontracts are passed through at cost, without fee and are burdened with a material handling fee. The Company is exempt from federal cost accounting standards coverage based on its size standard, but otherwise complies with applicable regulations.

GLENROSE INSTRUMENTS INC.

Direct costs of contracts include direct labor, subcontractors and consultants, materials and travel. The treatment of direct costs is outlined in the Federal Acquisition Regulations. The balance of costs, including facilities costs, insurance, administrative costs, overhead labor and fringe costs, are classified as either indirect costs or general and administrative expense and are allocated to jobs as a percentage of each division’s total cost base consistent with our approved cost structure. Direct materials, direct travel, other direct costs, and minor subcontract costs are passed through to the customer at cost, with or without fee depending on contract type and/or direct cost element and are burdened with general and administrative expenses. Major subcontracts are passed through at cost, without fee and are burdened with a material handling fee. The company is exempt from federal cost accounting standards coverage based on its size standard, but otherwise complies with applicable regulations.

Goodwill

Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. Goodwill is subject to an impairment test annually. Goodwill is also reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The ~~company~~Company performs impairment testing at the reporting unit level. An impairment loss is recognized when the fair value of the discounted cash flows of the reporting unit including its tangible assets is less than the carrying value. Model assumptions are based on the ~~company~~Company’s projections and best estimates using appropriate and customary market participant assumptions. Changes in forecasted cash flows or the discount rate would affect the estimated fair value of the reporting unity and could result in a goodwill impairment charge in a future period.

At ~~September~~March 25, ~~2011~~2012, the ~~company~~Company’s entire $2,740,913 goodwill balance was related to the Environmental Services segment which includes Eberline Services, ESHI and Benchmark ~~Environmental Corp~~. The Analytical Laboratories goodwill was written off in prior years. No goodwill impairment was identified during the ~~years~~year ended December 2625, ~~2010 and December 27, 2009~~2011. No events occurred or circumstances changed that required the ~~company~~Company to further test goodwill for impairment during the ~~nine~~three month period ended ~~September~~March 25, ~~2011~~2012.

Income Taxes

The ~~company~~Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The amount of such provisions is based on various factors, such as the amount of taxable income in the current and prior periods, and the likelihood of continued taxable income. Additionally, management is responsible for estimating the probability that certain tax assets or liabilities can and will be utilized in future periods. The ~~company~~Company believes it records and/or discloses such potential tax liabilities as appropriate and has reasonably estimated its income tax liabilities and recoverable tax assets. The ~~During~~Company ~~the three and nine month period ended September 25, 2011, the company~~ recorded a tax provision of $~~185~~113,~~388~~539 and $~~639~~255,~~705,~~817 ~~respectively. There was no tax provision recorded~~ during the three ~~and nine~~ month ~~period~~periods ended ~~September~~March 2625, ~~2010,~~2012 asand aMarch ~~result~~27, 2011, ~~of the availability of net loss carryforwards~~respectively.

Earnings per Common Share

The ~~company~~Company computes basic ~~earnings~~net income per share by dividing net income for the period by the weighted average number of shares of common stock outstanding during the period. The ~~company~~Company computes ~~its~~ diluted ~~earnings~~net income per common share using the treasury stock method. For purposes of calculating diluted ~~earnings~~net income per share, the ~~company~~Company considers ~~its~~ shares issuable in connection with ~~convertible~~stock ~~debentures~~options and ~~stock~~unvested ~~options~~restricted stock to be dilutive common stock equivalents when the exercise price is less than the average market price of the ~~company’s~~ common stock for the period. There were no dilutive common shares during the three ~~and nine~~ month ~~periods~~period ended ~~September~~March 25, ~~2011 and September 26, 2010~~2012. See “Note 5 – Earnings per Share.”

Stock Based Compensation

Stock based compensation cost is measured at the grant date based on the estimated fair value of the award and is recognized as an expense in the statement of ~~operations~~income over the requisite service period. The fair value of stock options granted is estimated using the Black-Scholes option pricing valuation model. The ~~company~~Company recognizes compensation on a straight-line basis for each separately vesting portion of the option award. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility is calculated based on the average volatility of 20 companies in the same industry as the ~~company~~Company. The average expected life is estimated using the simplified method for “plain vanilla” options. The simplified method determines the expected life in years based on the vesting period and contractual terms as set forth when the award is made. The ~~company~~Company uses the simplified method for awards of stock-based compensation since it does not have the necessary historical exercise and forfeiture data to determine an expected life for stock options. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term which approximates the expected life assumed at the date of grant. When options are exercised the ~~company~~Company normally issues new shares.

GLENROSE INSTRUMENTS INC.

Fair Value of Financial Instruments

At September 25, 2011 the Company’s financial instruments include cash and cash equivalents, short-term investments, accounts receivable, accounts payable, capital lease obligations, line of credit payable, term note payable and notes payable. The recorded values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value based on their short-term nature. The fair value of capital lease obligations and notes payable is estimated at its carrying value based on current rates. The carrying value of the Company’s line of credit and term loan approximates its fair value due to its variable interest rate. Short-term investments are recorded at fair value. See “Note 6 – Fair Value Measurements.”

Recovery of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the remaining estimated useful life of such assets might warrant revision or that the balances may not be recoverable. If undiscounted cash flows are insufficient to recover the net book value of long-term assets further analysis is performed in order to determine the amount of the impairment. In such circumstances an impairment loss would be recorded equal to the amount by which the net book value of the assets exceeds fair value. Fair value is usually determined based on the present value of estimated expected future cash flows using a discount rate commensurate with the risks involved. No events occurred or circumstances changed at ~~September~~March 25, ~~2011~~2012, that would indicate that the remaining net book value of the ~~company~~Company’s long-lived assets ~~are~~is not recoverable.

GLENROSE INSTRUMENTS INC.

Assets Held for Sale

The ~~company~~Company owns property in Albuquerque, New Mexico. In 2009, the ~~company~~Company entered into an agreement, subject to closing conditions, with a buyer to sell the property for approximately $1.9 million. At ~~September~~March 25, ~~2011~~2012, $507,700 in land, $2,265,764 in buildings and improvements less $1,916,926 in accumulated depreciation is classified as “Assets held for sale” on the ~~company~~Company’s balance sheet. The assets held for sale balance of $1,~~047~~185,~~367~~941 also includes selling costs incurred to date of $37,477 and an accrual of $~~153~~291,~~352~~926 towards decommissioning of the site. In 2010, the ~~company~~Company submitted a detailed site assessment of the facility to the New Mexico Environmental Department, or NMED, as part of the closure process which was approved in June 2011. The ~~company~~Company characterized and classified all radiological waste associated with the facility and all waste was crated and packaged for disposal in 2010. In January 2011, the ~~company~~Company applied for a shipment permit to transfer the remaining waste to an appropriate facility~~, which was shipped during the quarter~~. The ~~company~~Company is currently communicating with NMED on the report in preparation for the demolition of the building. The ~~company~~Company believes that it has adequately accrued for decommissioning of the site; however, it is possible that additional funds up to $100,000 may be needed. The ~~company~~Company expects to complete the sale in ~~2011~~2012.

New Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board, or FASB, issued an amendment to the accounting guidance for goodwill in order to simplify how companies test goodwill for impairment. The amendment permits an entity to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. The amendment is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this accounting pronouncement did not have a material impact on the Company’s financial statements and the Company does not expect it to have a material impact on the Company’s annual goodwill impairment assessment in the fourth quarter of 2012.

In June 2011, the FASB issued an amendment to the accounting guidance for presentation of comprehensive income. Under the amended guidance, an entity may present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In either case, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. For public companies, the amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and shall be applied retrospectively. The implementation of this accounting pronouncement did not have a material impact on the Company’s financial statements.

In May 2011, the FASB issued an amendment to the accounting guidance for fair value measurement and disclosure. Among other things, the guidance expands the disclosure requirements around fair value measurements categorized in Level 3 of the fair value hierarchy and requires disclosure of the level in the fair value hierarchy of items that are not measured at fair value in the statement of financial position but whose fair value must be disclosed. It also clarifies and expands upon existing requirements for measurement of the fair value of financial assets and liabilities as well as instruments classified in shareholders’ equity. The guidance is effective for interim and annual periods beginning after December 15, 2011. The adoption of this accounting pronouncement did not have a material impact on the Company’s financial statements.

Note 2 – Debt:

On ~~July~~August 2531, ~~2008~~2011, the ~~company~~Company entered into ~~subscription~~a ~~agreements~~line ~~with four investors for the sale~~ of ~~convertible~~credit ~~debentures~~agreement inwith ~~the~~Wells ~~aggregate~~Fargo ~~principal~~Bank ~~amount~~for ofa $145,~~875~~000,000. ~~The~~credit ~~primary investor was Blum Strategic Partners IV, L~~facility.~~P.,~~ ~~who~~The ~~subscribed~~facility ~~for~~included a $121,000,000 ofterm real-estate ~~the~~note, ~~debentures.~~or ~~Additional~~Term ~~investors included John N. Hatsopoulos~~Note, ~~the~~with ~~company’s~~a ~~Chairman~~7 ofyear ~~the~~straight ~~board,~~line ~~Arvin H. Smith~~amortization, ~~the~~at ~~company’s~~Libor ~~President~~plus ~~and Chief Executive Officer~~3.5%, and ~~Philip~~up ~~Frost~~to ~~M.D.~~$4,000,000 in a ~~holder~~revolving line of ~~more~~credit, ~~than~~or ~~10%~~Line of ~~the~~Credit, ~~outstanding~~for ~~equity~~5 ~~securities~~years, ofat ~~the~~Libor ~~company~~plus ~~immediately~~3.5%, ~~prior~~based toon ~~the~~a ~~sale~~borrowing base of the ~~debentures,~~Company’s ~~who~~trade ~~subscribed~~receivables subject ~~for~~to ~~$2,875,000~~certain ofadjustments. ~~debentures~~The byTerm ~~exchanging~~Note ~~existing~~and ~~promissory~~Line ~~notes~~ of ~~the~~Credit ~~company~~are ~~for~~payable ~~the~~by ~~debentures.~~Eberline ~~The~~Services, ~~debentures carried interest at 4%~~ESHI, Eberline ~~payable~~Analytical ~~quarterly~~Corporation ~~in cash,~~ and ~~matured on July 25~~Lionville, ~~2013.~~subsidiaries ~~The debentures were convertible at the option~~ of the ~~holder at any time into shares of common stock at a conversion price equal to $7~~Company.~~00 per share.~~

On ~~July~~August 2331, ~~2010~~2011, the ~~holders~~Company ~~of the outstanding principal amount of the company’s convertible debentures~~borrowed $1,000,000 ~~agreed~~against ~~to amend~~ the ~~debenture~~Term ~~agreements~~Note ~~to eliminate subsections (i)~~ and ~~(ii)~~at ofMarch ~~Section~~25, ~~6(a)~~2012, of the ~~debentures.~~outstanding ~~With~~balance ~~this~~on ~~amendment~~ the ~~holders~~Term ~~gave~~Note ~~the~~was $928,571. ~~company~~The ~~the~~Term ~~option~~Note ~~to redeem any portion of the debentures by written notice to the holders; provided that a redemption notice~~ is ~~delivered~~secured by the ~~company~~Company’s ~~and~~real beestate ~~received~~assets bywhich ~~the~~are ~~holder~~included ofin ~~the~~fixed ~~debentures~~assets which at ~~least ten (10) trading days but not more than thirty (30) trading days prior to the date of the redemption. In connection with the amendment described above~~March 25, ~~the company redeemed $10~~2012,~~000,000~~ onhad ~~August~~a 9,net ~~2010,~~book ~~$575,000~~value onof ~~January 13, 2011, and~~ $~~500~~1,~~000 on March 31~~394, ~~2011~~416.

On July 1, 2011, the company redeemed the outstanding amount of the convertible debentures with Blum Strategic Partners IV, L.P., in the principal amount of $3,065,546, plus accrued interest. In connection with that transaction, the company entered into a $500,000 Demand Note Agreement with John N. Hatsopoulos, the company’s Chairman of the Board, and into a $1,500,000 Demand Note Agreement with Arvin H. Smith, the company’s Chief Executive Officer. Both demand note agreements accrued interest at the rate of 4.50% per year.10

GLENROSE INSTRUMENTS INC.

OnAt ~~August~~March 3125, ~~2011~~2012, the ~~company~~outstanding ~~entered~~balance on ~~into~~the aLine ~~line~~ of ~~credit~~Credit ~~agreement~~was ~~with Wells Fargo Bank for a~~ $5558,~~000,000~~964 ~~credit~~and ~~facility.~~the ~~The~~undrawn ~~facility~~portion ~~included~~was a $13,~~000~~441,~~000 term real-estate note, or Term Note, with a 7 year straight line amortization, at Libor plus 3~~036.~~5%,~~ ~~and~~The ~~up to $4,000,000 in a revolving line of credit, or~~ Line of Credit, ~~for~~is 5secured ~~years,~~by ~~at Libor plus 3.5%, based on a borrowing base of~~ the ~~company~~Company’s trade receivables. The loan is also subject to ~~certain~~various ~~adjustments~~financial statement covenants.

~~The~~In ~~Term~~December ~~Note and Line of Credit are payable by Eberline Services Inc.~~2010, ~~Eberline Services Hanford Inc., Eberline Analytical Laboratory Inc., and Lionville Laboratory Inc., subsidiaries of~~ the Company~~. The~~ ~~Term~~entered ~~Note is secured by the company’s real estate assets which are included in fixed assets which at September 25, 2011 had~~ into a ~~net~~finance ~~book~~agreement ~~value~~with ofFord ~~$1,510,165.~~Motor ~~The Line of~~ Credit ~~is secured by the company’s trade receivables~~. ~~The~~At ~~undrawn~~March ~~portion of the Line of Credit at September~~ 25, ~~2011 was $3~~2012,~~342,540.~~ ~~The loan is also subject to various financial statement covenants including EBITDA, book value, and fixed charge coverage ratio. On August 31, 2011,~~ the ~~company~~outstanding ~~borrowed~~balance ~~$1,000,000~~with ~~against~~Ford ~~the~~Motor ~~Term~~Credit ~~Note~~was ~~and~~ $163,~~000,000~~693 ~~against the Line of Credit~~ and ~~used~~it is ~~the~~classified ~~proceeds~~on ~~to redeem~~ the ~~remaining~~Company’s balance ofsheet ~~the~~as ~~convertible~~Notes ~~debentures~~payable ~~and~~current ~~pay down the Demand Note Agreements with John N. Hatsopoulos~~ and ~~Arvin~~Notes H.payable ~~Smith~~long-term.

AsAnnual ofprincipal ~~September~~payments ~~25, 2011, there were no convertible debentures outstanding and the Demand Note Agreements were paid in full. The balance outstanding~~ on ~~the~~long-term ~~Term~~debt at ~~Note~~March ~~was $1~~25,~~000,000~~ ~~and~~2012 ~~the~~were ~~balance~~as ~~outstanding on the revolving line of credit was $696,570.~~follows:

Periods Ending March 25,	Amount

2012	$	155,266
2013		180,682
2014		152,135
2015		146,986
2016		142,858
2017 and thereafter		250,000
Total	$	1,027,927

Note 3 – Commitments and Contingencies:

The ~~company~~Company and its subsidiaries lease facilities and equipment under various operating leases. Future minimum rental commitments for long-term, non-cancelable operating leases at ~~September~~March 25, ~~2011~~2012, are as follows:

Summary of Lease Obligations:

	2012		2013		2014		2015		Totals
Facilities	$	~~224~~77,~~541~~376	$	139,655	$	49,128	$	12,282	$	~~425~~278,~~606~~441
Equipment		103,~~145~~804		1015,~~145~~217		10,~~145~~144		4,227		3433,~~662~~392
	$	~~234~~81,~~686~~180	$	~~149~~154,~~800~~872	$	59,~~273~~272	$	16,509	$	~~460~~311,~~268~~833

For the three ~~and nine~~ month ~~periods~~period ending ~~September~~ March 25, ~~2011~~2012, rent expense was $7991,~~893~~225 and $~~249~~88,~~967~~155, respectively~~, and for the three and nine month periods ending September 26, 2010, rent expense was $53,281 and $292,827, respectively~~.

The ~~company~~Company performs services under numerous subcontract agreements on cost-reimbursable contracts with the federal government. During the period from 1998 to 2003, the ~~company~~ Company was party to a subcontract agreement with Johnson Control Northern New Mexico, or JCNNM, to provide services to Los Alamos on a cost-reimbursable basis. On May 14, 2007, the ~~company~~Company received notification from IAP-Northern New Mexico, or IAPNNM, the successor corporation to JCNNM, that the results of a Los Alamos audit for the period ending in 2003 determined that certain costs previously claimed and billed by the ~~company~~Company were subsequently deemed unallowable or otherwise not reimbursable. IAPNNM requested that the Company ~~company~~ reimburse the amount of $321,836 that was paid to the ~~company~~Company during the subject time period. In January 2009, the Company ~~company~~ protested the Los Alamos audit results claiming they were inaccurate and requested to resubmit a claim for the subject contract. The Los Alamos audit team agreed to review the audit results and adjust the claim as needed. Management believes that the ~~company~~Company will prevail in this decision and has therefore not provided a specific reserve for this claim. In the event it is determined that the ~~company~~Company has to reimburse such amount in full, the resultant cost could materially affect its results of operations.

The ~~company~~Company is not currently a party to any material litigation and is not aware of any pending or threatened litigation against it that could have a material adverse effect on its business, operating results or financial condition.

Note 4 – Stockholders’ Equity:

Stock-based compensation expense was $295,~~240~~ 046 and $5911,~~694~~154 as of ~~September~~March 25, ~~2011~~2012 and ~~September~~March 2627, ~~2010~~2011, respectively. At ~~September~~March 25, ~~2011~~2012, there were 10,000 shares of unvested restricted stock outstanding and 6733,~~200~~400 of unvested stock options outstanding.

1211

GLENROSE INSTRUMENTS INC.

Note 5 – Earnings per Share:

Basic and diluted earnings per share for the three ~~and nine~~ month periods ended ~~September~~March 25, ~~2011~~2012 and ~~September~~March 2627, ~~2010~~2011 was as follows:

	Three Months				~~Nine Months~~
	September 25,		September 26,		September 25,		September 26,
	March 25,		March 27,
	2011		2010		2011		2010
	2012		2011
Earnings per share
Earnings available to stockholders	$	~~229~~188,~~714~~937	$	~~170~~406,~~420~~535	$	~~1,353,408~~	$	~~728,897~~
Weighted average shares outstanding - basic		3,102,647		3,102,647		~~3,102,647~~		~~3,102,647~~
Net earnings per share - basic	$	0.0706	$	0.0513	$	~~0.44~~	$	~~0.23~~
Assumed exercise of dilutive stock options and warrants		-		-		-		-
Weighted average shares outstanding - diluted		3,102,647		3,102,647		~~3,102,647~~		~~3,102,647~~
Net earnings per share - diluted	$	0.0706	$	0.0513	$	~~0.44~~	$	~~0.23~~
Anti-dilutive restricted stock outstanding		10,000		1510,000		~~10,000~~		~~15,000~~
Anti-dilutive shares underlying stock options outstanding		~~168~~167,000		~~173~~172,000		~~168,000~~		~~173,000~~
Anti-dilutive convertible debentures		-		~~696~~614,~~429~~286		-		~~696,429~~

Note 6 – Fair Value Measurements:

The fair value topic of FASB’s Accounting Standards Codification defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

Level 1 — ~~Unadjusted~~Quoted ~~quoted~~ prices in active markets for identical assets or liabilities. ~~The~~that ~~company~~the ~~currently~~entity ~~does~~has ~~not~~the ~~have~~ability ~~any~~to ~~Level~~access 1at ~~financial~~the ~~assets~~measurement ~~or liabilities~~date.

Level 2 — Observable inputs other than ~~quoted prices included in~~ Level 1. ~~Level~~prices, 2such ~~inputs~~as ~~include~~ quoted prices for ~~identical~~similar assets or liabilities; ~~in non-active markets,~~ quoted prices ~~for~~in ~~similar~~markets ~~assets~~that orare ~~liabilities~~not in active; or ~~markets~~other ~~and~~ inputs ~~other~~that ~~than~~are ~~quoted~~observable ~~prices~~or ~~that~~can ~~are~~be corroborated by observable market data for substantially the full term of the ~~asset~~ assets or ~~liability~~liabilities.

Level 3 — Unobservable inputs that ~~reflecting~~are ~~management’s~~supported ~~own~~by ~~assumptions~~little ~~about~~or ~~the~~no ~~input~~market ~~used~~activity inand ~~pricing~~that ~~the~~are ~~asset~~significant orto ~~liability.~~the ~~The~~fair ~~company~~value ~~currently~~of ~~does~~the ~~not have any Level 3 financial~~ assets or liabilities.

At ~~September~~March 25, ~~2011~~2012, the ~~company~~Company had ~~$12,305~~no infinancial instruments ~~short-term investments~~ that are ~~comprised~~required ofto ~~certificates~~be ofrecorded ~~deposits~~at ~~which are categorized as Level 2. The company determines the~~ fair value ofon ~~certificates~~a ofrecurring ~~deposits~~basis. ~~using~~The ~~information~~Company’s ~~provided~~financial byinstruments ~~the~~include cash ~~issuing~~and ~~bank~~cash ~~which~~equivalents, ~~includes~~short-term ~~discounted~~investments, ~~expected~~accounts ~~cash~~receivable, ~~flow~~accounts ~~estimates~~payable, ~~using~~capital ~~current~~lease ~~market~~obligations, ~~rates~~line ~~offered~~of ~~for~~credit payable, ~~deposits~~term ~~with~~note ~~similar~~payable ~~remaining~~and ~~maturities~~notes payable.

The recorded values of cash and cash equivalents, short-term investments, accounts receivable and accounts payable approximate fair value based on their short-term nature. The fair value of capital lease obligations and notes payable is estimated at its carrying value based on current market rates for instruments with similar maturities adjusted for applicable credit risk, which are Level 2 inputs. The carrying value of the Company’s line of credit and term loan approximates its fair value due to their variable interest rates, which are Level 2 inputs.

Note 7 - Segment Data:

The ~~company~~Company’s executive officers include Arvin Smith, Dr. Richard Chapman and Dr. Shelton Clark. Collectively, they are the Chief Operating Decision Maker, or CODM, as defined by Disclosures about Segments of an Enterprise and Related Information. The office of the CODM is responsible for assessing the performance of each segment, as well as the allocation of ~~company~~Company resources.

GLENROSE INSTRUMENTS INC.

The Company currently operates three business segments: Environmental Services, Analytical Laboratories and Instruments. The Environmental Services operating segment provides radiological and waste management services primarily to the federal government in connection with the clean-up of the former and present atomic weapons and energy sites operated by the federal government. The Analytical Laboratories operating segment provides analytical radiological services and involves the operation of a radiochemistry laboratory network and a radioactive check source manufacturing facility. The Instruments segment was formed in 2006 with the intent to acquire instrument companies, which have well-established and proven technology. This segment also includes the research and development of a new line of instruments that the Company expects to begin manufacturing later this year. As of the date of this report the Company has not made any commitments, nor has it acquired any instrument businesses. Acquisition of instrument businesses is no longer a focus in our strategy. Intercompany costs and sales are eliminated in the consolidated financial statements.

Segment data for the periods ending March 25, 2012 and March 27, 2011 are included below:

	Three Months Ended
	March 25,			March 27,
	2012			2011
	(unaudited)			(unaudited)
Revenues
Environmental Services	$	8,491,148		$	7,958,195
Analytical Laboratories		1,667,386			2,898,127
Instruments		-			-
		10,158,534			10,856,322
Cost of Sales
Environmental Services		7,702,385			7,102,332
Analytical Laboratories		1,634,847			2,449,253
Instruments		-			-
		9,337,232			9,551,585
Gross Profit
Environmental Services		788,763			855,863
Analytical Laboratories		32,539			448,874
Instruments		-			-
		821,302			1,304,737
General and administrative expenses
Environmental Services		327,133			381,848
Analytical Laboratories		83,539			120,414
Instruments		65,108			71,566
		475,780			573,828
Operating profit (Loss)
Environmental Services		461,630			474,015
Analytical Laboratories		(51,000	)		328,460
Instruments		(65,108	)		(71,566	)
		345,522			730,909
Supplemental Disclosure
Depreciation Expense
Environmental Services		38,264			23,505
Analytical Laboratories		105,034			98,936
Instruments		-			-
		143,298			122,441
Capital Expenditures
Environmental Services		8,925			52,462
Analytical Laboratories		1,583			103,285
Instruments		-			-
	$	10,508		$	155,747

	March 25,		December 25,
	2012		2011
	(unaudited)
Total Assets
Environmental Services	$	9,236,189	$	9,414,532
Analytical Laboratories		2,869,507		3,132,814
Instruments		596,804		146,876
	$	12,702,500	$	12,694,222

GLENROSE INSTRUMENTS INC.

~~The~~Note ~~company~~8 ~~currently~~– ~~operates~~Subsequent ~~three business segments~~Events: Environmental Services, Analytical Laboratories and Instruments. The Environmental Services operating segment provides radiological and waste management services primarily to the federal government in connection with the clean-up of the former and present atomic weapons and energy sites operated by the federal government. The Analytical Laboratories operating segment provides analytical radiological services and involves the operation of a radiochemistry laboratory network and a radioactive check source manufacturing facility. The Instruments segment was formed in 2006 with the intent to acquire instrument companies, which have well-established and proven technology. This segment also includes the research and development of a new line of instruments that the company expects to begin manufacturing later this year. As of the date of this report the company has not made any commitments, nor has it acquired any instrument businesses. Acquisition of instrument businesses is no longer a focus in our strategy. Intercompany costs and sales are eliminated in the consolidated financial statements.

~~Segment~~The ~~data~~Company ~~for~~has evaluated subsequent events through the ~~periods~~filing ~~ending~~date ~~September~~of ~~25,~~this ~~2011~~Form 10-Q and ~~September~~determined ~~26,~~that ~~2010~~no ~~are~~additional ~~included~~subsequent ~~below:~~events occurred that would require recognition in the consolidated financial statements or disclosure in the notes thereto.

	Three Months Ended						Nine Months Ended
	September 25,			September 26,			September 25,			September 26,
	2011			2010			2011			2010
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenues
Environmental Services	$	8,402,364		$	7,430,660		$	24,794,721		$	22,407,413
Analytical Laboratories		2,613,984			2,468,034			8,055,868			7,509,608
Instruments		-			-			-			-
		11,016,348			9,898,694			32,850,589			29,917,021
Cost of Sales
Environmental Services		7,630,428			6,680,747			22,249,310			20,581,248
Analytical Laboratories		2,295,684			2,213,391			6,714,135			6,391,846
Instruments		-			-			-			-
		9,926,112			8,894,138			28,963,445			26,973,094
Gross Profit (Loss)
Environmental Services		771,936			749,913			2,545,411			1,826,165
Analytical Laboratories		318,300			254,643			1,341,733			1,117,762
Instruments		-			-			-			-
		1,090,236			1,004,556			3,887,144			2,943,927
General and administrative expenses
Environmental Services		377,127			330,906			1,116,144			986,637
Analytical Laboratories		105,450			101,793			311,777			286,193
Instruments		96,577			54,692			245,946			242,231
		579,154			487,391			1,673,867			1,515,061
Operating profit (Loss)
Environmental Services		394,809			419,007			1,429,267			839,528
Analytical Laboratories		212,850			152,850			1,029,956			831,569
Instruments		(96,577	)		(54,692	)		(245,946	)		(242,231	)
		511,082			517,165			2,213,277			1,428,866
Supplemental Disclosure
Depreciation Expense
Environmental Services		36,183			16,273			84,413			44,060
Analytical Laboratories		80,377			95,247			277,946			271,129
Instruments		-			-			-			-
		116,560			111,520			362,359			315,189
Capital Expenditures
Environmental Services		44,157			-			164,604			60,257
Analytical Laboratories		35,166			21,963			150,832			65,521
Instruments		-			-			-			-
		79,323			21,963			315,436			125,778

	September 25,		December 26,
	2011		2010
	(unaudited)
Total Assets
Environmental Services		8,451,101		8,905,345
Analytical Laboratories		3,546,154		4,250,758
Instruments		340,368		119,452
	$	12,337,623	$	13,275,555

GLENROSE INSTRUMENTS INC.

Note 8 – Subsequent Events:

The company has evaluated subsequent events through the filing date of this Form 10-Q and determined that no additional subsequent events occurred that would require recognition in the consolidated financial statements or disclosure in the notes thereto.

GLENROSE INSTRUMENTS INC.

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

Forward-looking statements are made throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates” and similar expressions are intended to identify forward-looking statements. While the ~~company~~Company may elect to update forward-looking statements in the future, it specifically disclaims any obligation to do so, even if the ~~company~~Company's estimates change and readers should not rely on those forward-looking statements as representing the ~~company~~Company's views as of any date subsequent to the date of the filing of this Quarterly Report on Form 10-Q. There are a number of important factors that could cause the actual results of the ~~company~~Company to differ materially from those indicated by such forward-looking statements, including those detailed under the heading “Risk Factors” in this Quarterly Report on Form 10-Q.

~~Third~~First Quarter ~~2011~~2012 Compared to ~~Third~~First Quarter ~~2010~~2011

Revenues

Revenues in the first ~~third~~ quarter of ~~2011~~2012 were $1110,~~016~~158,~~348~~534 compared to $910,~~898~~856,~~694~~322 for the same period in ~~2010~~2011, ana ~~increase~~decrease of $1697,~~117,654~~788 or 116.34%. The decrease ~~increase~~ in revenues was primarily due to ana ~~increase~~decrease in ~~both~~ our ~~Environmental~~Analytical ~~Services~~Laboratory revenues, ~~and~~due ~~Analytical~~to ~~Laboratory~~lower ~~revenues.~~sample ~~The~~loads, offset by an increase in our Environmental Services revenues ~~was~~ due to ~~increased~~additional work at Hanford and ~~increased work at~~ Argonne National Laboratory. ~~The increase in revenue in our Analytical Laboratory revenues was due to increased sample volume primarily at our Lionville location.~~

Revenues from our Environmental Services in the ~~third~~first quarter of ~~2011~~2012 were $8,~~402~~491,~~364~~148 compared to $7,~~430~~958,~~660~~195 for the same period in ~~2010~~2011, an increase of $~~971~~532,~~704~~953 or 136.17%. Our Environmental Services contributed 7683.36% to total revenues in the ~~third~~first quarter of ~~2011~~2012 compared to 7573.13% for the same period in ~~2010~~2011. The increase in our Environmental Services revenue was due to increased work at Hanford and ~~new work~~ at Argonne National Laboratory. Our ~~Work~~Los ~~continued~~Alamos onwork ~~our~~continued ~~CHPRC~~in ~~contract~~environmental atwell ~~Hanford~~drilling and wesampling ~~added~~but ~~additional~~was ~~contract~~at ~~work in radiological mapping for CHPRC. At Los Alamos our work changed from~~ a ~~long-term~~lower ~~support~~level ~~contract~~than tothe ~~contracts~~previous ~~which~~period ~~include an on-site screening facility, remediation~~ in support ~~and~~of ~~environmental~~a ~~well~~restoration ~~drilling and sampling~~project. WeThe ~~also performed~~ work at the Argonne National Laboratory this quarter was in support of a ~~decontamination~~ characterization and ~~demolition~~survey project of a discontinued facility.

Revenues from our Analytical Laboratories in the ~~third~~first quarter of ~~2011~~2012 were $21,~~613~~667,~~984~~386 compared to $2,~~468~~898,~~034~~127 for the same period in ~~2010~~2011, ana decrease ~~increase~~ of $~~145~~1,~~950~~230,741 or 542.95%. Our Analytical Laboratories contributed 2316.74% to total revenues in the ~~third~~first quarter of ~~2011~~2012 compared to 2426.97% for the same period in ~~2010~~2011. The ~~increase~~decrease in revenues was the result of ~~increased~~decreased sample loads ~~primarily~~from at the ~~Lionville~~Hanford site ~~laboratory.~~at Inboth ~~addition~~our toRichmond ~~the~~and ~~number~~Lionville ~~of samples there was also an increased emphasis on performing quick-turn analyses as customers required faster results~~laboratories. ~~Faster analyses carry a premium price which helped increase revenues.~~

Cost of Sales

The cost of sales in the ~~third~~first quarter of ~~2011~~2012 was $9,~~926~~337,~~112~~232 compared to $89,~~894~~551,~~138~~585 for the same period in ~~2010~~2011, ana ~~increase~~decrease of $1214,~~031,974~~353 or 112.62%. While ~~The~~the ~~increase in~~ cost of sales ~~was primarily due to~~ increased ~~variable costs associated with the sales increases~~ at ~~both the Analytical Services and Laboratory segments. We also increased the number of employees, subcontracts and direct materials in those segments. The cost of sales from~~ our Environmental Services ~~in the third quarter of 2011 was $7~~,~~630,428~~ ~~compared to $6,680,747 for~~ the ~~same~~overall ~~period~~decrease in ~~2010, an increase of $949,681 or 14.2% primarily due to salaries of new employees and an increase in subcontracts. The~~ cost of sales ~~from our Analytical Laboratories in the third quarter of 2011~~ was ~~$2,295,684 compared to $2,213,391 for the same period in 2010, an increase of $82,293 or 3.7%,~~ primarily due to ~~increased~~decreased revenue ~~direct~~at ~~labor~~our Richmond and ~~direct~~Lionville ~~material~~laboratories ~~costs~~and ~~during~~their ~~the~~associated ~~period~~costs.

The cost of sales from our Environmental Services in the first quarter of 2012 was $7,702,385 compared to $7,102,332 for the same period in 2011, an increase of $600,053 or 8.4% primarily due to salaries of new employees and an increase in subcontracts. The increased subcontracts were at Los Alamos in support of the drilling project.

The cost of sales from our Analytical Laboratories in the first quarter of 2012 was $1,634,847 compared to $2,449,253 for the same period in 2011, a decrease of $814,406 or 33.3%, primarily due to cost reductions in staffing during the period. Early in the quarter we made significant cost reduction efforts by reducing staffing across the laboratory segment by 10 full time employees and reducing time for other employees. In addition, the lower sample volume resulted in lower variable material costs associated with the completion of samples.

Gross Profit

Gross profit in the ~~third~~first quarter of ~~2011~~2012 was $1821,~~090,236~~302 compared to $1,~~004~~304,~~556~~737 for the same period in ~~2010~~2011, ana ~~increase~~decrease of $85483,~~680~~435 or 837.51%. The gross profit margin decreased to 98.91% in the ~~third~~first quarter of ~~2011~~2012 from 1012.10% for the same period in ~~2010~~2011. The gross profit from our Environmental Services in the ~~third~~first quarter of ~~2011~~2012 was $~~771~~788,~~936~~763 compared to $~~749~~855,~~913~~863 for the same period in ~~2010~~2011, ana ~~increase~~ decrease of $2267,~~023~~100 or 27.98% ~~due to the use of on-site screening facility which carried a higher profit margin than labor dominated contracts~~. The gross profit from our Analytical Laboratories in the ~~third~~first quarter of 2012 ~~2011~~ was $~~318~~32,~~300~~539 compared to $~~254~~448,~~643~~874 for the same period in ~~2010~~2011, ana ~~increase~~decrease of $63416,~~657~~335. orOur ~~25.0%~~laboratories ~~due~~have certain fixed costs that need to ~~net~~be ~~revenue~~absorbed ~~increase~~and ~~across~~the lower sample volume at the ~~segment~~laboratories made it hard to cover those costs.

1615

GLENROSE INSTRUMENTS INC.

Operating Expenses

General and administrative expenses in the ~~third~~first quarter of ~~2011~~2012 were $~~579~~475,~~154~~780 compared to $~~487~~573,~~391~~828 for the same period in ~~2010~~2011, ana ~~increase~~decrease of $9198,~~763~~048 or 18 17.81%. The general and administrative expenses ~~increased~~decreased due to ~~meet~~ the ~~demands~~reduction of ~~increased~~two ~~work~~employees ~~and~~in tothe ~~accommodate~~beginning ~~increased~~of ~~business~~the ~~development efforts~~year.

Operating Income

The operating income in the ~~third~~first quarter of ~~2011~~2012 was $~~511~~345,~~082~~522 compared to $~~517~~730,~~165~~909 for the same period in ~~2010~~2011. The operating income consisted of $~~394~~461,~~809~~630 at the Environmental Services and was decreased by a loss of $~~212~~51,~~850~~000 at the Analytical Laboratories, ~~offset~~and by corporate general and administrative expenses of $9665,~~577~~108. The decrease in operating income compared to the previous period was due to anthe decrease ~~increase~~ in operating income at our Analytical Laboratories and general and administrative costs related to increased business development efforts.

Other Income (Expense)

Other expenses in the ~~third~~first quarter of ~~2011~~ 2012 were $9543,~~980~~046 compared to $~~346~~68,~~745~~557 for the same period in ~~2010~~2011, a decrease of $~~250~~25,~~765~~511. Interest and other miscellaneous income in the ~~third~~first quarter of ~~2011~~2012 was $~~1,122~~670 compared to $~~5,357~~876 for the same period in ~~2010~~2011. The decrease was primarily due to a lower return on invested cash balances. Interest expense in the ~~third~~first quarter of ~~2011~~2012 was $9743,~~102~~716 compared to $~~352~~69,~~102~~433 for the same period in 2011 ~~2010~~ due a smaller principal amount ofoutstanding on our ~~related~~loan ~~party~~balances ~~convertible~~and ~~debentures~~line ~~outstanding~~of ~~offset~~credit byand ~~amortization~~due ofto the ~~associated~~change ~~financing~~in ~~expenses~~interest ~~associated with those convertible debentures~~rates.

Provision for Income Taxes

The company recorded a tax provision of $~~185~~113,~~338~~539 in the ~~third~~first quarter of ~~2011~~2012 ascompared ~~the~~to ~~company~~$255,817 ~~had~~for ~~fully utilized~~ the ~~majority~~same ofperiod ~~its~~in ~~available~~2011 ~~non~~at ~~separate~~a ~~return~~37.5% ~~limitation~~and ~~year (“SRLY”), net loss carryforwards in prior periods~~38.6% ~~The~~effective ~~company recorded no~~ tax ~~provision in the third quarter of 2010~~rate, respectively.

Net Income/Loss

Net income in the ~~third~~first quarter of ~~2011~~ 2012 was $~~229~~188,~~714~~937 compared to $~~170~~406,~~420~~535 for the same period in ~~2010~~2011.

First Nine Months 2011 Compared to First Nine Months 2010

Revenues

Revenues in the first nine months of 2011 were $32,850,589 compared to $29,917,021 for the same period in 2010, an increase of $2,933,568 or 9.8%. The increase in revenues was due to an increase in both our Environmental Services revenues and Analytical Laboratory revenues. The increase in our Environmental Services revenues was due to increased work at Hanford and increased work at Argonne National Laboratory. The increase in revenue in our Analytical Laboratory revenues was due to increased sample volume at our Oak Ridge and Lionville laboratories because of increased demand on quick-turn analyses which carry a higher price and margin per sample.

Revenues from our Environmental Services in the first nine months of 2011 were $24,794,721 compared to $22,407,413 for the same period in 2010, an increase of $2,387,308 or 10.7%. Our Environmental Services contributed 75.5% to total revenues in the first nine months of 2011 compared to 74.9% for the same period in 2010. The increase in our Environmental Services revenue was due to increased work at Hanford and new work at Argonne National Laboratory. At Hanford our efforts are centered on all three contracts, however, the largest increase was with the River Corridor contract where we reached our highest level of effort as that contract is at its peak this year. Work continued on our CHPRC contract at Hanford and we added additional contract work in radiological mapping for CHPRC. At Los Alamos our work changed from a long-term support contract to a contract which includes an on-site screening facility and remediation support. We also performed work at the Argonne National Laboratory this period in support of a decontamination and demolition project.

Revenues from our Analytical Laboratories in the first nine months of 2011 were $8,055,868 compared to $7,509,608 for the same period in 2010, an increase of $546,260 or 7.3%. Our Analytical Labs contributed 24.5% to total revenues in the first nine months of 2011 compared to 25.1% for the same period in 2010. The increase in revenues was the result of increased sample loads. In addition to the number of samples there was also an increased customer demand in performing quick-turn analyses which carry a premium price. The largest increase was at the Lionville laboratory.

GLENROSE INSTRUMENTS INC.

Cost of Sales

The cost of sales in the first nine months of 2011 was $28,963,445 compared to $26,973,094 for the same period in 2010, an increase of $1,990,351 or 7.4%. The increase in cost of sales was primarily due to increased variable costs associated with the sales increases experienced in both the Analytical Services and Laboratory segments. We increased the number of employees, subcontracts and direct materials. The cost of sales from our Environmental Services in the first nine months of 2011 was $22,249,310 compared to $20,581,248 for the same period in 2010, an increase of $1,668,062 or 8.1% primarily due to salaries of new employees and an increase in subcontracts. The cost of sales from our Analytical Laboratories in the first nine months of 2011 was $6,714,135 compared to $6,391,846 for the same period in 2010, an increase of $322,289 or 5.0%, primarily due to increased direct labor and direct materials associated with the increased sales during the period. Our direct labor was affected by increased overtime required to meet response times despite our efforts to utilize our capacity more efficiently and establish better cost controls.

Gross Profit

Gross profit in the first nine months of 2011 was $3,887,144 compared to $2,943,927 for the same period in 2010, an increase of $943,217 or 32.0%. The gross profit margin increased to 11.8% in the first nine months of 2011 from 9.8% for the same period in 2010. The increase in the gross profit was primarily due to increased revenue at our Analytical Laboratories and Environmental Services segments. The gross profit from our Environmental Services in the first nine months of 2011 was $2,545,411 compared to $1,826,165 for the same period in 2010, an increase of $719,246 or 39.4%. The gross profit from our Analytical Laboratories in the first nine months of 2011 was $1,341,733 compared to $1,117,762 for the same period in 2010, an increase of $223,971 or 20.0%.

Operating Expenses

General and administrative expenses in the first nine months of 2011 were $1,673,867 compared to $1,515,061 for the same period in 2010, an increase of $158,806 or 10.5%. The general and administrative expenses increased as we increased business development efforts.

Operating Income

The operating income in the first nine months of 2011 was $2,213,277 compared to $1,428,866 for the same period in 2010. The operating income consisted of $1,429,267 at the Environmental Services and $1,029,956 at the Analytical Laboratories, offset by corporate general and administrative expenses of $245,946. The increase in operating income was due to the increased revenue in both operating segments. During the period we added direct personnel and were able to better utilize existing personnel in more direct roles on large contracts. The increase in our Analytical Laboratory revenues allowed for better utilization of existing infrastructure, staff and capacity, as the cost structure of the laboratories is generally fixed in the short-term. Increases in revenue at the laboratories require a lower incremental increase in direct costs, resulting in higher margins and subsequently a greater operating income.

Other Income (Expense)

Other expenses in the first nine months of 2011 were $220,164 compared to $699,969 for the same period in 2010, a decrease of $479,805. Interest and other miscellaneous income in the first nine months of 2011 was $2,669 compared to $10,745 for the same period in 2010. The decrease was primarily due to a lower return on our overall invested cash balances. Interest expense in the first nine months of 2011 was $222,833 compared to $710,714 for the same period in 2010 due the repayment of principal amount of our related party convertible debentures outstanding, offset by amortization of the associated financing expenses associated with those convertible debentures.

Provision for Income Taxes

The company recorded a tax provision of $639,705 in the first nine months of 2011 as the company had fully utilized the majority of its available non SRLY net loss carryforwards in prior periods. The company recorded no tax provision in the first nine months of 2010.

Net Income/Loss

Net income in the first nine months of 2011 was $1,353,408 compared to $728,897 for the same period in 2010.

GLENROSE INSTRUMENTS INC.

Liquidity and Capital Resources

Consolidated working capital at ~~September~~March 25, 2012, ~~2011~~ was $2,~~583~~679,~~625~~355 compared to $52,~~281~~372,~~340~~997 at December 2625, ~~2010~~2011. Included in working capital were cash, cash equivalents and short-term investments of $2714,~~958~~858 as of ~~September~~March 25, ~~2011~~2012, compared to $1843,~~682,173~~821 at December 2625, ~~2010~~2011. The ~~decrease~~increase in working capital was primarily due to cash ~~generated~~used ~~from operations offset~~ by ~~the~~our ~~redemption~~accounts ofreceivable ~~$4,875,000~~and ofcash ~~convertible~~provided ~~debentures~~by ~~including~~the ~~accrued~~Line ~~interest~~of Credit.

Cash ~~provided~~used by operating activities was $1,~~785~~325,~~647~~ 797 in the first ~~nine~~three months of ~~2011~~2012, compared to cash provided by operating activities of $~~175~~591,~~408~~417 for the same period in ~~2010~~2011. Our net receivables balance increased to $5,~~336~~106,~~701~~774 in the first ~~nine~~three months of ~~2011~~2012, compared to $43,~~376~~932,~~929~~918 at December 2625, ~~2010~~2011, resulting in a decrease in cash of $~~959~~1,~~772~~173,856 primarily due to timing of invoicing related to a new contract at Los Alamos. Our unbilled contract receivables decreased to $~~237~~810,~~575~~959 in the first ~~nine~~three months of ~~2011~~2012 compared to $~~370~~1,~~887~~110,193 at December 2625, ~~2010~~2011, resulting in an increase in cash of $~~133~~299,~~312~~234 due to timing of billings on our major cost-type contracts and the new fixed price contracts at Los Alamos. Our prepaid expenses increased to $~~210~~235,~~009~~368 in the first ~~nine~~three months of ~~2011~~2012, compared to $97163,~~450~~559 at December 2625, ~~2010~~2011, resulting in a decrease in cash of $~~112~~71,~~559~~809 primarily due to the payment and timing of normal operating expenses. Our other receivables ~~decreased~~increased to $3723,~~714~~246 in the first ~~nine~~three months of ~~2011~~2012, compared to $586,~~464~~561 at December 2625, ~~2010, resulting in an increase in cash of $20,750. Our income tax receivable decreased to $0 in the first nine months of~~ 2011, ~~compared to $161,356 at December 26, 2010,~~ resulting in ana ~~increase~~decrease in cash of $~~161~~16,~~356~~685.

Accounts payable ~~increased~~decreased to $1,~~181~~705,~~159~~ 759 in the first ~~nine~~three months of ~~2011~~2012, compared to $~~653~~2,~~130~~228,321 at December 2625, ~~2010~~2011 resulting in ana ~~increase~~decrease in cash of $~~528~~522,~~029~~562 due to ~~increased~~normal ~~subcontract~~accounts ~~invoices~~payable onevents asuch ~~new~~as ~~contract~~liquidation of liabilities. Other accrued liabilities, including accrued expenses, accrued employee-related costs and income taxes payable, ~~increased~~decreased to $2,~~372~~401,~~358~~637 in the first ~~nine~~three months of ~~2011~~2012, compared to $2,~~354~~627,~~038~~ 274 at December 2625, ~~2010~~2011, resulting in ana ~~increase~~decrease in cash of $18225,~~320~~637. Our ~~accrued~~due ~~interest~~to ~~balance~~related ~~associated~~party ~~with~~increased ~~the previously issued subordinated notes decreased~~ to $552,~~254~~988 in the first ~~nine~~ three months of ~~2011~~2012, compared to $4822,~~750~~078 at December 2625, ~~2010~~2011, resulting in aan ~~decrease~~increase in cash of $4330,~~496 due to interest payments~~910.

The primary investing activities of the company’s operations included the purchase of equipment. The company continues to manage its capital expenditures very selectively and in the first ~~nine~~three months of ~~2011~~2012, used $~~315~~10,~~436~~508 for purchases of equipment. The company’s financing activities ~~used~~ provided $3507,~~124,426~~342 of cash in the first ~~nine~~three months of ~~2011~~2012, primarily due to ~~redemption of convertible debentures and payments on capital lease obligations offset by proceeds from a Term Note payable and~~ an advance onby athe Line of Credit.

The company owns property in Albuquerque, New Mexico. In 2009, the company entered into an agreement, subject to closing conditions, with a buyer to sell the property for approximately $1.9 million. At September 25, 2011, $507,700 in land, $2,265,764 in buildings and improvements less $1,916,926 in accumulated depreciation is classified as “Assets held for sale” on the company’s balance sheet. The assets held for sale balance of $1,047,367 also includes selling costs incurred to date of $37,477 and an accrual of $153,352 towards decommissioning of the site. In 2010, the company submitted a detailed site assessment of the facility to the New Mexico Environmental Department, or NMED, as part of the closure process which was approved in June 2011. The company characterized and classified all radiological waste associated with the facility and all waste was crated and packaged for disposal in 2010. In January 2011, the company applied for a shipment permit to transfer the remaining waste to an appropriate facility, which was shipped during the quarter. The company is currently communicating with NMED on the report in preparation for the demolition of the building. The company believes that it has adequately accrued for decommissioning of the site; however, it is possible that additional funds up to $100,000 may be needed. The company expects to complete the sale in 2011.16

The company believes that its existing resources, including cash and cash equivalents and future cash flow from operations, are sufficient to meet the working capital requirements of its existing business for the foreseeable future, including the next 12 months. We believe that our cash and cash equivalents, available borrowings under the Line of Credit and our ability to control certain costs, including those related to general and administrative expenses will enable us to meet our anticipated cash expenditures for the next 12 months. The company’s long-term liabilities primarily include a Term Note secured by the company’s real estate assets with a 7 year straight line amortization at Libor plus 3.50%.

On August 31, 2011, the company entered into a credit agreement with Wells Fargo Bank for a $5,000,000 credit facility. The facility included a $1,000,000 term real-estate note with a 7 year straight line amortization, at Libor plus 3.5%, and up to $4,000,000 in a revolving line of credit for 5 years, at Libor plus 3.5%. On August 31, 2011, the company borrowed $1,000,000 against the Term Note and $1,000,000 against the line of credit and used the proceeds to redeem the remaining balance of the convertible debentures and pay down the Demand Note Agreements with John N. Hatsopoulos and Arvin H. Smith.

GLENROSE INSTRUMENTS INC.

AsThe ofcompany ~~September~~owns 25property in Albuquerque, New ~~2011~~Mexico. In 2009, ~~there~~the ~~were~~company noentered ~~convertible~~into ~~debentures~~an ~~outstanding~~agreement, ~~and~~subject to closing conditions, with a buyer to sell the ~~Demand~~property ~~Note~~for approximately ~~Agreements~~$1.9 ~~were~~million. ~~paid~~At March 25, 2012, $507,700 in ~~full.~~land, ~~The~~$2,265,764 ~~balance~~in ~~outstanding~~buildings and improvements less $1,916,926 in accumulated depreciation is classified as “Assets held for sale” on the ~~Term~~company’s ~~Note~~balance ~~was~~sheet. The assets held for sale balance of $1,~~000~~185,~~000~~941 also includes selling costs incurred to date of $37,477 and an accrual of $291,926 towards decommissioning of the ~~balance~~site. ~~outstanding~~In on2010, the ~~revolving~~company ~~line~~submitted a detailed site assessment of ~~credit~~the facility to the New Mexico Environmental Department, or NMED, as part of the closure process which was approved in June 2011. The company characterized and classified all radiological waste associated with the facility and all waste was crated and packaged for disposal in 2010. In January 2011, the company applied for a shipment permit to transfer the remaining waste to an appropriate facility. The company is currently communicating with NMED on the report in preparation for the demolition of the building. The company believes that it has adequately accrued for decommissioning of the site; however, it is possible that additional funds up to $~~696~~100,~~570~~000 may be needed. The company expects to complete the sale in 2012.

~~The~~On ~~company~~August ~~believes that its existing resources~~31, ~~including cash and cash equivalents~~2011, ~~available~~the ~~borrowings~~company ~~under~~entered into ~~the~~a ~~Line~~credit ofagreement ~~Credit,~~with ~~future~~Wells ~~cash~~Fargo ~~flow~~Bank ~~from~~for ~~operations~~a $5,000,000 ~~and~~credit ~~potential~~facility. ~~future~~The ~~property~~facility ~~sales~~included ina ~~Albuquerque~~$1,000,000 ~~New~~term ~~Mexico~~real-estate note ~~and~~with ~~Richmond~~a ~~California~~7 ~~will~~year bestraight ~~sufficient~~line toamortization, ~~meet~~at ~~those~~Libor ~~obligations~~plus 3.5%, ~~Our~~and ~~ability~~up to ~~continue to access capital~~$4, ~~however~~000,000 ~~could~~in bea ~~impacted~~revolving byline ~~various~~of ~~factors~~credit ~~including~~for ~~general~~5 ~~market~~years, at ~~conditions~~Libor ~~and~~plus ~~the~~3.5%. ~~continuing~~As ~~slowdown~~of inMarch ~~the economy~~25, ~~interest rates~~2012, the ~~perception~~balance ofoutstanding ~~our potential future earnings and cash distributions, any unwillingness~~ on the ~~part~~Term ofNote ~~lenders~~was to$928,571 ~~make loans to us~~ and ~~any~~the ~~deterioration~~balance inoutstanding on the ~~financial~~revolving ~~position~~line of ~~lenders~~credit ~~that~~was ~~might make them unable to meet their obligations to us~~$558,964.

InThe ~~March 2011 the~~ company ~~retained~~believes ~~the~~that ~~services~~its ofexisting ~~Raymond James & Associates~~resources, including ~~Inc.~~cash toand ~~act~~cash ~~as its sole~~equivalents, ~~external~~future ~~investment~~cash ~~banking~~flow ~~advisor~~from ~~in helping the company evaluate strategic alternatives~~operations, ~~including~~available ~~the~~borrowings ~~possible~~under ~~sale of all or a material portion of~~ the ~~assets~~Line ~~or securities~~ of ~~the~~Credit ~~company~~and ~~to,~~potential future orproperty ~~merger~~sales ofin ~~the company with~~Albuquerque, ~~various~~New ~~third~~Mexico ~~parties.~~and OnRichmond ~~October~~California ~~14,~~will ~~2011,~~enable ~~the~~it ~~company~~to ~~terminated~~meet the ~~engagement~~working capital requirements of ~~Raymond~~its ~~James~~existing &business ~~Associates.~~for ~~Starting in~~ the ~~fourth~~foreseeable ~~quarter~~future, ~~the~~including ~~company will increase its efforts in~~ the ~~development~~next ~~and~~12 ~~manufacturing of a line of radiation monitoring instruments~~months.

20The company’s ability to continue to access capital, however, could be impacted by various factors including general market conditions and the continuing slowdown in the economy, interest rates, the perception of the Company’s potential future earnings and cash distributions, any unwillingness on the part of lenders to make loans to the Company and any deterioration in the financial position of lenders that might make them unable to meet their obligations to the Company.

Significant Accounting Policies and Critical Estimates

The Company’s significant accounting policies are discussed in the Notes to the Consolidated Financial Statements above and are those that are incorporated in the Company’s Annual Report on Form 10-K filed with the SEC. The accounting policies and estimates that can have a significant impact upon the operating results, financial position and footnote disclosures of the Company are described in the above notes and the Financial Review in the Company’s Annual Report on Form 10-K filed with the SEC.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, including any outstanding derivative financial statements, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

GLENROSE INSTRUMENTS INC.

Item 3: Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4T: Controls and Procedures

Management’s evaluation of disclosure controls and procedures:

Our chief executive officer and our chief financial officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”) Rules 13a−15(e) and 15d−15(e); collectively, “Disclosure Controls”) as of the end of the period covered by this report (the “Evaluation Date”) has concluded that as of the Evaluation Date, our Disclosure Controls were effective to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission, and that material information relating to our ~~company~~Company and any consolidated subsidiaries is made known to management, including the chief executive officer and chief financial officer, particularly during the period when our periodic reports are being prepared to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting:

In connection with the evaluation referred to in the foregoing paragraph, we have identified no change in our internal control over financial reporting that occurred during the period ending ~~September~~March 25, ~~2011~~2012, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

2118

GLENROSE INSTRUMENTS INC.

PART II – OTHER INFORMATION

Item 1A: Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed under “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended December 2625, ~~2010~~2011. The risks discussed in our Annual Report on Form 10-K could materially affect our business, financial condition and future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or operating results.

Item 6: Exhibits

Exhibit Number		Description of Exhibit
31.1*	–	Rule 13a-14(a) Certification of Chief Executive Officer
31.2*	–	Rule 13a-14(a) Certification of Chief Financial Officer
32.1*	–	Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer
32.1**	–	Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer

* Filed herewith.

22** Furnished herewith

GLENROSE INSTRUMENTS INC.

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on ~~November~~March 9, ~~2011~~2012.

GLENROSE INSTRUMENTS INC. (Registrant) By: /s/ ARVIN H. SMITH Chief Executive Officer (Principal Executive Officer) By: /s/ ANTHONY S. LOUMIDIS Chief Financial Officer (Principal Financial Officer)

~~By: /s/ ANTHONY S. LOUMIDIS Chief Financial Officer (Principal Financial Officer)~~20

Filing Compare · GlenRose Instruments Inc.