______________________________________________________________________________



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



FORM 10-QSB



[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended September 30, 2005



[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934



For the transition period from  to



Commission file number 000-08161



DIONICS, INC.

(Exact name of Small Business Issuer as Specified in its Charter)



|                                                                        |                                                   
|----------------------------------------------------------------------- | --------------------------------------------------
|Delaware
(State or other jurisdiction
of incorporation or
organization) | 11-2166744
(I.R.S. Employer
Identification
Number)



65 Rushmore Street

Westbury, New York 11590

(Address of Principal Executive Offices)



(516) 997-7474

(Issuers Telephone Number, Including Area Code)



Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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   [     ] No   [  X   ]



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



Yes   [      ] No   [  X  ]



State the number of shares outstanding of each of the Issuers classes of common equity, as of the latest practicable date: The number of shares outstanding of the Common Stock ($.01 par value) of the Issuer as of the close of business on May 30, 2008 was 9,828,678.



______________________________________________________________________________



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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|DIONICS, INC.

TABLE OF CONTENTS

Page
PART I - FINANCIAL INFORMATION

Item 1.
Financial Statements.
3
Item 2.
Managements Discussion and Analysis or Plan of Operation.
16
Item 3.
Controls and Procedures.
17

PART II - OTHER INFORMATION

Item 1.
Legal Proceedings.
18
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
18
Item 3.
Default upon Senior Securities.
18
Item 4.
Submission of Matters to a Vote of Security Holders.
18
Item 5.
Other Information.
18
Item 6.
Exhibits.
18

SIGNATURES
19











2



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PART I - FINANCIAL INFORMATION



Item 1.   Financial Statements













DIONICS, INC



FINANCIAL STATEMENTS

(UNAUDITED)



For the Nine Months Ended September 30, 2005











|                                                                                                                                          |   |  |  |  |      |  |  |  |     
|----------------------------------------------------------------------------------------------------------------------------------------- | - |  |  |  | ---- |  |  |  | ----
|Table of Contents                                                                                                                        
|                                                                                                                                          |   |  |  |  |      |  |  |  | Page
|                                                                                                                                          |  
|Balance Sheet as of September 30, 2005 (unaudited) and December 31, 2004 (audited)                                                        | 4
|                                                                                                                                          |   |  |  |  |      |  |  |  |     
|Statement of Operations for the 9 Months Ended September 30, 2005 (unaudited) and
September 30, 2004 (unaudited)                          | 5
|                                                                                                                                          |   |  |  |  |      |  |  |  |     
|Statement of Operations for the 3 Months Ended September 30, 2005 (unaudited) and
September 30, 2004 (unaudited)                          | 6
|                                                                                                                                          |   |  |  |  |      |  |  |  |     
|Statement Of Shareholders Equity For The 9 Months Ended September 30, 2005 (unaudited)
and for the Year Ended December 31, 2004 (audited) | 7
|                                                                                                                                          |   |  |  |  |      |  |  |  |     
|Statement Of Cash Flows for the 9 Months Ended September 30, 2005 (unaudited) and
September 30, 2004 (unaudited)                          | 8
|                                                                                                                                          |   |  |  |  |      |  |  |  |     
|Notes to Financial Statements (unaudited)                                                                                                 |   |  |  |  | 9-15











3



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|                                                                            |                                                            |                           |         |           |                    |                    |                 |               
|--------------------------------------------------------------------------- | ---------------------------------------------------------- | ------------------------- | ------- | --------- | ------------------ | ------------------ | --------------- | --------------
|Dionics, Inc.                                                              
|Balance Sheets                                                             
|September 30, 2005 and December 31, 2004                                   
|                                                                            |                                                            |                           |         |           |                    |                    |                 |               
|                                                                            |                                                            |                           |         |           |                    | September 30, 2005 |                 | December 31,  
|                                                                            |                                                            |                           |         |           |                    | (Unaudited)        |                 | 2004          
|                                                                            |                                                            |                           |         |           |                    |                    |                 |               
|ASSETS                                                                     
|Current assets:                                                             |                                                            |                           |         |           |                    |                   
|                                                                            | Cash and cash equivalents                                  |                           |         |           | $           30,500 |                    | $        24,500
|                                                                            | Accounts receivable, net of allowance of                   |                           |         |           |                    |                   
|                                                                            | $7,300 in 2005 and 2004 (Notes 1 and 2)                    | 60,100                    |         | 72,100   
|                                                                            | Inventory (Note 1)                                         |                           |         |           | 309,400            |                    | 328,400        
|                                                                            | Prepaid expenses                                           |                           |         |           | 19,700             |                    | 10,100         
|                                                                            |                                                            | Total current assets      |         | 419,700   |                    | 435,100           
|                                                                            |                                                            |                           |         |           |                    |                    |                 |               
|Property, plant and other equipment                                         |                                                            |                           |        
|                                                                            | Net of accumulated depreciation of                         |                           |         |           |                   
|                                                                            | $1,419,300 in 2005 and $ 1,704,400 in 2004 (Notes 1 and 3) | 13,800                    |         | 60,600   
|                                                                            |                                                            |                           |         |           |                   
|Other assets                                                                |                                                            |                           | 21,100  |           | 32,600            
|                                                                            |                                                            |                           |         |           | $         454,600  |                    | $      528,300 
|                                                                            |                                                            |                           |         |           |                    |                    |                 |               
|LIABILITIES AND STOCKHOLDERS DEFICIENCY                                   
|Current liabilities                                                         |                                                            |                           |         |           |                    |                   
|                                                                            | Accounts payable                                           |                           |         |           | $           46,200 |                    | $        60,700
|                                                                            | Accrued expenses                                           |                           |         |           | 49,800             |                    | 40,600         
|                                                                            | Current portion of long-term debt (Note 5)                 |                           | -       |           | 63,600            
|                                                                            | Due to shareholder                                         |                           |         |           | 6,000              |                    | -              
|                                                                            |                                                            | Total current liabilities |         | 102,000   |                    | 164,900           
|                                                                            | Long-term debt (Note 5)                                    | -                         |         | 601,500  
|                                                                            | Deferred compensation (Note 4)                             |                           | 301,000 |           | 301,000           
|                                                                            |                                                            |                           |         |           | 403,000            |                    | 1,067,400      
|                                                                            |                                                            |                           |         |           |                    |                    |                 |               
|Stockholders' equity (deficit)                                              |                                                            |                           |        
|                                                                            | Common shares - $.01 par value,                            |                           |         |           |                   
|                                                                            | Authorized 51,000,000 shares,                              |                           |         |           |                    |                   
|                                                                            | Issued and outstanding 9,420,722 shares in 2005 and        |                           |         |           |                   
|                                                                            | 7,420,722 shares in 2004                                   |                           |         | 94,200    |                    | 74,200            
|                                                                            | Additional paid-in capital                                 |                           |         | 1,957,100 |                    | 1,869,200         
|                                                                            | Accumulated deficit                                        |                           |         |           | (1,779,100)        |                    | (2,261,900)    
|                                                                            |                                                            |                           |         |           |                    | 272,200            |                 | (318,500)     
|                                                                            |                                                            |                           |         |           |                    |                    |                 |               
|                                                                            | Less: Treasury Stock at cost (164,544 shares               |                           |         |          
|                                                                            | in 2005 and 2004)                                          |                           |         |           | (220,600)          |                    | (220,600)      
|                                                                            | Total stockholders' equity (deficit)                       | 51,600                    |         | (539,100)
|                                                                            |                                                            |                           |         |           |                    | $         454,600  |                 | $      528,300
|                                                                            |                                                            |                           |         |           |                    |                    |                 |               
|The accompanying footnotes are an integral part of the financial statements



4



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|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|----------------------------------------------------------------------------- | ------------------------------------- |  | ----------------- | ------- | --------------- | ------------------------------- | -------------- | ----
|Dionics, Inc.                                                                
|Statement of Operations
For the Nine Months Ended September 30, 2005 and 2004
|(Unaudited)                                                                  
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|                                                                              |                                       |  |                   |         |                 | Nine Months Ended September 30,
|                                                                              |                                       |  |                   |         |                 | 2005                            |                | 2004
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|Sales                                                                         |                                       |  |                   |         | $       538,300 |                                 | $      818,600
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|Cost of sales                                                                 |                                       |  |                   | 452,000 |                 | 624,000                        
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|Gross profit                                                                  |                                       |  |                   | 86,300  |                 | 194,600                        
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|Selling, general and administrative expenses                                  | 305,200                               |  | 287,700          
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|Net (loss) from operations                                                    |                                       |  | (218,900)         |         | (93,100)       
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|Other income and expense:                                                     |                                       |  |                   |         |                
|                                                                              | Dividends and other income            |  |                   | 500     |                 | 4,800                          
|                                                                              | Gain on sale of building and property |  |                   |         |                
|                                                                              | Less direct expenses of sale          |  | 730,000           |         | -              
|                                                                              | Interest expense                      |  |                   |         | (21,600)        |                                 | (14,800)      
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|Net income (loss) before income taxes                                         | 490,000                               |  | (103,100)        
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|Income taxes (Note 7)                                                         |                                       |  | (700)             |         | 900            
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|Net income (loss)                                                             | $       490,700                       |  | $    (104,000)   
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|Gain (loss) per common share                                                  | $            0.06                     |  | $          (0.02)
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|Weighted average number of common                                             |                                       |  |                  
|Shares outstanding                                                            |                                       |  | 8,256,178         |         | 5,157,288      
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|                                                                              |                                       |  |                   |         |                 |                                 |                |     
|The accompanying footnotes are an integral part of the financial statements  
|                                                                              |                                       |  |                   |         |                 |                                 |                |     









5



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|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|------------------------------------------------------------------------------------------ | ------------------------------------- | ----------------- | ---------------- | ------------------- | --------------- | -------------------------------- | ---------------- | ----
|Dionics, Inc.                                                                             
|Statement of Operations
For the Three Months ended September 30, 2005 and 2004
(Unaudited)
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|                                                                                           |                                       |                   |                  |                     |                 | Three Months Ended September 30,
|                                                                                           |                                       |                   |                  |                     |                 | 2005                             |                  | 2004
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|Sales                                                                                      |                                       |                   |                  |                     | $       152,900 |                                  | $        138,200
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|Cost of sales                                                                              |                                       |                   |                  | 179,000             |                 | 164,400                         
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|Gross profit                                                                               |                                       |                   |                  | (26,100)            |                 | (26,200)                        
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|Selling, general and administrative expenses                                               | 79,800                                |                   | 102,200         
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|Net gain (loss) from operations                                                            |                                       | (105,900)         |                  | (128,400)          
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|Other income and expense:                                                                  |                                       |                   |                  |                     |                
|                                                                                           | Dividends and other income            |                   |                  | 500                 |                 | 3,500                           
|                                                                                           | Gain on sale of building and property |                   |                  |                     |                
|                                                                                           | Less direct expenses of sale          |                   | 730,000          |                     | -              
|                                                                                           | Interest expense                      |                   |                  |                     | (4,400)         |                                  | (5,300)         
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|Net income (loss) before income taxes                                                      | 620,200                               |                   | (130,200)       
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|Income taxes  (Note 7)                                                                     |                                       |                   | (700)            |                     | -              
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|Net income (loss)                                                                          | $      620,900                        |                   | $      (130,200)
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|Gain (loss) per common share                                                               |                                       | $            0.08 |                  | $            (0.02)
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|Weighted average number of common                                                          |                                       |                   |                 
|Shares outstanding                                                                         |                                       |                   | 8,256,178        |                     | 7,256,178      
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|                                                                                           |                                       |                   |                  |                     |                 |                                  |                  |     
|The accompanying footnotes are an integral part of the financial statements               









6



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|                                                                               |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|------------------------------------------------------------------------------ |  | ------------ |  | ------------ |  | ----------- |  | -------------- |  | ------- |  | ------------ |  | ------------
|Dionics, Inc.                                                                 
|Statement of Stockholders Equity
For the Nine Months Ended September 30, 2005
|                                                                               |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|                                                                               |  | Common Stock |  | Additional   |  |             |  | Treasury Stock |  |        
|                                                                               |  | Number of    |  | Paid In      |  |             |  | Number of      |  |        
|                                                                               |  | Shares       |  | Value        |  | Capital     |  | Deficit        |  | Shares  |  | Cost         |  | Total       
|Balance as of December                                                         |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|31, 2003 (audited)                                                             |  | 3,848,222    |  | $     38,400 |  | $ 1,522,800 |  | $ (2,161,300)  |  | 164,544 |  | $  (220,600) |  | $  (820,700)
|                                                                               |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|Shares issued                                                                  |  | 3,400,000    |  | 34,100       |  | 135,900     |  |                |  |         |  |              |  | 170,000     
|                                                                               |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|Shares issued-exercise                                                         |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|of options                                                                     |  | 172,500      |  | 1,700        |  | 10,500      |  |                |  |         |  |              |  | 12,200      
|                                                                               |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|Shareholders'                                                                  |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|forgiveness of debt                                                            |  |              |  |              |  | 200,000     |  |                |  |         |  |              |  | 200,000     
|                                                                               |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|Issuance of options                                                            |  |              |  |              |  | 7,900       |  |                |  |         |  |              |  | 7,900       
|                                                                               |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|Net loss                                                                       |  |              |  |              |  |             |  | (108,500)      |  |         |  |              |  | (108,500)   
|                                                                               |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|Balance as of December                                                         |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|31, 2004 (audited)                                                             |  | 7,420,722    |  | 74,200       |  | 1,877,100   |  | (2,269,800)    |  | 164,544 |  | (220,600)    |  | (539,100)   
|                                                                               |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|Net gain                                                                       |  |              |  |              |  |             |  | 490,700        |  |         |  |              |  | 490,700     
|                                                                               |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|Shares issued - mortgage                                                       |  |              |  |              |  |             |  |                |  |         |  |              | 
|release                                                                        |  | 1,000,000    |  | 10,000       |  | 40,000      |  |                |  |         |  |              |  | 50,000      
|                                                                               |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|Shares issued - exercise                                                       |  |              |  |              |  |             |  |                |  |         |  |              | 
|of warrants                                                                    |  | 1,000,000    |  | 10,000       |  | 40,000      |  |                |  |         |  |              |  | 50,000      
|                                                                               |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|Balance as of                                                                  |  |              |  |              |  |             |  |                |  |         |  |              |  |             
|September 30, 2005 (unaudited)                                                 |  | 9,420,722    |  | $     94,200 |  | $ 1,957,100 |  | $ (1,779,100)  |  | 164,544 |  | $  (220,600) |  | $     51,600
|The accompanying footnotes are an integral part of the financial statements   



7



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|                                                                            |                                           |  |                                                  |  |                
|--------------------------------------------------------------------------- | ----------------------------------------- |  | ------------------------------------------------ |  | ---------------
|Dionics, Inc.                                                              
|Statement of Cash Flows                                                    
|For the Nine Months Ended September 30, 2005 and 2004                      
|(Unaudited)                                                                
|                                                                            |                                           |  |                                                  |  |                
|                                                                            |                                           |  | Increase (Decrease) in Cash and
Cash Equivalents
|                                                                            |                                           |  | Nine Months Ended September 30,                 
|                                                                            |                                           |  | 2005                                             |  | 2004           
|Cash flows from operating activities:                                       |                                           |  |                                                  | 
|                                                                            | Net income (loss)                         |  | $     490,700                                    |  | $    (104,000) 
|                                                                            |                                           |  |                                                  |  |                
|Adjustments to reconcile net income to net cash                             |                                           | 
|provided from operating activities:                                         |                                           |  |                                                  | 
|                                                                            | Depreciation and amortization             |  | 5,100                                            |  | 7,900          
|                                                                            | Gain on sale of building and land         |  | (849,100)                                        |  | -              
|                                                                            |                                           |  |                                                  |  |                
|Change in operating assets and liabilities:                                 |                                           |  |                                                  | 
|                                                                            | Accounts receivable                       |  | 12,000                                           |  | (3,500)        
|                                                                            | Prepaid expenses                          |  | (9,600)                                          |  | 12,000         
|                                                                            | Inventory                                 |  | 19,000                                           |  | 93,500         
|                                                                            | Deposits                                  |  | 11,500                                           |  | 2,400          
|                                                                            | Accounts payable                          |  | (13,400)                                         |  | (100,800)      
|                                                                            | Accrued expenses                          |  | 9,300                                            |  | 16,600         
|                                                                            | Net cash provided by operating activities |  | (324,500)                                        |  | (75,900)       
|                                                                            |                                           |  |                                                  |  |                
|Cash flows used in (provided by) financing activities:                      |                                           | 
|                                                                            | Repayment of debt                         |  | (665,100)                                        |  | (42,600)       
|                                                                            | Equipment leasing obligation              |  | (1,400)                                          |  | -              
|                                                                            | Shareholder loan                          |  | 6,000                                            |  | -              
|                                                                            | Proceeds from sale of common stock        |  | 1,000                                            |  | 170,000        
|                                                                            | Proceeds from sale of building and land   |  | 990,000                                          |  | -              
|                                                                            | Net cash used in financing activities     |  | 330,500                                          |  | 127,400        
|                                                                            |                                           |  |                                                  |  |                
|                                                                            | Net increase (decrease) in cash           |  | 6,000                                            |  | 51,500         
|                                                                            |                                           |  |                                                  |  |                
|                                                                            | Cash at beginning of year                 |  | 24,500                                           |  | 13,300         
|                                                                            |                                           |  |                                                  |  |                
|                                                                            | Cash at end of year                       |  | $       30,500                                   |  | $        64,800
|                                                                            |                                           |  |                                                  |  |                
|                                                                           
|The accompanying footnotes are an integral part of the financial statements





8



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|                              |  |                                                        |                                                                                                              |              |  |              |             |         |             |  |  | 
|----------------------------- |  | ------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------ | ------------ |  | ------------ | ----------- | ------- | ----------- |  |  | 
|Dionics, Inc.                 | 
|Notes To Financial Statements | 
|September 30, 2005            | 
|                              |  |                                                        |                                                                                                              |              |  |              |             |         |             |  |  | 
|                              |  | NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: |                                                                                                              |              |  |             
|                              |  |                                                        |                                                                                                              |              |  |              |             |         |             |  |  | 
|                              |  |                                                        | Business                                                                                                     |              |  |              |             |         |             |  | 
|                              |  |                                                        | The Company designs, manufactures and sells silicon semiconductor electronic products, as individual         |             
|                              |  |                                                        | discrete components, as multicomponent integrated circuits and as multicomponent hybrid circuits.            |             
|                              |  |                                                        |                                                                                                              |              |  |              |             |         |             |  |  | 
|                              |  |                                                        | Use of Estimates in the Preparation of Financial Statements                                                  |              |  |              |            
|                              |  |                                                        | The preparation of financial statements in conformity with generally accepted accounting principals          |             
|                              |  |                                                        | requires management to make estimates and assumptions that affect the reported amounts of                    |             
|                              |  |                                                        | assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial      |             
|                              |  |                                                        | statements and the reported amounts of revenues and expenses during the reporting period.  Actual            |             
|                              |  |                                                        | results could differ from those estimates.                                                                   |              |  |              |             |         |            
|                              |  |                                                        |                                                                                                              |              |  |              |             |         |             |  |  | 
|                              |  |                                                        | Cash and Cash Equivalents                                                                                    |              |  |              |             |         |             | 
|                              |  |                                                        | Holdings of highly liquid investments with maturities of three months or less, when purchased, are           |             
|                              |  |                                                        | considered to be cash equivalents.  The carrying amount reported in the balance sheet for cash and           |             
|                              |  |                                                        | cash equivalents approximates its fair values. The amount of federally insured cash deposits was             |             
|                              |  |                                                        | $ 30,500 as of September 30, 2005  and $ 24,500 as of December 31, 2004.                                     |              |  |             
|                              |  |                                                        |                                                                                                              |              |  |              |             |         |             |  |  | 
|                              |  |                                                        | Fair Values of Financial Instruments.                                                                        |              |  |              |             |         |            
|                              |  |                                                        | The carrying amount of trade accounts receivable, accounts payable, prepaid and accrued expenses,            |             
|                              |  |                                                        | bonds and notes payable, and amounts due to shareholders, as presented in the balance sheet,                 |             
|                              |  |                                                        | approximates fair value.                                                                                     |              |  |              |             |         |             | 
|                              |  |                                                        |                                                                                                              |              |  |              |             |         |             |  |  | 
|                              |  |                                                        | Accounts Receivable                                                                                          |              |  |              |             |         |             | 
|                              |  |                                                        | Accounts for which no payments have been received for three consecutive months are considered                |             
|                              |  |                                                        | delinquent and a reserve is setup for them.  Customary collection efforts are initiated and an allowance     |             
|                              |  |                                                        | for uncollectible amounts is set up and the related expense is charged to operations.                        |              |  |             
|                              |  |                                                        |                                                                                                              |              |  |              |             |         |             |  |  | 
|                              |  |                                                        | Merchandise Inventory                                                                                        |              |  |              |             |         |             | 
|                              |  |                                                        | Inventories are stated at the lower of cost (which represents cost of materials and manufacturing costs      |             
|                              |  |                                                        | on a first-in, first-out basis) or market. Cost is determined principally on the average actual cost method. |             
|                              |  |                                                        | Finished goods and work-in-process inventories include material, labor, and overhead costs. Factory          |             
|                              |  |                                                        | overhead costs are allocated to inventory manufactured in-house based upon cost of materials. The Company    |             
|                              |  |                                                        | monitors usage reports to determine if the carrying value of any items should be adjusted down due to        |             
|                              |  |                                                        | lack of demand for the item. The Company adjusts down the inventory for estimated obsolescence or            |             
|                              |  |                                                        | unmarketable inventory equal to difference between the cost of inventory and the estimated market            |             
|                              |  |                                                        | value based upon assumptions about future demand and market conditions. If actual market conditions          |             
|                              |  |                                                        | are less favorable than those projected by management, an additional inventory write-down may be required.   |             
|                              |  |                                                        |                                                                                                              |              |  |              |             |         |             |  |  | 
|                              |  |                                                        | Inventories are comprised of the following:                                                                  | September 30 |  | December 31  |             |         |            
|                              |  |                                                        |                                                                                                              |              |  |              | 2005        |         | 2004        |  |  | 
|                              |  |                                                        | Raw materials & factory supplies(net reserve)                                                                | $     78,500 |  | $     81,500 |             |         |            
|                              |  |                                                        | Work in process                                                                                              |              |  | 205,200      |             | 175,200 |             |  | 
|                              |  |                                                        | Finished goods                                                                                               |              |  | 25,700       |             | 71,700  |             |  | 
|                              |  |                                                        |                                                                                                              | Total        |  |              | $   309,400 |         | $   328,400 |  |  | 



9



---



|                              |  |                                                                    |                                                                                                           |  |          |  |                    |  |              |  |  | 
|----------------------------- |  | ------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------- |  | -------- |  | ------------------ |  | ------------ |  |  | 
|Dionics, Inc.                 | 
|Notes To Financial Statements | 
|September 30, 2005            | 
|                              |  |                                                                    |                                                                                                           |  |          |  |                    |  |              |  |  | 
|                              |  | NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) |                                                                                                           |  |         
|                              |  |                                                                    |                                                                                                           |  |          |  |                    |  |              |  |  | 
|                              |  |                                                                    | Long-Lived Assets- Property, Plant and Equipment                                                          |  |          |  |                    | 
|                              |  |                                                                    | These assets are recorded at cost less depreciation and amortization. Depreciation and Amortization       | 
|                              |  |                                                                    | are accounted for on the straight-line methods based on estimated useful lives. The amortization          | 
|                              |  |                                                                    | of leasehold improvements is based on the shorter of the lease term or the life of the improvement.       | 
|                              |  |                                                                    | Betterments and large renewals, which extend the life of the asset, are capitalized whereas               |  |         
|                              |  |                                                                    | maintenance and repairs and small renewals are expenses, as incurred.  The estimated useful               | 
|                              |  |                                                                    | lives are: machinery and equipment, 7-15 years; buildings, 30 years; and leasehold improvements,          | 
|                              |  |                                                                    | 10-20 years.  On April 20, 2005 a property sales and lease back agreement was made between                | 
|                              |  |                                                                    | the Company  and 65 Rushmore Realty ("the Buyer").  The Company sold its land and building located at     | 
|                              |  |                                                                    | 65 Rushmore Street, Westbury, NY for $990,000.  On July 27, 2005, the Company used the proceeds of        | 
|                              |  |                                                                    | the sale to pay back its debt of $669,100. In addition, a cash disbursement of $25,000 from the           | 
|                              |  |                                                                    | proceeds was made to an officer of the Company to purchase a third mortgage he held on the property       | 
|                              |  |                                                                    | being sold.  The Company netted $168,200 from the proceeds of the sale of property.  The remainder of the | 
|                              |  |                                                                    | proceeds was used to pay the expenses related to the sale.                                                |  |          |  |                   
|                              |  |                                                                    |                                                                                                           |  |          |  |                    |  |              |  |  | 
|                              |  |                                                                    | The lease agreement is a triple net lease and is for a period of seven years with a base annual rent of   | 
|                              |  |                                                                    | $83,300 to be paid in monthly installments of $6,900.  This annual rent is subject to annual increases    | 
|                              |  |                                                                    | based on the Consumer Price Index for All Urban Consumers of the United States Department of              | 
|                              |  |                                                                    | Labor Bureau of Labor Statistics in effect for New York and Northern New Jersey starting on Aug. 1, 09    | 
|                              |  |                                                                    |                                                                                                           |  |          |  |                    |  |              |  |  | 
|                              |  |                                                                    | Notes Payable                                                                                             |  |          |  |                    |  |              |  | 
|                              |  |                                                                    | The Company accounts for all notes liabilities that are due and payable in one year as                    |  |         
|                              |  |                                                                    | short term notes.                                                                                         |  |          |  |                    |  |              |  | 
|                              |  |                                                                    |                                                                                                           |  |          |  |                    |  |              |  |  | 
|                              |  |                                                                    | Bad Debt                                                                                                  |  |          |  |                    |  |              |  |  | 
|                              |  |                                                                    | The Company maintained an allowance for doubtful accounts of $7,300 at September 30, 2005 and 2004.      
|                              |  |                                                                    |                                                                                                           |  |          |  |                    |  |              |  |  | 
|                              |  |                                                                    | Deferred Mortgage Costs                                                                                   |  |          |  |                    |  |              | 
|                              |  |                                                                    | Costs related to the new mortgage and prior costs related to the paid off mortgage are being              | 
|                              |  |                                                                    | amortized over ten years as follows:                                                                      |  |         
|                              |  |                                                                    |                                                                                                           |  |          |  |                    |  |              |  |  | 
|                              |  |                                                                    |                                                                                                           |  |          |  | September 30       |  | December 31  |  |  | 
|                              |  |                                                                    |                                                                                                           |  |          |  | 2005               |  | 2004         |  |  | 
|                              |  |                                                                    | Cost                                                                                                      |  |          |  | $      52,000      |  | $     52,000 |  |  | 
|                              |  |                                                                    | Accumulated Amortization                                                                                  |  | (52,000) |  | (19,700)           |  |              | 
|                              |  |                                                                    |                                                                                                           |  |          |  | $                - |  | $     32,300 |  |  | 
|                              |  |                                                                    |                                                                                                           |  |          |  |                    |  |              |  |  | 
|                              |  |                                                                    | Due to the sale of the 65 Rushmore Street building in 2005, the remaining deferred mortgage expense       | 
|                              |  |                                                                    | was amortized in 2005.  Amortization for the 9 months ended September 30, 2005 was $32,300 and            | 
|                              |  |                                                                    | for the year ended December 31, 2004 was $3,300.                                                          |  |          |  |                    | 
|                              |  |                                                                    |                                                                                                           |  |          |  |                    |  |              |  |  | 
|                              |  |                                                                    |                                                                                                           |  |          |  |                    |  |              |  |  | 
|                              |  |                                                                    |                                                                                                           |  |          |  |                    |  |              |  |  | 



10



---



|                              |  |                                                                    |                                                                                                                   |  |  |  |  |  |  |  |  | 
|----------------------------- |  | ------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  |  | 
|Dionics, Inc.                 | 
|Notes To Financial Statements | 
|September 30, 2005            | 
|                              |  |                                                                    |                                                                                                                   |  |  |  |  |  |  |  |  | 
|                              |  | NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) |                                                                                                                   |  | 
|                              |  |                                                                    |                                                                                                                   |  |  |  |  |  |  |  |  | 
|                              |  |                                                                    | Major Customers                                                                                                   |  |  |  |  |  |  |  | 
|                              |  |                                                                    | For the quarter ended September 30, 2005, approximately 27% of total sales were to their 3 largest customers.    
|                              |  |                                                                    |                                                                                                                   |  |  |  |  |  |  |  |  | 
|                              |  |                                                                    | Net Gain/Loss Per Common share                                                                                    |  |  |  |  |  | 
|                              |  |                                                                    | Basic earnings per share ("EPS") are computed based on the weighted average number of common                      | 
|                              |  |                                                                    | shares outstanding for the period. Diluted EPS gives effect to all dilutive potential shares outstanding          | 
|                              |  |                                                                    | (i.e., options and warrants) during the period.                                                                   |  |  |  |  | 
|                              |  |                                                                    | For the 9 Months Ended Sept. 30, 2005, basic gain per share of the Company was $ .06 per share.                   | 
|                              |  |                                                                    | For the 9 Months Ended Sept. 30, 2004, basic (loss) per share of the Company was $( .02) per share.               | 
|                              |  |                                                                    |                                                                                                                   |  |  |  |  |  |  |  |  | 
|                              |  |                                                                    | Income Taxes                                                                                                      |  |  |  |  |  |  |  | 
|                              |  |                                                                    | Income taxes are accounted for under the asset and liability method.  Deferred tax assets and                     | 
|                              |  |                                                                    | liabilities are recognized for the future tax consequences attributable to differences between the                | 
|                              |  |                                                                    | financial statements carrying amounts of existing assets and liabilities and their respective tax bases           | 
|                              |  |                                                                    | and operating loss and tax credit carry forwards.  Deferred tax assets and liabilities are measured               | 
|                              |  |                                                                    | using enacted tax rates expected to apply to taxable income in the years in which those temporary                 | 
|                              |  |                                                                    | differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities           | 
|                              |  |                                                                    | of a change in tax rates is recognized in income in the period that includes the enactment date.                  | 
|                              |  |                                                                    | There were no deferred taxes for the period ending September 30, 2005 and December 31, 2004.                      | 
|                              |  |                                                                    |                                                                                                                   |  |  |  |  |  |  |  |  | 
|                              |  |                                                                    | Recently Issued Accounting Standards                                                                              |  |  |  |  |  | 
|                              |  |                                                                    | Recently Issued Accounting Standards In November 2004, the FASB issued SFAS No. 151, "Inventory                   | 
|                              |  |                                                                    | Costs - An Amendment of ARB Opinion No. 43, Chapter 4" ("SFAS 151"). SFAS 151 amends the                          | 
|                              |  |                                                                    | guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts            | 
|                              |  |                                                                    | of idle facility expense, freight, handling costs, and wasted material (spoilage). Among other provisions,        | 
|                              |  |                                                                    | the new rule requires that items such as idle facility expense, excessive spoilage, double freight, and           | 
|                              |  |                                                                    | rehandling costs be recognized as current period charges regardless of whether they meet the criterion            | 
|                              |  |                                                                    | of "so abnormal" as stated in ARB No. 43. Additionally, SFAS 151 requires that the allocation of fixed production | 
|                              |  |                                                                    | overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is    | 
|                              |  |                                                                    | effective for fiscal years beginning after June 15, 2005. The Company has considered SFAS 151 and has             | 
|                              |  |                                                                    | determined that this pronouncement will not materially impact the Companys consolidated results of               | 
|                              |  |                                                                    | operations.                                                                                                       | 
|                              |  |                                                                    |                                                                                                                   |  |  |  |  |  |  |  |  | 
|                              |  |                                                                    | In December 2004, the FASB issued SFAS No.123 (revised 2004), "Share-Based Payment" ("SFAS                        | 
|                              |  |                                                                    | 123R"), which replaces SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123")                       | 
|                              |  |                                                                    | and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees. "SFAS 123R                          | 
|                              |  |                                                                    | requires that all share-based payments to employees, including grants of employee stock options,                  | 
|                              |  |                                                                    | be recognized in the financial statements based on their fair values, beginning with the first interim or         | 
|                              |  |                                                                    | annual period after June 15, 2005, with early adoption encouraged. The pro forma disclosures                      | 
|                              |  |                                                                    | previously permitted under SFAS 123, no longer will be an alternative to financial statement                      |  | 
|                              |  |                                                                    | recognition. The Company is required to adopt SFAS 123R in the third quarter of 2005. Under SFAS 123R,            | 
|                              |  |                                                                    | the Company must determine the appropriate fair value model to be used in valuing share-based payments, the       | 
|                              |  |                                                                    | amortization method for compensation cost and the transition method to be used at the date of                     | 
|                              |  |                                                                    | adoption. Upon adoption, the Company may choose from two transition methods: the modified-prospective             | 
|                              |  |                                                                    | transition approach or the modified-retroactive transition approach. Under the modified-prospective               | 
|                              |  |                                                                    | transition approach the Company would be required to recognize compensation cost for awards that were             | 
|                              |  |                                                                    | granted prior to, but not vested as of the date of adoption. Prior periods remain unchanged and pro               | 
|                              |  |                                                                    | forma disclosures previously required by SFAS No. 123 continue to be required.                                    |  | 



11



---



|                              |  |                                                                    |                                                                                                                 |              |              |              |              |             |              |  |  | 
|----------------------------- |  | ------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------- | ------------ | ------------ | ------------ | ------------ | ----------- | ------------ |  |  | 
|Dionics, Inc.                 | 
|Notes To Financial Statements | 
|September 30, 2005            | 
|                              |  |                                                                    |                                                                                                                 |              |              |              |              |             |              |  |  | 
|                              |  | NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) |                                                                                                                 |              |             
|                              |  |                                                                    |                                                                                                                 |              |              |              |              |             |              |  |  | 
|                              |  |                                                                    | Under the modified-retrospective transition method, the Company would be required to restate prior periods by   |             
|                              |  |                                                                    | recognizing compensation cost in the amounts previously reported in the pro forma disclosure under SFAS No.     |             
|                              |  |                                                                    | 123.  Under this method, the Company would be permitted to apply this presentation to all periods presented or  |             
|                              |  |                                                                    | to the start of the fiscal year in which SFAS No. 123R is adopted. The Company would also be required to follow |             
|                              |  |                                                                    | the same guidelines as in the modified-prospective transition method for awards granted subsequent to adoption  |             
|                              |  |                                                                    | and those that were granted and not yet vested. The Company is currently evaluating the requirements of SFAS    |             
|                              |  |                                                                    | 123R and its impact on the Companys consolidated results of operations and earnings per share.  The            |             
|                              |  |                                                                    | Company has not yet determined the method of adoption or the effect of adopting SFAS 123R, and it has not       |             
|                              |  |                                                                    | been determined whether the adoption will result in amounts similar to the current pro forma disclosures under  |             
|                              |  |                                                                    | SFAS 123.                                                                                                       |              |              |              |              |            
|                              |  |                                                                    |                                                                                                                 |              |              |              |              |             |              |  |  | 
|                              |  | NOTE 2 -   TRADE ACCOUNTS RECEIVABLE                               |                                                                                                                 |              |              |              |              |            
|                              |  |                                                                    |                                                                                                                 |              |              |              |              |             |              |  |  | 
|                              |  |                                                                    | Trade accounts receivable were as follows:                                                                      |              |              |              |              |             |             
|                              |  |                                                                    |                                                                                                                 |              |              |              | September 30 |             | December 31  |  |  | 
|                              |  |                                                                    |                                                                                                                 |              |              |              | 2005         |             | 2004         |  |  | 
|                              |  |                                                                    | Trade accounts receivable                                                                                       |              | $     67,400 |              | $     79,400 |             |              | 
|                              |  |                                                                    | Less: allowance for doubtful accounts                                                                           | 7,300        |              | 7,300        |              |             |             
|                              |  |                                                                    |                                                                                                                 |              |              |              | $     60,100 |             | $     72,100 |  |  | 
|                              |  |                                                                    | There was no bad debt expense for the periods ended September 30, 2005 and 2004                                 |              |             
|                              |  |                                                                    |                                                                                                                 |              |              |              |              |             |              |  |  | 
|                              |  | NOTE 3 -   PROPERTY, PLANT AND EQUIPMENT                           |                                                                                                                 |              |              |             
|                              |  |                                                                    |                                                                                                                 |              |              |              |              |             |              |  |  | 
|                              |  |                                                                    | Property, plant and equipment consisted of the following:                                                       |              |              |              |              |            
|                              |  |                                                                    |                                                                                                                 |              |              |              |              |             |              |  |  | 
|                              |  |                                                                    |                                                                                                                 |              |              |              | September 30 |             | December 31  |  |  | 
|                              |  |                                                                    |                                                                                                                 |              |              |              | 2005         |             | 2004         |  |  | 
|                              |  |                                                                    | Equipment                                                                                                       |              |              | $ 1,199,800  |              | $ 1,200,200 |              |  | 
|                              |  |                                                                    | Building                                                                                                        |              |              |              | -            |             | 122,000      |  |  | 
|                              |  |                                                                    | Furniture and Fixtures                                                                                          |              | 233,300      |              | 233,400      |             |              | 
|                              |  |                                                                    | Leasehold Improvements                                                                                          |              | -            |              | 169,400      |             |              | 
|                              |  |                                                                    | Land                                                                                                            |              |              |              | -            |             | 40,000       |  |  | 
|                              |  |                                                                    |                                                                                                                 |              |              |              | $ 1,433,100  |             | $ 1,765,000  |  |  | 
|                              |  |                                                                    | Less: accumulated depreciation                                                                                  | (1,419,300)  |              | (1,704,400)  |              |             |             
|                              |  |                                                                    | Net property, plant and equipment                                                                               | $     13,800 |              | $     60,600 |              |             |             
|                              |  |                                                                    |                                                                                                                 |              |              |              |              |             |              |  |  | 
|                              |  |                                                                    | On April 20, 2005 a property sales and lease back agreement was made between the Company and 65 Rushmore       
|                              |  |                                                                    | Realty ("the Buyer").  The Company sold its land and building located at 65 Rushmore Street, Westbury, N.Y. for
|                              |  |                                                                    | $990,000 on July 27, 2005.  The Company used the proceeds of the sale to repay in full its debt of $669,100.   
|                              |  |                                                                    | A cash disbursement of $25,000 from the proceeds was made to an officer of the Company to purchase a third      |             
|                              |  |                                                                    | mortgage he held on the property being sold.  The Company netted $168,200 from the proceeds of the sale of      |             
|                              |  |                                                                    | property.  The remainder of the proceeds was used to pay the expenses related to the sale.                      |             
|                              |  |                                                                    |                                                                                                                 |              |              |              |              |             |              |  |  | 
|                              |  |                                                                    | The lease agreement is a triple net lease and is for a period of seven years with a base annual rent of         |             
|                              |  |                                                                    | $83,300 to be paid in monthly installments of $6,900.  This annual rent is subject to annual increases          |             
|                              |  |                                                                    | based on the Consumer Price Index for All Urban Consumers of the United States Department of                    |             
|                              |  |                                                                    | Labor Bureau of Labor Statistics in effect for New York and Northern New Jersey starting on August 1, 2009.     |             
|                              |  |                                                                    |                                                                                                                 |              |              |              |              |             |              |  |  | 
|                              |  |                                                                    | Depreciation expense for the year ended September 30, 2005 was $5,000 and for the year ended                    |             
|                              |  |                                                                    | December 31, 2004 was $10,600.                                                                                  |              |              |              |              |            



12



---



|                              |  |                                         |                                                                                                                  |                          |         |            |                  |  |             |  |  |  |  |  |  |  | 
|----------------------------- |  | --------------------------------------- | ---------------------------------------------------------------------------------------------------------------- | ------------------------ | ------- | ---------- | ---------------- |  | ----------- |  |  |  |  |  |  |  | 
|Dionics, Inc.                 | 
|Notes To Financial Statements | 
|September 30, 2005            | 
|                              |  |                                         |                                                                                                                  |                          |         |            |                  |  |             |  |  | 
|                              |  | NOTE 4 - DEFERRED COMPENSATION PAYABLE: |                                                                                                                  |                          |         |            |                 
|                              |  |                                         |                                                                                                                  |                          |         |            |                  |  |             |  |  | 
|                              |  |                                         | In 1987, the Company entered into an agreement, amended in 1997 and 1999, which provides for a 72-month          |                         
|                              |  |                                         | schedule of payments to the Companys chief executive officer.                                                   |                          |         |            |                  | 
|                              |  |                                         |                                                                                                                  |                          |         |            |                  |  |             |  |  | 
|                              |  |                                         | An investment agreement was entered into with the Company on May 18, 2004.  Pursuant to this                     |                         
|                              |  |                                         | agreement the executive officer forgave $200,000 of amounts due to him under the compensation                    |                         
|                              |  |                                         | agreement.  The executive officer also agreed to postpone any and all remaining payments due                     |                         
|                              |  |                                         | him under the deferred compensation agreement for a period of 5 years starting May 18, 2004.                     |                         
|                              |  |                                         |                                                                                                                  |                          |         |            |                  |  |             |  |  | 
|                              |  | NOTE 5 - LONG-TERM DEBT:                |                                                                                                                  |                          |         |            |                  |  |             | 
|                              |  |                                         |                                                                                                                  |                          |         |            |                  |  |             |  |  | 
|                              |  |                                         | As of September 30, 2005 and December 31, 2004, the Companys long-term debt includes a mortgage and             |                         
|                              |  |                                         | notes payable as follows:                                                                                        |                          |         |            |                  |  |             |  | 
|                              |  |                                         |                                                                                                                  |                          |         |            | September 30     |  | December 31 |  |  | 
|                              |  |                                         |                                                                                                                  |                          |         |            | 2005             |  | 2004        |  |  | 
|                              |  |                                         | Mortgages payable                                                                                                | $              -         |         | $  655,100 |                  |  |            
|                              |  |                                         | Lease                                                                                                            |                          |         |            | 4,900            |  |             |  |  | 
|                              |  |                                         |                                                                                                                  |                          |         |            | $      4,900     |  | $  665,100  |  |  | 
|                              |  |                                         |                                                                                                                  | Less: current maturities | (4,900) |            | (63,600)         |  |             | 
|                              |  |                                         |                                                                                                                  |                          |         |            | $              - |  | $  601,500  |  |  | 
|                              |  |                                         |                                                                                                                  |                          |         |            |                  |  |             |  |  | 
|                              |  |                                         | In August 2005, the mortgages payable were both paid off from the proceeds of the sale of the Rushmore building. |                         
|                              |  |                                         |                                                                                                                  |                          |         |            |                  |  |             |  |  | 
|                              |  |                                         | Mortgage Payable                                                                                                 |                          |         |            |                  |  |             |  | 
|                              |  |                                         |                                                                                                                  |                          |         |            |                  |  |             |  |  | 
|                              |  |                                         | In 1998, a loan agreement was entered into for $384,700 which requires 360 monthly                               |                         
|                              |  |                                         | self-liquidating payments in the amount of $2,900. Interest is calculated on the unpaid                          |                         
|                              |  |                                         | principal balance at an initial rate of 8.23% per annum. The interest rate on the loan is variable               |                         
|                              |  |                                         | depending on an independent index related to the yield of United States Treasury Notes. This rate                |                         
|                              |  |                                         | change will occur once every 60 months.  This loan was paid off with the proceeds from the sale of the           |                         
|                              |  |                                         | building and land at 65 Rushmore Street during the third quarter of 2005.                                        |                          |         |           
|                              |  |                                         |                                                                                                                  |                          |         |            |                  |  |             |  |  | 
|                              |  |                                         | Term loans agreements dated in 1999 were restructured and replaced by a new term loan in the                     |                         
|                              |  |                                         | principal amount of $283,900, ("Term Loan A") structured over two five-year periods.  During the                 |                         
|                              |  |                                         | first five-year period  ended March 31, 1999 the Company paid interest only. During the second five-year         |                         
|                              |  |                                         | period commencing April 1, 1999, the balance due was to be repaid over 60 equal monthly installments,            |                         
|                              |  |                                         | plus interest at prime plus two percent on the unpaid balance. The monthly payments are $6,423.                  |                         
|                              |  |                                         | This loan was paid off in 2004.                                                                                  |                         
|                              |  |                                         |                                                                                                                  |                          |         |            |                  |  |             |  |  | 
|                              |  |                                         | Small Business Administration Loan                                                                               |                          |         |            |                  |  |            
|                              |  |                                         |                                                                                                                  |                          |         |            |                  |  |             |  |  | 
|                              |  |                                         | On October 20, 2002, the Company obtained a loan in the amount of $305,800 with interest at the rate             |                         
|                              |  |                                         | of 4% per annum.  This loan was paid off with the proceeds from the sale of the building and land                |                         
|                              |  |                                         | at 65 Rushmore Street during the third quarter of 2005.                                                          |                         



13



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|                              |  |                                                     |                                                                                                                    |         |         |              |         |                    |  |                   |  | 
|----------------------------- |  | --------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------ | ------- | ------- | ------------ | ------- | ------------------ |  | ----------------- |  | 
|Dionics, Inc.                 | 
|Notes To Financial Statements | 
|September 30, 2005            | 
|                              |  |                                                     |                                                                                                                    |         |         |              |         |                    |  |                   |  | 
|                              |  | NOTE 6. STOCK OPTION PLAN                           |                                                                                                                    |         |         |              |         |                    | 
|                              |  |                                                     |                                                                                                                    |         |         |              |         |                    |  |                   |  | 
|                              |  |                                                     | The Company has an employee incentive compensation plan (the "Plan") pursuant to which the                         |        
|                              |  |                                                     | Company's board of directors may grant stock options to officers and key employees. In September                   |        
|                              |  |                                                     | 1997, the Board of Directors of the Company adopted the 1997 Incentive Stock Option Plan (The                      |        
|                              |  |                                                     | "1997 Plan") for employees of the Company to purchase up to 250,000 shares of common stock of                      |        
|                              |  |                                                     | the Company. Options granted under the 1997 plan are "incentive stock options" as defined in Section               |        
|                              |  |                                                     | 422 of the Internal Revenue Code. Any stock options granted under the 1997 Plan shall be granted at                |        
|                              |  |                                                     | no less than 100% of the fair market value of the Common Stock of the Company at the time of the                   |        
|                              |  |                                                     | grant.  As of May 2004, options to acquire 20,000 shares had lapsed under the 1997 Plan.  In May                   |        
|                              |  |                                                     | 2004, the Company issued 172,500 shares to 15 employees equal to the number of options held                        |        
|                              |  |                                                     | by such employees which shares were issued in place of and in cancellation for the outstanding                     |        
|                              |  |                                                     | options previously issued under the 1997 Plan.  As of September 30, 2005 and December 31, 2004,                    |        
|                              |  |                                                     | there were no outstanding options under the 1997 Plan.                                                             |        
|                              |  |                                                     |                                                                                                                    |         |         |              |         |                    |  |                   |  | 
|                              |  | NOTE 7. TAXES AND NET OPERATING LOSS CARRYFORWARDS: |                                                                                                                    |         |         |             
|                              |  |                                                     |                                                                                                                    |         |         |              |         |                    |  |                   |  | 
|                              |  |                                                     | As of September 31, 2005 and  December 31, 2004, the components of deferred tax assets were as follows:            |        
|                              |  |                                                     |                                                                                                                    |         |         |              |         |                    |  |                   |  | 
|                              |  |                                                     |                                                                                                                    |         |         |              |         | September
30, 2005 |  | December
31, 2004
|                              |  |                                                     | Accounts receivable allowance                                                                                      |         |         | $  2,500     |         | $  2,500          
|                              |  |                                                     | Net operating loss carry-forward                                                                                   |         | 395,300 |              | 502,600
|                              |  |                                                     | Total gross deferred tax assets (at 34% statutory rate)                                                            | 397,800 |         | 505,100     
|                              |  |                                                     | Less: Valuation allowance                                                                                          |         |         | (397,800)    |         | (505,100)         
|                              |  |                                                     | Net deferred tax assets                                                                                            |         |         | $          - |         | $         -       
|                              |  |                                                     |                                                                                                                    |         |         |              |         |                    |  |                   |  | 
|                              |  |                                                     | Under the provisions of SFAS 109, NOLs represent temporary differences that enter into the calculation             |        
|                              |  |                                                     | Of deferred tax assets. Realization of deferred tax assets associated with the NOL is dependent upon               |        
|                              |  |                                                     | generating sufficient taxable income prior to their expiration.                                                    |         |         |              |        
|                              |  |                                                     |                                                                                                                    |         |         |              |         |                    |  |                   |  | 
|                              |  |                                                     | Management believes that there is a risk that certain of these NOLs may expire unused and,                         |         |        
|                              |  |                                                     | accordingly, has established a valuation allowance against them. Although realization is not assured for           |        
|                              |  |                                                     | the remaining deferred tax assets, based on the historical trend in the Companys sales and profitability, sales   |        
|                              |  |                                                     | backlog, and budgeted sales management believes it is likely that they may not be totally realized                 |        
|                              |  |                                                     | through future taxable earnings. In addition, the net deferred tax assets could be reduced in the near             |        
|                              |  |                                                     | term if management's estimates of taxable income during the carryforward period are significantly reduced.         |        
|                              |  |                                                     |                                                                                                                    |         |         |              |         |                    |  |                   |  | 
|                              |  |                                                     | The Company believes it is possible that the benefit of these additional assets may not be realized in the future. |        
|                              |  |                                                     |                                                                                                                    |         |         |              |         |                    |  |                   |  | 
|                              |  | NOTE 8. COMMITMENTS AND CONTINGENCIES               |                                                                                                                    |         |         |              |         |                   
|                              |  |                                                     |                                                                                                                    |         |         |              |         |                    |  |                   |  | 
|                              |  |                                                     | The Company has an agreement with its chief executive officer to pay to his widow or estate for a                  |        
|                              |  |                                                     | period of five (5) years following his death an amount per year equal to the annual salary being earned            |        
|                              |  |                                                     | by him at the time of his death, provided that he was an employee of the Company at the time of his                |        
|                              |  |                                                     | death. Such arrangements had previously been funded by life insurance policies owned by the Company on             |        
|                              |  |                                                     | his life; however, currently the policy remains unfunded as of September 30, 2005 and December 31, 2004.           |        



14



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|                              |  |                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  |  |  | 
|----------------------------- |  | --------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  |  | 
|Dionics, Inc.                 | 
|Notes To Financial Statements | 
|September 30, 2005            | 
|                              |  |                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  |  |  | 
|                              |  | NOTE 9. RETIREMENT PLANS    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  | 
|                              |  |                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  |  |  | 
|                              |  |                             | On February 15, 2002 the Company repurchased 76,347 shares of Dionics, Inc. common stock from                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
|                              |  |                             | the Company's 401(k) plan.  These shares had been contributed by the Company's 401(k) Plan during                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 
|                              |  |                             | 1993.  The amount paid on February 22, 2002 was $3,800 or $.05 per share which management                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 
|                              |  |                             | determined to be the fair purchase price.  The proceeds from the repurchase were placed into the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|                              |  |                             | respective 401(k) accounts of the employees in proportion to the 401(k) plan shares, which had been                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 
|                              |  |                             | attributed to each of them.  In addition, the Company then issued the same number of shares as a                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|                              |  |                             | bonus to the same eleven employees.  The employees may not dispose of these shares in less than                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
|                              |  |                             | one year, as these were unregistered shares.  There are no more shares of the Company remaining in                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 
|                              |  |                             | the Company's 401(k) plan.  The outlay of $3,800 has been charged as an expense to the various                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
|                              |  |                             | departments of the Company.  Such 76,347 shares issued in February 2002 were distributed under the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 
|                              |  |                             | Company 2002 Stock Compensation Plan ("the 2002 Plan") which was adopted by the Company in                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
|                              |  |                             | February 2002.  The Company may issue up to 500,000 shares under the 2002 Plan.  In May 2004,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
|                              |  |                             | the Company issued, under the 2002 Plan, 172,500 restricted shares of Common Stock to 15                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 
|                              |  |                             | employees equal to the number of options held by such employees which shares were issued in                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 
|                              |  |                             | place of and in cancellation for all of the Outstanding Options.  As of September 30, 2005 and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
|                              |  |                             | December 31, 2004, there are no outstanding options under the 1997 Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 
|                              |  |                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  |  |  | 
|                              |  | NOTE 10.  SUBSEQUENT EVENTS |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  | 
|                              |  |                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  |  |  | 
|                              |  |                             | Auditors
Due primarily to financial constraints, the Company was not able to engage a new auditing firm until August
2005 which engagement became necessary after the Company was notified in January 2005 that its
then-current auditing firm had failed to register with the PCAOB.  Thereafter, the newly engaged firm
encountered a variety of internal issues regarding its ability to continue as the Companys public accountant.
Effective December 31, 2006, such firm resigned as the Companys principal independent accountants.  At
the time, the firm was in the final stages of completing its audited report for the year ended December 31,
2004 and indicated it would soon issue the report to the Company.  Following the filing on October 1, 2007
of the Companys Form 10-KSB for the year ended December 31, 2004, the Company engaged Michael F.
Albanese, CPA on October 3, 2007 as its independent registered public accountant.

Grant of Shares
On May 16, 2008, the Company granted an aggregate of 472,500 shares of common stock to certain
employees and 100,000 shares of common stock to a director of the Company for services rendered to
the Company. | 











15



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Item 2.  Managements Discussion and Analysis of Plan of Operation



The following should be read in conjunction with the financial statements of the Company included elsewhere herein.



Forward-Looking Statements



This report contains certain forward-looking statements and information relating to the Company that are based on the beliefs and assumptions made by the Companys management as well as information currently available to the management.  When used in this document, the words anticipate, believe, estimate, and expect and similar expressions, are intended to identify forward-looking statements.  Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected.



Introduction



This report is being filed in 2008, following a considerable lapse in SEC reporting by the Company. For a more detailed explanation of the causes of the reporting lapse, the reader is referred to the Managements Discussion in the 2005 year-end 10K SEC report.



Liquidity and Capital Resources



In the three-month period ending September 30, 2005 the Companys sales continued to deteriorate, worsening an already severe negative cash flow problem. Early in the period, the Companys president increased to $65,000 his total outstanding personal loans to the Company, permitting it to continue functioning. By this time, the efforts to complete the sale-leaseback transaction on the Companys real estate property were almost complete, and in fact a closing was held successfully in the month of August 2005. Net of direct expenses related to the transaction, the Company realized an $730,000 gain on the sale-leaseback transaction of its property. A variety of debts, mortgages and past-due accounts payable were cleared up with the cash proceeds, including the loans by the Companys president, In spite of operational losses, the Companys debt-structure was now reduced greatly and made more manageable. Residual working capital gave the Company a breathing spell in which to try to get its loss-ridden operations back onto a profitable track.



Results of Operations



Sales volume in the Third Quarter of 2005 fell to $152,900, down sequentially from the $181,900 achieved in the previous quarter, but actually higher than the dismal $138,200 level reached in the Third Quarter of 2004. It should be pointed out that the Third Quarter is traditionally the poorest one in our industry, reflecting vacations and other negative influences.



Cost of Sales in the Third Quarter of 2005 rose slightly to $179,000 from the $164,400 level of 2004, tracking with the change in Sales volume. Gross Profit, however, showed a ($26,100) Loss in the Third Quarter of 2005 essentially unchanged from the Gross Loss of the same period last year. With the closing of its real estate transaction, many of the Companys unusual expenses came to an end, so that Selling, General and Administrative Expenses in the Third Quarter of 2005 showed a decrease to $79,800, down from the $102,200 level of the Third Quarter of 2004.



The Net Loss from Operations in the Third Quarter of 2005 decreased to  ($105,900) as compared to



16



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a 2004 Third Quarter Net Loss from Operations of ($128,400). Third Quarter 2005 Net Income After Income Taxes reached $719,200 as compared to a 2004 Third Quarter Net Loss After Income Taxes of ($130,200), the difference mainly attributable to the gain on the sale of the Companys real-estate property.



In the First Nine-Months of 2005 sales volume fell to $538,300, down 34% from the $818,600 level achieved in the First Nine-Months of 2004. Much of the decrease traces to the absence of sales in 2005 to a special-situation customer that had boosted sales in 2004.



Cost of Sales fell proportionately, dropping to $452,000 in the First Nine-Months of 2005 from $624,000 in the First Nine-Months of 2004. Gross Profit also saw a proportionate drop to $86,300 in the First Nine-Months of 2005 as compared to a Gross Profit of $194,600 in the First Nine-Months of 2004. Over the Nine-Month period, with greater efforts going into sales and the real estate property transaction, Selling, General and Administrative Expenses rose in the First Nine-Months of 2005 to $305,200 from $287,700 in the First Nine-Months of 2004.



Net Loss from Operations rose to ($218,900) in the First Nine-Months of 2005 as compared to a Net Loss from Operations of ($93,100) in the First Nine-Months of 2004.  Net Income/(Loss) After Income Taxes for the Third Quarter of 2005 showed a Gain of $589,700 as compared to a Loss of ($104,000) for the First Nine-Months of 2004, the change mostly attributable to the sale of the Companys real-estate property.



Summary



As explained in the Introduction., this report is one of several being filed after a lengthy pause in the Companys fileing of reports with the SEC. The Company hopes to continue filing these delinquent reports until it finally becomes current in its reporting obligations. For more detailed information, see the Companys year-end 10K report for 2005, filed with the SEC.



Off-Balance Sheet Arrangements



We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.



Item 3.  Controls and Procedures.



Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report.  Based on that evaluation, our Principal Executive Officer and Principal Financial Officer has concluded that, as of September 30, 2005, these disclosure controls and procedures were effective to ensure that all information required to  be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commissions rule and forms; and (ii) accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.



There have been no significant changes in our internal controls over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.







17



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PART II - OTHER INFORMATION



Item 1.  Legal Proceedings.



There are no material pending legal proceedings to which the Company is a party or to which any of its property is subject.



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



In connection with the sale of the Westbury Property which occurred in July 2005, Bernard. Kravitz and the Company entered into a Discharge of Mortgage Agreement on July 27, 2005 in which Mr. Kravitz agreed to discharge the mortgage held by him.  As partial consideration for the discharge of the mortgage, the Company agreed as of July 27, 2005 (i) to issue 1,000,000 shares of restricted common stock of the Company to Mr. Kravitz and (ii) to re-price the 1,000,000 warrants issued to him in 2004 (exercisable for 1,000,000 shares) such that the exercise price shall be $.001 per share, which warrants Mr. Kravitz exercised in full on such date.  All of the foregoing securities were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the Securities Act, for transactions by the issuer not involving any public offering.



Item 3.  Defaults Upon Senior Securities.



None.



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



None.



Item 5.  Other Information.



None.



Item 6.  Exhibits.



(a) Exhibits.



31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act)

31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act)

32.1

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)





18



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SIGNATURES



In accordance with the requirements of the Exchange Act, the Registrant caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.





DIONICS, INC.

(Registrant)







Dated:   July14, 2008

By:

/s/ Bernard Kravitz

Bernard Kravitz, President







Dated:   July 14, 2008

By:

/s/ Bernard Kravitz

Bernard Kravitz, Principal Financial Officer















19