UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      DC 20549





**FORM
      10-Q**





(Mark
                One)




x
            Quarterly
                report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934For
                the quarterly period ended September 30, 2007o
            Transition
                report pursuant to Section 13 or 15(d) of the Securities Exchange
                Action
                of 1934For
                the transition period from ____________to
                ____________




Commission
      File Number 0-19266





**ALLIED
      HEALTHCARE PRODUCTS, INC.**





1720
      Sublette Avenue


St.
      Louis, Missouri 63110


314/771-2400


IRS
      Employment ID 25-1370721





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding twelve months (or for such shorter periods that the registrant was
      required to file such reports, and (2) has been subject to such filing
      requirements for the past ninety days.





Yes
x No
o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of "accelerated
      filer” and “large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
      one):




Large
      accelerated filer oAccelerated
      filer oNon-accelerated
      filer x





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





Yes
o No
x




The
      number of shares of common stock outstanding at November 9, 2007 is 7,883,577
      shares.









**INDEX**PageNumberPart
                I -
            Financial
                InformationItem
                1.
            Financial
                StatementsConsolidated
                Statement of Operations - three
                months ended September 30, 2007 and 2006
                (Unaudited)
            
            3Consolidated
                Balance Sheet - September
                30, 2007 (Unaudited) and June 30, 2007
            
            4
                -
                5Consolidated
                Statement of Cash Flows - Three
                months ended September 30, 2007 and 2006
                (Unaudited)
            
            6Notes
                to Consolidated Financial Statements
            
            7
                -
                10Item
                2.
            Management’s
                  Discussion and Analysis of Financial Conditionand
                Results of Operations
            
            10
                - 14Item
                3.
            Quantitative
                  and Qualitative Disclosure about Market Risk
            
            14****
            Item
                4.
            Controls
                and Procedures
            
            14Part
                II -
            Other
                InformationItem
                6.
            Exhibits
            
            15Signature
            
            16





SAFE
      HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995





Statements
      contained in this Report, which are not historical facts or information, are
      "forward-looking statements." Words such as "believe," "expect," "intend,"
      "will," "should," and other expressions that indicate future events and trends
      identify such forward-looking statements. These forward-looking statements
      involve risks and uncertainties, which could cause the outcome and future
      results of operations, and financial condition to be materially different than
      stated or anticipated based on the forward-looking statements. Such risks and
      uncertainties include both general economic risks and uncertainties, risks
      and
      uncertainties affecting the demand for and economic factors affecting the
      delivery of health care services, and specific matters which relate directly
      to
      the Company's operations and properties as discussed in the Company’s annual
      report on Form 10-K for the year ended June 30, 2007. The Company cautions
      that
      any forward-looking statements contained in this report reflects only the belief
      of the Company or its management at the time the statement was made. Although
      the Company believes such forward-looking statements are based upon reasonable
      assumptions, such assumptions may ultimately prove inaccurate or incomplete.
      The
      Company undertakes no obligation to update any forward-looking statement to
      reflect events or circumstances after the date on which the statement was
      made.





2




**PART
      I.**  **FINANCIAL
      INFORMATION**





**Item
      1.**  **Financial
      Statements**





**ALLIED
      HEALTHCARE PRODUCTS, INC.**


**CONSOLIDATED
      STATEMENT OF OPERATIONS**


**(UNAUDITED)**


Three
                  months endedSeptember
                  30,2007
              
              2006Net
                  sales
              
              $
              14,101,618
              
              $
              14,477,442Cost
                  of sales
              
              
              10,934,605
              
              
              10,957,890Gross
                  profit
              
              
              3,167,013
              
              
              3,519,552Selling,
                  general andadministrative
                  expenses
              
              
              3,042,969
              
              
              3,190,997Income
                  from operations
              
              
              124,044
              
              
              328,555Interest
                  income
              
              
              (40,769
              )
              
              (28,169
              )Other
                  expense, net
              
              
              15,150
              
              
              9,302(25,619
              )
              
              (18,867
              )Income
                  before provisionfor
                  income taxes
              
              
              149,663
              
              
              347,422Provision
                  for income taxes
              
              
              62,597
              
              
              145,788Net
                  income
              
              $
              87,066
              
              $
              201,634Basic
                  and diluted earningsper
                  share
              
              $
              0.01
              
              $
              0.03Weighted
                  average sharesoutstanding
                  - basic
              
              
              7,883,577
              
              
              7,859,903Weighted
                  average sharesoutstanding
                  - diluted
              
              
              8,106,796
              
              
              8,065,153




See
      accompanying Notes to Consolidated Financial Statements.




3




**ALLIED
      HEALTHCARE PRODUCTS, INC.**


**CONSOLIDATED
      BALANCE SHEET**


**ASSETS**


September
                  30,
              
              June
                  30,2007
              
              2007(Unaudited)Current
                  assets:Cash
                  and cash equivalents
              
              $
              4,017,496
              
              $
              3,638,870Accounts
                  receivable, net of allowancesof
                  $325,000 and $460,000, respectively
              
              
              7,395,812
              
              
              7,251,767Inventories,
                  net
              
              
              12,195,312
              
              
              12,999,472Other
                  current assets
              
              
              619,244
              
              
              275,254Total
                  current assets
              
              
              24,227,864
              
              
              24,165,363Property,
                  plant and equipment, net
              
              
              10,422,347
              
              
              10,677,000Goodwill
              
              
              15,979,830
              
              
              15,979,830Other
                  assets, net
              
              
              565,221
              
              
              496,127Total
                  assets
              
              $
              51,195,262
              
              $
              51,318,320




See
      accompanying Notes to Consolidated Financial Statements.





**(CONTINUED)**




4


**ALLIED
      HEALTHCARE PRODUCTS, INC.**


**CONSOLIDATED
      BALANCE SHEET**


**(CONTINUED)**


**LIABILITIES
      AND STOCKHOLDERS' EQUITY**


September
                  30,
              
              June
                  30,2007
              
              2007(Unaudited)Current
                  liabilities:Accounts
                  payable
              
              $
              3,010,398
              
              $
              3,040,313Other
                  accrued liabilities
              
              
              2,684,800
              
              
              2,508,820Deferred
                  income taxes
              
              
              734,531
              
              
              882,001Deferred
                  revenue
              
              
              465,000
              
              
              465,000Total
                  current liabilities
              
              
              6,894,729
              
              
              6,896,134Deferred
                  revenue
              
              
              1,821,250
              
              
              1,937,500Commitments
                  and contingenciesStockholders'
                  equity:Preferred
                  stock; $0.01 par value; 1,500,000 sharesauthorized;
                  no shares issued and outstanding
              
              
              -
              
              
              -Series
                  A preferred stock; $0.01 par value; 200,000 sharesauthorized;
                  no shares issued and outstanding
              
              
              -
              
              
              -Common
                  stock; $0.01 par value; 30,000,000 sharesauthorized;
                  10,187,069 shares issued at September 30, 2007and
                  June 30, 2007; 7,883,577 shares outstanding atSeptember
                  30, 2007 and June 30, 2007
              
              
              101,871
              
              
              101,871Additional
                  paid-in capital
              
              
              47,459,837
              
              
              47,441,163Retained
                  earnings
              
              
              15,649,003
              
              
              15,673,080Less
                  treasury stock, at cost; 2,303,492 shares atSeptember
                  30, 2007 and June 30, 2007
              
              
              (20,731,428
              )
              
              (20,731,428
              )Total
                  stockholders' equity
              
              
              42,479,283
              
              
              42,484,686Total
                  liabilities and stockholders' equity
              
              $
              51,195,262
              
              $
              51,318,320





See
      accompanying Notes to Consolidated Financial Statements.





5





**ALLIED
      HEALTHCARE PRODUCTS, INC.**


**CONSOLIDATED
      STATEMENT OF CASH FLOWS**


**(UNAUDITED)**


Three
                  months endedSeptember
                  30,2007
              
              2006Cash
                  flows from operating activities:Net
                  income
              
              $
              87,066
              
              $
              201,634Adjustments
                  to reconcile net income to netcash
                  provided by (used in) operating activities:Depreciation
                  and amortization
              
              
              330,000
              
              
              300,420Stock
                  based compensation
              
              
              18,674
              
              
              14,364Provision
                  for doubtful accounts and salesreturns
                  and allowances
              
              
              (95,186
              )
              
              (8,462
              )Deferred
                  tax benefit
              
              
              (7,470
              )
              
              (2,886
              )Loss
                  on disposition of equipment
              
              
              5,228
              
              
              -Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              (48,859
              )
              
              (148,680
              )Inventories
              
              
              804,160
              
              
              (453,617
              )Other
                  current assets
              
              
              (343,990
              )
              
              (435,702
              )Accounts
                  payable
              
              
              (29,915
              )
              
              461,536Deferred
                  revenue
              
              
              (116,250
              )
              
              (116,250
              )Other
                  accrued liabilities
              
              
              (110,569
              )
              
              (55,926
              )Net
                  cash provided by (used in) operating activities
              
              
              492,889
              
              
              (243,569
              )Cash
                  flows from investing activities:Capital
                  expenditures
              
              
              (79,263
              )
              
              (109,338
              )Purchase
                  of intangible asset
              
              
              (35,000
              )
              
              -Net
                  cash used in investing activities
              
              
              (114,263
              )
              
              (109,338
              )Cash
                  flows from financing activities:Stock
                  options exercised
              
              
              -
              
              
              54,450Excess
                  tax benefit from exercise of stock options
              
              
              -
              
              
              20,360Net
                  cash provided by financing activities
              
              
              -
              
              
              74,810Net
                  increase (decrease) in cash and cash equivalents
              
              
              378,626
              
              
              (278,097
              )Cash
                  and cash equivalents at beginning of period
              
              
              3,638,870
              
              
              2,696,324Cash
                  and cash equivalents at end of period
              
              $
              4,017,496
              
              $
              2,418,227




See
      accompanying Notes to Consolidated Financial Statements.




6


**ALLIED
      HEALTHCARE PRODUCTS, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(UNAUDITED)**




1.  Unaudited
      Consolidated Financial Statements





The
      accompanying unaudited consolidated financial statements have been prepared
      in
      accordance with the instructions for Form 10-Q and do not include all of the
      information and disclosures required by accounting principles generally accepted
      in the United States of America for complete financial statements. In the
      opinion of management, all adjustments, consisting only of normal recurring
      adjustments considered necessary for a fair presentation, have been included.
      Operating results for any quarter are not necessarily indicative of the results
      for any other quarter or for the full year. These statements should be read
      in
      conjunction with the consolidated financial statements and notes to the
      consolidated financial statements thereto included in the Company’s Form 10-K
      for the year ended June 30, 2007.





**** Recent
      Accounting Pronouncements





In
      June
      2006, the Financial Accounting Standards Board (FASB) issued Interpretation
      No.
      48 (“FIN 48”) “Accounting for Uncertainty in Income Taxes,” which clarifies the
      accounting for uncertainty in income taxes recognized in the financial
      statements in accordance with FASB Statement No. 109, “Accounting for Income
      Taxes”. FIN 48 provides guidance on the financial statement recognition and
      measurement of a tax position taken or expected to be taken in a tax return.
      FIN
      48 also provides guidance on derecognition, classification, interest and
      penalties, accounting in interim periods, disclosures, and
      transition.





The
      Company adopted FIN 48 as of July 1, 2007. The cumulative effect of adopting
      FIN
      48 has been recorded as a net decrease to retained earnings of $111,143. On
      the
      date of adoption of FIN 48, and September 30, 2007, the Company had
      approximately $220,000 of unrecognized tax benefits. Of the unrecognized tax
      benefits at September 30, 2007, approximately $82,000 would impact the Company’s
      effective income tax rate if recognized.





The
      Internal Revenue Service (IRS) commenced an examination of the Company’s U.S.
      income tax returns for the fiscal years ended June 30, 2005 and 2006 in the
      third quarter of fiscal 2007. The examination is anticipated to be complete
      by
      the end of fiscal 2008. As of September 30, 2007 the IRS has discussed certain
      potential adjustments with the Company. Management is currently evaluating
      those
      potential adjustments to determine if it agrees, but if accepted the Company
      does not anticipate the adjustments would result in a material change in its
      financial position. Due to the ongoing IRS examination, the Company anticipates
      that it is reasonably possible that the unrecognized tax benefits may increase
      or decrease, but are unable to reasonably estimate the range.




7





The
      Company’s federal income tax returns for the tax fiscal years 2004 and after
      remain subject to examination. The various states in which the Company is
      subject to income tax are generally open for the tax fiscal years 2004 and
      after.





The
      Company classifies interest expenses on taxes payable as interest expense.
      The
      Company classifies penalties as a component of other expenses. The total
      interest and penalty expense related to tax uncertainties recognized for the
      three months ended September 30, 2007 were approximately $5,000. Accrued
      interest and penalties of $70,000 related to income tax uncertainties were
      recognized as a component of other noncurrent liabilities at September 30,
      2007.




2.  Inventories





Inventories
      are comprised as follows:


September
                  30, 2007
              
              June
                  30, 2007Work-in
                  progress
              
              $
              990,733
              
              $
              742,890Raw
                  materials and component parts
              
              
              7,960,384
              
              
              8,544,226Finished
                  goods
              
              
              4,345,430
              
              
              4,812,220Reserve
                  for obsolete and excessinventory
              
              
              (1,101,235
              )
              
              (1,099,864
              )$
              12,195,312
              
              $
              12,999,472




3.  Earnings
      per share





Basic
      earnings per share are based on the weighted average number of shares of all
      common stock outstanding during the period. Diluted earnings per share are
      based
      on the sum of the weighted average number of shares of common stock and common
      stock equivalents outstanding during the period. The number of basic shares
      outstanding for the three months ended September 30, 2007 and 2006 was 7,883,577
      and 7,859,903 respectively. The number of diluted shares outstanding for the
      three months ended September 30, 2007 and 2006 was 8,106,796 and 8,065,153
      respectively.





4.  Commitments
      and Contingencies





The
      Company is subject to various investigations, claims and legal proceedings
      covering a wide range of matters that arise in the ordinary course of its
      business activities. The Company has recognized the costs and associated
      liabilities only for those investigations, claims and legal proceedings for
      which, in its view, it is probable that liabilities have been incurred and
      the
      related amounts are estimable. Based upon information currently available,
      management believes that existing accrued liabilities are sufficient and that
      it
      is not reasonably possible at this time to believe that any additional
      liabilities will result from the resolution of these matters that would have
      a
      material adverse effect on the Company’s consolidated results of operations,
      financial position or cash flows.





8





5.
      Financing





On
      September 1, 2005, the Bank and the Company agreed to an amendment of the credit
      facility. In conjunction with the amendment to the Company’s credit facility,
      the Bank extended the maturity on the Company’s revolving credit facility from
      April 24, 2007 to September 1, 2008. Based on the Company’s current level of
      debt, and performance, debt would bear interest at the Bank’s prime rate. The
      prime rate was 7.75% on September 30, 2007. The interest rate on prime rate
      loans may increase from prime to prime plus 0.75% if the ratio of the Company’s
      funded debt to EBITDA exceeds 2.5. The amended credit facility also provides
      the
      Company with a rate of LIBOR plus 1.75%, at the Company’s option. The optional
      LIBOR rate may increase from LIBOR plus 1.75% to LIBOR plus 2.75% based on
      the
      Company’s fixed charge coverage ratio. The 90-day LIBOR rate was 5.23% at
      September 30, 2007.





At
      September 30, 2007 the Company had no aggregate indebtedness, including capital
      lease obligations, short-term debt and long term debt.





The
      Company was in compliance with all of the financial covenants associated with
      its credit facility at September 30, 2007.




6.
      Baralyme® Agreement





A
      reconciliation of deferred revenue resulting from the agreement with Abbott
      Laboratories (“Abbott”), with the amounts received under the agreement, and
      amounts recognized as net sales is as follows:


Three
                  Months endedSeptember
                  30,2007
              
              2006Beginning
                  balance
              
              $
              2,402,500
              
              $
              1,937,500Payment
                  Received fromAbbott
                  Laboratories
              
              
              -
              
              
              -Revenue
                  recognizedas
                  net sales
              
              
              (116,250
              )
              
              (116,250
              )2,286,250
              
              
              1,821,250Less
                  - Current portionof
                  deferred revenue
              
              
              (465,000
              )
              
              (465,000
              )$
              1,821,250
              
              $
              1,356,250




9





In
      addition to the provisions of the agreement relating to the withdrawal of the
      Baralyme® product, Abbott has agreed to pay Allied up to $2,150,000 in product
      development costs to pursue development of a new carbon dioxide absorption
      product for use in connection with inhalation anesthetics that does not contain
      potassium hydroxide and does not produce a significant exothermic reaction
      with
      currently available inhalation agents. As of September 30, 2007; $854,355 has
      been received, and $97,551 is receivable, as a result of product development
      activities. For the three months ended September 30, 2007, $97,551 has been
      included in Net Sales and $97,551 has been included in Cost of Sales.




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





**RESULTS
      OF OPERATIONS**





**Three
      months ended September 30, 2007 compared to three months ended September 30,
      2006.**





Allied
      had net sales of $14.1 million for the three months ended September 30, 2007,
      down $0.4 million, or 2.8%, from net sales of $14.5 million in the prior year
      same quarter. Although customer purchase order releases were up $0.1 million
      compared to the same period of the prior year, shipments of the Company’s
      products for the first quarter of fiscal 2008 were lower due to short term
      delays in production and the timing of those order releases. These production
      delays have been resolved.





Sales
      for
      the three months ended September 30, 2007 include $116,250 for the recognition
      into income of payments resulting from the agreement with Abbott Laboratories
      to
      cease the production and distribution of Baralyme®. Sales for the three months
      ended September 30, 2007 also include $97,551 as a result of product development
      activities to pursue development of a new carbon dioxide absorption product.
      The
      agreement with Abbott provides for Abbott to pay Allied up to $2,150,000 in
      product development cost to pursue development of a new carbon dioxide
      absorption product for use in connection with inhalation anesthetics that does
      not contain potassium hydroxide and does not produce a significant exothermic
      reaction with currently available inhalation agents.




10





The
      Company ceased the sale of Baralyme® on August 27 th ,
      2004.
      Sales for the three months ended September 30, 2006 include $116,250 for the
      recognition into income of payments resulting from the agreement with Abbott
      Laboratories to cease the production and distribution of Baralyme®. Sales for
      the three months ended September 30, 2006 also include $149,512 as a result
      of
      product development activities to pursue development of a new carbon dioxide
      absorption product. Income from the agreement will continue to be recognized
      over eight years, the term of the agreement, at $38,750 per month. Allied
      continues to sell Carbolime®, a carbon dioxide absorbent with a different
      formulation than Baralyme®.





Domestic
      sales were down 9.8% from the prior year same quarter, while international
      business, which represented 21.7% of first quarter sales, was up 37.2%. Orders
      for the Company’s products for the three months ended September 30, 2007 of
      $13.2 million were $0.6 million or 4.3% lower than orders for the prior year
      same quarter of $13.8 million. Domestic orders are down 2.9% over the prior
      year
      same quarter while international orders are down 12.9%. The Company believes
      this decrease in orders does not reflect a loss of market share, but reflects
      order timing.





Gross
      profit for the three months ended September 30, 2007 was $3.2 million, or 22.7%
      of net sales, compared to $3.5 million, or 24.1% of net sales, for the three
      months ended September 30, 2006. The decrease in gross profit as a percent
      of
      sales is primarily due to lower sales volume and a decrease in inventory. The
      lower level of sales combined with the $0.8 million decrease in inventory
      results in less effective utilization of the Company’s manufacturing capacity
      and the fixed expenses associated with that capacity. Cost of sales for the
      three months ended September 30, 2007 also included $97,551 as a result of
      product development of a new carbon dioxide absorption product.





Selling,
      general and administrative expenses for the three months ended September 30
      2007
      and 2006 were $3.0 million and $3.2 million, respectively. Selling, general
      and
      administrative cost decreases for the current period include $96,000 for
      recruiting and relocation expenses and $58,000 for research and development
      expenses from the prior year same quarter. Additionally, legal expense decreased
      $18,000 and insurance expense decreased $18,000 from the prior year same
      quarter.





Income
      from operations was $0.1 million for the three months ended September 30, 2007
      compared to $0.3 million for the three months ended September 30, 2006. Interest
      income was $40,769 for the three months ended September 30, 2007 compared to
      interest income of $28,169 for the three months ended September 30, 2006. Allied
      had income before provision for income taxes in the first quarter of fiscal
      2008
      of $0.1 million, compared to income before provision for income taxes in the
      first quarter of fiscal 2007 of $0.3 million. The Company recorded a tax
      provision of $0.1 million for the three month period ended September 30, 2007
      and September 30, 2006.




11





Net
      income for the first quarter of fiscal 2008 was $0.1 million or $0.01 per basic
      and diluted share compared to net income for the first quarter of fiscal 2007
      was $0.2 million or $0.03 per basic and diluted share. The weighted average
      number of common shares outstanding, used in the calculation of basic earnings
      per share for the first quarters of fiscal 2008 and 2007 were 7,883,577 and
      7,859,903 shares respectively. The weighted average number of common shares
      outstanding used in the calculation of diluted earnings per share for the first
      quarters of fiscal 2008 and fiscal 2007 were 8,106,796 and 8,065,153 shares,
      respectively.





**LIQUIDITY
      AND CAPITAL RESOURCES**





The
      Company believes that available resources and anticipated cash flows from
      operations are sufficient to meet operating requirements in the coming
      year.





The
      Company’s working capital was $17.3 million at September 30, 2007 compared to
      $17.3 million at June 30, 2007. Cash and cash equivalents increased by $0.4
      million. Other current assets increased $0.3 million as a result of an increase
      in prepaid insurance and accrued liabilities decreased $0.1 million. Accounts
      receivable increased $0.1 million to $7.4 million at September 30, 2007.
      Accounts receivable as measured in days of sales outstanding (“DSO”) was 45 DSO
      at September 30, 2007, unchanged from June 30, 2007. At September 30, 2007,
      these increases in working capital were offset by a $0.8 million decrease in
      Inventory.





On
      September 1, 2005, the Bank and the Company agreed to an amendment of the credit
      facility. In conjunction with the amendment to the Company’s credit facility,
      the Bank extended the maturity on the Company’s revolving credit facility from
      April 24, 2007 to September 1, 2008. Based on the Company’s current level of
      debt, and performance, debt would bear interest at the Bank’s prime rate. The
      prime rate was 7.75% on September 30, 2007. The interest rate on prime rate
      loans may increase from prime to prime plus 0.75% if the ratio of the Company’s
      funded debt to EBITDA exceeds 2.5. The amended credit facility also provides
      the
      Company with a rate of LIBOR plus 1.75%, at the Company’s option. The optional
      LIBOR rate may increase from LIBOR plus 1.75% to LIBOR plus 2.75% based on
      the
      Company’s fixed charge coverage ratio. The 90-day LIBOR rate was 5.23% at
      September 30, 2007.





At
      September 30, 2007 the Company had no aggregate indebtedness, including capital
      lease obligations, short-term debt and long term debt.





The
      Company was in compliance with all of the financial covenants associated with
      its credit facility at September 30, 2007.




12





In
      the
      event that economic conditions were to severely worsen for a protracted period
      of time, we believe that our borrowing capacity under our credit facilities
      will
      provide sufficient financial flexibility. The Company would have options
      available to ensure liquidity in addition to increased borrowing. Capital
      expenditures, which are budgeted at $1.5 million for the fiscal year ended
      June
      30, 2008, could be postponed. At September 30, 2007, the Company had no bank
      debt. Based on the Company’s current level of debt, and performance, debt would
      bear interest at the Bank’s prime rate. The Company’s agreement with the Bank
      does include provisions for higher interest rates at higher debt levels and
      different levels of Company performance.





Inflation
      has not had a material effect on the Company’s business or results of
      operations.





**Litigation
      and Contingencies**





The
      Company becomes, from time to time, a party to personal injury litigation
      arising out of incidents involving the use of its products. The Company believes
      that any potential judgments resulting from these claims over its self-insured
      retention will be covered by the Company’s product liability
      insurance.





**Recent
      Accounting Pronouncements**





In
      June
      2006, the Financial Accounting Standards Board (FASB) issued Interpretation
      No.
      48 (“FIN 48”) “Accounting for Uncertainty in Income Taxes,” which clarifies the
      accounting for uncertainty in income taxes recognized in the financial
      statements in accordance with FASB Statement No. 109, “Accounting for Income
      Taxes”. FIN 48 provides guidance on the financial statement recognition and
      measurement of a tax position taken or expected to be taken in a tax return.
      FIN
      48 also provides guidance on derecognition, classification, interest and
      penalties, accounting in interim periods, disclosures, and
      transition.





The
      Company adopted FIN 48 as of July 1, 2007. The cumulative effect of adopting
      FIN
      48 has been recorded as a net decrease to retained earnings of $111,143. On
      the
      date of adoption of FIN 48, and September 30, 2007, the Company had
      approximately $220,000 of unrecognized tax benefits. Of the unrecognized tax
      benefits at September 30, 2007, approximately $82,000 would impact the Company’s
      effective income tax rate if recognized.





The
      Internal Revenue Service (IRS) commenced an examination of the Company’s U.S.
      income tax returns for the fiscal years ended June 30, 2005 and 2006 in the
      third quarter of fiscal 2007. The examination is anticipated to be complete
      by
      the end of fiscal 2008. As of September 30, 2007 the IRS has discussed certain
      potential adjustments with the Company. Management is currently evaluating
      those
      potential adjustments to determine if it agrees, but if accepted the Company
      does not anticipate the adjustments would result in a material change in its
      financial position. Due to the ongoing IRS examination, the Company anticipates
      that it is reasonably possible that the unrecognized tax benefits may increase
      or decrease, but are unable to reasonably estimate the range.




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The
      Company’s federal income tax returns for the tax fiscal years 2004 and after
      remain subject to examination. The various states in which the Company is
      subject to income tax are generally open for the tax fiscal years 2004 and
      after.





The
      Company classifies interest expenses on taxes payable as interest expense.
      The
      Company classifies penalties as a component of other expenses. The total
      interest and penalty expense related to tax uncertainties recognized for the
      three months ended September 30, 2007 were approximately $5,000. Accrued
      interest and penalties of $70,000 related to income tax uncertainties were
      recognized as a component of other noncurrent liabilities at September 30,
      2007.





**Item
      3. Quantitative and Qualitative Disclosure about Market
      Risk**





At
      September 30, 2007, the Company did not have any debt outstanding. The revolving
      credit facility bears an interest rate using the commercial bank’s “floating
      reference rate” or LIBOR as the basis, as defined in the loan agreement, and
      therefore is subject to additional expense should there be an increase in market
      interest rates.





The
      Company had no holdings of derivative financial or commodity instruments at
      September 30, 2007. Allied Healthcare Products has international sales; however
      these sales are denominated in U.S. dollars, mitigating foreign exchange rate
      fluctuation risk.





**Item
      4. Controls and Procedures**





Evaluation
      of Disclosure Controls and Procedures





(a)
      As of
      September 30, 2007, the Company, under the supervision, and with the
      participation, of its management, including its principal executive officer
      and
      principal financial officer, performed an evaluation of the Company’s disclosure
      controls and procedures, as contemplated by Securities Exchange Act Rule 13a-15.
      Based on that evaluation, the Company’s principal executive officer and
      principal financial officer concluded that such disclosure controls and
      procedures were effective as of September 30, 2007.




(b)
      There
      has been no change in our internal controls over financial reporting during
      the
      quarter ended September 30, 2007, that has materially affected, or is reasonably
      likely to materially affect, our internal control over financial
      reporting.




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Part
      II.  OTHER
      INFORMATION





**Item
      6.**  **Exhibits**





(a)
      Exhibits:




31.1
            Certification
                of Chief Executive Officer (filed
                herewith)





31.2
            Certification
                of Chief Financial Officer (filed
                herewith)





32.1
            Sarbanes-Oxley
                Certification of Chief Executive Officer (furnished
                herewith)*





32.2
            Sarbanes-Oxley
                Certification of Chief Financial Officer (furnished
                herewith)*





99.1
            Press
                Release dated November 14, 2007 announcing first quarter
                earnings*




*Notwithstanding
      any incorporation of this Quarterly Report on Form 10-Q in any other filing
      by
      the Registrant, Exhibits furnished herewith and designated with an asterisk
      (*)
      shall not be deemed incorporated by reference to any other filing under the
      Securities Act of 1933 or the Securities Exchange Act of 1934 unless
      specifically otherwise set forth therein.





15




SIGNATURE





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.


ALLIED
                HEALTHCARE PRODUCTS, INC./s/
                Daniel C. DunnDaniel
                C. Dunn
              Chief
                Financial OfficerDate:
                November 13, 2007


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