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 March 31, 2009 ̈
                          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.





Yesx            No ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See definitions of "large accelerated filer,” “accelerated
filer" and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.





Large accelerated
      filer ̈
                Accelerated
      filer  ̈
                Non-accelerated filer  ̈
                Smaller
      reporting company x(Do not check if a
      Smaller Reporting Company)





Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such
files).





Yes   ̈            No   ̈





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




Yes   ̈           
No  x





The
number of shares of common stock outstanding at May 4, 2009 is 7,901,327
shares.








INDEXPageNumberPart
      I –
                                    Financial
      InformationItem
      1.
                                    Financial
      StatementsConsolidated
      Statement of Operations -
                                    3Three
      and nine months ended March 31,2009
      and 2008 (Unaudited)Consolidated
      Balance Sheet -
                                    4 -
      5March
      31, 2009 (Unaudited) andJune
      30, 2008Consolidated
      Statement of Cash Flows -
                                    6Nine
      months ended March 31, 2009 and 2008(Unaudited)Notes
      to Consolidated Financial Statements
                                    7 -
      10Item
      2.
                                    Management’s
      Discussion and Analysis of
                                    10
      - 15Financial
      Condition and Results of OperationsItem
      3.
                                    Quantitative
      and Qualitative Disclosure
                                    16about
      Market RiskItem
      4T.
                                    Controls
      and Procedures
                                    16Part
      II -
                                    Other
      InformationItem
      6.
                                    Exhibits
                                    17Signature
                                    18





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, 2008.  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 ended
                      
                      
                      Nine months endedMarch 31,
                      
                      
                      March 31,2009
                      
                      
                      2008
                      
                      
                      2009
                      
                      
                      2008Net
      sales
                      
                      $
                      12,389,640
                      
                      
                      $
                      13,943,852
                      
                      
                      $
                      39,361,993
                      
                      
                      $
                      41,671,485Cost
      of sales
                      
                      
                      9,915,884
                      
                      
                      
                      10,779,631
                      
                      
                      
                      30,677,586
                      
                      
                      
                      32,428,408Gross
      profit
                      
                      
                      2,473,756
                      
                      
                      
                      3,164,221
                      
                      
                      
                      8,684,407
                      
                      
                      
                      9,243,077Selling,
      general and administrative expenses
                      
                      
                      3,198,135
                      
                      
                      
                      3,013,413
                      
                      
                      
                      9,782,064
                      
                      
                      
                      8,988,810Income
      (loss) from operations
                      
                      
                      (724,379
                      )
                      
                      
                      150,808
                      
                      
                      
                      (1,097,657
                      )
                      
                      
                      254,267Interest
      income
                      
                      
                      (5,041
                      )
                      
                      
                      (13,928
                      )
                      
                      
                      (54,155
                      )
                      
                      
                      (92,874
                      )Interest
      expense
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      5,849
                      
                      
                      
                      -Other,
      net
                      
                      
                      13,403
                      
                      
                      
                      9,241
                      
                      
                      
                      36,583
                      
                      
                      
                      35,5048,362
                      
                      
                      
                      (4,687
                      )
                      
                      
                      (11,723
                      )
                      
                      
                      (57,370
                      )Income
      (loss) before provision for(benefit
      from) income taxes
                      
                      
                      (732,741
                      )
                      
                      
                      155,495
                      
                      
                      
                      (1,085,934
                      )
                      
                      
                      311,637Provision
      for (benefit from) income taxes
                      
                      
                      (282,469
                      )
                      
                      
                      55,824
                      
                      
                      
                      (407,925
                      )
                      
                      
                      118,421Net
      income (loss)
                      
                      $
                      (450,272
                      )
                      
                      $
                      99,671
                      
                      
                      $
                      (678,009
                      )
                      
                      $
                      193,216Basic
      and diluted earnings (loss) per share
                      
                      $
                      (0.06
                      )
                      
                      $
                      0.01
                      
                      
                      $
                      (0.09
                      )
                      
                      $
                      0.02Weighted
      average shares outstanding - basic
                      
                      
                      7,901,327
                      
                      
                      
                      7,883,577
                      
                      
                      
                      7,897,937
                      
                      
                      
                      7,883,577Weighted
      average shares outstanding - diluted
                      
                      
                      7,901,327
                      
                      
                      
                      8,122,888
                      
                      
                      
                      7,897,937
                      
                      
                      
                      8,117,684





See
accompanying Notes to Consolidated Financial Statements.


3





ALLIED
HEALTHCARE PRODUCTS, INC.


CONSOLIDATED
BALANCE SHEET


ASSETS





(Unaudited)March
      31,
                  
                  
                  June
      30,2009
                  
                  
                  2008Current
      assets:Cash
      and cash equivalents
                  
                  $
                  2,036,057
                  
                  
                  $
                  6,149,015Accounts
      receivable, net of allowances of $300,000
                  
                  
                  5,758,278
                  
                  
                  
                  6,441,683Inventories,
      net
                  
                  
                  13,658,441
                  
                  
                  
                  12,046,450Other
      current assets
                  
                  
                  454,631
                  
                  
                  
                  394,975Total
      current assets
                  
                  
                  21,907,407
                  
                  
                  
                  25,032,123Property,
      plant and equipment, net
                  
                  
                  10,878,246
                  
                  
                  
                  10,542,573Goodwill
                  
                  
                  15,979,830
                  
                  
                  
                  15,979,830Other
      assets, net
                  
                  
                  694,144
                  
                  
                  
                  703,328Total
      assets
                  
                  $
                  49,459,627
                  
                  
                  $
                  52,257,854




See
accompanying Notes to Consolidated Financial Statements.





(CONTINUED)


4


ALLIED
HEALTHCARE PRODUCTS, INC.


CONSOLIDATED
BALANCE SHEET


(CONTINUED)


LIABILITIES
AND STOCKHOLDERS' EQUITY





(Unaudited)March
      31,
                    
                    
                    June
      30,2009
                    
                    
                    2008Current
      liabilities:Accounts
      payable
                    
                    $
                    2,303,360
                    
                    
                    $
                    2,590,804Other
      accrued liabilities
                    
                    
                    1,530,382
                    
                    
                    
                    2,960,334Deferred
      income taxes
                    
                    
                    514,461
                    
                    
                    
                    500,238Deferred
      revenue
                    
                    
                    688,200
                    
                    
                    
                    690,000Total
      current liabilities
                    
                    
                    5,036,403
                    
                    
                    
                    6,741,376Deferred
      revenue
                    
                    
                    1,663,150
                    
                    
                    
                    2,177,500Commitments
      and contingenciesStockholders'
      equity:Preferred
      stock; $0.01 par value; 1,500,000 shares authorized; no shares issued and
      outstanding
                    
                    
                    -
                    
                    
                    
                    -Series
      A preferred stock; $0.01 par value; 200,000 shares authorized; no shares
      issued and outstanding
                    
                    
                    -
                    
                    
                    
                    -Common
      stock; $0.01 par value; 30,000,000 shares authorized; 10,204,819 and
      10,188,569 shares issued at March 31, 2009 and June 30, 2008,
      respectively; 7,901,327 and 7,885,077 shares outstanding
      at  March 31, 2009 and June 30, 2008,
    respectively
                    
                    
                    102,048
                    
                    
                    
                    101,886Additional
      paid-in capital
                    
                    
                    47,623,027
                    
                    
                    
                    47,524,084Retained
      earnings
                    
                    
                    15,766,427
                    
                    
                    
                    16,444,436Less
      treasury stock, at cost; 2,303,492 shares at  March 31, 2009 and
      June 30, 2008
                    
                    
                    (20,731,428
                    )
                    
                    
                    (20,731,428
                    )Total
      stockholders' equity
                    
                    
                    42,760,074
                    
                    
                    
                    43,338,978Total
      liabilities and stockholders' equity
                    
                    $
                    49,459,627
                    
                    
                    $
                    52,257,854





See
accompanying Notes to Consolidated Financial Statements.


5





ALLIED
HEALTHCARE PRODUCTS, INC.


CONSOLIDATED
STATEMENT OF CASH FLOWS


(UNAUDITED)





Nine
      months endedMarch 31,2009
                    
                    
                    2008Cash
      flows from operating activities:Net
      income (loss)
                    
                    $
                    (678,009
                    )
                    
                    $
                    193,216Adjustments
      to reconcile net income (loss) to net cash provided by (used in) operating
      activities:Depreciation
      and amortization
                    
                    
                    1,074,119
                    
                    
                    
                    964,454Stock
      based compensation
                    
                    
                    17,392
                    
                    
                    
                    57,269Provision
      for doubtful accounts and sales returns and allowances
                    
                    
                    2,886
                    
                    
                    
                    (110,894
                    )Deferred
      taxes
                    
                    
                    14,223
                    
                    
                    
                    (22,908
                    )Loss
      on disposition of equipment
                    
                    
                    3,056
                    
                    
                    
                    5,228Changes
      in operating assets and liabilities:Accounts
      receivable
                    
                    
                    680,519
                    
                    
                    
                    216,393Inventories
                    
                    
                    (1,611,991
                    )
                    
                    
                    1,412,189Other
      current assets
                    
                    
                    (59,655
                    )
                    
                    
                    (175,996
                    )Accounts
      payable
                    
                    
                    (287,444
                    )
                    
                    
                    (809,256
                    )Deferred
      revenue
                    
                    
                    (516,150
                    )
                    
                    
                    (348,750
                    )Other
      accrued liabilities
                    
                    
                    (1,429,952
                    )
                    
                    
                    (626,474
                    )Net
      cash provided by (used in) operating activities
                    
                    
                    (2,791,006
                    )
                    
                    
                    754,471Cash
      flows from investing activities:Capital
      expenditures
                    
                    
                    (1,403,665
                    )
                    
                    
                    (509,197
                    )Purchase
      of intangible asset
                    
                    
                    -
                    
                    
                    
                    (35,000
                    )Net
      cash used in investing activities
                    
                    
                    (1,403,665
                    )
                    
                    
                    (544,197
                    )Cash
      flows from financing activities:Stock
      options exercised
                    
                    
                    81,094
                    
                    
                    
                    -Excess
      tax benefit from exercise of stock options
                    
                    
                    619
                    
                    
                    
                    -Net
      cash provided by financing activities
                    
                    
                    81,713
                    
                    
                    
                    -Net
      increase (decrease) in cash and cash equivalents
                    
                    
                    (4,112,958
                    )
                    
                    
                    210,274Cash
      and cash equivalents at beginning of period
                    
                    
                    6,149,015
                    
                    
                    
                    3,638,870Cash
      and cash equivalents at end of period
                    
                    $
                    2,036,057
                    
                    
                    $
                    3,849,144





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, 2008.





Recent Accounting
Pronouncements




In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
Combinations (FAS 141(R)). FAS 141(R) requires that the fair value of the
purchase price of an acquisition including the issuance of equity securities be
determined on the acquisition date; requires that all assets, liabilities,
noncontrolling interests, contingent consideration, contingencies, and
in-process research and development costs of an acquired business be recorded at
fair value at the acquisition date; requires that acquisition costs generally be
expensed as incurred; requires that restructuring costs generally be expensed in
periods subsequent to the acquisition date; and requires that changes in
deferred tax asset valuation allowances and acquired income tax uncertainties
after the measurement period impact income tax expense. FAS 141(R) also broadens
the definition of a business combination and expands disclosures related to
business combinations. FAS 141(R) will be applied prospectively to business
combinations occurring after the beginning of the Company's fiscal year 2010,
except that business combinations consummated prior to the effective date must
apply FAS 141(R) income tax requirements immediately upon adoption. The Company
is currently evaluating the impact of FAS 141(R) on its financial position,
results of operations, and cash flows, and does not anticipate any material
effect on the Company's consolidated financial statements.




In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements.  SFAS No. 157 does not require any new fair value
measurements, but provides guidance on how to measure fair value by providing a
fair value hierarchy used to classify the source of the
information.  This statement was effective for the Company beginning
July 1, 2008.Adoption of
SFAS No. 157 did not have a material impact on the Company’s results of
operations, financial position or cash flows.


7





2.           
Inventories





Inventories
are comprised as follows:





March 31, 2009
                  
                  
                  June 30, 2008Work-in
      progress
                  
                  $
                  922,894
                  
                  
                  $
                  807,358Raw
      materials and component parts
                  
                  
                  9,453,403
                  
                  
                  
                  8,072,976Finished
      goods
                  
                  
                  4,469,351
                  
                  
                  
                  4,465,599Reserve
      for obsolete and excessinventory
                  
                  
                  (1,187,207
                  )
                  
                  
                  (1,299,483
                  )$
                  13,658,441
                  
                  
                  $
                  12,046,450





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 March 31, 2009 and 2008 were 7,901,327 and 7,883,577
respectively.  The number of diluted shares outstanding for the three
months ended March 31, 2009 and 2008 was 7,901,327 and 8,122,888
respectively.  The number of basic shares outstanding for the nine
months ended March 31, 2009 and 2008 were 7,897,937 and 7,883,577
respectively.  The number of diluted shares outstanding for the nine
months ended March 31, 2009 and 2008 was 7,897,937 and 8,117,684
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 30, 2008, 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 to September 1, 2010, with automatic renewals.  The amendment
also increased the capital expenditure limitation to $4,000,000, from
$2,000,000, for the fiscal year ended June 30, 2009.  The entire
credit facility continues to accrue interest at the Bank’s prime
rate.  The prime rate was 3.25% on March 31, 2009. 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
continues to provide 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 1.21% at March 31,
2009.





At March
31, 2009 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 March 31, 2009.





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 ended
                      March 31,
                    
                    
                    Nine Months ended
                      March 31,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Beginning
      balance
                    
                    $
                    2,522,950
                    
                    
                    $
                    2,170,000
                    
                    
                    $
                    2,867,500
                    
                    
                    $
                    2,402,500Payment
      Received from Abbott Laboratories
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Revenue
      recognized as net sales
                    
                    
                    (171,600
                    )
                    
                    
                    (116,250
                    )
                    
                    
                    (516,150
                    )
                    
                    
                    (348,750
                    )2,351,350
                    
                    
                    
                    2,053,750
                    
                    
                    
                    2,351,350
                    
                    
                    
                    2,053,750Less
      - Current portion of deferred revenue
                    
                    
                    (688,200
                    )
                    
                    
                    (465,000
                    )
                    
                    
                    (688,200
                    )
                    
                    
                    (465,000
                    )$
                    1,663,150
                    
                    
                    $
                    1,588,750
                    
                    
                    $
                    1,663,150
                    
                    
                    $
                    1,588,750


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 March 31, 2009; $2,150,000 has been
received as a result of product development activities.  For the three
and nine months ended March 31, 2009; $0 and $99,000, has been included in Net
Sales, respectively.  For the three and nine months ended March 31,
2009; $0 and $94,000, has been included in Cost of Sales,
respectively.





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





RESULTS OF
OPERATIONS





Three months ended March 31,
2009 compared to three months ended March 31, 2008





Allied
had net sales of $12.4 million for the three months ended March 31, 2009, down
$1.5 million, or 10.8%, from net sales of $13.9 million in the prior year same
quarter. Customer orders were $0.8 million lower than the prior year same
quarter.    Purchase order releases were $1.9 million lower
than in the prior year same quarter.  Purchase order release times
depend on the scheduling practices of individual customers, and do vary over
time. Releases for the quarter are also impacted by year to date orders which
are $2.1 million lower than in the prior year.  At this time, the
Company believes this decrease in orders and releases is due to broad economic
conditions and does not represent a decrease in the Company’s market
share.





Sales
were also down from the prior year due to a $122,000 decrease in sales
recognized as a result of product development activities to pursue development
of a new carbon dioxide absorption product.  Sales for the three
months ended March 31, 2008 include $122,000 as a result of product development
activities to pursue development of a new carbon dioxide absorption
product.  While the Company continues to pursue development of a new
product, reimbursement of those activities by Abbott was completed during the
quarter ended September 30, 2008.  Additional cost to develop the new
product during the third quarter of fiscal 2009 was not reimbursed.





Sales for
the three months ended March 31, 2009 include $171,600 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 March 31, 2008 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®.  Income from the
agreement will continue to be recognized at $57,350 per month until the
expiration of the agreement in August 2012.  Allied continues to sell
Carbolime®, a carbon dioxide absorbent with a different formulation than
Baralyme®.  The Company ceased the sale of Baralyme® on August 27th,
2004.


10





Domestic
sales were down 13.4% from the prior year same quarter, while international
business, which represented 22.2% of third quarter sales, was down
2.0%.  Orders for the Company’s products for the three months ended
March 31, 2009 of $12.5 million were $0.8 million or 6.3% lower than orders for
the prior year same quarter of $13.4 million.  Domestic orders are
down 7.3% over the prior year same quarter while international orders, which
represented 20.2% of third quarter orders, were 2.2 % lower than orders for the
prior year same quarter.  At this time, the Company believes this
decrease in domestic orders is due to market conditions, and does not represent
a decrease in the Company’s market share.





Gross
profit for the three months ended March 31, 2009 was $2.5 million, or 20.2% of
net sales, compared to $3.2 million, or 23.0% of net sales, for the three months
ended March 31, 2008.  Gross profit during the third quarter was
negatively impacted by the lower level of sales and low production volume,
resulting in less effective utilization of the Company’s manufacturing capacity
and the fixed expenses associated with that capacity.





Selling,
general and administrative expenses for the three months ended March 31, 2009
were $3.2 million compared to selling, general and administrative expenses of
$3.0 million for the three months ended March 31 2008.  Salaries and
benefits increased approximately $0.2 million.  This increase is
primarily due to open employee positions in the third quarter of the prior
fiscal year and normal increases in the cost of fringe
benefits.  There have not been changes in staffing levels compared to
the same quarter of the prior fiscal year.  Selling, general and
administrative expenses also include approximately $24,000 in product
development cost for the new carbon dioxide absorption product being
developed.  In the prior year all development cost for this product
were reimbursed.  These development costs will continue for the
remainder of the fiscal year and are estimated to be an additional
$300,000.





Loss from
operations was $0.7 million for the three months ended March 31, 2009 compared
to income from operations of $0.2 million for the three months ended March 31,
2008.  Interest income was $5,041 for the three months ended March 31,
2009 compared to interest income of $13,928 for the three months ended March 31,
2008.   Allied had loss before benefit from income taxes in the
third quarter of fiscal 2009 of $0.7 million, compared to income before
provision for income taxes in the third quarter of fiscal 2008 of $0.2
million.  The Company recorded a tax benefit of $0.3 million for the
three-months ended March 31, 2009 compared to a tax provision of $0.1 million
for the three months ended March 31, 2008.





Net loss
for the third quarter of fiscal 2009 was $0.5 million or $0.06 per basic and
diluted share compared to net income of $0.1 million or $0.01 per basic and
diluted share for the third quarter of fiscal 2008.  The weighted
average number of common shares outstanding, used in the calculation of basic
earnings per share for the third quarters of fiscal 2009 and 2008 were 7,901,327
and 7,883,577 shares, respectively.  The weighted average number of
common shares outstanding used in the calculation of diluted earnings per share
for the third quarters of fiscal 2009 and fiscal 2008 were 7,901,327 and
8,122,888 shares, respectively.


11





Nine months ended March 31,
2009 compared to nine months ended March 31, 2008





Allied
had net sales of $39.4 million for the nine months ended March 31, 2009, down
$2.3 million, or 5.5%, from net sales of $41.7 million in the prior year same
period. Customer orders were $2.1 million lower than in the prior year same
period, and customer purchase order releases were $2.7 million lower than in the
prior year same period.  Purchase order release times depend on the
scheduling practices of individual customers and do vary over
time.  At this time, the Company believes this decrease in orders and
releases is due to broad economic conditions and does not represent a decrease
in market share.





Sales
were also down from the prior year due to a $671,000 decrease in sales
recognized as a result of product development activities to pursue development
of a new carbon dioxide absorption product.  While the Company
continues to pursue development of a new product, reimbursement of those
activities was limited to $99,000 during the nine months ended March 31,
2009.  Additional cost to develop the new product will not be
reimbursed.





Sales for the nine
months ended March 31, 2009 include $516,150 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 nine months
ended March 31, 2009 also include $99,000 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.  As of March 31, 2009; $2,150,000 has been received as a
result of product development activities.  The Company ceased the sale
of Baralyme® on August 27th,
2004.





Sales for
the nine months ended March 31, 2008 include $348,750 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
nine months ended March 31, 2008 also include $671,000 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 at
$57,350 per month until the expiration of the agreement in August
2012.  Allied continues to sell Carbolime®, a carbon dioxide absorbent
with a different formulation than Baralyme®.


12


Domestic
sales were down 4.8% from the first nine months of the prior year, while
international business, which represented 19.3% of the first nine months of
sales, was down 8.6%.  Orders for the Company’s products for the nine
months ended March 31, 2009 of  $38.1 million were $2.2 million or
5.5% lower than orders for the prior year same period of $40.3
million.  International orders, which represented 20.3% of the first
nine months of orders, are up 6.9% over the prior year same period while
domestic orders are down 8.0% over the prior year same period.  At
this time, the Company believes this decrease is due to market conditions and
does not represent a decrease in the Company’s market share.





Gross
profit for the nine months ended March 31, 2009 was $8.7 million, or 22.1% of
net sales, compared to $9.2 million, or 22.1% of net sales, for the nine months
ended March 31, 2008.  Cost of sales for the nine months ended March
31, 2009 also include $94,000 as a result of product development of a new carbon
dioxide absorption product.





Selling,
general and administrative expenses for the nine months ended March 31, 2009
were $9.8 million, a net increase of $0.8 million, or 8.9%, from $9.0 million
for the nine months ended March 31, 2008.  Salaries and benefits
increased by $0.6 million from the prior year primarily due to open employee
positions in the prior fiscal year and normal increases in the cost of fringe
benefits.  There have not been changes in staffing levels over the
prior year.  Also, outside services increased approximately $139,000
primarily for the testing of the Company’s new EPV100 and MCV ventilators
designed to meet the needs of the mass casualty and pandemic
markets.  Additionally, legal expenses increased by approximately $0.1
million, as a result of product liability claims.  Selling, general
and administrative expenses also include approximately $92,000 in product
development cost for the new carbon dioxide absorption product being
developed.  In the prior year all development cost for this product
were reimbursed.  These development costs will continue for the
remainder of the fiscal year and are estimated to be an additional
$300,000.





Loss from
operations was $1.1 million for the nine months ended March 31, 2009 compared to
income from operations of $0.3 million for the nine months ended March 31,
2008.  Interest income was $54,155 for the nine months ended March 31,
2009 compared to interest income of $92,874 for the nine months ended March 31,
2008.  Allied had loss before benefit for income taxes for the first
nine months of fiscal 2009 of $1.1 million, compared to income before provision
for income taxes for the first nine months of fiscal 2008 of $0.3
million.  The Company recorded a tax benefit of $0.4 million for the
nine-month period ended March 31, 2009, versus a tax provision of $0.1 million
for the nine-month period ended March 31, 2008.





In fiscal
2009, the net loss for the first nine months was $0.7 million or $0.09 per basic
and diluted share compared to net income of $0.2 million or $0.02 per basic and
diluted share for the first nine months of fiscal 2008. The weighted average
number of common shares outstanding, used in the calculation of basic earnings
per share for the first nine months of fiscal 2009 and 2008 were 7,897,937 and
7,883,577 shares, respectively.   The weighted average number of
common shares outstanding used in the calculation of diluted earnings per share
for the first nine months of fiscal 2009 and fiscal 2008 were 7,897,937 and
8,117,684 shares, respectively.


13





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 $16.9 million at March 31, 2009 compared to $18.3
million at June 30, 2008.  Accrued liabilities decreased $1.4 million
and accounts payable decreased $0.3 million.  Inventory increased $1.6
million, and other current assets increased $0.1 million.  At March
31, 2009 these increases in working capital were more than offset by a decrease
in Cash and cash equivalents of $4.1 million and a decrease of $0.7 million in
accounts receivable to $5.8 million at March 31, 2009.  Accounts
receivable as measured in days of sales outstanding (“DSO”) increased to 39 DSO
at March 31, 2009; up from 34 DSO at June 30, 2008.





The
increase in inventory is primarily due to the decrease in sales during the
second and third quarters of fiscal 2009. The Company does believe that
inventory will decline as a result of reductions in purchases and production to
adjust for the lower demand during the year.  However, approximately
$620,000 of the $1.6 million increase in inventory is due to finished goods and
components for the Company’s new mass casualty ventilators and is permanent in
nature.  Also, approximately $800,000 of the $4.1 million decrease in
Cash and cash equivalents is due to investment in capital expenditures for cost
reduction projects.  Additionally, approximately $550,000 of the
decrease in Cash and cash equivalents is due to investment in capital
expenditures for the Company’s new product introductions and maintenance of
plant capacity.





On
September 30, 2008, 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 to September 1, 2010, with automatic renewals.  The amendment
also increased the capital expenditure limitation to $4,000,000, from
$2,000,000, for the fiscal year ended June 30, 2009.  The entire
credit facility continues to accrue interest at the Bank’s prime
rate.  The prime rate was 3.25% on March 31, 2009. 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
continues to provide 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 1.21% at March 31,
2009.





At March
31, 2009 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 March 31, 2009.


14





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 $3.4 million
for the fiscal year ended June 30, 2009, could be postponed.  At March
31, 2009, 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
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
Combinations (FAS 141(R)). FAS 141(R) requires that the fair value of the
purchase price of an acquisition including the issuance of equity securities be
determined on the acquisition date; requires that all assets, liabilities,
noncontrolling interests, contingent consideration, contingencies, and
in-process research and development costs of an acquired business be recorded at
fair value at the acquisition date; requires that acquisition costs generally be
expensed as incurred; requires that restructuring costs generally be expensed in
periods subsequent to the acquisition date; and requires that changes in
deferred tax asset valuation allowances and acquired income tax uncertainties
after the measurement period impact income tax expense. FAS 141(R) also broadens
the definition of a business combination and expands disclosures related to
business combinations. FAS 141(R) will be applied prospectively to business
combinations occurring after the beginning of the Company's fiscal year 2010,
except that business combinations consummated prior to the effective date must
apply FAS 141(R) income tax requirements immediately upon adoption. The Company
is currently evaluating the impact of FAS 141(R) on its financial position,
results of operations, and cash flows, and does not anticipate any material
effect on the Company's consolidated financial statements.




In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements.  SFAS No. 157 does not require any new fair value
measurements, but provides guidance on how to measure fair value by providing a
fair value hierarchy used to classify the source of the
information.  This statement was effective for the Company beginning
July 1, 2008.Adoption of SFAS No.
157did not
have a material impact on the Company’s results of operations,
financial position or cash flows.


15





Item
      3.
            Quantitative
      and Qualitative Disclosure about Market
Risk





At March
31, 2009, 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
March 31, 2009.  Allied Healthcare Products has international sales;
however these sales are denominated in U.S. dollars, mitigating foreign exchange
rate fluctuation risk.





Item
      4T.
            Controls
      and Procedures





(a)
            Disclosure
      Controls and Procedures.




The
Company maintains controls and procedures designed to ensure that information
required to be disclosed in the reports that the Company files or submits under
the Securities Exchange Act of 1934 is recorded, processed, summarized, and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission and that such information is accumulated and
communicated to the Company's management, including its Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure. Based upon their evaluation of those controls and
procedures performed as of March 31, 2009, the Chief Executive Officer and Chief
Financial Officer of the Company concluded that its disclosure controls and
procedures were effective.





(b)
            Changes
      in internal control over financial
reporting





There
were no changes in the Company’s internal controls for financial reporting or
other factors during the quarter ended March 31, 2009 that could significantly
affect such internal controls.  However, the Company has been engaged
in the process of further reviewing and documenting its disclosure controls and
procedures, including its internal accounting controls.  The Company
may from time to time make changes aimed at enhancing the effectiveness of its
disclosure controls and procedures, including its internal controls, to ensure
that the Company’s systems evolve with its business.


16


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 May 12, 2009 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.


17





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. DunnChief
      Financial OfficerDate:
      May 12, 2009


18