<PAGE>

                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)
   [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
           SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended    MARCH 31, 2001
                               --------------------

                                       OR

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

               For the transition period from _______ to ________.

                      Commission file number:     1-10986

                                  MISONIX, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

         New York                                            11-2148932
-------------------------------                         -------------------
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                         Identification No.)


   1938 New Highway, Farmingdale, N.Y.                          11375
  -------------------------------------                        -------
(Address of principal executive offices)                      (Zip Code)

                                 (631) 694-9555
                                 --------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:

                                                       Outstanding at
             Class of Common Stock                       May 1, 2001
             ---------------------                       -----------
                $.01 par value                            6,079,015

<PAGE>

                                  MISONIX, INC.

Index

Part I -  FINANCIAL INFORMATION                                            Page

Item 1. Financial Statements:

         Consolidated Balance Sheets as of
         March 31, 2001 (Unaudited) and June 30, 2000                      3

         Consolidated Statements of Operations
         Nine Months Ended March 31, 2001
         and 2000 (Unaudited)                                              4

         Consolidated Statements of Operations
         Three Months Ended March 31, 2001
         and 2000 (Unaudited)                                              5

         Consolidated Statements of Cash Flows
         Nine months ended March 31, 2001
         and 2000 (Unaudited)                                              6-7

         Notes to Consolidated Financial Statements                        8-12

Item 2.  Management's Discussion and Analysis of Financial Condition       13-18
             and Results of Operations

Item 3.  Quantitative and Qualitative Disclosures About Market Risk        19

Part II - OTHER INFORMATION                                                20

Item 1.  Legal Proceedings                                                 20

Item 6.  Exhibits and Reports on Form 8-K                                  20

Signatures                                                                 21

                                        2
<PAGE>

Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.

                                  MISONIX, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                              MARCH 31,       JUNE 30,
                                                                2001            2000
                                                             (UNAUDITED)
                                                            ------------    ------------
<S>                                                         <C>             <C>
ASSETS
Current assets:
    Cash and cash equivalents                               $  3,106,695    $  7,069,502
    Investments held to maturity                               1,987,854       3,021,268
    Accounts receivable, net of allowance for
      doubtful accounts of $195,024 and $200,429,
      respectively                                             7,504,445       7,277,242
    Notes receivable                                             203,651         111,867
    Inventories                                                8,722,983       4,273,223
    Deferred income taxes                                        249,298         167,238
    Prepaid expenses and other current assets                  2,416,801         682,606
                                                            ------------    ------------
Total current assets                                          24,191,727      22,602,946
Property, plant and equipment, net                             3,091,817       3,111,112
Deferred income taxes                                          1,806,000         286,297
Goodwill, less accumulated amortization
   of $504,675 and $211,516, respectively                      3,567,843       2,007,151
Investment in Focus Surgery, Inc. and
   Hearing Innovations, Inc. less accumulated
   amortization of $406,626 and $233,450 and
   cumulative equity in losses of $819,938 and
   $531,014, respectively                                      2,629,527       3,069,536
Convertible debentures - Hearing Innovations, Inc.               311,375              --
Convertible debentures - Focus Surgery, Inc.                     305,166              --
Other assets                                                     164,794          86,580
                                                            ------------    ------------
Total assets                                                $ 36,068,249    $ 31,163,622
                                                            ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes payable                                            $    495,286    $    473,050
   Accounts payable                                            2,816,352       2,053,192
   Accrued expenses and other current liabilities              1,280,406       1,323,114
   Litigation settlement liabilities                           5,450,000              --
   Income taxes payable                                               --       1,283,554
   Current maturities of long-term debt
     and capital lease obligations                               214,130         189,632
                                                            ------------    ------------
Total current liabilities                                     10,256,174       5,322,542
Long-term debt and capital lease obligations                   1,072,863       1,274,738
Deferred income                                                  548,729         395,060
Minority interest                                                268,888         289,094
Stockholders' equity:
   Common stock, $.01 par value-shares authorized
   10,000,000; 6,121,915 and 5,967,817 issued,
   respectively                                                   61,219          59,678
   Additional paid-in capital                                 21,924,987      21,801,969
   Retained earnings                                           2,471,245       2,294,570
   Treasury stock, 42,900 shares                                (219,006)       (219,006)
   Accumulated other comprehensive loss                         (316,850)        (55,023)
                                                            ------------    ------------
Total stockholders' equity                                    23,921,595      23,882,188
                                                            ------------    ------------
Total liabilities and stockholders' equity                  $ 36,068,249    $ 31,163,622
                                                            ============    ============
</TABLE>

See accompanying Notes to Consolidated Financial Statements

                                       3
<PAGE>

                                  MISONIX, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                           For the nine months ended
                                                                   March 31,
                                                        -------------------------------
                                                            2001               2000
                                                        ------------       ------------
<S>                                                     <C>                <C>
Net sales                                               $ 21,812,405       $ 20,587,326

Cost of goods sold                                        10,385,568         10,989,538
                                                        ------------       ------------
Gross profit                                              11,426,837          9,597,788

Operating expenses:
   Selling expenses                                        2,904,166          2,281,753
   General and administrative expenses                     4,571,949          3,777,363
   Research and development expenses                       1,376,016          1,071,764
   Bad debt expense (recovery)                                 6,730           (401,846)
   Litigation settlement expenses                          5,450,000                 --
                                                        ------------       ------------
Total operating expenses                                  14,308,861          6,729,034
                                                        ------------       ------------
(Loss) income from operations                             (2,882,024)         2,868,754


Other income  (expense):
Interest income                                              446,032            488,089
Interest expense                                            (111,850)          (116,989)
License fees                                                  18,235             18,234
Royalty income                                               515,902            460,837
Amortization of investments                                 (173,175)          (150,308)
Foreign exchange gain (loss)                                     384             (2,950)
Miscellaneous income                                             720              6,033
                                                        ------------       ------------
(Loss) income before equity in loss of Focus Surgery,
  Inc., equity in loss of Hearing Innovations, Inc.,
  minority interest and income taxes                      (2,185,776)         3,571,700

Equity in loss of Focus Surgery, Inc.                       (256,780)          (305,928)
Equity in loss of Hearing Innovations, Inc.                  (32,144)           (33,548)
Minority interest in net loss (income)
   of consolidated subsidiaries                               20,206            (33,977)
                                                        ------------       ------------
(Loss) income before income taxes                         (2,454,494)         3,198,247

Income tax benefit (provision)                             2,631,169         (1,312,930)
                                                        ------------       ------------
Net income                                              $    176,675       $  1,885,317
                                                        ============       ============
Net income per share - Basic                            $        .03       $        .32
                                                        ============       ============
Net income per share - Diluted                          $        .03       $        .29
                                                        ============       ============
Weighted average common shares outstanding - Basic         5,991,087          5,942,538
                                                        ============       ============
Weighted average common shares outstanding - Diluted       6,549,124          6,494,533
                                                        ============       ============
</TABLE>

See accompanying Notes to Consolidated Financial Statements

                                       4
<PAGE>

                                  MISONIX, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                        For the three months ended
                                                                March 31,
                                                        --------------------------
                                                            2001           2000
                                                            ----           ----
<S>                                                     <C>            <C>
Net sales                                               $ 7,404,556    $ 6,820,221
Cost of goods sold                                        3,529,115      3,540,543
                                                        -----------    -----------
Gross profit                                              3,875,441      3,279,678

Operating expenses:
   Selling expenses                                       1,121,859        868,670
   General and administrative expenses                    1,514,818      1,428,107
   Research and development expenses                        552,499        479,260
   Bad debt expense (recovery)                               19,303       (441,941)
   Litigation settlement expenses                         5,450,000             --
                                                        -----------    -----------
Total operating expenses                                  8,658,479      2,334,096
                                                        -----------    -----------
(Loss) income from operations                            (4,783,038)       945,582

Other income  (expense):
Interest income                                             116,248        159,551
Interest expense                                            (36,996)       (39,276)
License fees                                                  6,079          6,078
Royalty income                                              108,222        150,540
Amortization of investments                                 (57,725)       (57,725)
Foreign exchange loss                                        (2,928)        (1,272)
                                                        -----------    -----------
(Loss) income before equity in loss of Focus Surgery,
  Inc., equity in loss of Hearing Innovations, Inc.,
  Minority interest and income taxes                     (4,650,138)     1,163,478

Equity in loss of Focus Surgery, Inc.                       (85,593)      (104,000)
Equity in loss of Hearing Innovations, Inc.                 (10,558)       (16,774)
Minority interest in net (income) loss
   of consolidated subsidiaries                              (6,037)         7,289
                                                        -----------    -----------
(Loss) income before income taxes                        (4,752,326)     1,049,993

Income tax benefit (provision)                            1,832,997       (480,578)
                                                        -----------    -----------
Net (loss) income                                       $(2,919,329)   $   569,415
                                                        ===========    ===========
Net (loss) income per share - Basic                     $      (.48)   $       .10
                                                        ===========    ===========
Net (loss) income per share - Diluted                   $      (.48)   $       .09
                                                        ===========    ===========

Weighted average common shares outstanding - Basic        6,079,002      5,918,271
                                                        ===========    ===========

Weighted average common shares outstanding - Diluted      6,079,002      6,545,527
                                                        ===========    ===========
</TABLE>

See accompanying Notes to Consolidated Financial Statements

                                       5
<PAGE>

                                  MISONIX, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                 For the nine months ended
                                                                         March 31,
                                                                 --------------------------
                                                                     2001           2000
                                                                     ----           ----
<S>                                                              <C>            <C>
OPERATING ACTIVITIES:
    Net income                                                   $   176,675    $ 1,885,317
    Adjustments to reconcile net income to net cash
      provided by operating activities:
      Bad debt expense (recovery)                                      6,730       (401,846)
      Deferred income tax (benefit) expense                       (1,601,763)       (21,027)
      Depreciation and amortization                                  803,455        552,964
      Loss on disposal of equipment                                       --        111,661
      Non-cash compensation charge                                        --         10,768
      Deferred income                                                153,669        (18,234)
      Foreign currency gain                                             (384)         2,950
      Minority interest in net (loss) income of subsidiaries         (20,206)        33,977
      Equity in loss of Focus Surgery, Inc.                          256,780        305,928
      Equity in loss of Hearing Innovations, Inc.                     32,144         33,548
      Change in operating assets and liabilities:
      Accounts receivable                                           (260,512)       937,167
      Inventories                                                 (3,684,788)    (1,519,354)
      Prepaid expenses and other current assets                   (1,759,012)      (500,043)
      Other assets                                                   (14,436)           506
      Accounts payable and accrued expenses                          426,742     (1,955,979)
      Litigation settlement liabilities                            5,450,000             --
      Income taxes payable                                        (1,300,378)       856,830
                                                                 -----------    -----------
      Net cash (used in) provided by operating activities         (1,335,284)       315,133
                                                                 -----------    -----------

INVESTING ACTIVITIES:
      Acquisition of property, plant and equipment                  (316,621)      (246,282)
      Redemption of investments held to maturity                   2,099,976      3,957,009
      Purchase of investments held to maturity                    (1,066,562)    (3,004,064)
      Purchase of Labcaire stock                                    (117,349)      (173,777)
      Cash paid for acquisition of Sonic Technologies
          Laboratory Services                                       (318,636)            --
      Cash paid for acquisition of CraMar Technologies, Inc.        (309,531)            --
      Cash paid for acquisition of Fibra Sonics, Inc., net of
          cash acquired                                           (1,723,191)            --
      Purchase of convertible debentures - Focus Surgery, Inc.      (305,166)            --
      Purchase of convertible debentures - Hearing                                       --
          Innovations, Inc.                                         (202,827)
      Loan to Hearing Innovations, Inc.                             (200,332)            --
      Cash paid for investment in Hearing Innovations, Inc.               --       (534,000)
      Cash paid for acquisition of Sonora Medical Systems,
          Inc., net of cash acquired                                (169,713)      (227,233)
                                                                 -----------    -----------
      Net cash used by investing activities                       (2,629,952)      (228,347)
                                                                 -----------    -----------
</TABLE>

                                        6
<PAGE>

                                  MISONIX, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
FINANCING ACTIVITIES:
<S>                                                         <C>            <C>
    Proceeds from short-term borrowings, net                     53,461         11,546
    Payment of revolving line of credit                              --       (222,388)
    Principal payments on capital lease obligations            (145,154)      (156,305)
    Proceeds from exercise of stock options                     124,559         64,376
    Purchase of treasury stock                                       --       (219,006)
    Payment of long-term debt                                   (31,746)       (39,173)
                                                            -----------    -----------
    Net cash provided by (used in) financing activities           1,120       (560,950)
                                                            -----------    -----------
    Effect of exchange rates on cash and cash equivalents         1,309        (29,990)
                                                            -----------    -----------
    Net decrease in cash and cash equivalents                (3,962,807)      (504,154)
    Cash and cash equivalents at beginning of period          7,069,502      8,361,231
                                                            -----------    -----------
    Cash and cash equivalents at end of period              $ 3,106,695    $ 7,857,077
                                                            ===========    ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Interest paid                                           $   111,850    $   116,989
                                                            ===========    ===========
    Income taxes paid                                       $ 1,832,416    $   564,350
                                                            ===========    ===========
NON-CASH INVESTING ACTIVITIES:
      Conversion of notes receivable from Hearing
          Innovations, Inc. to convertible debentures
          and equity investment                             $   113,444    $   400,000
                                                            ===========    ===========
</TABLE>

     See accompanying Notes to Consolidated Financial Statements

                                        7
<PAGE>

                                  MISONIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (Information with respect to interim periods is unaudited)

1.  Basis of Presentation

    The accompanying unaudited consolidated financial statements have been
    prepared in accordance with generally accepted accounting principles for
    interim financial information and with the instructions to Form 10-Q and
    Article 10 of Regulation S-X. Accordingly, they do not include all of the
    information and footnotes required by generally accepted accounting
    principles for complete financial statements. In the opinion of the
    management, all adjustments (consisting of normal recurring accruals)
    considered necessary for a fair presentation have been included. Operating
    results for the three and nine month periods ended March 31, 2001 are not
    necessarily indicative of the results that may be expected for the year
    ending June 30, 2001.

    The balance sheet at June 30, 2000 has been derived from the audited
    financial statements at that date, but does not include all of the
    information and footnotes required by generally accepted accounting
    principles for complete financial statements.

    For further information, refer to the consolidated financial statements and
    footnotes thereto included in the Company's Annual Report on Form 10-K for
    the year ended June 30, 2000.

2.  Litigation Settlement

    The Company recorded a litigation settlement charge of $5,450,000 during the
    third quarter ended March 31, 2001. The United States Court of Appeals for
    the Federal Circuit Court issued a decision reversing in large part the
    decision of the trial court and granting the motion by Mentor H/S, Inc.
    ("Mentor") against Medical Device Alliance, Inc., its subsidiary LySonix,
    Inc. and the Company for violation of Mentor's U.S. Patent No. 4,886,491.
    This patent covers Mentor's license for ultrasonic assisted liposuction.
    Damages were asserted in favor of Mentor for approximately $4,900,000 and
    the Court affirmed that the lower court did not have the ability to increase
    damages or award attorney's fees. Mentor may request further relief in the
    trial court, including interest and damages award and a permanent injunction
    enjoining further sales of the LySonix 2000. The Company and its
    co-defendants are considering all alternatives including further legal
    measures that are available. Accordingly, the Company accrued $5,450,000 for
    damages, attorney fees and other costs during the third quarter ended March
    31, 2001.

3.  Acquisitions

    Fibra Sonics, Inc.

    On February 8, 2001, the Company acquired certain assets and liabilities of
    Fibra Sonics, Inc. ("Fibra Sonics"), a Chicago-based, privately-held
    producer and marketer of ultrasonic medical devices for approximately
    $1,800,000. In addition to the purchase price, contingent consideration of
    up to, but not exceeding $1,120,000, may be made based upon sales generated
    during the consecutive twelve months commencing June 1, 2001. In the event
    any additional payments are made to Fibra Sonics, such payments will be
    recorded as additional goodwill and amortized over the remaining useful
    life. The Company will relocate the assets of Fibra Sonics to the Company's
    Farmingdale facility from Chicago Illinois. The acquisition was accounted
    for as a purchase. Accordingly, the acquired assets and liabilities have
    been initially recorded at their estimated fair value at the date of
    acquisition. The final allocation of the purchase price is pending the final
    determination of the inventory acquired. The excess of the cost of the
    acquisition ($1,720,738 plus acquisition costs of $128,453, which includes a
    broker fee of $100,716) over the fair value of net assets acquired of
    $1,285,571 is being treated as goodwill and being amortized on a
    straight-line basis over a period of 5 years.

                                       8
<PAGE>

                                  MISONIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (Information with respect to interim periods is unaudited)
                                   (CONTINUED)

    Focus Surgery, Inc.

    On November 7, 2000, the Company purchased a $300,000, 5.1% Secured
    Cumulative Convertible Debenture from Focus Surgery, Inc. ("Focus Surgery"),
    due December 22, 2002 (the "Focus Debenture"). The Focus Debenture is
    convertible to 250 shares of Focus Surgery preferred stock at the option of
    the Company at any time after December 22, 2000 for two years at a
    conversion rate of $1,200 per share, if the Focus Debenture is not retired
    by Focus Surgery. Interest accrues and is payable at maturity, or is
    convertible on the same terms as the Focus Debenture's principal amount. The
    Focus Debenture is secured by a lien on all of Focus Surgery's right, title
    and interest in accounts receivable, inventory, property, plant and
    equipment and processes of specified products whether now existing or
    hereafter arising after the date of the Focus Debenture. The principal and
    accrued interest of the Focus Debenture is $305,166 at March 31, 2001.

    Labcaire Systems Ltd.

    On November 1, 2000, under the terms of the revised purchase agreement (the
    "Labcaire Agreement") with Labcaire (as discussed in the Form 10-K for the
    year ended June 30, 2000), the Company paid $117,349 for 9,286 shares
    (2.65%) of the outstanding common stock of Labcaire bringing the acquired
    interest to 94.65%. This represents the fiscal 2001 buy-back portion, as
    defined in the Labcaire Agreement. As per the Labcaire Agreement, the
    Company is obligated to purchase 2.65% for the next three years until the
    Company owns 100% of Labcaire.

    Sonic Technologies Laboratory Services

    On October 12, 2000, the Company's subsidiary, Sonora, acquired the assets
    of Sonic Technologies Laboratory Services ("Sonic Technologies"), an
    ultrasound acoustic measurement and testing laboratory for approximately
    $319,000. The assets of the Hatboro, Pennsylvania-based operations of
    privately-held Sonic Technologies were relocated to Sonora's facility in
    Longmont, Colorado. The acquisition was accounted for as a purchase.
    Accordingly, acquired assets and liabilities have been recorded at their
    estimated fair value at the date of acquisition. The excess of the cost of
    the acquisition ($270,000 plus acquisition costs of $48,636, which includes
    a broker fee of $25,000) over the fair value of net assets acquired of
    $301,219 is being amortized on a straight-line basis over a period of 10
    years.

    Hearing Innovations, Inc.

    During the second and third quarters of fiscal 2001, the Company entered
    into eight loan agreements whereby Hearing Innovations, Inc. ("Hearing
    Innovations") was required to pay the Company amounts of $200,332 due May
    30, 2001. All notes bear interest at 8% per annum. The notes are secured by
    a lien on all of Hearing Innovations' right, title and interest in accounts
    receivable, inventory, property, plant and equipment and processes of
    specified products whether now existing or hereafter arising after the date
    of these agreements.

    During the fourth quarter of fiscal 2000, the Company entered into four loan
    agreements whereby Hearing Innovations was required to pay the Company
    amounts of $24,000 due July 1, 2000, $45,000 due July 15, 2000, $29,000 due
    July 15, 2000 and $13,000 due July 15, 2000. During the first quarter of
    fiscal 2001, the Company entered into an additional four loan agreements
    whereby Hearing Innovations was required to pay the Company the total
    principal amounts of $39,000, $13,000, $13,000 and $13,000 due September 15,
    2000. All notes bore interest at 8% per annum. The notes were secured by a
    lien on all of Hearing Innovations' right, title and interest in accounts
    receivable, inventory, property, plant and equipment and processes of
    specified products whether now existing or hereafter arising after the date
    of these agreements.

                                       9
<PAGE>

                                  MISONIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (Information with respect to interim periods is unaudited)
                                   (CONTINUED)

    No payments were made on the above notes. On September 11, 2000, the Company
    loaned an additional $108,000 to Hearing Innovations, which together with
    the then outstanding loans aggregating $192,000 (with accrued interest)
    described above were exchanged for a $300,000 7% Secured Convertible
    Debenture due August 27, 2002 (the "Hearing Debenture") and warrants to
    acquire 66,667 shares of Hearing Innovations common stock at $2.25 per
    share. The Hearing Debenture is convertible at the option of the Company at
    any time into shares of common stock of Hearing Innovations at a conversion
    rate of $2.25 per share. Interest accrues and is payable at maturity, or is
    convertible on the same terms as the Hearing Debenture's principal amount.
    The warrants expire August 27, 2002. If the Company were to convert the
    Hearing Debenture and exercise all warrants, including those previously
    outstanding, the Company would hold an approximately 20% interest in Hearing
    Innovations. The principal and accrued interest of the Hearing Debenture is
    $311,375 at March 31, 2001.

    CraMar Technologies, Inc.

    On July 27, 2000, the Company's subsidiary, Sonora, acquired 100% of the
    assets of CraMar Technologies, Inc. ("CraMar"), an ultrasound equipment
    servicer for approximately $310,000. The assets of the Colorado-based,
    privately-held operations of CraMar were relocated to Sonora's facility in
    Longmont, Colorado. The acquisition was accounted for as a purchase.
    Accordingly, acquired assets have been recorded at their estimated fair
    value at the date of acquisition. The cost of the acquisition ($272,908 plus
    acquisition costs of $36,623, which includes a broker fee of $25,000)
    approximates the fair value of net assets acquired.

4.  Inventories

    Inventories are summarized as follows:

<TABLE>
<CAPTION>
                                           March 31, 2001      June 30, 2000
                                           --------------      -------------
          <S>                               <C>                 <C>
          Raw materials                     $  4,265,886        $ 2,321,828
          Work-in-process                      1,287,679            362,664
          Finished goods                       3,169,418          1,588,731
                                            ------------        -----------
                                            $  8,722,983        $ 4,273,223
                                            ============        ===========
</TABLE>

    The increase in inventory is due to an increase in medical devices and
    industrial products. The buildup of inventory is due to anticipated
    shipments for the fourth quarter ending June 30, 2001.

5.  Income Taxes

    The Company recorded a reduction of the valuation allowance applied against
    deferred tax assets in accordance with the provisions of FASB statement
    No.109 "Accounting for Income Taxes" which provided a one-time income tax
    benefit of $1,681,502 during the first quarter of fiscal year 2001. The
    valuation allowance was established in fiscal year 1997 because the future
    tax benefit of certain below market stock option grants issued at that time
    could not be reasonably assured. The Company continually reviews the
    adequacy of the valuation allowance and recognized the income tax benefit
    during the quarter due to the reasonable expectation that such tax benefit
    will be realized due to the fiscal strength of the Company. Management
    believes that it will generate taxable income sufficient to realize the tax
    benefit associated with future deductible temporary differences and,
    therefore, the Company reduced the valuation allowance to zero during the
    first quarter of fiscal year 2001.

                                       10
<PAGE>

                                  MISONIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (Information with respect to interim periods is unaudited)
                                   (CONTINUED)

    During the year the Company made estimated tax payments which will exceed
    taxes payable for the fiscal year ended June 30, 2001. The reduced taxes
    payable was a result of the recording of an unanticipated litigation
    settlement expense of $5.4 million. Included in prepaid expenses and
    other current assets as of March 31, 2001 is approximately $1,600,000
    of income tax receivable.

6.  Accrued Expenses and Other Current Liabilities

    The following summarizes accrued expenses and other current liabilities:

<TABLE>
<CAPTION>
                                              March 31, 2001       June 30, 2000
                                              --------------       -------------
    <S>                                         <C>                  <C>
    Accrued payroll and vacation                $  130,903           $  111,764
    Accrued sales tax                               15,797               29,638
    Accrued commissions and bonuses                265,644              413,292
    Customer deposits                              446,596              278,635
    Professional fees                               58,513              117,640
    Warranty                                       312,907              309,766
    Other                                           50,046               62,379
                                                ----------           ----------
                                                $1,280,406           $1,323,114
                                                ==========           ==========
</TABLE>

7.  Commitments and Contingencies

    Employment Agreement

    The Company has entered into a new employment agreement with its chief
    executive officer and president, which expires on October 31, 2002. This
    agreement provides an annual base compensation of $275,000 with an annual
    bonus at the discretion of the Board of Directors if certain objectives are
    achieved. The agreement also provides for a guaranteed initial bonus of
    $250,000, which is to be paid in December 2001.

8.  Business Segments

    Commencing in fiscal year 2001, the Company operates in two business
    segments, which are organized by product types: industrial products and
    medical devices. Industrial products include the Sonicator ultrasonic liquid
    processor, Aura ductless fume enclosure, the Autoscope endoscope
    disinfectant system from Labcaire and the Mystaire scrubber. Medical devices
    include the Auto Sonix for ultrasonic cutting and coagulatory system and
    refurbishing revenues of high-performance ultrasound systems and replacement
    transducers for the medical diagnostic ultrasound industry. The Company
    evaluates the performance of the segments based upon income (loss) from
    operations less general and administrative expenses, bad debt expense and
    litigation settlement expenses. The accounting policies of the segments are
    the same as those described in the summary of significant accounting
    policies (Note 1) in the Company's June 30, 2000 Form 10-K. Certain items
    are maintained at the corporate headquarters (corporate) and are not
    allocated to the segments. They primarily include general and administrative
    expenses, bad debt expense and litigation settlement expenses. The Company
    does not allocate assets by segment as they are not provided to the chief
    decision maker. Summarized financial information for each of the segments
    for the nine and three months ended March 31, 2001 is as follows:

                                       11
<PAGE>

                                  MISONIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (Information with respect to interim periods is unaudited)
                                   (CONTINUED)

    For the nine months ended March 31, 2001

<TABLE>
<CAPTION>
                                                                   (a)
                                  MEDICAL       INDUSTRIAL    CORPORATE AND
                                  DEVICES        PRODUCTS      UNALLOCATED       TOTAL
                                ------------   ------------   ------------    ------------
    <S>                         <C>            <C>            <C>             <C>
    Net sales                   $  9,017,843   $ 12,794,562   $         --    $ 21,812,405
    Cost of goods sold             4,117,430      6,268,138             --      10,385,568
                                ------------   ------------                   ------------
    Gross profit                   4,900,413      6,526,424             --      11,426,837
    Direct selling expenses          621,067      2,283,099             --       2,904,166
    Direct research and
       development                   850,249        525,767             --       1,376,016
                                ------------   ------------                   ------------
    Total direct operating
       expenses                    1,471,316      2,808,866             --       4,280,182
                                ------------   ------------
    Corporate and unallocated             --             --     10,028,679      10,028,679
                                                              ------------    ------------
    Income (loss) from
        operations              $  3,429,097   $  3,717,558   $(10,028,679)   $ (2,882,024)
                                ============   ============   ============    ============
    </TABLE>

    (a)  Amount represents general and administrative, litigation settlement
         expenses and bad debt expense.

    For the three months ended March 31, 2001

<TABLE>
<CAPTION>
                                                                (a)
                                  MEDICAL     INDUSTRIAL   CORPORATE AND
                                  DEVICES      PRODUCTS     UNALLOCATED       TOTAL
                                -----------   -----------   -----------    -----------
    <S>                         <C>           <C>           <C>            <C>
    Net sales                   $ 3,235,468   $ 4,169,088   $        --    $ 7,404,556
    Cost of goods sold            1,393,391     2,135,724            --      3,529,115
                                -----------   -----------                  -----------
    Gross profit                  1,842,077     2,033,364            --      3,875,441
    Direct selling expenses         314,399       807,460            --      1,121,859
    Direct research and
       development                  360,304       192,195            --        552,499
                                -----------   -----------                  -----------
    Total direct operating
       expenses                     674,703       999,655            --      1,674,358
                                -----------   -----------
    Corporate and unallocated                                 6,984,121      6,984,121
                                                            -----------    -----------
    Income (loss) from
       operations               $ 1,167,374   $ 1,033,709   $(6,984,121)   $(4,783,038)
                                ===========   ===========   ===========    ===========
</TABLE>

    (a)  Amount represents general and administrative, litigation settlement
         expenses and bad debt expense.

The following table provides a breakdown of foreign sales by geographic area
during the periods indicated:

<TABLE>
<CAPTION>
                                            For the nine months ended
                                                     March 31

                                              2001              2000
                                              ----              ----
    <S>                                    <C>               <C>
    Canada and Mexico                      $  190,217        $2,079,310
    United Kingdom                          4,056,726         4,037,639
    Europe                                  1,212,506         1,009,409
    Asia                                      560,792           489,631
    Middle East                                48,953           250,428
    Other                                      87,451           173,215
                                           ----------        ----------
                                           $6,156,645        $8,039,632
                                           ==========        ==========
</TABLE>

                                       12
<PAGE>

                                  MISONIX, INC.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Nine months and Three months ended March 31, 2001 and 2000.

Net sales: Net sales of the Company's medical devices and industrial products
increased $1,225,079 (5.9%) from $20,587,326 for the nine months ended March 31,
2000 to $21,812,405 for the nine months ended March 31, 2001. This increase in
net sales is due to the increase in medical devices partially offset by a
decrease in industrial products. The increase in medical devices are due to the
inclusion of nine months of revenues of Sonora of $2,169,676, offset by $452,034
of lower medical devices. Industrial products decreased $492,563 predominately
due to less fume enclosure sales of $853,642, offset by an increase in wet
scrubber (Mystaire) sales of $374,358. The weakening of the English Pound
represents approximately $524,000 of the decrease in Labcaire fume enclosure
product sales.

Net sales of the Company's medical devices and industrial products increased
$584,335 (8.6%) from $6,820,221 for the three months ended March 31, 2000 to
$7,404,556 for the three months ended March 31, 2001. The increase is due to
larger revenues from medical devices predominantly from Sonora and industrial
products, primarily from wet scrubber (Mystaire).

The Company's backlog of unfilled orders increased from $9,219,560 at March 31,
2000 to $10,548,824 at March 31, 2001. This increase is primarily due to an
increase in medical device orders.

Gross profit: Gross profit increased to 52.4% of sales in the nine months ended
March 31, 2001 from 46.6% of sales in the nine months ended March 31, 2000.
Gross profit increased to 52.3% of sales in the three months ended March 31,
2001 from 48.1% of sales in the three months ended March 31, 2000. The increases
in gross profit for the periods are due to an increase in profit margins on
industrial product sales. In prior year and quarter wet scrubber (Mystaire) had
a large contract with one customer with a significantly lower gross profit
margin than the current year.

Selling expense: Selling expense increased $622,413 or 27.3% from $2,281,753
(11.1% of sales) in the nine months ended March 31, 2000 to $2,904,166 (13.3% of
sales) in the nine months ended March 31, 2001. Medical device selling expenses
increased $470,968 primarily due to the inclusion of nine months of Sonora of
$319,077 and increased sales and marketing efforts in all medical devices, such
as hiring of additional salesman. Industrial product selling expenses increased
$151,445 due to increased sales and marketing efforts in all industrial
products. Selling expense increased $253,189 or 29.1% from $868,670 (12.7% of
sales) in the three months ended March 31, 2000 to $1,121,859 (15.1% of sales)
in the three months ended March 31, 2001, primarily due to increased sales and
marketing efforts in medical devices, such as hiring of additional salesman.

                                       13
<PAGE>

                                  MISONIX, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

General and administrative expenses: General and administrative expenses
increased $794,586 or 21% from $3,777,363 in the nine months ended March 31,
2000 to $4,571,949 in the nine months ended March 31, 2001. The increases are
primarily due to the inclusion of the consolidated results of Sonora of
$337,335, increased expenditures for investor relations activities of
approximately $115,000, amortization of Sonora, Labcaire, Sonic Technologies and
Fibra Sonics goodwill of approximately $211,000 and expenses relating to the
maintenance of the Fibra Sonics facility located in Chicago during the
transition to the Company's Farmingdale facility of approximately $50,000.
General and administrative expenses increased $86,711 or 6.1% from $1,428,107 in
the three months ended March 31, 2000 to $1,514,818 in the three months ended
March 31, 2001. The increases are primarily due to the amortization of Sonora,
Labcaire, Sonic Technologies and Fibra Sonics goodwill of approximately $80,000
and expenses relating to the maintenance of the Fibra Sonics facility located in
Chicago during the transition to the Company's Farmingdale facility of
approximately $50,000.

Research and development expenses: Research and development expenses increased
$304,252 or 28.4% from $1,071,764 in the nine months ended March 31, 2000 to
$1,376,016 in the nine months ended March 31, 2001. The increases are primarily
due to medical devices due to the inclusion of Sonora of $199,201 and increased
development costs associated with certain medical products of $61,198. The
remaining increase of $43,853 is due to an increase in development costs
associated with certain industrial products. Research and development expenses
increased $73,239 or 15.3% from $479,260 in the three months ended March 31,
2000 to $552,499 in the three months ended March 31, 2001. The increases are
primarily due to the Sonora subsidiary, which relate to development costs
associated with certain medical devices.

Bad debt expense (recovery): Bad debt expense increased from recovery of
$401,846 for the nine months ended March 31, 2000 to an expense of $6,730 for
the nine months ended March 31, 2001. Bad debt expense increased from recovery
of $441,941 for the three months ended March 31, 2000 to an expense of $19,303
for the three months ended March 31, 2001. On October 22, 1998, the Company
reserved $1,700,000 against accounts receivable due and owing by Medical Device
Alliance, Inc. ("MDA") and its wholly owned subsidiary, LySonix, Inc.
("LySonix") as licensees for the Misonix ultrasonic soft tissue aspirator. In
December of 1998, an additional reserve was taken against all remaining
receivables from MDA and LySonix totaling $369,903. On June 30, 1999, the MDA
and LySonix accounts receivable of $2,069,903 was written off against the bad
debt reserve.

On March 30, 2000, the Company and LySonix signed a new ten-year Exclusive
License Agreement ("Agreement") for the marketing of the soft tissue aspirator
for aesthetic and cosmetic surgery applications. The Agreement called for
LySonix to purchase the soft tissue aspirators and exclusively represent the
Company's products for the fragmentation and aspiration of soft tissue. The
Company was paid in full for the amounts due and owing by the return of
inventory by MDA and LySonix, which was in accordance with the Agreement. The
Company recorded the receipt of inventory at the lower of cost or market,
thereby a recovery of bad debt expense of approximately $462,000 was recorded
during the third quarter of fiscal 2000.

                                       14
<PAGE>

                                  MISONIX, INC.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Litigation settlement expenses: The Company recorded a litigation settlement
charge of $5,450,000 during the third quarter ended March 31, 2001. The United
States Court of Appeals for the Federal Circuit Court issued a decision
reversing in large part the decision of the trial court and granting the motion
by Mentor H/S, Inc. ("Mentor") against MDA, its subsidiary LySonix and the
Company for violation of Mentor's U.S. Patent No. 4,886,491. This patent covers
Mentor's license for ultrasonic assisted liposuction. Damages were asserted in
favor of Mentor for approximately $4,900,000 and the Court affirmed that the
lower court did not have the ability to increase damages or award attorney's
fees. Mentor may request further relief in the trial court, including interest
and damages award and a permanent injunction enjoining further sales of the
LySonix 2000. The Company and its co-defendants are considering all alternatives
including further legal measures that are available. Accordingly, the Company
accrued $5,450,000 for damages, attorney fees and other costs during the third
quarter ended March 31, 2001.

Other income (expense): Other income during the nine months ended March 31, 2001
was $696,248. During the nine months ended March 31, 2000, other income was
$702,946. This decrease was principally due to increased royalty income received
from the Company's licensees on the sales of medical devices offset by an
increase in amortization of the goodwill from the investments in capital stock
of Focus Surgery, Inc. ("Focus Surgery") and Hearing Innovations, Inc. ("Hearing
Innovations") and a decrease in interest income due to less cash and cash
equivalents. Other income during the three months ended March 31, 2001 was
$132,900. During the three months ended March 31, 2000, other income was
$217,896. This decrease was principally due to a decrease in interest income and
decreased royalty income received from the Company's licensees on the sales of
medical devices.

Income taxes: For the nine months ended March 31, 2001 there was a tax benefit
of $1,058,828 or 43.1% including a reduction in the deferred tax valuation
allowance of $1,681,502 during the first quarter and a reduction of the deferred
tax asset of $109,161 during the second quarter, resulting in a benefit of
$2,631,169 as compared to a tax provision of $1,312,930 or 41.1% at March 31,
2000. For the three months ended March 31, 2001 there was a tax benefit of
$1,832,997 or 38.6% as compared to a tax provision of $480,578 or 45.8% at March
31, 2000. The decreases for the period and the quarter are due to lower income
tax rates utilized due to the litigation settlement expense recorded. During the
year the Company made estimated tax payments which will exceed taxes payable for
the fiscal year ended June 30, 2001. The reduced taxes payable was a result of
the recording of an unanticipated litigation settlement expense of $5.4 million.
Included in prepaid expenses and other current assets as of March 31, 2001 is
approximately $1,600,000 of income tax receivable.

The Company recorded a reduction of the valuation allowance applied against
deferred tax assets in accordance with the provisions of FASB statement No.109
"Accounting for Income Taxes" which provided a one-time income tax benefit of
$1,681,502 during the first quarter of fiscal year 2001. The valuation allowance
was established in fiscal year 1997 because the future tax benefit of certain
below market stock option grants issued at that time could not be reasonably
assured. The Company continually reviews the adequacy of the valuation allowance
and recognized the income tax benefit during the quarter due to the reasonable
expectation that such tax benefit will be realized due to the fiscal strength of
the Company. Management believes it will generate taxable income sufficient to
realize the tax benefit associated with future deductible temporary differences
and, therefore, the Company reduced the valuation allowance to zero during the
first quarter of fiscal year 2001.

                                       15
<PAGE>

                                  MISONIX, INC.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES:

Working capital at March 31, 2001 and June 30, 2000 was $13,935,553 and
$17,280,404, respectively. The decrease in working capital is due to the buildup
of medical device and industrial product inventory, primarily at Sonora,
payments of accrued expenses and income taxes and the recording of the accrual
for the litigation settlement (see below). The Company is joint and severally
liable for the litigation settlement with its co-defendants, MDA and its
subsidiary LySonix. The Company expects to pay the damages by the end of fiscal
year 2001. The Company plans to use existing cash, cash equivalents and
investments to pay the damages assessed. The Company is currently evaluating
opportunities to enter into a revolving line of credit up to $5,000,000 with a
commercial bank.

The Company believes that its existing capital resources will enable it to
maintain its current and planned operations for at least 18 months from the date
hereof.

The Company recorded a litigation settlement charge of $5,450,000 during the
third quarter ended March 31, 2001. The United States Court of Appeals for the
Federal Circuit Court issued a decision reversing in large part the decision of
the trial court and granting the motion by Mentor against MDA, its subsidiary
LySonix and the Company for violation of Mentor's U.S. Patent No. 4,886,491.
This patent covers Mentor's license for ultrasonic assisted liposuction. Damages
were asserted in favor of Mentor for approximately $4,900,000 and the Court
affirmed that the lower court did not have the ability to increase damages or
award attorney's fees. Mentor may request further relief in the trial court,
including interest and damages award and a permanent injunction enjoining
further sales of the LySonix 2000. The Company and its co-defendants are
considering all alternatives including further legal measures that are
available. Accordingly, the Company accrued $5,450,000 for damages, attorney
fees and other costs during the third quarter ended March 31, 2001.

On February 8, 2001, the Company acquired certain assets and liabilities of
Fibra Sonics, Inc. ("Fibra Sonics"), a Chicago-based, privately-held producer
and marketer of ultrasonic medical devices for approximately $1,800,000. In
addition to the purchase price, contingent consideration of up to, but not
exceeding $1,120,000, may be made based upon sales generated during the
consecutive twelve months commencing June 1, 2001. In the event any additional
payments are made to Fibra Sonics, such payments will be recorded as additional
goodwill and amortized over the remaining useful life. The acquisition gives the
Company immediate access to three medical markets - neurosurgery, urology and
ophthalmology and is also expected to strengthen the Company's presence in
cosmetic surgery. The Company will relocate the assets of Fibra Sonics to the
Company's Farmingdale facility from Chicago Illinois. The acquisition was
accounted for as a purchase. Accordingly, the acquired assets and liabilities
have been initially recorded at their estimated fair value at the date of
acquisition. The final allocation of the purchase price is pending the final
determination of the inventory acquired. The excess of the cost of the
acquisition ($1,720,738 plus acquisition costs of $128,453, which includes a
broker fee of $100,716) over the fair value of net assets acquired of $1,285,571
is being treated as goodwill and being amortized on a straight-line basis over a
period of 5 years.

On November 7, 2000, the Company purchased a $300,000, 5.1% Secured Cumulative
Convertible Debenture from Focus Surgery, due December 22, 2002 (the "Focus
Debenture"). The Focus Debenture is convertible to 250 shares of Focus Surgery
preferred stock at the option of the Company at any time after December 22, 2000
for two years at a conversion rate of $1,200 per share, if the Focus Debenture
is not retired by Focus Surgery. Interest accrues and is payable at maturity, or
is convertible on the same terms as the Focus Debenture's principal amount. The
Focus Debenture is secured by a lien on all of Focus Surgery's right, title and
interest in accounts receivable, inventory, property, plant and equipment and
processes of specified products whether now existing or hereafter arising after
the date of the Focus Debenture. The principal and accrued interest of the Focus
Debenture is $305,166 at March 31, 2001.

                                       16
<PAGE>

                                  MISONIX, INC.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

On November 1, 2000, under the terms of the revised purchase agreement (the
"Labcaire Agreement") with Labcaire (as discussed in the Form 10-K for the year
ended June 30, 2000), the Company paid $117,349 for 9,286 shares (2.65%) of the
outstanding common stock of Labcaire bringing the acquired interest to 94.65%.
This represents the fiscal 2001 buy-back portion, as defined in the Labcaire
Agreement. As per the Labcaire Agreement, the Company is obligated to purchase
2.65% for the next three years until the Company owns 100% of Labcaire.

On October 12, 2000, the Company's subsidiary, Sonora, acquired the assets of
Sonic Technologies Laboratory Services ("Sonic Technologies"), an ultrasound
acoustic measurement and testing laboratory for approximately $319,000. The
assets of the Hatboro, Pennsylvania-based operations of privately-held Sonic
Technologies were relocated to Sonora's facility in Longmont, Colorado. The
acquisition was accounted for as a purchase. Accordingly, acquired assets and
liabilities have been recorded at their estimated fair value at the date of
acquisition. The excess of the cost of the acquisition ($270,000 plus
acquisition costs of $48,636, which includes a broker fee of $25,000) over the
fair value of net assets acquired of $301,219 is being amortized on a
straight-line basis over a period of 10 years.

During the second and third quarters of fiscal 2001, the Company entered into
eight loan agreements whereby Hearing Innovations was required to pay the
Company amounts of $200,332 due May 30, 2001. All notes bear interest at 8% per
annum. The notes are secured by a lien on all of Hearing Innovations' right,
title and interest in accounts receivable, inventory, property, plant and
equipment and processes of specified products whether now existing or hereafter
arising after the date of these agreements.

During the fourth quarter of fiscal 2000, the Company entered into four loan
agreements whereby Hearing Innovations was required to pay the Company amounts
of $24,000 due July 1, 2000, $45,000 due July 15, 2000, $29,000 due July 15,
2000 and $13,000 due July 15, 2000. During the first quarter of fiscal 2001, the
Company entered into an additional four loan agreements whereby Hearing
Innovations was required to pay the Company the total principal amounts of
$39,000, $13,000, $13,000 and $13,000 due September 15, 2000. All notes bore
interest at 8% per annum. The notes were secured by a lien on all of Hearing
Innovations' right, title and interest in accounts receivable, inventory,
property, plant and equipment and processes of specified products whether now
existing or hereafter arising after the date of these agreements. On September
11, 2000, the Company loaned an additional $108,000 to Hearing Innovations,
which together with the then outstanding loans aggregating $192,000 (with
accrued interest) described above were exchanged for a $300,000 7% Secured
Convertible Debenture due August 27, 2002 (the "Hearing Debenture") and warrants
to acquire 66,667 shares of Hearing Innovations common stock at $2.25 per share.
The Hearing Debenture is convertible at the option of the Company at any time
into shares of common stock of Hearing Innovations at a conversion rate of $2.25
per share. Interest accrues and is payable at maturity, or is convertible on the
same terms as the Hearing Debenture's principal amount. The warrants expire
August 27, 2002. If the Company were to convert the Hearing Debenture and
exercise all warrants, including those previously outstanding, the Company would
hold an approximately 20% interest in Hearing Innovations. The principal and
accrued interest of the Hearing Debenture is $311,375 at March 31, 2001.

On July 27, 2000, the Company's subsidiary, Sonora, acquired 100% of the assets
of CraMar Technologies, Inc. ("CraMar"), an ultrasound equipment servicer for
approximately $310,000. The assets of the Colorado-based, privately-held
operations of CraMar were relocated to Sonora's facility in Longmont, Colorado.
The acquisition was accounted for as a purchase. Accordingly, acquired assets
have been recorded at their estimated fair value at the date of acquisition. The
cost of the acquisition ($272,908 plus acquisition costs of $36,623, which
includes a broker fee of $25,000) approximates the fair value of net assets
acquired.

                                       17
<PAGE>

                                  MISONIX, INC.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS

    Revenue Recognition

    In December 1999, the Securities and Exchange Commission issued Staff
    Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
    Statements." SAB 101 provides guidance on applying generally accepted
    accounting principles to revenue recognition in financial statements. The
    Company will adopt SAB 101, as required, during the fourth quarter of fiscal
    2001. The Company is currently assessing the impact of SAB 101 on its
    consolidated financial statements and believes that the effect will not be
    material to the Company's operating results and financial position.

    Derivatives

    In June 1998, the Financial Accounting Standards Board ("FASB") issued
    Statement No. 133, "Accounting for Derivative Instruments and Hedging
    Activities" and on June 15, 2000, issued Statement No. 138, "Accounting for
    Certain Derivative Instruments and Certain Hedging Activities - an Amendment
    to FASB Statement No. 133." These statements establish methods of accounting
    for derivative financial instruments and hedging activities related to those
    instruments as well as other hedging activities. The Company adopted these
    statements during the first quarter of 2001. There is no material impact
    from the adoption of these statements on its consolidated financial
    statements and on the Company's operating results and financial position.

Forward Looking Statements: This report contains certain forward looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act, which are intended to be covered by the safe harbors
created thereby. Although the Company believes that the assumptions underlying
the forward looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and, therefore, there can be no assurance that
the forward looking statements contained in this report will prove to be
accurate. Factors that could cause actual results to differ from the results
specifically discussed in the forward looking statements include, but are not
limited to, the absence of anticipated contracts, higher than historical costs
incurred in performance of contracts or in conducting other activities, product
mix in sales, results of joint venture and investments in related entities,
future economic, competitive and market conditions, the outcome of legal
proceedings, as well as management business decisions.

                                       18
<PAGE>

                                  MISONIX, INC.
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market Risk:

The principal market risks (i.e. the risk of loss arising from adverse changes
in market rates and prices) to which the Company is exposed are interest rates
on short-term investments and foreign exchange rates, which generate translation
gains and losses due to the English Pound to U.S. Dollar conversion of Labcaire.

Interest Rates:

The Company's short-term investments, which approximated $2 million at March 31,
2001, are made up entirely of held to maturity investments, which include mostly
corporate bonds. Assuming investment levels remained the same, a one-point
change in interest rates would not have a material impact on the Company's
interest income. The Company does not enter into interest rate swap agreements.

Foreign Exchange Rates:

Approximately 23% of the Company's revenues in fiscal 2001 were received in
English Pounds currency. To the extent that the Company's revenues are generated
in English Pounds, its operating results are translated for reporting purposes
into U.S. Dollars using rates of 1.43 and 1.61 for the nine months ended March
31, 2001 and 2000, respectively. A strengthening of the English Pound, in
relation to the U.S. Dollar, will have the effect of increasing its reported
revenues and profits, while a weakening of the English Pound will have the
opposite effect. Since the Company's operations in England generally sets prices
and bids for contracts in English Pounds, a strengthening of the English Pound,
while increasing the value of its UK assets, might place the Company at a
pricing disadvantage in bidding for work from manufacturers based overseas. The
Company collects its receivables in the currency the subsidiary resides in. The
Company has not engaged in foreign currency hedging transactions.

Euro Conversion: The January 1, 1999 adoption of the Euro created a
single-currency market in much of Europe. For a transition period from January
1, 1999 through January 1, 2002, the existing local currencies are anticipated
to remain legal tender as denominations of the Euro. The Company does not
anticipate that its operations will be materially adversely effected by the
conversion to the Euro. The Company has analyzed the impact of conversion to the
Euro on its existing systems and operations and implemented modifications to its
systems to enable the Company to handle Euro invoicing for transactions, which
commenced in 1999. The Company anticipates that any additional cost of such
modifications should not have a material effect on its consolidated results of
operations or liquidity.

                                       19
<PAGE>

                                  MISONIX, INC.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

        The United States Court of Appeals for the Federal Circuit Court issued
        a decision reversing in large part the decision of the trial court and
        granting the motion by Mentor against MDA, its subsidiary LySonix and
        the Company for violation of Mentor's U.S. Patent No. 4,886,491. This
        patent covers Mentor's license for ultrasonic assisted liposuction.
        Damages were asserted in favor of Mentor for approximately $4,900,000
        and the Court affirmed that the lower court did not have the ability to
        increase damages or award attorney's fees. Mentor may request further
        relief in the trial court, including interest and damages award and a
        permanent injunction enjoining further sales of the LySonix 2000. The
        Company and its co-defendants are considering all alternatives including
        further legal measures that are available. Accordingly, the Company
        accrued $5,450,000 for damages, attorney fees and other costs during the
        third quarter ended March 31, 2001.

Item 6. Exhibits and Reports on Form 8-K.

        (a) Exhibits:

              10(gg) - 6% Secured Convertible Debenture of Focus Surgery, Inc.
                       payable to the Company.

              10(hh) - Asset Purchase Agreement dated January 16, 2001, by and
                       among the Company, Fibra-Sonics, Inc., Mary Anne
                       Kirchschlager, James Kirchschlager and James Conrad
                       Kirchschlager.

              10(ii) - Purchase and Sale Agreement, dated July 28, 2000, by and
                       between Cramar Technologies, Inc., Acoustic Marketing
                       Research, Inc. and Randy Muelot.

              10(jj) - 7% Secured Convertible Debenture, dated August 28, 2000,
                       by Hearing Innovations, Inc. payable to the Company.

              10(kk) - 5.1% Secured Convertible Debenture, dated November 7,
                       2000, by Focus Surgery, Inc. payable to the Company.

              10(ll) - Asset Purchase Agreement by and between Perceptron, Inc.
                       and Acoustic Market Research, Inc. d/b/a Sonora Medical
                       Systems, Inc.

              10(mm) - First Amendment to Employment Agreement, dated October
                       13, 2000, by and between the Company and Michael A.
                       McManus, Jr. Exhibit 11 - Computation of Net Earnings Per
                       Share

              Exhibit 11-Computation of Net Earnings Per Share

       (b) On January 8, 2001 the Company filed a Report on Form 8-K under the
            caption "Item 4. Changes in Registrant's Certifying Accountant."

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<PAGE>

                                   SIGNATURES

     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.

Date: May 15, 2001

                                       MISONIX, INC.
                                       (Registrant)

                                       By: /s/ Michael A. McManus, Jr.
                                           -------------------------------------
                                           Michael A. McManus, Jr.
                                           President and Chief Executive Officer

                                       By: /s/ Richard Zaremba
                                           -------------------------------------
                                           Richard Zaremba
                                           Vice President,
                                           Chief Financial Officer,
                                           Treasurer and Secretary


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