**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 September
      30, 2007





OR






o
                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.
                Employerincorporation
                or organization)
            
            Identification
                No.)




1938
                New Highway, Farmingdale, NY
            
            11735(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
o





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





Large
      accelerated filer o  Accelerated
      filer o  Non-accelerated
      filer x





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


Exchange
      Act).





Yes
o  No x





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


Class
                  of Common Stock
              
              Outstanding
                    at November 10, 2007Common
                  Stock, $.01 par value
              
              7,001,369










**MISONIX,
      INC.**





**INDEX**


**Page****Part
                  I - FINANCIAL INFORMATION**Item
                  1. Financial Statements:Consolidated
                  Balance Sheets as of September 30, 2007 (Unaudited) and June 30,
                  2007
              
              3Consolidated
                  Statements of Operations Three months ended September 30, 2007
                  and 2006
                  (Unaudited)
              
              4Consolidated
                  Statement of Stockholders Equity Three months ended September 30,
                  2007
                  (Unaudited)
              
              5Consolidated
                  Statements of Cash Flows Three
                  months ended September 30, 2007 and
                  2006 (Unaudited)
              
              6Notes
                  to Consolidated Financial Statements
              
              7Item
                  2. Management’s Discussion and Analysis of Financial Condition and Results
                  of Operations
              
              14Item
                  3. Quantitative and Qualitative Disclosures About Market
                  Risk
              
              18Item
                  4. Controls and Procedures
              
              18Part
                  II OTHER INFORMATIONItem
                  1A. Risk Factors
              
              19Item
                  6. Exhibits
              
              19Signatures
              
              20
  2




PART
      I -
      FINANCIAL INFORMATION


**Item
      1. Financial Statements** .




**MISONIX,
      INC. and Subsidiaries**


**C** **onsolidated** **Balance Sheets**





**September
                30,**
              **2007**
            
            June
                30,
              2007**unaudited**
            
            Derived
                from
              audited
                financial statements**Assets**Current
                assets:Cash
            
            **$**
            **817,119**
            
            $
            2,900,358Accounts
                receivable, less allowance for doubtful accounts of$357,191
                and $313,981, respectively
            
            
            **7,401,126**
            
            
            7,679,466Inventories,
                net
            
            
            **12,070,128**
            
            
            11,903,294Deferred
                income taxes
            
            
            **1,028,988**
            
            
            1,028,988Prepaid
                expenses and other current assets
            
            
            **1,107,013**
            
            
            1,936,243Total
                current assets
            
            
            **22,424,374**
            
            
            25,448,349Property,
                plant and equipment, net
            
            
            **4,841,109**
            
            
            4,728,367Deferred
                income taxes
            
            
            **2,894,466**
            
            
            2,827,009Goodwill
            
            
            **5,270,192**
            
            
            5,008,549Other
                assets
            
            
            **750,382**
            
            
            733,470Total
                assets
            
            **$**
            **36,180,523**
            
            $
            38,745,744**Liabilities
                and stockholders’ equity**Current
                liabilities:Revolving
                credit facilities and notes payable
            
            **$**
            **2,973,146**
            
            $
            4,326,088Accounts
                payable
            
            
            **4,037,978**
            
            
            4,872,941Accrued
                expenses and other current liabilities
            
            
            **3,661,268**
            
            
            3,957,643Foreign
                income taxes payable
            
            
            **683,309**
            
            
            672,330Current
                portion of deferred gain from sale and leaseback of
                building
            
            
            **164,000**
            
            
            160,000Current
                maturities of capital lease obligations
            
            
            **342,363**
            
            
            294,257Total
                current liabilities
            
            
            **11,862,064**
            
            
            14,283,259Capital
                lease obligations
            
            
            **269,043**
            
            
            177,059Deferred
                lease liability
            
            
            **370,777**
            
            
            380,068Deferred
                income taxes
            
            
            **534,857**
            
            
            300,206Deferred
                gain from sale and leaseback of building
            
            
            **1,429,068**
            
            
            1,438,966Deferred
                income
            
            
            **419,818**
            
            
            494,261Total
                liabilities
            
            
            **14,885,627**
            
            
            17,073,819Commitments
                and contingenciesMinority
                interest
            
            
            **237,009**
            
            
            265,284Stockholders’
                equity:Common
                stock, $.01 par value—shares authorized 10,000,000;
              7,079,169
                issued and 7,001,369 outstanding
            
            
            **70,792**
            
            
            70,792Additional
                paid-in capital
            
            
            **24,916,693**
            
            
            24,871,444Accumulated
                deficit
            
            
            **(3,968,623**
            **)**
            
            (3,507,788
            )Accumulated
                other comprehensive income
            
            
            **451,449**
            
            
            384,617Treasury
                stock, 77,800 shares
            
            
            **(412,424**
            **)**
            
            (412,424
            )Total
                stockholders’ equity
            
            
            **21,057,887**
            
            
            21,406,641Total
                liabilities and stockholders’ equity
            
            **$**
            **36,180,523**
            
            $
            38,745,744




*See
      Accompanying Notes to Consolidated Financial Statements.*




3




**MISONIX,
        INC.** **and Subsidiaries**
 **C** **onsolidated** **Statements of Operations**
 **(Unaudited)**


**For the three months ended**
                **September 30** **,****2007**
              
              2006Net
                  sales
              
              **$**
              **10,532,237**
              
              $
              9,642,878Cost
                  of goods sold
              
              
              **5,866,443**
              
              
              5,711,012Gross
                  profit
              
              
              **4,665,794**
              
              
              3,931,866Operating
                  expenses:Selling
                  expenses
              
              
              **1,688,510**
              
              
              1,597,239General
                  and administrative expenses
              
              
              **2,505,760**
              
              
              2,404,283Research
                  and development expenses
              
              
              **710,237**
              
              
              820,217Total
                  operating expenses
              
              
              **4,904,507**
              
              
              4,821,739Loss
                  from operations
              
              
              **(238,713**
              **)**
              
              (889,873
              )Other
                  (expense) income:Interest
                  income
              
              
              **17,732**
              
              
              21,810Interest
                  expense
              
              
              **(132,309**
              **)**
              
              (66,662
              )Royalty
                  income and license fees net of royalty expense of $85,970 and $5,847,
                  respectively
              
              
              **100,108**
              
              
              180,855Other
              
              
              **(6,692**
              **)**
              
              (2,345
              )Total
                  other (expense) income
              
              
              **(21,161**
              **)**
              
              133,658Loss
                  before minority interest and income taxes
              
              
              **(259,874**
              **)**
              
              (756,215
              )Minority
                  interest in net income of consolidatedsubsidiaries
              
              
              **9,444**
              
              
              31,339Loss
                  before income taxes
              
              
              **(269,318**
              **)**
              
              (787,554
              )Income
                  tax benefit
              
              
              **(43,054**
              **)**
              
              (245,138
              )Net
                  loss
              
              **$**
              **(226,264**
              **)**
              $
              (542,416
              )Net
                  loss per share – Basic
              
              **$**
              **(0.03**
              **)**
              $
              (0.08
              )Net
                  loss per share – Diluted
              
              **$**
              **(0.03**
              **)**
              $
              (0.08
              )Weighted
                  average common shares outstanding – Basic
              
              
              **7,001,369**
              
              
              6,900,369Weighted
                  average common shares outstanding – Diluted
              
              
              **7,001,369**
              
              
              6,900,369




*See
        Accompanying Notes to Consolidated Financial Statements* .




4




**MISONIX,
      INC.** **and Subsidiaries**


**Consolidated
      Statement of Stockholders’ Equity**


**(Unaudited)**




Three months ended September 30, 2007**Common Stock,**
              **$.01**
              **Par Value**
            
            **Treasury Stock****Number**
              **of
                shares**
            
            **Amount**
            
            **Number**
              **of
                shares**
            
            **Amount**
            
            **Additional
                paid-in capital**
            
            **Accumulated
                deficit**
            
            **Accumulated
                other comprehensive income**
            
            **Total
                stockholders’ equity**Balance,
                June 30, 2007
            
            
            7,079,169
            
            $
            70,792
            
            
            (77,800
            )
            $
            (412,424
            )
            $
            24,871,444
            
            $
            (3,507,788
            )
            $
            384,617
            
            $
            21,406,641Net
                Loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (226,264
            )
            
            
            
            
            (226,264
            )Foreign
                      currency translation adjustment
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            66,832
            
            
            66,832Comprehensive
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            -
            
            
            -
            
            
            (159,432
            )Cumulative
                transition adjustment for FIN 48
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (234,571
            )
            
            -
            
            
            (234,571
            )Stock-based
                compensation
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            45,249
            
            
            -
            
            
            -
            
            
            45,249**Balance,
                September 30, 2007**
            
            
            **7,079,169**
            
            **$**
            **70,792**
            
            
            (77,800
            )
            $
            (412,424
            )
            **$**
            **24,916,693**
            
            $
            (3,968,623
            )
            **$**
            **451,449**
            
            **$**
            **21,057,887**




*See
      Accompanying Notes to Consolidated Financial
      Statements*.




5




**MISONIX,
      INC.** **and Subsidiaries**


**Consolidated
      Statements of Cash Flows**


**(Unaudited)**


**For
                  the three months ended****September
                  30,****2007**
              
              2006**Operating
                  activities**Net
                  loss
              
              **$**
              **(226,264**
              **)**
              $
              (542,416
              )Adjustments
                  to reconcile net loss to net cash used in operating activities:Depreciation
                  and amortization and other non cash items
              
              
              **470,912**
              
              
              427,483Bad
                  debt expense
              
              
              **39,095**
              
              
              35,625Deferred
                  income tax benefit
              
              
              **(43,985**
              **)**
              
              (270,881
              )Loss
                  on disposal of equipment
              
              
              **6,363**
              
              
              —Minority
                  interest in net income of subsidiaries
              
              
              **9,444**
              
              
              31,339Stock-based
                  compensation
              
              
              **45,249**
              
              
              50,085Deferred
                  income
              
              
              **(74,443**
              **)**
              
              (4,269
              )Deferred
                  leasehold costs
              
              
              **(49,609**
              **)**
              
              (46,059
              )Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              **304,745**
              
              
              (163,495
              )Inventories
              
              
              **(174,284**
              **)**
              
              36,945Income
                  taxes
              
              
              **(2,446**
              **)**
              
              (9,700
              )Prepaid
                  expenses and other current assets
              
              
              **803,214**
              
              
              163,751Accounts
                  payable and accrued expenses
              
              
              **(1,254,845**
              **)**
              
              (82,309
              )Foreign
                  income taxes payable
              
              
              **(8,161**
              **)**
              
              25,744Other
              
              
              **13,144**
              
              
              —Net
                  cash used in operating activities
              
              
              **(141,871**
              **)**
              
              (348,157
              )**Investing
                  activities**Acquisition
                  of property, plant and equipment
              
              
              **(185,944**
              **)**
              
              (160,067
              )Investment
                  in UKHIFU Limited
              
              
              **(12,632**
              **)**
              
              -Acquisition
                  of minority interest
              
              
              **(279,884**
              **)**
              
              -Net
                  cash used in investing activities
              
              
              **(478,460**
              **)**
              
              (160,067
              )**Financing
                  activities**Proceeds
                  from short-term borrowings
              
              
              **2,909,118**
              
              
              2,021,681Payments
                  of short-term borrowings
              
              
              **(4,283,357**
              **)**
              
              (142,397
              )Principal
                  payments on capital lease obligations
              
              
              **(98,708**
              **)**
              
              (94,979
              )Payments
                  of long-term debt
              
              
              **-**
              
              
              (16,192
              )Net
                  cash (used in) provided by financing activities
              
              
              **(1,472,947**
              **)**
              
              1,768,113Effect
                  of exchange rate changes on cash
              
              
              **10,039**
              
              
              1,363Net
                  (decrease) increase in cash
              
              
              **(2,083,239**
              **)**
              
              1,261,252Cash
                  at beginning of period
              
              
              **2,900,358**
              
              
              675,400Cash
                  at end of period
              
              **$**
              **817,119**
              
              $
              1,936,652Supplemental
                  disclosure of cash flow information:Cash
                  paid for:Interest
              
              **$**
              **137,182**
              
              $
              66,662Income
                  taxes
              
              **$**
              **11,539**
              
              $
              9,700Supplemental
                  disclosure of noncash investing and
                  financing activities:Capital
                  lease additions
              
              **$**
              **226,814**
              
              $
              29,985




See
      Accompanying Notes to Consolidated Financial Statements.




6




**MISONIX,
      INC.** **and Subsidiaries**


**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 accounting principles generally accepted in the United States for
      complete financial statements. In the opinion of management, all adjustments
      (consisting of normal recurring accruals) considered necessary for a fair
      presentation have been included. Operating results for the three months ended
      September 30, 2007 are not necessarily indicative of the results that may be
      expected for the year ending June 30, 2008, or any interim period.





The
      balance sheet at June 30, 2007 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, 2007.




2.
            Net
                Loss Per Share of Common Stock





We
      comply
      with the provisions of Statement of Financial Accounting Standards (“SFAS”) No.
      128, “Earnings Per Share” (“SFAS No. 128”). In accordance with SFAS No. 128,
      basic net loss per common share (“basic EPS”) is computed by dividing net loss
      by the weighted average number of common shares outstanding. Diluted net loss
      per common share (“diluted EPS”) is computed by dividing net loss by the
      weighted average number of common shares and dilutive common share equivalents
      outstanding. Diluted EPS for all periods presented is the same as basic EPS,
      as
      the inclusion of the effect of common stock equivalents then outstanding would
      be anti-dilutive. For this reason, we excluded from the calculation of diluted
      EPS for the three-month periods ended September 30, 2007 and 2006, the potential
      dilution which would occur if options to purchase common stock were
      exercised.





3.
            Comprehensive
                Loss





Total
      comprehensive loss was $159,432 and $406,924 for the three months ended
      September 30, 2007 and 2006, respectively. The components of comprehensive
      loss
      are net loss and foreign currency translation adjustments.





4.
            Stock-Based
                Compensation





The
      Company adopted the fair-value recognition provisions of SFAS 123R, “Share-Based
      Payment” effective July 1, 2006. Compensation cost recognized in the three-month
      periods ended September 30, 2007 and 2006 include compensation cost for all
      share-based payments granted prior to, but not yet vested as of, July 1, 2006,
      based on the grant date fair value estimated in accordance with the original
      provisions of SFAS No. 123, and compensation cost for all share-based payments
      granted subsequent to July 1, 2006, based on the grant date fair value estimated
      in accordance with the provisions of SFAS 123R.





Stock
      options are granted with exercise prices not less than the fair market value
      of
      our common stock at the time of the grant, with an exercise term (as determined
      by the Committee administering the applicable option plan (the “Committee”)) not
      to exceed 10 years. The Committee determines the vesting period for the
      Company’s stock options. Generally, such stock options have vesting periods of
      immediate to four years. Certain option awards provide for accelerated vesting
      upon meeting specific retirement,
      death or disability criteria, and upon a change in control. During the three
      month periods ended September 30, 2007 and 2006, the Company granted options
      to
      purchase 42,850 and 0 shares of the Company’s common stock,
      respectively.




7




**MISONIX,
        INC.** **and Subsidiaries**
 **Notes
        to Consolidated Financial Statements**
 (Information
        with respect to interim periods is unaudited)





As
      a
      result of adopting SFAS No. 123R, the Company’s loss before income taxes for the
      three month periods ended September 30, 2007 and 2006 is approximately $45,000
      and $50,000 higher, respectively, than if we had continued to account for
      stock-based compensation under Accounting Principles Board Opinion No. 25,
      “Accounting For Stock Issued to Employees”. Compensation expense is recognized
      in the administrative expenses line item of the Company’s statements of
      operations on a straight-line basis over the vesting periods. As of September
      30, 2007, there was $440,000 of total unrecognized compensation cost related
      to
      non-vested share-based compensation arrangements to be recognized over a
      weighted-average period of 2.5 years.





There
      was
      no cash received from the exercise of stock options for the three-month periods
      ended September 30, 2007 and 2006. SFAS No. 123R requires that cash flows from
      tax benefits attributable to tax deductions in excess of the compensation cost
      recognized for those options (excess tax benefits) be classified as financing
      cash flows.





There
      were no options granted during the three months ended September 30, 2006. The
      fair values of the options granted during the three month period ended September
      30, 2007 were estimated on the date of the grant using the Black-Scholes
      option-pricing model on the basis of the following weighted average
      assumptions:





September
                30,
              2007Risk-free
                interest rate
            
            
            4.3
            %Expected
                option life in years
            
            
            6.5Expected
                stock price volatility
            
            
            54.5
            %Expected
                dividend yield
            
            
            0
            %Weighted-average
                fair value of options granted
            
            $
            2.34





The
      expected life was based on historical exercises and terminations. The expected
      volatility for the periods with the expected life of the options is determined
      using historical volatilities based on historical stock prices. The expected
      dividend yield is 0% as the Company has historically not declared dividends
      and
      does not expect to declare any in the future.




8




**MISONIX,
      INC.** **and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Information
      with respect to interim periods is unaudited)





Changes
      in outstanding stock options during the three months ended September 30, 2007
      were as follows:




OptionsNumber
                of
              Shares
            
            Weighted
              Average
              Exercise
              Price
            
            Weighted
              Average
              Remaining
              Contractual
              Life
                (years)
            
            Aggregate
              Intrinsic
              ValueOutstanding
                as of June 30, 2007
            
            
            1,802,566
            
            $
            5.88
            
            
            5.4Granted
            
            
            42,850
            
            
            4.04Exercised
            
            
            —
            
            
            —Forfeited
            
            
            2,850
            
            
            5.20Expired
            
            
            15,000
            
            
            12.33Outstanding
                as of September 30, 2007
            
            
            1,827,566
            
            $
            5.78
            
            
            5.6
            
            $
            266,808Exercisable
                and vested at September 30, 2007
            
            
            1,647,541
            
            $
            5.89
            
            
            4.7
            
            $
            111,100Available
                for grant at September 30, 2007
            
            
            623,627








5. Income
      Taxes





The
      Company adopted the provisions of FIN 48, an interpretation of SFAS 109
      effective July 1, 2007. In response to the issuance of FIN 48, the Company
      reviewed its uncertain tax positions in accordance with the recognition
      standards established by FIN 48. As a result of this review, the Company has
      adjusted its estimate of its uncertain tax positions by recognizing an
      additional liability (including interest) of approximately $235,000 through
      a
      charge to accumulated deficit. The liability is included in deferred income
      taxes payable. The Company does not expect any material changes to the estimated
      amount of liability associated with its uncertain tax positions through July
      1,
      2008.





The
      Company generally recognizes interest and penalties related to uncertain tax
      positions through income tax expense. As of July 1, 2007, the Company had
      accrued approximately $32,000 for the payment of tax-related
      interest.





There
      are
      no federal, state or foreign audits in process as of September 30, 2007. Open
      tax years related to federal filings are for the years ended June 30, 2005
      and
      2006. The Company files state tax returns in New York and Colorado and its
      tax
      returns in those states have never been examined. The Company’s foreign
      subsidiaries, Labcaire Systems Ltd., Misonix, Ltd. and UKHIFU Limited file
      tax
      returns in England. The England Inland Revenue Service has not examined these
      tax returns.





In
      June
      2006, the FASB ratified the consensus reached by the Emerging Issues Tax Force
      in Issue No. 06-3 (“EITF 06-3”), “How Taxes Collected from Customers and
      Remitted to Governmental Authorities Should Be Presented in the Income Statement
      (That is, Gross versus Net Presentation).” The scope of EITF 06-3 includes any
      tax assessed by a governmental authority that is directly imposed on a
      revenue-producing activity between a seller and a customer and may include,
      but
      is not limited to, sales, use, value added, and some excise taxes. EITF 06-3
      also concluded that the presentation of taxes within its scope on either a
      gross
      (included in revenues and costs) or net (excluded from revenues) basis is an
      accounting policy decision subject to appropriate disclosure. EITF 06-3 is
      effective for periods beginning after December 15, 2006. The Company currently
      presents these taxes on a net basis and has elected not to change its
      presentation method.





9





**MISONIX,
      INC.** **and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Information
      with respect to interim periods is unaudited)





6.  Inventories




Inventories
      are summarized as follows:








**September
                30,**
              **2007**
            
            June
                30,
              2007Raw
                material
            
            **$**
            **6,712,270**
            
            $
            6,593,458Work–in–process
            
            
            **2,684,526**
            
            
            2,624,212Finished
                goods
            
            
            **4,594,392**
            
            
            4,599,040**13,991,188**
            
            
            13,816,710Less
                valuation reserve
            
            
            **1,921,060**
            
            
            1,913,416**$**
            **12,070,128**
            
            $
            11,903,294





7. Accrued
      Expenses and Other Current Liabilities





The
      following summarizes accrued expenses and other current
      liabilities:




**September
                30,**
            
            June 30,**2007**
            
            2007Customer
                deposits and deferred contracts
            
            **$**
            **1,249,914**
            
            $
            1,084,412Accrued
                payroll and vacation
            
            
            **772,672**
            
            
            567,296Accrued
                VAT on sale of Labcaire building
            
            
            **235,486**
            
            
            631,229Accrued
                VAT and sales tax
            
            
            **314,121**
            
            
            118,176Accrued
                commissions and bonuses
            
            
            **235,281**
            
            
            484,022Accrued
                professional fees
            
            
            **53,892**
            
            
            47,413Litigation
            
            
            **419,000**
            
            
            419,000Other
            
            
            **380,902**
            
            
            606,095**$**
            **3,661,268**
            
            $
            3,957,643





8. Revolving
      Credit Facilities





On
      December 29, 2006, the Company and its subsidiaries, Acoustic Marketing
      Research, Inc. d/b/a Sonora Medical Systems (“Sonora”) and Hearing Innovations,
      Inc. (collectively referred to as the “Borrowers”) and Wells Fargo Bank entered
      into a (i) Credit and Security Agreement and a (ii) Credit and Security
      Agreement Export-Import Subfacility (collectively referred to as the “Credit
      Agreements”). The aggregate credit limit under the Credit Agreements is
      $8,000,000 consisting of a revolving facility in the amount of up to $8,000,000.
      Up to $1,000,000 of the revolving facility is available under the Export-Import
      Agreement as a subfacility for Export-Import working capital financing. All
      credit facilities under the Credit Agreements mature on December 29, 2009.
      Payment of amounts outstanding under the Credit Agreements may be accelerated
      upon the occurrence of an Event of Default (as defined in the Credit
      Agreements). All loans and advances under the Credit Agreements are secured
      by a
      first priority security interest in all of the Borrowers’ accounts receivable,
      letter-of-credit rights, and all other business assets. The Borrowers have
      the
      right to terminate or reduce the credit facility prior to December 29, 2008
      by
      paying a fee base on the aggregate credit limit (or reduction, as the case
      may
      be) as follows: (i) during year one of the Credit Agreements, 3%; (ii) during
      year two of the Credit Agreements, 2%; and (iii) during year three of the Credit
      Agreements, 1%.





The
      Credit Agreements contain financial covenants requiring that the Borrowers
      not
      incur or contract to incur Capital Expenditures (as defined in the Credit
      Agreements) of more than $1,000,000 in the aggregate
      in any fiscal year or more than $1,000,000 in any one transaction. At September
      30, 2007, the Borrowers were in compliance with the financial
      covenants.




10


**MISONIX,
        INC.** **and Subsidiaries**
 **Notes
        to Consolidated Financial Statements**
 (Information
        with respect to interim periods is unaudited)


The
      available amount under the Credit Agreements is the lesser of $8,000,000 or
      the
      amount calculated under the Borrowing Base (as defined in the Credit
      Agreements). The Borrowers must maintain a minimum outstanding amount of
      $1,250,000 under the Credit Agreements at all times and pay a fee equal to
      the
      interest rate set forth on any such shortfall. Interest on amounts borrowed
      under the Credit Agreements is payable at Wells Fargo’s prime rate of interest
      plus 1% per annum floating, payable monthly in arrears. The default rate of
      interest is 3% higher than the rate otherwise payable. A fee of 1⁄2 % per annum on
      the Unused Amount (as defined in the Credit Agreements) is payable monthly
      in
      arrears. At September 30, 2007, the balance outstanding under the Credit
      Agreement is $1,771,000.





Labcaire
      Systems Limited (“Labcaire”) has a debt purchase agreement with Lloyds TSB
      Commercial Finance (“Lloyds”). The amount of this facility bears interest at
      Lloyd’s base rate (5.5%) at September 30, 2007 plus 2.0%. The agreement expires
      September 28, 2008. The agreement covers all United Kingdom and European sales.
      At September 30, 2007, the balance outstanding under this credit facility was
      $1,047,000 and Labcaire is not in violation of financial covenants.





9. Commitments
      and Contingencies





A
      jury in
      the District Court of Boulder County, Colorado has returned a verdict against
      Sonora in the amount of $419,000 which was recorded by the Company during the
      fourth quarter of fiscal 2005. The case involved royalties claimed on recoating
      of transesophogeal probes, which is a process performed by Sonora. Approximately
      80% of the judgment was based on the jury’s estimate of royalties for potential
      sales of the product in the future. Sonora has moved for judgment
      notwithstanding the verdict based on, among other things, the award of damages
      for future royalties. Sonora has also moved for a new trial in the
      case.





The
      Company is a defendant in claims and lawsuits arising in the ordinary course
      of
      business. The Company believes that it has meritorious defenses to such claims
      and lawsuits and is vigorously contesting them. Although the outcome of
      litigation cannot be predicted with certainty, the Company believes
      that these actions will not have a material adverse effect on the Company’s
      consolidated financial position or results of operations.





On
      September 6, 2007, but effective as of August 30, 2007, the Company and William
      H. Phillips (“Phillips”) entered into a Settlement Agreement (the “Agreement”).
      Pursuant to the Agreement, the Company and Phillips resolved certain disputes
      between them concerning the purchase price to be paid by the Company for shares
      of the common stock of Sonora owned by Phillips. The Company owned ninety (90%)
      percent of the outstanding shares of Sonora prior to the execution of the
      Agreement.





Pursuant
      to the Agreement, the Company will pay Phillips the aggregate sum of $1,214,780
      (the “Purchase Price”). The Company paid Phillips $296,118 on June 7, 2007 and
      $311,272 on August 30, 2007. The Company will pay the balance of the Purchase
      Price in two (2) installments with the final installment due on March 1, 2008.





The
      shares of Acoustic being sold to the Company are being held in escrow and
      released pro-rata with each installment payment of the Purchase
      Price.





The
      effect of this transaction will be to increase goodwill by $969,800, decrease
      minority interest by $149,737 and record interest expense of
      $95,242.





11





**MISONIX,
      INC.** **and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Information
      with respect to interim periods is unaudited)




10. Business
      Segments





The
      Company operates in two business segments which are organized by product types:
      medical devices and laboratory and scientific products. Medical devices include
      the Auto Sonix ultrasonic cutting and coagulatory system, the Sonablate 500®
(used to treat prostate cancer), refurbishing of high-performance ultrasound
      systems and replacement transducers for the medical diagnostic ultrasound
      industry, ultrasonic lithotriptor, ultrasonic neuroaspirator (used for
      neurosurgery), soft tissue aspirator (used primarily for the cosmetic surgery
      market) and the wound debrider. Laboratory and scientific products include
      the
      Sonicator Ultrasonic liquid processor, Aura ductless fume enclosure, the
      Labcaire ISIS and Guardian endoscope disinfectant systems. The Company evaluates
      the performance of the segments based upon income from operations before general
      and administrative 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 Annual Report on Form 10-K for the year ended June 30, 2007.





Certain
      items are maintained at the corporate headquarters (corporate) and are not
      allocated to the segments. They primarily include general and administrative
      expenses. General and administrative expenses at the Company’s Sonora, Labcaire,
      UKHIFU Limited and Misonix, Ltd. subsidiaries are included in corporate and
      unallocated amounts in the tables below. The Company does not allocate assets
      by
      segment. Summarized financial information for each of the segments is as
      follows:





For
      the
      three months ended September 30, 2007





**Medical Device**
              **Products**
            
            **Laboratory and**
              **Scientific**
              **Products**
            
            **Corporate and**
              **Unallocated**
            
            **Total**Net
                sales
            
            $
            5,298,117
            
            $
            5,234,120
            
            $
            -
            
            $
            10,532,237Cost
                of goods sold
            
            
            2,707,026
            
            
            3,159,417
            
            
            -
            
            
            5,866,443Gross
                profit
            
            
            2,591,091
            
            
            2,074,703
            
            
            -
            
            
            4,665,794Selling
            
            
            1,080,171
            
            
            608,339
            
            
            -
            
            
            1,688,510Research
                and development
            
            
            468,845
            
            
            241,392
            
            
            -
            
            
            710,237General
                and administrative
            
            
            -
            
            
            -
            
            
            2,505,760
            
            
            2,505,760Total
                operating expenses
            
            
            1,549,016
            
            
            849,731
            
            
            2,505,760
            
            
            4,904,507Income
                (loss) from operations
            
            $
            1,042,075
            
            $
            1,224,972
            
            
            ($2,505,760
            )
            
            ($238,713
            )




For
      the
      three months ended September 30, 2006:





**Medical Device**
              **Products**
            
            **Laboratory
                and**
              **Scientific**
              **Products**
            
            **Corporate and**
              **Unallocated**
            
            **Total**Net
                sales
            
            $
            4,830,455
            
            $
            4,812,423
            
            $
            -
            
            $
            9,642,878Cost
                of goods sold
            
            
            2,976,088
            
            
            2,734,924
            
            
            -
            
            
            5,711,012Gross
                profit
            
            
            1,854,367
            
            
            2,077,499
            
            
            -
            
            
            3,931,866Selling
            
            
            1,071,422
            
            
            525,817
            
            
            -
            
            
            1,597,239Research
                and development
            
            
            523,684
            
            
            296,533
            
            
            -
            
            
            820,217General
                and administrative
            
            
            -
            
            
            -
            
            
            2,404,283
            
            
            2,404,283Total
                operating expenses
            
            
            1,595,106
            
            
            822,350
            
            
            2,404,283
            
            
            4,821,739Income
                (loss) from operations
            
            $
            259,261
            
            $
            1,255,149
            
            
            ($2,404,283
            )
            
            ($889,873
            )





12





**MISONIX,
      INC.** **and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Information
      with respect to interim periods is unaudited)




The
      Company’s revenues are generated from various geographic regions. The following
      is an analysis of net sales by geographic region:




For
      the
      three months ended September 30:





**2007**
            
            2006United
                States
            
            **$**
            **5,643,733**
            
            **$**
            6,009,501United
                Kingdom
            
            
            **3,448,066**
            
            
            2,721,335Europe
            
            
            **391,600**
            
            
            373,953Asia
            
            
            **682,610**
            
            
            307,510Canada
                and Mexico
            
            
            **108,143**
            
            
            65,563Middle
                East
            
            
            **27,921**
            
            
            45,568Other
            
            
            **230,264**
            
            
            119,448**$**
            **10,532,337**
            
            $
            9,642,878




11. Recent
      Accounting Standards





In
      March
      2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 156,
“Accounting for Servicing of Financial Assets” (“SFAS 156”), an amendment of
      SFAS 140, “Accounting for Transfers and Servicing of Financial Assets and
      Extinguishment of Liabilities”. SFAS 156 requires all separately recognized
      servicing assets and servicing liabilities to be initially measured at fair
      value, if practicable, and permits an entity to subsequently measure those
      servicing assets and servicing liabilities at fair value. SFAS 156 is effective
      for fiscal years beginning after September 15, 2006. The Company adopted SFAS
      156 effective July 1, 2007 and the adoption of SFAS 156 did not have a material
      effect on the Company’s consolidated financial position or results of
      operations.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
      157”). SFAS 157 provides a new single authoritative definition of fair value and
      provides enhanced guidance for measuring the fair value of assets and
      liabilities and requires additional disclosures related to the extent to which
      companies measure assets and liabilities at fair value, the information used
      to
      measure fair value, and the effect of fair value measurements on earnings.
      SFAS
      157 is effective for the Company as of January 1, 2008. The Company is currently
      evaluating the impact that the adoption of SFAS 157 may have on the Company's
      consolidated financial position or results of operations.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities,” which provides companies with an
      option to report selected financial assets and liabilities at fair value in
      an
      attempt to reduce both complexity in accounting for financial instruments and
      the volatility in earnings caused by measuring related assets and liabilities
      differently. This Statement is effective as of the beginning of an entity’s
      first fiscal year beginning after November 15, 2007. The Company is currently
      evaluating the impact that the adoption of SFAS 159 may have on the Company's
      consolidated financial position or results of operation.





13





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





Three
      months ended September 30, 2007 and 2006.





**Net
      sales** **:** Net
      sales of the Company’s medical device products and laboratory and scientific
      products increased $889,359 to $10,532,237 for the three months ended September
      30, 2007 from $9,642,878 for the three months ended September 30, 2006. This
      difference in net sales is due to an increase in sales of medical device
      products of $467,662 to $5,298,117 for the three months ended September 30,
      2007
      from $4,830,455 for the three months ended September 30, 2006. This difference
      in net sales is also due to an increase in laboratory and scientific products
      sales of $421,697 to $5,234,120 for the three months ended September 2007 from
      $4,812,423 for the three months ended September 30, 2006. The increase in sales
      of medical device products is due to an increase in sales of therapeutic medical
      device products of $156,942 plus an increase of $310,690 in sales of diagnostic
      medical device products. The increase in sales of therapeutic medical device
      products was primarily attributable to the increased sales of the Company’s
      neuroaspirator of $337,000, an increase in sales of the Company’s ultrasonic
      assisted liposuction product of $160,000 and other therapeutic medical device
      products of $134,000, partially offset by a decrease in AutoSonix®
      sales
      to United States Surgical, a unit of Covidien Ltd., of $450,000 and a decrease
      in revenue from the Sonablate 500® of $24,000. The increase in sales of
      diagnostic medical device products was not attributable to a single customer,
      distributor or any other specific factor but an increase in customer demand
      for
      several new products. The increase in sales of laboratory and scientific
      products is due to a $731,000 increase in Labcaire products sales, an increase
      of $155,000 in ductless fume enclosure product sales and an increase of $87,000
      in ultrasonic product sales, partially offset by a $551,000 decrease in sales
      of
      wet scrubber products. The Company is selective in the opportunities it pursues
      for wet scrubber products. The increase in Labcaire sales of $731,000 is due
      to
      shipments of its new ISIS endoscope cleaning system and the strengthening of
      the
      English Pound versus the U.S. dollar which accounted for approximately $242,000
      of the sales increase. The increase in ductless fume enclosure product sales
      and
      ultrasonic product sales is due to an increase in customer demand for several
      products and not attributable to a single customer, distributor or any other
      specific factor.





Export
      sales from the United States are remitted in U.S. dollars and export sales
      for
      Labcaire are remitted in English Pounds. UKHIFU sales are remitted in English
      Pounds and Misonix, Ltd. sales to date have been remitted in Euros. To the
      extent that the Company’s revenues are generated in English Pounds, its
      operating results were translated for reporting purposes into U.S. dollars
      using
      weighted average rates of 2.02 and 1.87 for the three months ended September
      30,
      2007 and 2006, respectively. To the extent that the Company’s revenues are
      generated in Euros, its operating results were translated for reporting purposes
      into U.S. dollars using a weighted average rate of 1.87 for the three months
      ended September 30, 2007. A strengthening of the English Pound and Euro, in
      relation to the U.S. dollar, will have the effect of increasing recorded
      revenues and profits, while weakening of the English Pound and Euro will have
      the opposite effect. Since the Company’s operations in England generally set
      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 predominately in the currency of the country
      the subsidiary resides in. The Company has not engaged in foreign currency
      hedging transactions, which include forward exchange agreements. See Item 3.
      “Quantitative and Qualitative Disclosures About Market Risk.”





14





**Gross
      profit:** Gross
      profit increased to 44.3% for the three months ended September 30, 2007 from
      40.8% for the three months ended September 30, 2006. Gross profit for medical
      device products increased to 48.9% for the three months ended September 30,
      2007
      from 38.4% for the three months ended September 30, 2006. Gross profit for
      laboratory and scientific products decreased to 39.6% for the three months
      ended
      September 30, 2007 from 43.2% for the three months ended September 30, 2006.
      Gross profit for medical device products was favorably impacted by increased
      sales of neuroaspirator and ultrasonic assisted liposuction products and a
      decrease in AutoSonix®
      sales.
      The neuroaspirator and ultrasonic assisted liposuction products have higher
      gross profits than the AutoSonix® products. The September 2007
      quarter also benefited from a favorable mix of diagnostic medical device
      products sales. The decrease in gross profit in the September 2007 quarter
      for
      laboratory and scientific products is due to lower margins at Labcaire due
      to
      higher costs related to the first ISIS units shipped. The three months ended
      September 2006 included high gross profit wet scrubber sales.





**Selling
      expenses:** Selling
      expenses increased $91,271 to $1,688,510 for the three months ended September
      30, 2007 from $1,597,239 for the three months ended September 30, 2006.
      Laboratory and scientific products selling expenses increased $82,522,
      predominantly due to an increase in commissions of $49,000 related to increased
      sales and the impact of the stronger English Pound of $30,000.





**General
      and administrative expenses** :
      General
      and administrative expenses increased $101,477 from $2,404,283 in the three
      months ended September 30, 2006 to $2,505,760 in the three months ended
      September 30, 2007. General and administrative expenses increased for the three
      months ended September 30, 2007 principally due to higher professional fees
      of
      $107,000, increased staffing of $42,000 and the impact of the stronger English
      Pound of $51,000 partially offset by decreased administrative costs of $93,000
      related to the Sonablate business in Europe.




**Research
      and development expenses** **:**  Research
      and development expenses decreased $109,980 from $820,217 for the three months
      ended September 30, 2006 to $710,237 for the three months ended September 30,
      2007. Laboratory and scientific products research and development expenses
      decreased approximately $55,100 due to reduced effort on the Labcaire ISIS
      product which was introduced and launched in fiscal 2007. Research and
      development expense for medical device products decreased $54,800. Therapeutic
      medical device products research and development expenses decreased
      approximately $97,000, primarily due to reduced headcount and consulting expense
      of $66,000 related to completing efforts to upgrade the first product selected
      for the new digital platform and reduced research expenses for the Company’s
      Hearing Innovation product. Research and development expense for diagnostic
      medical device products increased approximately $42,000 related to developing
      new products and services which are expected to be introduced during the current
      fiscal year.





**Other
      income (expense):** Other
      expense for the three months ended September 30, 2007 was $21,161 as compared
      to
      income of $133,658 for the three months ended September 30, 2006. The decrease
      of $154,819 was primarily due to increased royalty expense of $80,123 at Sonora
      related to licensed probe repair technology and sale of API tanks. Interest
      expense increased $65,647 due to increased average borrowing by the U.S.
      operations in the September 30, 2007 quarter and interest related to the
      purchase of minority shares of Sonora partially offset by decreased interest
      expense at Labcaire.





**Income
      taxes:** The
      effective tax rate was 16% for the three months ended September 30, 2007, as
      compared to an effective tax rate of 31.1% for the three months ended September
      30, 2006. The September 2007 effective income tax rate differs from the
      statutory rate due to the impact of permanent differences related to SFAS 123R
      stock-based compensation and non-deductible entertainment expenses on taxable
      income.





15





**Critical
      Accounting Policies:**





The
      Company prepares its consolidated financial statements in accordance with
      accounting principles generally accepted in the United States of America.
      Certain of these accounting policies require the Company to make estimates
      and
      judgments that affect the reported amounts of assets, liabilities, revenues
      and
      expenses, and the related disclosure of contingent assets and liabilities,
      revenues and expenses. On an ongoing basis, the Company bases its estimates
      on
      historical data and experience, when available, and on various other assumptions
      that are believed to be reasonable under the circumstances, the combined results
      of which form the basis for making judgments about the carrying values of assets
      and liabilities that are not readily apparent from other sources.





Actual
      results may differ from these estimates. There have been no material changes
      in
      the Company’s critical accounting policies and estimates from those discussed in
      Item 7 of the Company’s Annual Report on Form 10-K for the year ended June 30,
      2007.





**Recent
      Accounting Standards**





In
      March
      2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 156,
“Accounting for Servicing of Financial Assets” (“SFAS 156”), an amendment of
      SFAS 140, “Accounting for Transfers and Servicing of Financial Assets and
      Extinguishment of Liabilities”. SFAS 156 requires all separately recognized
      servicing assets and servicing liabilities to be initially measured at fair
      value, if practicable, and permits an entity to subsequently measure those
      servicing assets and servicing liabilities at fair value. SFAS 156 is effective
      for fiscal years beginning after September 15, 2006. The Company adopted SFAS
      156 effective July 1, 2007 and the adoption of SFAS 156 did not have a material
      effect on the Company’s consolidated financial position or results of
      operations.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
      157”). SFAS 157 provides a new single authoritative definition of fair value and
      provides enhanced guidance for measuring the fair value of assets and
      liabilities and requires additional disclosures related to the extent to which
      companies measure assets and liabilities at fair value, the information used
      to
      measure fair value, and the effect of fair value measurements on earnings.
      SFAS
      157 is effective for the Company as of January 1, 2008. The Company is currently
      evaluating the impact that the adoption of SFAS 157 may have on the Company's
      consolidated financial position or results of operations.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities,” which provides companies with an
      option to report selected financial assets and liabilities at fair value in
      an
      attempt to reduce both complexity in accounting for financial instruments and
      the volatility in earnings caused by measuring related assets and liabilities
      differently. This Statement is effective as of the beginning of an entity’s
      first fiscal year beginning after November 15, 2007. The Company is currently
      evaluating the impact that the adoption of SFAS 159 may have on
      the Company's consolidated financial position or results of
      operation.





16





**Forward
      Looking Statements**





This
      Report contains certain forward looking statements within the meaning of Section
      27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
      Exchange Act of 1934, as amended (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 ventures
      and investments in related entities, future economic, competitive and market
      conditions, and the outcome of legal proceedings as well as management business
      decisions.




**Liquidity
      and Capital Resources**





Working
      capital at September 30, 2007 and June 30, 2007 was $10,562,000 and $11,165,000,
      respectively. For the three months ended September 30, 2007, cash used in
      operations totaled $141,871. The major use of cash from operations was to pay
      down accounts payable of approximately $869,000 in the three months ended
      September 30, 2007. For the three months ended September 30, 2007, cash used
      in
      investing activities totaled $478,460, primarily consisting of the purchase
      of
      property, plant and equipment during the regular course of business and the
      purchase of shares of the common stock of Sonora increasing the Company’s
      ownership to 92.5%. For the three months ended September 30, 2007, cash used
      in
      financial activities was $1,472,947, primarily consisting of principal payments
      on capital lease obligations and short-term borrowings of $4,283,357, partially
      offset by proceeds from short term borrowings of $2,909,118.




**Revolving
      Credit Facilities**





Labcaire
      has a debt purchase agreement with Lloyds TSB Commercial Finance. The amount
      of
      this facility bears interest at the bank’s base rate (5.5% at September 30,
      2007) plus 2% and fluctuates based upon the outstanding United Kingdom and
      European receivables. The agreement expires September 28, 2008. The agreement
      covers all United Kingdom and European sales. At September 30, 2007, the balance
      outstanding under this credit facility was $1,047,000 and Labcaire is not in
      violation of financial covenants.





The
      Company has a revolving credit facility with the Wells Fargo Bank N.A. The
      revolving credit facility has a variable interest rate based on prime plus
      1%.
      This facility is secured by the assets of the Company. The terms provide for
      the
      repayment of the debt in full on its maturity date. The Company has $1,367,000available
      on its line of credit. At September 30, 2007 the balance outstanding under
      this
      agreement was $1,771,000. The Company was in compliance with loan covenants
      at
      September 30, 2007.




**Off-Balance
      Sheet Arrangements**





The
      Company has no off-balance sheet arrangements that have or are reasonably likely
      to have a current or future effect on the Company’s financial condition, changes
      in financial condition, revenues or expenses, results of operations, liquidity,
      capital expenditures or capital resources that is material to the
      Company.




**Other**





In
      the
      opinion of management, inflation has not had a material effect on the operations
      of the Company.





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**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,
      Misonix, Ltd. and UKHIFU.





*Foreign
      Exchange Rates:*


Approximately
      46.4% of the Company’s revenues in the three month period ended September 30,
      2007 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 2.02 and 1.87 for the
      three months ended September 30, 2007 and 2006, 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 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 predominately in the currency of the country
      the subsidiary resides in. Misonix, Ltd. invoices certain customers in Euros
      and
      as a result there is an exchange rate exposure between the English Pound and
      the
      Euro. The Company has not engaged in foreign currency hedging transactions,
      which include forward exchange agreements.





*Interest
      Rate Risk:*


The
      Company earns interest on cash balances and pays interest on debt incurred.
      In
      light of the Company’s existing cash, results of operations, the term of its
      debt obligations and projected borrowing requirements, it does not believe
      a 10%
      change in interest rates would have a significant impact on its consolidated
      financial position.





**Item
      4. Controls and Procedures.**





Our
      disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
      under the Exchange Act) are designed to ensure that information required to
      be
      disclosed in the reports that we file or submit under the Exchange Act is
      recorded, processed, summarized and reported within the time periods specified
      in the rules and forms of the Securities and Exchange Commission. The Company
      carried out an evaluation, under the supervision and with the participation
      of
      the Company’s management, including the Company’s Chief Executive Officer and
      Chief Financial Officer, of the effectiveness of the design and operation
      of the Company’s disclosure controls and procedures as of September 30, 2007
      and, based on their evaluation, the Chief Executive Officer and Chief Financial
      Officer concluded that the Company’s disclosure controls and procedures are
      effective.





There
      has
      been no change in the Company’s internal control over financial reporting (as
      defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred
      during the three months ended September 30, 2007 that has materially affected,
      or is reasonable likely to materially affect, the Company’s internal control
      over financial reporting.





18





Part
      II-
      OTHER INFORMATION





Item
      1A.
      Risk Factors





Risks
      and
      uncertainties that, if they were to occur, could materially adversely affect
      our
      business or that could cause our actual results to differ materially from the
      results contemplated by the forward-looking statements contained in this report
      and other public statements were set forth in the “Item 1A-Risk Factors” section
      of our Annual Report on Form 10-K for the year ended June 30, 2007. There have
      been no material changes from the risk factors disclosed in that Form
      10-K.





Item
      6.  Exhibits





Exhibits
      31.1- Rule 13a-14(a)/15d-14(a) Certification


Exhibits
      31.2- Rule 13a-14(a)/15d-14(a) Certification


Exhibits
      32.1- Section 1350 Certification of Chief Executive Officer


Exhibits
      32.2- Section 1350 Certification of Chief Financial Officer





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**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:
                  November 14, 2007MISONIX,
                  INC.(Registrant)By:
              /s/
                  Michael A. McManus, Jr.Michael
                  A. McManus, Jr.President
                  and Chief Executive OfficerBy:
              /s/
                  Richard ZarembaRichard
                  ZarembaSenior
                  Vice President, Chief Financial Officer,Treasurer
                  and Secretary






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