DION Dionics Inc (CE)

______________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-QSB

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

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

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

SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to                

Commission file number 000-08161

DIONICS, INC.

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

Delaware (State or other jurisdiction of incorporation or organization)

11-2166744 (I.R.S. Employer Identification Number)

65 Rushmore Street

Westbury, New York 11590

(Address of Principal Executive Offices)

(516) 997-7474

(Issuer’s Telephone Number, Including Area Code)

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

Yes   [   ]   No   [  X   ]

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

Yes   [    ]   No   [  X  ]

State the number of shares outstanding of each of the Issuer’s classes of common equity, as of the latest practicable date: The number of shares outstanding of the Common Stock ($.01 par value) of the Issuer as of the close of business on September 15, 2008 was 9,828,678.

______________________________________________________________________________

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DIONICS, INC.

TABLE OF CONTENTS

			Page
PART I - FINANCIAL INFORMATION
	Item 1.	Financial Statements.	3
	Item 2.	Management’s Discussion and Analysis or Plan of Operation.	15
	Item 3.	Controls and Procedures.	16
PART II - OTHER INFORMATION
	Item 1.	Legal Proceedings.	17
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	17
	Item 3.	Default upon Senior Securities.	17
	Item 4.	Submission of Matters to a Vote of Security Holders.	17
	Item 5.	Other Information.	17
	Item 6.	Exhibits.	17
SIGNATURES		18

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PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

Dionics, Inc.
Financial Statements
Table Of Contents
For The Nine Months Ended September 30, 2007
								Page no.
Balance Sheet As of September 30, 2007 (unaudited) and December 31, 2006 (audited)	4
Statement Of Operations For The 9 Months Ended September 30, 2007 (unaudited)
and September 30, 2006 (unaudited)					5
Statement Of Operations For The 3 Months Ended September 30, 2007 (unaudited)
and September 30, 2006 (unaudited)					6
Statement Of Shareholders Equity For The 9 Months Ended September 30, 2007
(unaudited) And For The Year Ended December 31, 2006 (audited)		7
Statement Of Cash Flows For The 9 Months Ended September 30, 2007 (unaudited)
and September 30, 2006 (unaudited)					8
Notes to Financial Statements						9 - 14

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Dionics, Inc.
Balance Sheets
						September 30, 2007		December 31, 2006
						(Unaudited)		(Audited)
ASSETS
Current assets:
	Cash and cash equivalents			$            132,500		$              43,200
	Accounts receivable trade net of allowance
	of $7,300 in 2007 and 2006 - (Notes 1 and 2)	59,000		53,600
	Inventory - Note 1				197,100		197,100
	Prepaid expenses				5,200		11,500
		Total current assets			393,800		305,400
Property, plant and other equipment
	Net of accumulated depreciation of $1,421,300 in
	2007 and $1,420,300 in 2006 - (Notes 1 and 3)	1,900		2,300
Other assets					21,100		21,100
						$            416,800		$            328,800
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
	Accounts payable				$              72,100		$            116,700
	Accrued expenses				18,200		16,800
	Due to shareholder				29,000		29,000
		Total current liabilities			119,300		162,500
	Deferred compensation - (Note 4)		301,000		301,000
		Total liabilities			420,300		463,500
Stockholders' deficit
	Common shares - $.01 Par Value		94,200		94,200
	Authorized 51,000,000 shares issued and
	outstanding 9,420,722 Shares in 2007 and 2006
	Additional paid-in capital			1,957,100		1,957,100
	Accumulated deficit				(1,834,200)		(1,965,400)
						217,100		85,900
	Less: Treasury stock at cost
	(164,544 shares in 2007 and 2006)		(220,600)		(220,600)
	Total stockholders' deficit			(3,500)		(134,700)
						$            416,800		$            328,800
The accompanying footnotes are an integral part of the financial statements

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Dionics, Inc.
Statement Of Operations
(Unaudited)
						Nine Months Ended September 30
						2007		2006
Net sales					$           829,700		$           590,400
Cost of sales					492,700		388,300
Gross profit					337,000		202,100
Selling, general and administrative expenses		210,500		243,800
Earnings (loss) from operations			126,500		(41,700)
Other income and (expense):
	Dividends and other income		5,700		13,100
	Interest expense				-		-
Net income (loss) before income taxes		132,200		(28,600)
Income taxes - note 6				1,000		-
Net income (loss)				$          131,200		$           (28,600)
Gain (loss) per share				$              0.014		$             (0.003)
Weighted average number of common
Shares outstanding				9,256,178		9,256,178
The accompanying footnotes are an integral part of the financial statements

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Dionics, Inc.
Statement Of Operations
(Unaudited)
						Three Months Ended September 30
						2007		2006
Net sales					$           256,900		$           162,200
Cost of sales					155,900		129,400
Gross profit					101,000		32,800
Selling, general and administrative expenses		70,800		76,300
Earnings (loss) from operations			30,200		(43,500)
Other income and (expense):
	Dividends and other income		5,600		4,500
	Interest expense				-		-
Net income (loss) before income taxes		35,800		(39,000)
Income taxes - note 6				-		-
Net income (loss)				$           35,800		$           (39,000)
Gain (loss) per share				$             0.004		$             (0.004)
Weighted average number of common
Shares outstanding				9,256,178		9,256,178
The accompanying footnotes are an integral part of the financial statements

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Dionics, Inc.
Statement of Shareholders' Equity
For The Nine Months Ended September 30, 2007
		Common Stock		Additional				Treasury Stock
		Number of		Paid In				Number of
		Shares		Value		Capital		Deficit		Shares		Cost		Total
Balance as of December 31, 2005 (audited)	9,420,722		$    94,200		$ 1,957,100		$(1,954,200)		164,544		$  (220,600)		$  (123,500)
Net loss								(11,200)						(11,200)
Balance as of December 31, 2006 (audited)	9,420,722		$     94,200		$ 1,957,100		$(1,965,400)		164,544		$  (220,600)		$  (134,700)
Net income								131,200						131,200
Balance as of September 30, 2007 (unaudited)	9,420,722		$     94,200		$ 1,957,100		$(1,834,200)		164,544		$  (220,600)		$      (3,500)
The accompanying footnotes are an integral part of the financial statements

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Dionics, Inc.
Statement Of Cash Flows
(Unaudited)
			Increase (Decrease) in Cash
			and Cash Equivalents
			Nine Months Ended September 30
			2006		2006
Cash flows from operating activities:
	Net income (loss)		$       131,200		$        (28,600)
Adjustments to reconcile net income to net cash
provided by operating activities:
	Depreciation and amortization		800		3,000
Change in operating assets and liabilities:
	Accounts receivable		(5,400)		43,600
	Prepaid expenses		6,300		(800)
	Inventory		-		-
	Other assets		-		-
	Accounts payable		(44,500)		22,800
	Accrued expenses		1,400		(9,100)
	Net cash provided by operating activities		89,800		30,900
Cash flows used in investing activities:
	Increase in fixed assets		(500)		(800)
	Net cash used in investing activities		(500)		(800)
Cash flows used in (provided by) financing activities:
	Shareholder loan		-		6,000
	Net cash used in financing activities		-		6,000
	Net increase (decrease) in cash		89,300		36,100
	Cash at beginning of period		43,200		5,700
	Cash at end of period		$       132,500		$         41,800
The accompanying footnotes are an integral part of the financial statements

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Dionics, Inc.

Notes To Financial Statements

September 30, 2007

(Unaudited)

NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Business

The Company designs, manufactures and sells silicon semiconductor electronic products, as individual discrete components, as multicomponent integrated circuits and as multicomponent hybrid circuits.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principals requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Cash and cash equivalents

Holdings of highly liquid investments with maturities of three months or less, when purchased, are considered to be cash equivalents.  The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair values. The amount of federally insured cash deposits was $132,500 as of September 30, 2007 and $43,200 as of December 31, 2006.

Fair Values of Financial Instruments.

The carrying amount of trade accounts receivable, accounts payable, prepaid and accrued expenses, bonds and notes payable, and amounts due to shareholders, as presented in the balance sheet, approximates fair value.

Accounts Receivable

Accounts for which no payments have been received for three consecutive months are considered delinquent and a reserve is setup for them.  Customary collection efforts are initiated and an allowance for uncollectible amounts is set up and the related expense is charged to operations.

Merchandise Inventory

Inventories are stated at the lower of cost (which represents cost of materials and manufacturing costs on a first-in, first-out basis) or market. Cost is determined principally on the average actual cost method.  Finished goods and work-in-process inventories include material, labor, and overhead costs. Factory overhead costs are allocated to inventory manufactured in-house based upon cost of materials. The Company monitors usage reports to determine if the carrying value of any items should be adjusted down due to lack of demand for the item. The Company adjusts down the inventory for estimated obsolescence or unmarketable inventory equal to difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-down may be required.

Inventories are comprised of the following:

	September 30		December 31
				2007		2006
Raw materials (net of reserves)		$      39,900		$     39,900
Work in process			113,900		113,900
Finished goods			43,300		43,300
				$    197,100		$   197,100

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Dionics, Inc.

Notes To Financial Statements

September 30, 2007

(Unaudited)

NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

Long-Lived Assets- Property, Plant and Equipment

These assets are recorded at cost less depreciation and amortization. Depreciation and Amortization are accounted for on the straight-line methods based on estimated useful lives.  The amortization of leasehold improvements is based on the shorter of the lease term or the life of the improvement.  Betterments and large renewals, which extend the life of the asset, are capitalized whereas maintenance and repairs and small renewals are expenses, as incurred.  The estimated useful lives are: machinery and equipment, 7-15 years; buildings, 30 years; and leasehold improvements, 10-20 years.  

Notes Payable

The Company accounts for all notes liabilities that are due and payable in one year as short term notes.

Bad Debt

The Company maintained an allowance for doubtful accounts of $7,300 at September 30, 2007 and 2006.

Deferred Mortgage Costs

Prior costs related to the paid off mortgage are being amortized over ten years as follows:

				September 30		December 31
				2007		2006
Cost				$      52,000		$     52,000
Accumulated Amortization		(52,000)		(52,000)
				$               -		$              -

Due to the sale of the 65 Rushmore Street building in 2005, the remaining deferred mortgage expense was amortized in 2005.  Amortization for the quarter ended September 30, 2007 and for the year ended December 31, 2006 was zero.

Major Customers

For the 9 months ended September 30, 2007, approximately 43% of total sales were to the Company’s 3 largest customers.

Net Gain/Loss Per Common share

Basic earnings per share ("EPS") are computed based on the weighted average number of common shares outstanding for the period. Diluted EPS gives effect to all dilutive potential shares outstanding (i.e., options and warrants) during the period.

For the 9 months ended September 30, 2007, basic gain per share of the Company was $ .014 per share.

For the 9 months ended September 30, 2006, basic (loss) per share of the Company was $( .003) per share.

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Dionics, Inc.

Notes To Financial Statements

September 30, 2007

(Unaudited)

NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

INCOME TAXES

Income taxes are accounted for under the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  There were no deferred taxes for the periods ending September 30, 2007 and December 31,2006.

Recently Issued Accounting Standards

Recently Issued Accounting Standards In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - An Amendment of ARB Opinion No. 43, Chapter 4" ("SFAS 151"). SFAS 151 amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Among other provisions, the new rule requires that items such as idle facility expense, excessive spoilage, double freight, and rehandling costs be recognized as current period charges regardless of whether they meet the criterion of "so abnormal" as stated in ARB No. 43. Additionally, SFAS 151 requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005. The Company has considered SFAS 151 and determined that this pronouncement will not materially impact its consolidated results of operations.

In December 2004, the FASB issued SFAS No.123 (revised 2004), "Share-Based Payment" ("SFAS 123R"), which replaces SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123") and APB Opinion No. 25, "Accounting for Stock Issued to Employees. "SFAS 123R requires that all share-based payments to employees, including grants of employee stock options, be recognized in the financial statements based on their fair values, beginning with the first interim or annual period after June 15, 2005, with early adoption encouraged. The pro forma disclosures previously permitted under SFAS 123, no longer will be an alternative to financial statement recognition. The Company was required to adopt SFAS 123R in the third quarter of 2005. Under SFAS 123R, it must determine the appropriate fair value model to be used in valuing share-based payments, the amortization method for compensation cost and the transition method to be used at the date of adoption. Upon adoption, the Company may choose from two transition methods: the modified-prospective transition approach or the modified-retroactive transition approach. Under the modified-prospective transition approach it would be required to recognize compensation cost for awards that were granted prior to, but not vested as of the date of adoption. Prior periods remain unchanged and pro forma disclosures previously required by SFAS No. 123 continue to be required.

Under the modified-retrospective transition method, the Company would be required to restate prior periods by recognizing compensation cost in the amounts previously reported in the pro forma disclosure under SFAS No. 123. Under this method, it would be permitted to apply this presentation to all periods presented or to the start of the fiscal year in which SFAS No. 123R is adopted. The Company would also be required to follow the same guidelines as in the modified-prospective transition method for awards granted subsequent to adoption and those that were granted and not yet vested. The Company is currently evaluating the requirements of SFAS 123R and its impact on the consolidated results of operations and earnings per share. The Company has not yet determined the method of adoption or the effect of adopting SFAS 123R, and it has not been determined whether the adoption will result in amounts similar to the current pro forma disclosures under SFAS 123.   

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Dionics, Inc.

Notes To Financial Statements

September 30, 2007

(Unaudited)

NOTE 2 -   TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable were as follows:

				September 30		December 31
				2007		2006
Trade accounts receivable		$      66,300		$     60,900
Less: allowance for doubtful accounts	7,300		7,300
				$      59,000		$     53,600

There was no bad debt expense for the periods ended September 30, 2007 and 2006.

NOTE 3 -   PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

				September 30		December 31
				2007		2006
Equipment			$ 1,189,900		$ 1,189,500
Furniture and Fixtures		233,300		233,300
				$ 1,423,200		$ 1,422,800
	Less: accumulated depreciation	(1,421,300)		(1,420,500)
		Net property, plant and equipment	$        1,900		$       2,300

On April 20, 2005 a property sales and lease back agreement was made between the Company and 65 Rushmore Realty.  The Company sold its land and building located at 65 Rushmore Street, Westbury, NY for $990,000.

The lease agreement is a triple net lease and is for a period of seven years with a base annual rent of $83,300 to be paid in monthly installments of $6,900.  This annual rent is subject to annual increases based on the Consumer Price Index for All Urban Consumers of the United States Department of Labor Bureau of Labor Statistics in effect for New York and Northern New Jersey starting on August 1, 2009.

Depreciation expenses for the 9 months ended September 30, 2007 were $800 and for the year ended December 31, 2006 were $7,800.

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Dionics, Inc.

Notes To Financial Statements

September 30, 2007

(Unaudited)

NOTE 4 - DEFERRED COMPENSATION PAYABLE:

In 1987, the Company entered into an agreement, amended in 1997 and 1999, which provides for a 72-month schedule of payments to its chief executive officer.

An investment agreement was entered into with the Company on May 18, 2004.  Pursuant to this agreement the executive officer forgave $200,000 of amounts due to him under the compensation agreement.  The executive officer also agreed to postpone any and all remaining payments due him under the deferred compensation agreement for a period of 5 years starting May 18, 2004.

NOTE 5. STOCK OPTION PLAN

The Company has an employee incentive compensation plan (the "Plan") pursuant to which the Company's board of directors may grant stock options to officers and key employees. In September 1997, the Board of Directors of the Company adopted the 1997 Incentive Stock Option Plan (The "1997 Plan") for employees of the Company to purchase up to 250,000 shares of common stock of the Company. Options granted under the 1997 plan are "incentive stock options" as defined in Section 422 of the Internal Revenue Code. Any stock options granted under the 1997 Plan shall be granted at no less than 100% of the fair market value of the Common Stock of the Company at the time of the grant.  As of May 2004, options to acquire 20,000 shares had lapsed under the 1997 Plan.  In May 2004, the Company issued 172,500 shares to 15 employees equal to the number of options held by such employees which shares were issued in place of and in cancellation for the outstanding options previously issued under the 1997 Plan.  As of September 30, 2007, there were no outstanding options under the 1997 Plan.  Pursuant to its terms, the 1997 Plan expired in September 2007.

NOTE 6. TAXES AND NET OPERATING LOSS CARRY FORWARDS:

As of September 30, 2007 and December 31, 2006, the components of deferred tax assets were as follows:

				September 30		December 31
				2007		2006
Accounts receivable allowance		$        2,500		$       2,500
Net operating loss carry-forward		343,900		399,200
Total gross deferred tax assets (at
34% statutory rate)		346,400		401,700
Less: Valuation allowance		(346,400)		(401,700)
Net deferred tax assets		$               -		$              -

Under the provisions of SFAS 109, NOLs represent temporary differences that enter into the calculation of deferred tax assets. Realization of deferred tax assets associated with the NOL is dependent upon generating sufficient taxable income prior to their expiration.  

Management believes that there is a risk that certain of these NOLs may expire unused and, accordingly, has established a valuation allowance against them. Although realization is not assured for the remaining deferred tax assets, based on the historical trend in Company sales and profitability, sales backlog, and budgeted sales management believes it is likely that they may not be totally realized through future taxable earnings. In addition, the net deferred tax assets could be reduced in the near term if management's estimates of taxable income during the carry forward period are significantly reduced.

The Company believes it is possible that the benefit of these additional assets may not be realized in the future.

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Dionics, Inc.

Notes To Financial Statements

September 30, 2007

(Unaudited)

NOTE 7. COMMITMENTS AND CONTINGENCIES

The Company has an agreement with its chief executive officer to pay to his widow or estate for a period of five (5) years following his death an amount per year equal to the annual salary being earned by him at the time of his death, provided that he was an employee of the Company at the time of his death. Such arrangements had previously been funded by life insurance policies owned by the Company on his life; however, currently the policy remains unfunded.  

NOTE 8. RETIREMENT PLANS

On February 15, 2002 the Company repurchased 76,347 shares of Dionics, Inc. common stock from the Company's 401(k) plan.  These shares had been contributed by the Company's 401(k) Plan during 1993.  The amount paid on February 22, 2002 was $3,800 or $.05 per share which management determined to be the fair purchase price.  The proceeds from the repurchase were placed into the respective 401(k) accounts of the employees in proportion to the 401(k) plan shares, which had been attributed to each of them.  In addition, the Company then issued the same number of shares as a bonus to the same eleven employees.  The employees may not dispose of these shares in less than one year, as these were unregistered shares.  There are no more shares of Dionics, Inc. remaining in the Company's 401(k) plan.  The outlay of $3,800 has been charged as an expense to the various departments of the Company.  Such 76,347 shares issued in February 2002 were distributed under the Company 2002 Stock Compensation Plan ("the 2002 Plan") which was adopted by the Company in February 2002.  The Company may issue up to 500,000 shares under the 2002 Plan.  In May 2004, the Company issued, under the 2002 Plan, 172,500 restricted shares of Common Stock to 15 employees equal to the number of options held by such employees which shares were issued in place of and in cancellation for all of the Outstanding Options.  Pursuant to its terms, the 2002 Plan expired in February 2007.

NOTE 9. SUBSEQUENT EVENTS

Auditors

Due primarily to financial constraints, the Company was not able to engage a new auditing firm until August 2005 which engagement became necessary after the Company was notified in January 2005 that its then-current auditing firm had failed to register with the PCAOB.  Thereafter, the newly engaged firm encountered a variety of internal issues regarding its ability to continue as the Company’s public accountant.  Effective December 31, 2006, such firm resigned as the Company’s principal independent accountants.  At the time, the firm was in the final stages of completing its audited report for the year ended December 31, 2004 and indicated it would soon issue the report to the Company.  Following the filing on October 1, 2007 of the Company’s Form 10-KSB for the year ended December 31, 2004, the Company engaged Michael F. Albanese, CPA on October 3, 2007 as its independent registered public accountant.

Grant of Shares  

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

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

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

 

Forward-Looking Statements

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

Introduction

This report is being filed late in September 2008, following what had become a protracted SEC reporting lapse. A detailed account of the reasons behind the SEC reporting lapse is contained in the MD&A section of our Form 10-KSB for 2005, filed on July 16, 2008.The Company is vigorously pursuing the filing of all previously delinquent SEC reports, and hopes to very shortly become current in its filing obligations.

Liquidity and Capital Resources

The Company’s cash resources continued to improve as sales increased during the First Nine-Months of 2007 compared to the First Nine-Months of 2006. This was reflected both in actual Cash on hand as well as in Accounts Receivable. The Company’s debt structure was also improved by having paid off all mortgage debt when its property was sold in 2005, resulting in the majority of the Company’s debt now being in the form of Deferred Compensation, not payable until May of 2009.

Results of Operations

Sales volume in the Third Quarter of 2007 reached $256,900 as compared to $162,200 in the same period last year, an increase of 58 percent. Cost of Sales reached $155,900 in the Third Quarter of 2007 as compared to $129,400 in the Third Quarter of 2006, leading to a Gross Profit of $101,000 in the current period as compared to $32,800 in the same period last year.  Selling, General and Administrative expenses were $70,800 in the Third Quarter of 2007 versus $76,300 in the Third Quarter of 2006. Net Income (Loss) in the Third Quarter of 2007 showed a Profit of $35,800 as compared to a Loss of $39,000 in the Third Quarter of 2006.

Sales volume in the First Nine-Months of 2007 rose 40 percent, reaching $829,700 as compared to $590,400 in the First Nine-Months of 2006. Increases were seen across all product lines, with an especially large increase having come when a single customer chose to buy an inventory position of a strategic product no longer in active production by the Company. Cost of Sales rose on the larger First Nine-Months 2007 sales volume, reaching $492,700 as compared to $388,300 in the same period last year. This resulted in a Gross Profit of $337,000 in the current period versus $202,100 in the First Nine-Months of 2006, Selling, General and Administrative expenses dropped to $210,500 in the First Nine-Months of 2007, compared to $243,800 in the same period last year.

Net Income (Loss) after taxes showed a Profit of $131,200 in the First Nine-Months of 2007, compared to a Loss of $28,600 in the same period in 2006. The primary factors in the improvement were the increase in Sales volume and the decrease in S,G&A expenses.

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Summary

As explained in the Introduction, this report is one of several being filed after a lengthy lapse in the Company’s SEC reporting. The Company hopes to continue filing these delinquent reports until it soon becomes current in its filing obligations. For more information on the subject, see the MD&A section of the Company’s year-end filing of its 10-KSB SEC report for 2005.

Off-Balance Sheet Arrangements

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

Item 3.   Controls and Procedures .

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report.  Based on that evaluation, our Principal Executive Officer and Principal Financial Officer has concluded that, as of September 30, 2007, these disclosure controls and procedures were effective to ensure that all information required to  be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rule and forms; and (ii) accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.   

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

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PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

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

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

None.

Item 3.  Defaults Upon Senior Securities.

None.

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

None.

Item 5.  Other Information.

None.

Item 6.   Exhibits.

(a) Exhibits.

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

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

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

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SIGNATURES

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

DIONICS, INC.

(Registrant)

Dated: October 2, 2008	By:   /s/ Bernard Kravitz
	Bernard Kravitz, President
Dated:   October 2, 2008	By:   /s/ Bernard Kravitz
	Bernard Kravitz, Principal Financial Officer

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