SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

     (Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004

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

                         Commission file number 0-21271

                       SANGUI BIOTECH INTERNATIONAL, INC.
             (Exact Name of Registrant as Specified in its Charter)

                     COLORADO                        84-1330732
         (State or other jurisdiction of          (I.R.S. Employer
          incorporation or organization)         Identification No.)

                            Alfred-Herrhausen-Str. 44
                                  58455 Witten
                                     Germany

               (Address of Principal Executive Offices) (Zip Code)
     Registrant's Telephone Number, Including Area Code: 011-49-2302-915-204

                                  -----------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. Yes [X] No [ ]

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

Title of each class of Common Stock          Outstanding at May 14, 2004
-----------------------------------          -----------------------------------
Common Stock, no par value                   40,655,363

Transitional Small Business Disclosure Format
(Check one);

Yes [ ]  No [X]


                                                                             -1-

<PAGE>

INDEX

                       SANGUI BIOTECH INTERNATIONAL, INC.

                                                   PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheet at March 31, 2004 (Unaudited)..............3

        Consolidated Statements of Operations and Comprehensive
           Loss (Unaudited)Three and Nine Months Ended
           March 31, 2004 and 2003............................................4

           Consolidated Statements of Cash Flows(Unaudited)
           Nine Months Ended March 31, 2004 and 2003..........................5

           Notes to Consolidated Financial Statements (Unaudited)..........6-10

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations............................................11

Item 3.  Controls and Procedures.............................................13

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings....................................................14

Item 2. Change in Securities and Use of Proceeds.............................14

Item 3. Defaults Upon Senior Securities......................................14

Item 4. Submission of Matters to a Vote of Securities Holders................14

Item 5. Other Information....................................................14

Item 6. Exhibits and Reports on Form 8-K.....................................14

                                                                             -2-

<PAGE>


                       SANGUI BIOTECH INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEET

                                     ASSETS

                                                                      March 31,
                                                                         2004
                                                                     (Unaudited)
                                                                    -----------
Current assets
       Cash and cash equivalents                                    $   503,919
       Available for sale securities                                    242,035
       Taxes receivable                                                  82,830
       Prepaid expenses and other assets                                 52,266
                                                                    -----------
            Total current assets                                        881,050

Property and equipment-net                                              111,322

Patents and licenses-net                                                 13,504

                                                                    -----------
Total assets                                                        $ 1,005,876
                                                                    ===========

                       LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities
       Accounts payable and accrued expenses                        $    64,944
Commitments and contingencies
Stockholders' equity
       Preferred stock, no par value, 5,000,000 shares
       authorized, no shares issued and outstanding                        --
       Common stock,  no par value, 50,000,000 shares
       authorized, 40,655,363 shares issued and outstanding          18,345,491
       Treasury stock at cost, 100,000 shares                           (26,997)
       Additional paid-in capital                                     2,000,000
       Accumulated other comprehensive income                           577,470
       Accumulated deficit                                          (19,955,032)
                                                                    -----------
       Total stockholders' equity                                       940,932
                                                                    -----------

Total liabilities and stockholders' equity                          $ 1,005,876
                                                                    ===========

The accompanying notes are an integral part of these unaudited consolidated
financial statements

                                                                             -3-
<PAGE>

                       SANGUI BIOTECH INTERNATIONAL, INC.
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

<TABLE>
<CAPTION>
                                                                           For The                             For The
                                                                     Three Months Ended                   Nine Months Ended
                                                                          March 31,                           March 31,
                                                                         (Unaudited)                         (Unaudited)
                                                              -------------------------------       -------------------------------
                                                                   2004               2003              2004               2003
                                                              ------------       ------------       ------------       ------------
<S>                                                            <C>               <C>                <C>                <C>
Revenues                                                      $       --         $       --         $       --         $       --
Operating expenses:
Research and development                                           254,413            307,852            670,852            712,181
General and administrative                                         134,624            262,153            503,681            778,843
Depreciation and amortization                                       15,989            129,935             72,983            221,432
                                                              ------------       ------------       ------------       ------------
Total operating expenses                                           405,026            699,940          1,247,516          1,712,456
Other income:
Interest income                                                      4,989             14,423             19,649             53,859
Other income                                                         5,452             23,235             27,092             99,347
                                                              ------------       ------------       ------------       ------------
Total other income                                                  10,441             37,658             46,741            153,206
Loss from continuing operations                                   (394,585)          (662,282)        (1,200,775)        (1,559,250)
Loss from discontinued operations                                     --                 --                 --             (138,997)
                                                              ------------       ------------       ------------       ------------
Net loss                                                          (394,585)          (662,282)        (1,200,775)        (1,698,247)
Other comprehensive income (loss):
Foreign currency translation adjustments                            16,510            113,370             68,082            (41,261)
Unrealized (loss) gain on marketable securities                    (62,874)            (2,264)            16,682            (83,228)
                                                              ------------       ------------       ------------       ------------
Comprehensive loss                                            $   (440,949)      $   (551,176)      $ (1,116,011)      $ (1,822,736)
                                                              ============       ============       ============       ============
Net loss per common share - basic and diluted:
Loss from continuing operations                               $      (0.01)      $      (0.02)      $      (0.03)      $      (0.04)
                                                              ============       ============       ============       ============
Loss from discontinued operations                             $       --         $       --         $       --         $       --
                                                              ============       ============       ============       ============
Net loss                                                      $      (0.01)      $      (0.02)      $      (0.03)      $      (0.04)
                                                              ============       ============       ============       ============
Basic and diluted weighted average
number of common shares outstanding                             40,555,363         40,655,363         40,555,363         40,655,363
                                                              ============       ============       ============       ============
</TABLE>

The accompanying notes are an integral part of these unaudited consolidated
financial statements

                                                                             -4-
<PAGE>


                       SANGUI BIOTECH INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                            For The
                                                                                       Nine Months Ended
                                                                                           March 31,
                                                                                          (Unaudited)
                                                                                --------------------------------
                                                                                    2004                2003
                                                                                -----------          -----------
<S>                                                                             <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss                                                                        $(1,200,775)         $(1,698,247)
Adjustments to reconcile net loss to net cash used in operating activities
      Depreciation and amortization                                                  72,983              221,432
      Realized loss (gains) on marketable securities                                    290              (53,495)
      Realized gain on sale of assets of discontinued operations                       --                (16,980)
      Loss on impairment of assets                                                     --                106,927
Changes in operating assets and liabilities:
      Accounts receivable                                                              --                 84,919
      Inventories                                                                      --                 16,362
      Grant receivable                                                                 --                214,321
      Taxes receivable                                                               99,990                 --
      Prepaid expenses and other assets                                              19,150              116,819
      Accounts payable and accrued expenses                                         (60,872)            (452,341)
                                                                                -----------          -----------

Net cash used in operating activities                                            (1,069,234)          (1,460,283)
                                                                                -----------          -----------
CASH FLOWS FROM INVESTING ACTIVITIES:

      Increase in marketable securities                                                --             (1,846,531)
      Maturities of marketable securities                                           580,400            2,660,870
      Repurchase of the Company's common stock                                      (26,997)                --
      Collection of note receivable                                                  20,000               20,000
      Purchase of property and equipment                                             (9,730)             (32,911)
                                                                                -----------          -----------

Net cash provided by investing activities                                           563,673              801,428
                                                                                -----------          -----------

Effect of exchange rate changes                                                      52,949              (41,261)
                                                                                -----------          -----------
Net decrease in cash and cash equivalents                                          (452,612)            (700,116)

Cash and cash equivalents, beginning of period                                      956,531              832,130
                                                                                -----------          -----------

Cash and cash equivalents, ending of period                                     $   503,919          $   132,014
                                                                                ===========          ===========
Supplemental disclosures:
      Cash paid during the period for:
      Interest                                                                  $      --            $      --
                                                                                ===========          ===========
      Income taxes                                                              $      --            $       800
                                                                                ===========          ===========
</TABLE>

During August 2002, the Company  received a note receivable for $60,000 from the
sale of inventory and equipment related to its discontinued operations.

The accompanying notes are an integral part of these unaudited consolidated
financial statements

                                                                             -5-
<PAGE>


                       SANGUI BIOTECH INTERNATIONAL, INC.
             Notes to Consolidated Financial Statements (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying  consolidated  financial  statements have been prepared without
audit in accordance with accounting  principles generally accepted in the United
States of America for interim financial information and with the instructions to
Form 10-QSB and Item 301 of Regulation  S-B.  Certain  information  and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with accounting  principles  generally  accepted in the United States of America
have been  condensed  or omitted  pursuant  to such rules and  regulations.  The
unaudited consolidated financial statements and notes should, therefore, be read
in conjunction with the consolidated  financial  statements and notes thereto in
the  Company's  Form 10-KSB for the year ended June 30, 2003.  In the opinion of
management,  all  adjustments  (consisting of normal and recurring  adjustments)
considered necessary for a fair presentation, have been included. The results of
operations  for the three- and  nine-month  periods ended March 31, 2004 are not
indicative  of the results  that may be expected for the full fiscal year ending
June 30, 2004.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business
------------------

Sangui BioTech  International,  Inc.,  incorporated in Colorado in 1995, and its
subsidiaries  (collectively,  the "Company")  have been engaged in the research,
development, manufacture, and sales of medical products.

SanguiBioTech GmbH ("Sangui GmbH"), the Company's German subsidiary,  is engaged
in the  development of artificial  oxygen  carriers  (external  applications  of
hemoglobin,  blood substitute and blood additives) as well as in the development
of glucose implant  sensors.  Prior to June 30, 2003, the Company had two German
subsidiaries, SanguiBioTech AG and GlukoMediTech AG. GlukoMediTech AG was merged
into   SanguiBioTech  AG  on  June  30,  2003.   Effective   November  4,  2003,
SanguiBioTech  AG was converted  into  SanguiBioTech  GmbH, a limited  liability
company under German law.

The operations of Sangui BioTech, Inc. ("Sangui USA"), a wholly owned subsidiary
of the Company, were discontinued during 2002.

The  operations  of Sangui  Singapore,  incorporated  in  Singapore in 1999 as a
regional office for the Company, were discontinued during 2002.

Consolidation
-------------

The  consolidated  financial  statements  include the accounts of Sangui BioTech
International,   Inc.  and  its  wholly  owned  subsidiaries.   All  significant
intercompany  accounts and transactions  have been eliminated in  consolidation.
Certain  amounts in the three and nine  months  ended  March 31,  2003 have been
reclassified  to  conform  to the three and nine  months  ended  March 31,  2004
presentation.  These reclassifications have no effect on previously reported net
loss.

Use of Estimates
----------------

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America 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 respective  reporting period.  Actual results could differ from those
estimates.  Significant  estimates  made by management  are,  among others,  the
realization of taxes receivable,  long-lived assets, and valuation  allowance on
deferred tax assets.


                                                                             -6-

<PAGE>

Risk and Uncertainties
----------------------

The Company's line of future pharmaceutical products (artificial oxygen carriers
or blood  substitute  and  additives) and in vivo  biosensors  (glucose  implant
sensor)  being  developed  by Sangui  GmbH,  are  deemed as  medical  devices or
biologics,  and as such are governed by the Federal Food and Drug and  Cosmetics
Act and by the  regulations  of state  agencies and various  foreign  government
agencies.  The  pharmaceutical  and biosensor  products,  under  development  in
Germany, will be subject to more stringent regulatory requirements, because they
are in vivo  products  for  humans.  The Company  and its  subsidiaries  have no
experience  in  obtaining  regulatory  clearance  on these  types  of  products.
Therefore,  the Company  will be subject to the risks of delays in  obtaining or
failing to obtain regulatory clearance.

The accompanying  consolidated  financial statements have been prepared assuming
the Company will continue as a going concern,  which  contemplates,  among other
things,  the realization of assets and satisfaction of liabilities in the normal
course of business.  The Company has an accumulated deficit of $19,955,032 as of
March 31, 2004 and has been  significantly  reducing its working  capital  since
June 30, 2003. The Company's management believes, based on its current operating
plan,  that its current cash and highly liquid  marketable  securities  totaling
approximately  $746,000 at March 31, 2004,  are sufficient to fund the Company's
operations and working capital requirements at least through September 30, 2004.
There are no assurances, however, that the Company will generate sufficient cash
flows from operations or complete any sales or financing  transactions  or, even
if such  transactions  are  completed,  have  sufficient  funds to  execute  its
intended  business  plan  over an  extended  period  of time.  The  accompanying
financial  statements  do not include any  adjustments  that might be  necessary
should the Company be unable to continue as a going concern.

Foreign Currency Translation
----------------------------

Assets and liabilities of the Company's  foreign  operations are translated into
U.S.  dollars  at  period-end  exchange  rates.  Net  exchange  gains or  losses
resulting from such  translation  are excluded from net loss but are included in
comprehensive   income  (loss)  and  accumulated  in  a  separate  component  of
stockholders'  equity.  Income and expenses are  translated at weighted  average
exchange rates for the period.

Cash and Cash Equivalents
-------------------------

The  Company  maintains  its cash in bank  accounts  in  Germany.  Cash and cash
equivalents  include time deposits for which the Company has no requirements for
compensating  balances.  The  Company  has not  experienced  any  losses  in its
uninsured bank accounts.

Marketable Securities
---------------------

Marketable securities are classified as available-for-sale. Unrealized gains and
losses are  excluded  from net  income  (loss)  and are  reported  as a separate
component of other comprehensive income (loss) in stockholders' equity. Realized
gains and losses are  included in other income and are  determined  based on the
specific identification of the securities bought and sold (see Note 3).

Revenue Recognition
-------------------

Revenues from product sales are recognized at the time of shipment.

Research and Development
------------------------

Research and  development  costs are charged to operations as they are incurred.
Legal fees and other direct costs incurred in obtaining and  protecting  patents
are expensed as incurred.

Basic and Diluted Earnings (Loss) Per Common Share
--------------------------------------------------

Basic  earnings  (loss) per common share is computed by dividing  income  (loss)
available to common stockholders by the weighted average number of common shares
outstanding during the period of computation.  Diluted earnings (loss) per share
gives effect to all  potential  dilutive  common shares  outstanding  during the
period of  compensation.  The  computation of diluted  earnings (loss) per share


                                                                             -7-

<PAGE>

does not assume conversion,  exercise or contingent  exercise of securities that
would have an  antidilutive  effect on earnings.  As of March 31, 2004 and 2003,
the Company had no potentially  dilutive  securities  that would effect the loss
per share if they were to be dilutive.

Comprehensive Income (Loss)
---------------------------

Total  comprehensive  income (loss)  represents the net change in  stockholders'
equity during a period from sources other than  transactions  with  stockholders
and as such,  includes net earnings (loss).  For the Company,  the components of
other  comprehensive  income  (loss) are the changes in the  cumulative  foreign
currency  translation  adjustments  and unrealized  gains (losses) on marketable
securities and are recorded as components of stockholders' equity.

Segments of an Enterprise and Related Information
-------------------------------------------------

The Company applies  Statement of Financial  Accounting  Standards  ("SFAS") No.
131, "Disclosures about Segments of an Enterprise and Related Information". SFAS
No. 131 establishes  standards for the way public companies  report  information
about  segments  of their  business in their  annual  financial  statements  and
requires them to report selected segment  information in their quarterly reports
issued to  shareholders.  It also  requires  entity-wide  disclosures  about the
products and  services an entity  provides,  the material  countries in which it
holds assets and reports revenues and its major customers (see Note 7).

New Accounting Pronouncements
-----------------------------

In May 2003, the Financial  Accounting  Standards Board ("FASB") issued SFAS No.
150, "Accounting for Certain Financial  Instruments with Characteristics of Both
Liabilities and Equity".  SFAS No. 150  establishes  standards for how an issuer
classifies and measures certain financial  instruments with  characteristics  of
both  liabilities  and equity.  It requires that an issuer  classify a financial
instrument  that is  within  its  scope  as a  liability  (or an  asset  in some
circumstances). SFAS No. 150 is effective for financial instruments entered into
or modified  after May 31, 2003,  and otherwise is effective at the beginning of
the first interim period  beginning after June 15, 2003. It is to be implemented
by reporting the  cumulative  effect of a change in an accounting  principle for
financial instruments created before the issuance date of SFAS No. 150 and still
existing at the beginning of the interim period of adoption.  Restatement is not
permitted.  The  adoption of SFAS No. 150 did not have a material  effect on the
Company's consolidated financial statements.

NOTE 3 - AVAILABLE FOR SALE SECURITIES

Available for sale securities consist of the following at March 31, 2004:

                                                 Fair market    Unrealized
                                       Cost         value          Gain
                                     ---------    ---------      --------
Corporate bonds due within one year  $ 190,359    $ 243,469      $ 53,110
                                     =========    =========      ========

NOTE 4 - STOCKHOLDERS' EQUITY

During the three months ended March 31, 2004,  the Company  repurchased  100,000
shares of its common  stock  from a third  party for cash of  $26,997,  which is
reflected  in  stockholders'  equity  as  treasury  stock  in  the  accompanying
consolidated  balance  sheet.  The  Company's  management  intends to sell these
shares in the near future.

NOTE 5  - DISCONTINUED OPERATIONS

Sangui  USA  manufactured  in vitro  immunodiagnostic  blood test kits that were
primarily  sold  in the  United  States  and  Europe.  The  Company  decided  to
discontinue the in vitro immunodiagnostics  business in August 2002, sold Sangui
USA's  inventory and property and  equipment to an unrelated  party for $60,000,
and  closed  the  facility.  The sale  resulted  in a gain of  $16,980  which is
included  as part of  loss  from  discontinued  operations  in the  accompanying
statement of operations  for the nine months ended March 31, 2003. In July 2002,
the Company received $100,000 as part of an agreement to cease manufacturing and
selling  certain  blood test kits which is  included  in loss from  discontinued
operations in the


                                                                             -8-

<PAGE>

accompanying  statement  of operations for the nine months ended March 31, 2003.
The Company decided to discontinue the operations of Sangui  Singapore in August
2002,  recorded an impairment  loss on property and  equipment of $106,927,  and
closed the facility effective December 31, 2002.

Components of amounts reflected in the accompanying  consolidated  statement  of
operations and  comprehensive  loss for the nine months ended March 31, 2003 are
presented below:

                                    Sangui         Sangui
                                     USA          Singapore          Total
                                  ---------       ---------       ---------
Sales                             $ 138,542       $      --       $ 138,542
Cost of sales                        94,747              --          94,747
Operating expenses                   88,564         107,644         196,208
                                  ---------       ---------       ---------
Loss from operations                (44,769)       (107,644)       (152,413)
Other income                        116,980           3,363         120,343
Impairment of assets                     --        (106,927)       (106,927)
                                  ---------       ---------       ---------
Income (loss) from
 discontinued
 operations                       $  72,211       $(211,208)      $(138,997)
                                  =========       =========       =========

NOTE 6 - COMMITMENTS AND CONTINGENCIES

Litigation
----------

The Company may, from time to time, be involved in various litigation  resulting
from the ordinary course of operating its business.  Management is currently not
able to predict the outcome of any such cases. However, management believes that
the amount of ultimate liability,  if any, with respect to such actions will not
have a  material  effect on the  Company's  financial  position  or  results  of
operations.

Indemnities and Guarantees
--------------------------

During the normal course of business,  the Company has made certain  indemnities
and  guarantees  under which it may be required to make  payments in relation to
certain  transactions.  These  indemnities  include certain  agreements with the
Company's  officers,  under which the Company may be required to indemnify  such
person  for  liabilities  arising  out of  their  employment  relationship.  The
duration of these  indemnities  and guarantees  varies and, in certain cases, is
indefinite.  The majority of these indemnities and guarantees do not provide for
any  limitation of the maximum  potential  future  payments the Company could be
obligated  to make.  Historically,  the Company has not been  obligated  to make
significant payments for these obligations and no liabilities have been recorded
for these  indemnities and guarantees in the accompanying  consolidated  balance
sheet.

                                                                             -9-
<PAGE>


NOTE 7 - BUSINESS SEGMENTS

The Company reports it business segments based on geographic regions, which are
as follows:

<TABLE>
<CAPTION>
                                                                  Three months ended March 31,         Nine months ended March 31,
                                                                  -----------------------------       -----------------------------
                                                                     2004               2003              2004              2003
                                                                  -----------       -----------       -----------       -----------
<S>                                                               <C>               <C>               <C>               <C>
Net sales:
Sangui GmbH                                                       $      --         $      --         $      --         $      --
Sangui Biotech International, Inc.                                       --                --                --                --
Sangui USA (included in discontinued operations)                         --                --                --             138,542
Sangui Singapore                                                         --                --                --                --
                                                                  -----------       -----------       -----------       -----------
                                                                  $      --         $      --         $      --         $   138,542
                                                                  ===========       ===========       ===========       ===========
Net income (loss):
Sangui GmbH                                                       $  (374,616)      $  (654,245)      $(1,059,574)      $(1,441,587)
Sangui Biotech International, Inc.                                    (19,969)           (8,037)         (141,201)      $  (117,663)
Sangui USA                                                               --                --                --              72,211
Sangui Singapore                                                         --                --                --            (211,208)
                                                                  -----------       -----------       -----------       -----------
                                                                  $  (394,585)      $  (662,282)      $(1,200,775)      $(1,698,247)
                                                                  ===========       ===========       ===========       ===========
Depreciation and amortization
Sangui GmbH                                                       $    15,989       $   129,935       $    72,983       $   221,432
Sangui Biotech International, Inc.                                       --                --                --                --
Sangui USA                                                               --                --                --                --
Sangui Singapore                                                         --                --                --                --
                                                                  -----------       -----------       -----------       -----------
                                                                  $    15,989       $   129,935       $    72,983       $   221,432
                                                                  ===========       ===========       ===========       ===========
Sangui GmbH                                                       $   932,878
Sangui Biotech International, Inc.                                     74,432
Sangui USA                                                               --
Sangui Singapore                                                         --
                                                                  -----------
                                                                  $ 1,007,310
                                                                  ===========
</TABLE>


                                                                            -10-

<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Forward-looking Statements
--------------------------

The following  discussion  of our financial  condition and results of operations
should be read in conjunction with the consolidated financial statements and the
related notes thereto included  elsewhere in this quarterly report.  Some of the
information  in  this  quarterly  report  contains  forward-looking  statements,
including statements related to anticipated operating results,  margins, growth,
financial resources,  capital requirements,  adequacy of the Company's financial
resources,  trends in spending on research and  development,  the development of
new markets, the development,  regulatory approval,  manufacture,  distribution,
and  commercial  acceptance  of new  products,  and future  product  development
efforts.  Investors are cautioned that forward-looking  statements involve risks
and  uncertainties,  which may affect our business and prospects,  including but
not limited  to, the  Company's  expected  need for  additional  funding and the
uncertainty of receiving the additional funding,  changes in economic and market
conditions,  acceptance  of our  products by the health  care and  reimbursement
communities,   new   development   of  competitive   products  and   treatments,
administrative and regulatory approval and related  considerations,  health care
legislation and regulation,  and other factors discussed in our filings with the
Securities and Exchange Commission.

GENERAL

The  Company is  primarily  involved in the  development  of  artificial  oxygen
carriers and glucose sensors.

The Company's  clinical  development  projects are primarily in the  preliminary
stages.  The  Company is  diligently  developing  several  applications  for its
clinical development projects,  but does not anticipate beginning any government
protocols or clinical trials in the near term. In the course of the ongoing cost
containment  efforts,  these  projects  were halted during the last fiscal year,
after having  achieved  the planned  milestones.  The Company  decided to reduce
further expenditures in the blood substitute,  blood additive and glucose sensor
projects to the amount  necessary to find financing,  industrial or distribution
partners for further  development and marketing of the resulting  products.  The
Company has adopted a program aimed at cost  reductions  and at  refocusing  the
Company's  funds to  accelerate  time to market  its most  promising  and mature
products.

The  Company's  development  projects  related to  cosmetic  and other  external
applications  of its oxygen  carrier are nearing  completion.  In addition,  the
Company  holds  licensing  agreements  with Russian  manufacturers  granting the
Company  exclusive  marketing rights for certain medical  products  developed or
produced in Russia.  The Company has established  contact with German  cosmetics
vendors and other  industrial  partners and is planning and preparing to jointly
introduce  related  products  in the  German and other  European  markets in the
course of the current fiscal year.

As of May 4, 2004, Sangui GmbH and Mercatura Cosmetics Biotech AG ("Mercatura"),
a third party entity,  have signed a letter of intent aiming at marketing  "Pure
Moisture",  an anti-aging  nano-formulation  developed by Sangui GmbH. Under the
proposed agreement, Sangui GmbH will license to Mercatura the exclusive right to
sell the nano-emulsion in German and international markets.

Cost Savings
------------

In total, management has been able to reduce the Company's operating expenses by
29% to  approximately  $1.2  million  in the first nine  months of fiscal  2004,
compared to approximately  $1.7 million in the respective  period of last fiscal
year. General and administrative  expenses have been reduced by 35% in the first
nine months of fiscal 2004 as compared to the  respective  period of last fiscal
year. This effort is also reflected in the net cash used in operating activities
which decreased 27% to approximately $1.1 million compared to approximately $1.5
million net cash used in operating  activities in the respective  period of last
fiscal year.  Management assumes that the current planning is realistic and that
the Company's  funds and liquidity are  sufficient to finance its  activities at
least through the period ending September 30, 2004.


                                                                            -11-

<PAGE>

FINANCIAL POSITION

The Company's current assets decreased  approximately $1.1 million, or 57%, from
June 30, 2003 to  approximately  $881,000  at March 31,  2004.  The  decrease is
primarily   attributable  to  a  decrease  in  cash  and  cash   equivalents  of
approximately  $453,000  and a decrease  in  available  for sale  securities  of
approximately  $557,000. The decrease in cash and cash equivalents and available
for sale securities results primarily from funding the current year's operations
of the Company with no revenues in the three- and nine-month periods ended March
31, 2004.

The Company's net property and equipment decreased approximately $49,000, or 31%
from June 30, 2003 to approximately  $111,000 at March 31, 2004. The decrease is
primarily  attributable to current year  depreciation of approximately  $73,000,
partially  offset by  purchases  of  property  and  equipment  of  approximately
$10,000.

The Company funded its operations  primarily through its existing cash reserves.
The Company's  stockholders'  equity decreased  approximately $1.1 million.  The
primary  decrease  is  caused  by the  Company's  current  period  net  loss  of
approximately $1.2 million,  and an increase in accumulated other  comprehensive
income of approximately $84,000 due to foreign currency translation  adjustments
and unrealized gains on marketable securities.

RESULTS OF OPERATIONS

Three months ended March 31, 2004 and 2003:

Sangui Gmbh
-----------
RESEARCH AND  DEVELOPMENT.  Research and development  expenses  decreased 18% to
approximately $254,000 in 2004 from approximately $308,000 in 2003. The decrease
is mainly attributed to the ongoing refocusing program.

GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased 55% to
approximately  $115,000  in 2004  from  approximately  $253,000  in  2003.  This
decrease is mainly attributed to the ongoing refocusing program.

DEPRECIATION.  Depreciation  decreased 88% to approximately $16,000 in 2004 from
approximately  $130,000  in 2003.  This  decrease  is mainly  attributed  to the
ongoing restructuring of Sangui GmbH.

Sangui Biotech International, Inc.
---------------------------------
GENERAL AND ADMINISTRATIVE.  General and administrative  expenses increased 122%
to approximately $20,000 in 2004 from approximately $9,000 in 2003. The increase
is due to increased consulting and legal fees.

Consolidated
------------
NET LOSS. As a result of the above factors, the Company's  consolidated net loss
was  approximately  $395,000,  or $0.01 per common share,  in 2004,  compared to
approximately $662,000, or $0.02 per common share, in 2003.

Nine months ended March 31, 2004 and 2003:

Sangui Gmbh
-----------
RESEARCH AND  DEVELOPMENT.  Research and  development  expenses  decreased 6% to
approximately $671,000 in 2004 from approximately $712,000 in 2003. The decrease
is mainly attributed to the ongoing refocusing program.

GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased 45% to
approximately  $363,000  in 2004  from  approximately  $655,000  in  2003.  This
decrease is mainly attributed to the ongoing refocusing program.

DEPRECIATION.  Depreciation  decreased 67% to approximately $73,000 in 2004 from
approximately  $221,000  in 2003.  This  decrease  is mainly  attributed  to the
ongoing restructuring of Sangui GmbH.


                                                                            -12-

<PAGE>

Sangui Biotech International, Inc.
----------------------------------
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased 14% to
approximately $141,000 in 2004 from approximately $124,000 in 2003. The increase
is due to increased consulting and legal fees.

Consolidated
------------
NET  LOSS.  As a result  of the above  factors  and the loss  from  discontinued
operations (see Note 5), the Company's  consolidated net loss was  approximately
$1.2 million, or $0.03 per common share, in 2004, compared to approximately $1.7
million, or $0.04 per common share, in 2003.

LIQUIDITY AND CAPITAL RESOURCES

For the nine months ended March 31, 2004, net cash used in operating  activities
decreased to approximately  $1.1 million from  approximately $1.5 million in the
corresponding  period in 2003,  primarily related to a decrease in the Company's
consolidated net loss as a result of the ongoing refocusing program.

For the nine  months  ended  March 31,  2004,  net cash  provided  by  investing
activities decreased to approximately  $564,000 from approximately  $801,000 net
cash provided by investing  activities in the corresponding  period in 2003. The
principal decrease is due to the maturity of marketable securities and purchases
of marketable securities in 2003. Additionally,  the Company decreased purchases
of property and equipment during the nine months ended March 31, 2004,  compared
to the corresponding period in 2003.

Working  capital was  approximately  $816,000 at March 31,  2004,  a decrease of
approximately $1.1 million from June 30, 2003 due primarily to the Company's net
loss for the nine-month  period.  A substantial  portion of the Company's  total
assets consists of cash and highly liquid  marketable  securities  classified as
available for sale securities. The highly liquid nature of these assets provides
the Company with  flexibility  in financing and managing its  business.  For the
three and nine months ended March 31, 2004,  the realized loss  on the Company's
marketable  securities  were  approximately  $290 and  $290,  respectively,  and
unrealized   (losses)   gains  were   approximately   $(63,000)   and   $17,000,
respectively.

At March 31,  2004,  the Company had cash and liquid  marketable  securities  of
approximately  $746,000.  The Company  believes that its available  cash will be
sufficient  to satisfy  its  requirements  at least  through  the period  ending
September  30,  2004.  However,  the Company  will need  substantial  additional
funding to fulfil its business plan and the Company intends to explore financing
sources for its future  development  activities.  No assurance can be given that
these efforts will be successful.

ITEM 3 - CONTROLS AND PROCEDURES

As of March 31, 2004, an evaluation was performed under the supervision and with
the  participation of the Company's  management,  including the CEO/CFO,  of the
effectiveness of the design and operation of the Company's  disclosure  controls
and procedures.  Based on that evaluation,  the Company's management,  including
CEO/CFO,  concluded that the Company's  disclosure  controls and procedures were
effective as of March 31, 2004.  There have been no  significant  changes in the
Company's internal controls or in other factors that could significantly  affect
internal controls subsequent to March 31, 2004.

ITEM 4 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company  has no  derivative  financial  instruments.  Exposure  to  foreign
currency exchange rates is limited,  as the Company has no operating business or
staff outside Germany since March 31, 2002.

                                                                            -13-
<PAGE>

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

On November 27, 2003, the Company was served with a lawsuit  (Langericht  Bochum
Court, Case No. 6 O 435/03).  The lawsuit names among others SanguiBioTech AG as
defendant.  The plaintiff alleges that SanguiBioTech AG which was converted into
Sangui GmbH in the meantime had  neglected  its duty in dealing with some of the
plaintiff's Sangui BioTech International,  Inc. shares. The court has called for
a hearing on July 28, 2004. The plaintiff is seeking $134,000 compensation.  The
claim is believed to be of no merit.

On August 4, 2003, SanguiBioTech AG filed a lawsuit against a former director of
the  Company,  claiming  that  some  payments  incurred  by the  defendant  were
unjustified  under  German  law  (Landgericht  Munich  I Court,  Case  No.  34 O
14027/03).  The  defendant  denies that the claim is  justified  and has brought
forward  the  opinion  that he can claim  additional  fees.  The  plaintiff  has
rejected the defendant's  opinion. A hearing of the court has not been scheduled
yet. The financial risk related to this lawsuit does not exceed $1,000.

ITEM 2 - CHANGE IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

Not applicable.

ITEM 5 - OTHER INFORMATION

None.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

31.1 Certification Pursuant to Rule 13a-14(a) and 15d-14(a), filed herewith.

32.  Certification  Pursuant  to Section  1350 of Title 18 of the United  States
     Code, filed herewith.


                                                                            -14-

<PAGE>

SIGNATURES

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

SANGUI BIOTECH INTERNATIONAL, INC.

By:      /s/ Wolfgan Barnikol
         ---------------------
         Wolfgang Barnikol
         President, Chief Executive Officer and
         Chief Financial Officer

Date:    May 14, 2004


                                                                            -15-