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 DECEMBER 31, 2003

[ ]  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 February 16, 2004
-----------------------------------           --------------------------------
  Common  Stock,  no par  value                           40,655,363


Transitional Small Business Disclosure Format
(Check one);

Yes [ ]  No [X]

<PAGE>

INDEX

                       SANGUI BIOTECH INTERNATIONAL, INC.

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheet at December 31, 2003 (Unaudited)..........3

        Consolidated Statements of Operations and Comprehensive Loss
        (Unaudited) Three and Six Months Ended December 31, 2003 and 2002....4

        Consolidated Statements of Cash Flows(Unaudited) Six Months
        Ended December 31, 2003 and 2002.....................................5

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

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...................................................13

Item 2. Change in Securities and Use of Proceeds............................13

Item 3. Defaults Upon Senior Securities.....................................13

Item 4. Submission of Matters to a Vote of Securities Holders...............13

Item 5. Other Information...................................................13

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


                                                                             -2-
<PAGE>

                       SANGUI BIOTECH INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEET

                                     ASSETS

                                                                  December 31,
                                                                      2003
                                                                  (Unaudited)
                                                                  -----------

Current assets
       Cash and cash equivalents                                 $    223,664
       Available for sale securities                                  878,624
       Taxes receivable                                               191,039
       Prepaid expenses and other assets                               51,654
                                                                 ------------
            Total current assets                                    1,344,981

Property and equipment-net                                            126,863

Patents and licenses-net                                               15,796
                                                                 ------------
Total assets                                                     $  1,487,640
                                                                 ============

                       LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities
       Accounts payable and accrued expenses                     $     78,762
                                                                 ------------
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
       Additional paid-in capital                                   2,000,000
       Accumulated other comprehensive income                         623,834
       Accumulated deficit                                        (19,560,447)
                                                                 ------------
       Total stockholders' equity                                   1,408,878
                                                                 ------------
Total liabilities and stockholders' equity                       $  1,487,640
                                                                 ============

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                     Six Months Ended
                                                                        December 31,                          December 31,
                                                                        (Unaudited)                           (Unaudited)
                                                              -------------------------------       -------------------------------
                                                                   2003              2002               2003               2002
                                                              ------------       ------------       ------------       ------------
<S>                                                           <C>                <C>                 <C>               <C>
Revenues                                                      $       --         $       --         $       --         $       --

Operating expenses:
Research and development                                           232,332            174,623            416,439            404,329
General and administrative                                         157,839            242,088            369,057            516,690
Depreciation and amortization                                       26,024             45,902             56,994             91,497
                                                              ------------       ------------       ------------       ------------

Total operating expenses                                           416,195            462,613            842,490          1,012,516

Other income:
Interest income                                                      6,744             24,295             14,660             39,436
Other income                                                        17,316             29,000             21,640             76,112
                                                              ------------       ------------       ------------       ------------
Total other income                                                  24,060             53,295             36,300            115,548

Loss from continuing operations                                   (392,135)          (409,318)          (806,190)          (896,968)

Loss from discontinued operations                                     --              (91,938)              --             (138,997)
                                                              ------------       ------------       ------------       ------------
Net loss                                                          (392,135)          (501,256)          (806,190)        (1,035,965)

Other comprehensive income (loss):
Foreign currency translation adjustments                            52,233             54,593             51,572           (154,631)
Unrealized (loss) gain on marketable securities                     67,447            (19,318)            79,556            (80,964)
                                                              ------------       ------------       ------------       ------------

Comprehensive loss                                            $   (272,455)      $   (465,981)      $   (675,062)      $ (1,271,560)
                                                              ============       ============       ============       ============

Net loss available to common
shareholders per common share:
Net loss from continuing operations                           $      (0.01)      $      (0.01)      $      (0.02)      $      (0.02)
                                                              ============       ============       ============       ============
Net loss from discontinued operations                         $       --         $       --         $       --         $        --
                                                              ============       ============       ============       ============
Net loss                                                      $      (0.01)      $      (0.01)      $      (0.02)      $      (0.03)
                                                              ============       ============       ============       ============

Basic and diluted weighted average
number of common shares outstanding                             40,655,363         40,655,363         40,655,363         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
                                                                                        Six Months Ended
                                                                                           December 31,
                                                                                           (Unaudited)
                                                                                 --------------------------------
                                                                                     2003                 2002
                                                                                 -----------          -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                              <C>                  <C>
Net loss                                                                         $  (806,190)         $(1,035,965)
Adjustments to reconcile net loss to net cash used in operating activities:
      Depreciation and amortization                                                   56,994               91,497
      Realized gains on sale of marketable securities                                   --                (45,170)
      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                                                                  --                161,128
      Taxes receivable                                                                (8,219)              77,211
      Prepaid expenses and other assets                                               19,762                2,716
      Accounts payable and accrued expenses                                          (47,054)            (432,391)
                                                                                 -----------          -----------

Net cash used in operating activities                                               (784,707)            (989,746)
                                                                                 -----------          -----------
CASH FLOWS FROM INVESTING ACTIVITIES:

      Increase in marketable securities                                                 --             (1,684,600)
      Maturities of marketable securities                                               --              2,296,671
      Collection of note receivable                                                   20,000                 --
      Purchase of property and equipment                                              (7,995)             (53,950)
                                                                                 -----------          -----------
Net cash provided by investing activities                                             12,005              558,121
                                                                                 -----------          -----------

Effect of exchange rate changes                                                       39,835             (154,631)
                                                                                 -----------          -----------
Net decrease in cash and cash equivalents                                           (732,867)            (586,256)

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

Cash and cash equivalents, ending of period                                      $   223,664          $   245,874
                                                                                 ===========          ===========
Supplemental disclosures:
      Cash paid during the period for:
      Interest                                                                   $      --            $      --
                                                                                 ===========          ===========
      Income taxes                                                               $      --            $      --
                                                                                 ===========          ===========
</TABLE>

During 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 six-month  periods ended December 31, 2003 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.

Effective  November 4, 2003,  SanguiBioTech AG was converted into  SanguiBioTech
GmbH ("Sangui GmbH"), a limited liability company under German law.

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.  On June 30, 2003,  GlukoMediTech AG, the Company's German  subsidiary,
was merged into Sangui BioTech AG.

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 six months  ended  December 31, 2002 have been
reclassified  to conform to the three and six months  ended  December  31,  2003
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  accumulated  deficit of  $19,560,447 as of
December 31, 2003 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  $1.1  million at December 31, 2003,  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 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
does not assume conversion,  exercise or contingent  exercise of securities that
would have an antidilutive effect on earnings. As of December 31, 2003 and 2002,
the Company had no potentially  dilutive  securities  that would effect the loss
per share if they were to be dilutive.

                                                                             -7-
<PAGE>

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 6).

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 December 31, 2003:


                                        Cost      Fair market    Unrealized Gain
                                                     value

Corporate bonds due within one year   $680,612      $878,624        $198,012
                                      ========      ========        ========

NOTE 4 - 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
statements  of  operations  for the six months ended  December 31, 2002. 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 accompanying statements of operations for the six
months  ended  December  31,  2002.  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  statements of
operations and  comprehensive  loss for the three months ended December 31, 2002
are presented below:


                                                                             -8-
<PAGE>

                                                        2002
                                        Sangui         Sangui
                                         USA          Singapore          Total
                                       --------       ---------        ---------
Sales                                  $     --        $     --        $     --
Cost of sales                                --              --              --
Operating expenses                       12,504          82,797          95,301
                                       --------        --------        --------
Loss from
 operations                             (12,504)        (82,797)        (95,301)
Other income                               --             3,363           3,363
Loss from
discontinued
operations                             $(12,504)       $(79,434)       $(91,938)
                                       ========        ========        ========

Components of amounts reflected in the accompanying  consolidated  statements of
operations and comprehensive loss for the six months ended December 31, 2002 are
presented below:

                                                        2002
                                        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 5 - 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 6 - BUSINESS SEGMENTS
--------------------------

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

<TABLE>
<CAPTION>
                                                      Three months ended December 31,         Six months ended December 31,
                                                      -------------------------------        ------------------------------
                                                            2003           2002                 2003             2002
                                                            ----           ----                 ----             ----
<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                                              $ (320,785)    $ (389,014)           $ (684,958)     $   (787,342)
Sangui Biotech International, Inc.                          (71,350)       (20,304)             (121,232)     $   (109,626)
Sangui USA                                                       --        (12,504)                   --            72,211
Sangui Singapore                                                 --        (79,434)                   --          (211,208)
                                                        ---------------------------          ------------------------------
                                                         $ (392,135)    $ (501,256)           $ (806,190)     $ (1,035,965)
                                                        ===========================          ==============================


Depreciation and amortization
-----------------------------
Sangui GmbH                                              $   26,024     $   45,902            $  56,994       $     91,497
Sangui Biotech International, Inc.                               --             --                   --                 --
Sangui USA                                                       --             --                   --                 --
Sangui Singapore                                                 --             --                   --                 --
                                                        ---------------------------          ------------------------------
                                                         $   26,024     $   45,902            $  56,994       $     91,497
                                                        ===========================          ==============================

Identifiable assets
-------------------
Sangui GmbH                                              $1,443,239
Sangui Biotech International, Inc.                           44,401
Sangui USA                                                       --
Sangui Singapore                                                 --
                                                        ------------
                                                         $1,487,640
                                                        ============
</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  applications  of its
oxygen carrier are nearing completion.  The Company has established contact with
a German  cosmetics  vendor and is planning and  preparing to jointly  introduce
this  application as a cosmetic  anti-aging  product in the German market in the
course of the current fiscal year.

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

In total, management has been able to reduce the Company's operating expenses by
17% to approximately  $842,000 in the first six months of fiscal 2004,  compared
to  approximately  $1,013,000  in the  respective  period of last  fiscal  year.
General and  administrative  expenses  have been reduced by 29% in the first six
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 21% to approximately  $785,000 compared to approximately  $990,000 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.

FINANCIAL POSITION
------------------

The Company's current assets decreased approximately $685,000, or 34%, from June
30, 2003 to  approximately  $1.3 million at December  31, 2003.  The decrease is
primarily   attributable  to  a  decrease  in  cash  and  cash   equivalents  of
approximately  $733,000.  The  decrease  in cash  and cash  equivalents  results
primarily  from  funding the current  year's  operations  of the Company with no
revenues in the three- and six-month periods ended December 31, 2003.

The Company's net property and equipment decreased approximately $33,000, or 21%
from June 30, 2003 to approximately  $127,000 at December 31, 2003. The decrease
is primarily attributable to current year depreciation of approximately $57,000,
partially offset by purchase of property and equipment of approximately $8,000.

The Company funded its operations  primarily through its existing cash reserves.
The Company's stockholders' equity decreased approximately $675,000. The primary
decrease is caused by the  Company's  current  period net loss of  approximately


                                                                            -11-
<PAGE>

$806,000,   and  an  increase  in  accumulated  other  comprehensive  income  of
approximately  $131,000  due to foreign  currency  translation  adjustments  and
unrealized gains on marketable securities.

RESULTS OF OPERATIONS
---------------------

Three months ended December 31, 2003 and 2002:

Sangui GmbH
-----------
RESEARCH AND  DEVELOPMENT.  Research and development  expenses  increased 33% to
approximately $232,000 in 2003 from approximately $175,000 in 2002. The increase
is due to the renewed continuation of research and development activities.

GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased 60% to
approximately $87,000 in 2003 from approximately $220,000 in 2002. This decrease
is mainly attributed to the ongoing refocusing program.

DEPRECIATION.  Depreciation  decreased 43% to approximately $26,000 in 2003 from
approximately $46,000 in 2002. This decrease is mainly attributed to the ongoing
restructuring of the German subsidiary.

Sangui BioTech International, Inc.
----------------------------------
GENERAL AND ADMINISTRATIVE.  General and administrative  expenses increased 223%
to  approximately  $71,000  in 2003  from  approximately  $22,000  in 2002.  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 4), the Company's  consolidated net loss was  approximately
$392,000,  or $0.01  per  common  share,  in  2003,  compared  to  approximately
$501,000, or $0.01 per common share, in 2002.

Six months ended December 31, 2003 and 2002:

Sangui GmbH
-----------
RESEARCH AND  DEVELOPMENT.  Research and  development  expenses  increased 3% to
approximately $416,000 in 2003 from approximately $404,000 in 2002. The increase
is due to the renewed continuation of research and development activities.

GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased 38% to
approximately  $248,000  in 2003  from  approximately  $401,000  in  2002.  This
decrease is mainly attributed to the ongoing refocusing program.

DEPRECIATION.  Depreciation  decreased 37% to approximately $57,000 in 2003 from
approximately $91,000 in 2002. This decrease is mainly attributed to the ongoing
restructuring of the German subsidiary.

Sangui BioTech International, Inc.
----------------------------------
GENERAL AND ADMINISTRATIVE.  General and administrative expenses increased 5% to
approximately $121,000 in 2003 from approximately $115,000 in 2002. 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 4), the Company's  consolidated net loss was  approximately
$806,000,  or $0.02 per common  share,  in 2003,  compared to  approximately  $1
million, or $0.03 per common share, in 2002.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

For the  six  months  ended  December  31,  2003,  net  cash  used in  operating
activities  decreased to approximately  $785,000 from approximately  $990,000 in
the  corresponding  period  in 2002,  primarily  related  to a  decrease  in the
Company's consolidated net loss as a result of the ongoing refocusing program.

For the six months  ended  December  31,  2003,  net cash  provided by investing
activities  decreased to approximately  $12,000 from approximately  $558,000 net
cash provided by investing  activities in the corresponding  period in 2002. The


                                                                            -12-
<PAGE>

principal decrease is due to the maturity of marketable securities and purchases
of  marketable  securities  in  2002.  There  was no  maturity  or  purchase  of
marketable securities in 2003. Additionally,  the Company decreased purchases of
property and equipment  during the six months ended December 31, 2003,  compared
to the corresponding period in 2002.

Working capital was approximately  $1.3 million at December 31, 2003, a decrease
of  approximately  $600,000  million  from June 30,  2003 due  primarily  to the
Company's  net loss for the  six-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 six months ended  December 31, 2003,  there were no
realized gains on the Company's marketable  securities and unrealized gains were
approximately $67,000 and $80,000, respectively.

At December 31, 2003, the Company had cash and liquid  marketable  securities of
approximately $1.1 million. 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 December 31, 2003, 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  December  31,  2003.  There  have  been  no
significant  changes in the Company's internal controls or in other factors that
could significantly affect internal controls subsequent to December 31, 2003.

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 December 31, 2002.


PART II - OTHER INFORMATION
---------------------------

ITEM 1 - LEGAL PROCEEDINGS
--------------------------

None.

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.


                                                                            -13-
<PAGE>

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/ Wolfgang Barnikol
    --------------------------------------
    Wolfgang Barnikol
    President, Chief Executive Officer and
    Chief Financial Officer

Date: February 16, 2004


                                                                            -15-