<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               -------------------

                                    FORM 10-Q

(Mark One)
     [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934
                For the Quarterly Period Ended September 30, 2001

     [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934
                For the Transition Period From_____________ to___________



                         Commission File Number 0-68440



                           STRATEGIC DIAGNOSTICS INC.
             (Exact name of Registrant as specified in its charter)

                          ----------------------------


                Delaware                              56-1581761
     (State or other jurisdiction of               (I.R.S. employer
      incorporation or organization)               identification no.)

           111 Pencader Drive
            Newark, Delaware                             19702
(Address of principal executive offices)               (Zip Code)


       Registrant's telephone number, including area code: (302) 456-6789

                              --------------------


               Former Name, Former Address and Former Fiscal Year,
                       if Changed Since Last Report: None


         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
                                             -----   -----

         As of September 30, 2001 there were 16,915,472 outstanding shares of
the Registrant's common stock, par value $.01 per share.
<PAGE>

                           STRATEGIC DIAGNOSTICS INC.

                                      INDEX

<TABLE>
<CAPTION>
Item                                                                            Page
----                                                                            ----
<S>                                                                             <C>
PART I

   ITEM 1.  Financial Statements (Unaudited)

      Consolidated Balance Sheets - September 30, 2001 and December 31, 2000      2

      Consolidated Statements of Operations - Three months and nine months
            ended September 30, 2001 and 2000                                     3

      Consolidated Statement of Stockholders' Equity and
            Comprehensive Income for the nine months ended
            September 30, 2001                                                    4

      Consolidated Statements of Cash Flows - Nine months ended
            September 30, 2001 and 2000                                           5

      Notes to Consolidated Interim Financial Statements                          6

   ITEM 2.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                            12

   ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk           17

PART II                                                                          18

   ITEM 4.  Submission of Matters to a Vote of Security Holders                  18

   ITEM 6.  Exhibits and Reports on Form 8-K                                     18

SIGNATURES                                                                       19
</TABLE>













                                       1
<PAGE>

                                     PART I

ITEM 1. FINANCIAL STATEMENTS


                   STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                 (in thousands, except share and per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                        September 30,      December 31,
-------------------------------------------------------------------------------------------------------
                                                                           2001                2000
-------------------------------------------------------------------------------------------------------
<S>                                                                        <C>               <C>
ASSETS
-------------------------------------------------------------------------------------------------------
Current Assets :
     Cash and cash equivalents                                             $  2,459          $  1,288
     Receivables, net                                                         5,537             4,298
     Inventories                                                              7,558             6,844
     Deferred tax asset                                                       1,070             1,070
     Other current assets                                                       563               216
-------------------------------------------------------------------------------------------------------
        Total current assets                                                 17,187            13,716
-------------------------------------------------------------------------------------------------------

Property and equipment, net                                                   3,442             2,919
Other assets                                                                    272               438
Deferred tax asset                                                            5,517             5,416
Intangible assets, net                                                        4,576             4,019
-------------------------------------------------------------------------------------------------------
        Total assets                                                       $ 30,994          $ 26,508
=======================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------------------------------------------------------------------------
Current Liabilities :
     Accounts payable                                                      $  1,568          $    655
     Accrued expenses                                                           861             1,129
     Deferred revenue                                                            62               162
     Current portion of long term debt                                        1,333             1,339
-------------------------------------------------------------------------------------------------------
        Total current liabilities                                             3,824             3,285
-------------------------------------------------------------------------------------------------------
Long-term debt                                                                  559             1,889
-------------------------------------------------------------------------------------------------------
Stockholders' Equity
     Preferred stock, $.01 par value, 17,500,000 shares authorized,
        no shares issued or outstanding                                        --                --
     Series A preferred stock, $.01 par value, 2,164,362 shares
        authorized, no shares issued or outstanding                            --                --
     Series B preferred stock,  $.01 par value, 556,286 shares
        authorized, no shares issued or outstanding                            --                --
     Series C preferred stock,  $.01 par value, 700,000 shares
        authorized, issued and outstanding                                        7              --
     Common stock, $.01 par value, 35,000,000 shares authorized,
        16,915,472 and 16,699,052 issued and outstanding
        at September 30, 2001 and December 31, 2000, respectively               169               167
     Additional paid-in capital                                              30,193            26,814
     Accumulated deficit                                                     (3,733)           (5,622)
     Cumulative translation adjustments                                         (25)              (25)
-------------------------------------------------------------------------------------------------------
        Total stockholders' equity                                           26,611            21,334
-------------------------------------------------------------------------------------------------------
        Total liabilities and stockholders' equity                         $ 30,994          $ 26,508
=======================================================================================================
</TABLE>
            The accompanying notes are an integral part of these statements.

                                       2
<PAGE>

       STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF OPERATIONS
     (in thousands, except share and per share data)
                       (unaudited)

<TABLE>
<CAPTION>
                                                              Three Months                              Nine Months
                                                           Ended September 30,                       Ended September 30,
---------------------------------------------------------------------------------          -----------------------------
                                                        2001            2000                  2001            2000
=================================================================================          =============================
<S>                                                 <C>              <C>                   <C>              <C>
NET REVENUES:
----------------------------------------------------------------     ------------          ------------     ------------
     Product related                                $      8,270     $      5,462          $     22,160     $     16,272
     Contract and other                                      205              239                   590              993
----------------------------------------------------------------     ------------          ------------     ------------
        Total net revenues                                 8,475            5,701                22,750           17,265
----------------------------------------------------------------     ------------          ------------     ------------
OPERATING EXPENSES:
     Manufacturing                                         3,671            2,408                10,252            7,227
     Research and development                                718              700                 2,142            2,135
     Selling, general and administrative                   2,667            2,312                 7,317            6,755
----------------------------------------------------------------     ------------          ------------     ------------
        Total operating expenses                           7,056            5,420                19,711           16,117
----------------------------------------------------------------     ------------          ------------     ------------

        Operating income                                   1,419              281                 3,039            1,148

Interest expense, net                                         (4)            (120)                  (52)            (333)

Gain on sale of assets                                      --               --                      76              283
----------------------------------------------------------------     ------------          ------------     ------------
Income before taxes                                        1,415              161                 3,063            1,098

----------------------------------------------------------------     ------------          ------------     ------------
        Income tax expense                                   519               72                 1,174              439

----------------------------------------------------------------     ------------          ------------     ------------

Net income                                                   896               89                 1,889              659
----------------------------------------------------------------     ------------          ------------     ------------
Basic net income per share                          $       0.05     $       0.01          $       0.11     $       0.04
================================================================     ============          ============     ============
Shares used in computing basic net income
     net income per share                             16,856,000       16,583,000            16,807,000       16,534,000
================================================================     ============          ============     ============
Diluted net income per share                        $       0.05     $       0.01          $       0.11     $       0.04
================================================================     ============          ============     ============
Shares used in computing diluted net income
     net income per share                             17,473,000       17,362,000            17,353,000       17,494,000
================================================================     ============          ============     ============
</TABLE>
The accompanying notes are an integral part of these statements.

                                       3
<PAGE>

                   STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                            AND COMPREHENSIVE INCOME
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                          Series C                 Additional                   Cumulative
                                         Preferred       Common     Paid-In     Accumulated     Translation
                                           Stock         Stock      Capital       Deficit       Adjustments      Total
-----------------------------------------------------------------------------------------------------------------------
<S>                                       <C>              <C>       <C>          <C>              <C>          <C>
Balance,
December 31, 2000                         $  --            167       26,814       (5,622)          (25)         $21,334
-----------------------------------------------------------------------------------------------------------------------
Exercises of stock options, warrants
     and other                               --              2          397         --             --               399
Shares issued in connection with
     purchase of Azur Environmental             7         --          2,982         --             --             2,989
Net and comprehensive income                 --           --           --          1,889           --             1,889
-----------------------------------------------------------------------------------------------------------------------
Balance,
September 30, 2001                        $     7          169       30,193       (3,733)          (25)         $26,611
=======================================================================================================================
</TABLE>

        The accompanying notes are an integral part of these statements.































                                       4
<PAGE>

                   STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                  Nine Months
                                                                               Ended September 30,
----------------------------------------------------------------------------------------------------
                                                                              2001             2000
====================================================================================================
<S>                                                                         <C>              <C>
Cash Flows from Operating Activities :
Net income                                                                  $ 1,889          $   659
     Adjustments to reconcile net income to net
     cash provided by operating activities :
        Depreciation and amortization                                           669              613
        Deferred income tax provision                                           999              439
        Gain on sale of assets                                                  (76)            (283)
(Increase) decrease in :
     Receivables                                                             (1,214)           1,530
     Inventories                                                               (273)          (1,832)
     Other current assets                                                      (298)            (247)
     Other assets                                                              (281)              80
Increase (decrease) in :
     Accounts payable                                                           731             (310)
     Accrued expenses and taxes payable                                         474             (193)
     Deferred revenue                                                          (100)            --
----------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                     2,520              456

Cash Flows from Investing Activities :
     Purchase of property and equipment                                        (954)            (216)
     Proceeds from sale of land                                                 330             --
     Proceeds from sale of intangible assets                                   --                663
     Net cash acquired in acquisition of Azur Environmental                     212             --
----------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities                            (412)             447

Cash Flows from Financing Activities :
     Proceeds from exercise of incentive stock options                          399              225
     Debt issuance costs                                                       --                (41)
     Repayments on financing obligations                                     (1,336)          (2,349)
----------------------------------------------------------------------------------------------------
Net cash used in financing activities                                          (937)          (2,165)

Net increase (decrease) in Cash and Cash Equivalents                          1,171           (1,262)

Cash and Cash Equivalents, Beginning of Period                                1,288            2,491
----------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Period                                    $ 2,459          $ 1,229
====================================================================================================
Supplemental Cash Flow Disclosure :

     Cash paid for taxes                                                        176              113

     Cash paid for interest                                                     126              409
====================================================================================================
Non-cash investing and financing activity:

     Common stock issued for the purchase of Envirol products                  --                 43

     Preferred stock issued for the purchase of Azur Environmental            2,989
====================================================================================================
</TABLE>

    The accompanying notes are an integral part of these statements

                                       5
<PAGE>

                   STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES

               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

                                   (unaudited)

1.  BACKGROUND:

Business
--------

Strategic Diagnostics Inc. and its subsidiaries (the "Company") develops,
manufactures and markets immunoassay-based test kits for rapid and inexpensive
detection of a wide variety of substances in the food safety and water quality
markets through its test kit segment. Through its Strategic BioSolutions
segment, the Company also provides antibody and immunoreagent research,
development and production services.

Business Risks
--------------

      The Company is subject to certain risks of entities in similar stages of
development. These risks include, among others, the Company's ability to
successfully develop, produce and market its products and its dependence on its
key collaborative partners and management personnel.

Basis of Presentation and Interim Financial Statements
------------------------------------------------------

       The accompanying balance sheets at September 30, 2001 and December 31,
2000, and the statements of operations for the three months and nine months
ended September 30, 2000 and 2001, and cash flows for the nine months ended
September 30, 2000 and 2001 include the consolidated financial statements of the
Company. All intercompany balances and transactions have been eliminated in
consolidation.

       The accompanying unaudited consolidated interim financial statements of
the Company have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission regarding financial
reporting. Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for complete financial
statements and should be read in conjunction with the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000. In the opinion of
management, the accompanying financial statements include all adjustments (all
of which are of a normal recurring nature) necessary for a fair presentation.
The results of operations for the three months and nine months ended September
30, 2001 are not necessarily indicative of the results expected for the full
year.

                                       6
<PAGE>

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

Product related sales are composed of the sale of immunoassay-based test kits
and the sale of certain antibodies and immunochemical reagents. For the nine
months ended September 30, 2001 and 2000 these sales represented 91% and 83% of
total Company revenues, respectively. The sale of immunoassay-based test kits
and certain antibodies and immunochemical reagents are recognized upon the
shipment of the product and transfer of title or when related services are
provided.

Sales of certain antibodies and immunochemical reagents are recognized under the
percentage of completion method and are recorded based on the percentage of
costs or time incurred through the reporting date versus the estimate for the
complete contract or project. For the nine months ended September 30, 2001 and
2000 these sales represented 6% and 11% of total Company revenues, respectively.

Contract revenues are recognized upon the completion of contractual milestones.
For the nine months ended September 30, 2001 and 2000 these sales represented 3%
and 6% of total Company revenues, respectively.

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

The Company adopted the provisions of FASB Statement No. 141, Business
Combinations, which requires that the purchase method of accounting be used for
all business combinations initiated after June 30, 2001 as well as all purchase
method business combinations completed after June 30, 2001. Statement No. 142,
Goodwill and Other Intangible Assets, which is effective January 1, 2002, will
require that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead tested for impairment at least annually in
accordance with the provisions of Statement 142. Statement 142 will also require
that intangible assets with definite useful lives be amortized over their
respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.

Furthermore, any goodwill and any intangible asset determined to have an
indefinite useful life that are acquired in a purchase business combination
completed after June 30, 2001 will not be amortized, but will continue to be
evaluated for impairment in accordance with the appropriate pre-Statement 142
accounting literature. Goodwill and intangible assets acquired in business
combinations completed before July 1, 2001 will continue to be amortized prior
to the adoption of Statement 142. Statement 141 will require, upon adoption of
Statement 142, that the Company evaluate its existing intangible assets and
goodwill that were acquired in a prior purchase business combination, and to
make any necessary reclassifications in order to conform with the new criteria
in Statement 141 for recognition apart from goodwill. Upon adoption of Statement
142, the Company will be required to reassess the useful lives and residual
values of all intangible assets acquired in purchase business combinations, and
make any necessary amortization period adjustments by the end of the first
interim period after adoption. In addition, to the extent an intangible asset is
identified as having an indefinite useful life, the Company will be required to
test the intangible asset for impairment in accordance with the provisions of
Statement 142 within the first interim period. Any impairment loss will be
measured as of the date of adoption and recognized as the cumulative effect of a
change in accounting principle in the first interim period.

The Company anticipates the adoption of Statement 142 will result in a reduction
of goodwill amortization of approximately $123 thousand per year.

                                       7
<PAGE>

FASB Statement No. 143, Accounting for Asset Retirement Obligations (Statement
No. 143) which was released in August 2001, addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and for the associated asset retirement costs. Statement No. 143 requires
an enterprise to record the fair value of an asset retirement obligation as a
liability in the period in which it incurs a legal obligation associated with
the retirement of tangible long-lived assets that result from the acquisition,
construction, development and or normal use of the assets. The enterprise is
also required to record a corresponding increase to to the carrying amount of
the related long-lived asset (i.e., the associated asset retirement cost) and to
depreciate that cost over the life of the asset. The liability is changed at the
end of each period to reflect the passage of time (i.e., accretion expense) and
changes in the estimated future cash flows underlying the initial fair value
measurement. Because of the extensive use of estimates, most enterprises will
record a gain or loss when they settle the obligation. The Company is required
to adopt Statement No. 143 for its fiscal year beginning January 1, 2003 and is
not expected to have an impact on the financial position or results of
operations of the Company.

On October 3, 2001, the Financial Accounting Standards Board issued FASB
Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets (Statement No. 144), which addresses financial accounting and reporting
for the impairment or disposal of long-lived assets. While Statement No. 144
supersedes FASB Statement No. 121, Accounting for the Impairment of Long-Lived
Assets to Be Disposed Of, it retains many of the fundamental provisions of that
Statement.

Statement No. 144 also supersedes the accounting and reporting provisions of APB
Opinion No. 30, Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions, for the disposal of a segment of a business.
However, it retains the requirement in Opinion 30 to report separately
discontinued operations and extends that reporting to a component of an entity
that either has been disposed of (by sale, abandonment, or in a distribution to
owners) or is classified as held for sale. Statement No. 144 is effective for
the Company for fiscal years beginning after December 15, 2001 and interim
periods within those fiscal years and is not expected to have an impact on the
financial position or results of operations of the Company.

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

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

2.  BASIC AND DILUTED INCOME PER SHARE:

Basic EPS is computed by dividing net income or loss by the weighted-average
number of common shares outstanding during the period. Diluted EPS is similar to
basic EPS except that the effect of converting or exercising all potentially
dilutive securities is also included in the denominator. The Company's
calculation of diluted EPS includes the effect of converting or exercising stock
options and warrants into common shares.

                                       8
<PAGE>

<TABLE>
<CAPTION>
                                                     Three Months Ended             Nine Months Ended
                                                        September 30,                  September 30,
                                                    2001            2000           2001             2000
                                                 ----------      ----------      ----------      ----------
<S>                                              <C>             <C>             <C>             <C>
Average common shares outstanding                16,856,103      16,583,182      16,807,262      16,534,023

Shares used in computing basic net income
per share                                        16,856,103      16,583,182      16,807,262      16,534,023
                                                 ==========      ==========      ==========      ==========

Series C preferred stock(1)                          15,385            --             5,147            --

Stock options                                       552,814         726,722         496,914         896,263

Warrants                                             48,570          51,625          43,583          63,493
                                                 ----------      ----------      ----------      ----------

Shares used in computing diluted net income
per share                                        17,472,872      17,361,529      17,352,906      17,493,779
                                                 ==========      ==========      ==========      ==========
</TABLE>

(1) See Note 3.

On April 24, 2001 at the Company's annual stockholders' meeting, an amendment to
the Company's 2000 Stock Incentive Plan was approved increasing the number of
authorized shares to 3.2 million from the previously authorized amount of 2.5
million.

3.  ACQUISITIONS:

The Company completed an asset purchase agreement with Envirol, Inc., a private
company located in Logan, Utah on April 26, 2000. Pursuant to the terms of the
agreement, the Company acquired Envirol's TCE and PCP test kit product lines for
consideration consisting of (i) a cash payment of $35 thousand (ii) the issuance
of 10,000 shares of common stock with a fair value of $43 thousand based on the
last reported sales price of the common stock on the closing date of the
transaction, May 12, 2000, and (iii) the payment of a continuing royalty to
Envirol for ten years, at a rate of 10% of purchased product sales for the first
$125 thousand, and a rate of 4% of purchased product sales for the remainder of
the royalty term. The continuing royalty payments are being expensed as
incurred.

On September 28, 2001 the Company acquired Azur Environmental (Azur), a
privately held manufacturer of proprietary rapid test systems, including the
Microtox Toxicity Test System, which measures toxicity in drinking and process
water, formerly located in Carlsbad, California. With more than 500
peer-reviewed scientific articles and more than 1,700 instruments sold
worldwide, the Microtox Toxicity Test System has been approved in regulations or
standards in Canada, eight (8) European countries, and has been submitted to the
U.S. EPA for approval. In the twelve month period ended June 30, 2001, Azur
recorded sales of approximately $3.0 million. Under the terms of the merger
agreement, the Company issued 700,000 shares of Series C preferred stock, with a
fair market value of approximately $3.0 million as determined by an independent
valuation firm. Each preferred share was convertible into common shares at any
time at the option of the holder, and automatically when the closing price of
the Company's common stock was $6.00 or more for a period of 20 consecutive
trading days. The closing price of the Company's common stock was $6.00 or more
for each of the twenty trading days from October 8, 2001 through and including
November 2, 2001. As a result, on November 2, 2001 the 700,000 Series C
preferred shares were automatically converted to 700,000 shares of the Company's
common stock. The Series C preferred shares also had a liquidation value of
$6.00 per share and carried a cumulative cash dividend of $.30 per share through
the date of automatic conversion.

                                       9
<PAGE>

The Series C preferred stock was valued by an independent third party, Fleet M&A
Advisors. In valuing the Series C preferred stock, Fleet M&A Advisors assumed
that as convertible securities, they represented both a nonconvertible fixed
income security and a call option on the common stock of the Company.
Accordingly, the Series C preferred stock was valued as straight preferred stock
with an embedded option on the stock of the Company. Fleet M&A Advisors
performed an analysis of comparable publicly traded securities to determine the
straight preferred stock value taking into account the fixed charge and
liquidation coverage ratios for the Company and for companies issuing comparable
publicly traded straight preferred stock. The embedded option was valued using
the Black-Scholes options pricing model. The combined values resulted in a
valuation of $4.27 per share, or approximately $3.0 million in the aggregate for
the Series C preferred stock.

The purchase price of Azur Environmental was allocated as follows :

           Azur Environmental
           --------------------------------------------------

           Cash                                        $ 212
           Other Assets                                  973
           Fixed Assets                                  300
           Liabilities                                  (345)
           Deferred Tax Asset                          1,100
           Goodwill                                      749
           --------------------------------------------------

           Total fair value                          $ 2,989
           --------------------------------------------------

           Series C Preferred Stock Issued           $ 2,989


4.  SEGMENT INFORMATION:

The Test Kit segment develops, manufactures and markets immunoassay-based test
kits for rapid, cost-effective detection of a wide variety of different analytes
in two primary market categories: food safety and water quality testing.

The Antibody Segment, Strategic BioSolutions (SBS), includes the former TSD
BioServices, HTI and the acquired operating assets of the OEM business of
Atlantic Antibodies. These companies provide fully integrated polyclonal and
monoclonal antibody development and large scale manufacturing services to
pharmaceutical and medical diagnostic companies.

For reporting purposes a "pro-rata" share of common costs is charged to the
Antibody segment. Segment assets are those assets associated with the respective
segment's operating activities. Segment profit is based on income before income
taxes.

                                       10
<PAGE>

Segment Information:

<TABLE>
<CAPTION>
For the three months ended September 30,              Test Kits       Antibody           Total
<S>                                                    <C>             <C>              <C>
2001     Revenues                                      $ 5,727         $2,748           $ 8,475
         Segment profit                                  1,282            133             1,415
         Segment assets                                 19,187         11,807            30,994
         Depreciation and amortization                      94            132               226
         Capital expenditures                              150            482               632

2000     Revenues                                      $ 3,016         $2,685           $ 5,701
         Segment profit                                    (85)           246               161
         Segment assets                                 16,496         11,268            27,764
         Depreciation and amortization                      71            121               192
         Capital expenditures                               96             --                96

For the nine months ended September 30,

2001     Revenues                                     $ 14,908         $7,842          $ 22,750
         Segment profit                                  2,697            366             3,063
         Segment assets                                 19,187         11,807            30,994
         Depreciation and amortization                     284            385               669
         Capital expenditures                              214            740               954

2000     Revenues                                      $ 9,135         $8,130          $ 17,265
         Segment profit                                    215            883             1,098
         Segment assets                                 16,496         11,268            27,764
         Depreciation and amortization                     249            364               613
         Capital expenditures                              216             --               216
</TABLE>

5.  INVENTORIES:

At September 30, 2001 and December 31, 2000, inventories consisted of the
following (in thousands):

                             September 30, 2001         December 31, 2000
                             ------------------         -----------------

Raw Materials                   $  3,005                   $   2,945
Work in progress                   1,665                       1,620
Finished goods                     2,888                       2,279
--------------------------------------------------------------------
                                $  7,558                   $   6,844
--------------------------------------------------------------------

                                       11
<PAGE>

6.  DEBT:

On May 5, 2000, the Company entered into a financing agreement with a commercial
bank. This agreement provides for a $4 million term loan, of which approximately
$1.9 million is outstanding at September 30, 2001, repayable over three years,
and for up to a $5 million revolving line of credit, based on eligible assets as
described below. Proceeds from this financing retired substantially all of the
Company's previous indebtedness.

The term loan bears a variable interest rate of between 2% and 3% over the
London Interbank Offered Rate ("LIBOR"), depending upon the ratio of the
Company's funded debt to EBITDA (earnings before interest expense, income taxes,
depreciation and amortization). Payments are due monthly, with equal
amortization of principal payments plus interest.

The revolving line of credit bears a variable interest rate of between 1.75% and
2.75% over LIBOR, depending upon the ratio of the Company's funded debt to
EBITDA, and is subject to a borrowing base determined by the Company's eligible
accounts receivable.

Under the terms of the financing, the Company is required to meet certain
financial covenants including funded debt to EBITDA and EBITDA to current
maturities of debt plus interest and taxes. At September 30, 2001, the Company
is in compliance with all such covenants, with additional borrowing capabilities
of approximately $3.9 million available under the revolving line of credit. The
financing is secured by substantially all of the Company's assets.

7.  SEVERANCE ACCRUAL:

In June 2001, the Company recorded $253 thousand in expense for severance costs
in connection with the announced consolidation and expansion of its Strategic
BioSolutions segment, which is included in selling, general and administrative
expense in the accompanying statement of operations for the nine months ended
September 30, 2001. The severance costs relate to 40 employees in the Company's
San Diego, California facility, the majority of which will be terminated over
the next twelve months as production is transferred to the Company's Maine
facility. As of September 30, 2001, no employees had been terminated and no
amounts had been charged against the $253 thousand severance accrual.


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

Forward-Looking Statements

The information included in this report of Form 10-Q contains forward-looking
statements reflecting the current expectations of Strategic Diagnostics Inc. and
its subsiduaries (the "Company"). When used in this press release, the words
"anticipate", "enable", "estimate", "intend", "expect", "believe", "potential",
"will", "should", "project" and similar expressions as they relate to the
Company are intended to identify said forward-looking statements. Investors are
cautioned that all forward-looking statements involve risks and uncertainties,
which may cause actual results to differ from those anticipated at this time.
Such risks and uncertainties include, without limitation, changes in demand for
products, delays in product development, delays in market acceptance of new
products, retention of customers and employees, adequate supply of raw
materials, inability to obtain required government approvals, the ability to
meet increased market demand, competition, protection of intellectual property,
non-infringement of intellectual property, seasonality, and other factors more
fully described in the Company's public filings with the U.S. Securities and
Exchange Commission.

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Background

The Company is the entity resulting from the combination of EnSys Environmental
Products, Inc. ("EnSys"), Ohmicron Corporation ("Ohmicron"), TSD BioServices
("TSD") and Strategic Diagnostics Inc. ("SDI") and the acquisitions of HTI
Bio-Products Inc. ("HTI"), Atlantic Antibodies Inc. ("ATAB") and Azur
Environmental ("Azur").

The Company develops, manufactures and markets immunoassay-based test kits for
rapid and inexpensive detection of a wide variety of substances in the food
safety and water quality markets. Through its Strategic BioSolutions division,
the Company also provides antibody and immunoreagent research, development and
production services.

Since its inception, the Company and its predecessors have, in addition to
conducting internal research and development of new products, entered into
research and development agreements with multiple corporate partners that have
led to the introduction of various products to the food safety, water quality
and other markets. The Company expects that internal research and development
projects, primarily in the food safety area, will continue to represent a larger
percentage of its research and development expenditures. The Company believes
that its competitiveness has been enhanced through the combinations of talents,
technology and resources resulting from the relationships and the acquisitions
it concluded during the past four years. These relationships and acquisitions
have enabled the Company to achieve meaningful economies of scale for the unique
products it offers through the utilization of its consolidated facilities in
Newark, Delaware, for the manufacture of test kits, antibodies and biochemicals,
its facility located in Oceanside, California for the manufacture of
instruments, its facility located outside of San Diego, California (currently
being relocated to Windham, Maine, see Note 7) for the manufacture of antibodies
and biochemicals and its facility located in Windham, Maine for the manufacture
of custom, high-volume bulk polyclonal antibodies. These economies of scale, in
turn, enable the Company to offer its customers the most appropriate test for
each specific customer application.

On September 28, 2001 the Company acquired Azur Environmental (Azur), a
privately held manufacturer of proprietary rapid test systems, including the
Microtox Toxicity Test System, which measures toxicity in drinking and process
water, formerly located in Carlsbad, California. With more than 500
peer-reviewed scientific articles and more than 1,700 instruments sold
worldwide, the Microtox Toxicity Test System has been approved in regulations or
standards in Canada, eight (8) European countries, and has been submitted to the
U.S. EPA for approval. In the twelve month period ended June 30, 2001, Azur
recorded sales of approximately $3.0 million. Under the terms of the merger
agreement, the Company issued 700,000 shares of Series C preferred stock, with a
fair market value of approximately $3.0 million as determined by an independent
valuation firm. On November 2, 2001 the 700,000 Series C preferred shares were
automatically converted to 700,000 shares of the Company's common stock in
accordance with their terms (see Note 3).

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Results of Operations

Three Months Ended September 30, 2001 vs. September 30, 2000

Net revenues for the third quarter of 2001 were $8.5 million versus $5.7 million
in the third quarter of 2000 or an increase of 49%. Product related revenues
increased by $2.8 million or 51%, compared to the third quarter of 2000.
Revenues increased in both business segments during the quarter. Revenues in the
food safety category of the test kit segment increased 116% to approximately
$3.3 million, as demand for GMO (genetically modified organism) tests continues
to build. Revenues in the Company's water quality category of the test kit
segment grew by 80%, to approximately $2.2 million, on strong sales of the
Company's recently acquired Microtox test system which was being sold by the
Company under the terms of a sales and marketing agreement, prior to the
acquisition of Azur by the Company on September 28, 2001. Revenues from the sale
of antibody products grew by 3%, to approximately $2.8 million. Contract and
other revenues decreased $34 thousand or 14% in the third quarter of 2001 versus
the same period in 2000. This decrease reflects the Company's continued emphasis
on internal research and development projects.

In the water quality market category, the Company's Microtox test system is
increasingly being used to monitor drinking water supplies in various countries
and major U.S. cities where accidental or deliberate contamination is a concern.
The test can be completed in as little as fifteen minutes, allowing for a quick
response to changes in water quality. The US Army Corps of Engineers and the
Washington Aqueduct system are currently using Microtox systems to monitor the
drinking water that is supplied to the Pentagon to protect personnel from the
terrorist threat of contamination.

In the food safety category, the Company is now offering its customers a full
complement of testing tools needed to detect all of the major genetic traits in
commercial production. This testing capability gives farmers, grain handlers and
food processors a fast and inexpensive tool for consigning grain to meet the
expectations of their customers and to ensure appropriate distribution.

The Company has made significant progress with its previously announced plans to
consolidate the production operations of its antibody business. The first of two
36 thousand square foot facilities was opened in Windham, Maine on October 15,
2001 and the Company has begun to initiate new customer projects at this
facility.

Also during the third quarter the Company took significant steps to streamline
manufacturing in preparation for full-scale production of test kits under its
previously announced Bayer medical device program.

Manufacturing expenses increased $1.3 million or 52% in the third quarter of
2001 versus the third quarter of 2000. This increase reflects the higher level
of product shipments made in the third quarter of 2001 versus the comparable
period of 2000. Gross profits increased 46% to $4.8 million in the third quarter
of 2001 due to the higher volume of test kit product revenues. Gross margins in
the third quarter of 2001 decreased slightly to 57% from 58% in the third
quarter of 2000 due to somewhat lower average selling prices at significantly
higher volumes in the third quarter of 2001.

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Research and development costs were approximately the same in the third quarter
of 2001 and the third quarter of 2000.

Selling, general and administrative expenses increased $355 thousand or 15% in
the third quarter of 2001 versus the third quarter of 2000. This increase is due
to the inclusion of approximately $150 thousand of charges related to the
previously announced consolidation and expansion of the Company's Strategic
BioSolutions division, which is expected to result in anticipated savings of
$750 thousand to $1 million annually, as well as higher overall levels of
business activity experienced during the quarter.

Interest expense decreased $116 thousand or 97% in the third quarter of 2001
versus the third quarter of 2000. This decrease is due to a lower level of
outstanding indebtedness and increased interest bearing cash balances.

Income before income taxes increased to $1.4 million from $161 thousand or 779%
in the third quarter of 2001 versus the third quarter of 2000, due principally
to the increased levels of sales as described above. Segment profit for the test
kit segment increased by $1.4 million from a loss of $85 thousand to
approximately $1.3 million, due primarily to the increase in sales of the
segments' food safety and water quality products. Segment profit for the
antibody segment exclusive of approximately $150 thousand in consolidation
charges, increased by $37 thousand to $283 thousand, due primarily to an
increase in antibody segment sales and lower interest costs.

Net income increased $807 thousand or 907% in the third quarter of 2001 versus
the third quarter of 2000, for reasons all as described above.

Nine Months Ended September 30, 2001 vs. September 30, 2000

Net revenues for the first nine months of 2001 were $22.8 million versus $17.3
million in the first nine months of 2000 or an increase of 32%. Product related
revenues increased by $5.9 million or 36% compared to the first nine months of
2000. The increase in product related revenues was primarily attributable to
increases in sales of the Company's food safety and water quality products (the
test kit segment), with sales in the food safety category increasing 133% to
$9.7 million and sales in the water quality category increasing 17% to $4.6
million. These increases more than offset a 3% decrease in antibody product
sales. Contract and other revenues decreased $403 thousand or 41% in the first
nine months of 2001 versus the same period in 2000. This decrease reflects the
Company's continued emphasis on internal research and development projects.

Manufacturing expenses increased $3.0 million or 42% in the first nine months of
2001 versus the first nine months of 2000. This increase reflects the higher
level of test kit product shipments made in the first nine months of 2001 versus
the comparable period of 2000. Gross profits increased 25% to $12.5 million in
the first nine months of 2001 due to the higher volume of test kit product
revenues. Gross margins in the first nine months of 2001 decreased to 55% from
58% in the first nine months of 2000 due to somewhat lower average selling
prices at significantly higher volume during the first nine months of 2001.

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<PAGE>

Research and development costs increased $7 thousand in the first nine months of
2001 when compared to the first nine months of 2000.

Selling, general and administrative expenses increased $562 thousand or 8% in
the first nine months of 2001 versus the first nine months of 2000. This
increase is due to the inclusion of approximately $400 thousand of charges
related to the recently announced consolidation and expansion of the Company's
Strategic BioSolutions division, which is expected to result in anticipated
savings of $750 thousand to $1 million annually commencing in the second quarter
of 2002.

Interest expense decreased $281 thousand or 84% in the first nine months of 2001
versus the first nine months of 2000. This decrease is due to a lower level of
outstanding indebtedness and increased interest bearing cash balances.

Income before income taxes increased to $3.1 million from $1.1 million or 179%
in the first nine months of 2001 versus the first nine months of 2000. Pre-tax
income in the first nine months of 2001 included $76 thousand in other income
attributable to a gain on sale of assets the Company recorded in connection with
the sale of land in California, and approximately $400 thousand in charges for
the business consolidation and expansion of it's Strategic BioSolutions segment.
Net income in the first nine months of 2000 included $283 thousand in other
income attributable to the sale of the Company's Macra Lp(a) product line.
Excluding the $76 thousand gain on sale of assets and $400 thousand in
consolidation charges recorded in the first nine months of 2001, and the $283
thousand gain on sale of assets in the first nine months of 2000, income before
taxes grew 316% to $3.4 million from the $815 thousand recorded in the year
earlier period. Segment profit for the test kit segment increased $2.5 million
to $2.7 million, due primarily to the increase in sales of the segments' food
safety and water quality products. Segment profit excluding one-time charges for
the antibody segment decreased by $117 thousand to $766 thousand, due primarily
to a decrease in antibody segment sales and slightly higher manufacturing
expenses.

Net income increased $1.2 million to $1.9 million or 187% in the first nine
months of 2001 versus the first nine months of 2000, for reasons all as
described above.

Liquidity and Capital Resources

The Company's working capital, which consists principally of cash, accounts
receivable and inventory, increased approximately $2.9 million in the first nine
months of 2001 to $13.3 million at September 30, 2001 from $10.4 million at
December 31, 2000. This increase was primarily attributable to cash provided by
the operating activities of the Company and the acquisition of Azur. Outstanding
debt decreased $1.3 million from $3.2 million at December 31, 2000 to $1.9
million on September 30, 2001.

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For the nine months ended September 30, 2001, the Company's operating activities
provided more than $2.5 million in cash, a significant increase from the $456
thousand provided in the first nine months of 2000. This cash, along with
available cash balances allowed the Company to satisfy all of its operating cash
requirements and reduce total debt outstanding by approximately $1.3 million in
the first nine months of 2001. At September 30, 2001, the Company had $559
thousand in long-term debt, stockholders' equity in excess of $26.6 million and
unused borrowing capacity under a revolving line of credit of approximately $3.9
million.

The Company believes it has, or has access to sufficient resources to meet its
operating requirements for the forseeable future. The Company's ability to meet
its long-term capital requirements will depend on a number of factors, including
the success of its current and future products, the focus and direction of its
research and development program, competitive and technological advances, future
relationships with corporate partners, government regulation, the Company's
marketing and distribution strategy and the success of the Company's plan to
make future acquisitions. Accordingly, no assurance can be given that the
Company will be able to meet the future liquidity requirements that may arise
from these inherent and similar uncertainties.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company has exposure to changing interest rates, and is currently not
engaged in hedging activities. Interest on approximately $1.9 million of
outstanding indebtedness is at a variable rate of between 1.75% to 3% over the
published London Interbank Offered Rate.

The Company conducts operations in Great Britain. The consolidated financial
statements of the Company are denominated in U.S. Dollars and changes in
exchange rates between foreign countries and the U.S. dollar will affect the
translation of financial results of foreign subsidiaries into U.S. dollars for
purposes of recording the Company's consolidated financial results.
Historically, the effects of translation have not been material to the
consolidated financial results, however this may change in the future as the
Company increases its foreign operations as a result of the consummation of the
Azur transaction.



















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                           PART II - OTHER INFORMATION


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

             None

Item 6. Exhibits and Reports on Form 8-K

        (a)  Exhibits

             2.1  Agreement and Plan of Merger among Strategic Diagnostics Inc.,
                  Azur Acquisition Corp. and AZUR Environmental dated as of May
                  4, 2001.

             3.1  Fourth Amended and restated Certificate of Incorporation of
                  Strategic Diagnostics Inc., as amended.

             4.1  Strategic Diagnostics Inc. Certificate of the Powers,
                  Designations, Preferences and Rights of the Series C
                  Convertible Preferred Stock filed with the Secretary of State
                  of Delaware on September 27, 2001.

        (b)  Reports on Form 8-K

             On July 26, 2001, the Company filed a report of Form 8-K pursuant
             to Item 7 and Item 9 announcing USDA certification of mycotoxin
             test kit and the retention of Goldman Sachs & Co. as financial
             advisor, as well as preliminary results for the second quarter of
             2001.

















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                                   SIGNATURES

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



                           STRATEGIC DIAGNOSTICS INC.
                           --------------------------
                                  (Registrant)

<TABLE>
<CAPTION>
Signature                                   Title                               Date
---------                                   -----                               ----
<S>                          <C>                                          <C>
/s/ RICHARD C. BIRKMEYER     President and Chief Executive Officer        November 13, 2001
------------------------
    Richard C. Birkmeyer     (Principal Executive Officer)

/s/ ARTHUR A. KOCH, JR.      Vice President and Chief Operating Officer   November 13, 2001
-----------------------
    Arthur A. Koch, Jr.      (Principal Financial Officer)
</TABLE>

























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