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UNITED STATESSECURITIES
AND EXCHANGE COMMISSIONWashington, DC 20549

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FORM 10-Q/A

Amendment
  No. 1
(Mark One)

| |  | QUARTERLY
            REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934
| |  | -------------------------------------------------------------------------------------------------

For the Quarterly Period Ended June 30, 2005

| |  | 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 000-22400

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

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|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

---

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 | No | 
| | --- | -- | 

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).


| | Yes | No | 
| | --- | -- | 

As of June 30, 2005, there were 19,779,898 outstanding shares of
the Registrants common stock, par value $.01 per share.


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STRATEGIC DIAGNOSTICS
INC.

EXPLANATORY
NOTE

We are amending our quarterly report on Form 10-Q for the period ended June
        30, 2005 to restate our consolidated interim financial statements for the three and
        six month periods ended June 30, 2005 and 2004 and the related disclosures.
        Please refer to Note 2 to our consolidated interim financial statements included
        in this amendment on Form 10-Q/A for a further discussion of the restatement.
        We have also corrected various minor typographical errors in this Form 10-Q/A
        that
      occurred during the process of preparing our 2005 second quarter report on
Form 10-Q.
Following
    a series of discussions with the U.S. Securities and Exchange Commission
    (the SEC), the Company determined on December 15, 2005 that it would change its method of accounting for revenue on certain custom
      antibody arrangements. Accordingly, the Companys financial statements for the three and six month periods ended June 30, 2005 and 2004 have been restated. The Company changed its revenue recognition policy for custom antibody projects to
      utilize a methodology whereby revenue is recognized when a projects
      specifications have been met and the related antibodies have been shipped,
      rather than on
      the percentage-of-completion methodology the Company had used since 1996.
      The adjustments required to effect this change in accounting impact certain
      line
items as reported in the Consolidated Balance Sheet and Statement of Operations.
The Company
    also identified an error in the consolidated interim financial statements for the three and six
    month periods ended June 30, 2005, relating to the determination as
    to whether the Company had established the technological feasibility of a
    software project as defined by Statement of Financial Accounting Standard
No. 86, Accounting for the Costs of Computer Software to Be Sold, Leased
or Otherwise Marketed whereby costs had been capitalized rather than recognized as
research and development expense.
We have amended our annual report on Form 10-K for the year ended December
        31, 2004 to restate our consolidated financial statements for the years ended
        December 31, 2002, 2003 and 2004, and our interim report on Form 10-Q for
        the three month period ended March 31, 2005 and 2004 and the related disclosures.
        We have issued consolidated interim financial statements for the quarter ended September
30, 2005 that incorporate the new methodology.

Except as discussed above, we have not modified or updated disclosures presented
        in the original quarterly report on Form 10-Q, except as required to reflect
        the effects of the restatement in this Form 10-Q/A. Accordingly, this Form
        10-Q/A does not reflect events occurring after the filing of our original
        Form 10-Q or modify or update those disclosures affected by subsequent events.
        Information not affected by the restatement is unchanged and reflects the
        disclosures made
      at the time of the original filing of the Form 10-Q on August 15, 2005. This
        Form 10-Q/A should be read in conjunction with our filings made with the
        Securities and Exchange Commission subsequent to the filing of the original
        Form 10-K, including any amendments to those filings. The following items
in this Form 10-Q/A have been amended as a result of the restatement:

| | • | Part
    IItem 1Financial Statements                                                                             
| | - | -------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                    
| | • | Part
        IItem 2Management’s Discussion and Analysis of Financial
        Condition
and Results of Operations
| |   |                                                                                                                    
| | • | Part
        IItem 4Controls and Procedures                                                                      

Please refer to Note 2 to the accompanying consolidated interim financial statements
for additional information on the restatement.

1

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STRATEGIC
DIAGNOSTICS INC.

INDEX

|             | Item                                                                                                                 |                                                                                               | Page
|------------ | -------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | ----
|             |                                                                                                                      |                                                                                               |     
|PART
	    I  | FINANCIAL
    INFORMATION                                                                                            |                                                                                              
|             |                                                                                                                      |                                                                                               |     
|             | ITEM
    1.                                                                                                          | Financial
    Statements (Unaudited)                                                          |     
|             |                                                                                                                      |                                                                                               |     
|             | Consolidated
	    Balance Sheets  June 30, 2005 and  December
    31, 2004 (restated)                               | 3                                                                                            
|             |                                                                                                                      |                                                                                               |     
|             | Consolidated
	    Statements of Operations  Three months and six months ended
    June 30, 2005 and 2004 (restated) | 4                                                                                            
|             |                                                                                                                      |                                                                                               |     
|             | Consolidated
	    Statements of Cash Flows  Six months ended June
    30, 2005 and 2004 (restated)                  | 5                                                                                            
|             |                                                                                                                      |                                                                                               |     
|             | Notes
    to Consolidated Interim Financial Statements                                                               | 6                                                                                            
|             |                                                                                                                      |                                                                                               |     
|             | ITEM
    2.                                                                                                          | Managements
    Discussion and Analysis of Financial Condition and
    Results of Operations | 15  
|             |                                                                                                                      |                                                                                               |     
|             | ITEM
    3.                                                                                                          | Quantitative
    and Qualitative Disclosures About Market Risk                                | 21  
|             |                                                                                                                      |                                                                                               |     
|             | ITEM
    4.                                                                                                          | Controls
    and Procedures                                                                   | 22  
|             |                                                                                                                      |                                                                                               |     
|PART
	    II | OTHER
    INFORMATION                                                                                                |                                                                                              
|             |                                                                                                                      |                                                                                               |     
|             | ITEM
    4.                                                                                                          | Submission
    of Matters to a Vote of Security Holders                                       | 23  
|             |                                                                                                                      |                                                                                               |     
|             | ITEM
    6.                                                                                                          | Exhibits                                                                                      | 23  
|             |                                                                                                                      |                                                                                               |     
|SIGNATURES   | 24                                                                                                                  

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PART I.

ITEM
1. FINANCIAL STATEMENTS

STRATEGIC DIAGNOSTICS
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in
thousands, except share and per share data)
(unaudited)

|                                                                                                               | June 30,          |        | December
    31,  |  
|-------------------------------------------------------------------------------------------------------------- | ----------------- | ------ | ----------------- | -
|                                                                                                               |                   |        |                   |  
|                                                                                                               | 2005              |        | 2004              |  
|                                                                                                               |                   |        |                   |  
|                                                                                                               | (as
    restated) |        | (as
    restated) |  
|ASSETS                                                                                                         |                   |        |                   |  
|CURRENT
    ASSETS:                                                                                            |                   |        |                   |  
|Cash and cash equivalents                                                                                      | $                 | 8,575  |                   | $
|Receivables, net                                                                                               |                   | 3,694  |                   |  
|Inventories                                                                                                    |                   | 3,416  |                   |  
|Deferred tax asset                                                                                             |                   | 878    |                   |  
|Other current assets                                                                                           |                   | 920    |                   |  
|                                                                                                               |                   |        |                   |  
|Total current assets                                                                                           |                   | 17,483 |                   |  
|                                                                                                               |                   |        |                   |  
|Property and equipment, net                                                                                    |                   | 3,478  |                   |  
|Other assets                                                                                                   |                   | 6      |                   |  
|Deferred tax asset                                                                                             |                   | 8,241  |                   |  
|Intangible assets, net                                                                                         |                   | 6,904  |                   |  
|                                                                                                               |                   |        |                   |  
|Total assets                                                                                                   | $                 | 36,117 |                   | $
|                                                                                                               |                   |        |                   |  
|LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                           |                   |        |                   |  
|CURRENTLIABILITIES:                                                                                            |                   |        |                   |  
|Accounts payable                                                                                               | $                 | 518    |                   | $
|Accrued expenses                                                                                               |                   | 1,589  |                   |  
|Current portion of long term debt                                                                              |                   | 211    |                   |  
|                                                                                                               |                   |        |                   |  
|Total current liabilities                                                                                      |                   | 2,318  |                   |  
|                                                                                                               |                   |        |                   |  
|Long-term debt                                                                                                 |                   | 667    |                   |  
|                                                                                                               |                   |        |                   |  
|Stockholders’ Equity:                                                                                          |                   |        |                   |  
|Preferred
	      stock, $.01 par value, 20,920,648 shares authorized, no
    shares issued or outstanding      |                   | —      |                   |  
|Common
	      stock, $.01 par value, 35,000,000 shares authorized, 19,779,898
	      and 19,379,602 issued and |                   |        |                   |  
|outstanding at
    June 30, 2005 and December 31, 2004, respectively                                           |                   | 198    |                   |  
|Additional paid-in capital                                                                                     |                   | 37,619 |                   |  
|Accumulated deficit                                                                                            |                   | (4,401 | )                 |  
|Deferred compensation                                                                                          |                   | (343   | )                 |  
|Cumulative translation adjustments                                                                             |                   | 59     |                   |  
|                                                                                                               |                   |        |                   |  
|Total stockholders’ equity                                                                                     |                   | 33,132 |                   |  
|                                                                                                               |                   |        |                   |  
|Total liabilities and stockholders’ equity                                                                     | $                 | 36,117 |                   | $
|                                                                                                               |                   |        |                   |  

The accompanying
  notes are an integral part of these statements


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STRATEGIC
DIAGNOSTICS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
OF OPERATIONS(in
thousands, except share and per share data)(unaudited)

|                                        | Three
    Months
    Ended
    June 30, |                   | Six
    Months
    Ended
    June 30, |  
|--------------------------------------- | --------------------------------------- | ----------------- | ------------------------------------- | -
|                                        |                                         |                   |                                       |  
|                                        | 2005                                    |                   | 2004                                  |  
|                                        |                                         |                   |                                       |  
|                                        |                                         | (as
    restated) |                                       |  
|NET
    REVENUES:                       |                                         |                   |                                       |  
|Product
    related                     | $                                       | 6,178             |                                       | $
|                                        |                                         |                   |                                       |  
|Total
    net revenues                  |                                         | 6,178             |                                       |  
|                                        |                                         |                   |                                       |  
|OPERATING
    EXPENSES:                 |                                         |                   |                                       |  
|Manufacturing                           |                                         | 2,898             |                                       |  
|Research
    and development            |                                         | 851               |                                       |  
|Selling,
    general and administrative |                                         | 2,290             |                                       |  
|                                        |                                         |                   |                                       |  
|Total
    operating expenses            |                                         | 6,039             |                                       |  
|                                        |                                         |                   |                                       |  
|Operating
    income                    |                                         | 139               |                                       |  
|                                        |                                         |                   |                                       |  
|Interest
    income (expense), net      |                                         | 44                |                                       |  
|                                        |                                         |                   |                                       |  
|Income
    before taxes                 |                                         | 183               |                                       |  
|                                        |                                         |                   |                                       |  
|Income
    tax expense                  |                                         | 45                |                                       |  
|                                        |                                         |                   |                                       |  
|Net
    income                          |                                         | 138               |                                       |  
|                                        |                                         |                   |                                       |  
|Basic
    net income per share          | $                                       | 0.01              |                                       | $
|                                        |                                         |                   |                                       |  
|Shares
    used in computing basic      |                                         |                   |                                       |  
|net
    income per share                |                                         | 19,728,000        |                                       |  
|                                        |                                         |                   |                                       |  
|Diluted
    net income per share        | $                                       | 0.01              |                                       | $
|                                        |                                         |                   |                                       |  
|Shares
    used in computing diluted    |                                         |                   |                                       |  
|net
    income per share                |                                         | 19,810,000        |                                       |  
|                                        |                                         |                   |                                       |  

The accompanying
notes are an integral part of these statements

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STRATEGIC
DIAGNOSTICS INC. AND SUBSIDIARIESCONSOLIDATED
STATEMENTS OF CASH FLOWS(in
thousands)(unaudited)

|                                                                                               | Six
	        Months
      Ended
    June 30, |      
|---------------------------------------------------------------------------------------------- | -------------------------------------------- | -----
|                                                                                               |                                              |      
|                                                                                               | 2005                                         |      
|                                                                                               |                                              |      
|                                                                                               | (as
    restated)                            |      
|Cash Flows from Operating Activities:                                                          |                                              |      
|Net income                                                                                     | $                                            | 557  
|Adjustments
	      to reconcile net income to netcash
	      provided by operating activities: |                                              |      
|Depreciation and amortization                                                                  |                                              | 457  
|Stock compensation expense                                                                     |                                              | 83   
|Deferred income tax provision                                                                  |                                              | 231  
|                                                                                               |                                              |      
|(Increase) decrease in:                                                                        |                                              |      
|Receivables                                                                                    |                                              | (587 
|Inventories                                                                                    |                                              | (198 
|Other
	      current assets                                                                    |                                              | (553 
|Other
	      assets                                                                            |                                              | (4   
|                                                                                               |                                              |      
|Increase (decrease) in:                                                                        |                                              |      
|Accounts
	      payable                                                                        |                                              | (350 
|Accrued
	      expenses                                                                        |                                              | 334  
|                                                                                               |                                              |      
|Net cash provided by (used in) operating activities                                            |                                              | (30  
|                                                                                               |                                              |      
|Cash Flows from Investing Activities:                                                          |                                              |      
|Purchase of property and equipment                                                             |                                              | (237 
|                                                                                               |                                              |      
|Net cash used in investing activities                                                          |                                              | (237 
|                                                                                               |                                              |      
|Cash Flows from Financing Activities:                                                          |                                              |      
|Proceeds
	      from exercise of incentive stock options                                       |                                              | 925  
|Proceeds
	      from employee stock purchase plan                                              |                                              | 8    
|Proceeds
	      from issuance of long and short term debt                                      |                                              | —    
|Repayments
	      on financing obligations                                                     |                                              | (106 
|                                                                                               |                                              |      
|Net cash provided by financing activities                                                      |                                              | 827  
|                                                                                               |                                              |      
|Effect of exchange rate changes on cash                                                        |                                              | (81  
|                                                                                               |                                              |      
|Net increase in cash and cash equivalents                                                      |                                              | 479  
|Cash and cash equivalents, beginning of period                                                 |                                              | 8,096
|                                                                                               |                                              |      
|Cash and cash equivalents, end of period                                                       | $                                            | 8,575
|                                                                                               |                                              |      
|Supplemental Cash Flow Disclosure:                                                             |                                              |      
|Cash
	      paid for taxes                                                                     |                                              | 15   
|Cash
	      paid for interest                                                                  |                                              | 23   
|                                                                                               |                                              |      

The accompanying
notes are an integral part of these statements

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STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(in thousands, except share
and per share data)
(unaudited)

|1. | DESCRIPTION
    OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
|-- | ---------------------------------------------------------------------------

Business

Strategic
      Diagnostics Inc. and its subsidiaries (the Company)
            develops and markets biotechnology-based detection solutions for
      a broad range of food, water, agricultural, industrial, environmental and
      scientific
            applications.
            By leveraging its expertise in immunology, proteomics, bio-luminescence,
            and other bio-reactive technologies with innovative application and
      production
            capabilities, the Company is able to provide sophisticated diagnostic
      testing and
            immunoreagent systems to a diverse customer base serving multiple
      vertical markets. The Company also serves the research, human diagnostic
      and
      pharmaceutical sectors with a wide range of services, including the production
      of monoclonal
            and polyclonal antibodies used in commercialized products offered
      by leading diagnostic and pharmaceutical companies.


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 interim 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/A for the fiscal year ended December 31, 2004. In the
        opinion
            of
            management, the accompanying consolidated financial statements include
            all adjustments (all of which are of a normal recurring nature) necessary
            for
            a fair presentation of the
    results of operations.


Certain prior period
      amounts have been reclassified to conform to the current periods
  presentation.


Revenues composed
        of sales 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. Revenues
        associated with such products or services are recognized when persuasive evidence
        of
                an order exists, shipment of product has occurred or services have been
        provided, the price is fixed and determinable and, collectibility is probable.
        Management
                is
              required to make judgments based on actual experience about whether or
        not
        collectibility is reasonably assured.


The
    Company enters into contracts related to the production of custom antibodies,
          which provide for the performance of defined tasks for a fixed price,
    with
delivery of the product upon completion
of production. The standard time to complete a project is typically longer than
30 days but less than 12 months and effort is expended over the life of the project.
Revenues related to sales of custom antibody projects are recognized when a projects
specifications have been met and the related
materials have been shipped.


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Fees associated with products and services added on to a custom antibody project
        subsequent to delivery of the initial project are billed monthly and recognized
        as revenue as the services and other deliverables are
  provided.


The preparation of the consolidated financial statements requires management
        of the Company to make a number of estimates and assumptions relating to
        the reported amount of assets and liabilities and disclosure of contingent
        assets and liabilities at the date of the consolidated financial statements
        and the reported amounts of revenues and expenses during the period. These
        estimates include those made in connection with assessing the valuation of
        accounts receivable,
    inventories, deferred tax assets and percentage of completion on projects for
  revenue recognition. Actual results could differ from these estimates.


Comprehensive income consists of the following for each period:


|                                          | Three
    Months Ended  |      | Six
    Months Ended |                        
|----------------------------------------- | ----------------------- | ---- | -------------------- | -----------------------
|June
    30,                              | June
    30,           
|2005                                      |                         | 2004 | 2005                 |                        
|                                          |                         |      |                      |                        
|                                          | (as
          restated) |      |                      | (as
          restated)
|Net
          income                      | $                       | 138  |                      | $                      
|Currency
          translation adjustment |                         | (61  | )                    |                        
|                                          |                         |      |                      |                        
|Total
          comprehensive income      | $                       | 77   |                      | $                      
|                                          |                         |      |                      |                        
|                                          |                         |      |                      |                        

|2. | RESTATEMENT
            OF
CONSOLIDATED FINANCIAL STATEMENTS
|-- | ------------------------------------------------------------

Following
      a series of discussions with the U.S. Securities and Exchange Commission
      (the SEC), the Company determined on December 15, 2005 that
      it would change its method of accounting for revenue on certain  custom
      antibody arrangements. Accordingly, the Companys financial statements
      for the three and nine month periods ended September 30, 2004
      have been restated. The Company changed its revenue recognition policy
      for custom
      antibody projects  to utilize a methodology whereby revenue is recognized
      when a projects
        specifications have been met and the related antibodies have been shipped,
        rather than on the percentage-of-completion methodology the Company had
        used since 1996. The adjustments required to effect this change in accounting
        primarily impact certain line items as reported in the Consolidated Balance
        Sheet and
        Statement of Operations as follows: accounts receivable because of the
        elimination
        of unbilled
        receivables; revenues because they are now recognized when a project
        is complete; inventories, accrued expenses and manufacturing costs because
        of the deferral
        of costs until the completion of a project; and, taxes because of the
        changes
in net income.

 In addition, the Company identified errors in the 2004 interim financial statements that, although considered to be immaterial have been recorded in the restated 2004 Consolidated Interim Balance Sheet and Statement of Operations.

 The effect of these changes was an increase of $5,000, $13,000,
      $87,000 and a decrease of $68,000 in net income for the three months ended
      June
      30, 2005, the three months ended June 30, 2004, the six months ended June
  30, 2005 and six months ended June 30, 2004, respectively.


In addition,
      the Company identified an error in the interim financial statements for
      the three and six month periods ended June 30, 2005 relating to the determination as to whether the Company had established the technological
      feasibility of a software development project as defined in Statement of
  Financial Accounting Standards No. 86, Accounting for the Costs of Computer
  Software to Be Sold, Leased or Otherwise Marketed, whereby costs had been capitalized
  rather than recognized as research and development. Based upon a review
  of the progress of the project in the fourth quarter of 2005, the Company determined
  that development issues reported in January 2005 should have led to the conclusion
  that technological feasibility had not been established. Accordingly,
  all previously capitalized costs and additional cost incurred to establish
  technological feasibility should be charged to expense. The effect of this
  error on net income is a decrease of approximately $56,000 and $137,000 for the three and six month periods ended June 30, 2005, respectively.


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The
    following schedules
    reconcile the amounts originally reported in the Companys consolidated
    balance sheets as of June 30, 2005 and December 31, 2004, and the consolidated
    statements of operations for the three and six month periods ended June 30,
    2005 and 2004
to the corresponding amounts in each of these statements (in thousands).


|                                                               | June
    30, |                         |   |      | June
          30, |                        
|-------------------------------------------------------------- | ------------ | ----------------------- | - | ---- | ------------------ | -----------------------
|2005                                                           | Adjustments  | 2005                   
|                                                               |              |                         |   |      |                    |                        
|                                                               |              | (as
          reported) |   |      |                    | (as
          restated)
|Selected
          Balance Sheet Amounts:                      |              |                         |   |      |                    |                        
|Receivables,
          net                                     | $            | 4,335                   |   | (641 | )                  | 3,694                  
|Inventories                                                    | $            | 3,266                   |   | 150  |                    | 3,416                  
|Other current assets                                           | $            | 861                     |   | 59   |                    | 920                    
|Total
          current assets                                 | $            | 17,915                  |   | (432 | )                  | 17,483                 
|Property and equipment, net                                    | $            | 3,731                   |   | (253 | )                  | 3,478                  
|Deferred
          tax asset                                   | $            | 8,090                   |   | 151  |                    | 8,241                  
|Total
          assets                                         | $            | 36,646                  |   | (529 | )                  | 36,117                 
|Accrued
          expenses                                     | $            | 1,869                   |   | (280 | )                  | 1,589                  
|Total
          current liabilities                            | $            | 2,598                   |   | (280 | )                  | 2,318                  
|Accumulated
          deficit                                  | $            | (4,152                  | ) | (249 | )                  | (4,401                 
|Total
          stockholder’s
          equity                 | $            | 33,381                  |   | (249 | )                  | 33,132                 
|Total
          liabilities and stockholder’s
          equity | $            | 36,646                  |   | (529 | )                  | 36,117                 
|                                                               |              |                         |   |      |                    |                        
|                                                               |              |                         |   |      |                    |                        

|                                           | December
	        31, |        |   |      | December
	        31, |       
|------------------------------------------ | --------------------- | ------ | - | ---- | --------------------- | ------
|2004                                       | Adjustments           | 2004  
|                                           |                       |        |   |      |                       |       
|                                           | (as reported)         |        |   |      | (as restated)         |       
|Selected Balance Sheet Amounts:            |                       |        |   |      |                       |       
|Receivables, net                           | $                     | 3,858  |   | (751 | )                     | 3,107 
|Inventories                                | $                     | 3,090  |   | 128  |                       | 3,218 
|Other current assets                       | $                     | 336    |   | 31   |                       | 367   
|Total current assets                       | $                     | 16,451 |   | (592 | )                     | 15,859
|Deferred tax asset                         | $                     | 8,288  |   | 127  |                       | 8,415 
|Intangible assets, net                     | $                     | 6,996  |   | (4   | )                     | 6,992 
|Total assets                               | $                     | 35,342 |   | (469 | )                     | 34,873
|Accrued expenses                           | $                     | 1,525  |   | (270 | )                     | 1,255 
|Total current liabilities                  | $                     | 2,604  |   | (270 | )                     | 2,334 
|Accumulated deficit                        | $                     | (4,759 | ) | (199 | )                     | (4,958
|Total stockholder’s equity                 | $                     | 31,965 |   | (199 | )                     | 31,766
|Total liabilities and stockholder’s
equity | $                     | 35,342 |   | (469 | )                     | 34,873

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|                                                                     | Three
    Months Ended |       |             |      | Three
	        Months Ended |      
|-------------------------------------------------------------------- | ---------------------- | ----- | ----------- | ---- | --------------------------- | -----
|                                                                     | June
	        30, 2005 |       | Adjustments |      | June
	        30, 2005      |      
|                                                                     |                        |       |             |      |                             |      
|                                                                     | (as
	        reported) |       |             |      | (as
    restated)           |      
|Selected Statement of Operations Amounts:                            |                        |       |             |      |                             |      
|Product related revenues                                             | $                      | 6,218 |             | (40  | )                           | 6,178
|Total revenues                                                       | $                      | 6,218 |             | (40  | )                           | 6,178
|Manufacturing expenses                                               | $                      | 2,931 |             | (33  | )                           | 2,898
|Research and development                                             | $                      | 737   |             | 114  |                             | 851  
|Selling general and administrative expenses                          | $                      | 2,324 |             | (34  | )                           | 2,290
|Total operating expenses                                             | $                      | 5,992 |             | 47   |                             | 6,039
|Operating income (loss)                                              | $                      | 226   |             | (87  | )                           | 139  
|Income (loss) before taxes                                           | $                      | 270   |             | (87  | )                           | 183  
|Income tax expense (benefit)                                         | $                      | 81    |             | (36  | )                           | 45   
|Net income (loss)                                                    | $                      | 189   |             | (51  | )                           | 138  
|Basic net
income (loss) per shareapplicable to common shareholders   | $                      | 0.01  |             | 0.00 |                             | 0.01 
|Diluted
net income (loss) per shareapplicable to common shareholders | $                      | 0.01  |             | 0.00 |                             | 0.01 



|                                                                     | Three
    Months Ended |       |             |      | Three
	      Months Ended |      
|-------------------------------------------------------------------- | ---------------------- | ----- | ----------- | ---- | ------------------------- | -----
|                                                                     | June
	      30, 2004   |       | Adjustments |      | June
	      30, 2004      |      
|                                                                     |                        |       |             |      |                           |      
|                                                                     | (as
	      reported)   |       |             |      | (as
    restated)         |      
|Selected Statement of Operations Amounts:                            |                        |       |             |      |                           |      
|Product related revenues                                             | $                      | 5,420 |             | 130  |                           | 5,550
|Total revenues                                                       | $                      | 5,420 |             | 130  |                           | 5,550
|Manufacturing expenses                                               | $                      | 2,579 |             | 108  |                           | 2,687
|Selling general and administrative expenses                          | $                      | 2,144 |             | 0    |                           | 2,144
|Total operating expenses                                             | $                      | 5,229 |             | 108  |                           | 5,337
|Operating income (loss)                                              | $                      | 191   |             | 22   |                           | 213  
|Income (loss) before taxes                                           | $                      | 201   |             | 22   |                           | 223  
|Income tax expense (benefit)                                         | $                      | 53    |             | 9    |                           | 62   
|Net income (loss)                                                    | $                      | 148   |             | 13   |                           | 161  
|Basic net
income (loss) per shareapplicable to common shareholders   | $                      | 0.01  |             | 0.00 |                           | 0.01 
|Diluted
net income (loss) per shareapplicable to common shareholders | $                      | 0.01  |             | 0.00 |                           | 0.01 

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|                                                                     | Six
    Months Ended |        |             |      | Six
	      Months Ended |       
|-------------------------------------------------------------------- | -------------------- | ------ | ----------- | ---- | ----------------------- | ------
|                                                                     | June
	      30, 2005 |        | Adjustments |      | June
	      30, 2005    |       
|                                                                     |                      |        |             |      |                         |       
|                                                                     | (as
	      reported) |        |             |      | (as restated)           |       
|                                                                    
|Selected Statement of Operations Amounts:                            |                      |        |             |      |                         |       
|Product related revenues                                             | $                    | 12,773 |             | 82   |                         | 12,855
|Total revenues                                                       | $                    | 12,773 |             | 82   |                         | 12,855
|Manufacturing expenses                                               | $                    | 5,832  |             | (117 | )                       | 5,715 
|Research
    and development                                         | $                    | 1,379  |             | 279  |                         | 1,658 
|Selling general and administrative expenses                          | $                    | 4,766  |             | (1   | )                       | 4,765 
|Total operating expenses                                             | $                    | 11,977 |             | (161 | )                       | 12,138
|Operating income (loss)                                              | $                    | 796    |             | (79  | )                       | 717   
|Income (loss) before taxes                                           | $                    | 867    |             | (79  | )                       | 788   
|Income tax expense (benefit)                                         | $                    | 260    |             | (29  | )                       | 231   
|Net income (loss)                                                    | $                    | 607    |             | (50  | )                       | 557   
|Basic net
income (loss) per shareapplicable to common shareholders   | $                    | 0.03   |             | 0.00 |                         | 0.03  
|Diluted
net income (loss) per shareapplicable to common shareholders | $                    | 0.03   |             | 0.00 |                         | 0.03  



|                                                                                             | Six
    Months Ended |        |             |      | Six
            Months Ended |       
|-------------------------------------------------------------------------------------------- | -------------------- | ------ | ----------- | ---- | ---------------------------- | ------
|                                                                                             | June
    30, 2004    |        | Adjustments |      | June
            30, 2004    |       
|                                                                                             |                      |        |             |      |                              |       
|                                                                                             | (as
    reported)    |        |             |      | (as
            restated)    |       
|Selected
          Statement of Operations Amounts:                                          |                      |        |             |      |                              |       
|Product
          related revenues                                                           | $                    | 11,770 |             | (8   | )                            | 11,762
|Total
          revenues                                                                     | $                    | 11,770 |             | (8   | )                            | 11,762
|Manufacturing
          expenses                                                             | $                    | 5,201  |             | 103  |                              | 5,304 
|Selling
          general and administrative expenses                                        | $                    | 4,672  |             | 0    |                              | 4,672 
|Total
          operating expenses                                                           | $                    | 10,966 |             | 103  |                              | 11,069
|Operating
          income (loss)                                                            | $                    | 804    |             | (111 | )                            | 693   
|Income
          (loss) before taxes                                                         | $                    | 818    |             | (111 | )                            | 707   
|Income
          tax expense (benefit)                                                       | $                    | 252    |             | (43  | )                            | 209   
|Net
          income (loss)                                                                  | $                    | 566    |             | (68  | )                            | 498   
|Basic
            net income (loss) per shareapplicable
            to common shareholders   | $                    | 0.03   |             | 0.00 |                              | 0.03  
|Diluted
            net income (loss) per shareapplicable
            to common shareholders | $                    | 0.03   |             | 0.00 |                              | 0.03  

Net cash provided
    by operating activities decreased by $307,000 and net cash used in investing
    activities decreased by $307,000 for the six months ended June 30, 2005 as
    a result of the restatement. There was no impact on net cash provided
  by financing activities for the six months ended June 30, 2005.


There is no impact on net cash provided by operating activities,
          net cash used in investing activities or on net cash provided by financing
          activities as reported on the consolidated statements of cash flows for the
  period ended June 30, 2004.


|3. | BASIC
          AND DILUTED
INCOME (LOSS) PER SHARE:
|-- | ----------------------------------------------------

Basic earnings per share (EPS) is computed by dividing net income
        available for common shareholders by the weighted-average number of common
        shares outstanding during the period. Diluted EPS is similar to basic EPS,
        except that the dilutive effect of converting or exercising all potentially
        dilutive securities is also included in the denominator. The Companys
        calculation of diluted EPS includes the dilutive effect of exercising stock
  options into common shares.


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As
    of June 30, 2005, options to purchase 1,821,000 shares of the Companys
    common stock were outstanding, with options to purchase approximately 1,205,000
  shares exercisable. Listed below are the basic and diluted share calculations.


|                                                      | Three
    Months Ended |  | Six
    Months Ended | 
|----------------------------------------------------- | ---------------------- |  | -------------------- | 
|                                                      | June
    30,           |  | June
    30,         | 
|                                                      |                        |  |                      | 
|                                                      | 2005                   |  | 2004                 | 
|                                                      |                        |  |                      | 
|Weighted avg. common shares outstanding               | 19,727,816             |  | 19,236,317           | 
|                                                      |                        |  |                      | 
|Shares used in computing basicnet income per share    | 19,727,816             |  | 19,236,317           | 
|                                                      |                        |  |                      | 
|Stock options                                         | 82,368                 |  | 436,613              | 
|                                                      |                        |  |                      | 
|Shares used in computing diluted net income per share | 19,810,183             |  | 19,672,930           | 
|                                                      |                        |  |                      | 




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|4. | STOCK-BASED
    COMPENSATION
|-- | ----------------------------

The Company
    applies the intrinsic-value-based method to account for its fixed-plan stock
    options.
    Compensation expense is recorded on the date of grant only
    if the current market price of the underlying stock, at that date, exceeded
    the exercise price. The Company has elected to continue to apply the intrinsic-value-based
    method of accounting described above, and has adopted only the disclosure
    requirements of SFAS No. 123, Accounting for Stock-Based
Compensation. Under the Companys employee share option plans, the
Company grants employee and outside director stock options at an exercise price
equal to the fair market value at the date of grant. No compensation expense
is recorded with respect to such stock option grants. Compensation expense with
respect to stock awards granted is measured based upon the fair value of such
awards and is charged to expense over the vesting period.


The following table illustrates the effect on net income and earnings per share
    if the fair value based method had been applied to all outstanding and unvested
awards in each period.


|                                                   | Three
	    Months Ended |                    | Six
	    Months Ended |                   
|-------------------------------------------------- | ----------------------- | ------------------ | --------------------- | ------------------
|June
	    30,                                      | June
	    30,          
|2005                                               |                         | 2004               | 2005                  |                   
|                                                   |                         |                    |                       |                   
|(as
	    restated)                                 |                         | (as
	    restated) | (as
	    restated)    | (as
	    restated)
|                                                   |                         |                    |                       |                   
|Net
	    income                                    | $                       | 138                |                       | $                 
|                                                  
|Add: Stock-based
    employee compensation expense |                         |                    |                       |                   
|included
    in reported net income (loss), net of |                         |                    |                       |                   
|related tax effects                                |                         | 39                 |                       |                   
|Deduct:
	    Total stock-based employee            |                         |                    |                       |                   
|compensation
	    expense determined under fair    |                         |                    |                       |                   
|value
	    based method for all awards, net of     |                         |                    |                       |                   
|related
	    tax effects                           |                         | (211               | )                     |                   
|                                                   |                         |                    |                       |                   
|Net
	    income (loss)as adjusted                 | $                       | (34                | )                     | $                 
|                                                   |                         |                    |                       |                   
|Earnings
	    per share:                           |                         |                    |                       |                   
|Basicas reported                                  | $                       | 0.01               |                       | $                 
|                                                   |                         |                    |                       |                   
|Basicas adjusted                                  | $                       |                   |                       | $                 
|                                                   |                         |                    |                       |                   
|Dilutedas reported                                | $                       | 0.01               |                       | $                 
|                                                   |                         |                    |                       |                   
|Dilutedas adjusted                                | $                       |                   |                       | $                 
|                                                   |                         |                    |                       |                   

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|5. | INVENTORIES:
|-- | ------------

The Company’s inventories are valued at the lower of cost or market. For inventories
    that consist primarily of test kit components, bulk serum and antibody products,
    cost is determined using the first in, first out method. For inventories
    that consist of costs associated with the production of custom antibodies,
    cost is determined using the specific identification method. At June 30,
2005 and December 31, 2004, inventories consisted of the following:


|                     |  | June
    30, 2005 |       | December
    31, 2004
|-------------------- |  | ----------------- | ----- | ---------------------
|                     |  |                   |       |                      
|                     |  | (as
    restated) |       | (as
    restated)    
|Raw
    materials    |  | $                 | 1,419 |                      
|Work
    in progress |  |                   | 628   |                      
|Finished
    goods   |  |                   | 1,369 |                      
|                     |  |                   |       |                      
|                     |  | $                 | 3,416 |                      
|                     |  |                   |       |                      
|                    

|6. | INTANGIBLE
    ASSETS:
|-- | ----------------------

At June 30, 2005 and December 31, 2004, intangible assets
consisted of the
following:


|                                  |  | June
    30, 2005 |        | December
    31, 2004 |  
|--------------------------------- |  | ----------------- | ------ | --------------------- | -
|                                  |  |                   |        |                       |  
|Goodwill                          |  | $                 | 5,168  |                       | $
|Other                             |  |                   | 3,017  |                       |  
|Less-accumulated
    amortization |  |                   | (1,281 | )                     |  
|                                  |  |                   |        |                       |  
|Net
    intangible assets         |  | $                 | 6,904  |                       | $
|                                  |  |                   |        |                       |  
|                                  |  |                   |        |                       |  

|7. | DEBT:
|-- | -----

On
    May 5, 2000, the Company entered into a financing agreement with a commercial
    bank. This
    agreement provides for a $4,000 term loan, all of which had been paid
    on or before December 31, 2002, and for up to a $5,000
      revolving line of credit, none of which was outstanding and approximately $2,685
      of which was available at June 30, 2005, based on eligible assets. 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. The Companys
      annual effective rate of interest on this line of credit, taking into account
the variable interest rate and LIBOR, was approximately 5.07% at June 30, 2005.


On December
    13, 2001, the Company entered into an agreement with a commercial bank to
    finance
    the construction of new facilities at its Windham, Maine location.
      This agreement provided for up to $1,500 in financing, $878
      of which was outstanding at June 30, 2005, and is repayable over seven
      years, with principal payments that began on October 1, 2002. The loan
      bears a variable
interest rate of between 2% and 3% over LIBOR depending upon the ratio of the Companys funded debt to EBITDA, as defined.  Payments are due monthly, with equal amortization of principal payments plus interest. The Companys
      annual effective rate of interest on this loan at June 30, 2005 was approximately
5.32% .




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Under the
    terms of the above financing, the Company is required to meet certain quarterly
    financial covenants that included for the first three quarters of
      2003 a minimum quick ratio of 2.25 and a minimum tangible net worth ratio
      of $22,500, which the Company met. Beginning with the fourth quarter
      of 2003, the original provisions of the loan agreement regarding financial
      covenants were operative, namely a ratio of EBITDA to current maturities
      of debt plus interest and  cash paid for taxes greater than 1.50 and a
      ratio of funded debt to EBITDA not to exceed 3.25. The Company was not
      in compliance with these fourth quarter 2003 covenants at December 31,
      2003. In February 2004, the Company amended the terms of the
      EBITDA covenants with the lender to exclude the impact of up to $3,315
      of charges the Company incurred in the fourth quarter 2003, and therefore,
      the Company met the covenant requirements for the fourth quarter 2003.
      Under the amended covenant, the Company met all of its financial covenants
      with
      respect to this indebtedness at June 30, 2005 and expects that it will
      be able to meet
      all of its financial covenants with respect to this indebtedness for the
remainder of 2005.


As of June
    30, 2005, the outstanding balance on all of the Companys commercial bank debt was $878. This indebtedness is secured by substantially all of the Companys
assets.


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

Forward-Looking
  Statements

This Form
    10-Q contains certain forward-looking statements reflecting the current expectations
    of Strategic Diagnostics Inc. and its subsidiaries (we, the Company
    or SDI). These statements include, among others, statements regarding:
    the Companys intentions with respect to future spending on research
    and development; the development, market acceptance and sales of tests for
    food-borne pathogens and related growth media; the size and nature of demand
    in the markets for the Companys products and related effects on operating
    results; the need for water quality and toxicity tests; approval and validation
    by third parties of the Companys food pathogen tests; the performance
    of the Companys testing products; sales of the Companys antibodies;
    timing of new product introductions and other information that may be predictive
    of future operating results; the Companys ability to reduce operating
    expenses; and the Companys ability to improve operating results thus
    enabling it to meet future loan covenants. In addition, when used in this
    Form 10-Q, the words anticipate, enable, estimate,
    intend, expect, believe, potential,
    may, 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,
    attraction and retention of management and key employees, adequate supply
    of raw materials, inability to obtain or delays in obtaining third party approvals,
    or required government approvals, the ability to meet increased market demand,
    competition, protection of intellectual property, non-infringement of intellectual
    property, seasonality, the ability to obtain financing and other factors more
    fully described in the Companys public filings with the U.S. Securities
    and Exchange Commission.


Restatement
  of Consolidated Financial Statements

Following
       a series of discussions with the SEC, the Company determined on December
      15,
    2005 that it would change its method of accounting for revenue on certain
       custom antibody arrangements. Accordingly, the Companys financial
       statements  for the three and six month periods ended June 30, 2005 and
       2004 have been
    restated. The Company changed its revenue recognition policy for custom antibody
        projects to utilize a methodology whereby revenue is recognized when
       a projects
    specifications have been met and the related antibodies have been shipped,
        rather than on the percentage-of-completion methodology the Company had
       used
    since 1996. The Company also identified an error in the financial
       statements for the three and six month periods ended June 30, 2005 related
       to the determination as to whether the Company had established the technological
       feasibility of a software project as defined by Statement
       of Financial Accounting Standard No. 86, Accounting for the Costs
       of Computer Software to Be Sold, Leased or Otherwise Marketed, whereby costs had been capitalized rather than expensed as
	   research and development. Please
       refer to Note 2 to our consolidated interim financial statements  for
       a further discussion of the restatement.


We provide
  bio-services and industrial bio-detection services. Bio-services include providing
  custom antibody production services and antibody reagents to the diagnostic,
  pharmaceutical, bio-medical and academic research and development markets. Industrial
  bio-detection services include providing test kits for assessing the health,
  safety and quality of food, water and the environment.


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Our primary
    core competency is the development and manufacture of antibodies. Such antibodies
    are incorporated into test kits manufactured by us for the detection of a
    wide variety of substances related to food safety and water quality and for
    use by medical diagnostic and pharmaceutical companies and research institutions.


Our food
    safety product group includes tests to detect specific traits in genetically
    engineered plants, tests to detect Genetically Modified (GM) traits in food
    ingredients and food fractions, tests to detect naturally occurring fungi
    in grains (mycotoxins) and tests for food pathogens.


Our water
    quality product group includes tests to detect toxicity in drinking water,
    industrial process water and wastewater, and tests to detect specific traits
    in soil and other waste matter for use at environmental remediation projects,
    hazardous waste operations and other applications.


Our antibody
    product group provides a wide array of antibodies and antibody services, including
    hybridoma development, calibrators, antigens and reagents and the production
    of monoclonal and polyclonal antibodies. Such antibodies are incorporated
    into test kits we manufacture as described above and diagnostic and therapeutic
    products, and used in clinical research.


We sell
    products and services in the food safety, water quality and antibody market
    categories through our U.S. direct sales force, a network of over 50 distributors
    in Canada, Mexico, Latin America, Europe and Asia and our corporate partners.
    These products and services are sold to a wide range of customers including
    water utilities, food processors, pharmaceutical, biotechnology and diagnostic
    companies and major biomedical research centers.


Results
  of Operations

Three
  Months Ended June 30, 2005 versus June 30, 2004

Revenues
    for the second quarter of 2005 increased 11.3% to $6.18 million, compared
    to $5.55 million for the second quarter of 2004. Included in revenues
    in the second quarter of 2004 was $56,000 of sales associated with certain
    catalog antibody inventories that were written off in the fourth
    quarter of 2003 and therefore recorded with no associated cost of goods sold.
    Revenue growth in 2005 continued to be offset by previously anticipated reductions
    in StarLinkTM test kit sales, which decreased by $43,000 to
    $233,000 in the second quarter of 2005, compared to the same quarter in
    2004.


For the
      second quarter of 2005, gross profit (defined as total revenues less manufacturing
      costs) increased 14.5% to $3.28 million, compared to $2.86 million
       in the second quarter of 2004, and gross margins increased from 51.6%
      in the
    second quarter of 2004 to 53.0% in the second quarter of 2005.


Operating
      expenses for the second quarter of 2005 increased 13.2% to $6.04 million,
      compared to $5.34 million for the second quarter of 2004, partially
      due  to research expenses incurred of $165,000 related to our investment
      in  the commercialization of new technologies and high throughput production
      of antibodies and the investment in a software upgrade for the Microtox® test
      system totaling $114,000.


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Research
    and  development spending was $851,000, or 13.8% of net revenues, in
    the second quarter of 2005, compared to $506,000, or 9.1% of net revenues,
    in the second  quarter of 2004. This increase reflects our continued commitment
    to customer-centric
  product development.


Selling,
    general  and administrative expenses were $2.29 million in the 2005 quarter,
    compared to $2.14 million for the same quarter in 2004. Selling, general
    and administrative  expenses for the second quarter of 2004 reflect a benefit
    related to the recovery
  of a $100,000 receivable it had written off in 2001. No comparable benefit
   was recorded for the second quarter of 2005.


We recorded
  interest income, net of interest expense, of $44,000 in the second quarter
  of 2005 compared to interest income of $10,000 in the prior year second
  quarter primarily due to higher levels of invested cash during the 2005 period.


Pre-tax income
     totaled $183,000 for the second quarter of 2005, compared to pre-tax
     income of $223,000 for the same period in 2004.


Our effective
    tax rate of 25% for the second quarter of 2005 is below the federal and state
    statutory rates primarily due to research and development credits and the
    utilization
  of foreign net operating losses not previously benefited.


Net income
     in the second quarter of 2005 was $138,000, compared to $161,000
     for  the same period in 2004, or $0.01 per diluted share for each quarter.
     Diluted  shares utilized in these computations were 19,810,000 and 19,673,000
     for the
  second quarter of 2005 and 2004, respectively.


Six Months
  Ended June 30, 2005 vs. June 30, 2004

For the six
    months ended June 30, 2005, revenues increased 9.3% to $12.86 million,
    compared to $11.76 million for the same period in 2004. Included in revenues
    in the  six month period ended June 30, 2004 was $212,000 of sales associated
    with  certain catalog antibody inventories that were written-off
    in the  fourth quarter of 2003 with substantially no associated cost of goods
    sold.
  StarLink test kit sales, as described above, decreased to $405,000
   for the six month period ended June 30, 2005, compared to $512,000 for
   the  same period in 2004. Sales of our test kits used in other agriculture
   applications
  were also down, primarily due to order pattern. We see the agriculture market
    becoming very competitive among providers of test methods. This market has
   not
  expanded as new product introduction has slowed, and existing applications
   have  seen a decrease in testing demand.


Gross profit
     for the six months ended June 30, 2004 increased $682,000 compared
     to the first six months of 2004, from $6.46 million to $7.14 million,
     and  gross margins increased from 54.9% in 2004 to 55.5% in 2005.


For the six
    months ended June 30, 2005, operating expenses increased 9.9% to $12.14
    million, compared to $11.07 million in the same period in 2004, due primarily
     to research expenses incurred of $297,000 related to our investment
     in the  commercialization of new technologies and high throughput production
     of antibodies and the investment in a software upgrade for the Microtox®
     test system totaling $279,000.


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For
      the six months ended June 30, 2005, research and development spending was $1.66
      million, or 12.9%, of net revenues, compared to $1.09
million, or 9.3%, for the same period in 2004.


Selling,
    general and administrative expenses were $4.77 million for the six months
    ended June 30, 2005, compared to $4.67 million for the same period in 2004. Selling, general and administrative expenses for the six month
        period ended June 30, 2004 included a charge of $100,000 associated
        with the termination of a distribution reseller agreement for an instrument
        we
        determined was not going to be marketable. No comparable charge was recorded
        for the six
months ended June 30, 2005.


We recorded
    interest income, net of interest expense, of $71,000 for the six months ended June 30, 2005 compared to $14,000
        for the six months ended June 30, 2004, due to higher levels of invested
cash during the 2005 period.


Pre-tax income
    totaled $788,000 for the six months ended June 30, 2005, compared to $707,000
for the same period in 2004.


Our effective tax rate of 29% for the six months ended June 30, 2005 is below
          the federal and state statutory rates primarily due to research and
      development credits and the utilization of foreign net operating losses
      not previously
benefited.


Net income
    in the six months ended June 30, 2005 was $557,000, or $0.03 per
    diluted share, compared to $498,000 for the same period in 2004, or $0.03
        per diluted share for same six month period. Diluted shares totaling
        19,691,000 and 19,718,000 were used in the computation for the first
        six months of
2005 and 2004, respectively.


Product Groups

Food
      Safety Products  Food safety revenues were $1.85 million in the second quarter of 2005, compared to $1.41 million in the second quarter of 2004, an increase of 31.1% . For the six
            months ended June 30, 2005, food safety revenues were $4.35 million, compared to $3.65
            million for the same period in 2004, an increase of 19.4% . Food pathogen
            test sales in the second quarter of 2005 and the six months ended June
            30, 2005
            were up 139.0% and 125.0%, respectively, compared to the same periods
            of 2004. Contributing to the increase in food pathogen test sales in
            the second
            quarter
            of 2005 is the impact of the previously announced exclusive agreement
            with an international
  distributor.


Water and
    Environmental Products  Water and environmental revenues increased 2.8% to $1.63 million for the second quarter of 2005, compared to $1.59 million for the same quarter in
        2004, but decreased 6.4% to $2.85 million for the six month period ended June 30, 2005, compared to $3.05
        million for the same period in 2004. Although this product group has
        historically had high attrition, our efforts, including the development
        of new channels
        to market, adding new products and adding sales professionals, are beginning
        to have a positive impact on revenues. This is the first quarter in several
        years where this product line has seen an increase over prior
        quarters. The previously announced US Biosystems (now Genapure) initiative
was commercially launched to the Florida market in July 2005 to immediate sales.


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Antibody
      Products  antibody
      revenues increased 5.8% to $2.70 million for the second quarter of
      2005 compared to $2.55
      million for the same quarter in 2004, and increased 11.9% to $5.66
       million in the six months ended June 30, 2005, compared to $5.06
        million for the same period in the prior year. The increase in the second
        quarter
        of 2005 over the same period in 2004 continues the improvement in the
        business, which saw a steep decline in revenues in the first half of
        2004 associated
        with the completion of several large, one-time customer projects in 2003,
        and
the discontinuation of low margin business early in 2004.


Liquidity
and Capital Resources

The net
  cash used by operating activities of $30,000 for the six
          months ended June 30, 2005 was primarily the result of cash from operating
          activities being reduced by increases in current assets. The increase
          in current assets was primarily the result of the purchase of insurance
          for
          the 2005 business
  year.


Net cash
    used in investing activities of $237,000 for the six months ended June
    30, 2005 was driven by capital expenditures primarily for laboratory and
    manufacturing equipment related to the Companys investment in the
        commercialization of new technologies and high throughput production
    of antibodies. This compares to net cash used in investing activities of $87,000
        for the same period in 2004, which was driven by capital expenditures
        for the period primarily related to purchases of office and manufacturing
equipment.


Net cash
    provided by financing activities of $827,000 for the six months ended June 30, 2005 was primarily driven by proceeds from the exercise of stock options, which was partially offset by net repayments of outstanding
        debt.  The $198,000 provided by financing activities for the same period in 2004 was primarily the result of acquiring a $551,000
loan to finance our 2004 business insurance program, net of debt repayments.


Our working
    capital, current assets less current liabilities, increased $1.66 million
    to $15.19 million at June 30, 2005 from $13.53 million at December
    31, 2004, primarily due to the increase in current assets  described above.
    Outstanding debt decreased $106,000 from $984,000 at December 31,
    2004 to $878,000
on June 30, 2005, due to scheduled repayments.


On May 5,
    2000, we entered into a financing agreement with a commercial bank. This
    agreement
        provides for a $4.00 million term loan, all of which had been paid on or before December 31, 2002, and for up to a $5.00 million
        revolving line of credit, none of which was outstanding and approximately $2.69
million of which was available at June 30, 2005, based on eligible assets.


The revolving line of credit bears a variable interest rate of between 1.75%
          and 2.75% over LIBOR depending upon the ratio of our funded debt to EBITDA,
          and is subject to a borrowing base determined by our eligible accounts receivable.
          Our annual effective rate of interest on this line of credit, taking into
          account the variable interest rate and LIBOR, was approximately 5.07% at
June 30, 2005.


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On
      December 13, 2001, we entered into an agreement with a commercial bank
      to finance the construction of new facilities at our Windham, Maine location.
      This agreement provided for up to $1.5 million
      in financing, $878,000
        of which was outstanding at June 30, 2005, and is repayable over seven
      years, with principal payments that began
        on October 1, 2002. The loan bears a variable interest rate of between
      2% and 3% over LIBOR depending upon the ratio of our funded debt to EBITDA.
        Payments
        are due monthly, with equal amortization of principal payments plus interest.
        Our annual effective rate of interest on this loan at June 30, 2005 was
      approximately
5.32%.


Under the terms of the above financing, we are required to meet certain quarterly
          financial covenants that include a ratio of EBITDA to current maturities
          of debt plus interest and cash paid for taxes greater than 1.50 and a ratio
          of funded debt to EBITDA not to exceed 3.25. We met all of our financial
          covenants with respect to this indebtedness at June 30, 2005 and expect that
          we will be able to meet all of our financial covenants with respect to this
          indebtedness for the
remainder of 2005.


For the six
    months ended June 30, 2005, we satisfied all of our cash requirements from
    cash
        provided by operating activities, cash available and on-hand and
        from the financing agreements described above. At June 30, 2005, we had $667,000
        in long-term debt and stockholders equity of $33.13
        million. Although we have no material commitments for capital expenditures
        at June 30, 2005, we do anticipate that we may spend approximately $1
        million in 2005 to  upgrade or expand certain manufacturing, research & development
        and office equipment and systems that will drive productivity or generate
        cost savings,
        and also to introduce automation into certain manufacturing processes
that are currently labor intensive.


Based upon our cash on hand, credit facilities, current product sales and the
          anticipated sales of new products, we believe we have, or have access to,
          sufficient resources to meet our operating requirements at least through
          July 2006. Our ability to meet our long-term capital needs will depend on
          a number of factors, including compliance with existing and new loan covenants,
          the success of our current and future products, the focus and direction of
          our research and
        development programs, competitive and technological advances, future relationships
          with corporate partners, government regulation, our marketing and distribution
          strategy, our successful sale of additional common stock and/or our successfully
          locating and obtaining other financing, and the success of our plan to make
          future acquisitions. Accordingly, no assurance can be given that we will
          be able to meet the future liquidity requirements that may arise from these
          inherent and similar
uncertainties.


Non-GAAP
  Financial Measures

EBITDA measures are presented as we believe this provides investors and our management with additional information to measure our liquidity. EBITDA measures
              are not a measure of performance under GAAP, and therefore should not be
              considered in isolation or as a substitute for net income or cash flows from
              operations. Additionally, our EBITDA calculations may differ from the EBITDA
    calculations for other companies.


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The calculation of our EBITDA measure (as discussed above), and the reconciliation
          of our EBITDA measure to net cash provided by operating activities for the
six months ended June 30, 2005 and 2004, respectively, is as follows:


|                                                         | **Six
      Months Ended June 30,** |         
|-------------------------------------------------------- | ----------------------------------- | --------
|                                                         |                                     |         
|**2005**                                                 |                                     | **2004**
|                                                         |                                     |         
|                                                         | **(as restated)**                   |         
|                                                         |                                     |         
|Net
      cash (used in) provided by operatingactivities | $                                   | (30     
|Changes in assets and liabilities:                       |                                     |         
|Receivables                                              |                                     | 587     
|Inventories                                              |                                     | 198     
|Other current assets                                     |                                     | 553     
|Other assets                                             |                                     | 4       
|Accounts payable                                         |                                     | 350     
|Accrued expenses                                         |                                     | (334)   
|Stock compensation expense                               |                                     | (83)    
|Interest income, net                                     |                                     | (71)    
|                                                         |                                     |         
|EBITDA                                                   | $                                   | 1,174   
|                                                         |                                     |         
|                                                         |                                     |         
|                                                         |                                     |         

|Item
    3. | Quantitative
    and Qualitative Disclosures About Market Risk
|----------- | --------------------------------------------------------------

We have
  exposure to changing interest rates, and are currently not engaged in hedging
  activities. Interest on approximately $878,000 of outstanding indebtedness
  is at a variable rate of between 2% to 3% over the published London Interbank
  Offered Rate (LIBOR), based upon our ratio of funded debt to EBITDA, and was
  3% over LIBOR on average for the year. At our current level of indebtedness,
  each 1% change in the variable interest rate will have an effect of $9,000
  on our annual interest expense charges.


We conduct
  operations in United Kingdom. The consolidated financial statements are presented
  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 our consolidated financial
  results. Historically, the effects of translation have not been material to
  the consolidated financial results.


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|Item
    4. | Controls
    and Procedures
|----------- | ---------------------------

|    |                                                 
|--- | ------------------------------------------------
|(a) | Evaluation of Disclosure Controls and Procedures

Our management,
  with the participation of our Chief Executive Officer and Chief Financial Officer,
  evaluated the effectiveness of our disclosure controls and procedures, as defined
  in Rule 13a-15(e) under the Securities Act of 1934, as amended, as of June 30,
  2005, the end of the period covered by the previously issued second quarter
  of 2005 Form 10-Q. Based upon that evaluation, the Chief Executive Officer and
  Chief Financial Officer concluded that our disclosure controls and procedures
  were functioning effectively as of that date to provide reasonable assurance
  that the information required to be disclosed by us in reports filed under the
  Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
  and reported within the time periods specified in the SECs rules and forms,
  and that information required to be disclosed by us in the reports we file or
  submit under the Securities Exchange Act of 1934, as amended, is accumulated
  and communicated to our management, including our principal executive and financial
  officers, or persons performing similar functions, as appropriate to allow timely
  decisions regarding required disclosure.


Following
     a series of discussions with the U.S. Securities and Exchange Commission,
    the
  Company determined on December 15, 2005 that it would change its method of
    accounting  for revenue on certain custom antibody arrangements. Consequently,
    the Company
  has reflected the change in its restated results for all periods presented
    in  this Form 10-Q/A. The Company changed its revenue recognition policy
    for custom
  antibody projects to utilize a methodology whereby revenue is recognized when
     a projects specifications have been met and the related antibodies
     have  been shipped, rather than on the percentage-of-completion methodology
     the Company
  had used since 1996. In addition, the Company corrected an error in their 2005
     interim financial statements relating to the determination as to whether
     the Company had established the technological feasibility of a software
     development project.


The Companys
     Chief Executive Officer and Chief Financial Officer have reassessed our
    disclosure
  controls and procedures for this Form 10-Q/A. Based on the reassessment, the
     Chief Executive Officer and Chief Financial Officer concluded

  that the Companys disclosure controls and procedures were therefore not,
  as of June 30, 2005, effective to provide reasonable assurance
  that
  the
  information
  required to be disclosed by us in reports filed under the Securities Exchange
   Act of 1934, as amended, is recorded, processed, summarized and reported within

  the time periods specified in the SEC’s rules and forms, and that information
   required to be disclosed by us in the reports we file or submit under the
  Securities
  Exchange Act of 1934, as amended, is accumulated and communicated to our management,
   including our principal executive and financial officers, or persons performing

  similar functions, as appropriate to allow timely decisions regarding required
   disclosure. Not withstanding the need to restate previously issued financial

  statements, we believe that management had reasonable support for its historical
   method of accounting.


|(b) | Change
      in Internal Control over Financial Reporting
|--- | ---------------------------------------------------------

No change
  in the Companys internal control over financial reporting occurred during
  the most recent fiscal quarter that has materially affected, or is reasonably
  likely to materially affect, the internal control over financial reporting.


Subsequent
    to June 30, 2005, management has instituted additional annual and quarterly review procedures
    for revenue recognition and software capitalization accounting policies to ensure that we continually
    evaluate such policies and their compliance with generally accepted accounting
    principles.


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PART II  OTHER INFORMATION

|ITEM
    4. | Submission
    of Matters to a Vote of Security Holders.
|----------- | --------------------------------------------------------

On May 3,
    2005, we held our annual meeting of stockholders. At the annual meeting, the
    stockholders voted on the election of three directors, each for a two-year
    term. The voting results at the annual meeting were as follows:


|Name of
      Nominee |  | Votes For  |  | Votes  Withheld | 
|--------------------- |  | ---------- |  | --------------- | 
|                      |  |            |  |                 | 
|Morton Collins        |  | 17,248,955 |  | 132,071         | 
|Matthew H. Knight     |  | 17,248,360 |  | 132,666         | 
|Grover C. Wrenn       |  | 17,244,388 |  | 136,638         | 

The terms
    of Richard J. Defieux, Herbert Lotman, Timothy S. Ramey and Stephen L. Waechter
    as directors continued after the annual meeting.


|Item
      6. | Exhibits                                                                                                                                                                                                      
|------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              |                                                                                                                                                                                                               
|10.1          | Exclusive
            Distribution and Supply Agreement, dated as of May 4, 2005, by and
            between the Registrant and the DuPont Qualicon division of E.I. du
            Pont
      de Nemours. * 
|              |                                                                                                                                                                                                               
|31.1          | Certifications of the Chief Executive Officer of Strategic Diagnostics Inc.
      required by Rule 13a-14(a) under the Securities Exchange Act of 1934                                                        
|              |                                                                                                                                                                                                               
|31.2          | Certifications of the Chief Financial Officer of Strategic Diagnostics Inc.
      required by Rule 13a-14(a) under the Securities Exchange Act of 1934                                                        
|              |                                                                                                                                                                                                               
|32.1          | Certification of the Chief Executive Officer of Strategic Diagnostics Inc.
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      Sarbanes-Oxley Act of 2002                   
|              |                                                                                                                                                                                                               
|32.2          | Certification of the Chief Financial Officer of Strategic Diagnostics Inc.
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      Sarbanes-Oxley Act of 2002                   

| 
|-
|*
| 
|

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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.                          
|----- | -------------- | --- | ----------------------------------------------------
|     
|Date: | March 16, 2006 | /s/ | Matthew H. Knight                                   
|      |                |     |                                                     
|      |                |     | Matthew H. Knight                                   
|      |                |     | President, Chief Executive Officer                  
|      |                |     | (Principal Executive Officer)                       
|     
|Date: | March 16, 2006 | /s/ | Anthony J. Simonetta                                
|      |                |     |                                                     
|      |                |     | Anthony J. Simonetta                                
|      |                |     | Vice President  Finance and Chief Financial Officer
|      |                |     | (Principal Financial and Accounting Officer)        

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