UNITED  STATES
                      SECURITIES  AND  EXCHANGE  COMMISSION
                            WASHINGTON,  D.C.  20549
                  ---------------------------------------------


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

                 FOR  THE  FISCAL  YEAR  ENDED  June  30,  2001

                                  FORM  10-KSB

                                 Annual  REPORT

   PURSUANT  TO  SECTION  13  OR  15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

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


                       Sangui BioTech International, Inc.
    -------------------------------------------------------------------------
         (Exact  name  of  registrant  as  specified  in  its  charter)

                                    Colorado
    -------------------------------------------------------------------------
               (State  or  other  jurisdiction  of  incorporation)


           0-29233                                         84-1330732
----------------------                      ------------------------------------
(Commission  File  Number)                  (IRS  Employer  Identification  No.)


         1508  Brookhollow  Drive,  Suite  354,  Santa  Ana,  CA  92705
--------------------------------------------------------------------------------
          (Address  of  principal  executive  offices)     (Zip  Code)

                                 (714)  429-7807
                   -------------------------------------------
            Registrant's  telephone  number,  including  area  code:




      Securities  to  be  registered  under  Section  12(b)  of  the  Act:

   Title  of  each  class                   Name  of  each  exchange on which
   to  be  so  registered                   each  class  is  to be registered
      -------------------                   ------------------------------
                 None                                        N/A


      Securities  to  be  registered  under  Section  12(g)  of  the  Act:

                         Common  Stock,  no  par  value

                                      Page1
<PAGE>

                 ----------------------------------------------------
                               (Title  of  class)


Check  whether  the issuer (1) filed all reports required to be filed by Section
13  or  15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter  period  that the registrant was required to file such reports), and (2)
  has  been  subject  to  such  filing  requirements  for  the  past  90  days.

                              Yes  [X]    No  [  ]

Check  whether  there is no disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-B  in  this  Form,  and  will not be contained, to the best of
Registrant's  incorporated  by  reference in Part III of this Form 10-KSB or any
                       amendment  to  this  Form  10-KSB.

                              Yes  [  ]    No  [X]

The  issuer's  revenue  for  the  fiscal  year ended June 30, 2001 was $567,007.

The  market value of the voting stock held by non-affiliates of the issuer as of
               September 25, 2001 was approximately  $10,354,613.

   The number of shares of the common stock outstanding as of September 25, 2001
                                       was
                                   40,514,363.

                 Documents  incorporated  by  reference:   None.


         Transitional  Small  Business  Disclosure  Format  (check  one)
                              Yes  [  ]    No  [X]

   Part III of this Form 10 KSB is incorporated by reference to the Registrant's
definitive proxy statement, which is expected to be filed within 120 days of the
end of the Registrant's fiscal year ended June 30, 2001.

FORWARD  LOOKING  STATEMENT

This  Annual  Report contains forward-looking statements concerning, among other
things,  the  Company's  prospects  affecting  our  potential  and  our business
strategies.

These  forward  looking  statements  involve  risks  and  uncertainties.  Actual
results  may  differ  materially  from  those  predicted  by the forward-looking
statements  because  of  various  factors  and  possible events, including those
discussed under "Risk Factors". Because these forward looking statements involve
risks  and  uncertainties,  actual  results  may differ significantly from those
predicted  in  these  forward  looking  statements.  These  statements  may  be
accompanied  by  words  such  as  "believe,"  "estimate,"  "project,"  "expect,"
"anticipate,"  or  "predict"  that  conveys  the uncertainty of future events or
outcomes.  These  statements  are based on assumptions that the Company believes
are  reasonable;  however, many factors could cause the Company's actual results
in  the  future  to  differ  materially from the forward-looking statements made
herein  and  in  any other documents or oral presentations made by, or on behalf
of,  the  Company.  Important factors which could cause actual results to differ
materially  from  those in forward-looking statements include, among others, the
ability  to  obtain  additional  financing,  which  is  not  assured;  rapid
technological  developments  and  changes;  problems  in  developments  of  the
Company's  products;  price  and  product  competition  by  competitors; general
economic  conditions;  and  factors  discussed  in  the  Company's  SEC filings.


                                      Page2
<PAGE>
PART  1

ITEM  1.  DESCRIPTION  OF  BUSINESS

HISTORY

       Sangui  BioTech,  Inc.  ("SBT") was incorporated in Delaware on August 2,
1996,  and  began  operations  in  October  1996.  In  August  1997,  Citadel
acquired one hundred percent (100%) of the outstanding common shares of SBT, and
as  a  result,  SBT  became a wholly-owned subsidiary  of  Citadel.  Thereafter,
Citadel  Investment  System  Inc,  a  publicly held company, changed its name to
Sangui BioTech International, Inc. Sangui BioTech International Inc. is referred
in  this  report  as  the Company or SGBI. The Company's business operations are
conducted  through  four  subsidiaries:  SBT,  SanguiBioTech  AG  ("Sangui AG"),
GlukoMediTech  AG  ("Gluko AG"), and Sangui Biotech Singapore Pte Ltd.  ("Sangui
Singapore").

       SBT  is  principally  engaged  in  the  development  and  manufacturing
of  immunodiagnostic  kits,  which  are  sold  by  SBT  in  niche markets in the
United  States  and  Europe.  SBT  is  located  in  Santa  Ana,  California. The
California  laboratory  facility,  approximately  3,360  square  feet,  is
devoted  to  immunodiagnostic  research,  development,  manufacturing,  and
marketing,  as  well  as  the  Company's  administrative  functions.

     Sangui AG was established and organized under the laws of Germany in Mainz,
Germany,  on  November  25,  1995.  Sangui  AG  is in the business of developing
hemoglobin-based  artificial  oxygen  carriers  as  blood volume substitutes and
blood  additive  and   products  thereof.  The  officers  of  Sangui  AG  are
Professor  Wolfgang  Barnikol,  M.D.,  Ph.D.,  Sieglinde Borchert, Ph.D., Harald
Poetzschke,  M.D.  and  Detlev  Freiherr von Linsingen, attorney. The members of
Sangui  AG's  supervisory  board  are  Professor Joachim Lutz, M.D., Dora Malek,
attorney,  Oswald  Burkhard, M.D., Ph.D., Cornelius Grau, businessman, Professor
Dietrich  Gronemeyer,  M.D.  and  Doris  Barnikol,  Ph.D.

     Gluko  AG  was  established  and  organized  under  the  laws of Germany in
Mainz,  Germany,  on  July  15,  1996.  Gluko  AG  is  developing  a  long-term
implantable  glucose  sensor, by-products thereof, and sensors.  The officers of
Gluko  AG  are  Professor  Wolfgang  Barnikol,  M.D., Ph.D., Sieglinde Borchert,
Ph.D.,  Kai  Zirk, engineer, and Detlev Freiherr von Linsingen, attorney-at-law.
The  members  of Gluko AG's supervisory board are Professor Dietrich Gronemeyer,
M.D., Dora Malek, attorney-at-law, Oswald Burkhard, M.D., Ph.D., Cornelius Grau,
business  man,  Professor  Joachim  Lutz,  M.D.  and  Doris  Barnikol,  Ph.D.

     Since  April  1998,  the  facilities  of  Sangui AG and Gluko AG, about 800
square  meters,  are  located on  the  premises of the Forschungs- und
Entwickungszentrum of the University of Witten/Herdecke,  Witten,  Germany.

     Sangui  Singapore  was  incorporated  in  Singapore  on  May  15,  1999.
Sangui  Singapore  is  the  Asia regional office for the Company and is expected
to  be engaged in the business of carrying out research and development projects
as  well  as  animal  experiments  in  conjunction  with  the  German
subsidiaries.  The  premises  of  the  company,  about  350 square  meters,  are
located  in  the  Science  Park  II,  Gemini  Building,  Singapore.

     On March 30, 2000, the Company acquired all the outstanding common stock of
Felnam  Investments,  Inc.  ("Felnam").  The  transaction was funded through the
issuance  of 100,000 shares of the Company's stock valued at $0 per share due to
the  Company  treating the transaction as a recapitalization of the Company.  In
conjunction  with  the transaction, the Company incurred approximately $ 180,000
of  transaction  costs  which  were  charged  to  operations.

    To  date,  neither  SGBI  nor  any  of  its  subsidiaries has had profitable
operations.  The  Company  has never been profitable and, through June 30, 2001,
the  Company's accumulated deficit exceeded $11.6  million.  The Company expects
to  continue  to  incur  substantial  and  increasing  losses  over at least the
next  several  years  as  it  expands  its  research  and  development  efforts,
testing  activities  and

                                      Page3
<PAGE>
manufacturing  operations.  All  of  the  Company's potential  products  are  in
development  except  for the immunodiagnostic test kits.  The  Company  will
need  to obtain  substantial  additional  capital  to fulfill  its  business
plan.

BUSINESS  OF  THE  COMPANY

     The  Company's  mission  is  the development of novel proprietary products.

     The  special  focus  of  Sangui  AG  is  on  developing  oxygen  carriers
capable  of  human organ support in cases of acute and chronic lack of oxygen or
blood loss due to surgery, accident, arterial occlusion, anemia or other causes.
The  Company  seeks to develop and commercialize such artificial oxygen carriers
with  blood  volume  substitute/blood  additive  technologies  by  reproducibly
synthesizing  polymers  of  defined  molecular  sizes. The Company also develops
oxygen  carriers  for external application in the medical and cosmetic fields in
the  form  of  jellies  and  emulsions  for  the  regeneration  of  the  skin.

The  second  important  project  pertains  to  Gluko  AG's long term implantable
glucose  sensor for  day  and  night  monitoring  of  a patient's glucose level.
The project is designed  to  obviate  the  need  for  persistent  blood sampling
and  to  provide  required  information  on  a  continuous  basis,  which  could
minimize the harmful effects  of peaks  and troughs in the patient's blood sugar
level.

     SBT  has completed the development of nine in vitro diagnostics kits.  Five
products  have  been  cleared  for  marketing by  the  United  States  Food  and
Drug  Administration  ("FDA").  The  other  four  kits  were  sold overseas with
Certificate  of  Exportability  from  the FDA.  In December, 2000, the Company's
only competitor in the CDT business, Axis/Shields, a Norwegian Company purchased
by  Shields  Diagnostics of United Kingdoms, filed a lawsuit against the Company
for  alleged  infringement  on  a U.S. patent held by Axis Biochemical ASA.  The
Company has reached a settlement with Axis/Shields and agreed to discontinue the
sales  of  the  Company's  CDT  product, trade-marked ChronAlco ID CDT test kit.
Sales  related  to  this  test  kit totalled $312,000 and $279,000 for the years
ended  June  30, 2001 and 2000, respectively.  The Company has since re-designed
its  CDT  product,  called  ChronAlco  ID II CDT test kit, to resolve the patent
conflict.  The Company has since sold the new version of CDT kit, i.e. ChronAlco
ID  II CDT test kit, to its distributors and customers.  There is no significant
loss  or  gain  of  the  Company's  CDT  business.

ARTIFICIAL  OXYGEN  CARRIER

     There  are  several  products  in  development  that  are  polymers  of
natural hemoglobins with oxygen carrying abilities similar to native hemoglobin:

     The Company seeks to develop and commercialize proprietary artificial blood
volume  substitute/artificial  oxygen  carrier  technologies  by  synthesizing
reproducible  polymers  of  defined  molecular  sizes. The experiments completed
in  the  Company's  laboratories  demonstrated that it is possible to polymerize
hemoglobins  isolated  from  pigs  resulting  in  huge  soluble  molecules,  the
so-called hyperpolymers. In August 2000 the Company  finalized  its  work on the
pharmaceutical  formulation  of  the  oxygen  carrier  for laboratory  scale. In
February  2001  a pilot production in a laboratory scale has been carried out in
the  Company's  clean  room.  At  present  the Company is working on the upscale
process.

Blood  Volume  Substitute
----------------------------------

     The  need  for  blood volume substitutes is growing because of: (i) reduced
willingness  of  the  population to give blood; and (ii) contamination of donors
with  HIV  and  hepatitis  viruses.  The  worldwide  market  for stored blood is
estimated  to  total  about  US  $  5  billion  per  year.

     Invasive  surgery,  resulting  from  such  causes  as  transplantation  or
accidents, can result in substantial loss of blood. In such circumstances, blood
volume  has  to  be  substituted to avoid shock. Blood substitution must be done
with  an  isoncotic solution that has the same colloid-osmotic pressure as blood

                                      Page4
<PAGE>
plasma.  Such  blood  volume  substitutes  are  called "plasma expanders". These
expanders  use  macromolecules  like  polysaccharides or gelatin to generate the
oncotic  pressure.

Blood  additive
-------------------

     In  cases  where  the  native  blood oxygen carrier system does not deliver
enough  oxygen  to  tissues  of the heart, brain, extremities, kidneys and other
organs  or  to  cancer  tumors,  a  critical clinical situation arises requiring
another  oxygen  carrier  strategy.  In  these cases, the patients do not have a
blood  volume  deficiency,  but suffer from an oxygen deficiency.  To compensate
for  this  oxygen  deficiency,  an  artificial oxygen carrier must be introduced
into  the  circulatory  system  and  this additive must have no influence on the
oncotic  pressure,  i.e., it must have a negligible oncotic pressure as compared
to  normal,  which  is  about  30hPa.  Sangui  AG  has  polymerized  various
hyperpolymers  in  small  quantities,  as  described  above with characteristics
such  as  sufficiently  low  viscosity  and a negligible oncotic pressure at the
desired  concentration  and  desired  hematocrit  concentration.

Small  animal  exchange  experiments with artificial oxygen carriers carried out
by  the  Company  have  demonstrated  that  these carriers are very effective in
oxygen  transport  already  in  small concentrations within the blood plasma and
that  they  show  a  synergistic effect with native transport  systems.  Also it
was  possible  to  synthesize  hyperpolymeric  oxygen  carriers  which  exhibit
almost  no  immunogenicity  in  mice  sensitized  to  hemoglobin.  Experiments
conducted  in  alert  rats with a magnetometric  method  appear  to  demonstrate
that  the  hyperpolymer  hemoglobins irritate the reticulo-endothelial system of
the liver far less than emulsions of fluorocarbon  or  encapsulated  hemoglobins
solutions.


The  management  of  Sangui  AG believes that the additive feature of the oxygen
carrier  under  development,  could potentially address a market possibly  equal
to  or  larger than that of blood volume substitutes.  It has been reported that
the  oxygenation  of  solid  tumors  makes  them  more  sensitive  to  radio and
chemo therapy.  Management  believes  that its blood additive  technologies, for
which  there  are no known competitive products, could be very attractive in the
medical  field.    Therefore,  the development of an artificial  oxygen  carrier
has  become  the  primary  focus  of  the  management of SGBI.  However,  such a
market  projection  for  plasma  expanders  and  additives, as therapeutics  for
oxygen deficiency disorders, cannot be ascertained, since such products  are not
available  in  the  marketplace.

     If oxygen carriers can be used successfully in the cancer field, this could
be  expected  to  speed  the  approval  process  for  the  use  of  blood volume
substitutes  based on similar technologies.  However, there can be no assurances
that  these  applications  will be approved by the various government regulatory
agencies,  including  but  not  limited  to the FDA in the United States and the
similar  agencies  in  Germany  and  other  Western  European  countries.

     It  should  be  noted  that  this  specialized  or  niche  application,  if
successfully developed, would have a market potential substantially smaller than
the  overall  market  of  artificial  blood volume substitute or the therapeutic
market  (with  oxygen  carrier  as  an  additive  or therapeutic agent) for more
widespread oxygen deficiency disorders such as myocardial infarction and stroke.

      Sangui  AG has received a grant from the government of the German state of
Northrhine-Westphalia  in  an amount of more than US $2,000,000 which covers 40%
of  the  estimated  costs  of  the  research and pre-clinical development of the
Company's  polymer  hemoglobin  based  artificial  oxygen carrier. Sangui AG has
received  installments  of approximately  1,880,000  German Marks (approximately
US$818,000)  from  the  grant  to  reimburse 40% of its research and development
expenses  and  related  capital  expenditures in  the  period  from  April  1998
through  June  2001.


Oxygen  carriers  for  regeneration  of  the  skin
-----------------------------------------------------
                                      Page5
<PAGE>

The  healthy  skin  is supplied with oxygen, both through the supply from inside
and also through diffusion from outside, in which connection with the proportion
of  the  supply  of  the  exterior  cell layers of the upper skin, the so-called
Stratum  germinativum, located directly beneath the Stratum corneum, is normally
around  50  percent.  Lack  of  oxygen  of  the  skin  will  cause  degenerative
alterations  of  various extent, ranging from surface damage to open wounds. The
cause  for the lack of oxygen may be the normal aging process, but also burns or
radiation.  Impairment  of  the  blood  flow,  for  example  caused  by diabetes
mellitus, can also lead to insufficient oxygen supply and resulting skin damage.

The  new  preparations  under  development  by  Sangui  AG have been designed to
contribute  to  supporting  the  regeneration of the skin in the case of lack of
oxygen.  In  addition  to  the therapy, these preparations are also intended for
purposes  of prevention, among others for the improved oxygen supply of the skin
in  the  course  of  a  radiation  therapy, or in the case of an acne treatment.

The  basic  idea  of  the mode of effectiveness consists of the mechanism of the
facilitated  oxygen  diffusion. The oxygen carriers are intended to increase the
diffuse  flow  of oxygen from outside, when having been worked into the exterior
cell  layers.

GLUCOSE  SENSOR  AND  TECHNICAL  BETA-CELL

     Over  5%  of  the  inhabitants  of the industrialized countries suffer from
diabetes.  About  one  tenth  of  these  patients  are  afflicted  with diabetes
mellitus  Type  1,  which  means  they  are dependent for life on the parenteral
application  of  insulin.  In addition, about 10 % of the Type II diabetics also
get  insulin  dependent  during  the  course  of  their  illness.

     Diabetes Type I patients suffer from the irreversible destruction of the so
called  beta cells of the pancreas (absolute insulin deficiency); the beta cells
normally  produce  the  hormone,  insulin.

     Diabetes  Type  II  patients suffer from a relative insulin deficiency; the
insulin  receptors  are   insensitive  to  the  hormone.

     The  central  problem of the diabetic is to properly and constantly measure
the  blood  glucose  level,  ideally  24 hours a day, and thereby to know how to
adjust,  quantitatively,  the  glucose  level  in  the  tissues by administering
insulin,  for example, in order to stabilize the blood sugar level at its normal
value  of  1  g/L.  Only  a rough adjustment may be achieved during waking hours
when  the  patient  is  able  to  sample  a  drop  of  blood from the fingertips
periodically,  and  to determine the level of glucose with the aid of dipsticks.

     Nevertheless,  the  permanent  sampling  of  blood  and  the need to inject
insulin  deteriorate  the  quality of life.  An enormous danger for the diabetic
patient  arises  when  he is asleep, i.e. one third of his life time, when he is
neither  able to sample the glucose level in his blood system, nor to adjust it,
if  necessary.

     Furthermore,  as  shown  by  measurements  using a short time (only 3 days)
glucose  monitoring system based on the enzymatic detection of glucose, (even in
patients who seem to be well adjusted) dramatic changes of the blood sugar occur
during  night  and  day.

     Infectious  diseases  and  vegetative  disorders  are  also  reasons  for
uncontrollable  disturbances  and  variations  of the glucose level, even during
waking  hours.  Those  are  very  dangerous  for  the patient as it is explained
below:

     A  glucose level which remains too low over long periods of time results in
damage to organs with high metabolism, such as the brain.  Brain cells which die
cannot  be replaced.  If a glucose level remains too high, the typical long term
sequelae  of  Type I diabetes occur, such as peripheral circulatory deficiencies
resulting in the need for amputation of extremities and detachment of the retina
resulting  in  blindness.

                                      Page6
<PAGE>

     Accordingly,  it  should  be  of  substantial  advantage  to  be  able  to
constantly  and  automatically monitor the blood sugar level of the patient.  To
do  so,  the glucose monitor must stay at or in the patient for a long period of
time  making  the  procedure  cost  effective  and  efficacious.  Problems
ofinfection,  comfort,  and  the  risk  of  detachment  should  all  favor  a
permanently  implantable  sensor.

     The  device  being  developed by the Company communicates via radio signals
with  a  control panel/modem outside  the  body  and  supplies  the patient with
the  necessary  information.  In  combination  with  a  dosage  pump for insulin
(internal  or  external)  an  artificial  beta-cell  for  insulin  dependent
diabetics  could  be  realized.  Until  now,  an  implantable glucose sensor has
been the missing link in the development  of  a  beta  cell  for  the  automatic
dispensation  of  insulin.

     German  insurance  companies  have  estimated  the  possible  savings for a
patient  with  Type  I  diabetes  to  range from between approximately $6,000 to
$8,000  per  annum.  Based on a unit price of about $7,000, the market potential
for  the  developed  countries could amount to several billion dollars per year.

     The  following  experimental  results  were  obtained in furtherance of the
Company's  objective of developing an implantable glucose sensor on the basis of
physical  measurement  systems:

*    polarimetric,  infrared  and  refraktometric  measurements  of  glucose
concentrations  in  the  physiological  range  resulted  in  electronic signals,
sufficiently  high  for  further  processing
*    glucose  is  responsible  for  at  least  95%  of  the  optical rotation of
ultrafiltered  blood  plasma
*    the  concentration of glucose in ultrafiltrated tissue fluid equals that of
blood
*    the  level  of glucose in an implanted ultrafiltrating hollow fiber did not
drift,  in  the  sense  of  decreasing,  over  a  period  of  three  weeks
*    the  adjusting  time  of the glucose level in the hollow fiber is about ten
minutes  and  is  also  stable  over  a  period  of  three  weeks

     Gluko  AG presented a first model of a long-term implantable glucose sensor
at  the  Duesseldorf  MEDICA Show in November 1998.  The Company demonstrated an
improved  model  comprised  of  a  miniaturized  optical  system  (which
includes  a  light  source,  diodes,  light  detectors  and an integrated sensor
electronics  which  has  not  been  finally miniaturized yet) at the Duesseldorf
MEDICA  Show  in  November  1999.  In  August 2000, the Company stated a further
development  of  its  concept  for  the  long  term  implantable  glucose sensor
which  offers  the  Company  an  additional  possibility  to  also  develop  an
"insertable"  sensor  for  the  initial  clinical  adjustment  of diabetics.  In
contrast  to  an  implanted  sensor this  is completely under the skin and has
no connection at all through the skin to  the  outside, an inserted sensor is
"pierced" through the skin.  In contrast to the implantable sensor, the
functional capacity does not depend on a complete miniaturizing  of  the
electronic  system.  Gluko's engineers have advanced the construction  of  the
sensor in such a way that in future all moveable mechanic parts can be
completely dispensed.  Since the final mechanically moveable sensor component  -
a  micro  pump  with  a  relatively  high energy demand - has been omitted,  the
sensor  might become safer in operation.  The change might have a positive
effect  on  the  sensor's  energy  supply.

In  September  1999,  Gluko  AG  received  a  grant  from  the  German  state of
Northrhine-Westphalia  in  the  amount  of approximately $2,000,000 for the long
term implantable glucose sensor.  The grant will cover 40% of the budget project
cost  from  December  1998  to  November  2001.  Gluko  AG  has  already
received  installments  of  approximately  800,000  German  Marks (approximately
$365,000)  from  the  grant  to  reimburse  40% of its relevant expenses  in the
period  from December 1998 through June 2001.  The grant requires the  Company's
economic  ability  to  cover 60% of the project costs on its own. An  additional
condition  of  the  grant  is  that if the product is  developed before 2003, it
must  be  produced  in  the  German  state  of  Northrhine-Westphalia.

BY  PRODUCTS

     The  knowledge gained during developing the glucose sensor, has resulted in
the development of two by-products based on the measuring systems of the glucose
sensor:

                                      Page7
<PAGE>

*     a high precision analytical micro system for monitoring and controlling of
(bio)chemical  processes  in  biotechnology,  chemistry  and Pharma industry and
*     a  polarimeter/spectrometer  designed  for  laboratory  work

     During  his  work  at  the  University  in  Mainz,  Germany,  one  area  of
Professor  Barnikol's  research  focused  on  respiration  processes.  From this
research  work  Gluko AG's  projects  in  the  field  of  anesthesia,  intensive
care  and  sleep  diagnostics  are  derived.  The  product  line  comprises
monitoring  devices  as:

*     a  sensor  tube
*     a  sensor  connector  for  new  borns
*     a  nose  sensor
*     a  main  stream  respiratory  oxygen  sensor

     Further  by  products  of  the  Gluko  AG  are:

*     an  oxygen  sensor  device  for  the  skin  (skin-oxy-meter)
*     an  equipment  for  small  animal  (rats  and  also  mice)  experiments
*     a  respiratory  microvalve
*     a  micro  respiratory  flow  sensor


IMMUNODIAGNOSTIC  TEST  KITS

     The  Company  has  developed  a  number  of  immunodiagnostic  products
including  the  niche  Carbohydrate-Deficient  Transferrin  (CDT)  test kit. The
Company  plans  to  attempt  to  increase  the  sales  of  its  products  by (1)
introducing its products to additional distributors covering geographic markets,
which  the Company currently has  no  coverage, and (2) offering the products to
established  distributors  and  larger  companies  who  have  established
distribution  and  worldwide  marketing  network  at  significant  discounts.

     SBT  has  completed  the  research  and  development of certain health care
products  which  are  intended  to  be  produced,  promoted,  marketed, and used
world-wide.  SBT's  products  consist  of:  (i)  a  CDT-  test  kit,  which  is
used to detect chronic alcohol abuse; (ii) a urinary  micro-albumin  test, which
is  a  diagnostic  test  to  detect  small amounts of  proteinuria  in  diabetes
mellitus;  (iii) two different kits  for the measurement of Parathyroid Hormone,
which  is a diagnostics adjunct to  the  differential  diagnosis  of  hyper- and
hypo-parathyroidism.  ;  (iv)  ACTH  (Adrenocorticotropic  Hormone),  a  niche
endocrine  test  for  adrenal  cortex  function;  (v)  Calcitonin,  another
endocrine test for a rare disease; (vi)Erythropoietin  (EPO), a test for certain
types  of  anemia; and (vii) TSH (Thyroid Stimulating Hormone or Thyrotropin), a
common  and  popular  thyroid function test, but  faced  with  over  forty  (40)
competitors'  products  on  the  same  test.

     All  the  products  are  based  on  the microplate format, except  for  the
Parathyroid  Hormone  (PTH)  IRMA  and  TSH  IRMA. This microplate or microtiter
platform was chosen, because microplate readers are quite common in the clinical
and  hospital  medical  laboratory  setting.  All the test kits, except TSH, are
targeted  at  the  niche  laboratory  market.  Nonetheless,  due to the aging or
maturation  of  the  in  vitro  diagnostics  industry,  unprecedented  fierce
competition  coupled  with  healthcare  cost  containment  has  resulted  in the
appearance  of  the  previous  niche  tests  on  the  menu  of  proprietary
instrumentation  made  by  billion dollar well-capitalized  companies  owned  by
the  world-class pharmaceutical companies.  At  present, the only product, which
truly  can  be  considered  "niche"  is  the  CDT.

*   CDT  (Carbohydrate  Deficient  Transferrin).  Has  been reported as the most
reliable  test for identification of chronic alcohol abuse. The worldwide market
potential  is  estimated  at  between  US  $1.5  million  to  US $ 2 million per
annum.  The  market  potential  has  been reduced, due to the discontinuation of
reimbursement  in  Germany.  This  test  uses  microplate  format  Turbidimetric
Immunoassay  with

                                      Page8
<PAGE>
prepackaged  chromatography  columns.  The  SBT  CDT  test  kit,  trademarked as
ChronAlco  I.D. in Germany, has been found to be superior to the product made by
the  only  other  manufacturer  (competitor)  by  two leading German scientists.
However, the Company's only CDT competitor, Axis/Shields has changed its product
such  that  the Axis/Shields new product is quite similar to the Company's.  The
Company has no patent or patent application for its CDT assay.  About 55% of the
product  sales  realized  by the Company were derived from this product for  the
fiscal  year  ended  June  30,  2001.

*   Intact-PTH  on  the  ELISA  Microplate format (2nd Generation). This product
has  been cleared under the 510(k) regulations by the FDA in late December 1997.
It  has  one  distinct advantage over the two other ELISA microplate PTH kits on
the market. It is faster and easier, with performance characteristics similar or
superior  to the competitors.  Nonetheless, the sales increase has been gradual.
The  management  believes  that  the  lack of significant sales is mostly likely
due  to  the  current  market  trend  of  complete  turn-key  (hands  off  or
complete) automation in the laboratory business, dominated by divisions of large
pharmaceutical  companies.

*    Intact-PTH  IRMA  (ImmunoRadioMetricAssay).  The  radioactive  version will
compete  mainly  based  on price. The worldwide market potential for all the PTH
kits,  with  over  12  competitors, is estimated at   US $ 50 million per annum,
dominated  by  large companies with proprietary fully automated instrumentation.

*    Microalbumin  quantitative  test via TIA. Highly sensitive determination of
small  quantities  of  albumin in urine. Early detection of microalbuminuria can
prevent  subsequent  irreversible  renal  impairment  in patients with Diabetics
Mellitus.  The  worldwide  market  potential  is  estimated  at US$5 million per
annum.  However,  the  Company  has  derived negligible sales for the last three
years  (since  the  completion  of  product  development on this product) due to
market  dominance  of  large  companies,  such as Roche/ Boehringer Mannheim and
Beckman  Instruments,Inc.

*    ACTH  (Adrenocorticotropic  Hormone)  ELISA.  This  product is the only 2nd
Generation  ELISA Kit in the market. This test is intended for the assessment of
adrenal  cortex  function such as Addison Disease and the differential diagnosis
of Cushing Syndrome. The estimated market potential size is  US $ 5 million  per
annum.

*    Calcitonin  ELISA.  This  product  is the only ELISA in the market. This is
another  calcium  metabolism test. The test volume has been increasing in Europe
and  the  US.  The  estimated market potential size is US $ 1 million per annum.

*    Erythropoietin  (EPO)  ELISA.  Quantitation  of  serum  erythropoietin
concentration  serves as a diagnostic adjunct in determining the cause of anemia
or  erythrocytosis  (an  increase  of  red  blood  cell mass). Also, Amgen, Inc.
manufacturers the drug Erythropoietin, trade-name Epogen.  Hence, it is believed
that  there  is  a small market for drug monitoring as well.  However, there are
several  competitors  including  at  least  one  competitor with fully automated
system.

*    TSH  IRMA.  TSH  (Thyrotropin) is a very useful, if not the most important,
screening  test  for  thyroid  function assessment.  However, there are at least
forty  kits  in  the  market-place, so this product is not a niche product.  The
Company's  kit  is  based  on  the  ImmunoRadioMetricAssay  and  was  originally
developed  specifically  for  sale  to  a  small  German  distributor,  who  had
overestimated  its  ability  to  sell  significant  quantities  in  Germany.

The  majority  of  the  sales  and repeat orders are from Germany and the United
States.

To  date, the Company's efforts to sell its products to emerging markets such as
the  mainland  China,  Hong  Kong  and  Taiwan  have  been  unsuccessful and the
sales  to  date  have been  very  limited.  At  present,  the Company intends to
comply with the regulations published by the Notified Bodies of the CE (European
Community)  for  in  vitro  diagnostic kits.  The Company plans to implement the
requirements  in compliance with the CE Mark regulations  before the deadline in
2003.

                                      Page9
<PAGE>

DEVELOPMENT  PROCESS

ARTIFICIAL  OXYGEN  CARRIER

     In December 1997 the Company decided that porcine hemoglobin should be used
as basic material for its artificial oxygen carriers.  In March 1999 the Company
came  to  the  fundamental  decision as to which hemoglobin hyperpolymer will go
into  preclinical  investigation  and that glutaraldehyde will be taken as cross
linker  and  pyridoxalphosphate as effector.  The fine adjustment of the formula
of  the  artificial  oxygen  carriers  -  optimized  for  laboratory scale - was
finalized  in  Summer 2000.  This fine adjustment comprises different conditions
like  concentrations  of glutaraldehyde and pyridoxalphoshate, incubation times,
and  temperature.

     In  laboratory  scale  the manufacturing is set out as follows: First, pure
porcine  blood  must  be  obtained  from slaughterhouses.  The blood must not be
contaminated  with  endotoxins  released  by  bacteria  or  other  contaminating
material.  Therefore, it must be guaranteed that the pigs, of which the blood is
taken,  were  neither ill nor had received medicine.  The state of health of the
pigs has to be contractually fixed with the pig breeders.  In order to determine
and  prove the purity of the source material as well as that of intermediate and
final  products,  an  analytic  department  has  been  set  up.

     After  release of the hemoglobin molecules from erythrocytes, about fifteen
molecules  are  cross-linked  to  a hyperpolymer molecule by a chemical reaction
using  glutaraldehyde  as  a  cross-linker.  This hemoglobin hyperpolymer is the
artificial  oxygen  carrier.  An advantage of the hyperpolymer structure is that
it  prevents  the oxygen carrier from secreting via the kidneys which would have
harmful  effects  on  the  patients.

     Pyridoxalphosphate  is  used  as  an  effector  by which the oxygen binding
properties of the hemoglobin hyperpolymer molecules, for instance the functional
oxygen  transport capacity, are adjusted properly.  During all preparation steps
defined conditions have to be chosen and maintained carefully (e.g. temperature,
pH  of  the solutions).  After preparation of the oxygen carrying hyperpolymers,
they  are  separated into a high molecular fraction and a low molecular fraction
to  obtain  the  blood  additive  and the blood volume substitute, respectively.

    At  this  point in time, the Company is developing the upscaling process for
preparation  of  a  large  amount of oxygen carrier for preclinical and clinical
trials.  According  to  regulatory  requirements, all drugs have to pass through
preclinical and clinical trials before approval (e.g. FDA approval: Federal drug
administration)  and  launching  to  the  market.  In  preclinical  trials,
experiments using animal models and tissue culture models have to be carried out
to  evaluate  the  efficacy  and  safety  of the developed drug.  Phase I of the
clinical  trials,  so  called  "human pharmacology" comprises the application of
the  drug in healthy volunteers.  Phase  II  is called "therapeutic explanatory"
and  comprises trials with  a  small  number  of  ill  patients.  Phase  III  is
called  "therapeutic  confirmation"  and  comprises  trials  with  a  larger
number  of  ill  patients.

     Management  of  the  Company  believes  that  the European and FDA approval
process  will  take  at  least  several  years.

IMPLANTABLE  GLUCOSE-SENSOR  AND  TECHNICAL  BETA-CELL

     The  glucose  sensor  under  development  by  Gluko AG is based on physical
methods  for  the  determination  of  the  diabetic's  glucose  level.  Three
physical  measurement  systems  have  been  developed  for the glucose detection
system:  a  polarimetric,  an  infrared  system,  and  a  refractometric system.
These  systems  have  to  be proved to be specific for in vitro determination of
glucose  levels in the  physiological  range  of  50  to  500  milligram glucose
per  decilitre.  At  present,  it  is  not settled which one of the systems will
be  used  in the first generation  of the sensor.  Gluko AG endeavors to install

                                     Page10
<PAGE>
two  independent  measuring systems  in  its  sensor to increase the specificity
and  accuracy  of  the  glucose  determination.

     The  sensor  will  be  implanted  into  the  subcutaneous fat tissue in the
stomach  area near the belly button.  The Company endeavors to develop a glucose
sensor  that might be implanted for a period of three to five years.  To protect
the  detection  system  inside the measuring chamber from large compounds of the
interstitial fluid, especially from proteins, and to increase the specificity of
the  system,  an  exchange  membrane  will  be  part  of  the  sensor.

     During  the  day, it is planned to send the measuring signal telemetrically
to  a  glucose  watch  which  the  diabetic  patient  will  carry  at his wrist.
During  the  night,  the telemetric signal will be sent to a receiver which will
monitor  the  glucose  level  and  warn  the  patient  of  hypoglycemia  and
hyperglycemia  acoustically.

     The  latest  further  development  in the sensor construction  provides the
additional  possibility  of  developing  also  an "insertable"  sensor  for  the
initial  clinical  adjustment  of  diabetics.  In  contrast  to  an  implanted
sensor  that is completely under the skin and has no connection  at  all through
the skin to the outside, an inserted sensor is so to speak "pierced" through the
skin  and  it has a connection to the outside.  The  insertable  sensor  of  the
Company  is  being  designed  to allow a continuous glucose  determination  over
several  days  and  to  exhibit  the same measuring principles  and  almost  the
identical  design  as  the  implantable  sensor.  In contrast to the implantable
sensor, the functional capacity does not depend on a complete  miniaturizing  of
the  electronic  system.  The  analyzing  unit  will  be outside  of  the  human
body  and  connected  by  cable  with  the  insertable  sensor.

     The  construction  of  the  glucose  sensor  has  been changed so that  all
moveable  mechanical parts can be completely dispensed  in an effort to increase
the  safety  of the sensor and to have a positive effect on the sensors'  energy
supply.

     According  to  regulatory  requirements,  all  medical devices have to pass
through  clinical  trials  before  approval  (e.g.  FDA  approval;  Federal drug
administration) and  launching  to  the  market.  Unlike  the  Company's  oxygen
carriers  that  are  classified  under  pharmaceutical products, glucose sensors
are  classified  as  medical devices and have a different approval process.  The
clinical  trials  for the  glucose  sensor  do  not  have  different  phases and
entails  doing  studies  immediately  with  diabetic  patients.

     Management  of  the Company believes that European and FDA approval process
will  take  at  least  several  years  for  the  implantable  glucose  sensor.


PATENTS  AND  PROPRIETARY  RIGHTS

     The  Company  has  the  policy  of  seeking  patents  covering its research
and  development  and  all  modifications  and improvements thereto.  The German
subsidiaries Sangui AG and Gluko AG have been granted 15 patents belonging to 14
patent  families.  Furthermore,  the  subsidiaries  have  applied for 37 patents
belonging  to  23  patent  families.



MARKETING  AND  DISTRIBUTION

     Other  than  the  immunodiagnostic  products,  the  Company  has  not  yet
manufactured  its  products  in  commercial  quantities.

SBT  markets  its  immunodiagnostic  products  through  a  distributor  in  a
particular  country.  The  products  are targeted at the smaller laboratories in
Western  Europe  and the United States, who may have insufficient test volume to
justify  the  installation  of  "turn-key"  fully  automated  proprietary

                                     Page11
<PAGE>
instrumentation  by  the  large  competitors.  It  also  includes end users like
independent  clinical,  hospital  or  physician  operated  laboratories.

     The  Company  sells  its  CDT  kits  mainly through one German distributor,
selling  directly  to  one  customer  in  the  US,  and  one  distributor
covering  Switzerland  and  Austria.  In  December,  2000,  the  Company's  only
competitor  in  the CDT business, Axis/Shields, a Norwegian Company purchased by
Shields  Diagnostics of United Kingdoms, filed a lawsuit against the Company for
alleged infringement on a U.S. patent held by Axis Biochemical ASA.  The Company
has  reached  a settlement with Axis/Shields and agreed to discontinue the sales
of  the  Company's  CDT  product,  trade-marked  ChronAlco ID CDT test kit.  The
Company  has  since re-designed its CDT product, called ChronAlco ID II CDT test
kit, to resolve the patent conflict.  The Company has since sold the new version
of  CDT  kit,  i.e.  ChronAlco  ID  II  CDT  test  kit,  to its distributors and
customers.  There  is no significant loss or gain of the Company's CDT business.

     The  Company has limited experience in sales  and  marketing  of  products.
In  general,  the distributor is required to commit to a minimum sales volume in
order  to  maintain  an  exclusive  position in a given  territory.  It  is  not
uncommon to provide a 30 to 50 % discount or even more from the product transfer
price.  The  distributor  typically  uses  the  margin  to  pay for the shipping
costs, its overhead, sales staff and keep the balance as profit.  To  date,  the
Company's  has  made  exclusive  distribution  agreements  in  the certain sales
territories,  i.e.  Austria,  Italy  and  Turkey.

     Two  customers  accounted  for  approximately  54%  of  sales  for the year
ended June 30,  2001. Four customers accounted to approximately 70% of sales for
the  year  ended  June  30,  2000.

      To  raise  its  profile,  the  Company  regularly  participates in various
medical and health related product exhibitions and trade fairs, for instance the
latest  Medica  2000  held  in  Duesseldorf.

GOVERNMENT  REGULATION

     SGBI  and  its  subsidiaries  are,  and  will  continue  to  be, subject to
governmental  regulation  under  the  Occupational  Safety  and  Health Act, the
Environmental  Protection  Act,  the  Toxic  Substances  Control  Act, and other
similar laws of general application, as to all of which SGBI believes it and its
subsidiaries  are  in  material  compliance.
     Because  of  the  nature of the operations of SGBI and its subsidiaries and
the  use  of hazardous substances and their ongoing research and development and
manufacturing  activities,  SGBI  and  its subsidiaries are subject to stringent
federal,  state  and  local  laws, rules, regulations and policies governing the
use,  generation,  manufacturing,  storage,  air  emission,  effluent discharge,
handling  and  disposal of certain materials and wastes. Although it is believed
that  SGBI  and  its subsidiaries are in material compliance with all applicable
governmental  and environmental laws, rules, regulations and policies, there can
be  no  assurance  that  the  business,  financial  conditions,  and  results of
operations  of  SGBI  and  its  subsidiaries  will  not  be materially adversely
affected  by  current  or  future  environmental  laws,  rules,  regulations and
policies,  or  by  liability occurring because of any past or future releases or
discharges  of  materials  that  could  be  hazardous.

     Additionally,  the  clinical  testing, manufacture, promotion and sale of a
significant  majority  of the products and technologies of the subsidiaries, and
to  a  much  less  extent  to SGBI, if those products and technologies are to be
offered  and  sold  in the United States, are subject to extensive regulation by
numerous governmental authorities in the United States, principally the FDA, and
corresponding  state  regulatory  agencies.  Additionally,  to  the extent those
products  and  technologies are to be offered and sold in markets other than the
United  States,  the  clinical testing, manufacture, promotion and sale of those
products and technologies will be subject to similar regulation by corresponding
foreign  regulatory  agencies.  In  general,  the  regulatory  framework  for
biological  health care products is more rigorous than for non-biological health
care  products.  Generally,  biological health care products must be shown to be
safe,  pure, potent and effective. There are numerous state and federal statutes
and  regulations  that  govern  or  influence  the testing, manufacture, safety,
effectiveness,  labeling,  storage,  record  keeping,  approval,  advertising,
distribution  and  promotion of biological health care products.  Non-compliance
with  applicable  requirements  can  result  in,  among  other  things,  fines,
injunctions,  seizures  of  products,  total  or  partial  suspension of product

                                     Page12
<PAGE>
marketing, failure of the government to grant pre-market approval, withdrawal of
marketing  approvals,  product  recall  and  criminal  prosecution.


COMPETITION

IMMUNODIAGNOSTIC  KITS

TYPE  OF  IMMUNODIAGNOSTIC  KIT                MAJOR   COMPETITORS

Intact-PTH on the ELISA Microplate format      Abbott  Laboratories
                                               Bayer
                                               Hoffman  La-Roche
                                               DPC
                                               Nichols  Institute  Diagnostics
                                               DSL  (Diagnostic  Systems
                                               Laboratories)
                                               Bio  Rad
                                               DiaSorin

Intact-PTH  IRMA                               Nichols
                                               IncStar
                                               DSL

ACTH  ELISA                                    Bayers
                                               DPC
                                               Nichols  Institute
                                               DSL
                                               CIS
                                               DiaSorin
                                               Euro  Diagnostics

Calcitonin  ELISA                              Nichols  Institute  Diagnostics
                                               DPC
                                               Mitsubishi
                                               DiaSorin
                                               DSL

CDT                                            Axis  Biochemical,
                                               ASA  (Axis/Shields)
                                               Hoffman-La-Roche (Distributor of
                                               one older Version of  Axis  kit)

Erythropoietin  ELISA                          R&D  Laboratories
                                               Nichols  Institute
                                               DLS
                                               DPC

 Microalbumin  quantitative test via TIA       BMC/  Hitachi
                                               Beckman
                                               DPC

     The  market  for  the  products  and  technologies of the Company is highly
competitive,  and  SBT  expects  competition to increase.  SBT will compete with
many other health  care research product suppliers, most of which will be larger
than  SBT.

                                     Page13
<PAGE>

     Some  of the competitors of SBT offer a broad range of equipment, supplies,
products  and  technology,  including  many  of  the  products  and technologies
contemplated  to  be  offered  by  SBT.  To  the  extent  that customers exhibit
loyalty  to  the  supplier that first supplies them with a particular product or
technology,  the  competitors of SBT may have an advantage over SBT with respect
to  products and technologies first developed by such competitors. Additionally,
many  of  the  competitors  of  SBT  have,  and  will  continue to have, greater
research  and  development,  marketing,  financial  and other resources than SBT
and, therefore, represent and will continue to represent significant competition
in  the  anticipated  markets of SBT.  As a result of their size and the breadth
of  their  product  offerings,  certain of these companies have been and will be
able  to  establish  managed  accounts by which, through a combination of direct
computer  links and volume discounts, they seek to gain a disproportionate share
of  orders for health care products and technologies from prospective customers.
Such  managed  accounts present significant competitive barriers for SBT.  It is
anticipated  that  SBT will benefit from their participation in selected markets
which,  as  they  expand,  may  attract the attention of the competitors of SBT.
There  can be no assurance that the Company will be able to compete successfully
in  these  markets.

     The  competition  in  the  US  $20  billion  diagnostic business is fierce,
mainly  dominated  by  the  large  pharmaceutical  and  larger  established
biotechnology  companies  such  as  Abbott  Laboratories,  Hoffman La Roche etc.

     For  its CDT kits, the Company's only competitor is Axis Biochemicals, ASA,
in Oslo, Norway which has entered into European and distributorship arrangements
with  Bio  Rad  Laboratories,  Inc.  and  Roche  Diagnostics,  a  division  of
Hoffman-La-Roche.   Large  competitors with complete automation with proprietary
instrumentation  have  offered  packaged  reagent  rental  programs to potential
customers,  for  which the use of instrument is not paid by the customers except
for  some  small  commitment  to  purchase  the  products.  These  large
companies  dominate  essentially  over 80% of the endocrine assay markets in the
developed  countries  such  as  the United States, Western Europe and Japan with
their  proprietary fully automated instruments. SBT can only attempt to increase
the  sales  for  its  endocrine  products  to  small  laboratories  through  its
distributors  and  seek  to  enter  emerging  markets in Latin America, Asia and
Eastern Europe, where the need for endocrine has been traditionally minimal, due
to  the  prevalent  poverty  and  in  some  cases  over-population.

BLOOD  VOLUME  SUBSTITUTE

     In  the  business  of  blood  volume  substitute,  there  are  at least six
large companies  that  have  obtained  substantial capitalization either through
equity funding or through acquisition by  large  corporations,  such  as  Baxter
International  acquiring Somatogen. Other future competitors are Hemosol Inc. in
Canada,  Northfield,  Alliance  Pharmaceutical  and  Biopure  Corporation.
Nearly  all  these  companies  have  already  made strategic marketing alliances
with  large companies with  established  marketing  and  distribution  channels,
such  as  Johnson  and  Johnson,  Eli  Lilly  and Company, and Pharmacia/Upjohn.
Most of these companies have already proceeded Clinical Trial Phase III with the
FDA.    Biopure Corporation has received approval in South Africa to treat acute
anemia in surgery patients.  To be competitive, the  Company  is  attempting  to
develop  well-characterized  and differentiated products  in unique formulations
which  could  capture  some  of  the  market  as  a  new  generation  of  oxygen
carrier/additives  to  address  the  markets  of  artificial  blood  volume
substitutes  as  well  as  the  potential  new market of therapeutics for oxygen
deficiencies.

BLOOD  ADDITIVE

     In  the  business  of  blood  additive,  Sangui  AG  is  not  aware  of any
existing  or  potential  competitors.

GLUCOSE  SENSOR

     The  Company  is  not  aware  of  any  glucose  sensing  implants currently
available .  In the last few years  different  approaches  have  been  chosen by
companies  to  reduce  the  pain caused  by  the  finger  pricks  necessary  for
the  determination  of  the  blood  glucose.  Cygnus  Inc.,  Redwood  City,
California,  USA,  for  example,  has  been  developing  a device which collects
interstitial  fluid  at  the  diabetic's  wrist  by use  of  electrical  energy.

                                     Page14
<PAGE>
Cygnus  applied  for FDA approval. and is currently engaged in  further  testing
of  the  device.  On  devices  close  to  an  implantable  glucose  sensor,
MiniMed  Inc.  of  Sylmar,  CA  has  submitted  to  FDA  a  Notification  on  a
Continuous  Glucose  Sensor  For  Diabetes  in  December,  1997.  MiniMed  Inc.
announced  its  intention  to  produce  and market this product.  It expects  to
utilize  the sensor for a series of products, the first two of which will  be  a
physician  diagnostic  device  and an alarm product to warn people with diabetes
of  dangerously  low  glucose  levels.  However,  the reagents for the MiniMed's
sensor  are  stable  for  only  three days.  By contrast to the objective of  an
implantable  long term glucose sensor by Gluko AG, the MiniMed's sensor does not
solve  the  problem  in  the  long  term.

     Gluko  AG  is  aware  of  three other companies also developing implantable
glucose  sensors.  Medical  Research  Group,  LLC, MRG, a privately-held company
has  been  developing  a  glucose  sensor  and  is  planning  to  connect  this
sensor  with  an  insulin  pump  developed  by  MiniMed.  The  sensor  under
development  by  Synthetic  Blood  International,  Kettering,  Ohio,  USA  is
based  on  an  enzymatic  glucose
determination.  Animas,  Corp., Frazer, Pennsylvania, USA has been developing an
implantable  glucose  sensor  based  on  infrared  spectroscopy.

RISK  FACTORS

     An  investment in SGBI involves significant risks associated with economic,
business,  market and financial factors and developments  which may have adverse
impacts  on  the  Company's  future performance, including significant risks not
normally  associated  with  investing  in  equity  securities  of  United States
companies  including  the  following:


LIMITED  OPERATING  HISTORY  OF  THE  COMPANY;  LOSSES  ARE EXPECTED TO CONTINUE

     The  Company  is  a  relatively  new  entity  with  a  limited  operating
history  upon  which  a significant evaluation of the Company's prospects can be
made.  The  prospects  of  SGBI  must  be  considered keeping in mind the risks,
expenses,  and difficulties frequently encountered in the establishment of a new
business  in  an  ever  changing  industry  and  the  research,  development,
manufacture,   distribution,  and  commercialization  of  esoteric  medical
technology,  procedures, and products and related technologies. There can be  no
assurance  that  unanticipated  technical or other problems will not occur which
would  result  in  material  delays  in  product  commercialization  or that the
efforts  of  SGBI will result in successful product commercialization.  SGBI has
been  operating  at  a loss and expects its costs to increase as its development
efforts  and  testing  activities  accelerate.  It  is  currently  unknown  when
profitable  operations  might  be  achieved.

DEPENDENCE  ON  KEY  PERSONNEL

     The  future  success  of  the  Company  will  depend  on  the  service  of
its key  scientific  personnel in its pharmaceutical, chemistry and biochemistry
departments  and,  when appropriate, computer hardware and software engineering,
electrical  and  mechanical  engineering  and  management  personnel  and,
additionally,  its  ability  to  identify,  hire and retain additional qualified
personnel.  There is intense competition for qualified personnel in the areas of
the  activities  of SGBI and there can be no assurance that SGBI will be able to
attract  and  retain  personnel necessary for the development of the business of
SGBI.  Because  of  the intense competition, there can be no assurance that SGBI
will  be  successful  in  adding  technical  personnel  if needed to satisfy its
staffing  requirements. Failure to attract and retain key personnel could have a
material  adverse  effect  on  SGBI.

     SGBI  and  its  subsidiaries  are dependent on the efforts and abilities of
their senior management.  The loss of various members from management could have
a material adverse effect on the business and prospects of SGBI.  In particular,
SGBI  will  depend  on  the service of Professor Wolfgang Barnikol because he is
instrumental  in  his  expertise  in  the  development of the oxygen carrier and
glucose  sensor  products.  There can be no assurance that upon the departure of
key  personnel  from  the  service  of  SGBI  or  its subsidiaries that suitable
replacement  personnel  will  be  available.

                                     Page15
<PAGE>
FUTURE  CAPITAL  NEEDS  AND  UNCERTAINTY  OF  ADDITIONAL  FUNDING

     Although the Company's cash position is  strong,  substantial funds will be
required  to  effect  the  Company's development plans. The Company will require
additional  cash  for:  (i)  payment  of  increased  operating  expenses;  (ii)
payment  of  development  expenses;  and  (iii)  further  implementation  of
those  business  strategies.  Such  additional  capital  may  be  raised  by
additional  public  or  private  financing,  as  well  as  borrowings  and other
resources.  To  the  extent  that  additional  capital  is  received  by SGBI by
the sale of equity or equity-related securities, the issuance of such securities
will  result  in  dilution  to  the  Company's  shareholders.  There  can  be no
assurance  that  additional  funding will be available on favorable terms, if at
all.   SGBI  may  also seek arrangements with collaborative partners in order to
gain  additional funding, marketing assistance or other contributions.  However,
such  arrangements may require SGBI to relinquish rights or reduce its interests
in  certain  of  its the  technologies  or  product  candidates.   The inability
of  the  Company to access the capital markets or  obtain  acceptable  financing
could  have  a  material  adverse  effect  on  the  results  of  operations  and
financial  condition  of  the  Company.  Moreover, if funds  are  not  available
from  any  sources,  the  Company  may  not  be  able  to continue  to  operate.

LICENSES  AND  CONSENTS

     The  utilization  or  other  exploitation  of  the  products  and  services
developed  by  SGBI  or its subsidiaries may require SGBI or its subsidiaries to
obtain licenses or consents from the producers or other holders of copyrights or
other  similar  rights  relating to the products and technologies of SGBI or its
subsidiaries.  In the event SGBI or its subsidiaries are unable, if so required,
to obtain any necessary license or consent on terms which the management of SGBI
or  its  subsidiaries consider to be reasonable, SGBI or its subsidiaries may be
required  to cease developing, utilizing, or exploiting products or technologies
affected  by  those  copyrights  or  similar  rights.  In  the event SGBI or its
subsidiaries  is  challenged  by the holders of such copyrights or other similar
rights,  there  can  be no assurance that SGBI or its subsidiaries will have the
financial  or  other resources to defend any resulting legal action, which could
be  significant.


TECHNOLOGICAL  FACTORS

     The  market  for  the  products  and  technology  developed  by  SGBI  is
characterized  by  rapidly  changing  technology  which  could result in product
obsolescence  or  short  product  life  cycles.  Similarly,  the  industry  is
characterized  by  continuous  development  and introduction of new products and
technology  to  replace  outdated  products  and  technology.  Accordingly,  the
ability of SGBI to compete will be dependent upon the ability of SGBI to provide
new  and  innovative  products  and  technology.  There can be no assurance that
competitors  will  not develop technologies or products that render the proposed
products  and  technology  of  SGBI  obsolete  or less marketable.  SGBI will be
required  to adapt to technological changes in the industry and develop products
and  technology  to  satisfy  evolving industry or customer requirements, any of
which could require the expenditure of significant funds and resources, and SGBI
does  not  have  a  source  or  commitment  for  any  such  funds and resources.
Development  efforts  relating  to  the  technological  aspects  of  the various
products  and  technologies  to  be  developed  by  SGBI  are  not substantially
completed.  Accordingly, SGBI will continue to refine and improve those products
and  technologies.  Continued  refinement and improvement efforts remain subject
to  the  risks  inherent  in  new  product  development, including unanticipated
technical  or  other  problems  which could result in material delays in product
commercialization  or  significantly increased costs.  In addition, there can be
no  assurance that those products and technologies will prove to be sufficiently
reliable  or  durable  in  wide  spread  commercial application. The products or
technologies  sought  to  be developed by SGBI will be the result of significant
efforts  which  may  result  in  errors  that  become  apparent  subsequent  to
widespread  commercial  utilization.  In  such  event, SGBI would be required to
modify  such  products or technologies and continue with additional research and
development,  which  could  delay  the  plans  of  SGBI  and cause SGBI to incur
additional  cost.

                                     Page16
<PAGE>
EARLY STAGE OF PRODUCT DEVELOPMENT; LACK OF COMMERCIAL PRODUCTS; NO ASSURANCE OF
SUCCESSFUL  PRODUCT  DEVELOPMENT

   Although the Company is currently marketing immunodiagnotic kits, its primary
efforts  are  devoted  on  the  development  of  proprietary  products involving
artificial  oxygen  carriers  and  glucose  sensors.

     The potential products of SGBI will  require  additional  pre-clinical  and
clinical  development,  regulatory  approval  and additional investment prior to
commercialization,  either  by  SGBI  independently  or  by  others  through
collaborative  arrangements.  Potential  products that appear to be promising at
early stages of development may be ineffective or be shown to cause harmful side
effects  during  pre-clinical  testing  or  clinical  trials,  fail  to  receive
necessary  regulatory approvals, be difficult to manufacture, be uneconomical to
produce,  fail  to  achieve  market  acceptance  or  be  precluded  from
commercialization  by  proprietary  rights  of others. There can be no assurance
that any potential products will be successfully developed, prove to be safe and
efficacious  in  clinical  trials,  satisfy  applicable regulatory standards, be
capable  of  being  produced  in  commercial  quantities  at acceptable costs or
achieve  commercial  acceptance.

     All  products  and  technologies  under  development  by  SGBI will require
significant  commitment  of personnel and financial resources.  Several products
will  require  extensive  evaluation  and pre-marketing clearance by the FDA and
comparable agencies in other countries prior to commercial sale.  SGBI regularly
re-evaluates  its   product  development  efforts.  On  the  basis  of  these
re-evaluations,  SGBI  may  abandon development efforts for particular products.
No  assurance  can  be  given  that  any product or technology under development
will  result  in  the  successful  introduction  of  any  new  product.  The
failure to introduce  new  products into the market on a timely basis could have
a  material  adverse  effect on the business, financial conditions or results of
operation  of  SGBI.

     The  technologies  of SGBI have not yet been tested in humans and there can
be  no  assurance  that  human  testing  of  potential  products  based  on such
technologies  will  be  permitted  by  regulatory  authorities or, even if human
testing  is permitted, that products based on such technologies will be shown to
be  safe  or  efficacious.  Potential products based on the technologies of SGBI
are  at  an  early  stage  of  testing  and  there can be no assurance that such
products  will  be  shown  to  be  safe  or  effective.

MARKET  ACCEPTANCE

     There  can  be no assurance that the products and technologies of SGBI will
achieve  a  significant  degree  of  market  acceptance, and that acceptance, if
achieved,  will  be  sustained  for  any significant period or that product life
cycles  will be sufficient ( or substitute products developed) to permit SGBI to
achieve  or sustain market acceptance which could have a material adverse effect
on the business,  financial  condition,  and  results  of  operations  of  SGBI.

GOVERNMENT  REGULATION;  NO  ASSURANCE  OF  PRODUCT  APPROVAL

     The clinical testing, manufacture, promotion, and sale of biotechnology and
pharmaceutical  products  are  subject  to  extensive  regulation  by  numerous
governmental  authorities  in  the  United  States,  principally  the  FDA,  and
corresponding state and foreign regulatory agencies prior to the introduction of
those products.  Management of SGBI believes that many of the potential products
of  SGBI  will  be  regulated  by  the FDA under current regulations of the FDA.
Other  federal  and  state  statutes and regulations may govern or influence the
testing,  manufacture, safety, effectiveness, labeling, storage, record-keeping,
approval,  advertising, distribution and promotion of certain products developed
by  SGBI.  Noncompliance with applicable requirements can result in, among other
things,  fines,  injunctions,  seizure  of  products,  suspensions of regulatory
approvals, product recalls, operating restrictions, re-labeling costs, delays in
sales, cessation of manufacture of products, the imposition of civil or criminal
sanctions,  total  or  partial  suspension  of product marketing, failure of the
government  to  grant pre-market approval, withdrawal of marketing approvals and
criminal  prosecution.

                                     Page17
<PAGE>
     The FDA's requirements include lengthy and detailed laboratory and clinical
testing  procedures,  sampling  activities  and  other costly and time-consuming
procedures.  In  particular,  human therapeutic products are subject to rigorous
pre-clinical and clinical testing and other approval requirements by the FDA and
agencies in Germany, Singapore and other countries.  Although the  time required
for  completing  such  testing  and  obtaining  such  approvals  is  uncertain,
satisfaction  of these requirements typically takes a number of years and varies
substantially  based on the  type,  complexity  and  novelty  of  each  product.
Neither  SGBI  nor  its  subsidiaries  can  accurately  predict  when  product
applications or submissions for FDA or other regulatory review may be submitted.
Management of the Company has no experience in obtaining regulatory clearance on
these  types  of  products. The lengthy process of obtaining regulatory approval
and  ensuring  compliance  with  applicable  law  requires  the  expenditure  of
substantial  resources.  Any  delays  or  failure by SGBI or its subsidiaries to
obtain  regulatory  approval  and ensure  compliance  with appropriate standards
could  adversely  affect  the commercialization  of  such  products, the ability
of  SGBI  to  earn  product  or  royalty revenue, and its results of operations,
liquidity  and  capital  resources.

     Pre-clinical  testing  is  generally  conducted  in  laboratory  animals to
evaluate the potential safety and effectiveness of a drug.  The results of these
studies  are submitted to the FDA, which must be approved before clinical trials
can  begin.  Typically, clinical evaluation involves a time consuming and costly
three-phase  process.  In  Phase  I,  clinical trials are conducted with a small
number  of  subjects  to determine the early safety profile, the pattern of drug
distribution  and  metabolism.  In  Phase II, clinical trials are conducted with
groups  of  patients  afflicted  with  a  specific disease in order to determine
preliminary efficacy, optimal dosages and expanded evidence of safety.  In Phase
III,  large-scale,  multi-center, comparative trials are conducted with patients
afflicted  with  a target disease in order to provide enough data to demonstrate
the  efficacy  and  safety  required  by  the FDA.  The FDA closely monitors the
progress  of  each  of  the  three  phases  of  clinical  trials and may, at its
discretion,  re-evaluate, alter, suspend or terminate the testing based upon the
data  which  have  been  accumulated  to  that  point  and its assessment of the
risk/benefit  ratio  to  the  patient.

     Clinical trials and the marketing and manufacturing of products are subject
to the rigorous testing and approval processes of the FDA and foreign regulatory
authorities.  The  process  of  obtaining  FDA  and  other  required  regulatory
approvals is lengthy and expensive.  There can be no assurance that SGBI will be
able  to  obtain  the  necessary  approvals  to  conduct clinical trials for the
manufacturing  and  marketing of products, that all necessary clearances will be
granted  to SGBI or their licensors for future products on a timely basis, or at
all,  or  that  FDA  review  or  other actions will not involve delays adversely
affecting  the  marketing  and  sale  of the products or SGBI.  In addition, the
testing and approval process with respect to certain new products which SGBI may
seek  to  introduce  is likely to take a substantial number of years and involve
the  expenditure  of  substantial  resources.  There  can  be  no assurance that
pharmaceutical  products  currently in development will be cleared for marketing
by  the FDA. Failure to obtain any necessary approvals or failure to comply with
applicable  regulatory  requirements could have a material adverse effect on the
business, financial condition or results of operations of SGBI.  Further, future
government regulation could prevent or delay regulatory approval of the products
of  SGBI.

     There  can be no assurance as to the length of the clinical trial period or
the  number  of  patients  the  FDA  will require to be enrolled in the clinical
trials  in  order  to  establish the safety and effectiveness of the products of
SGBI.  SGBI may encounter significant delays or excessive costs in their efforts
to  secure  necessary  approvals,  and  regulatory requirements are evolving and
uncertain.  Future  United  States or foreign legislative or administrative acts
could  also  prevent  or  delay regulatory approval of the products of SGBI.  If
commercial  regulatory  approvals  are  obtained,  they  may include significant
limitations  on  the  indicated  uses  for  which a product may be marketed.  In
addition,  a  marketed  product  is  subject  to  continual  FDA  review.  Later
discovery  of  previously  unknown  problems  or  the failure to comply with the
applicable  regulatory  requirements may result in restrictions on the marketing
of  a  product,  or  even the removal of the product from the market, as well as
possible  civil  or  criminal  sanctions.  Failure  of  SGBI to obtain marketing
approval  for  any of their products under development on a timely basis, or FDA
withdrawal  of  marketing  approval once obtained, could have a material adverse
effect  on  the business, financial condition and results of operations of SGBI.

                                     Page18
<PAGE>
     Any  party  that  manufactures  therapeutic  or  pharmaceutical products is
required  to  adhere  to applicable standards for manufacturing practices and to
engage  in extensive record keeping and reporting.  Any manufacturing facilities
of  SGBI  are  subject  to  periodic  inspection  by state and federal agencies,
including  the  FDA  and  comparable  agencies  in  foreign  countries.

     The  effect of governmental regulation may be to delay the marketing of new
products for a considerable period of time, to impose costly requirements on the
activities of SGBI or to provide a competitive advantage to other companies that
compete  with  SGBI.  There  can  be  no  assurance that FDA or other regulatory
approval  for  any products developed by SGBI will be granted on a timely basis,
if  at  all  or,  if  granted, that compliance with regulatory standards will be
maintained.  Adverse  clinical  results  by SGBI could have a negative impact on
the  regulatory process and timing.  A delay in obtaining, or failure to obtain,
regulatory  approvals  could  preclude  or  adversely  affect  the  marketing of
products  and  the  liquidity  and  capital  resources  of  SGBI.  The extent of
potentially  adverse  governmental  regulation  that  might  result  from future
legislation  or  administrative  action  cannot  be  predicted.

      SGBI  will be subject to regulatory authorities in Germany, Singapore, and
other  countries  governing  clinical  trials and product sales.   Even  if  FDA
approval  is  obtained,  approval  of  a  product  by  the comparable regulatory
authorities of other  countries  must be  obtained  prior to the commencement of
marketing  the  product  in  those  countries.  The approval process varies from
country to country and the time  required  may  be  longer  or shorter than that
required for FDA approval.  The  foreign  regulatory  approval  process includes
all  of  the  risks associated  with obtaining FDA approval set forth above, and
approval  by  the  FDA does not ensure approval by the health authorities of any
other country.   There can  be  no  assurance that any foreign regulatory agency
will  approve  any  product  submitted  for  review  by  SGBI.

     SGBI  is  subject to various federal, state and local laws, regulations and
recommendations  relating  to  safe  working  conditions,  laboratory  and
manufacturing  practices,  the  experimental  use  of  animals  and  the use and
disposal of hazardous or potentially hazardous substances, including radioactive
compounds  and  infectious  disease agents, used in connection with its research
work.  The  extent  and  character  of governmental regulation that might result
from future legislation or administrative action cannot be accurately predicted.

INTENSE  COMPETITION

     Competition  in  the biotechnology and pharmaceutical industries is intense
and is expected to increase. SGBI and its subsidiaries compete directly with the
research  departments  of  biotechnology  and pharmaceutical companies, chemical
companies  and,  possibly,  joint  collaborations between chemical companies and
research  and  academic  institutions.  Management  of  SGBI is aware that other
companies  and  businesses  have  developed and are in the process of developing
technologies  and  products  which  may  be  competitive  with  the products and
technologies  developed  and  offered  by  SGBI.  The  biotechnology  and
pharmaceutical  industries  continue  to  undergo rapid change.  There can be no
assurance  that  competitors  have  not  or  will  not  succeed  in  developing
technologies  and  products  that are more effective than any which have been or
are being developed by SGBI or which would render the technology and products of
SGBI  obsolete.  Many  of  the  competitors  of  SGBI have substantially greater
experience,  financial  and  technical  resources  and production, marketing and
development  capabilities  than SGBI.  Accordingly, certain of those competitors
may  succeed  in  obtaining  regulatory  approval  for  products more rapidly or
effectively  than  SGBI.

UNCERTAINTIES  ASSOCIATED  WITH  PATENTS  AND  PROPRIETARY  RIGHTS

     The  success  of  SGBI  and  its  subsidiaries  may depend in part on their
ability to obtain patents for their technologies and products, if any, resulting
from  the  application of such technologies, to defend patents once obtained and
to  maintain  trade secrets, both in the United States and in foreign countries.

                                     Page19
<PAGE>
The  success  of SGBI will also depend upon avoiding the infringement of patents
issued  to  competitors.  There  can  be  no assurance that SGBI will be able to
obtain  patent  protection  for  products  based  upon  the  technology of SGBI.
Moreover,  there  can  be  no  assurance  that any patents issued to SGBI or its
subsidiaries  will  not  be  challenged, invalidated or circumvented or that the
rights  granted  there  under  will  provide  competitive  advantages  to  SGBI.
Litigation,  which  could  result in substantial cost to  SGBI, may be necessary
to  enforce  the  patent  and  license  rights of SGBI or to determine the scope
and validity  of  its  and  others'  proprietary  rights.

     Due to the length of time and expense associated with bringing new products
through  development  and  the  length  of  time  required  for the governmental
approval  process,  the  biotechnology  and  pharmaceutical  industries  have
traditionally placed considerable importance on obtaining and maintaining patent
and  trade  secret  protection  for  significant  new technologies, products and
processes.  The  enforceability  of  patents  issued  to  biotechnology  and
pharmaceutical  firms  can  be  highly  uncertain.  Federal  court  decisions
establishing  legal  standards for determining the validity and scope of patents
in  the  field  are  in transition.  In addition, there can be no assurance that
patents  will  be  issued  or,  if  issued,  any  such  patents will afford SGBI
protection  from  infringing  patents  granted  to  others.

     A  number  of  biotechnology and pharmaceutical companies, and research and
academic institutions, have developed technologies, filed patent applications or
received  patents on various technologies that may be related to the business of
Sangui  and  its  Subsidiaries.  Some  of  these  technologies,  applications or
patents  may  conflict with the technologies of SGBI.  Such conflicts could also
limit  the  scope  of  the patents, if any, that SGBI or its subsidiaries may be
able  to  obtain  or  result  in  the denial of the patent applications of SGBI.

     In  December,  2000,  the  Company's  only  competitor in the CDT business,
Axis/Shields,  a  Norwegian  Company  purchased by Shields Diagnostics of United
Kingdoms,  filed  a lawsuit against the Company for alleged patent infringement.
The Company reached a settlement with Axis/Shields and agreed to discontinue the
sales of the Company's CDT product, trade-marked ChronAlco ID CDT test kit.  The
Company  has  since re-designed its CDT product, called ChronAlco ID II CDT test
kit, to resolve the patent conflict.  The Company has since sold the new version
of CDT kit, i.e. ChronAlco ID II CDT test kit to its distributors and customers.
There  has been no significant loss or gain of the Company's CDT business.   The
Company  believes  its new ChronAlco ID II CDT test does not infringe the patent
and  patent  application  held  by  Axis/Shields.  Nonetheless,  there can be no
assurance  that  the  Company  will  prevail  if  a  lawsuit  is  brought  by
Axis/Shields.

     Many  of  the  competitors  of  SGBI have, or are affiliated with companies
having,  substantially  greater resources than SGBI, and such competitors may be
able  to  sustain the costs of complex patent litigation to a greater degree and
for  longer  periods  of  time  than  SGBI.  Uncertainties  resulting  from  the
initiation  and  continuation  of  any patent or related litigation could have a
material  adverse  effect  on  the ability of SGBI to compete in the marketplace
pending  resolution of the disputed matters.  Moreover, an adverse outcome could
subject  SGBI  to  significant  liabilities to third parties and require SGBI to
license  disputed  rights  from third parties or cease using the technology.  In
the  event  that third parties have or obtain rights to intellectual property or
technology  used  or needed by SGBI, there can be no assurance that any licenses
would  be available to SGBI or would be available on terms reasonably acceptable
to  SGBI.

     SGBI  may  rely  on  certain  proprietary  technologies, trade secrets, and
know-how  that  are  not  patentable.  Although  SGBI has taken steps to protect
their  unpatented  trade  secrets  and  technology,  in  part through the use of
confidentiality  agreements with their employees, consultants and certain of its
contractors,  there  can  be no assurance that: (i) these agreements will not be
breached;  (ii)  SGBI  would have adequate remedies for any breach; or (iii) the
proprietary  trade  secrets and know-how of SGBI will not otherwise become known
or  be  independently  developed  or  discovered  by  competitors.

RISK  OF  PRODUCT  LIABILITY;  POTENTIAL  UNAVAILABILITY  OF  INSURANCE

                                     Page20
<PAGE>
     The  business  of  SGBI will expose it to potential product liability risks
that  are  inherent  in  the  testing,  manufacturing  and  marketing  of  human
pharmaceutical  and  therapeutic  products. SGBI does not currently have product
liability  insurance,  and  there  can be no assurance that SGBI will be able to
obtain or maintain such insurance on acceptable terms or, if obtained, that such
insurance will be adequate to cover potential product liability claims or that a
loss  of  insurance  coverage  or  the assertion of a product liability claim or
claims  would  not materially adversely affect the business, financial condition
and  results  of  operations  of  SGBI.  SGBI  faces  an  inherent business risk
of  exposure  to  product  liability  and  other  claims  in  the event that the
development  or  use  of  its  technology  or  products  is  alleged  to  have
resulted in adverse effects.  Such  risk  exists  even  with  respect  to  those
products  that  are  manufactured  in  licensed  and  regulated  facilities  or
that otherwise possess regulatory  approval  for  commercial sale.  There can be
no  assurance  that  SGBI will  avoids  significant  product liability exposure.
While  SGBI  has  taken,  and  will  continue  to  take,  what  it  believes are
appropriate  precautions,  there  can  be  no  assurance  that  it  will  avoid
significant  liability  exposure.  An  inability  to  obtain  product  liability
insurance  at  acceptable  cost  or  to  otherwise  protect  against  potential
product  liability  claims  could prevent or inhibit  the  commercialization  of
products  developed  by  SGBI.  A  product  liability  claim  could  have  a
material  adverse  effect on the business, financial condition  and  results  of
operations  of  SGBI.

UNCERTAINTIES  RELATING  TO  PRICING  AND  THIRD-PARTY  REIMBURSEMENT

     The  operating  results  of  SGBI may depend in part on the availability of
adequate reimbursement for the products of SGBI from third-party payers, such as
government  entities,  private  health  insurers and managed care organizations.
Third-party  payers are increasingly seeking to negotiate the pricing of medical
services  and products.  In some cases, third-party payers will pay or reimburse
a  user or supplier of a product for only a portion of the purchase price of the
product.  In  the  case  of  the  products  of SGBI, payment or reimbursement by
third-party  payers  of  only  a portion of the cost of such products could make
such  products less attractive, from a cost perspective, to users, suppliers and
physicians.  There can be no assurance that reimbursement, if available, will be
adequate.  Moreover, certain of the products  of  SGBI  may  not  be of the type
generally  eligible  for  third-party  reimbursement.  If adequate reimbursement
levels  are  not provided by government entities or other third-party payers for
the  products  of  SGBI,  the  business,  financial  condition  and  results  of
operations  of  SGBI  would  be  materially  adversely  affected.  A  number  of
legislative  and regulatory proposals aimed at changing the nation's health care
system  have  been  proposed in recent years.  While SGBI cannot predict whether
any  such  proposals  will  be adopted, or the effect that any such proposal may
have  on its business, such proposals, if enacted, could have a material adverse
effect  on  the  business,  financial  condition  or  results  of  operations of
SGBI.

RISK  OF  PRODUCT  RECALL;  PRODUCT  RETURNS

Product  recalls  may  be  issued  at  the  discretion of SGBI, the FDA or other
government  agencies having regulatory authority for product sales and may occur
due  to disputed labeling claims, manufacturing issues, quality defects or other
reasons.  No  assurance  can be given that product recalls will not occur in the
future.  Any  product  recall  could  materially  adversely affect the business,
financial condition or results of operations of SGBI.  There can be no assurance
that future recalls or returns would not have a material adverse effect upon the
business,  financial  condition  and  results  of  operations  of  SGBI.

RISKS  OF  INTERNATIONAL  SALES  AND  OPERATIONS

     SGBI's  results  of  operations are subject to fluctuations in the value of
the  German  Deutschmark  against  the  U.S.  Dollar  due  to  SGBI's  German
subsidiaries.  Although  management  of  SGBI  will monitor exposure to currency
fluctuations, there can be no assurance that exchange rate fluctuations will not
have  a  material  adverse  effect  on  the  results  of operations or financial
condition  of  SGBI.  In the future, SGBI could be required to sell its products
in  other  currencies,  which would make the management of currency fluctuations
more  difficult  and  expose  SGBI  to  greater  risks  in  this  regard.

     The  products  of  SGBI  will  be  subject  to  numerous foreign government
standards  and  regulations  that  are continually being amended.  Although SGBI
will  endeavor  to satisfy foreign technical and regulatory standards, there can

                                     Page21
<PAGE>
be  no  assurance  that the products of SGBI will comply with foreign government
standards and regulations, or changes thereto, or that it will be cost effective
for  SGBI to redesign its products to comply with such standards or regulations.
The  inability  of  SGBI  to  design or redesign products to comply with foreign
standards  could  have  a  material adverse effect on SGBI's business, financial
condition  and  results  of  operations.

LACK  OF  COMMERCIAL  MANUFACTURING  AND  MARKETING  EXPERIENCE

     SGBI  has  not  yet manufactured its products, other than its nine in vitro
immunodiagnostic  products,  in commercial quantities.  Its subsidiaries will be
engaged  in manufacturing pharmaceutical products which will be subject to  much
more  stringent  regulatory requirements, as compared to the in vitro diagnostic
products.  No  assurance  can be given that its subsidiaries, on a timely basis,
will be able to make the transition from manufacturing clinical trial quantities
to  commercial  production  quantities  successfully  or  be able to arrange for
contract  manufacturing.  SGBI  and  its  subsidiaries have no experience in the
sales,  marketing and distribution of  products.  There can be no assurance that
SGBI will be able to establish sales, marketing and distribution capabilities or
make  arrangements  with  collaborators,  licensees  or  others  to perform such
activities  or  that  such  efforts  will  be  successful.

The  manufacture of the products of SGBI involves a number of steps and requires
compliance  with stringent quality control specifications imposed by SGBI and by
the  FDA.  Moreover, SGBI's products can only be manufactured in a facility that
has  undergone  a  satisfactory  inspection by the FDA.  For these reasons, SGBI
would  not  be  able  to  quickly  replace its manufacturing capacity if it were
unable  to  use  its  manufacturing  facilities  as  a result of a fire, natural
disaster (including an earthquake), equipment failure or other difficulty, or if
such facilities are deemed not in compliance with the FDA's GMP requirements and
the  non-compliance  could  not  be rapidly rectified.  The inability or reduced
capacity  of  SGBI  to  manufacture their products would have a material adverse
effect  on  SGBI's  business  and  results  of  operations.

     SGBI  may  enter into arrangements with contract manufacturing companies to
expand  its  production  capacities  in  order  to  satisfy requirements for its
products, or to attempt to improve manufacturing efficiency.  If SGBI chooses to
contract  for  manufacturing  services  and encounters delays or difficulties in
establishing relationships with manufacturers to produce, package and distribute
its finished products, clinical trials, market introduction and subsequent sales
of  such  products would be adversely affected.  Further, contract manufacturers
must  also  operate in compliance with the FDA's GMP requirements; failure to do
so  could  result  in,  among  other things, the disruption of product supplies.

HAZARDOUS  MATERIALS  AND  ENVIRONMENTAL  MATTERS

     The  research  and  development  processes  of SGBI involves the controlled
storage,  use  and  disposal  of  hazardous materials and radioactive compounds.
SGBI  is  subject to federal, state and local laws and regulations governing the
use,  generation,  manufacturing,  storage,  handling,  and  disposal  of  such
materials  and  certain  waste  products.  Although  SGBI  does  not  currently
manufacture commercial quantities of its product candidates, it produces limited
quantities  of  such  products  for  its  clinical  trials  and  SGBI intends to
manufacture  commercial quantities of its products.  Although SGBI believes that
its  safety  procedures for handling and disposing of such materials comply with
the  standards  prescribed  by such laws and regulations, the risk of accidental
contamination  or  injury  from these materials cannot be completely eliminated.
In the event of such an accident, SGBI could be held liable for any damages that
result, and any such liability could exceed the resources of SGBI.  There can be
no assurance that SGBI will not be required to incur significant costs to comply
with  current  or  future  environmental  laws  and  regulations  nor  that  the
operations,  business  or  assets  of  SGBI  will not be materially or adversely
affected  by  current  or  future  environmental  laws  or  regulations.

DEPENDENCE  ON  MAJOR  CUSTOMERS

     The  Company has a relatively small customer base.  Two customers accounted
for  approximately  51%  of  accounts  receivable  as  of  June  30,  2001  and

                                     Page22
<PAGE>
approximately  54%  of  sales  for the year ended June 30, 2001.  Four customers
accounted  for  approximately  70%  of  sales  for the year ended June 30, 2000,
respectively.  Although  the  Company  is  currently  the  supplier  of  certain
immunodiagnostic  kits  to  these  customers,  there  is no assurance  that  the
Company  will  continue  to  be the supplier or the supplier of choice.  In  the
event that the Company loses the business from any of its major customers,  this
would  have  a  significant  negative  impact  on  the  Company's  sales.


HUMAN  RESOURCES

The  Company considers its relations with its  employees  to  be  favorable.  As
of  June 30, 2001 the Company and its subsidiaries have 31 fulltime employees of
which  24  were  involved in research and development and 7 were responsible for
administrative  matters.  The  Company  had  consulting  arrangements  with  5
individuals  as  of  that  date.



ITEM  2.
Properties

The Company's US laboratory facility consists of approximately 3,360 square feet
located  in Santa Ana, California.  Rent expense for the fiscal year ended  June
30,  2001  was  approximately  $53,000.

The  German  subsidiaries,  approximately  800  square  meters, are based in the
Forschungs-  und Entwicklungszentrum of the University Witten/Herdecke, Germany.
Rent  expense  for  the  fiscal  year  was  approximately  $65,000.

The  Singaporean  subsidiary, approximately  350  square meters, is based in the
Science  Park  II,  Gemini  Building.  Rent  expense  for  the  fiscal  year was
approximately  $74,000.



ITEM  3.
Legal  Proceedings

On  July 26, 2001, the Company commenced a lawsuit in the United States District
Court  for  the  District  of  Colorado against Helmut Kappes, a director of the
Company.  In  the  lawsuit,  the  Company  alleges that Mr. Kappes is engaged in
conduct  related  to  the  Company's affairs that is fraudulent, dishonest and a
gross  abuse  of  his authority or discretion as a director and that his removal
from  the  Company's  Board  of  Directors  would be in the best interest of the
Company.  Among  other  things,  the  Company alleges that Mr. Kappes caused the
Company  to  enter  into  a  contract  with  Axel  Kleinkorres  without adequate
disclosure  of Mr. Kappes's conflicts of interest and that the remuneration paid
to  Mr.  Kleinkorres was excessive.  The Company also alleges that Mr. Kappes is
engaged  in  an improper exchange offer campaign involving the Company's shares.
The  Court  issued  a Temporary Restraining Order suspending Mr. Kappes from the
Board  of  Directors of the Company and restraining Mr. Kappes from pursuing the
exchange  offer.  The  Temporary Restraining Order has expired.  The Company has
filed  a  Motion  for  Preliminary  Injunction  which  is  pending.

The  Company  seeks  the  removal  of  Mr.  Kappes  from  the Company's Board of
Directors,  an  injunction against Mr. Kappes and his affiliates from exchanging
the Company's shares for shares of an entity in which Mr. Kappes has a financial
interest,  compensatory  damages  in an amount to be determined and costs of the
action.  Mr.  Kappes has not yet filed an Answer to the Complaint by the Company
in  the  lawsuit.



ITEM  4.
Submission  of  matters  to  a  vote  of  security  holders

                                     Page23
<PAGE>
Not  applicable


PART  II

ITEM  5.  MARKET  FOR  SGBI'S  SECURITIES

SGBI's  common  stock  is presently traded on the OTC Bulletin Board operated by
Nasdaq  under  the  symbol  SGBI.

The  following  table  sets forth the high and low closing prices for shares  of
SGBI  common  stock  for  the  calendar  periods  noted,  as  reported  by  the
National  Daily  Quotation  Service  and  the  Over-The-Counter  Bulletin Board.
Quotations  reflect  inter-dealer  prices,  without retail mark-up, mark-down or
commission  and  may  not  represent  actual  transactions.

                                                          CLOSING     PRICES
YEAR              PERIOD                                   HIGH        LOW

 2001            First  quarter                            $1.45      $0.94
                 Second  quarter                           $0.93      $0.48

 2000            First  quarter                            $5.00      $2.00
                 Second  quarter                           $3.31      $2.06
                 Third  quarter                            $2.72      $1.75
                 Fourth  quarter                           $2.38      $1.11

 1999            Third quarter                             $4.19      $2.00
                 Fourth quarter                            $3.63      $1.50


In  addition  to  freely  tradeable  shares,  SGBI has numerous shares of common
stock  outstanding  which could be sold pursuant to Rule 144.  In general, under
Rule  144,  subject  to  the satisfaction of certain other conditions, a person,
including one of our affiliates, who has beneficially owned restricted shares of
common  stock  for  at  least one year is entitled to sell, in certain brokerage
transactions,  within  any  three-month period, a number of shares that does not
exceed  the  greater of 1% of the total number of outstanding shares of the same
class,  or  the  average  weekly  trading  volume during the four calendar weeks
immediately  preceding  the sale.  A person who presently is not and who has not
been  an  affiliate for at least three months immediately preceding the sale and
who  has beneficially owned the shares of common stock for at least two years is
entitled  to sell such shares under Rule 144 without regard to any of the volume
limitations  described  above.

At  August  21, 2001, the number of record holders of the Company's common stock
was  2,090.  The  Company  did  not  pay  any cash dividends during the past two
fiscal  years  and  does  not  contemplate  paying  dividends in the foreseeable
future.


RECENT  SALES  OF  UNREGISTERED  SECURITIES

During  the  fiscal  year  ended  June  30,  2001,  the  Company  did  not  sell
unregistered  shares  of  its  Common  Stock.


ITEM  6.
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION AND RESULTS OF
OPERATIONS
                                     Page24
<PAGE>

The  following  discussion  contains  forward-looking  statements  that  are
subject  to  business  and  economic  risks and uncertainties, and the Company's
actual  results  could  differ  materially from these forward looking statement.
The  following  discussion  regarding  the  financial  statements of the Company
should  be  read in conjunction with the financial statements and notes thereto.

FISCAL  2001  COMPARED  TO  FISCAL  2000

RESULTS  OF  OPERATIONS

SBT
---
SALES.  Sales increased 32% to approximately $567,000 in 2001 from approximately
$429,000  in  2000.  This  increase  of $138,000 is attributed to an increase in
sales  of  the  Company's  immunodiagnostic  kits.

COST  OF  SALES.  Cost  of sales increased 40% to approximately $395,000 in 2001
from  approximately  $283,000  in 2000.  This increase of $112,000 is related to
costs  associated  with  the increase in sales of the Company's immunodiagnostic
kits.  The  Company's  gross  margin  decreased  to 30% in 2001 from 34% in 2000
primarily due to additional costs incurred in 2001 for quality control purposes.

GENERAL  AND ADMINISTRATIVE.   General and administrative expenses, exclusive of
amortization of prepaid consulting fees of approximately $444,000, decreased 48%
to  approximately  $670,000  in  2001 from approximately $1,283,000 in 2000.  In
2000,  general  and  administrative  expenses included one time professional and
consulting  fees  of approximately $180,000 related to the acquisition of Felnam
Investments,  Inc.  and  $470,000  of  other  non-recurring  professional  and
consulting  fees.  This  decrease  in  non-recurring  charges  of  approximately
$650,000,  combined  with  an increase of approximately $37,000 in other general
and  administrative  expenses,  results  in  a net decrease of $613,000 in 2001.

COMPENSATION  EXPENSE RELATED TO STOCK OPTIONS.  Compensation expense related to
stock  options  was $1,000,000 in 2001, which represents the amortization of the
fair  value  of  stock options previously issued to the chairman of the Company.
There  was  no  compensation  expense  related  to  stock  options  in  2000.

AMORTIZATION  OF  PREPAID  CONSULTING  FEES.  Amortization of prepaid consulting
fees decreased 72% to $444,000 in 2001 from $1,572,500 in 2000.  The decrease of
$1,128,500  results from an extension of the corresponding consulting  agreement
for  an  additional  24  months  effective  July  2000.

Sangui  AG
----------
RESEARCH  AND  DEVELOPMENT.  Research and development expenses increased 449% to
approximately  $785,000  in  2001  from  approximately  $143,000 in 2000, due to
increased  research  and  development  activities.

GENERAL AND ADMINISTRATIVE.   General and administrative expenses increased  78%
to  approximately  $562,000  in  2001 from approximately $315,000 in 2000.  This
increase  of  $247,000  is  attributed  to  increases  in staffing and operating
expenses.

Gluko  AG
---------
RESEARCH  AND  DEVELOPMENT.  Research and development expenses increased 295% to
approximately  $162,000  in  2001  from  approximately  $41,000  in 2000, due to
increased  research  and  development  activities.

GENERAL AND ADMINISTRATIVE.   General and administrative expenses increased  65%
to  approximately  $162,000  in  2001  from approximately $98,000 in 2000.  This
increase  of  $64,000  is  attributed  to  increases  in  staffing and operating
expenses.

                                     Page25
<PAGE>
Sangui  Singapore
-----------------
GENERAL  AND  ADIMISTRATIVE.   General  and  administrative  expenses  were
approximately $183,000 in 2001.  There were insignificant amounts of general and
administrative  expenses  in  2000.  This  increase  is  attributed to full time
operations  beginning  during  the  most  recent  fiscal  year.

SGBI
----
NET LOSS.  The Company's net loss was approximately $3,628,000, or approximately
nine  cents per common share, in 2001, compared to approximately  $3,120,000, or
nine  cents  per  common  share, in 2000.  This increase in net loss is a result
primarily  of  increased  research  and  development expenses and an increase in
compensation  expense  related  to  stock  options,  offset  by  a  decrease  in
amortization  of  prepaid  consulting  fees.

LIQUIDITY  AND  CAPITAL  RESOURCES

At  June  30,  2001  the  Company  had  cash and liquid marketable securities of
approximately $5.8 million.  The  Company  believes that its available cash will
be  sufficient  to  satisfy its requirements for at least the fiscal year ending
June  30,  2002.  Moreover, the Company is able to collect about $2.3 million of
its  funds  granted  by  the German state of Northrhine-Westfalia.  However, the
Company  will  need  substantial additional funding to fulfill its business plan
and  the Company intends to explore financing sources for its future development
activities  during  the  current  year.  No  assurance  can  be given that these
efforts  will  be  successful.


ITEM  7.  FINANCIAL  STATEMENTS


CONTENTS

Independent  Auditors'  Report

Consolidated  Balance  Sheet

Consolidated  Statements  of  Operations  and  Comprehensive  Income  (Loss)

Consolidated  Statements  of  Stockholders'  Equity

Consolidated  Statements  of  Cash  Flows

Notes  to  the  Consolidated  Financial  Statements

                                     Page26
<PAGE>





                                             SANGUI  BIOTECH INTERNATIONAL, INC.

                                             CONSOLIDATED FINANCIAL STATEMENTS

                                             FOR THE YEAR ENDED JUNE 30, 2001

                                                            WITH

                                            INDEPENDENT AUDITORS' REPORT THEREON
<PAGE>




                          INDEPENDENT AUDITORS' REPORT


To  the  Stockholders  of
  Sangui  Biotech  International,  Inc.


We  have  audited  the  accompanying  consolidated  balance  sheet  of  Sangui
Biotech  International,  Inc.  (the  "Company")  as  of  June 30, 2001, and  the
related  consolidated  statements  of  operations  and  comprehensive  loss,
stockholders'  equity,  and  cash  flows  for  each of the years in the two-year
period  then  ended.  These  consolidated  financial  statements  are  the
responsibility  of  the  Company's  management.   Our  responsibility  is  to
express  an  opinion on these consolidated financial  statements  based  on  our
audits.

We  conducted  our  audits  in  accordance  with  auditing  standards  generally
accepted in  the  United  States  of  America.  Those  standards require that we
plan  and  perform  the  audit  to obtain reasonable assurance about whether the
consolidated  financial  statements  are  free  of  material  misstatement.  An
audit  includes  examining,  on  a  test  basis, evidence supporting the amounts
and  disclosures  in  the  financial  statements.  An  audit  also  includes
assessing the accounting principles  used  and  significant  estimates  made  by
management,  as  well  as  evaluating  the  overall  financial  statement
presentation.  We  believe that our audits    provide a reasonable basis for our
opinion.

In  our  opinion,  based  on  our  audits,  the financial statements referred to
above  present  fairly,  in  all material respects, the  consolidated  financial
position  of  Sangui  BioTech  International,  Inc.  at  June  30, 2001, and the
results  of  their  operations and their cash flows for each of the years in the
two-year  period then ended, in  conformity with accounting principles generally
accepted  in  the  United  States  of  America.




                                                    CORBIN  &  WERTZ

Irvine,  California,  U.S.A.
August  16,  2001

<PAGE>

                       SANGUI BIOTECH INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
<S>                                                     <C>
                                ASSETS
                                ------
                                                           JUNE 30,
                                                           --------
                                                             2001
                                                        -------------

Current assets
  Cash and cash equivalents. . . . . . . . . . . . . .  $  2,354,584
  Available for sale securities. . . . . . . . . . . .     3,463,509
  Accounts receivable. . . . . . . . . . . . . . . . .       128,928
  Inventories. . . . . . . . . . . . . . . . . . . . .        70,021
  Prepaid expenses and other assets. . . . . . . . . .       362,736
                                                        -------------
       Total current assets. . . . . . . . . . . . . .     6,379,778

Property and equipment-net . . . . . . . . . . . . . .       514,188

Patents-net. . . . . . . . . . . . . . . . . . . . . .        36,867
                                                        -------------

Total assets . . . . . . . . . . . . . . . . . . . . .  $  6,930,833
                                                        =============



              LIABILITIES & STOCKHOLDERS' EQUITY
              ----------------------------------

Current liabilities
  Accounts payable and accrued expenses. . . . . . . .  $    288,617

Commitments and contingencies. . . . . . . . . . . . .             -

Stockholders' equity
  Preferred stock, no par value; 5,000,000 shares
  authorized; no shares issued and outstanding . . . .             -
  Common stock:  no par value; 50,000,000 shares
  authorized, 40,514,363 shares issued and outstanding    18,305,881

  Additional paid-in capital . . . . . . . . . . . . .     1,000,000
  Prepaid consulting fees. . . . . . . . . . . . . . .      (661,169)
  Accumulated other comprehensive loss . . . . . . . .      (356,370)
  Accumulated deficit. . . . . . . . . . . . . . . . .   (11,646,126)
                                                        -------------

  Total stockholders' equity . . . . . . . . . . . . .     6,642,216
                                                        -------------

Total liabilities and stockholders' equity . . . . . .  $  6,930,833
                                                        =============
</TABLE>


See  independent  auditors'  report  and  accompanying  notes  to  consolidated
financial  statements

<PAGE>



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

<TABLE>
<CAPTION>
<S>                                              <C>                    <C>
                                                         YEAR ENDED JUNE 30,
                                                         ---------------------
                                                                 2001          2000
                                                 ---------------------  ------------


Sales . . . . . . . . . . . . . . . . . . . . .  $            567,007   $   429,400

Cost of sales . . . . . . . . . . . . . . . . .               395,282       282,611
                                                 ---------------------  ------------

Gross profit. . . . . . . . . . . . . . . . . .               171,725       146,789
                                                 ---------------------  ------------

Operating expenses
Research and development. . . . . . . . . . . .               946,959       183,878
General and administrative. . . . . . . . . . .             1,577,315     1,696,458
Compensation expense related to stock options .             1,000,000             -
Depreciation and amortization . . . . . . . . .               147,191       151,317
Amortization of prepaid consulting fees . . . .               443,831     1,572,500
                                                 ---------------------  ------------

Total operating expenses. . . . . . . . . . . .             4,115,296     3,604,153
                                                 ---------------------  ------------

Loss from operations. . . . . . . . . . . . . .            (3,943,571)   (3,457,364)
                                                 ---------------------  ------------

Other income
Interest income, net of interest expense of
approximately $7,000 and $16,000, respectively.               276,824       138,861
Other income. . . . . . . . . . . . . . . . . .                38,886       118,067
Gain on marketable securities . . . . . . . . .                     -        80,557
                                                 ---------------------  ------------
Total Other Income. . . . . . . . . . . . . . .               315,710       337,485
                                                 ---------------------  ------------

Net loss. . . . . . . . . . . . . . . . . . . .            (3,627,861)   (3,119,879)

Other comprehensive (loss)
Foreign currency translation adjustments. . . .              (310,272)      (47,746)
Unrealized gain on marketable securities
 and cash equivalents . . . . . . . . . . . . .                64,716             -
                                                 ---------------------  ------------

Comprehensive loss. . . . . . . . . . . . . . .  $         (3,873,417)  $(3,167,625)
                                                 =====================  ============

Net loss available to common
shareholder per common share
Net loss. . . . . . . . . . . . . . . . . . . .                ($0.09)       ($0.09)
                                                 =====================  ============

Basic and diluted weighted average
number of common shares outstanding . . . . . .            40,514,363    32,879,796
                                                 =====================  ============
</TABLE>

See  independent  auditors'  report  and  accompanying  notes  to  consolidated
financial  statements

<PAGE>

                      SANGUI BIOTECH INTERNATIONAL, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                   FOR THE YEARS ENDED JUNE 30, 2001 AND 2000

<TABLE>
<CAPTION>
<S>                                               <C>               <C>             <C>         <C>           <C>
                                                         Preferred Stock               Common Stock           Additional
                                                         ---------------               --------------         Paid-in
                                                       Shares            Amount       Shares      Amount      Capital
                                                  ----------------  --------------  ----------  ------------  ----------

Balance at July 1, 1999. . . . . . . . . . . . .          505,000   $       5,050   31,867,878  $10,277,373   $        -

Issuance of common stock
for cash at $1.15 per share. . . . . . . . . . .                -               -      466,485      536,458            -

Issuance of common stock for cash at $0.964
(including 80,000 shares issued for finders fees)               -               -    8,080,000    7,712,000            -

Issuance of common stock for the
recapitalization of Felnam Investments . . . . .                -               -      100,000            -            -

Receipt of stock subscriptions . . . . . . . . .                -               -            -            -            -

Amortization of prepaid consulting fees. . . . .                -               -            -            -            -

Currency translation adjustments . . . . . . . .                -               -            -            -            -

Net loss . . . . . . . . . . . . . . . . . . . .                -               -            -            -            -
                                                  ----------------  --------------  ----------  ------------  ----------

Balance at June 30, 2000 . . . . . . . . . . . .          505,000           5,050   40,514,363   18,525,831            -

Receipt of stock subscriptions . . . . . . . . .                -               -            -            -            -

Write-off of stock subscriptions . . . . . . . .                -               -            -     (225,000)           -

Cancellation of preferred stock. . . . . . . . .         (505,000)         (5,050)           -        5,050            -

Compensation expense related to stock options. .                -               -            -            -    1,000,000

Amortization of prepaid consulting fees. . . . .                -               -            -            -            -

Currency translation adjustments . . . . . . . .                -               -            -            -            -

Unrealized gain on marketable securities
and cash equivalents . . . . . . . . . . . . . .                -               -            -            -            -

Net loss . . . . . . . . . . . . . . . . . . . .                -               -            -            -            -
                                                  ----------------  --------------  ----------  ------------  ----------

Balance at June 30, 2001 . . . . . . . . . . . .                -   $           -   40,514,363  $18,305,881   $1,000,000
                                                  ================  ==============  ==========  ============  ==========


<S>                                               <C>              <C>                <C>              <C>            <C>

                                                                                      Accumulated
                                                                                      Other                           Total
                                                     Stock            Prepaid         Comprehensive   Accumulated     Stockholders
                                                  Subscriptions    Consulting Fees    Income (Loss)    Deficit        Equity
                                                  ---------------  -----------------  ---------------  -------------  ------------

Balance at July 1, 1999. . . . . . . . . . . . .  $     (341,072)  $     (2,677,500)  $      (63,068)  $ (4,898,386)  $ 2,302,397

Issuance of common stock
for cash at $1.15 per share. . . . . . . . . . .               -                  -                -              -       536,458

Issuance of common stock for cash at $0.964
(including 80,000 shares issued for finders fees)       (429,708)                 -                -              -     7,282,292

Issuance of common stock for the
recapitalization of Felnam Investments . . . . .               -                  -                -              -             -

Receipt of stock subscriptions . . . . . . . . .         224,413                  -                -              -       224,413

Amortization of prepaid consulting fees. . . . .               -          1,572,500                -              -     1,572,500

Currency translation adjustments . . . . . . . .               -                  -          (47,746)             -       (47,746)

Net loss . . . . . . . . . . . . . . . . . . . .               -                  -                -     (3,119,879)   (3,119,879)
                                                  ---------------  -----------------  ---------------  -------------  ------------

Balance at June 30, 2000 . . . . . . . . . . . .        (546,367)        (1,105,000)        (110,814)    (8,018,265)    8,750,435

Receipt of stock subscriptions . . . . . . . . .         321,367                  -                -              -       321,367

Write-off of stock subscriptions . . . . . . . .         225,000                  -                -              -             -

Cancellation of preferred stock. . . . . . . . .               -                  -                -              -             -

Compensation expense related to stock options. .               -                  -                -              -     1,000,000

Amortization of prepaid consulting fees. . . . .               -            443,831                -              -       443,831

Currency translation adjustments . . . . . . . .               -                  -         (310,272)             -      (310,272)

Unrealized gain on marketable securities
and cash equivalents . . . . . . . . . . . . . .               -                  -           64,716              -        64,716

Net loss . . . . . . . . . . . . . . . . . . . .               -                  -                -     (3,627,861)   (3,627,861)
                                                  ---------------  -----------------  ---------------  -------------  ------------

Balance at June 30, 2001 . . . . . . . . . . . .  $            -   $       (661,169)  $     (356,370)  $(11,646,126)  $ 6,642,216
                                                  ===============  =================  ===============  =============  ============
</TABLE>

See  independent  auditors'  report  and  accompanying  notes  to  consolidated
financial  statements

<PAGE>

                       SANGUI BIOTECH INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
<S>                                                                     <C>                    <C>
                                                                                  YEAR ENDED JUNE 30,
                                                                                  -------------------
                                                                                        2001          2000
                                                                        ---------------------  ------------

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $         (3,627,861)  $(3,119,879)
Adjustments to reconcile net loss to cash used by operating activities
  Compensation expense related to stock options. . . . . . . . . . . .             1,000,000             -
  Depreciation and amortization. . . . . . . . . . . . . . . . . . . .               147,191       151,317
  Amortization of prepaid consulting fees. . . . . . . . . . . . . . .               443,831     1,572,500
  Gain on marketable securities. . . . . . . . . . . . . . . . . . . .                     -       (80,557)

Changes in operating asset and liabilities:
  Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . .               (73,210)       43,856
  Grant receivable . . . . . . . . . . . . . . . . . . . . . . . . . .               176,844       (79,844)
  Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 9,669        32,346
  Prepaid expenses and other assets. . . . . . . . . . . . . . . . . .              (147,226)     (112,210)
  Accounts payable and accrued expenses. . . . . . . . . . . . . . . .                58,412       102,785
                                                                        ---------------------  ------------

Net cash used in operating activities. . . . . . . . . . . . . . . . .            (2,012,350)   (1,489,686)
                                                                        ---------------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES:

  Purchase of marketable securities. . . . . . . . . . . . . . . . . .            (4,394,972)            -
  Purchase of property and equipment . . . . . . . . . . . . . . . . .              (234,626)     (222,641)
  Proceeds from sale of marketable securities. . . . . . . . . . . . .               996,179     1,369,177
  Cash grants received for property and equipment. . . . . . . . . . .                     -        81,490
                                                                        ---------------------  ------------

Net cash (used in) provided by investing activities. . . . . . . . . .            (3,633,419)    1,228,026
                                                                        ---------------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of common stock . . . . . . . . . . . . . . . . . . . . . .                     -     7,768,750
  Collection of stock subscription receivable. . . . . . . . . . . . .               321,367       224,413
                                                                        ---------------------  ------------

Net cash provided by financing activities. . . . . . . . . . . . . . .               321,367     7,993,163
                                                                        ---------------------  ------------

Effect of exchange rate changes on cash. . . . . . . . . . . . . . . .              (310,272)      (47,746)
                                                                        ---------------------  ------------

Net (decrease) increase in cash and cash equivalents . . . . . . . . .            (5,634,674)    7,683,757

Cash and cash equivalents, beginning of period . . . . . . . . . . . .             7,989,258       305,501
                                                                        ---------------------  ------------

Cash and cash equivalents, ending of period. . . . . . . . . . . . . .  $          2,354,584   $ 7,989,258
                                                                        =====================  ============

Supplemental disclosures:
  Cash paid during the period for:
  Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $              7,309   $    15,537
                                                                        =====================  ============
  Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $                800             -
                                                                        =====================  ============
</TABLE>

     See  accompanying  notes  to accompanying consolidated financial statements
     for  more  information  on  non-cash  investing  and  financing  activities
     during  the  years  ended  June  30,  2001 and 2000.


     See  independent  auditors'  report  and accompanying notes to consolidated
     financial  statements

<PAGE>

                       SANGUI BIO TECH INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR  THE  YEAR  ENDED  JUNE  30,  2001

NOTE  1  -  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
-----------------------------------------------------------------------------

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

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

The Company's wholly owned subsidiary Sangui Bio Tech, Inc. ("SBT") incorporated
in  Delaware  in  1996, is located in Santa Ana, California. SBT manufactures in
vitro  immunodiagnostic  blood  test  kits  that  are primary sold in the United
States  and  Europe.   ,  The Company has three subsidiaries located outside the
United States , SanguiBioTech AG ("Sangui  AG"), GlukoMediTech, AG ("Gluko AG"),
and  Sangui  BioTech  PTE  Ltd.  ("Sangui  Singapore").

Sangui AG, incorporated in Mainz, Germany in 1995, is engaged in the development
of  artificial  oxygen  carriers  (blood  substitute  and additives).  Gluko AG,
incorporated in Mainz, Germany in 1996, is engaged in the development of glucose
implant  sensors.

Sangui  Singapore,  incorporated  in Singapore in 1999, is a regional office for
the  Company  and  its subsidiaries and is carrying out research and development
projects  in  conjunction  with  Sangui  AG  and  Gluko  AG.

Risks  and  Uncertainties
-------------------------

The  Company's line of in vitro immunodiagnostic products, as well as the future
pharmaceutical  (artificial  oxygen  carriers or blood substitute and additives)
and  in  vivo  biosensors (glucose implant sensor) being developed by its German
subsidiaries,  are  deemed  as  medical  devices  or  biologics, and as such are
governed  by  the  Federal  Food  and  Drug  and  Cosmetics  Act  and  by  the
regulations  of  state  agencies  and  various  foreign  government  agencies.
Currently, most of the Company's immunodiagnostic tests for use with humans have
been  cleared  by the above regulatory agencies.  There can be no assurance that
the  Company  will  maintain  the  regulatory  approvals  required to market its
products  elsewhere.  The  pharmaceutical  and  biosensor  products,  under
development  in  Germany,  will  be  subject  to  more  stringent  regulatory
requirements,  because  they are in vivo products for humans.  The  Company  and
its  subsidiaries  have  no  experience  in  obtaining  regulatory  clearance on
these types of products.  Therefore, the Company will be subject to the risks of
delays  in  obtaining  or  failing  to  obtain  regulatory  clearance.

The  Company's  revenues  from  product  sales derived from its immunodiagnostic
blood  test  kits  are small.  However, management believes its current cash and
liquid  marketable  securities  totaling  approximately $5.8 million at June 30,
2001,  are  sufficient  to  fund  the  Company's  operations and working capital
requirements  at  least  through  June  30,  2002.

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

The  consolidated  financial  statements  have  been prepared in accordance with
accounting  principles  generally  accepted  in the United States of America and
include  the  accounts  of the Company and its wholly owned domestic and foreign
subsidiaries.  All  significant intercompany accounts and transactions have been
eliminated. Certain amounts in 2000 and have been reclassified to conform to the
current  year's  presentation.


<PAGE>

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

The preparation of financial statements in conformity with accounting principles
generally  accepted  in  the United Sates of America requires management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities,  disclosure of contingent assets and liabilities at the date of the
financial  statements,  and the reported amounts of revenues and expenses during
the  reporting  period.  Significant  estimates  made  by  management are, among
others,  provisions  for  losses  on  accounts  receivable,  realizability  of
long-lived  assets,  and  estimates for deferred income tax valuation allowance.
Actual  results  could  differ  from  those  estimates.

Financial  Instruments
----------------------

The Company has adopted Statement of Financial Accounting Standards ("SFAS") No.
107  "Disclosures  About  Fair  Value  of  Financial Instruments."  SFAS No. 107
requires  disclosure  of fair value information about financial instruments when
it  is  practicable  to  estimate  that  value.  The  carrying  amount  of  the
Company's  cash,  accounts  receivable,  accounts  payable  and accrued expenses
approximate  their estimated fair values due to the short-term  nature of  these
financial  statements.  Marketable  securities  are  stated  at fair value based
upon quoted market prices and are  classified as  available-for-sale securities.

Derivative  and  hedging  activities
------------------------------------

In  June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133,  "Accounting  for  Derivative  Instruments  and  Hedging Activities," which
establishes  standards  for  accounting  of  derivative  instruments  including
certain  derivative  instruments  embedded  in  other  contracts,  and  hedging
activities.  Management  has  completed  its  evaluation  of  the various issues
related to SFAS No. 133 for the year ended June 30, 2001, and the Company has no
derivative  instruments  or  hedging  activities,  as  defined  by SFAS No. 133.
Therefore,  the  adoption  of  SFAS  No.  133  had  no  impact on the  Company's
consolidated  financial  position  or  operations.

Concentration  of  Risk
-----------------------

Two  customers  accounted for 51% of accounts receivable as of June 30, 2001 and
approximately  54%  of  sales  for the year ended June 30, 2001.  Four customers
accounted for 70% of sales for the year ended June 30, 2000.  The loss of any of
these customers in the future would significantly affect the Company's operating
results  (see  Note  10).

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

Assets  and  liabilities  of  the  Company's German and Singapore operations are
translated  into  U.S.  dollars  at  period-end  exchange  rates.  Net  exchange
gains  or losses resulting  from such translation are excluded from net earnings
but are included in comprehensive income and accumulated in a separate component
of  stockholders' equity.  Income and expense are translated at weighted average
exchange  rates  for  the  period.  During fiscal 2001 and 2000, the Company had
foreign  exchange  transaction  gains included in other  income of approximately
$33,600  and  $100,000,  respectively.

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

The  Company  maintains  its  cash  in  uninsured  accounts  and  not  in  bank
depository  accounts  insured  by  the  Federal  Deposit  Insurance  Corporation
(FDIC).  The  Company  has  not  experienced  any  losses  in  these  uninsured
accounts.  Cash  and  cash  equivalents  include  time  deposits  for  which the
Company  has  no  requirements  for  compensating  balances  and mutual funds of
money  markets.  As  of  June  30,  2001,  the Company's mutual funds had a fair
market value of $629,319 with a cost of $595,077 resulting in an unrealized gain
of  $34,242,  and the Company's time deposits had a currency translation gain of
$38,865.  The  Company  recorded the entire amount of $73,107 as unrealized gain
under  other comprehensive income in the statement of stockholders' equity.  The
Company  also  maintains  bank  accounts  in  Germany.

<PAGE>
Marketable  Securities
----------------------

Marketable  securities  are classified as available-for-sale, as defined by SFAS
No.  115,  "Accounting  for  Certain  Investments  in  Debt  and  Equity
Securities."   Unrealized  gains  and  losses are excluded from earnings and are
reported  as  a  separate component of other comprehensive loss in shareholders'
equity.  Realized  gains  and  losses  are included in income and are determined
based on the specific identification of the securities bought and sold (see Note
3).

Inventories
-----------

Inventories,  which  consist primarily of finished immunodiagnostic products and
related  materials,  are  stated  at  the  lower  of  cost  or  market with cost
determined  on  a  first-in,  first-out  (FIFO)  basis.  The  Company  regularly
monitors  inventory  for  excess  or  obsolete  items  and  makes  any valuation
corrections  when  such  adjustments  are  needed.


Property  and  Equipment
------------------------

Property  and  equipment  are  recorded at cost and are depreciated or amortized
using  the straight-line method over the expected useful lives, which range from
three  to  five  years.  Depreciation  expense for the years ended June 30, 2001
and  2000  was  $137,750  and  $131,440, respectively.  Expenditures for  normal
maintenance  and  repairs  are  charged  to income, and significant improvements
are  capitalized.  The  cost  and  related  accumulated  depreciation of  assets
are  removed  from  the  accounts  upon  retirement  or  other  disposition; any
resulting  gain  or  loss  is  reflected  in  the  statement  of  operations.

Patents
-------

Patents  are recorded at cost and are depreciated using the straight-line method
over  their  estimated  useful  lives,  which  range from three to eleven years.
Amortization expense  for  the years ended June 30, 2001 and 2000 was $9,441 and
$19,877,  respectively.

Impairment  of  Long-Lived  Assets
----------------------------------

The  Company accounts for the impairment and disposition of long-lived assets in
accordance with SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets
and  Long-Lived  Assets to Be Disposed Of" which requires that long-lived assets
and  certain  identifiable  intangibles  to  be  held  and  used by an entity be
reviewed  for  impairment  whenever  events or changes in circumstances indicate
that the carrying value of an asset may not be recoverable.  The Company reviews
its  intangible  and  other  long-lived  assets  for  events  or  changes  in
circumstances  which  indicate that their carrying value may not be recoverable.
As  of  June 30, 2001, management of the Company believes that no impairment has
been  indicated.   There  can  be no assurances, however, that market conditions
will  not  change or demand for the Company's products will continue which could
result  in  impairment  on  long-lived  assets  in  the  future.

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

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

In  December  1999,  the  Securities  and  Exchange  Commission  released  Staff
Accounting  Bulletin  No. 101, "Revenue Recognition in the Financial Statements"
("SAB  No.  101"), which provides guidance on the recognition,  presentation and
disclosure  of  revenue  in  the  financial  statements  and  which
was  effective  October  1,  2000.  The  adoption  of SAB No. 101 did not have a
material  impact  on  the  Company's  financial  statements.

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

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

<PAGE>
Grants
------

The  Company  receives  grants from the German government which are used to fund
research  and  development activities and the acquisition of equipment (see note
10).  Revenue  from  grants  for  the  reimbursement  of  research  and
development expenses are offset  against  research and development expenses when
the  related  expenses  are  incurred.  Grants  related  to  the  acquisition of
tangible  property  are  recorded  as  a  reduction  of  the  properties'
historical  cost.

Income  Taxes
-------------

The  Company  accounts  for  deferred income taxes using the liability method in
accordance  with  SFAS  No.  109,  "Accounting  for Income Taxes."  Deferred tax
assets  and  liabilities are recognized for future tax consequences attributable
to  differences  between  the  financial  statement carrying amounts of existing
assets and liabilities and their respective tax bases.  A valuation allowance is
provided  for significant deferred tax assets when it is more  likely  than  not
that  such  assets  will  not  be  recovered.

Accounting  for  Stock-Based  Compensation
------------------------------------------

The  Company accounts for stock-based compensation issued to employees using the
intrinsic  value  based  method  as  prescribed  by  Accounting Principles Board
Opinion  No.  25  "Accounting for Stock  Issued to Employees" ("APB 25").  Under
the  intrinsic  value  based method, compensation  is the excess, if any, of the
fair  value  of the stock at the grant date  or  other measurement date over the
amount  an employee must pay to acquire the  stock.  Compensation,  if  any,  is
recognized over the applicable service period,  which  is  usually  the  vesting
period.  The  FASB  has  issued  SFAS  No.  123  "Accounting  for  Stock-Based
Compensation."  This  standard,  if  fully  adopted,  changes  the  method  of
accounting  for  all  stock-based compensation to the fair value  based  method.
For  stock  options  and  warrants,  fair  value is determined using  an  option
pricing  model  that takes into account the stock price at the grant  date,  the
exercise price, the expected life of the option or warrant and the  annual  rate
of  quarterly  dividends.   Compensation  expense,  if  any, is recognized  over
the  applicable  service  period,  which  is  usually  the  vesting  period.

The  adoption  of  the  accounting  methodology of SFAS No. 123 for employees is
optional  and  the  Company  has  elected to continue accounting for stock-based
compensation  issued  to employees using APB 25; however, pro forma disclosures,
as  if the Company adopted the cost recognition requirements under SFAS No. 123,
are  required  to  be  presented  (see  Note  6).

In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"), "Accounting for
Certain Transactions involving Stock Compensation, an interpretation of APB 25."
FIN  44  clarifies  the application of APB 25 for (a) the definition of employee
for purposes of applying APB 25, (b) the criteria for determining whether a plan
qualifies  as a noncompensatory plan, (c) the accounting consequence for various
modifications  to the terms of a previously fixed stock option or award, and (d)
the  accounting  for  an  exchange  of  stock  compensation awards in a business
combination.  The  adoption  of the provisions of FIN 44 did not have a material
effect  on  the  financial  statements.

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

The  Company  computes  net  loss per common share using  SFAS No. 128 "Earnings
Per  Share."  Basic  earnings  (loss)  per common share is computed based on the
weighted average number  of shares outstanding for the period.  Diluted earnings
(loss)  per  share  is  computed  by  dividing  net  income  (loss)  by  the
weighted  average  shares  outstanding  assuming  all  dilutive potential common
shares  were  issued.  Basic  and  diluted  loss  per  share are the same as the
effect  of  stock  options  on  loss  per  share  are anti-dilutive and thus not
included  in  the  diluted  loss  per  share  calculation  (see  Note  8).

<PAGE>
Comprehensive  Income
---------------------

The  Company  adopted  SFAS No. 130 "Reporting Comprehensive Income."   SFAS No.
130  establishes standards for reporting and display of comprehensive income and
its  components  in  a  full set of general-purpose financial statements.  Total
comprehensive  income represents the net change in stockholders' equity during a
period  from  sources  other  than  transactions  with stockholders and as such,
includes  net  earnings.  For the Company, the components of other comprehensive
income  are  the  changes  in  the  cumulative  foreign  currency  translation
adjustments  and  unrealized  gains  (losses)  on marketable securities and cash
equivalents  and  are  recorded  as  components  of  stockholders'  equity.

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

The Company adopted SFAS  No.  131 "Disclosures about  Segments of an Enterprise
and  Related  Information."  SFAS  No.  131  establishes  standards  for the way
public companies  report  information  about segments of their business in their
annual  financial  statements  and  requires  them  to  report  selected segment
information  in  their  quarterly  reports  issued  to  shareholders.  It  also
requires  entity-wide  disclosures  about  the  products  and services an entity
provides,  the material countries  in which it holds assets and reports revenues
and  its  major  customers  (see  Note  11).


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

In  July  2001, the FASB issued SFAS  No. 141, "Business Combinations", which is
effective  for business combinations initiated after June 30, 2001. SFAS No. 141
eliminates  the  pooling  of  interest  method  of  accounting  for  business
combinations  and  requires that all business combinations occurring on or after
July  1, 2001 are accounted for under the purchase method.  The Company does not
expect  SFAS  No.  141  to  have  a material impact on its financial statements.

In  July  2001,  the  FASB  issued SFAS  No. 142, "Goodwill and Other Intangible
Assets",  which is effective for fiscal years beginning after December 15, 2001.
Early adoption is permitted for entities with fiscal years beginning after March
15,  2001,  provided  that  the first interim financial statements have not been
previously  issued.  SFAS  No.  142  addresses  how  intangible  assets that are
acquired individually or with a group of other assets should be accounted for in
the  financial  statements  upon  their  acquisition  and  after  they have been
initially  recognized  in  the  financial statements. SFAS No. 142 requires that
goodwill  and  intangible  assets  that  have  indefinite  useful  lives  not be
amortized  but rather be tested at least annually for impairment, and intangible
assets  that have finite useful lives be amortized over their useful lives. SFAS
No.  142  provides  specific guidance for testing goodwill and intangible assets
that will not be amortized for impairment. In addition, SFAS No. 142 expands the
disclosure  requirements about goodwill and other intangible assets in the years
subsequent  to  their  acquisition.  Impairment  losses  for  goodwill  and
indefinite-life  intangible  assets that arise due to the initial application of
SFAS  No.  142  are  to  be  reported  as  resulting from a change in accounting
principle.  However, goodwill and intangible assets acquired after June 30, 2001
will  be  subject  immediately  to the provisions of SFAS No. 142.   The Company
does  not  expect  SFAS  No.  142  to  have  a  material effect on its financial
statements.

In  July  2001,  the FASB issued SFAS  No. 143, "Accounting for Asset Retirement
Obligations"  .  SFAS  No.  143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated  asset  retirement  costs and is effective for fiscal years beginning
after June 15, 2002. The Company does not expect SFAS No. 143 to have a material
impact  on  its  financial  statements.


NOTE  2  -  BUSINESS  ACQUISITIONS
----------------------------------

On  March  30,  2000,  the  Company acquired all the outstanding common stock of
Felnam  Investments,  Inc.  ("Felnam").  The  transaction was funded through the
issuance  of  100,000  shares  of  the Company's  stock  valued at $0 due to the
Company  treating  the  transaction  as a recapitalization  of the Company.   In
conjunction with the transaction, the Company incurred approximately $180,000 of

<PAGE>
transaction  costs, which are charged to operations.  The net assets and results
of  operations  of  Felnam  were  not  material  to  the  Company's consolidated
financial  statements.  Accordingly,  pro  forma  financial  information was not
disclosed.


NOTE  3  -  AVAILABLE  FOR  SALE  SECURITIES
--------------------------------------------

Available  for  sale  securities  consist  of  the  following  at June 30, 2001:

<TABLE>
<CAPTION>
<S>                                  <C>         <C>                 <C>
                                     Cost        Fair Market         Unrealized
                                     -----          Value               Loss
                                                 ------------------  ------------------

Corporate bonds due within one year  $3,471,900  $        3,463,509  $          (8,391)
                                     ----------  ------------------  ------------------
</TABLE>

During fiscal 2000, the Company sold remaining shares from a previous investment
with  a  book  value  of  zero  for $80,557 which is included in gain on sale of
securities  in  the  accompanying  statement  of  operations.

NOTE  4  -  PROPERTY  AND  EQUIPMENT
------------------------------------

Property  and  equipment   consists  of  the  following  at  June  30,  2001:


  Leasehold  improvements                              $  139,268
  Technical  and  laboratory  equipment                   990,061
  Office  equipment                                        31,170
                                                           ------
                                                        1,160,499

  Less  accumulated  depreciation and amortization       (646,311)
                                                        ---------
                                                       $  514,188
                                                          =======


NOTE  5  -  PATENTS
-------------------

Patents    consist  of  the  following  at  June  30,  2001:


Patents                                                $  79,934

Less  accumulated  amortization                          (43,067)
                                                        --------

                                                       $  36,867
                                                        ========

NOTE  6  -  STOCKHOLDERS'  EQUITY
---------------------------------

Common  Stock
-------------

The  Company  is  authorized  to  issue 50,000,000 shares of no par value common
stock.  The  holders  of the Company's common stock are entitled to one vote for
each  share  held of record on all matters to be voted on by those stockholders.

<PAGE>
On  September  15,  1998,  the  Company  entered into an exchange agreement with
Euro-American  GmbH  to  sell  1,062,394 shares of its common stock at $0.50 per
share,  or  $531,197.  Payment  was  in  the  form  of a promissory note bearing
interest  at  9%  with  monthly payments of $24,267, maturing September 1, 2000.
Principal payments of $116,655 and $224,413 were received on the note during the
years ended June 30, 2001 and 2000, respectively.  At June 30, 2001, the note is
paid  in  full.

During the fiscal year ended June 30, 2000, the Company issued 466,485 shares of
common  stock  to  Euro-American GmbH for $536,458 of which $50,000 was received
during  the  fiscal  year  ended  June  30,  1999.

In   1999,  the  Company  issued  2,600,000  shares  of  its  common  stock to a
consultant  in  exchange for a public relations/promotions contract covering the
period January 1999 to December 2002, as amended in August 2000.  The fair value
of  the  services, $3,145,000, is  being  amortized ratably  over  the  contract
period.  For  the  years  ended June 30, 2001 and 2000, the  Company  recognized
$444,000  and $1,572,500 of amortization expense, respectively.  The unamortized
balance of the prepaid asset at June 30, 2001 was $661,169 which the Company has
offset  against  stockholders'  equity in the accompanying financial statements.

During  2000,  the  Company  entered  into a subscription with Euro-America GmbH
valued  at  $7,712,000,  of which the Company received $7,487,000.  The balance,
$225,000, was recorded as stock subscription receivable as of June 30, 2000.  On
June  30,  2001,  the  Company's  Board of Directors authorized - because of the
deficiency  in  collection  -  the  writing  off  of  the  $225,000  of  stock
subscription  receivable which the Company has recorded as a reduction of common
stock  in  the  accompanying  statement  of  stockholders'  equity.

Preferred  Stock
----------------

The  Company  is authorized to issue 5,000,000 shares of non-voting no par value
preferred  stock.  The  Board  of  Directors  has not designated any liquidation
value  or  dividend  rates.  During  the  year  ended June 30, 2001, the Company
cancelled  all  505,000  shares  of  its  preferred  stock that had been issued.

Stock  Options
--------------

From  time  to  time,  the  Company  may issue stock options pursuant to various
agreements  and  other  contemporary  agreements.

In November 1999, pursuant to an agreement with its chairman, the Company issued
the chairman options to purchase 3,000,000 shares of common stock at an exercise
price  of  $0.01  valued  at  $10,845,000  (under  APB 25).   The options can be
exercised  at  the  time the Company completes the development of the artificial
oxygen  carrier  or the implantable sensor and receives regulatory approval from
either  Germany,  the  United  States  or  Singapore,  which  the  Company  is
amortizing  to  compensation expense over the remaining estimated vesting period
of the options since the Company is in the process of developing the  artificial
oxygen carrier and implantable sensor.  The options are exercisable through June
30,  2009.   As  a  result,  the  Company  recognized  compensation  expense  of
$1,000,000  in  fiscal  2001  related  to  the  vesting  of  the  options.

 Option  activity  for  the  years  indicated  below  is  as  follows:

                                          Options          Weighted
                                                         Average Price
Outstanding, June 30, 1999                       -                   -
   Granted                               3,000,000               $0.01
   Exercised                                     -                   -
   Cancelled/Forfeited                           -                   -
                                         ---------        ------------
Outstanding, June 30, 2000 and 2001      3,000,000               $0.01
                                         =========        ============

Exercisable, June 30,2001                        -                   -
                                         =========        ============

Weighted average fair value of options
granted in 1999                                                  $3.62
                                                        ==============
<PAGE>


3,000,000  of the options outstanding at June 30, 2001 have an exercise price of
$0.01  per  share  and a weighted average remaining contractual life of 8 years;
none  of  these  options  are  exercisable  at  June  30,  2001.

SFAS  123  Pro  Forma  Information
----------------------------------

The  Company  has  adopted  the disclosure-only provisions of SFAS No. 123.  Pro
forma  information  regarding net income (loss) is required by SFAS No. 123, and
has  been  determined  as  if the Company had accounted for its employee's stock
options  under  the  fair  value  method  of  SFAS  No. 123.  The fair value for
these  options  was  estimated  at  the  date  of  grant using the Black Scholes
option  pricing  model  with  the  following assumptions for the year ended June
30,  2000:  risk  free  interest  rate  of  6.0%;  expected dividend yield of 0%
(for  all  years);  volatility  factor  of 62.5%; and an expected term of  three
years.

For purpose of pro forma disclosures, the estimated fair value of the options is
amortized  to  expense over the option vesting period.  Adjustments are made for
options  forfeited prior to vesting.  The effect on compensation expense and net
loss  had  compensation  cost  for  the  Company's  stock  option issuances been
determined  based  on  fair  value  on  the  date  of  grant consistent with the
provisions  of  SFAS  No.  123  is  as  follows  for  the  years ended June 30:

<TABLE>
<CAPTION>
<S>                  <C>           <C>
                            2001          2000
                     ------------  ------------
Net loss
     As reported. .  $(3,627,861)  $(3,119,879)
     Pro forma. . .  $(3,627,861)  $(3,119,879)

Net loss per share:
     As reported. .  $     (0.09)  $     (0.09)
     Pro forma. . .  $     (0.09)  $     (0.09)
</TABLE>

NOTE  7  -  INCOME  TAX  PROVISION
----------------------------------

There  is  no income tax expense recorded for the years ended June 30,  2001 and
2000,  due  to  the  Company's  net  losses.

Income  tax expense for the years ended June 30, 2001 and 2000 differed from the
amounts computed by applying the U.S. federal income tax rate of 34  percent for
the  following  reasons:
<TABLE>
<CAPTION>
<S>                                                             <C>           <C>
                                                                       2001          2000
                                                                ------------  ------------
Income tax expense (benefit) at U.S. federal statutory rates .  $(1,233,000)  $(1,010,000)
Net operating losses not benefited . . . . . . . . . . . . . .    1,233,800     1,011,600
State and local income taxes, net of federal income tax effect         (800)       (1,600)
                                                                $         -   $         -
                                                                ------------  ------------
</TABLE>

The  tax effects of temporary differences that give rise to significant portions
of  the  deferred  tax  assets  at  June  30,  2001  are  presented  below:

Deferred  tax  assets:
Net  operating  loss  carryforwards  $ 1,638,000
Less  valuation  allowance. . . . .   (1,638,000)
Net  deferred  tax  assets. . . . .  $         -
                                     ------------

<PAGE>


As  of  June  30,  2000,  the  Company had net operating  loss  carryforwards of
approximately  $3,858,000  $3,506,000, and $3,795,000 available to offset future
taxable Federal, state, and foreign income, respectively.  The federal and state
carryforward  amounts  expire  in  varying  amounts  between 2001 and 2011.  The
foreign  net  operating  loss  carryforwards  do  not have an expiration period.


NOTE  8  -  BASIC  AND  DILUTED  LOSS  PER  COMMON  SHARE
---------------------------------------------------------

The  following  is  a  reconciliation  of the numerators and denominators of the
basic  and  diluted  loss  per  common  share  computations:
<TABLE>
<CAPTION>
<S>                                                                       <C>           <C>
                                                                                 2001          2000
Numerator for basic and diluted loss earnings per common share  net loss  $(3,627,861)  $(3,119,879)
                                                                          ===========   ============

Denominator for basic and diluted earnings per
  common stock - weighted average shares . . . . . . . . . . . . . . . .   40,514,363    34,476,465
                                                                          ===========   ============

Basic and diluted loss per common stock. . . . . . . . . . . . . . . . .  $     (0.09)  $     (0.09)
                                                                          ===========   ============
</TABLE>

NOTE  9  -  RELATED  PARTY  TRANSACTIONS

As  described  in  Note  6, the Company wrote-off $225,000 of stock subscription
receivable  due  from  Euro-American  GmbH.


NOTE  10  -  COMMITMENTS  AND  CONTINGENCIES
--------------------------------------------

Operating  Leases
-----------------

The  Company  leases  its office and laboratory facilities in the United States,
Germany,  and  Singapore  under  three  operating  leases  which  expire through
December  2003,  respectively.

Future  minimum  lease  payments  under  these  leases  at  June  30,  2001 are:

Years  Ending
June  30,
---------
2002                                    $271,000
2003                                     251,000
2004                                      45,000
                                        --------

                                         567,000
                                        ========

Rent  expense  for  the  years  ended  June  30, 2001 and 2000 was approximately
$210,000  and  $120,000,  respectively.

Grants
------

In November  1998,  the  German  state  of  Northrhine-Westphalia granted Sangui
AG  German  Marks  (DM)  3,574,575  for  the  research and  development  of  the
Company's  artificial  oxygen carrier.  The grant originally covered the  period

<PAGE>
from  April  1998  to March 2001 but was extended to June 2002.    In  September
1999,  Northrhine-Westphalia  granted  the Company's  subsidiary,  Gluko AG,  DM
4,340,764  for  the  research  and  development  of  the  Company's  long-term
implantable  glucose  sensor.  The  grant  originally  covered  the  period from
December  1998  to November 2001, including retroactive months, but was extended
to  June  2002.

The  grants covers 40% of eligible research  and  development  costs and capital
expenditures  and  are  subject  to  the  Company's  ability  to  cover  the
remaining  60%  of the costs.  An additional condition of the grant is that  the
product  was  originally to be developed and subsequently produced in the German
state  of  Northrhine-Westphalia  if  developed  by  2003.

Based  on research and development expenditures and capital expenditures through
June  30,  2000,  the Company had qualified for  $817,560, of the grants.  There
were no research and development expenditures and capital expenditures in fiscal
2001which qualified for grants.  Approximately $736,000  related to research and
development  expenditures  has  been  recorded  as  a  reduction of research and
development  expenses  and  $81,490  related  to  capital  expenditures  was
recorded as a reduction to the historical costs of property and equipment, as of
June  30,  2000.  As  of  June  30,  2001,  all  of  the  grants the Company had
qualified  for  so  far  have  been  received.

Legal  proceedings
------------------


On  December  20,  2000,  Axis/Shields ASA, a Norway Corporation (Axis), filed a
lawsuit in the United States District Court in the Southern California District,
alleging  that  the  manufacture  or  sale  by  Sangui  USA  of  its
Carbohydrate-Deficient  Transferring  ("CDT")  test kit, which is used to detect
chronic  alcohol  abuse,  constituted  an infringement of patent rights owned by
Axis.  On March 26, 2001, the Company settled the lawsuit with Axis in which the
Company  agreed  to pay Axis $50,000 in damages which is recorded in general and
administrative  expenses  in  the  accompanying  consolidated  statement  of
operations.  In  addition,  the Company agreed to cease the manufacture and sale
of  the ChronAlco CDT test kit by June 26, 2001.  Sales related to this test kit
totalled  $312,000  and  $279,000  for  the  years ended June 30, 2001 and 2000,
respectively.  Sangui  USA  redesigned  and  introduced  a  new kit in May 2001.

On  July 26, 2001, the Company commenced a lawsuit in the United States District
Court  for  the  District of Colorado against a director of the Company.  In the
lawsuit,  the Company alleges that the director is engaged in conduct related to
the  Company's  affairs  that  is fraudulent, dishonest and a gross abuse of his
authority  or  discretion  as a director and that his removal from the Company's
Board  of  Directors  would be in the best interest of the Company.  Among other
things, the Company alleges that the director caused the Company to enter into a
contract without adequate disclosure of the director's conflicts of interest and
that the remuneration paid in conjunction with this contract was excessive.  The
Company  also alleges that the director is engaged in an improper exchange offer
campaign  involving  the  Company's  shares.  The  Court  issued  a  Temporary
Restraining  Order  suspending  the  director from the Board of Directors of the
Company  and  restraining  the  director  from pursuing the exchange offer.  The
Temporary  Restraining  Order  has  expired.  The Company has filed a Motion for
Preliminary  Injunction  which  is  pending.

The  Company  seeks  the  removal  of  the  director from the Company's Board of
Directors, an injunction against the director and his affiliates from exchanging
the  Company's  shares  for  shares  of  an  entity  in which the director has a
financial interest, compensatory damages in an amount to be determined and costs
of the action.  The director has not yet filed an Answer to the Complaint by the
Company  in  the  lawsuit.

<PAGE>

NOTE 11 - BUSINESS SEGMENTS
---------------------------------

The Company Reports it business segments based on geographic regions, which are
As follows for the years ended June 30:


<TABLE>
<CAPTION>
<S>                                      <C>         <C>
                                         2001        2000
                                   ----------  ----------

Net sales:
----------
Sangui USA. . . . . . . . . . . .  $  567,007  $  429,400
Sangui BioTech AG . . . . . . . .           -           -
GlukoMediTech,AG. . . . . . . . .           -           -
Sangui BioTech PTE Ltd, Singapore           -           -
                                   ----------  ----------
                                   $  567,007  $  429,400
                                   ==========  ==========


Net loss:
---------
Sangui USA. . . . . . . . . . . .  $1,895,170  $2,397,120
Sangui BioTech AG . . . . . . . .   1,102,167     548,587
GlukoMediTech,AG. . . . . . . . .     447,456     156,460
Sangui BioTech PTE Ltd, Singapore     183,068      17,712
                                   ----------  ----------
                                   $3,627,861  $3,119,879
                                   ==========  ==========


Depreciation and amortization
-----------------------------
Sangui USA. . . . . . . . . . . .  $   14,570  $   42,264
Sangui BioTech AG . . . . . . . .      98,031      91,242
GlukoMediTech,AG. . . . . . . . .      34,590      17,811
Sangui BioTech PTE Ltd, Singapore           -           -
                                   ----------  ----------
                                   $  147,191  $  151,317
                                   ==========  ==========

Identifiable assets
-------------------
Sangui USA. . . . . . . . . . . .  $1,288,538
Sangui BioTech AG . . . . . . . .   2,491,604
GlukoMediTech,AG. . . . . . . . .   2,828,593
Sangui BioTech PTE Ltd, Singapore     322,098
                                   ----------
                                   $6,930,833
                                   ==========
</TABLE>

<PAGE>

ITEM  8.  CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON AN ACCOUNTING AND
FINANCIAL  DISCLOSURE

None


ITEM  13  EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)   Index  to  Exhibits

Exhibit  No.
-----------

2.1  (1)  Exchange  Agreement  between  MRC Legal Services LLC and SanguiBioTech
        International,  Inc.,  dated  of  March  31,  2000  (1)

3.1  (1)  Articles  of  Incorporation  of  the  Company  (1)

3.2  (1)  Bylaws  of  the  Company(1)

3.3     Articles  of  Association  of  GlukoMeditech  Aktiengesellschaft (2)

3.4     Articles  of  Association  of  SanguiBiotech  Aktiengesellschaft (2)

3.5     Memorandum  and Articles of Association of Sangui Biotech Singapore Pte.
Ltd. (3)

4.1     Stock  Option  Agreement  between Professor Wolfgang Barnikol and Sangui
Biotech  International,  Inc.  dated  October  12,  2000 (2)

10.1     Office  Lease  between  Brookhollow  Office  Park  and  Sangui  Biotech
International,  Inc.  dated  September  4,  1996  and  as  amended  2000 (3)

10.2     Fee Agreement between GlukoMeditech AG and Dr. Seiglinde Borchert dated
June  15,  1998 (2)

10.3     Fee Agreement between SanguiBiotech AG and Dr. Seiglinde Borchert dated
June  15,  1998 (2)

10.4     Service  Contract  between  GlukoMeditech  AG and Dr. Wolfgang Barnikol
dated  June  30,  1998 (2)

10.5     Service  Contract  between  SanguiBiotech  AG and Dr. Wolfgang Barnikol
dated  June  30,  1998 (2)

10.6     Service Agreement between Axel Kleinkorres Promotionsagentur and Sangui
Biotech  International,  Inc.  dated  April  26,  1999 (2)

10.7     Amendment  to  Service  Agreement  between  Axel  Kleinkorres
Promotionsagentur  and  Sangui Biotech International, Inc. dated August 18, 2000
(2)
10.8     Appropriation  Notice  from  North-Rhine-Westphalia to GlukoMediTech AG
dated  November  30,  1998 (2)

10.9     Appropriation Notice from North-Rhine-Westphalia SanguiBiotech AG dated
November  30,  1998 (2)

10.10     Lease  Contract  for  Business  Rooms between Research and Development
Centre,  Witten,  Germany  and  GlukoMeditech  AG  dated  June  6,  2000 (2)

10.11     Additional  Agreement  to  Lease  Contract  between  Research  and
Development  Centre,  Witten,  Germany  and  GlukoMeditech AG dated June 7, 2000
(2)
10.12     Additional  Agreement  to  Lease  Contract  between  Research  and
Development  Centre,  Witten,  Germany  and  SanguiBiotech AG dated June 7, 2000
(2)

10.13 Assignment of Patents and Royalty Agreement with Dr. Wolfgang Barnikol (3)

10.14 Prolongation Letter for SanguiBiotech AG Grants

21.1    Subsidiaries  of  the  Company (2)

---------
(1)  Filed  as  an  Exhibit to the Report on Form 8-K filed on or about April 4,
2000  and  incorporated  herein  by  reference.

(2)  Filed  as  an  Exhibit  to  the  original  Report  on  Form 10-KSB filed on
October 13, 2000.

(3)  Filed as an Exhibit to the amended Report on Form 10-KSB filed on November
20, 2000.


(b)         Reports  on  Form  8-K

None

<PAGE>
                                  SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-KSB to be signed on its behalf
by  the  undersigned  hereunto  duly  authorized.

                                            SANGUI  BIOTECH  INTERNATIONAL, INC.

                                            /s/ Wolfgang Barnikol
                                              ----------------------------------
                                              Wolfgang  Barnikol
                                              President  and  Director

Date:  September, 28,  2001



        In  accordance with the Exchange Act, this report has been signed by the
following  persons  on behalf of the registrant and in the capacities and on the
dates  indicated.




Signatures                                 Title                     Date

/s/ Wolfgang Barnikol
Professor Wolfgang Barnikol, M.D., Ph.D.   President  and         9/28/01
                                           Chief Executive
                                           Officer

/s/ Sieglinde Borchert
Sieglinde  Borchert,  Ph.D.                Chief Operating        9/28/01
                                           Officer

/s/ Harald Potzschke.
Harald  Potzschke,  M.D.                   Chief Scientific       9/28/01
                                           Officer

/s/ Detlev Baron Von Linsingen
Detlev  Baron  Von  Linsingen              Chief Financial        9/28/01
                                           Officer

/s/ Patrick Onishi
Patrick  Onishi                            Corporate Secretary    9/27/01

/s/ Oswald Burkhard
Oswald  Burkhard,  M.D.,  Ph.D             Director               9/27/01

/s/ Dora Malek
Dora  Malek,  attorney                     Director               9/27/01

<PAGE>

/s/ Joachim Lutz
Professor  Joachim  Lutz,  M.D.            Director               9/27/01

[unsigned]
Helmut  Kappes                             Director