UNITED STATES 
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934



|For the Quarterly Period
 Ended March 31, 2004 | Commission File
 Number 1-11700
|---------------------------------------------- | -------------------------------

|HEMAGEN DIAGNOSTICS, INC.                                               
|------------------------------------------------------------------------
|(Exact name of Small Business Issuer as
       Specified in its Charter)

|Delaware                |  | 04-2869857              
|----------------------- |  | ------------------------
|(State of Organization) |  | (I.R.S. Employer Number)

|9033 Red Branch Road, Columbia, Maryland 21045-2105
|---------------------------------------------------
|(Address of principal executive offices, Zip Code) 

|(443) 367 5500                                  
|------------------------------------------------
|(Issuer's telephone number, including area code)

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

Yes  [X]
                                    No  [   ]

As
of May 14, 2004, the issuer had 10,104,855 shares of Common Stock, $.01 par value per
share outstanding.

---

# HEMAGEN DIAGNOSTICS,
INC. AND SUBSIDIARIES

# INDEX

|PART I.
       FINANCIAL INFORMATION | PAGE NUMBER
|------------------------------------ | -----------
|                                     | Item 1.    
|                                     |            
|                                     |            
|                                     |            
|                                     |            
|                                     | Item 2.    
|                                     | Item 3.    

|PART II.
       OTHER INFORMATION |        
|--------------------------------- | -------
|                                  | Item 2.
|                                  | Item 4.
|                                  | Item 6.

|SIGNATURES     |  |  | 16
|-------------- |  |  | --
|CERTIFICATIONS |  |  | 17

---

PART I  Financial
Information

Item 1.    Financial
Statements

HEMAGEN DIAGNOSTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS(UNAUDITED)

|                                                        | March 31,
2004 | September 30,
2003
|------------------------------------------------------- | -------------- | ------------------
|ASSETS                                                  |                |                   
|CURRENT ASSETS:                                         |                |                   
|Cash and cash equivalents                               |                |                   
|Accounts receivables, less allowance for                |                |                   
|doubtful accounts of $182,851 and $179,251 at           |                |                   
|March 31, 2004 and September 30, 2003,                  |                |                   
|respectively                                            |                |                   
|Inventories; net                                        |                |                   
|Prepaid expenses and other current assets               |                |                   
|                                                        |                |                   
|Total current assets                                    |                |                   
|                                                        |                |                   
|PROPERTY AND EQUIPMENT; net of accumulated depreciation |                |                   
|and amortization of $6,927,574 and $6,647,532 at        |                |                   
|March 31, 2004 and September 30, 2003, respectively     |                |                   
|OTHER ASSETS                                            |                |                   
|                                                        |                |                   
|Total Assets                                            |                |                   
|                                                        |                |                   

The accompanying notes are an
integral part of the financial statements.

-3-

---

# HEMAGEN DIAGNOSTICS,
INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS(UNAUDITED)

|                                                                     | March 31,
2004 | September 30,
2003
|-------------------------------------------------------------------- | -------------- | ------------------
|LIABILITIES AND STOCKHOLDERS' EQUITY                                 |                |                   
|                                                                     |                |                   
|CURRENT LIABILITIES:                                                 |                |                   
|Accounts payable and accrued liabilities                             |                |                   
|Deferred revenue                                                     |                |                   
|                                                                     |                |                   
|Total Current Liabilities                                            |                |                   
|                                                                     |                |                   
|Senior subordinated secured convertible notes, net of                |                |                   
|unamortized discount of $2,223,180 and $2,977,060 at                 |                |                   
|March 31, 2004 and September 30, 2003, respectively                  |                |                   
|                                                                     |                |                   
|Total liabilities                                                    |                |                   
|                                                                     |                |                   
|COMMITMENTS AND CONTINGENGIES                                        |                |                   
|                                                                     |                |                   
|STOCKHOLDERS' EQUITY                                                 |                |                   
|Preferred stock, $0.01 par value - 1,000,000 shares authorized; none |                |                   
|issued                                                               |                |                   
|Common stock, $.01 par value - 30,000,000 shares authorized;         |                |                   
|issued and outstanding:  10,204,855 at March 31, 2004 and            |                |                   
|September 30, 2003, respectively                                     |                |                   
|Additional paid-in capital                                           |                |                   
|Accumulated deficit                                                  |                |                   
|Accumulated other comprehensive loss-                                |                |                   
|currency translation loss                                            |                |                   
|Less treasury stock at cost; 100,000 shares at March 31, 2004        |                |                   
|and September 30, 2003, respectively                                 |                |                   
|                                                                     |                |                   
|                                                                     |                |                   
|Total Stockholders' Equity                                           |                |                   
|                                                                     |                |                   
|Total Liabilities and Stockholders' Equity                           |                |                   
|                                                                     |                |                   

The accompanying notes are an
integral part of the financial statements.

-4-

---

# HEMAGEN DIAGNOSTICS,
INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED)

|                                         | Three Months Ended | Six Months Ended
|---------------------------------------- | ------------------ | ----------------
|
|Revenues:                                |                    |                 
|                                         |                    |                 
|Product sales                            |                    |                 
|                                         |                    |                 
|Costs and expenses:                      |                    |                 
|Cost of product sales                    |                    |                 
|Research and development                 |                    |                 
|Selling, general and administrative      |                    |                 
|                                         |                    |                 
|Operating income (loss)                  |                    |                 
|                                         |                    |                 
|Other expenses:                          |                    |                 
|                                         |                    |                 
|Interest expense                         |                    |                 
|Other expenses                           |                    |                 
|                                         |                    |                 
|Total other expenses                     |                    |                 
|                                         |                    |                 
|Net loss before income taxes             |                    |                 
|                                         |                    |                 
|Income tax expense                       |                    |                 
|                                         |                    |                 
|                                         |                    |                 
|Net loss                                 |                    |                 
|                                         |                    |                 
|Net loss per share - basic and diluted:  |                    |                 
|                                         |                    |                 
|Weighted average shares used in the      |                    |                 
|calculation of loss per share -basic and |                    |                 
|diluted                                  |                    |                 
|                                         |                    |                 

The accompanying notes are an
integral part of the financial statements

-5-

---

# HEMAGEN DIAGNOSTICS,
INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS
OF CASH FLOWS(UNAUDITED)

|                                                  | Six Months Ended
March 31,
|------------------------------------------------- | --------------------------
|
|Cash flows from operating activities:             |                           
|Net loss                                          |                           
|Adjustments to reconcile net loss to net          |                           
|cash provided by operating activities:            |                           
|Depreciation and amortization                     |                           
|Amortization of debt discount                     |                           
|Loss on disposal of property and equipment        |                           
|Changes in operating assets and liabilities:      |                           
|Accounts and other receivables                    |                           
|Prepaid expenses and other current assets         |                           
|Inventories                                       |                           
|Accounts payable and accrued expenses             |                           
|Deferred revenue                                  |                           
|Net cash provided by operating activities         |                           
|                                                  |                           
|Cash flows from investing activities:             |                           
|Purchase of property and equipment                |                           
|Disposal of property and equipment                |                           
|                                                  |                           
|Net cash used in investing activities             |                           
|                                                  |                           
|Cash flows from financing activities:             |                           
|Repayments of subordinated note payable           |                           
|                                                  |                           
|Net cash used in financing activities             |                           
|                                                  |                           
|Effects of foreign exchange rate                  |                           
|                                                  |                           
|Net (decrease) in cash and cash equivalents       |                           
|                                                  |                           
|Cash and cash equivalents at beginning of period  |                           
|                                                  |                           
|                                                  |                           
|Cash and cash equivalents at end of period        |                           
|                                                  |                           
|Supplemental disclosure of cash flow information: |                           
|                                                  |                           
|Interest paid                                     |                           
|                                                  |                           
|Stock issued in satisfaction of director's fees   |                           
|and accrued expenses                              |                           
|                                                  |                           

The accompanying notes are an
integral part of the financial statements.

-6-

---

# HEMAGEN DIAGNOSTICS,
INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS



NOTE A  BASIS OF
PRESENTATION

The Company has prepared the
accompanying unaudited consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America for interim financial
information and pursuant to the rules and regulations of the Securities and Exchange
Commission instructions to Form 10-QSB and Item 310(b) of regulation S-B. These financial
statements should be read together with the financial statements and notes in the
Companys 2003 Annual Report on Form 10-KSB filed with the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles have been
condensed or omitted. The accompanying financial statements reflect all adjustments and
disclosures which, in our opinion, are necessary for fair presentation. All such
adjustments are of a normal recurring nature. The results of operations for the interim
periods are not necessarily indicative of the results of the entire year.

NOTE B  NET INCOME (LOSS)
PER SHARE

Basic earnings per common share are
computed based upon the weighted average number of common shares outstanding during the
three and six months ended March 31, 2004 and March 31, 2003. Diluted earnings per common
share are computed based on common shares outstanding plus the effect of dilutive stock
options and other potentially dilutive common stock equivalents consisting of stock
purchase warrants and convertible debentures. The dilutive effect of stock options and
other potentially dilutive common stock equivalents is determined using the treasury stock
and if-converted method based on the Companys average stock price. Common stock
equivalents totaling 5,340,014 and 8,316,910 at March 31, 2004 and 2003, respectively,
were not included in the computation of diluted net loss per share because to do so would
have been anti-dilutive, given the Companys net loss.

NOTE C  STOCK BASED
COMPENSATION

At March 31, 2004, options for the purchase
of 2,295,014 shares of common stock with a weighted average exercise price of $1.21 were
outstanding. During the six months ended March 31, 2004 options for the purchase of 25,000
shares of common stock were granted with an exercise price of $0.70 per share, which
represented fair value on the date of grant. During the six months ended March 31, 2004,
options for the purchase of 204,996 shares of Common Stock expired with exercise prices
ranging from $0.29 to $2.00 per share.

-7-

---

In December 2002, the FASB issued
Statement No. 148 Accounting for Stock-Based Compensation- Transition and
Disclosure, (SFAS 148). SFAS 148 provides for alternative methods of
transition for an entity that voluntarily changes to the fair value based method of
accounting for stock-based employee compensation and certain disclosures about the effects
of stock-based compensation. The fair value method of accounting would require the use of
an option pricing model such as the Black-Scholes option pricing model to determine the
compensation expenses associated with stock-based compensation issued in the current
period.

If the compensation cost for our
compensation plans had been determined consistent with SFAS No.148, our net income and our
net income per common and common share equivalent would have changed to the pro forma
amounts indicated below:

|                                       | Three Months Ended | Six Months Ended
|-------------------------------------- | ------------------ | ----------------
|
|Net Loss:                              |                    |                 
|As reported                            |                    |                 
|                                       |                    |                 
|Less stock-based compensation expense: |                    |                 
|determined under the fair value method |                    |                 
|for all awards                         |                    |                 
|                                       |                    |                 
|Pro forma net income (loss)            |                    |                 
|                                       |                    |                 
|Net income per common share:           |                    |                 
|Basic and Diluted;                     |                    |                 
|As reported                            |                    |                 
|Pro forma                              |                    |                 

The fair value of each option grant
is estimated on the date of the grant using the Black-Scholes option-pricing model with
the following weighted-average assumptions used for grants in 2004 and 2003; dividend
yield of 0%; expected volatility of 165% and 196% for 2003 and 2002, respectively;
risk-free interest rate of 4% for both periods; and expected terms of 5.0 to 10.0 years.

NOTE D  INVENTORIES

Inventories at March 31, 2004 and
September 30, 2003 consist of the following;

|                | March 31,
2004 | September 30,
2003
|--------------- | -------------- | ------------------
|Raw Materials   |                |                   
|Work-in-process |                |                   
|Finished goods  |                |                   
|                |                |                   
|                |                |                   
|Less reserves   |                |                   
|                |                |                   
|Net inventories |                |                   
|                |                |                   

-8-

---

NOTE E  LINE OF
CREDIT

In September 2002, the Company
obtained a revolving line of credit with a bank for the purpose of financing working
capital needs as required. The line of credit facility provides for borrowing up to
$1,000,000 at an interest rate of Prime Rate plus 3⁄4 % and expires March 31, 2005.
Maximum borrowings under the loan are based on the domestic receivables and inventory of
the Company. At March 31, 2004 there was no outstanding balance on the line of credit and
the effective interest rate on the line of credit was 4.75%. The Company has never
borrowed on this line of credit.

MANAGEMENTS
DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements in this report
that are not historical facts constitute forward-looking statements, within the meaning of
the Private Securities Litigation Reform Act of 1995, and are intended to be covered by
the safe harbors created by that Act. Reliance should not be placed on forward looking
statements because they involve unknown risks, uncertainties and other factors which may
cause actual results, performance or achievements to differ materially from those
expressed or implied. Any forward-looking statement speaks only as of the date made. The
Company undertakes no obligation to update any forward-looking statements to reflect
events or circumstances after the date on which they are made.

Forward-looking statements may be
identified by words such as estimates, anticipates,
projects, plans, expects, intends,
believes, should, and similar expressions and the negative
versions thereof and by the context in which they are used. Statements concerning the
establishments of reserves and adjustments for dated and obsolete products, expected
financial performance, on-going business strategies and possible future action which
Hemagen intends to pursue to achieve strategic objectives constitute forward-looking
information. The sufficiency of such charges, implementation of strategies and the
achievement of financial performance are each subject to numerous conditions,
uncertainties and risk factors. Factors which could cause actual performance to differ
materially from these forward-looking statements, include, without limitation,
managements analysis of Hemagens assets, liabilities and operations, the
failure to sell datesensitive inventory prior to its expiration, competition, new
product development by competitors which could render particular products obsolete, the
inability to develop or acquire and successfully introduce new products or improvements of
existing products, costs and difficulties in complying with laws and regulations
administered by the U.S. Food and Drug Administration and the ability to assimilate
successfully product acquisitions.

-9-

---

Overview

Hemagen Diagnostics, Inc., is a
biotechnology company that develops, manufactures, and markets more than 150 FDA-cleared
proprietary medical diagnostic test kits used to aid in the diagnosis of certain
autoimmune and infectious diseases. Hemagen also manufactures and markets a complete line
of Clinical Chemistry Reagents through its wholly owned subsidiary RAICHEM. In addition,
Hemagen manufactures and sells the Analyst®, an FDA-cleared Benchtop Clinical
Chemistry System used to measure important constituents in human and animal blood, and the
Endochek, a clinical chemistry analyzer used to measure important constituents in animal
blood. In the United States, the Company sells its products directly to physicians,
veterinarians, clinical laboratories and blood banks and on a private-label basis through
multinational distributors of medical supplies. Internationally, the Company sells its
products primarily through distributors. The Company sells the Analyst® and the
Endochek both directly and through distributors servicing both physicians office
laboratories and veterinarians offices. Hemagens products are used in many of
the largest laboratories, hospitals and blood banks around the world. Hemagen sells its
products to over 1,000 customers worldwide. The Company focuses on markets that offer
significant growth opportunities. The Company was incorporated in 1985 and became publicly
traded in 1993.

Hemagens principal offices are
located at 9033 Red Branch Road, Columbia, Maryland 21045 and the telephone number is
(443) 367-5500. Hemagen maintains a website at www.hemagen.com. Investors can obtain
copies of our filings with the Securities and Exchange Commission from this site free of
charge as well as from the Securities and Exchange Commission website at www.sec.gov.

Critical Accounting
Policies

We have identified certain accounting
policies as critical to our business operations and the understanding of our results of
operations. The impact and any associated risks related to the identified critical
accounting policies on our business operations are discussed in our Annual Report on Form
10-KSB for the fiscal year ended September 30, 2003 filed with the Securities and Exchange
Commission.

Results of Operations

The Three Month Period Ended March
31, 2004 Compared to the Three Month Period Ended March 31, 2003

Revenues for the three-month period
ended March 31, 2004 decreased approximately $44,000 (2%) to approximately $2,003,000 from
$2,047,000 for the same period ended March 31, 2003. This decrease is primarily attributed
to reduced sales of the Companys Virgo autoimmune and infectious disease product
line of $249,000 offset by increases experienced with the Companys Raichem division,
Analyst product line and 51% owned Brazilian subsidiary. The reduced sales of the Virgo
autoimmune and infectious disease product line resulted from the loss of a large contract
with a major U.S. based reference laboratory and reduced sales to European distributors.
The Company currently owns 51% of Hemagen Diagnosticos Comercio, Importacao e Exportacao,
Ltd., its Brazilian subsidiary. The Company is currently planning to purchase
significantly all of the ownership of the subsidiary and plans to grow its focus in Brazil
and the remainder of South and Central America.

-10-

---

Cost of product sales decreased
approximately $215,000 (15%) to $1,204,000 from $1,419,000 for the same period last year.
Cost of product sales as a percentage of sales decreased from 69% to 60%. This decrease in
cost of sales as a percentage of sales is mainly attributed to lower costs at the
Companys Raichem division and 51% owned Brazilian subsidiary. The cost of sales
percentage has decreased at Raichem as a result of increased production levels as compared
to the levels in the same quarter in the previous year and lower overall spending at
Raichem. Reduced cost of sales at the Companys Brazilian subsidiary resulted from
the favorable impact of the Brazilian real relative to the subsidiarys product costs
which are mainly in U.S. dollars, as compared to the previous year, and efficiencies
realized by shipping larger quantities of products from the U.S. to Brazil.

Research and development expenses
increased 5,500 (10%) to approximately $62,000 from $57,000 due to the timing of
expenditures.

The Company is currently working to
complete several research and development programs including:

| |  | The development of additional assays and reagents to supplement its clinical chemistry
reagent product line which will be completed over the next three to six months and allow
the Company to increase its sales on an OEM basis.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The completion of several autoimmune disease ELISA kits over the next twelve months to
expand the breadth of the Companys autoimmune product line and allow the Company to
grow sales in this area.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Over the next twelve to eighteen months, the development of several new rotors to be used
with the Analyst® Clinical Chemistry Analyzer for the veterinary market to allow the
Company to expand its consumable sales to todays veterinary users and to be used in
conjunction with selling additional instruments in the veterinary marketplace.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Submission of applications to the FDA to market new blood banking products, which will
take approximately eighteen to twenty four months to complete. This submission will expand
the intended use of certain FDA-approved Hemagen products from clinical use to
blood-banking use, thereby expanding the market for these products.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Selling, general and administrative
(SG&A) expenses decreased by approximately $82,000 (12%) for the quarter
ended March 31, 2004 to $597,000 from $679,000 in the previous period. This reduction is
attributable to reduced legal, consulting and administrative labor expenses.

Other expenses (income) increased
approximately $167,000 (49%) to approximately $513,000 in the quarter ended March 31, 2004
from $339,000 in the prior period, due to increased interest expense. Interest expense for
the three months ended March 31, 2004, was $510,000 as compared to $347,000 in the three
months ended March 31, 2003, primarily as the result of the increase in the amortization
of the Senior Subordinated Convertible Notes. (See Liquidity and Capital
Resources).

-11-

---

Income tax expense for the quarter
ended March 31, 2004 was $19,000 as compared to no expense for the quarter ended March 31,
2003. This tax expense resulted from income realized at the Companys Brazilian
subsidiary.

The net loss for the period was
approximately $386,000 for the three months ended March 31, 2004 as compared to a net loss
of approximately $447,000 in the prior period. The decrease in the net loss from the prior
period mainly resulted from lower cost of sales and selling, general and administrative
expenses offset by higher interest expense associated with the Senior Subordinated
Convertible Notes.

The Six Month Period Ended March 31,
2004 Compared to the Six Month Period Ended March 31, 2003

Revenues for the six-month period
ended March 31, 2004 decreased approximately $378,000 (9%) to approximately $3,653,000
from $4,032,000 for the same period ended March 31, 2003. This decrease is primarily
attributed to:

| |  | Reduced
sales of approximately $339,000 with the Companys Virgo autoimmune and infectious
disease product line resulting from approximately $150,000 of lower sales from the loss
of a contract with a major reference laboratory, $97,000 of lower sales to foreign
distributors, and $85,000 of lower sales to domestic reference labs due to consolidation
within the industry.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Lower
sales of Analyst products of approximately $130,000. In particular, sales of Analyst
consumables to human market distributors have decreased from the prior year.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Lower
sales at the Companys Raichem division of approximately $82,000, which resulted
from lower sales to an OEM customer. The Company is negotiating the supply of other
reagents to this customer and is awaiting FDA clearance on three such products.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Offsetting
these decreases, was an increase of sales at the Companys Brazilian subsidiary of
$201,000.
| | - | -------------------------------------------------------------------------------------------------------

Cost of product sales decreased
approximately $439,000 (16%) to approximately $2,315,000 for the six-month period ended
March 31, 2004 as compared to approximately $2,754,000 in the prior period. As a
percentage of sales, cost of product sales decreased to 63% of sales from 68% of sales in
the prior period. The decrease in cost of product sales is attributed to lower product
costs and improved margins experienced in Brazil with the Companys Brazilian
distributor subsidiary and Raichem division. The Brazilian subsidiarys cost of
product sales decreased to 44% of sales as compared to 66% in the prior period, which
resulted from an improvement in the exchange rate for Brazilian Reals from the prior year.
The Brazilian subsidiarys product costs have been consistently in US dollars while
the revenue dollars have been consistently charged in Reals, therefore as the exchange
rate for Reals improves the cost of product sales as a percentage of sales decreases.

Research and development expenses
increased slightly by 2 % to $111,000 as a result of the timing of project expenditures in
the current period. For detail of current research and development projects see the
comparison of three-month periods ended March 31, 2004 and 2003.

-12-

---

Selling, general and administrative
expenses decreased approximately $169,000 (13%) to approximately $1,170,000 from
$1,339,000 due to reduced legal, headcount and labor costs.

Other expenses (income) increased
approximately $325,000 (48%) to approximately $997,000 from approximately $672,000 as a
result of higher interest expense associated with the non-cash amortization of debt
discount related to the private placement offering completed in May 2000. (See
Liquidity and Capital Resources).

Income tax expense for the six months
ended March 31, 2004 was $19,000 compared to no expense for the six months ended March 31,
2003. This tax expense resulted from income realized at the Companys Brazilian
subsidiary.

Net loss for the six months ended
March 31, 2004 was $960,000 as compared to a net loss of approximately $843,000 in the
same period last year. This increase in net loss is mainly attributed to the increased
interest expense, offset by lower cost of sales and selling, general and administrative
expenses.

Liquidity and Capital
Resources

At March 31, 2004, Hemagen had
$744,000 of cash, working capital of approximately $3,957,000 and a current ratio of 4.3
to 1.0. On April 17, 2004, the outstanding Senior Subordinated Secured Convertible notes
became current liabilities of the Company thereby reducing the working capital and current
ratio on that date. If these notes had been recorded as current liabilities at March 31,
2004, the working capital would have been $90,000 and the current ratio would have been
1.0 to 1.0.

On April 17, 2005, the Companys
Senior Subordinated Secured Convertible Notes outstanding of $6,090,000 become due and
payable. Hemagen does not believe that it will have sufficient cash to pay off these
notes. Hemagen is currently working to restructure or refinance these notes with a new
instrument in its place to repay these notes. The new instrument that the Company is
proposing will probably continue to include a debt instrument that is convertible to
common stock and potentially will have a dilutive impact on the shareholders of the
Company. However, Hemagen can give no assurances that it will be able to refinance or
repay these notes.

During the six month period ended
March 31, 2004, Hemagen generated $23,000 of cash from operating activities, offset by
$3,000 of cash used in investing activities.

In September 2002, the Company
obtained a revolving line of credit with a bank for the purpose of financing working
capital needs as required. The line of credit facility provides for borrowing up to
$1,000,000 at an interest rate of Prime Rate plus 3⁄4 %. To date, the Company has not
borrowed on the line of credit and the effective interest rate on the line of credit is
4.75%.

-13-

---

Hemagen believes that cash flow from
operations, cash on hand at March 31, 2004, and its credit available under its line of
credit facility will be sufficient to finance its operations and capital expenditures over
the next twelve months, although it will be unable to repay its Senior Subordinated
Convertible Notes on April 17, 2005. Hemagen can give no assurances that it will have
sufficient cash flow to finance its operations. Hemagen has no off-balance sheet financing
arrangements.

The Six Month Period Ended March 31,
2004 Compared to the Six Month Period Ended March 31, 2003

Net cash provided by operating
activities during the six months ended March 31, 2004 decreased to $23,000 from $142,000
in the six months ended March 31, 2003. The cash used by the change in operating assets
and liabilities represented a change of approximately $307,000 (140%) to approximately
$88,000 of cash used in the six month period ended March 31, 2004 as compared to $219,000
generated in the prior period, while the net loss after adjusting for non-cash items such
as depreciation and amortization, for the six months ended March 31, 2004 generated cash
of approximately $111,000 as compared to $77,000 of cash used in the previous period.

Approximately $3,000 of cash was used
in investing activities in the six months ended March 31, 2004 as compared to no investing
activities in the six months ended March 31, 2003. This change in cash used is attributed
to capital expenditures in the current period net of fixed asset disposals. At this time,
Hemagen has no commitments for capital expenditures; however, the Companys corporate
headquarters lease expires in approximately three years and the lease of the
Companys San Diego facility expires in approximately one year. As such, the Company
is currently evaluating its future facility requirements which may result in substantial
capital investment or improvement in the near term.

There were no financing activities in
the six months ended March 31, 2004 as compared to $157,000 used in the six months ended
March 31, 2003. The cash used in the prior year was attributed to the scheduled payments
required for the subordinated note payable to Dade Behring, Inc. that was paid off in
November 2002.

Item 3.   Controls and
Procedures

The Companys Chief Executive
Officer, William P. Hales, and Chief Financial Officer, Deborah F. Ricci, have reviewed
the Companys disclosure controls and procedures as of March 31, 2004. Based upon
this review, these officers believe that the Companys disclosure controls and
procedures are effective in ensuring that material information related to the Company is
made known to them as of March 31, 2004 by others within the Company.

There have been no significant
changes including corrective actions with regard to significant deficiencies or material
weaknesses in the Companys internal control over financial reporting that occurred
during the last fiscal quarter that has materially affected or is reasonably likely to
materially affect Hemagens internal control over financial reporting.

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---

# PART II.       OTHER
INFORMATION

# Item 2.        Changes
in Securities and Small Business Issuer Purchases of Equity Securities.

|Period             | (a) Total Number
of Shares (or
Units) Purchased | (b) Average
Price Paid per Share
(or Unit) | (c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Progams | (d) Maximum Number (or
Approximate Dollar Value)
of Shares (or Units) that
May Yet Be Purchased Under
the Plans or Programs
|------------------ | ----------------------------------------------- | ------------------------------------------ | ---------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------
|February 19, 2004- |                                                 |                                            |                                                                                                |                                                                                                                            
|February 23, 2004  |                                                 |                                            |                                                                                                | 13,407                                                                                                                     
|Total              |                                                 |                                            |                                                                                                | 13,407                                                                                                                     

| | (1) | Represents shares of Companys Common Stock purchase in pursuant to the
               Companys Employee Stock Ownership Plan (ESOP) that was established October
               1, 2003 with no expiration. The purpose of the plan is not to repurchase, but
               rather is an employee benefit plan.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | There is no maximum number of shares that may be purchased under the
               Companys Employee Stock Ownership Plan.
| | --- | ----------------------------------------------------------------------------------------------------------------------------

Item 4.

Hemagens Annual Meeting of
Shareholders was held on February 25, 2004. Each of the following matters was voted upon
and approved by Hemagens shareholders as indicated below:

(1)    
          Election of the following director:

Edward
T. Lutz 7,804,365 votes for, 22,288 votes against, and zero abstentions.

(2)    
          Ratification of appointment of Grant Thornton, LLP as Hemagens independent
          public accountants for fiscal year 2004, 7,845,228 votes for, 16,400 votes
          against, and 1,025 abstentions.

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

(a)    
Exhibits

| | Exhibit 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
| | ------------ | -------------------------------------------------------------------

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---

| | Exhibit 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
| | ------------ | -------------------------------------------------------------------

| | Exhibit 32.1 | Certification of Chief Executive Officer pursuant to Section 1350 of Chapter 63 of
Title 18 of the United States Code
| | ------------ | ---------------------------------------------------------------------------------------------------------------------

| | Exhibit 32.2 | Certification of Chief Financial Officer pursuant to Section 1350 of Chapter 63 of
Title 18 of the United States Code
| | ------------ | ---------------------------------------------------------------------------------------------------------------------

(b)       
          Reports on Form 8-K

| | A
Form 8-K dated March 16, 2004 was filed pursuant to Item 5 with respect to the
Companys announcement of the commencement of its Employee Stock Ownership Plan and
the Announcement of the Companys Board and Management appointments.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

SIGNATURES

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

|May 16, 2004May 16, 2004 |  | Hemagen Diagnostics, Inc.
(Registrant)BY: /s/William P. Hales
William P. HalesPresident andChief Executive OfficerBY: /s/Deborah F. Ricci
Deborah F. RicciChief Financial Officer
|------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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