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, 2005 | 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 March 31, 2005, the issuer had 15,204,351 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
|---------------------------------
|                                 
|                                 
|                                 
|                                 
|                                 

|SIGNATURES     |  |  | 19
|-------------- |  |  | --
|CERTIFICATIONS |  |  | 20

2

---

# PART I  Financial
Information

Item 1.   Financial
Statements

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

|ASSETS                                                  | March 31,
2005 | September 30,
2004
|------------------------------------------------------- | -------------- | ------------------
|CURRENT ASSETS:                                         |                |                   
|Cash and cash equivalents                               |                |                   
|Accounts receivables, less allowance for                |                |                   
|doubtful accounts of $132,502 and $102,359 at           |                |                   
|March 31, 2005 and September 30, 2004, respectively     |                |                   
|Inventories, net                                        |                |                   
|Prepaid expenses and other current assets               |                |                   
|                                                        |                |                   
|Total current assets                                    |                |                   
|                                                        |                |                   
|PROPERTY AND EQUIPMENT; net of accumulated depreciation |                |                   
|and amortization of $7,108,619 and $6,871,498 at        |                |                   
|March 31, 2005 and September 30, 2004, respectively     |                |                   
|                                                        |                |                   
|OTHER ASSETS                                            |                |                   
|                                                        |                |                   
|Total Assets                                            |                |                   
|                                                        |                |                   

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

3

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

|LIABILITIES AND STOCKHOLDERS EQUITY                    | March 31,
2005 | September 30,
2004
|------------------------------------------------------- | -------------- | ------------------
|                                                        |                |                   
|CURRENT LIABILITIES:                                    |                |                   
|                                                        |                |                   
|Senior subordinated secured convertible notes due       |                |                   
|April 17, 2005, net of unamortized discount of          |                |                   
|$5,188 at September 30, 2004 and                        |                |                   
|Accounts payable and accrued liabilities                |                |                   
|Deferred revenue                                        |                |                   
|                                                        |                |                   
|Total Current Liabilities                               |                |                   
|Senior subordinated secured convertible notes due       |                |                   
|September 30, 2009, net of unamortized discount of      |                |                   
|$298,788 and $326,863 at March 31, 2005 and             |                |                   
|September 30, 2004, 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: 15,304,351 and      |                |                   
|15,294,343 at March 31, 2005 and September 30, 2004,    |                |                   
|respectively                                            |                |                   
|Additional paid-in capital                              |                |                   
|Accumulated deficit                                     |                |                   
|Accumulated other comprehensive loss-                   |                |                   
|currency translation loss                               |                |                   
|Less treasury stock at cost; 100,000 shares at          |                |                   
|September 30, 2004 and September 30, 2003, respectively |                |                   
|                                                        |                |                   
|                                                        |                |                   
|Total Stockholders' (Deficit) Equity                    |                |                   
|                                                        |                |                   
|Total Liabilities and Stockholders' Equity              |                |                   
|                                                        |                |                   

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

4

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# 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 and amortization of debt         |                    |                 
|discount                                  |                    |                 
|Other                                     |                    |                 
|                                          |                    |                 
|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

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# 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 (used in) 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:                |                           
|Exercise of stock options                            |                           
|                                                     |                           
|Net cash provided/used by financing activities       |                           
|                                                     |                           
|Effects of foreign exchange rate                     |                           
|                                                     |                           
|Net (decrease) increase 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                                        |                           
|                                                     |                           

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

6

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# 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 2004 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 accounting principles generally accepted in the
United States of America 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  RECENT
ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued
SFAS No. 123 (revised 2004), Share-Based Payment. This statement will provide
investors and other users of financial statements with more complete and neutral financial
information by requiring that the compensation cost relating to share-based payment
transactions be recognized in financial statements. That cost will be measured based on
the fair value of the equity or liability instruments issued. This statement covers a wide
range of share-based compensation arrangements including share options, restricted share
plans, performance-based awards, share appreciation rights, and employee share purchase
plans, and replaces FASB SFAS No. 123 Accounting for Stock-Based Compensation,
and supersedes APB Opinion No. 25. Statement 123, as originally issued in 1995,
established as preferable a fair-value-based method of accounting for share-based payment
transactions with employees. However, that statement permitted entities the option of
continuing to apply the guidance in APB No. 25, as long as the footnotes to financial
statements disclosed the pro forma net income under the fair-value-based method. The
Company will be required to apply SFAS No. 123(R) as of the first interim or annual
reporting period that begins after December 15, 2005. The Company is evaluating the impact
of the adoption of SFAS No. 123(R), and does not believe the impact will be significant to
the Companys overall results of operations or financial position.

7

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# NOTE C  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, 2005 and March 31, 2004. 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 options
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
7,650,647 and 5,340,014 at March 31, 2005 and 2004, 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 D  STOCK
BASED COMPENSATION

At March 31, 2005, options for the
purchase of 2,273,014 shares of common stock with a weighted average exercise price of
$1.20 were outstanding. During the six months ended March 31, 2005 options to purchase
15,000 shares at an exercise price of $0.35 per share were granted. During the six months
ended March 31, 2005, options for the purchase of 10,000 shares of Common Stock were
exercised with exercise prices of $0.29 per share while options for the purchase of 80,000
shares of common stock expired with weighted average exercise prices of $0.85 per share.

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 loss            |                    |                 
|                              |                    |                 
|Net loss per common share:    |                    |                 
|Basic and Diluted;            |                    |                 
|As reported                   |                    |                 
|Pro forma                     |                    |                 
|                              |                    |                 

8

---

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 2005 and 2004; dividend
yield of 0%; expected volatility of 300% and 196% for 2005 and 2004, respectively;
risk-free interest rate of 4% for both periods; and expected terms of 3.0 to 10.0 years.

# NOTE E  INVENTORIES

Inventories at March 31, 2005 and
September 30, 2004 consist of the following;

| |  | March 31,
2005 | September 30,
2004
| |  | -------------- | ------------------
| |  |                | Raw Materials     
| |  |                | Work-in-process   
| |  |                | Finished goods    
| |  |                |                   
| |  |                |                   
| |  |                | Less reserves     
| |  |                |                   
| |  |                | Net inventories   
| |  |                |                   

# NOTE F  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, 2006.
Maximum borrowings under the loan are based on the domestic receivables and inventory of
the Company. At March 31, 2005 there was no outstanding balance on the line of credit and
the effective interest rate on the line of credit was 6.5%.

# NOTE G  EXCHANGE
OFFERING

The Company completed an exchange
offering of $6,065,000 of its senior subordinated secured convertible notes (Old
Notes) due on April 17, 2005 for 5,079,438 shares of its common stock and $4,033,225
of senior subordinated secured convertible notes (New Notes) due on September
30, 2009. At the completion of the exchange offering in December 2004, all but $25,000 of
the Old Notes had been exchanged. The exchange offering was effective as of September 30,
2004, since at that time more than 80% of the Old Notes were tendered for exchange. The
Company has accounted for the exchange offering as though the entire amount of $6,065,000
of Old Notes were exchanged as of September 30, 2004, since at September 30, 2004 the
Company had the right and the intent to require the remaining Old Notes to be exchanged,
as long as more than 75% of the Notes were tendered. Subsequent to September 30, 2004 all
but one $25,000 Note was tendered, or over 99% of the notes were tendered in the exchange
offer.

9

---

The shares of common stock issued in
connection with the exchange offering are restricted by the terms of the tender offer from
sale or transfer until after September 30, 2005.

The New Notes pay interest quarterly
at an annual rate of 8%, are convertible at the option of the holder into shares of the
Companys common stock after September 30, 2005 at $0.75 per share, and mature on
September 30, 2009. The New Notes are secured by a first lien on all real, tangible and
intangible property except for a subordination provided as security interest of the
$25,000 of Old Notes and Security for up to a maximum of $3 million credit facility, real
estate financing used to secure a corporate headquarters subject to limitation and up to
$4.0 million for financing related to strategic acquisitions. The Company has the right to
require conversion of the New Notes at any time after September 30, 2005 if the
Companys common stock has traded at or above $1.25 per share for a consecutive
twenty-day trading period. The Company may also prepay the New Notes at any time at their
full face amount plus any accrued and unpaid interest.

The Company determined the fair value
of the 5,079,438 shares of its common stock on the closing market price, at September 30,
2004, of its common stock of $0.38 to be $1,930,186. The fair value of the New Notes was
determined by management based on a 10% discount rate, resulting in a fair value of the
New Notes of $3,706,362. At March 31, 2005 and September 30, 2004, the unamortized
discount on these notes was $298,788 and $326,863, respectively.

# NOTE H  SENIOR
SUBORDINATED SECURED CONVERTIBLE NOTES

On May 24, 2000, the Company
completed a private placement offering of senior subordinated secured convertible note
units in the face amount of $6,315,000 with net proceeds of $6,025,524. The units
consisted of senior subordinated convertible notes, common stock and detachable warrants.
Each unit was sold for $500,000 and consisted of one $500,000 senior subordinated secured
convertible note, 200,000 detachable warrants to purchase common stock and 93,750 shares
of common stock.

As described in Note G, on September
30, 2004, Senior Subordinated Secured notes payable with a face value of $6,065,000 were
exchanged for shares of the Companys Common Stock and new notes. The face value of
the notes outstanding at March 31, 2005 is $25,000. The unamortized discount on these
notes was $5,188 at September 30, 2004. This outstanding Note has been classified as a
current liability of the Company.

10

---

# NOTE I 
GEOGRAPHICAL INFORMATION

The Company considers its
manufactured kits, tests and instruments as one operating segment, as defined under
Statement of Financial Accounting Standards No. 131 Disclosures about Segments of an
Enterprise and Related Information.

The following table sets forth
revenue for the periods reported and assets by geographic location.

|                  | United*
States | Brazil | Consolidated
|----------------- | -------------- | ------ | ------------
|Six Months Ended  |                |        |             
|March 31, 2005:   |                |       
|Revenues          |                |        | $           
|Long-lived assets |                |        |             
|Six Months Ended  |                |       
|March 31, 2004:   |                |       
|Revenues          |                |        | $           
|Long-lived assets |                |        |             

* Includes export sales to countries
other than Brazil.

# Managements Discussion
and Analysis of Financial Conditionand 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.

11

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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, the ability to assimilate
successfully product acquisitions, difficulties in securing credit and the effects of
negative stockholders equity.

# 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, a complete line of Clinical Chemistry Reagents through
its wholly owned subsidiary RAICHEM, 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 Corporate 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.

12

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# 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, 2004 filed with the Securities and Exchange
Commission.

# Results of Operations

The Three Month Period
Ended March 31, 2005Compared to the Three Month Period Ended March 31, 2004

Revenues for the three-month period
ended March 31, 2005 decreased slightly by approximately $16,000 (1%) to approximately
$1,987,000 from $2,003,000 for the same period ended March 31, 2004. The change in
revenues mainly resulted from lower volume of product sold in the current period.

Cost of product sales increased
approximately $388,000 (32%) to $1,592,000 from $1,204,000 for the same period last year.
Cost of product sales as a percentage of sales increased from 60% to 80%. This increase in
cost of sales as a percentage of sales is mainly attributed to reduced production levels
and increased costs. Increased costs included higher labor, consulting and facility costs
in the period. Gross margins for the quarter were 20% as compared to 40% in the previous
period. The reduced margin was attributed to reduced levels of manufacturing of finished
goods inventory of the Analyst product line, a line with historically higher margins, and
increased costs with the Companys Raichem division and VIRGO product line, a lower
margin line. The manufacturing levels with respect to the Companys Analyst division
were substantially below the previous periods production level because of a lower
level of consumables rotor production. This production was lower than the previous period
due, in part, to mechanical problems and scrapped raw materials. In the quarter ended
March 31, 2005, production levels were low thereby providing low absorption of the product
lines fixed overhead.

The Company also experienced
increased operating expenses at the Raichem division and the VIRGO product line. Increased
expenses at Raichem resulted from an increase of temporary labor expense and facility
expense associated with production employee turnover. The increased expenses for the VIRGO
product line resulted from increased labor expense from the previous period, increased
consulting and travel expenses, freight expense and higher inventory scrap rates.

Research and development expenses
increased $18,000 (30%) to approximately $80,000 from $62,000 due to an increase of
expenditures on research supplies in the current quarter.

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

13

---

| |  | Evaluating and developing complimentary products for Hemagens Analyst product line
to distribute to the veterinary market, expanding the consumable rotor products to include
a VetSelect and T4 rotor for the veterinary market.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Company entered into discussions and is currently negotiating terms with instrument
design and manufacturing companies to redesign and upgrade the Analyst instrument
technology.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Selling, general and administrative
(SG&A) expenses decreased by approximately $36,000 (6%) for the quarter
ended March 31, 2005 to $561,000 from $597,000 in the previous period. This reduction is
attributable to reduced legal, consulting and administrative labor expenses.

Other expenses decreased
approximately $409,000 (81%) to approximately $97,000 in the quarter ended March 31, 2005
from $506,000 in the prior period, due to reduced interest and amortization of debt
discount expense. Interest expense for the three months ended March 31, 2005, was $97,000
as compared to $510,000 in the three months ended March 31, 2004, primarily as the result
of the exchange offering completed with an effective date of September 30, 2004 (See Note
G). The reduction is mainly related to the reduction in non-cash interest expense
resulting from the amortization of the debt discount. Cash payments of interest expense
decreased from $120,000 to $79,000 in the current period.

Income tax expense for the quarter
ended March 31, 2005 was $5,000 as compared to $19,000 for the quarter ended March 31,
2004. This tax expense resulted from income realized at the Companys Brazilian
subsidiary.

The net loss for the period was
approximately $349,000 for the three months ended March 31, 2005 as compared to a net loss
of approximately $386,000 in the prior period. The decrease in the net loss from the prior
period mainly resulted from lower interest expense associated with the exchange offering
offset by lower margins resulting from lower production levels and increased expenses.

The Six Month Period
Ended March 31, 2005Compared to the Six Month Period Ended March 31, 2004

Revenues for the six-month period
ended March 31, 2005 increased by approximately $112,000 (3%) to approximately $3,765,000
from $3,653,000 for the same period ended March 31, 2004. This increase is primarily
attributed to higher sales at the Companys Raichem division of approximately
$196,000 offset by lower sales with the Companys Analyst product line of $56,000 and
$26,000 of lower sales of the Companys Endocheck veterinary product line.

14

---

Cost of product sales increased by
approximately $550,000 (24%) to $2,865,000 from $2,315,000 for the same period last year.
Cost of product sales as a percentage of sales increased from 63% to 76%. This increase in
cost of sales as a percentage of sales is mainly attributed to higher costs with the
Companys Analyst product line, which resulted from reduced manufacturing in the
current period and, higher period costs with the Companys Virgo Product Line.

Research and development expenses
increased $31,000 (28%) to approximately $142,000 from $111,000 mainly due to increased
research material supply purchases, and consulting expenditures.

The Company is currently working to
complete several research and development projects that are more fully described in the
above comments for the three months ended March 31, 2005.

Selling, general and administrative
(SG&A) expenses for the six months ended March 31, 2005 were $1,133,000
which is slightly less than the previous period expenses of $1,170,000. This reduction is
attributable to reduced legal, consulting and administrative labor expenses.

The operating loss for the current
period was $375,000 as compared to operating income of $57,000 in the prior period, an
increase in loss of $432,000 from the prior period. This increase in loss is mainly
attributed to the increase in cost of product sales and lower margin reported in the
current period.

Other expenses decreased by
approximately $805,000 (81%) to approximately $192,000 in the six months ended March 31,
2005 from $997,000 in the prior period, due to reduced interest expense. Interest expense
for the six months ended March 31, 2005, was $192,000 as compared to $987,000 in the six
months ended March 31, 2004, primarily as the result of the exchange offering completed
with an effective date of September 30, 2004 (See Note G). This reduction in interest
expense is mainly related to the reduction of the non-cash interest expense resulting from
the amortization of the debt discount. Cash payments of interest expense decreased from
$242,000 in the prior period to $160,000 in the current period.

Income tax expense for the quarter
ended March 31, 2005 was $16,000 as compared to $19,000 for the quarter ended March 31,
2004. This tax expense resulted from income realized at the Companys Brazilian
subsidiary.

The net loss for the period was
approximately $584,000 for the six months ended March 31, 2005 as compared to a net loss
of approximately $960,000 in the prior period. The decrease in the net loss from the prior
period mainly resulted from lower interest expense associated with the non-cash
amortization of discount on the Senior Subordinated Convertible Notes offset by increased
cost of sales.

15

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# Liquidity and Capital
Resources

At March 31, 2005, Hemagen had
approximately $206,000 of cash, and working capital of approximately $2,959,000. At
September 30, 2004 the Company had $539,000 of cash and working capital of $3,334,000.

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 %. The line of credit has an
effective interest rate of 6.5% and expires on March 31, 2006. At March 31, 2005, the
borrowing availability under this line of credit was approximately $740,000.

Hemagen believes that cash flow from
operations, cash on hand at March 31, 2005, and its credit available under its line of
credit facility will be sufficient to finance its operations, over the next twelve months.
The Company has entered into a cancelable agreement to purchase a building that will be
improved and used as the Companys corporate headquarters and main manufacturing
facility. Hemagen has obtained the necessary credit facilities to finance this purchase
over a long term basis. This acquisition will require the Company to use some of its cash
flow and existing unused line of credit to finance this purchase. Hemagen believes that
this purchase, the cash flow from operations, its current line of credit facility, and
additional financing it has received for the purchase and build out of its new facility if
it should decide to purchase the building, will be sufficient to finance its operations
and capital expenditures over the next twelve months.

Effective September 30, 2004, the
Company issued $4,033,225 principal amount of Senior Subordinated Secured Convertible
Notes due September 30, 2009 and 5,079,438 shares of common stock in exchange for
$6,065,000 principal amount of its Senior Subordinated Secured Convertible Notes due April
17, 2005. The new Notes issued are convertible into Common Stock at $0.75 per share at any
time after September 30, 2005 (See Note G).

Net cash used in operating activities
during the six months ended March 31, 2005 was $278,000 as compared to cash generated of
approximately $23,000 during the six months ended March 31, 2004. The net loss after
adjusting for non-cash items such as depreciation and amortization of discount on debt,
for the six months ended March 31, 2005 was approximately $318,000 as compared to $111,000
generated in the previous period. The cash generated by the change in operating assets and
liabilities represented a change of approximately $128,000 (145%) to approximately $40,000
of cash generated in the six month period ended March 31, 2005 as compared to $88,000 used
in the prior period. The increase in cash generated by the change in operating assets
mainly resulted from the reduction in cash used for inventory of $374,000 and lower cash
used for accounts payable, accrued expenses and deferred revenue of $159,000 offset by
lower cash generated from receivables of $310,000 and prepaids and other current assets of
$95,000.

16

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Approximately $11,000 of cash was
used in investing activities in the six months ended March 31, 2005 as compared to $3,000
of cash used for investing activities in the six months ended March 31, 2004. The cash
used in the current period is attributed to capital expenditures which is consistent with
the previous period. The Company has capital expenditures planned for fiscal 2005 related
to the purchase and build out of a new corporate manufacturing facility in Baltimore,
Maryland. No commitments for capital expenditures in fiscal 2005 have been made at this
time. The Company has a deposit on a building in the amount of $25,000 that it is
evaluating at this time, and estimates these capital expenditures will be between $2.0 to
$2.2 million.

Approximately $3,000 of cash was
generated from financing activities in the six months ended March 31, 2005, which was
derived from the exercise of stock options. There were no such amounts in the six months
ended March 31, 2004.

# Item 3.    Controls and
Procedures

The Companys Chief Executive
Officer, William P. Hales, and Chief Financial Officer, Deborah F. Ricci, have evaluated
the effectiveness of the design and operation of the Companys disclosure controls
and procedures as of March 31, 2005. Based upon this evaluation, these officers believe
that the Companys disclosure controls and procedures were effective as of March 31,
2005.

Management is aware that there is a
lack of segregation of duties due to the small number of employees within the financial
and administrative functions of the Company. However, management has decided that
considering the employees involved and the control procedures in place, risks associated
with such lack of segregation are insignificant and the potential benefits of adding
employees to clearly segregate duties do not justify the expenses associated with such
increases. Management will continue to evaluate this segregation of duties. In addition,
management is aware that many of the internal controls that are in place at the Company
are undocumented. The Company is currently working to appropriately documents these
internal controls. The Company is working to document these controls to be in compliance
with Section 404 of the Sarbanes-Oxley Act of 2002 by September 30, 2006.

There has been no change in the
Companys internal control over financial reporting identified in connection with the
evaluation of internal controls that occurred during the last fiscal quarter that has
materially affected, or is reasonably likely to affect, Hemagens internal control
over financial reporting.

# PART II.    OTHER
INFORMATION

# Item 2.   
Unregistered Sales of Equity Securities and Use of Proceeds.

17

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|Period                 | (a) Total
Number of
Shares
Purchased | (b) Average
Price Paid per
Share | (c) Total Number of Shares
Purchased as Part of
Publicly Announced Plans
or Programs(1) | (d) Maximum Number (or
Approximate Dollar Value)
of Shares that May Yet Be
Purchased Under the Plans
or Programs (2)
|---------------------- | ------------------------------------ | -------------------------------- | --------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------
|October 15, 2004       |                                      |                                  |                                                                                         | 2,000                                                                                                               
|March 1 - 31, 2005     |                                      |                                  |                                                                                         | 20,999                                                                                                              
|April 14 - May 6, 2005 |                                      |                                  |                                                                                         | 26,563                                                                                                              
|                       |                                      |                                  |                                                                                         |                                                                                                                     
|Total                  |                                      |                                  |                                                                                         | 49,562                                                                                                              

| | (1) | Represents shares of Companys Common Stock purchased 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.    Submission
of Matters to a Vote of Security Holders.

The
Registrants Annual Shareholders Meeting was held March 18, 2005. At the
meeting, William P. Hales was elected a director for the term expiring in 2008 by a vote
of 10,982,000 shares For and 235,200 shares Withheld.

Shareholders
ratified the appointment of Grant Thornton, LLP as independent public accountants for
fiscal 2005 for a vote of 11,179,875 shares For and 15,200 shares Withheld and 22,125
shares Abstained.

# Item 6.    Exhibits.

| | (a) | Exhibits
| | --- | --------

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

| | 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
| | ------------ | ---------------------------------------------------------------------------------------------------------------------

18

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# SIGNATURES

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

|May 16, 2005May 16, 2005 |  | 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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