U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                  FORM 1O-QSB/A

                                 Amendment No. 1


|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2005

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      For the transition period from ________ to ________

                         Commission File Number: 0-21284

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

             Delaware                                    91-1549305
----------------------------------                  -------------------
  (State or other jurisdiction                        (I.R.S. Employer
of incorporation or organization)                   Identification No.)

                                1 Clarks Hill Rd.
                              Framingham, MA. 01702
              -----------------------------------------------------
              (Address of principal executive offices and zip code)

                                 (508) 872-2625
                 -----------------------------------------------
                 (Issuer's telephone number including area code)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days: Yes |_| No |X|

The number of shares outstanding of the Registrant's Common Stock as of May 13,
2005, 31,709,491 shares.

Transitional Small Business Disclosure Format (check one):  Yes |_| No |X|
================================================================================


                                       1
<PAGE>

                                Explanatory Note

This Amendment No. 1 on Form 10-QSB/A to the Quarterly Report on Form 10-QSB of
Saliva Diagnostic Systems Inc. (the Company) for the quarterly period ended
March 31, 2005 is being filed to (a) restate the Company's Balance Sheet and
Statements of Operations and Cash Flows (Unaudited) and (b) revise related and
other disclosures included in the quarterly report on Form 10-QSB.

The restatement of the Balance Sheet involves an adjustment of $929,250 to the
additional paid-in capital account, recognition of $920,340 in deferred
compensation cost and an adjustment of $8,910 to the selling, general and
administrative expense on the Statement of Operations for the 550,000 options
granted to an employee in March 2005.

The Statement of Cash Flows has been restated to reflect the compensation cost
recognized related to option granted. Accordingly, management's discussion
regarding Liquidity and Capital Resources has been revised to reflect the
changes made.

Additionally, Note 4 to the Financial Statements has been added to provide
additional detail on the option granted.

This Amendment No. 1 amends Parts I and II of the Quarterly Report on Form
10-QSB for the quarterly period ended March 31, 2005. This Amendment No. 1
continues to reflect circumstances as of the date of the original filing of the
Quarterly Report on Form 10-QSB and the Company has not updated the disclosures
contained therein to reflect events that occurred at a later date, except for
items relating to the restatement.


                                       2
<PAGE>

   SALIVA DIAGNOSTIC SYSTEMS, INC.

                                  FORM 10-QSB/A
                                      INDEX


   PAGE

   PART I FINANCIAL INFORMATION

   Item 1. Financial Statements

           Balance sheets - March 31, 2005 (unaudited) and
           December 31, 2004................................................3

           Statements of Operations - Three Months Ended
           March 31, 2005 and 2004 (unaudited)..............................4

           Statements of Cash Flows- Three Months Ended
           March 31, 2005 and 2004 (unaudited)..............................5

           Notes to Financial Statements (unaudited)........................6

   Item 2. Management's Discussion and Analysis of Financial Condition
           And Plan of Operation...........................................15

   Item 3. Controls and Procedures.........................................22


   PART II OTHER INFORMATION

   Item 1. Legal Proceedings...............................................23

   Item 2. Changes in Securities...........................................23

   Item 3. Defaults Upon Senior Securities.................................23

   Item 4. Submission of Matters to a Vote of Security Holders.............23

   Item 5. Other Information...............................................23

   Item 6. Exhibits and Reports on Form 8-K................................24

   Signatures.     25

   Certifications  26


                                       3
<PAGE>

  PART I FINANCIAL INFORMATION
  Item 1. FINANCIAL STATEMENTS

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                          March 31, 2005   December 31,
                                                                                            (Unaudited)        2004
                                                                                           ------------    ------------
                                                                                            (Restated)
<S>                                                                                        <C>             <C>
ASSETS

CURRENT ASSETS:
Cash and cash equivalents                                                                  $     20,910    $    148,630
Accounts receivable, net of allowance for doubtful accounts of $55,495 (2005) and (2004)        286,922         248,279
Inventories                                                                                      84,010         102,027

                                                                                           ------------    ------------
Total current assets                                                                            391,842         498,936

Property and equipment, net of accumulated depreciation of $528,567 and $518,675                113,562          73,269
Equipment under construction                                                                    664,401         603,111
Patents and trademarks, net of accumulated amortization of $117,827 and $115,220                 59,439          62,046
Deferred costs, less accumulated amortization of $167,748 and $141,600                          304,252         170,400
Deposits                                                                                            800             800

                                                                                           ------------    ------------
 TOTAL ASSETS                                                                              $  1,534,296    $  1,408,562
                                                                                           ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Bank overdraft                                                                             $         --    $     26,953
Note payable - shareholders                                                                      17,221         243,398
Accounts payable                                                                                 82,037         129,222
Customer advances                                                                                   455          18,465
Accrued expenses                                                                                 84,754         356,081
Accrued payroll expense to officers                                                             229,750         161,250
Payroll and payroll taxes payable                                                               106,078          70,078

                                                                                           ------------    ------------
Total current liabilities                                                                       520,295       1,005,447

LONG-TERM DEBT
Debenture payable                                                                             1,100,000              --
Note payable - shareholder                                                                    1,932,099       2,069,839

                                                                                           ------------    ------------
TOTAL LIABILITIES                                                                             3,552,394       3,075,286

                                                                                           ------------    ------------
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT:
Series 1998-B Convertible Preferred Stock: 1,645 shares
     authorized, none issued and outstanding                                                         --              --
Common stock, $.001 par value, 50,000,000 shares authorized, issued and
     outstanding: 31,709,491 shares (2005) and 30,509,491 (2004)                                 31,709          30,509
Additional paid-in capital                                                                   43,293,106      42,073,056
Less: Deferred compensation                                                                    (920,340)
Accumulated deficit                                                                         (44,422,573)    (43,770,289)
                                                                                           ------------    ------------
TOTAL SHAREHOLDERS' DEFICIT                                                                  (2,018,098)     (1,666,724)
                                                                                           ------------    ------------
 TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                                               $  1,534,296    $  1,408,562
                                                                                           ============    ============
</TABLE>



        The accompanying notes are an integral part of these statements.


                                       4
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                      Three Months Ended March 31,
                                                      ----------------------------
                                                          2005            2004
                                                      ------------    ------------
                                                       (Restated)
<S>                                                   <C>             <C>
REVENUES:
Product Sales                                         $    264,473    $    280,198
Royalty Income                                                 546             921

                                                      ------------    ------------
                                                           265,019         281,119

COSTS OF PRODUCTS SOLD                                      94,346          73,317

                                                      ------------    ------------
Gross profit                                               170,673         207,802
                                                      ------------    ------------
OPERATING EXPENSES:
Research and development                                    77,000         210,000
Selling, general and administrative expense                644,672          73,159
                                                      ------------    ------------

                                                           721,672         283,159
                                                      ------------    ------------

Loss from operations                                      (550,999)        (75,357)

Interest expense                                          (101,285)        (72,923)
                                                      ------------    ------------
NET LOSS TO COMMON STOCKHOLDERS                       $   (652,284)   $   (148,280)
                                                      ============    ============

BASIC AND DILUTED NET LOSS PER SHARE                  $      (0.02)   $      (0.01)
                                                      ============    ============

SHARES USED IN BASIC AND DILUTED NET LOSS PER SHARE     30,565,256      30,509,700
                                                      ============    ============
</TABLE>

        The accompanying notes are an integral part of these statements.


                                       5
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                       Three Months Ended March 31,
                                                                                                      ----------------------------
                                                                                                          2005            2004
                                                                                                      ------------    ------------
                                                                                                        (Restated)
<S>                                                                                                   <C>             <C>
OPERATING ACTIVITIES:
Net loss                                                                                              $   (652,284)   $   (148,280)
Adjustments to reconcile net loss to net cash  (used in) operating activities:
Depreciation and amortization                                                                               12,499           8,931
Amortization of deferred costs                                                                              26,148          21,300
Warrants issued for recruiting services                                                                    280,000              --
Amortization of Options granted to employee                                                                  8,910              --
Changes in assets and liabilities:
Accounts receivable                                                                                        (38,643)        (26,619)
Royalty receivable                                                                                              --           9,078
Subscription receivable                                                                                         --           2,000
Inventories                                                                                                 18,017         (26,348)
Other current assets                                                                                            --            (474)
Accounts payable, accrued payroll expense to officers and accrued expenses                                  (3,249)         56,521
                                                                                                      ------------    ------------
Net cash used in operating activities                                                                     (348,602)       (103,891)
                                                                                                      ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                                                                       (111,475)       (130,312)
Deferred finance cost                                                                                     (160,000)             --
                                                                                                      ------------    ------------
Net cash used in investing activities                                                                     (271,475)       (130,312)
                                                                                                      ------------    ------------
Cash overdraft                                                                                             (26,953)             --
Proceeds from shareholder loans                                                                             30,000         522,000
Proceeds from issuance of debentures                                                                     1,100,000              --
Repayments of shareholder loans                                                                           (612,690)       (273,500)
Proceeds from issuance of common stock                                                                       2,000              --
                                                                                                      ------------    ------------
Net cash provided by financing activities                                                                  492,357         248,500
                                                                                                      ------------    ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                                      (127,720)         14,297

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                             148,630          24,182
                                                                                                      ------------    ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                                              $     20,910    $     38,479


SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW INFORMATION:
During the three month periods ended March 31, 2005 and 2004, the previous
year's balance of accrued interest of $228,773 and $68,265, respectively, for a
shareholder's loan was added to the
loan balance as principal                                                                             $    228,773    $     68,265
During the three month period ended March 31, 2005, 1,000,000 shares of common stock were issued
for a warrant conversion at $.01 per share. Payment due of $10,000 was offset to a note payable to
this stockholder                                                                                      $     10,000              --
During the three month period ended March 31, 2005, 550,000 options were granted to an employee and
recorded as Additional Paid in Capital and deferred compensation cost                                 $    929,250              --
</TABLE>

        The accompanying notes are an integral part of these statements.


                                       6
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (UNAUDITED)

1.  Description of Business/Basis of Presentation

Saliva Diagnostic Systems, Inc., (SDS), a Delaware corporation (the "Company"),
is primarily engaged in the development and marketing of oral fluid collection
devices for the drugs of abuse market, and rapid immunoassays for use in the
detection of infectious diseases. The Company believes that its patented
proprietary platform for rapid testing for infectious diseases, offers
significant advantages over the existing products, including ease-of-use, lower
costs, and significantly reduced risk of infection from collecting and handling
specimens. In the oral fluid collection market, the Company's platform has a
patented internal quality control that indicates sufficient volume of the oral
fluid ("volume adequacy indicator").

In May 2002, the Company received its Investigational Device Exemption (IDE)
from the U.S. Food and Drug Administration (FDA) for its Rapid HIV
Hema-Strip(TM) Test. Upon termination of all business relationships with its
then contract manufacturer, Chembio Diagnostic Systems, (CEMI.OB) the Company
signed a Manufacturing / Research & Development Agreement with American Bio
Medica Corporation, Nasdaq SC (ABMC), of Kinderhook, NY. Responsibilities of
ABMC include manufacturing and regulatory compliance of the Company's HIV test
devices. The Company filed a new IDE with the FDA naming ABMC as its contract
manufacturer. This IDE submission to the FDA was made in October 2003.
Thereafter, the Company completed its clinical trials and had submitted all
modules of the Pre-Market Approval (PMA) to the FDA. The FDA has recently
requested certain additional testing and the Company is presently completing
these tests. Based on the results of the Hema-Strip(TM) HIV Test clinical
trials, the Company has reason to believe the product's performance meets the
necessary criteria for FDA approval. Should the Company receive PMA approval for
its rapid HIV test, it will also file for a CLIA (Clinical Laboratory
Improvements Amendments) waiver.

SDS is committed to and focused on the completion of the necessary requirements
towards obtaining U.S. Food and Drug Administration (FDA) PMA marketing approval
of our rapid Hema-Strip(TM) HIV diagnostic tests in the United States. Although
there is no assurance that we will receive approval, we believe that the
Hema-Strip(TM) HIV device format, if approved for detecting antibodies to HIV-1
in fingerstick and venipuncture whole blood, serum and plasma samples, will have
certain competitive advantages in the market for rapid HIV testing both in the
United States and internationally.

The accompanying unaudited financial statements as of and for the three month
periods ended March 31, 2005 and 2004, have been prepared in conformity with
accounting principles generally accepted in the United States of America. The
financial information as of December 31, 2004, is derived from Saliva Diagnostic
Systems, Inc. (the "Company") financial statements included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 2004. Certain
information or 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, pursuant to the rules
and regulations of the Securities and Exchange Commission for interim filings.
In the opinion of management, the accompanying financial statements include all
adjustments necessary (which are of a normal and recurring nature) for the fair
presentation of the results of the interim periods presented. The accompanying
financial statements should be read in conjunction with the Company's audited
financial statements for the year ended December 31, 2004, as included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2004.
Operating results for the three month period ended March 31, 2005 are not
necessarily indicative of the results that may be expected for the entire year
ending December 31, 2005, or any other portion thereof.


                                       7
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (UNAUDITED)

2. Substantial Doubt Regarding Ability To Continue As A Going Concern

Significant operating losses - accumulated deficit:

Since July 1990, the Company has been engaged almost exclusively in research and
development activities focused on developing proprietary saliva based collection
devices and rapid assays for infectious diseases. Other than sales of the
Company's collection devices, the Company has not yet commenced any significant
product commercialization. The Company has incurred significant operating losses
since its inception, resulting in an accumulated deficit of $44,422,573 at March
31, 2005. Such losses are expected to continue for the foreseeable future and
until such time, if ever, as the Company is able to attain sales levels
sufficient to support its operations. There can be no assurance that the Company
will achieve or maintain profitability in the future. Substantial additional
financing will be required in future periods.

The Company's capital requirements have been and will continue to be
significant. The Company's capital base is smaller than that of many of its
competitors, and there can be no assurance that the Company's cash resources
will be able to sustain its business. The Company is dependent upon its effort
to raise capital to finance its future operations, including the cost of
development, manufacturing and marketing of its products, to conduct clinical
trials and submissions for FDA approval of its products and to continue the
design and development of its new products. Marketing, manufacturing and
clinical testing may require capital resources substantially greater than the
resources available to the Company. The Company will continue to seek public or
private placement of its equity securities and corporate partners to develop
products. The Company's future capital needs will depend upon numerous factors,
including the progress of the approval for sale of the Company's products in
various countries, including the United States, the extent and timing of the
acceptance of the Company's products, the cost of marketing and manufacturing
activities and the amount of revenues generated from operations, none of which
can be predicted with much certainty. The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. The
Company's significant operating losses and significant capital requirements,
however, raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.


3. Summary Of Significant Accounting Policies

Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.

Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.

Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under
the liability method deferred tax assets and liabilities are determined based on
the differences between financial reporting and the tax bases of the assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect, when the differences are expected to reverse. An allowance against
deferred tax assets is recognized, when it is more likely that not, that such
tax benefits will not be realized.


                                       8
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (UNAUDITED)

3. Summary Of Significant Accounting Policies (continued)

On March 31, 2005, the Company has unused net operating loss carryforwards of
approximately $44,000,000 which expire at various dates through 2024. Most of
this amount is subject to annual limitations due to "changes in ownership" that
have occurred upon the conversion of the Company's Series 1998-B Convertible
Preferred Stock in previous years.

Basic And Diluted Net Income (Loss) Per Share
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equivalent shares outstanding as if shares had been issued on the
exercise of any common or preferred share rights unless the exercise becomes
antidilutive and then only the basic per share amounts are shown in the report.

Financial And Concentration Risk
The Company has no financial instruments that potentially subject the Company to
significant concentration of credit risk.

Property And Equipment
Equipment is reflected at cost and is depreciated on the straight line method
over five and seven years.

Patents
Patents have been recorded at cost and are being amortized over their useful
lives of 17 years.

Research And Development Costs
Research and development costs, including wages and supplies, used in the
research activity, are being expensed as incurred.

Revenue Recognition
Revenue will be recognized on the sale of a product or the completion of a
service provided.

Advertising And Market Development
The Company will expense advertising and market development costs as incurred.
For the three months ended March 31, 2005, the Company expensed $125 in
advertising costs.

Evaluation Of Long-Lived Assets
The Company periodically reviews its long lived assets, including equipment and
patents, and makes adjustments, if the carrying value exceeds the fair value.

Financial Instruments
The carrying amounts of financial instruments, including cash and accounts
payable, are considered by management to be their fair values due to their short
term maturities.

Recent Accounting Pronouncements
The Company does not expect that the adoption of recent accounting
pronouncements will have a material impact on its financial statements.

Reclassifications
Certain reclassifications have been made in the December 31, 2004 financial
statements to confirm to the current fiscal year presentation.


                                       9
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (UNAUDITED)

4. Restatement

Subsequent to the filing of form 10-QSB for the period ended March 31, 2005, the
Company determined that 550,000 options granted to an employee in March of 2005
was not recognized as required under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees ("APB 25") and related Interpretations
to account for the options using the intrinsic value method.

In March of 2005, 550,000 options were granted to an employee per an employment
agreement. The Company measured the options based on market value on the date of
grant less the exercise price, discounted 30% for its restriction. Of these
options, 100,000 are vested immediately and exercisable from June 1, 2005 until
June 1, 2015 and remaining options are vested in three equal amounts annually,
commencing on October 1, 2005.

On the date of grant, the Company recorded an increase in deferred compensation
of $929,250 and corresponding increase in additional paid-in capital. The
compensation cost related to the options will be deferred over the two-year
employment period. An adjustment of $8,910 in the selling, general and
administrative expense was recorded to reflect the amortized portion of the
deferred compensation cost and as compensation expense for the period ended
March 31, 2005. As a result, the balance sheet as of March 31, 2005 and
statements of operations and cash flows for the three-month period ended March
31, 2005 were restated to reflect these changes. The table below details the
items affected by the restatement:

                                              March 31, 2005
                                        ----------------------------
                                        As reported     As Restated
                                        ------------    ------------
      BALANCE SHEET:
          Additional paid-in capital    $ 42,363,856    $ 43,293,106
          Less: Deferred compensation             --        (920,340)
          Accumulated deficit            (44,413,663)    (44,422,573)

<TABLE>
<CAPTION>
                                                         For the three months ended
                                                                March 31, 2005
                                                         ---------------------------
                                                         As reported    As Restated
                                                         -----------    -----------
      STATEMENT OF OPERATIONS:
<S>                                                     <C>             <C>
          Selling, general and administrative expense   $    635,762    $    644,672
           Loss from operations                             (542,089)       (550,999)
          Net loss to common shareholders                   (643,374)       (652,284)

                                                         For the three months ended
                                                                March 31, 2005
                                                        ----------------------------
                                                         As reported     As Restated
                                                         -----------     -----------
      STATEMENT OF CASH FLOWS:
          Net loss                                      $   (643,374)   $   (652,284)
          Amortization of option granted to employees             --           8,910
</TABLE>

The Company has adopted the disclosure provisions of Financial Accounting
Standards Board Statement No. 123 ("SFAS 123") which defines a fair value based
method of accounting for employee stock options and similar equity instruments
and encourages all entities to adopt that method of accounting for all employee
stock-based compensation plans. However, SFAS 123 also allows an entity to
continue to measure compensation cost for such plans using the method of
accounting prescribed by Accounting Principles Board Opinion No. 25 ("APB 25").
Entities electing to remain with the accounting as prescribed by APB 25 must
make pro forma disclosures of net income and, if presented, earnings per share,
as if the fair value based method of accounting defined in SFAS 123 had been
adopted.


                                       10
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (UNAUDITED)

The Company has elected to account for its stock-based compensation plans using
APB 25. The Company has computed, for pro forma disclosure purposes, the value
of options granted for the three months period ended March 31, 2005 using the
Black-Scholes pricing model.





4. Restatement (Continued)

<TABLE>
<CAPTION>
                                                       For the three months ended
                                                             March 31, 2005
                                                       --------------------------
<S>                                                           <C>
      Net loss to common shareholders
          As reported                                         $   (652,284)
      Add: Stock-based employee compensation expense
      included in reported net loss, net of related tax
      affects                                                        8,910
      Deduct: Total stock-based employee compensation
      expense determined  under fair value based method for
      all awards, net of related tax affects
                                                                    (8,512)
                                                              ------------
          Pro forma                                           $   (651,886)
                                                              ============

      Basic and diluted net loss per share
          As reported                                         $      (0.02)
          Pro forma                                                  (0.02)
</TABLE>

The fair value of each option grant was estimated on the date of the grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions for 2005: expected volatility of 30%; risk-free interest rate of
4.197%; and expected lives of 5 years.

The effects of applying SFAS 123 (revised 2004) in the above pro forma
disclosures are not indicative of future amounts as future amounts are likely to
be affected by the number of grants awarded and since additional awards are
generally expected to be made at varying prices.


5. Inventories
Inventories are stated at the lower of cost or market determined on a first-in,
first-out basis and are comprised of the following:

                                  March 31, 2005      December 31, 2004
                                  --------------      -----------------

          Raw materials          $        72,771       $          87,407
          Finished goods                  11,239                  14,620
                                 ---------------       -----------------
                                 $        84,010       $        102,027
                                 ===============       ================


                                       11
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (UNAUDITED)

6. Accrued Expenses
                                  March 31, 2005         December 31, 2004
                                  ---------------        ----------------

Accrued interest                  $        79,985        $        228,773
Accrued legal expense                          --                 112,500
Other accrued liabilities                   4,769                  14,808
                                  ---------------        ----------------
                                  $        84,754        $        356,081
                                  ===============        ================

7. Geographic Area Information
Under the disclosure requirements of SFAS No. 131, "Segment Disclosures and
Related Information," we operate within one segment. Our products are sold
principally in the United States and Europe. Segmentation of operating income
and identifiable assets is not applicable since all of our revenues outside the
United States are export sales.


7. Geographic Area Information (Continued)

The following table represents total product sales revenue by geographic area:

                           Three months ended March 31,
                       -----------------------------------
                             2005               2004
                       ----------------   ----------------

      United States    $        147,608   $        133,966
      United Kingdom             80,948             95,339
      Africa                     26,490             26,300
      Others                      9,877             24,593
                       ----------------   ----------------
                       $        264,473   $        280,198
                       ================   ================

8.  Deferred Costs

Deferred costs represent the value of payments of cash, warrants and shares
issued to brokers and a shareholder as consideration for loan financing during
the years. In addition deferred costs include $160,000 of cost incurred for the
issuance of debentures this quarter. As of March 31, 2005, net deferred costs
were $304,252, which are being amortized over the lives of the respective loan
and debentures.

9.  Debenture Payable

On January 19, 2005, the Company's board authorized the issuance of up to three
million dollars of convertible debentures. These debentures mature March 31,
2009 and carry an interest rate of 9% per year and are convertible into common
stock at the lower of 66.6% of the valuation of the Company's next raise of
equity or $1 per share. As of March 31, 2005, the Company had not closed the
entire funding but had sold an aggregate of $1,100,000 in convertible
debentures. During April 2005, subsequent to the balance sheet date, an
additional $260,000 worth of debentures were sold.

10.  Financing From Shareholders

Per a promissory note dated January 2004, Helenka Bodner, a shareholder, agreed
to advance or cause to be advanced to the Company from time to time, through
December 31, 2005, up to the sum of $1,000,000 at the interest rate of 12% per
annum in order to advance the process of the FDA approval of the HemaStrip(TM)


                                       12
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (UNAUDITED)

HIV Rapid Test. The shareholder reserves the right to demand payment in full or
in part at anytime on or after December 31, 2005. As of March 31, 2005, there
was no loan balance on this note.

As of March 31, 2005, Helenka Bodner had loaned the Company $10,597. The loan is
to be repaid in 2005 and bears no interest and has no conversion features. If
the loan is repaid after its due dates in 2005, the Company agreed to repay such
borrowed funds with accrued interest at 12% per annum from the date of the loan
origination.

Per a promissory note dated February 2003, Jules Nordlicht, agreed to advance in
total or in installments, up to the amount of $1,000,000 to the Company. In
November 2003 and August 2004, agreements were executed with this shareholder to
cause additional advances in total or in installments up to the amount of
$2,500,000 to advance the process of the FDA approval. In consideration for the
financing, the Company agreed to repay such borrowed funds with accrued interest
at 12% per annum and the shareholder reserves the right to demand payment in
full or in part at anytime after December 31, 2006. As of March 31, 2005 the
loan balance to this second shareholder aggregated $1,932,099.

Resonance Limited, a shareholder, is owed $6,624 as of March 31, 2005. The loan
bears no interest and is due on demand.


11. Shareholders' Equity Transactions

For the three months ended March 31, 2005, 200,000 warrants exercisable at a
price of $.01 per share, were issued as payment for services rendered to the
Company. Based upon the market value of the common stock on the date of
issuance, discounted 30% for its restriction, the Company recorded an expense
and related additional paid-in capital of $280,000.

These warrants, as well as additional warrants exercisable into 1,000,000 shares
previously issued, exercisable at $.01 per share, were converted during March
2005 into common stock, resulting in the issuance of 1,200,000 common shares
during this period.

In March of 2005, 550,000 stock options were granted to an employee per an
employment agreement. Of these options, 100,000 are vested immediately and
exercisable from June 1, 2005 until June 1, 2015 and remaining options are
vested in three equal amounts annually, commencing on October 1, 2005. On the
date of grant, the Company recorded an increase in deferred compensation of
$929,250 and corresponding increase in additional paid-in capital. The
compensation cost related to the options is been deferred over a two-year
employment period. An adjustment of $8,910 in the selling, general and
administrative expense was recorded to recognize the compensation expense for
the period ended March 31, 2005.

12.  Contingencies

In March 2005, the Company signed a lease to occupy premises in Framingham, MA
beginning April 1, 2005. This location will be our primary corporate office. The
lease has a three-year initial term ending March 31, 2008 and a base rental rate
starting at approximately $26,350 and increasing to approximately $40,500 per
year over that initial term. The lease also has a one-year renewal option at an
annual base rental rate of approximately $40,500. The following table lists the
future payments required on debt and any other contractual obligations of the
Company:

               Payments Due by Period            Future Payments
       ------------------------------------     ------------------
       <1 year                                   $       43,571
       1-3 years                                      2,746,433
       4th year                                         366,666
                                                 --------------
                                                 $    3,156,670
                                                 ==============


                                       13
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (UNAUDITED)

Legal Matters

In March 2004, Chembio Diagnostics, Inc. commenced an action in Federal Court,
Eastern District of New York, seeking a declaration that the Company's US Patent
No. 5,935,864 was invalid and not infringed. The Company has filed counterclaims
for patent infringement seeking an injunction and damages. Discovery has
commenced and the parties are in the midst of filing briefs with the Court that
seek different interpretations of the patent. The Company believes its position
is sound, and intends to vigorously defend its intellectual property rights.

In January 2000, the Company received notice from the United States Patent and
Trademark Office that Bayer Corporation has filed a petition to cancel the
Company's trademark, HemaStrip(TM). The petition alleged that the Company's
trademark HemaStrip(TM), would likely be confused with Bayer's trademark,
HEMASTICK. The Company did not respond to the Petition and in December 2000, the
Company received notice that the trademark was cancelled. In November 2003, the
Company filed to re-register the trademark in the U.S., and in April 2004 filed
in Europe. Bayer has filed opposition to the Company's trademark and the Company
is currently in discussions with Bayer to settle this matter. Other than that
set forth above, to the best knowledge of the Company, no other material legal
proceedings are pending.

12.  Contingencies  (continued)

Economic Dependency

The Company had two customers that accounted for 87% of product sales (56% and
31%) during the first quarter of 2005 and 69% of product sales (35% and 34%)
during the first quarter of 2004. The loss of these customers could have a
material adverse effect on the Company.


13.  Subsequent Events

The Company announced the appointment of Mr. D. Bruce Pattison as President and
Chief Operating Officer, effective May 2, 2005. Mr. Pattison had been working
closely with the Company as a consultant over the past five months. Mr. Pattison
has over thirty years experience with technology based health-care companies
serving both diagnostic and therapeutic market segments.

In connection with hiring Mr. Pattison, during the Employment Period ending May
2, 2007, the Company will pay a temporary base salary at the annual rate of one
hundred twenty thousand dollars ($120,000). Said base salary shall increase to
the annual rate of One Hundred Eighty Thousand ($180,000) upon the closing of a
financing for the Company with gross proceeds of at least three million dollars
($3,000,000). The Board of Directors may determine, from time to time, in its
sole discretion, to pay Mr. Pattison bonuses or additional compensation. Mr.
Pattison shall be entitled to participate in all fringe benefits the Company
provides for its employees generally, and such other benefits as the Company
provides generally for its senior executives. Until such benefit programs are
adopted, the Company shall reimburse Mr. Pattison for 75% of Health Insurance
and for up to $2,000/yr of Life Insurance premiums. In addition the Company
granted 550,000 options to Mr. Pattison to purchase the common stock of the
Company (the "Common Stock"), as follows:

(1) Stock options, vested as of the date hereof, exercisable from June 1, 2005
until June 1, 2015, entitling Mr. Pattison to purchase 100,000 shares of the
Company's common stock ("Common Stock") at an exercise price of $ 0.10-per
share.

(2) Stock options (the "Options") to acquire 450,000 shares of Common Stock only
if Mr. Pattison remains employed as of a vesting date. The Options shall vest in
three equal amounts annually, commencing on October 1, 2005 at which time
one-third, (150,000) of the Options shall vest, and on each of the two
anniversaries thereafter, an additional one-third of the Options shall vest,
provided that, if Mr. Pattison is terminated without Cause within six months of


                                       14
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (UNAUDITED)

a vesting date, all Options due to vest as of such date shall vest as of the
date of termination. All vested Options shall terminate ten years from issuance.
The exercise price shall be equal to the lessor of (i) 66-2/3% of the price per
share of Common Stock as established in any Company offering and sale of Common
Stock occurring prior to April 30, 2006, and (ii) $1.00 per share. In the event
of a termination of Mr. Pattison's employment for any reason other than for
Cause, Mr. Pattison shall have until their expiration to exercise any vested
portion of an Option. In the event of an acquisition or change in control of the
Company, all unvested options shall immediately vest.


                                       15
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 March 31, 2005

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion of the Company's financial condition and the results of
operations should be read in conjunction with the Financial Statements and Notes
thereto appearing elsewhere in this document.

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. In order to comply with the terms of the safe
harbor, the Company notes that in addition to the description of historical
facts contained herein, this report contains certain forward-looking statements
that involve risks and uncertainties as detailed herein and from time to time in
the Company's other filings with the Securities and Exchange Commission and
elsewhere. Such statements are based on management's current expectations and
are subject to a number of factors and uncertainties, which could cause actual
results to differ materially from those, described in the forward-looking
statements. These factors include, among others: (a) the Company's fluctuations
in sales and operating results; (b) risks associated with international
operations; (c) regulatory, competitive and contractual risks; (d) product
development risks; (e) the ability to achieve strategic initiatives, including
but not limited to the ability to achieve sales growth across the business
segments through a combination of enhanced sales force, new products, and
customer service; and (f) pending litigation.

GENERAL

Since July 1990, the Company has been engaged almost exclusively in research and
development activities focused on developing proprietary saliva based collection
devices and rapid assays for infectious diseases. The Company's products have
been purchased by foreign governments, distributors, laboratories, as well as
the U.S. Center for Disease Control (CDC), an agency of the United States
government.

In February 2000, the Company closed its Vancouver, Washington manufacturing
facility and moved its executive offices to New York. The Company no longer has
its own manufacturing plant which would allow it to independently produce its
products, and relies exclusively on its contract manufacturers to supply the
Company's needs.

In July of 2003, the Company signed a Manufacturing / Research & Development
Agreement with American Bio Medica Corporation (ABMC) of Kinderhook, NY.
Responsibilities of ABMC include manufacturing and regulatory compliance of the
Company's HIV test devices. Based on the results of the Hema-Strip HIV Test
clinical trials completed thus far, the Company believes the product's
performance meets the necessary criteria for U.S. approval. The Company has
recently been notified by the FDA that certain additional clinical testing is
required and the Company expects to complete these tests during the second
quarter of 2005.

The Company is seeking a PMA for its HIV rapid test from the FDA and submitted
all modules of the PMA by the end of November 2004. Since that time the FDA has
inspected each of the six clinical sites that participated in the clinical
trials for our HIV-HemaStrip(TM) product. The Company is completing a small
study of 200 samples and expects to complete its data base with that information
in June 2005. Following that, the Company expects its contract manufacturer
(ABMC) to be audited by the FDA. Typically several months pass, following a
successful inspection and submission of a completed PMA, to receive
notification. In addition to the US., the Company intends to submit the
appropriate regulatory submissions, import/export documentation and any other
requirement for a number of countries, including but not limited to, Russia,
Brazil, Canada, Vietnam, India, Mexico, Australia, Philippines, Thailand, and a
number of African countries.

The IDE, Clinical Trials, and application modules are only part of a difficult
and financially costly process to receive U.S. marketing approval. There is no
assurance that the Company will have the financial resources, expertise, or
ability to complete the approval process.


                                       16
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 March 31, 2005

ITEM 2.  Management's Discussion And Analysis Or Plan Of Operation (Continued)

General (Continued)

A Certificate of Exportability was issued by the FDA in October 2003 allowing
the resumption of the Company's HIV diagnostics export sales.

We believe that the potential market for rapid tests in the United States and
foreign countries will continue to grow as the benefits of rapid testing are
better understood by the appropriate government agencies, by diagnostic and
treatment practitioners, and by the general population. Recently, the need for
and availability of rapid tests to screen large populations for HIV has been the
subject of the medical, scientific and lay press, including the New England
Journal of Medicine's Editorial pages. Consequently, we are now actively working
to commercialize our HIV rapid test products, and to obtain requisite regulatory
approvals to introduce these products in international markets. There can be no
assurance that we will achieve or sustain significant revenues from sales of HIV
diagnostic tests, internationally or domestically, or from other new products we
may develop or introduce.


The Company has limited marketing, sales and distribution resources. The Company
relies in large part on forming partnerships for marketing, sales and
distribution of its products. To date, the Company has signed an exclusive
distribution agreement of our HemaStrip(TM) test product, for The Russian
Federation, the C.I.S. and certain African countries with Memorand Limited.
Memorand is currently working to obtain appropriate government and regulatory
requirements. ADR PRE Ltd. acted as the agent in developing this relationship
and distribution agreement. The Company has agreed to compensate ADR PRE Ltd.
for their efforts based on a sales commission basis.

The Company has signed a distribution agreement with Medsource Ozone Biomedicals
for distribution of our HemaStrip(TM) and SeroStrip products throughout India.

Our Saliva Sampler(R) oral fluid collectors are being sold under a distribution
agreement with Immunalysis, Inc., whereby they have been granted exclusive
rights to the Saliva Sampler(R) for sale in the U.S. and Canada solely for the
laboratory testing market to detect a drug of abuse. They have incorporated our
Saliva Sampler(R) collector in their application for FDA marketing approval of
their assay kit for oral fluid substance abuse testing.

We continue to distribute our Hema-Strip(TM) HIV test and Saliva Sampler(R) oral
fluid collection product through our current distribution networks and we will
also seek new distribution relationships for our current and future test
products.

The Company has incurred significant operating losses since its inception,
resulting in an accumulated deficit of $44,422,573 at March 31, 2005. Such
losses are expected to continue for the foreseeable future and until such time,
if ever, as the Company is able to attain sales levels sufficient to support its
operations.

The Company believes that its current cash position will not be sufficient to
maintain the Company's operations through 2005. However, the Company will need
to raise additional capital to fund its aggressive growth and marketing efforts
and to capitalize on its IP portfolio to design, develop, test, gain regulatory
approval and launch new products. Development, marketing, manufacturing and
clinical testing may require capital resources substantially greater than the
resources, which may be available to the Company. The Company is in the midst of
raising up to three million dollars as a convertible debt instrument. The
Company has received to date approximately $1.4 million dollars and expects to
close this round shortly. The Company is reviewing its options, including the
selling of common stock, as a means to fund the Company's future growth plans.
There can be no assurance that the Company will be able to obtain the additional
capital resources necessary to fund its growth plans, or that such financing
will be available on commercially reasonable terms.


                                       17
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 March 31, 2005

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the unaudited Financial Statements and accompanying notes. Estimates are used
for, but not limited to, the accounting for the allowance for doubtful accounts,
inventories, income taxes and loss contingencies. Management bases its estimates
on historical experience and on various other assumptions that are believed to
be reasonable under the circumstances. Actual results could differ from these
estimates under different assumptions or conditions.

The Company believes there have been no significant changes, during the
quarterly period ended March 31, 2005, to the items disclosed as critical
accounting policies and estimates in Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 2004.


                                       18
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 March 31, 2005

RESULTS OF OPERATIONS

First Quarter of 2005 Compared to First Quarter of 2004

REVENUES. The Company's revenues consist of product sales and royalties.
Revenues decreased 6% to $265,019 in the first quarter of 2005 yielding a gross
margin of $170,673 or 64% from the first quarter of 2004 revenues of $281,119,
yielding a gross margin of $207,802 or 74%. The first quarter of 2005 decrease
in margins is primarily due to increased scrap rates incurred in validating new
machinery in conformity with Good Manufacturing Practices (GMP). This incurs
labor costs and running the machinery while consuming materials as if it were a
normal production cycle. However the product produced is used only for
evaluation and is thereafter scrapped.

The Company's revenues are primarily generated from sales of its patented saliva
collection devices. Specimens collected with the device are sent to and
processed at laboratories. The Company is presently working on updating its
saliva collection devices to meet the needs of laboratories high throughput
machines and expects to announce product changes and patent filings during the
second quarter 2005.

For the first quarter of 2005, sales to two customers were in excess of 10% of
the Company's total sales. Sales to these customers were approximately $148,000,
and $81,000. The Company is continuing to seek new markets and sales
opportunities for its products

COST OF PRODUCTS SOLD. Costs of products sold increased to $ 94,346 (36% of
product sales) in the first quarter of 2005 from $73,317 (26% of product sales)
in the first quarter of 2004. The increase in product cost was attributable to
increased scrap rates in validating new machinery. SEE REVENUES

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses decreased
to $77,000 in the first quarter of 2005 from $210,000 in the first quarter of
2004. The decrease is due to fewer expenses incurred in the first quarter of
2005 for:

      o     the Hema-Strip(TM) HIV test clinical trials
      o     the preparation of documents for FDA submissions

R&D costs for Hema-Strip(TM) HIV are expected to continue in 2005 until such
time that we receive FDA approval to market the test in the U.S. Hema-Strip(TM)
HIV R&D costs in 2005 are estimated at $200,000. The Company expects total R&D
costs to increase in 2005 should it begin clinical trials for a new product, a
project presently being considered by management.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 781% to $644,672 in the first quarter of 2005
from $73,159 in the first quarter of 2004. In the first quarter of 2005, the
Company incurred significantly greater expenses for consulting of $60,000 and
recruitment expenses of $380,000. Included in recruitment expenses are $280,000
of non-cash expenses associated with the issuance of shares and/or warrants for
services rendered. The Company did not incur similar expenses in the first
quarter of 2004.

LOSS FROM OPERATIONS. The loss from operations for the first quarter of 2005 of
$550,999 reflects a 631% increase over the $75,357 loss reported for the first
quarter of 2004. Decreased sales, lower gross margins and greater expenses in
the first quarter of 2005 contributed to the Company's increased loss.

INTEREST EXPENSE. Net interest expense for the first quarter of 2005 increased
to $101,285 from $72,923 in the first quarter of 2004. This increase is
primarily due to increased borrowings.


INCOME TAXES. The Company is in a net deferred tax asset position and has
generated net operating losses to date. No provision for or benefit from income
taxes has been recorded in the accompanying statements of operations. The


                                       19
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 March 31, 2005

Company will continue to provide a valuation allowance for its deferred tax
assets until it becomes more likely than not, in management's assessment, that
the Company's deferred tax assets will be realized. The Company has a net
operating loss carryforward of approximately $44 million, which is available to
offset future taxable income, if any, expiring in various years through the year
2025. The Internal Revenue Code rules under Section 382 could limit the future
use of these losses based on ownership changes and the value of the Company's
stock.



LIQUIDITY AND CAPITAL RESOURCES

                                 March 31, 2005         December 31, 2004
                                ----------------       -------------------
Cash and cash equivalents        $       20,910         $      148,630
Working capital deficit                (128,453)              (506,511)

Net cash used by operating activities in the first quarter 2005 was $348,602.
Net cash used in the first quarter 2004 was $103,891. In 2005, the increase in
cash used by operations was primarily due to the increase of the net loss
$652,284 (2005) and $148,280 (2004). The following expenses increased in the
first quarter of 2005 when compared to the first quarter of 2004:

      o     Legal and accounting costs
      o     Expenses recorded for beneficial conversion features of convertible
            debt, and
      o     Stock and warrant issuance costs
      o     Consulting expenses


Cash used in investing activities in the first quarter 2005 was $271,475 as
compared to $130,312 in the first quarter 2004. The increase represents costs
incurred and paid for in our debenture financing. However this cost is being
amortized over the life of the debenture.

Cash provided by financing activities in the first quarter 2005 was $492,357 and
in the first quarter 2004 was $248,500. These are primarily additional net
borrowings from a debenture less repayments of shareholder loans.

Our cash requirements depend on numerous factors, including product development
activities, penetration of the direct sales market, market acceptance of our
products, and effective management of accounts receivable. We expect to devote
capital resources to improve our sales and marketing efforts, continue our
product development, expand manufacturing capacity and continue research and
development activities. We will examine other growth opportunities, including
strategic alliances, and we expect any such activities will be funded from
existing cash as well as funds provided from debenture offerings in 2005.

Since inception, the Company has financed its capital requirements through the
proceeds from its public offering of common stock in March 1993 and the exercise
of common stock purchase warrants pursuant to such offering, proceeds from sales
of convertible debentures, proceeds from private placements of common stock and
preferred stock, the exercise of common stock purchase warrants and stock
options and loans.

On January 19, 2005 the Company's board authorized the issuance of up to three
million dollars of convertible debentures. These debentures mature March 31,
2009 and carry an interest rate of 9% per year and are convertible into common
stock at the lower of 66.6% of the valuation of the Company's next raise of
equity or $1 per share. As of March 31, 2005, the Company had not closed the
entire funding but had sold an aggregate of $1,100,000 in convertible
debentures. During April 2005, subsequent to the Balance Sheet date, an
additional $260,000 worth of debentures were issued.


                                       20
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 March 31, 2005

Per a promissory note dated January 2004, Helenka Bodner, a shareholder, agreed
to advance or cause to be advanced to the Company from time to time, through
December 31, 2005, up to the sum of $1,000,000 at the interest rate of 12% per
annum in order to advance the process of the FDA approval of the HemaStrip(TM)
HIV Rapid Test. The shareholder reserves the right to demand payment in full or
in part at anytime on or after December 31, 2005. As of March 31, 2005, there
was no loan balance on this note.

As of March 31, 2005, Helenka Bodner loaned the Company $10,597. The loan is to
be repaid in 2005 and bears no interest and has no conversion features. If the
loan is repaid after its due dates in 2005, the Company agreed to repay such
borrowed funds with accrued interest at 12% per annum from the date of the loan
origination.

Per a promissory note dated February 2003, Jules Nordlicht, agreed to advance in
total or in installments, up to the amount of $1,000,000 to the Company. In
November 2003 and August 2004, agreements were executed with this shareholder to
cause additional advances in total or in installments up to the amount of
$2,500,000 to advance the process of the FDA approval . In consideration for the
financing, the Company agreed to repay such borrowed funds with accrued interest
at 12% per annum and the shareholder reserves the right to demand payment in
full or in part at anytime after December 31, 2006. As of March 31, 2005 the
loan balance to this second shareholder aggregated $1,932,099.

Resonance Limited, a shareholder, is owed $6,624 as of March 31, 2005. The loan
bears no interest and is due on demand.

For the three months ended March 31, 2005, 200,000 warrants exercisable at a
price of $.01 per share, were issued as payment for services rendered to the
Company. Based upon the market value of the common stock on the date of
issuance, discounted 30% for its restriction, the Company recorded an expense
and related additional paid-in capital of $280,000.

These warrants, as well as additional warrants exercisable into 1,000,000 shares
previously issued exercisable at $.01 per share, were converted during March
2005 into common stock, resulting in the issuance of 1,200,000 common shares
during this period.

In March of 2005, 550,000 stock options were granted to an employee per an
employment agreement. Of these options, 100,000 are vested immediately and
exercisable from June 1, 2005 until June 1, 2015 and remaining options are
vested in three equal amounts annually, commencing on October 1, 2005. On the
date of grant, the Company recorded an increase in deferred compensation of
$929,250 and corresponding increase in additional paid-in capital. The
compensation cost related to the options is been deferred over a two-year
employment period. An adjustment of $8,910 in the selling, general and
administrative expense was recorded to recognize the compensation expense for
the period ended March 31, 2005. To conserve cash and to obtain goods and
services, the Company may continue to issue options and warrants at discounts to
market or issue direct stock grants. In the event that the Company issues
additional options and warrants, it is anticipated that the securities will
contain cost-free registration rights which will be granted to holders of the
options and warrants, and that there may be dilution to the Company's existing
stockholders.

The Company's capital requirements have been and will continue to be
significant. The Company currently has an accumulated deficit due to its history
of losses. The Company is dependent upon its efforts to raise capital to finance
its future operations, including the cost of manufacturing and marketing of its
products, to conduct clinical trials and submissions for FDA approval of its
products and to continue the design and development of its new products.

Marketing, manufacturing and clinical testing may require capital resources
substantially greater than the resources available to the Company.




The following table lists the future payments required on debt and any other
contractual obligations of the Company:


                                       21
<PAGE>

           Payments Due by Period              Future Payments
   -----------------------------------        -----------------
     <1 year                                    $       43,571
     1-3 years                                       2,746,433
     4th year                                          366,666
                                                --------------
                                                $    3,156,670
                                                ==============

In March 2005, the Company signed a lease to occupy premises in Framingham, MA
beginning April 1, 2005. This location will be our primary corporate office. The
lease has a three-year initial term ending March 31, 2008 and a base rental rate
starting at approximately $26,350 and increasing to approximately $40,500 per
year over that initial term. The lease also has a one-year renewal option at an
annual base rental rate of approximately $40,500.

There can be no assurance that the Company will be able to obtain the additional
capital resources necessary to implement or continue its programs, or that such
financing will be available on commercially reasonable terms or at all. The
Company will continue to seek public or private placement of its equity
securities and corporate partners to develop products. There can be no assurance
that the Company will be able to sell its securities on commercially reasonable
terms or to enter into agreements with corporate partners on favorable terms or
at all. The Company's future capital needs will depend upon numerous factors,
including the progress of the approval for sale of the Company's products in
various countries, including the U.S., the extent and timing of the acceptance
of the Company's products, the cost of marketing and manufacturing activities
and the amount of revenues generated from operations, none of which can be
predicted with certainty.

SUBSEQUENT EVENTS


The Company announced the appointment of Mr. D. Bruce Pattison as President and
Chief Operating Officer, effective May 2, 2005. Mr. Pattison had been working
closely with the Company as a consultant over the past five months. Mr. Pattison
has over thirty years experience with technology based health-care companies
serving both diagnostic and therapeutic market segments.


                                       22
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 March 31, 2005

ITEM 3.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we evaluated, under the
supervision and with the participation of our management, including our
president and chief financial officer, the effectiveness of the design and
operation of our "disclosure controls and procedures" [as defined in the
Securities Exchange Act of 1934, Rules 13a - 15(e) and 15d - 15(e)]. Based on
this evaluation, our president and chief financial officer has concluded that as
of the date of the evaluation our disclosure controls and procedures are
effective to ensure that all material information required to be filed in this
report has been made known to them.

CHANGE IN INTERNAL CONTROLS

There have been no changes in internal controls over financial reporting that
occurred during the most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal controls over financial
reporting.


                                       23
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 March 31, 2005

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

In March 2004, Chembio Diagnostics, Inc. commenced an action in Federal Court,
Eastern District of New York, seeking a declaration that the Company's US Patent
No. 5,935,864 was invalid and not infringed. The Company has filed counterclaims
for patent infringement seeking an injunction and damages. Discovery has
commenced and the parties are in the midst of filing briefs with the Court that
seek different interpretations of the patent. The Company believes its position
is sound, and intends to vigorously defend its intellectual property rights.

In January 2000, the Company received notice from the United States Patent and
Trademark Office that Bayer Corporation has filed a petition to cancel the
Company's trademark, HemaStrip(TM). The petition alleged that the Company's
trademark HemaStrip(TM), would likely be confused with Bayer's trademark,
HEMASTICK. The Company did not respond to the Petition and in December 2000, the
Company received notice that the trademark was cancelled. In November 2003, the
Company filed to re-register the trademark in the U.S., and in April 2004 filed
in Europe. Bayer has filed opposition to the Company's trademark and the Company
is currently in discussions with Bayer to settle this matter. Other than that
set forth above, to the best knowledge of the Company, no other material legal
proceedings are pending.



Item 2. CHANGES IN SECURITIES

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5.  OTHER INFORMATION

None


                                       24
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibit index

Exhibit
-------

10.16 Employment Agreement dated May 2, 2005 between the Company and D. Bruce
      Pattison.

11    Earnings per share

31.1  Certification of Chief Executive Officer required by Rule 13a-14(a) or
      Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.

31.2  Certification of Chief Financial Officer required by Rule 13a-14(a) or
      Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.

32.1  Certification of Chief Executive Officer required by Rule 13a-14(b) or
      Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended, and
      18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.

32.2  Certification of Chief Financial Officer required by Rule 13a-14(b) or
      Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended, and
      18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.




(b)   Reports on Form 8-K

      No reports on Form 8-K were filed during the quarter ended March 31, 2005.


                                       25
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated:   July 8, 2005

                                    SALIVA DIAGNOSTIC SYSTEMS, INC.

                                    /s/
                                    -------------------------------
                                    Steven M. Peltzman
                                    Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.



<TABLE>
<CAPTION>
SIGNATURE                                   TITLE                              DATE
<S>                              <C>                                         <C>
                                 Chairman of the Board, Chief
                                 Executive Officer, And Director
/s/                              (Principal Executive Officer)               July 8, 2005
--------------------------
Steven M. Peltzman


                                 President And
                                 Chief Operating Officer
/s/                                                                          July 8, 2005
--------------------------
D. Bruce Pattison

                                 Chief Financial Officer And Director
/s/                              (Principal Accounting Officer)              July 8, 2005
--------------------------
Leo Ehrlich


                                 Director
/s/                                                                          July 8, 2005
--------------------------
Joseph Levi
</TABLE>


                                       26