<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 1O-QSB

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

      For the quarterly period ended March 31, 2003

[ ] 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.)

                              2294 Nostrand Avenue
                               Brooklyn, NY 11210
              -----------------------------------------------------
              (Address of principal executive offices and zip code)

                                 (718) 552-3599
                 -----------------------------------------------
                 (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 March
31, 2004, 30,509,491 shares.

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


<PAGE>

<TABLE>
<CAPTION>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                   FORM 10-QSB
                                      INDEX

PART I    FINANCIAL INFORMATION                                             Page No.
<S>                                                                            <C>

    Item 1.  Financial Statements

             Balance Sheets - March 31, 2003
             (unaudited) and December 31, 2002                                 3

             Statements of Operations - Three Months
             Ended March 31, 2003 and 2002 (unaudited)                         4

             Statements of Cash Flows -
             Three Months Ended March 31, 2003 and 2002 (unaudited)            5

             Notes to Financial Statements (unaudited)                         6

    Item 2.  Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                         12

    Item 3.  Quantitative and Qualitative Disclosures about Market Risk        17

    Item 4.  Controls and Procedures                                           17



PART II    OTHER INFORMATION


    Item 1.  Legal Proceedings                                                 18

    Item 2.  Changes in Securities                                             18

    Item 3.  Defaults upon Senior Securities                                   18

    Item 4.  Submission of Matters to a Vote of Security Holders               18

    Item 5.  Other Information                                                 18

    Item 6.  Exhibits and Reports on Form 8-K                                  18

    Signatures                                                                 19

    Certifications                                                             20
</TABLE>


<PAGE>




PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                               MARCH 31, 2003  December 31,
                                                                                (UNAUDITED)         2002
                                                                                ------------   ------------
                                       ASSETS                                                  (Restated)

<S>                                                                            <C>             <C>
Current assets:
       Cash and cash equivalents                                               $         53    $      1,900
       Accounts receivable, less allowance for
              doubtful accounts $5,000                                              287,491         146,591
       Royalty receivable                                                              --             8,148
       Subscriptions receivable - collected                                           3,000            --
       Inventory                                                                      8,176          17,353
       Due from third party manufacturer                                               --           133,033
       Other current assets                                                          17,504          17,504
                                                                               ------------    ------------
              Total current assets                                                  316,224         324,529


Property and equipment, less accumulated  depreciation of
$470,977(2003) and 464,178(2002)                                                     60,384          67,183
Equipment under construction                                                         45,530          30,530

Patents and trademarks, less accumulated  amortization of
$98,015(2003) and $95,637(2002)                                                      63,625          66,003
Deferred costs, less accumulated amortization of $7,412 (2003) and $- (2002)
                                                                                    244,588            --
Deposits                                                                                800             800
                                                                               ------------    ------------
                                                                               $    731,151    $    489,045
                                                                               ============    ============

                       LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
       Notes payable - shareholders                                            $    716,159    $  1,033,898
       Accounts payable                                                             232,963         220,150
       Accrued expenses                                                             332,549         378,094
       Payroll and payroll taxes payable                                             14,972         182,972
                                                                               ------------    ------------
              Total current liabilities                                           1,296,643       1,815,114

Long-term debt:
       Note payable - shareholder                                                   125,000            --
                                                                               ------------    ------------

              Total liabilities                                                   1,421,643       1,815,114
                                                                               ------------    ------------

Commitments and Contingencies
Shareholders' deficit:
       Common stock, $.001 par value, 50,000,000
              shares authorized, issued and outstanding:
              30,429,491 shares (2003) and 8,929,491 shares
              (2002)                                                                 30,429           8,929
       Additional paid-in capital                                                39,444,386      38,419,333
       Accumulated deficit                                                      (40,165,307)    (39,754,331)
                                                                               ------------    ------------
          Total shareholders' deficit                                              (690,492)     (1,326,069)
                                                                               ------------    ------------
                                                                               $    731,151    $    489,045
                                                                               ============    ============
</TABLE>

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

                                       3
<PAGE>

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

<TABLE>
<CAPTION>

                                                                THREE MONTHS
                                                                   ENDED
                                                                 MARCH 31,
                                                      -----------------------------
                                                           2003             2002
                                                      -------------   --------------
Revenues:                                                (Restated)

<S>                                                   <C>             <C>
        Product Sales                                 $    285,172    $    129,245
        Royalty Income                                       1,852           2,975
                                                      -------------   --------------
                                                           287,024         132,220

Cost of products sold                                       66,699          28,496
                                                      -------------   --------------

Gross profit                                               220,325         103,724
                                                      -------------   --------------

Operating expenses:
        Research and development expense                   175,000            --
        Selling, general and administrative expense        297,252         104,766
                                                      -------------   --------------
                                                           472,252         104,766

                 (Loss) from operations                   (251,927)         (1,042)


Interest (expense)                                        (152,799)        (25,181)
Other expense                                               (6,250)           --
                                                      -------------   --------------

        Net (loss) to common stockholders             $   (410,976)   $    (26,223)
                                                      =============   ==============

Basic and diluted net (loss) per share                $      (0.02)   $      (0.01)
                                                      =============   ==============

Shares used in basic and diluted net (loss) per
        share calculations                              18,485,047       2,415,129
                                                      =============   ==============

</TABLE>


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

                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                        THREE MONTHS ENDED
                                                                                            MARCH 31,
                                                                                ----------------------------------
                                                                                      2003             2002
                                                                                ---------------    ---------------
Cash Flows From Operating Activities:                                                                (Restated)
<S>                                                                              <C>               <C>
       Net (loss)                                                                $    (410,976)    $     (26,223)
       Adjustments to reconcile net (loss) to net cash
              (used) in operating activities:
          Depreciation and amortization                                                  9,177             9,775
          Amortization of deferred costs                                                 7,412                -
          Write off of accounts receivable                                             133,033                -
          Stock issued for consulting services                                         123,000                -
          Beneficial conversion feature of convertible debts                           118,053            10,652

       Changes in current assets and liabilities:
          Accounts receivable                                                         (140,900)          (27,973)
          Royalty receivable                                                             8,148            (4,959)
          Inventory                                                                      9,177                -
          Other current assets                                                              -             (1,132)
          Accounts payable and accrued expenses                                         37,229            32,378
          Deposits                                                                          -            (30,000)
                                                                                ---------------    ---------------

              Net cash (used) in operating activities                                 (106,647)          (37,482)
                                                                                ---------------    ---------------

Cash Flows From Investing Activities:
       Acquisitions of property and equipment                                          (15,000)               -
                                                                                ---------------    ---------------
                Net cash (used) in investing activities                                (15,000)               -
                                                                                ---------------    ---------------

Cash Flows From Financing Activities:
       Proceeds from shareholders loans                                                409,200            53,041
       Repayment of shareholders loans and capital lease                              (289,400)          (34,052)
                                                                                ---------------    ---------------

              Net cash provided by financing activities                                119,800            18,989
                                                                                ---------------    ---------------

       Net (decrease) in cash and cash equivalents                                      (1,847)          (18,493)

       Cash and cash equivalents, beginning of period                                    1,900            19,197
                                                                                ---------------    ---------------

       Cash and cash equivalents, end of period                                   $         53     $         704
                                                                                ===============    ===============

Supplemental Disclosure of Cash Flow Information:
       Cash paid during the period for interest                                   $         -      $          -

Supplemental Disclosure of Non-Cash Information:

       Conversion of shareholder loans into common stock                          $    382,500     $   1,446,445

       During the three month period ended March 31, 2003, the Company  obtained
          financing from a  shareholder.  As  consideration,  the Company issued
          6,000,000   shares  of  common  stock,   valued  at  $252,000  to  the
          shareholder.

                                                                                 $     252,000     $          -
</TABLE>



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

                                       5
<PAGE>



                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2003

1.  DESCRIPTION OF BUSINESS/BASIS OF PRESENTATION

Saliva  Diagnostic  Systems,  Inc., a Delaware  corporation (the "Company"),  is
primarily  engaged in the  development,  manufacturing  and marketing of medical
collection devices and rapid immunoassays for use in the detection of infectious
diseases.  The Company believes that its patented proprietary  platforms,  offer
significant  advantages compared to existing  competitive blood and saliva based
devices,  including  ease-of-use,  lower total costs, and significantly  reduced
risk of infection from collecting and handling specimens.

The accompanying  unaudited  financial  statements as of and for the three month
periods  ended March 31, 2003 and 2002 have been  prepared  in  conformity  with
accounting  principles  generally accepted in the United States of America.  The
financial  information as of December 31, 2002 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,  2002.  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, 2002, as included in the
Company's  Annual  Report on Form 10-KSB for the year ended  December  31, 2002.
Operating  results  for the three  month  period  ended  March 31,  2003 are not
necessarily indicative of the results that may be expected for the entire fiscal
year ending December 31, 2003, or any other portion thereof.

All prior  year  common  stock  and share  amounts  have  been  restated  in the
financial  statements  due to the  Company's one for  twenty-five  reverse stock
split of March 18, 2002.


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 $40,165,307 at March
31, 2003.  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. Despite the Company's debt
financings in 2002 and 2003,  substantial  additional financing will be required
through 2004.

                                       6
<PAGE>



                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2003

2.  SUBSTANTIAL   DOUBT  REGARDING  ABILITY  TO  CONTINUE  AS  A  GOING  CONCERN
(CONTINUED)

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.  RESTATEMENT

Subsequent  to the filing of form  10-KSB for  December  31,  2002,  the Company
determined that a beneficial  conversion  feature on certain  convertible  debts
with a shareholder  was not recognized as required  under EITF 98-5  "Accounting
for Convertible  Securities With Beneficial  Conversion Features or Contingently
Adjustable Conversion Features",  as amended by EITF 00-27 "Application of Issue
No. 98-5 to Certain Convertible Instruments" for prior years.

The adjustments caused an increase of $470,183 in the accumulated deficit and an
corresponding increase in additional paid-in capital effective December 31, 2001
for  conversions  that arose in periods prior to 2002. As a result,  the balance
sheet as of December 31, 2002 and  statements of  operations  and cash flows for
the  three-month  period  ended  March 31, 2002 were  restated to reflect  these
changes. The table below details the items affected by the restatement:

                                       December 31, 2002  December 31, 2002
                                       -----------------  -----------------
                                          As reported       As restated
                                       -----------------  -----------------
BALANCE SHEETS:

Additional paid-in capital              $ 37,696,410     $    38,419,333
Accumulated deficit                      (39,031,408)        (39,754,331)

                                          Three months ended March 31
                                             2002             2002
                                       -----------------  -----------------
                                          As reported       As restated
                                       -----------------  -----------------

STATEMENTS OF OPERATIONS:

Interest (expense)                       $  (14,529)       $   (25,181)
Net (loss) to common shareholders           (15,571)           (26,223)
Basic and diluted net (loss) per share        (0.01)             (0.01)

                                       7
<PAGE>
                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2003

4. DUE FROM THIRD PARTY MANUFACTURER

In November 2000, the Company entered into a letter of intent whereby they would
acquire all the outstanding  shares of Chembio Diagnostic  Systems,  Inc. (CDS).
This  acquisition  would have been  accounted for as a reverse  acquisition  and
would have  resulted  in the CDS  shareholders  holding a majority of the common
stock of the Company.

As of May  20,  2002,  the  Company  announced  that  it had  terminated  merger
discussions  with CDS. In April 2003,  subsequent to the balance sheet date, the
Company and CDS terminated all business relationships. Considering the financial
condition  of CDS and the costs of  collecting  an  amount  due from  them,  the
Company has made a full reserve of $133,033  against this receivable as of March
31, 2003.


5.    DEFERRED COSTS:

Deferred  costs  represent  the  value of  shares  issued  to a  shareholder  as
consideration  for loan  financing  during the current  period.  As of March 31,
2003, net deferred costs were $244,588,  which are being amortized over the life
of the loan.


6.  FINANCING FROM SHAREHOLDERS

Pursuant to an agreement  dated  October 1999 and later amended as to amount and
expiration  date,  Helenka Bodner,  agreed to advance or cause to be advanced to
the Company  from time to time,  through  December  31,  2004,  up to the sum of
$1,500,000.  In  consideration  for the above,  the Company agreed to repay such
borrowed funds with accrued  interest at 12% per annum, six months from the date
of the loan or upon demand,  at the option of the lender.  Pursuant to the terms
of the loan  instrument,  the loan is convertible,  at the option of the holder,
into Common  Stock of the Company  upon terms  similar to the Series B Preferred
Stock (i.e. 75% of the closing bid price for the five prior days of conversion).
In  accordance  with  EITF  Issue  98-5,  the  Company  has  evaluated  that the
convertible debt have a beneficial  conversion  feature as the exercise price is
less than the fair value of the Company's common stock on the measurement  date.
Accordingly,  the Company has recognized this beneficial  conversion  feature by
charging  interest  expense of $118,053 and $10,652 for the three month  periods
ended  March  31,  2003 and 2002,  respectively;  and  corresponding  additional
paid-in  capital  account.  The conversion  feature  inherent in the convertible
debts  was  recognized  at the  commitment  date  since  they  were  immediately
convertible.

As of March 31, 2003, the loan balance to this shareholder aggregated $689,535.

Per a  promissory  note dated  February  2003,  a second  shareholder  agreed to
advance  in  total or in  installments  at a later  date,  up to the  amount  of
$1,000,000  to the Company.  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,  2003,  the loan  balance to the second  shareholder  aggregated
$125,000.


                                       8
<PAGE>
                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2003

7. SHAREHOLDERS' TRANSACTIONS

In  February  2003,  a  shareholder  elected to convert  an  aggregate  total of
$382,500 in convertible  debt held into 8,500,000 shares of the Company's common
stock.

In July 2002,  pursuant to a dispute  regarding  the rights of Brian  Bramell et
al.,  to  additional  common  stock of the Company as set forth in a prior stock
subscription agreement, the Company agreed to issue 80,000 shares of the Company
common  stock with a  restrictive  legend.  Based  upon the market  value of the
common stock on the date of settlement,  discounted 30% for its restriction, the
Company  recorded a  settlement  expense and  related  accrual of $67,200 in the
September  2002  financial  statements.  The common  stock was issued in October
2003.

On February 19, 2003, the Company authorized the issuance of 6,000,000 shares of
common stock as additional  compensation  for financing the Company's  equipment
purchases  and  clinical  trials.  The shares were valued at $252,000 as of this
date and recorded as deferred costs on the balance sheet (see note 5).

In February 2003, the Company issued Leo Ehrlich,  President and CEO,  4,000,000
shares of common stock with a  restrictive  legend in lieu of  compensation  for
past  services.  Based upon the market  value of the common stock on the date of
settlement,  discounted 30% for its restriction,  the Company recorded a payroll
expense and related accrual of $168,000.

In February  2003, the Company's  Board of Directors  authorized the issuance of
three million shares of its common stock as compensation to individuals who will
participate and act as the Company's Business Advisory board. The Company issued
3,000,000  shares of its common stock in October 2003;  1,000,000 shares each to
Harmon  Aronson,  Robert  Cook,  and Harold  Snyder who have  agreed to join the
Company's  Advisory Board. The Company recorded a consulting expense of $123,000
to reflect this transaction.

In December  2003,  subsequent  to the Balance  Sheet date,  the Company  issued
1,000,000 warrants exercisable to purchase 1,000,000 shares of Saliva Diagnostic
Systems,  Inc. Common Shares,  Par Value $.001 at a price of $.01 per share. The
warrants expiring December 31, 2013, were issued to secure a funding of $500,000
to be used for clinical  trials and  equipment  purchases.  These  warrants were
valued  at  $620,000  and  will  be  recorded  at the  December  2003  financial
statements.


8. CHANGES IN EQUITIES

As of March  2002,  the  Company's  common  stock  resumed  trading  on the NASD
Bulletin  Board  market  with a new  symbol  "SVAD".  Prior  to such  date,  the
Company's stock had traded under the symbol "SALV".  Subsequent to May 2002, the
Company was delisted from the NASD Bulletin  Board market and due to its failure
to meet the  financial  reporting  requirements  of the NASD;  the common  stock
trades on the OTC "Pink Sheets".

As a result of the  delisting,  an investor may find it difficult to dispose of,
or to obtain accurate quotations as to the price of, the Company's securities.




                                       9
<PAGE>
                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2003




9. CONTINGENCIES

During 2003,  the Company's  counsel  notified  Chembio  Diagnostic  Systems Inc
("CDS"),  see note 4, of its intent to file a patent  infringement  lawsuit.  In
March 2004,  subsequent  to the balance  sheet date,  an action was commenced in
Federal Court whereby CDS is attempting to invalidate  the Company's  patent for
its unique rapid test format.  The Company had authorized an independent  patent
validity search and no objections to its patent were found.  The Company intends
to  vigorously  defend  its  intellectual  property  and  is  proceeding  with a
countersuit against Chembio for monetary damages.

In  February  1998,  Lealos v.  Saliva  Diagnostic  Systems,  Inc.  was filed in
Superior  Court in Clark  County in the State of  Washington  by Ronald  Lealos,
former President and CEO of the Company.  The complaint  alleged that Mr. Lealos
was entitled to certain cash payments and benefits under an employment agreement
whereby  he  would  serve as the  Company's  president,  and that the  Company's
failure to make such payments and grant such benefits  constituted  anticipatory
breach and breach of that  contract.  The complaint  sought damages in excess of
$1,000,000.  In addition,  the  complaint  alleged  that the Company  wrongfully
rescinded options to purchase 38,500 shares of common stock in breach of a stock
option  agreement  with Mr. Lealos.  The Company  denied all  allegations of the
complaint and filed a counterclaim  for Mr.  Lealos'  wrongful  conduct  seeking
damages of  approximately  $1,500,000.  On January 15, 2000, the Company and Mr.
Lealos  settled the claim for $246,000 paid and payable as follows:  $72,095 was
paid on January  15,  2000,  $11,048 was paid on February  15,  2000;  $6,000 is
payable on the 15th of each month for thirteen additional months beginning March
15, 2000, plus $5,048 payable on the 15th of each month for nineteen  additional
months  beginning March 15, 2000. The Company had already paid $156,381  towards
this  settlement  agreement when the Company  ceased making  payments due to the
alleged  actions of Ronald Lealos and his attorneys.  Lealos,  in 2002,  filed a
motion in New York State seeking summary  judgement in the amount of $148,206.02
plus interest.  In a ruling dated March 21, 2003, the court denied Lealos motion
for summary judgement. The Company has made additional accruals or contingencies
for  interest  or legal fees due to Lealos  However,  should  this  matter go to
trial, the Company will vigorously defend its position.


10. SUBSEQUENT EVENTS

In May 2002, the Company  received its  Investigational  Device  Exemption (IDE)
from the U.S. Food and Drug  Administration  (FDA) for approval of its Rapid HIV
Hema-Strip  Test. Upon termination of all business  relationships  with its then
contract  manufacturer,  Chembio  Diagnostic  Systems,  Inc.  (see note 4),  the
Company  needed to file a new IDE with the FDA. A new  submission to the FDA was
made in October 2003 and the IDE was received in November  2003,  subsequent  to
the balance sheet date.  This is the initial step towards FDA approval to market
and sell the test in the United States. After conferring with representatives of
the FDA's  Center for  Biologics  Evaluation  and Research  (CBER),  the Company
decided  to  begin  its  filing  using  a  modular  pre-market   approval  (PMA)
application  approach.  Instead of beginning  filing after all the clinicals are
completed, the modular method allows the Company to begin its filings concurrent
with its US clinical studies.  Should the Company receive PMA approval,  it will
file for a CLIA (Clinical Laboratory Improvements Amendments) waiver.

The IDE is only the first step in a difficult and financially  costly process to
receive US marketing approval.  There is no assurance that the Company will have
the financial  resources,  expertise,  ability, or that the product will perform
adequately to complete the application process.

                                       10
<PAGE>
                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2003

10. SUBSEQUENT EVENTS (CONTINUED)

In July of 2003,  subsequent  to the balance  sheet date,  the Company  signed a
Manufacturing/Research   &  Development   Agreement  with  American  Bio  Medica
Corporation  (ABMC)  of  Kinderhook,   NY.   Responsibilities  of  ABMC  include
manufacturing,   assembly,   regulatory  compliance  and  documentation  of  the
Company's HIV test devices.  The Company has already completed  transferring its
technology to ABMC.  Based on internal test panels used to test the  performance
of HIV tests, the Company believes the product's performance meets the necessary
criteria for US approval.  However,  no assurances can be given that the product
will meet performance specifications required for FDA approval, until actual FDA
approved trials are completed.

                                       11
<PAGE>
                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 MARCH 31, 2003

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.  Other  than sales of the
Company's  collection devices, the Company has not yet commenced any significant
product commercialization.

The Company no longer has its own manufacturing plant and relies entirely on its
vendors to produce its products.  The Company  believes that it has successfully
transferred  its technology to these  vendors,  but  significant  start-up costs
associated with producing its product line are still likely to be incurred.

In May 2002 the Company received its Investigational Device Exemption (IDE) from
the U.S.  Food and Drug  Administration  (FDA)  for  approval  of its  Rapid HIV
Hema-Strip  Test. Upon termination of all business  relationships  with its then
contract manufacturer,  Chembio Diagnostic Systems, the Company needed to file a
new IDE with the FDA.  A new IDE was  received  in  November  2003.  This is the
initial  step  towards  FDA  approval  to market and sell the test in the United
States.  After conferring with representatives of the FDA's Center for Biologics
Evaluation and Research (CBER),  the Company decided to begin its filing using a
modular  pre-market  approval (PMA) application  approach.  Instead of beginning
filing after all the  clinicals  are  completed,  the modular  method allows the
Company to begin its filings concurrent with its US clinical studies. Should the
Company  receive  PMA  approval,  it will file for a CLIA  (Clinical  Laboratory
Improvements Amendments) waiver.

The IDE is only the first step in a difficult and financially  costly process to
receive US marketing approval.  There is no assurance that the Company will have
the financial  resources,  expertise,  ability, or that the product will perform
adequately to complete the application process.


                                       12
<PAGE>
                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 MARCH 31, 2003

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

GENERAL (CONTINUED)

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,  assembly, regulatory compliance
and  documentation  of the Company's  HIV test devices.  The Company has already
completed  transferring  its  technology to ABMC.  Based on internal test panels
used to test the  performance of HIV tests,  the Company  believes the product's
performance meets the necessary criteria for US approval. However, no assurances
can be given that the product will meet performance  specifications required for
FDA approval, until actual FDA approved trials are completed.

The Company has  incurred  significant  operating  losses  since its  inception,
resulting in an  accumulated  deficit of  $40,165,307  at March 31,  2003.  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 be insufficient to fund
the Company's operations through 2003.  Substantial additional financing will be
required in 2003. The Company's  significant  operating  losses and  significant
capital  requirements  raise  substantial  doubt about the Company's  ability to
continue as a going concern.  There can be no assurance that the Company will be
able to obtain the  additional  capital  resources  necessary  to  continue  its
business,  or that such financing will be available on  commercially  reasonable
terms or at all.

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 the following critical accounting  policies,  among others,
may be impacted significantly by judgment, assumptions and estimates used in the
preparation of the unaudited Financial Statements:

The Company  recognizes  revenue in  accordance  with  Securities  and  Exchange
Commission Staff Accounting Bulleted No. 104, "Revenue  Recognition"("SAB 104"),
which supersedes SAB 101, "Revenue  Recognition in Financial  Statements.  Under
SAB 104,  revenue is recognized at the point of passage to the customer of title
and risk of loss,  there is  persuasive  evidence of an  arrangement,  the sales
price is determinable,  and collection of the resulting receivable is reasonably
assured. The Company generally recognizes revenue at the time of shipment. Sales
are reflected net of discounts and returns.

The allowance for doubtful  accounts is maintained to provide for losses arising
from customers' inability to make required payments. If there is a deterioration
of our customers' credit worthiness and/or there is an increase in the length of
time that the receivables  are past due greater than the historical  assumptions
used, additional allowances may be required.

                                       13
<PAGE>
                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 MARCH 31, 2003


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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)

Saliva  diagnostic  Systems,  Inc.  accounts for income taxes in accordance with
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes." Under SFAS No. 109,  deferred tax assets and  liabilities are determined
based on the difference between the financial  statement and tax bases of assets
and  liabilities,  using  enacted  tax rates in effect for the year in which the
differences  are expected to reverse.  Deferred tax assets are  reflected on the
balance  sheet only when it is  determined  that it is more likely than not that
the asset will be realized.

RESULTS OF OPERATIONS

First Quarter of 2003 Compared to First Quarter of 2002

Revenues:  The  Company's  revenues  consist  of  product  sales and  royalties.
Revenues  increased  117% to $287,024 in the first quarter of 2003 from $132,220
in the first quarter of 2002.  The Company is continuing to seek new markets and
sales opportunities for its products.

Cost of products  sold:  Costs of products  sold  increased  to $66,699  (23% of
product  sales) in the first quarter of 2003 from $28,496 (22% of product sales)
in the first quarter of 2002 due to increased sales activity.

Research and development expenses:  Research and development expenses aggregated
$175,000  in the first  quarter of 2003 as a result of  clinical  trials for FDA
approval of the Company's rapid HIV test. The Company did not incur any research
and development expenses during the first quarter of 2002.

Selling,   general   and   administrative   expenses:   Selling,   general   and
administrative  expenses increased 184% to $297,252 in the first quarter of 2003
from $104,766 in the first quarter of 2002,  primarily as a result of consulting
fee to the Business Advisors.

Interest expense: Interest expense increased to $152,799 in the first quarter of
2003 from $25,181 in the first quarter of 2002 due to interest  expense  related
to the conversion  feature of convertible debt as well as new financing received
in 2003 from a shareholder.

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
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 $40 million,
which is available to offset future taxable income, if any, expiring through the
year 2023. As a result of the shares issued in March 2002, the Internal  Revenue
Code rules under Section 382 could  significantly  limit the future use of these
losses based on ownership changes.

As of March 31, 2003, the Company had negative working capital of $980,419. Cash
used in operating  activities  in the first three  months of 2003 was  $106,647.
This  was  primarily  a result  of a net loss of  $410,976,  offset  by  certain
non-cash charges.

Cash  provided by  financing  activities  in the first three  months of 2003 was
$119,800.  This was  primarily a result of  additional  funding of $409,200 from
shareholders, offset by repayments of $289,400 to the same shareholders.

                                       14
<PAGE>
                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 MARCH 31, 2003


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

LIQUIDITY AND CAPITAL RESOURCES

Since  inception,  the Company has  financed  its capital  requirements  through
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 borrowings.

Pursuant to an agreement  dated  October 1999 and later amended as to amount and
expiration  date,  Helenka Bodner,  agreed to advance or cause to be advanced to
the Company  from time to time,  through  December  31,  2004,  up to the sum of
$1,500,000.  In  consideration  for the above,  the Company agreed to repay such
borrowed funds with accrued  interest at 12% per annum, six months from the date
of the loan or upon demand,  at the option of the lender.  Pursuant to the terms
of the loan  instrument,  the loan is convertible,  at the option of the holder,
into Common  Stock of the Company  upon terms  similar to the Series B Preferred
Stock (i.e. 75% of the closing bid price for the five prior days of conversion).
In  accordance  with  EITF  Issue  98-5,  the  Company  has  evaluated  that the
convertible debt have a beneficial  conversion  feature as the exercise price is
less than the fair value of the Company's common stock on the measurement  date.
Accordingly,  the Company has recognized this beneficial  conversion  feature by
charging  interest  expense of $118,053  and $10,652 for the three month  period
ended  March  31,  2003 and 2002,  respectively;  and  corresponding  additional
paid-in  capital  account.  The conversion  feature  inherent in the convertible
debts  was  recognized  at the  commitment  date  since  they  were  immediately
convertible.

Helenka  Bodner has assigned the Note to Resonance Ltd. The balance at March 31,
2003 was  $689,535.  Pursuant to the terms of the loan  instrument,  the loan is
convertible,  at the option of the holder,  into Common  Stock of the Company at
75% of the closing stock bid price for the five days prior to conversion.

As of March 31,  2004,  subsequent  to the  Balance  Sheet date,  the  Company's
outstanding  loans from  stockholders,  which are convertible into the Company's
common stock,  totaled $192,128 (See earlier paragraph  regarding Helenka Bodner
loan). Had the  stockholders  elected to convert these loans into common stock -
as of such  date,  it would  result in the  issuance  by the  Company of 232,882
shares of common stock.

Per a  promissory  note dated  February  2003,  a second  shareholder  agreed to
advance  in  total or in  installments  at a later  date,  up to the  amount  of
$1,000,000  to the Company.  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,  2003,  the loan  balance to the second  shareholder  aggregated
$125,000.

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.



                                       15
<PAGE>
                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 MARCH 31, 2003



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

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

In March 2002, the Company amended its Certificate of  Incorporation to effect a
one-for-twenty  five reverse  split of its common stock.  As of that date,  each
twenty five outstanding  shares of the Company's common stock were converted and
reconstituted  into one share of common stock,  par value $0.001 per share.  The
number of  authorized  shares of common stock of the Company was not affected by
the reverse stock split and remains at 50,000,000.  Options, warrants, preferred
stock and other securities convertible into shares of the Company's common stock
will be adjusted  in  accordance  with their terms to reflect the reverse  stock
split. Upon exercise or conversion,  holders of such securities will be entitled
to receive  one-twenty fifth of the number of shares of post-split  common stock
as they were entitled to receive of pre-split common stock.

As of March  2002,  the  Company's  common  stock  resumed  trading  on the NASD
Bulletin  Board  market  with a new  symbol  "SVAD".  Prior  to such  date,  the
Company's  stock had traded under the symbol "SALV".  Subsequent to May 2002 the
Company was delisted from the NASD  Bulletin  Board market and has traded on the
OTC  "Pink  Sheets"  due  to  its  failure  to  meet  the  financial   reporting
requirements of the NASD. As a result of the delisting,  an investor may find it
difficult to dispose of, or to obtain  accurate  quotations  as to the price of,
the Company's securities.

In July 2002,  pursuant to a dispute  regarding  the rights of Brian  Bramell et
al.,  to  additional  common  stock of the Company as set forth in a prior stock
subscription agreement, the Company agreed to issue 80,000 shares of the Company
common  stock with a  restrictive  legend.  Based  upon the market  value of the
common stock on the date of settlement,  discounted 30% for its restriction, the
Company  recorded a  settlement  expense and  related  accrual of $67,200 in the
September  2002  financial  statements.  The common  stock was issued in October
2003.

On February 19, 2003, the Company issued Jules  Nordlicht,  6,000,000  shares of
common stock as additional  compensation  for financing the Company's  equipment
purchases  and  clinical  trials.  The shares  were valued at $252,000 as of the
issuance date and recorded as deferred costs on the balance sheet.

In February 2003, the Company issued Leo Ehrlich,  President and CEO,  4,000,000
shares of common stock with a restrictive legend to the President and CEO of the
Company in lieu of compensation  for past services.  Based upon the market value
of the  common  stock  on  the  date  of  settlement,  discounted  30%  for  its
restriction,  the Company  recorded a payroll  expense  and  related  accrual of
$168,000.

In February  2003, the Company's  Board of Directors  authorized the issuance of
three million shares of its common stock as compensation to individuals who will
participate and act as the Company's Business Advisory board. The Company issued
3,000,000  shares of its common stock in October 2003;  1,000,000 shares each to
Harmon  Aronson,  Robert  Cook,  and Harold  Snyder who have  agreed to join the
Company's  Advisory Board. The Company recorded a consulting expense of $123,000
to reflect this transaction.

In December  2003,  subsequent  to the Balance  Sheet date,  the Company  issued
1,000,000 warrants exercisable to purchase 1,000,000 shares of Saliva Diagnostic
Systems,  Inc. Common Shares,  Par Value $.001 at a price of $.01 per share. The
warrants expiring December 31, 2013, were issued to secure a funding of $500,000
to be used for clinical trials and equipment purchases.


                                       16
<PAGE>
                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 MARCH 31, 2003


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

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

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. The Company's significant operating losses and capital
requirements  raise substantial doubt about the Company's ability to continue as
a going concern.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

From time to time,  the  Company's  earnings  and cash flow have been subject to
fluctuations  due to changes in foreign  currency  exchange  rates in connection
with its foreign subsidiaries. The Company is not currently generating any sales
from its foreign  subsidiaries.  We do not anticipate any material currency risk
to the Company's  financial  condition or results of operations  resulting  from
currency fluctuations.


ITEM 4.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE OF 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 chief
executive officer 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 chief executive  officer and chief financial  officer have
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.


                                       17
<PAGE>

                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 MARCH 31, 2003


PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During 2003, the Company's  counsel notified Chembio  Diagnostic  Systems of its
intent to file a patent infringement  lawsuit. In March 2004,  subsequent to the
balance sheet date, an action was commenced in Federal Court whereby  Chembio is
attempting to invalidate the Company's  patent for its unique rapid test format.
The  Company  had  authorized  an  independent  patent  validity  search  and no
objections to its patent were found.  The Company  intends to vigorously  defend
its intellectual  property and is proceeding with a countersuit  against Chembio
for monetary damages.

The Company had stopped making payments on its January 2000 settlement agreement
with Ronald  Lealos.  In a ruling dated March 21, 2003,  the court denied Lealos
motion for summary  judgment.  Should this matter go to trial,  the Company will
vigorously defend its position. The Company has retained legal counsel.


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

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)    Certification of Chief Financial  Officer Pursuant to Rules 13a-14(a) and
       15d-14(a)  promulgated  under the  Securities  Exchange  Act of 1934,  as
       amended.

       Certification of Chief Executive Officer Pursuant to 18 U.S.C.ss. 1350.

(b) Earnings per share - See Exhibit 11

(c) Reports on Form 8-K

No reports on Form 8-K were filed during the quarter ended March 31, 2003.



                                       18

<PAGE>
                         SALIVA DIAGNOSTIC SYSTEMS, INC.
                                 MARCH 31, 2003

                                   SIGNATURES

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

                                    Saliva Diagnostic Systems, Inc.
                                    --------------------------------------------
                                    (Registrant)

Date:  April 15, 2004                        /s/ LEO EHRLICH
                                     -------------------------------------------
                                       Leo Ehrlich
                                     President & Chief Financial Officer
                                     (Duly Authorized Officer)