SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

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- -------------------------------------------------------------------------------
Avitar, Inc. (File Number 1-15695)
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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AVITAR, INC.
65 Dan Road
Canton, Massachusetts 02021

August 27, 2004

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of the Stockholders
of Avitar, Inc., a Delaware corporation ("Avitar"), at Batterymarch Conference
Center, 60 Batterymarch Street, 2nd Floor, Boston, Massachusetts on September
28, 2004 at 10:00 a.m.

At the meeting you will be asked to consider and vote upon (1) the election
of five Directors to Avitar's Board of Directors; (2) the ratification and
approval of the May 2004 Private Placement, as described in this Proxy
Statement; (3) the ratification and approval of the August 2004 Private
Placement, as described in this Proxy Statement; (4) the approval of the
issuance and reservation of shares of common stock in connection with the New
Private Placement, as described in this Proxy Statement; (5) the adoption of an
Amendment of the Certificate of Incorporation to increase the authorized shares
of common stock from 200,000,000 to 300,000,000; (6) the re-appointment of BDO
Seidman, LLP as Avitar's independent auditors for the fiscal year ending
September 30, 2004; and (7) any other business that properly comes before the
meeting or any adjournments or postponements thereof.

The Board of Directors recommends that shareholders vote FOR Items 1, 2, 3,
4, 5 and 6.

Your vote is important. We urge you to complete, sign, date and return the
enclosed proxy card promptly in the accompanying prepaid envelope. You may, of
course, attend the Meeting and vote in person, even if you have previously
returned your proxy card.

Sincerely yours,

Peter P. Phildius,
Chairman and Chief Executive Officer

Avitar, Inc.
65 Dan Road
Canton, Massachusetts 02021
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on September 28, 2004.

To the Stockholders of Avitar, Inc.:

Notice is hereby given that the Annual Meeting of Stockholders of Avitar,
Inc., a Delaware corporation ("Avitar") will be held at 10:00 a.m., local time,
on September 28, 2004 at Batterymarch Conference Center, 60 Batterymarch Street,
2nd Floor, Boston, Massachusetts, for the following purposes:

(1) To consider and vote upon the election of the Board of Directors consisting
of five persons to serve until the next annual meeting of the stockholders;

(2) To consider and vote upon the ratification and approval of the issuance and
reservation of all shares of Common Stock issued or issuable in connection with
the May 2004 Private Placement described in this Proxy Statement;

(3) To consider and vote upon the ratification and approval of the issuance and
reservation of all shares of Common Stock issued or issuable in connection with
the August 2004 Private Placement described in this Proxy Statement;

(4) To consider and vote upon the approval of the issuance and reservation of
all shares of Common Stock issued or issuable in connection with the New Private
Placement described in this Proxy Statement;

(5) To consider and vote upon the Amendment of the Certificate of Incorporation
of Avitar to increase the authorized shares of Common Stock from 200,000,000 to
300,000,000;

(6) To consider and vote upon a proposal to ratify the selection of BDO Seidman,
LLP as Avitar's independent auditors for the fiscal year ending September 30,
2004; and

(7) To conduct such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.

Only record holders of Common Stock at the close of business on August 16,
2004 are entitled to notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof. To ensure that your vote will be counted,
please complete, sign, date and return the Proxy in the enclosed prepaid
envelope whether or not you plan to attend the Annual Meeting. You may revoke
your proxy by notifying the Secretary of the Company in writing at any time
before it has been voted at the Annual Meeting.

August 27, 2004 By Order of the Board of Directors
Canton, Massachusetts Jay C. Leatherman,
Secretary, Avitar, Inc.

YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY CARD PROMPTLY WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING.

Avitar, Inc.
-----------------------------------

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 28, 2004
------------------------------------

THE ACCOMPANYING PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AVITAR, INC.

If properly signed and returned and not revoked, the proxy will be voted in
accordance with the instructions it contains. The persons named in the
accompanying proxy will vote the proxy for the Board of Directors' slate of
directors and for the other matters listed on the proxy, in each case as
recommended by the Board of Directors unless contrary instructions are given. At
any time before it is voted, each proxy granted may be revoked by the
stockholder by a later dated proxy, by written revocation addressed to the
Secretary of Avitar, Inc. at the address below or by voting by ballot at the
Annual Meeting.

The Company's principal executive offices are located at 65 Dan Road,
Canton, Massachusetts 02021. This proxy statement and the accompanying proxy are
being sent to stockholders on or about August 27, 2004. ANY PROXY MAY BE REVOKED
IN PERSON AT THE ANNUAL MEETING, BY SUBMITTING A PROXY DATED LATER THAN THE
PROXY TO BE REVOKED OR BY NOTIFYING THE SECRETARY OF THE COMPANY IN WRITING AT
ANY TIME PRIOR TO THE TIME THE PROXY IS VOTED.

VOTING SECURITIES

The Board has fixed the close of business on August 16, 2004 as the record
date (the "Record Date") for determination of stockholders entitled to receive
notice of and to vote at the Annual Meeting or any adjournment thereof. Only
stockholders of record at the close of business on the Record Date will be
entitled to notice of and to vote at the Annual Meeting.

On the Record Date, the Company had outstanding 120,509,917 shares of
Common Stock and 47,446 shares of Preferred Stock, of which 5,689 were shares of
Series B Preferred Stock, 2,000 were shares of 6% Convertible Preferred Stock
and 1,391 were shares of Series A Preferred Stock. Stockholders are entitled to
one vote for each share of Common Stock (including the shares into which each
share of Series A and 6% Convertible Preferred Stock are convertible) and each
share of Series B Preferred Stock on the business as may properly come before
the meeting or any adjournments thereof. The holders of a majority of the
outstanding voting shares constitute a quorum. Abstentions from voting and
broker non-votes on a particular Proposal will be counted for purposes of
determining the presence of a quorum but will not be counted as affirmative or
negative votes on the Proposals.

As of the Record Date, the directors and executive officers of Avitar as a
group held 4,459,797 voting shares, representing 3.2% of the shares eligible to
vote at the Annual Meeting. (In addition, also as of the Record Date, beneficial
owners of approximately 5% or more of Common Stock, as listed in the table of
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT in this Proxy
Statement, held in the aggregate 24,206,575 voting shares, representing 17.5% of
the shares eligible to vote at the Annual Meeting.)

ACTION TO BE TAKEN UNDER PROXY

All proxies for stockholders in the accompanying form that are properly
executed and returned will be voted at the Annual Meeting and any adjournments
thereof in accordance with any specifications thereon or, if no specifications
are made, will be voted for the election of the five nominees described herein
and for Items 2, 3, 4, 5 and 6.

SOLICITATION

Avitar will bear the entire cost of the solicitation of proxies from its
stockholders, including preparation, assembly, printing and mailing of this
Proxy Statement, the proxy card and any additional information furnished to
stockholders. Copies of solicitation materials will be furnished to banks,
brokerage houses, fiduciaries and custodians holding in their names shares
beneficially owned by others to forward to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, facsimile,
telegram or personal solicitation by directors, officers or other regular
employees of Avitar. No additional compensation will be paid to such persons for
such services. Avitar has also engaged the Proxy Advisory Group of Strategic
Surveillance, LLC to assist in the solicitation of proxies and provide related
informational support for fees and the reimbursement of certain expenses that
are not expected to exceed $8,000.

ITEM NO. 1
ELECTION OF DIRECTORS

Five (5) directors will be elected to hold office until the next Annual
Meeting of Stockholders and until their successors have been elected and duly
qualified. The persons named on the accompanying proxy will vote all shares for
which they have received proxies for the election of the nominees named below
unless contrary instructions are given. In the event that any nominee should
become unavailable, shares will be voted for a substitute nominee unless the
number of directors constituting a full board is reduced. Directors are elected
by plurality vote.

NOMINEES

The name, age and position with Avitar of each nominee for director is
listed below, followed by summaries of their background and principal
occupations.

Name Age Title
Peter P. Phildius 74 Chairman of the Board/Chief Executive Officer
Douglas W. Scott 57 President and Chief Operating Officer/Director
Neil R. Gordon (1)(2) 56 Director
James Groth (1)(2) 65 Director
Charles R. McCarthy, Jr. 65 Director
(1)(2)

1. Member of Audit Committee.
2. Member of Compensation Committee.

PETER P. PHILDIUS

Mr. Phildius has been Chairman of the Board of Directors since October 1990
and Chief Executive Officer since July 1996. He has been a general partner in
Phildius Kenyon & Scott, a partnership ("PKS"), since that firm's founding in
1985. Prior to 1985, Mr. Phildius was an independent consultant and Chairman and
co-founder of Nutritional Management, Inc., a company that operated weight loss
clinics (1983 - 1985), President and Chief Operating Officer of Delmed, Inc., a
medical products company (1982 - 1983), President and Chief Operating Officer of
National Medical Care, Inc., a dialysis and medical products company (1979-1981)
and held a variety of senior management positions with Baxter Laboratories, Inc.
("Baxter"), a hospital supply company and the predecessor of Baxter Healthcare
Corporation. During the last eight years of his 18 year career at Baxter (1961 -
1979), Mr. Phildius was Group Vice President and President of the Parenteral
Division, President of the Artificial Organs Division and President of the
Fenwal Division.

DOUGLAS W. SCOTT

Mr. Scott has been the Chief Operating Officer since July 1996, was the
Chief Executive Officer from August 1989 until July 1996 and has been a director
since August 1989. Mr. Scott has been a general partner in PK&S since its
founding in 1985. Prior to 1985, Mr. Scott was Executive Vice President of
Nutritional Management, Inc. (1983 - 1985); Senior Vice President, Operations of
Delmed, Inc. (1982 - 1983); Vice President, Quality Assurance of Frito-Lay,
Inc., a consumer products company (1980 - 1982); and held several senior
positions at Baxter from 1970 to 1980. The last two of these senior positions at
Baxter were General Manager of the Vicra Division and General Manager of Irish
Operations. Mr. Scott is also a director of Candela Corporation, a
publicly-traded company in the business of manufacturing and marketing medical
lasers. Mr. Scott received an M.B.A. from the Harvard Business School.

JAMES GROTH

Mr. Groth has served as a director since January 1990. Mr. Groth has been
President of Mountainside Corporation, a provider of corporate sponsored
functions, for over the past 15 years.

NEIL R. GORDON

Mr. Gordon has served as a director since June 1997. He has been President
of N.R. Gordon & Company, Inc., a company that provides a broad range of
financial consulting services, since 1995. From 1981 to 1995, he was associated
with Ekco Group, Inc. and served as its Treasurer from 1987 to 1995. Mr. Gordon
has also served as Director of Financing and Accounting for Empire of Carolina,
Inc. and was with the accounting firm of Haskins & Sells. He received a Bachelor
of Science Degree from the Pennsylvania State University.

CHARLES R. McCARTHY, JR.

Mr. McCarthy was elected as a director in February 1999. He has been a
counsel in the Washington D.C. law firm, O'Connor & Hannan, since 1993.
Previously, Mr. McCarthy was General Counsel to the National Association of
Corporate Directors, served as a trial attorney with the Securities and Exchange
Commission, was Blue Sky Securities Commissioner for the District of Columbia
and was a law professor teaching securities law topics and served as a Board
member of and counsel to a number of public companies over the last 30 years.

NUMBER OF DIRECTORS

The Company's Bylaws allow the Board to fix the number of Board members
between 3 and 7. The number has been fixed, at present, at 5. The Board can
increase the number to 7 at any time without stockholder approval. There are no
family relationships between any Director or Executive Officer of Avitar and any
other Director or Executive Officer of Avitar.

TERM

Directors hold office for a period of one year from the Annual Meeting of
Stockholders at which they are elected or until their successors are duly
elected and qualified. Officers are appointed by the Board of Directors and hold
office at the will of the Board.

BOARD MEETINGS AND COMMITTEES

The Board held 3 meetings during the fiscal year ended September 30, 2003.

The Board has two standing committees: the Audit Committee and the
Compensation Committee. The Board does not have a standing nominating committee
or any committee performing the function of such a committee. During fiscal year
2003, each Board member attended at least 75% of the aggregate number of
meetings of the Board and the Committee of the Board on which he served.

CONTACTING OUR BOARD

Our stockholders and other interested parties who wish to communicate with
our Board or individual directors may send written correspondence addressed to
them, care of Secretary, Avitar, Inc., 65 Dan Road, Canton, Massachusetts 02021.
All written correspondence addressed to our directors will be forwarded promptly
by our Secretary to the directors to whom it is addressed.

The Company has no policy on attendance by Directors at the Annual Meeting
of Shareholders, although the By-Laws provide that the Annual Meeting of
Directors shall be held as soon as possible after the Annual Meeting of
Shareholders. In fact, all Directors attended the Annual Meeting of Shareholders
last year.

NOMINATION OF DIRECTORS

The Board of Directors does not have a separately constituted nominating
committee. The Board believes that it is appropriate under existing
circumstances not to have a separate nominating committee because the Board is
comprised of only five (5) existing members, three (3) of whom are "independent"
within the meaning of The American Stock Exchange listing standards. All members
of the Board of Directors participate in the consideration of director nominees.
The Board of Directors does not have a formal policy with regard to the
consideration of any director candidates recommended by shareholders. However,
the Board of Directors would consider for possible nomination qualified nominees
recommended by shareholders. Shareholders who wish to propose a qualified
nominee for consideration should submit complete information as to the identity
and qualifications of that person to the Secretary of the Company at 65 Dan Road
Canton, MA 02021, sufficiently in advance of an annual meeting. Absent special
circumstances, the Board of Directors will continue to nominate qualified
incumbent Directors whom the Board of Directors believes will continue to make
important contributions to the Board of Directors. The Board generally requires
that nominees be persons of sound ethical character, be able to represent all
shareholders fairly, have no material conflicts of interest, have demonstrated
professional achievement, have meaningful experience and have a general
appreciation of the major business issues facing Avitar. The Board of Directors
does not have a formal process for identifying and evaluating nominees for
Director.

AUDIT COMMITTEE

The Audit Committee meets with the independent auditors, at a minimum
annually, to review the results of the annual audit and discuss the financial
statements; recommends to the Board the independent auditors to be retained; and
receives and considers the accountants' comments as to controls, adequacy of
staff and management performance and procedures in connection with audit and
financial records. Management has primary responsibility for financial
statements and the reporting process, including the systems of internal
controls, and has represented to the Audit Committee that Avitar's 2003
consolidated financial statements are in accordance with generally accepted
accounting principles. The Audit Committee, comprised of Mr. Gordon, Mr. Groth
and Mr. McCarthy, held 1 telephone meeting concerning fiscal year 2003. In
addition, the Audit Committee reviewed and approved the financial statements
that were included in each of the quarterly reports on Form 10-QSB during the
year ended September 30, 2003.

AUDIT COMMITTEE REPORT

In connection with the fiscal 2003 audit, the Audit Committee has:

- reviewed and discussed with management Avitar's audited consolidated
financial statements included in our annual report on Form 10-KSB for the year
ended September 30, 2003,

- discussed with BDO Seidman, LLP the matters required to be discussed by
Statement of Auditing Standards No. 61, - discussed with BDO Seidman, LLP
whether various other services performed for Avitar during 2003 were compatible
with BDO Seidman, LLP maintaining its independence, and

- received from and discussed with BDO Seidman, LLP the written disclosures
and the letter from BDO Seidman, LLP required by the Independence Standards
Board Standard No. 1 and discussed with BDO Seidman, LLP its independence.

Based on the review and the discussions described above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in our annual report on Form 10-KSB for the
year ended September 30, 2003 for filing with the Securities and Exchange
Commission.

The Board of Directors has approved a written charter, a copy of which is
attached to the Proxy Statement as Annex A. All members of the Audit Committee
have been determined to be independent in accordance with the requirements of
Section 121(A) of the American Stock Exchange listing standards.

Fiscal 2003 and 2002 Audit Firm Fee Summary. During fiscal years 2003 and
2002, Avitar retained its principal auditor, BDO Seidman, LLP to provide
services in the following categories and amounts:

2003 2002

Audit Fees(services in connection with the
audit of the Company's financial statements, review
of the Company's quarterly reports of Form 10-QSB
and statutory or regulatory filings or engagements).....................................$ 118,330 $108,390
Audit Related Fees (assurance and related services).....................................$ - $ -
Tax Fees(services in connection with the preparation
of the Company's tax returns)...........................................................$ 12,350 $ 16,000
All Other Fees..........................................................................$ - $ -

The Audit Committee has considered whether the provision of non-audit
services by the Company's principal auditor was compatible with maintaining
auditor independence and has determined such services were not incompatible with
maintaining auditor independence.

THE AUDIT COMMITTEE
Neil R. Gordon
James Groth
Charles R. McCarthy, Jr.

The Audit Committee Report shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934 (together, the "Acts"), except to the extent Avitar specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.

COMPENSATION COMMITTEE.

The Compensation Committee makes recommendations to the Board concerning
salaries and incentive compensation, awards stock options to employees and
consultants and otherwise determines compensation levels and performs such other
functions regarding compensation as the Board may delegate. The Compensation
Committee, comprised of Mr. Gordon, Mr. Groth and Mr. McCarthy, held no meetings
in fiscal year 2003.

DIRECTOR COMPENSATION

During Fiscal 2003, in accordance with a plan approved by the Company on
September 25, 2001, the Company compensated its non-management directors with a
$5,000 annual retainer, $1,000 for each board meeting attended and $500 for each
committee meeting attended. In addition, this plan provides for each
non-management director to be granted options covering 100,000 shares of the
Company's common stock upon initial election to the Board and 30,000 shares of
the Company's common stock for each year in which he/she was selected to serve
as a director. On August 3, 2004, the Company approved a plan to increase the
number of shares of the Company's common stock covered by options granted to
non-management directors for each year he/she was elected to serve as a director
from 30,000 to 75,000.

For information on compensation to management directors, see
"Management-Executive Compensation" below.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the number of shares of the Common Stock
beneficially owned as of August 16, 2004 by (i) each person believed by Avitar
to be the beneficial owner of more than 5% of the Common Stock; (ii) each
director; (iii) the Chief Executive Officer and its four most highly compensated
executive officers (other than the Chief Executive Officer) who earn over
$100,000 a year; and (iv) all directors and executive officers as a group.
Beneficial ownership by the stockholders has been determined in accordance with
the rules promulgated under Section 13(d) of the Securities Exchange Act of
1934, as amended. All shares of the Common Stock are owned both of record and
beneficially, unless otherwise indicated.

Name and Address of Beneficial Owner (1) No. Owned %
- ---------------------------------- --------- ----

Peter P. Phildius (2)(3)(9)(11) 4,807,115 3.9
Douglas W. Scott (2)(4)( 9)(12) 3,704,496 2.9
Phildius, Kenyon & Scott("PK&S") (2)(9) 1,792,595 1.5
Jay C. Leatherman, Jr.(2)(5) 368,130 *
James Groth (2)(6)(13) 232,199 *
Neil R.Gordon (2)(7) 323,097 *
Charles R. McCarthy (2)(8) 305,156 *
David Brown (10) 8,682,056 10.1
Gryphon Master Fund, LP (14) 10,333,334 8.6
All directors and executive officers
as a group (3)(4)(5)(6)(7)(8)(9)(11)
(12)(13) 7,713,598 6.2

* Indicates beneficial ownership of less than one (1%) percent.

(1) Information with respect to holders of more than five (5%) percent of the
outstanding shares of the Company's Common Stock was derived from, to the extent
available, Schedules 13D and the amendments thereto on file with the Commission
and the Company's records regarding stock issuances.

(2) The business address of such persons, for the purpose hereof, is c/o Avitar,
Inc., 65 Dan Road, Canton, MA 02021.

(3) Includes 1,668,120 shares of the Company's Common Stock, options and
warrants to purchase 1,346,400 shares of the Company's Common Stock. Also
includes the securities of the Company beneficially owned by PK&S as described
below in Note 10.

(4) Includes 715,501 shares of the Company's Common Stock and options to
purchase 962,400 shares of the Company's Common Stock. Also includes the
securities of the Company beneficially owned by PK&S as described below in Note
10.

(5) Includes 5,630 shares of the Company's Common Stock, and options to purchase
362,500 shares of the Company's Common Stock.

(6) Includes 74,699 shares of the Company's Common Stock and options to purchase
157,500 shares of the Company's Common Stock.

(7) Includes 90,597 shares of the Company's Common Stock, warrants to purchase
90,000 shares of the Company's Common Stock granted to such director under a
consulting agreement to provide services to the Company and options to purchase
142,500 shares of the Company's Common Stock.

(8) Includes 172,655 shares of the Common Stock and options to purchase 132,501
shares of the Common Stock.

(9) Represents ownership of 1,732,595 shares of the Company's Common Stock,
options and warrants to purchase 60,000 shares of the Company's Common Stock.
PK&S is a partnership of which Mr. Phildius and Mr. Scott are general partners.

(10) The business address for such person is 4101 Evans Avenue, Fort Meyers, FL
33901. Represents 12,113,874 shares of the Company's Common Stock.

(11) Does not include 35,600 shares of the Common Stock owned by Mr. Phildius'
wife, all of which he disclaims beneficial ownership.

(12) Does not include 15,000 shares of the Common Stock owned by Mr. Scott's
children, all of which he disclaims beneficial ownership.

(13) Does not include 10,929 shares of the Company's Common Stock owned by a
trust established for Mr. Groth's children, all of which he disclaims beneficial
ownership

(14) The business address for such entity is 500 Crescent Court, #270, Dallas,
TX 75201. Represents preferred stock convertible into 11,296,296 shares of the
Company's Common Stock, but limited to 9.9% beneficial holding.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the officers
and directors, and persons who own more than 10% of a registered class of equity
securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Officers, directors and greater than
10% stockholders are required by SEC regulation to furnish Avitar with copies of
all Section 16(a) forms they file.

Based on its review of the copies of such forms received by it or its
written representations from certain reporting persons, the Company believes
that, during Fiscal 2003, all filing requirements applicable to its officers,
directors and greater than ten-percent shareholders were met except the
following failures to file timely reports as required by Section 16(a):

- - Reports (Forms 4 and/or 5) covering 15 transactions by Douglas Lewis, the
president of USDTL, a former subsidiary of the Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PK&S, a 1.8 % beneficial owner of the Company, provided consulting services
to the Company from September 1989 to May 1995. On May 28, 1992, the Company
entered into a written consulting agreement with PK&S, which reflected the
provisions of a previous oral agreement approved by the Company's Board of
Directors in October 1990. Pursuant to its arrangement with the Company, PK&S
provided the services of each of Messrs. Phildius and Scott to the Company.

On May 19, 1995, the Company's Consulting Agreement ended and was replaced
by the Employment Agreements with Messrs. Phildius and Scott (See "Employment
Agreements"). As requested by Messrs. Phildius and Scott and approved by the
Company's Board of Directors, the salary and benefits provided under the
Employment Agreements will be paid directly to PK&S. Under the terms of the
current employment agreements with Peter Phildius and Douglas Scott described
above, the Company pays their salaries and related expenses directly to PK&S.
The aggregate of salaries, fringe benefits and reimbursement of expenses paid to
PK&S by the Company on behalf of Messrs. Phildius and Scott for fiscal years
2003 and 2002 totaled $364,989 and $448,727 respectively. The amount for 2003
reflects the temporary salary reductions in effect during Fiscal 2003.

In October 1996, the Company entered into a consulting agreement with N.R.
Gordon & Company, Inc. Neil Gordon, a member of the Company's Board of
Directors, is the President of N.R. Gordon and Company, Inc. Under this
agreement, N.R. Gordon & Company, Inc. provided financial consulting services
for which it received 50,000 warrants at an exercise price of $0.93 per share
and was paid $100.00 per hour for all services performed. In addition, N.R.
Gordon & Company, Inc. was entitled to receive commissions for certain capital
raising services. During Fiscal 1998, the Company canceled the 50,000 warrants
granted to N.R. Gordon & Company in 1996 and replaced them with 100,000 warrants
(of which 50,000 where exercised in October 2001 and the remaining 50,000
expired in 2003) to purchase the Company's Common Stock for $.25 per share. No
services were provided to the Company under this Agreement during Fiscal 1999
and Fiscal 2000. In March 2001, the Company entered into a new consulting
agreement with N.R. Gordon & Company, Inc. for financial consulting services.
Under this new agreement, N.R. Gordon and Company, Inc. received warrants to
purchase 40,000 shares of the Company's common stock at an exercise price of
$.79 per share until February 2006 and was paid $100.00 per hour for services
rendered to the Company. Expenses incurred for N.R. Gordon & Company, Inc.
amounted to nothing in Fiscal 2003 and $4,082 in Fiscal 2002. MANAGEMENT

The executive officers of the Company and their respective ages and
positions with the Company, as of May 9, 2003, along with certain biographical
information (based solely on information supplied by them), are as follows:

Name Age Title
Peter P. Phildius 74 Chairman of the Board/Chief Executive Officer
Douglas W. Scott 57 President and Chief Operating Officer
Jay C. Leatherman Jr. 60 Vice President, Chief Financial Officer and
Secretary

PETER P. PHILDIUS

Biographical information of Mr. Phildius is included under "Proposal No. 1,
Election of Directors -- Nominees" in this Proxy Statement.

DOUGLAS W. SCOTT

Biological information of Mr. Scott is included under "Proposal No. 1,
Election of Directors -- Nominees" in this Proxy Statement.

JAY C. LEATHERMAN, JR.

Mr. Leatherman has served as the Company's Chief Financial Officer since
October 1992 and its Secretary since July 1994. He has over 27 years experience
in financial management in the health care, medical products and medical
diagnostic fields. Mr. Leatherman served as Vice President and Chief Financial
Officer of 3030 Park, Inc. and 3030 Park Management Company from 1985 to 1992,
responsible for financial, management information services and business
development functions for this continuing care retirement community and
management company. He served as Director of Finance and Business Services for
the Visiting Nurses Association of New Haven, Inc. from 1977 to 1985. In
addition, he served in a variety of accounting and financial positions with
Westinghouse Electric Corporation from 1969 to 1977. Mr. Leatherman has a B.B.A
in accounting from the University of Hawaii.

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth compensation earned
by or paid to the Chief Executive Officer, Chief Operating Officer and other
executive officers for Fiscal 2003 and, to the extent required by applicable
Commission rules, the preceding two fiscal years.

Annual Compensation Long-Term
Name/Position Year Salary(1) Bonus Compensation Options
- ------------- ---- --------- ----- ---------------------
Peter P. Phildius 2003(4) $171,661 $0 0
(Chairman of the Board/ 2002 $200,000 $0 125,000(2)
Chief Executive Officer) 2001 $200,000 $0 252,000(3)
Douglas W. Scott 2003(4) $154,500 $0 0
(President/ 2002 $180,000 $0 66,000(2)
Chief Operating Officer) 2001 $180,000 $0 132,000(3)
Jay C. Leatherman, Jr. 2003(4) $120,616 $0 0
(Chief Financial Officer) 2002 $131,230 $0 43,750(2)
2001 $125,000 $0 87,500(3)
Douglas Lewis 2003 $126,000 $0 0
(Vice President/President 2002 $126,000 $0 0
of USDTL) 2001 $126,000 $0 0

(1) Does not include amounts reimbursed for business-related expenses incurred
by the executive officers on behalf of the Company.

(2) Reflects additional stock options granted to executive officers by the
Company's Board of Directors in January 2002.

(3) Reflects additional stock options granted to executive officers by the
Company's Board of Directors in September 2001.

(4) Reflects temporary salary reductions in effect during Fiscal 2003.

Stock Option Grants in Last Fiscal Year. No stock options were granted
during Fiscal 2003.

Option Exercises in Last Fiscal Year and Year-Ended Option Values. No stock
options or stock appreciation rights were exercised by the executive officers in
Fiscal 2003.

As of September 30, 2003, the executive officers held options as follows,
none of which are in the money:

Options Value of Options
Total Options Exercisable Exercisable Not Exercisable

Peter Phildius 2,178,000 1,170,000 $ 0 $ 0
Douglas Scott 1,398,000 870,000 0 0
Jay Leatherman 651,250 301,250 0 0
Douglas Lewis 250,000 100,000 0 0

Employment Agreements.

Messrs. Phildius and Scott are covered by Employment Agreements (the
"Employment Agreements") which commenced on May 19, 1995. Pursuant to the
Employment Agreements, if Messrs. Phildius and/or Scott are terminated without
"Cause" (as such term is defined in the Employment Agreements) by the Company or
if Messrs. Phildius and/or Scott terminate their employment as a result of a
breach by the Company of its obligations under such Agreements, he will be
entitled to receive his annual base salary ($200,000 for Mr. Phildius and
$180,000 for Mr. Scott) for a period of up to 18 months following such
termination. In addition, if there is a "Change of Control" of the Company (as
such term is defined in the Employment Agreements) and, within two years
following such "Change of Control", either of Messrs. Phildius or Scott is
terminated without cause by the Company or terminates his employment as a result
of a breach by the Company, such executive will be entitled to certain payments
and benefits, including the payment, in a lump sum, of an amount equal to up to
two times the sum of (i) the executive's annual base salary and (ii) the
executive's most recent annual bonus (if any). In addition, pursuant to the
Employment Agreements, which have a three-year term (subject to extension),
Messrs. Phildius and Scott are each entitled to annual bonus payments of up to
$150,000 if the Company achieves certain levels of pre-tax income (as such term
is defined in such Agreements) or alternative net income objectives established
by the Board of Directors.

In July 1999, the Company entered into employment agreements with two
executives of USDTL. The agreements provide for annual compensation aggregating
$226,000 per year, plus cost-of-living increases and bonuses or commissions, as
defined. The agreements terminated on December 1, 2003. Expenses under these
agreements totaled approximately $245,000 and $238,000 in 2003 and 2002,
respectively.

REQUIRED VOTE

Election of each of the five nominees for director requires, under Avitar's
Bylaws, the affirmative vote of the holders of a majority of the Avitar Common
Stock and other voting shares present in person or by proxy at the Avitar Annual
Meeting (assuming a quorum exists) and entitled to vote thereon.

BOARD RECOMMENDATION

The Avitar Board of Directors unanimously recommends a vote FOR election of
all of the five nominees for director.

ITEM NO. 2

RATIFICATION AND APPROVAL OF THE ISSUANCE OF THE MAXIMUM NUMBER OF SHARES OF THE
COMPANY'S COMMON STOCK ISSUED OR ISSUABLE IN CONNECTION WITH THE MAY 2004
PRIVATE PLACEMENT.

The Board of Directors has unanimously approved, and is hereby soliciting
stockholder approval of, the issuance and reservation of up to the maximum
number of shares of common stock issuable in connection with the May 2004
Private Placement described below.

BACKGROUND

During fiscal year 2004, the Company's cash requirements include primarily
the funding of operating losses, the payment of outstanding accounts payable,
the funding of operating capital to grow the Company's drugs of abuse testing
products and services, and the continued funding for the development of its
ORALscreen product line. The cash available at June 30, 2004, along with cash
received from the private placement in August 2004 (discussed below) and
anticipated customer receipts, is expected to be sufficient to fund the
operations of the Company through November 2004.

During Fiscal 2004 to date, the Company has raised gross proceeds of
approximately $3.25 million in private placements of convertible preferred stock
and warrants. These proceeds were raised as follows:

a) $1 million in the Second Closing of the September 2003 Private
Placement with Gryphon Master Fund, L.P. ("Gryphon"), which occurred
in March 2004 after shareholder approval for issuance of 6%
Convertible Preferred Stock was received in the Special Shareholders
Meeting held in February 2004;

b) $1 million in a private placement of Series A Convertible Preferred
Stock and Warrants with GCA Strategic Investment Fund in May 2004, at
which time the Company also exchanged Series A Convertible Preferred
Stock with Global Capital Funding Group, L.P. for cancellation of
$1.25 million of long-term debt plus accrued interest (collectively,
the "May 2004 Private Placement"); and

c) $1,250,000 in a private placement of Series A Convertible Preferred
Stock and Warrants with GCA Strategic Investment Fund held in August
2004 (the "August 2004 Private Placement," discussed in Item 3 below).

Also during Fiscal 2004, the Company received the initial gross proceeds of
$500,000 from the sale of a subsidiary in December 2003.

Beyond November 2004, the Company will require significant additional
financing from outside sources to fund its operations. The Company plans to
continue working with placement agents and/or investment fund managers in order
to raise approximately $8 million during Fiscal 2005 from the sales of equity
and/or debt securities. In the first step, the Company proposes to raise gross
proceeds of $750 thousand in exchange for 750 shares of Series A Convertible
Preferred Stock and Warrants to purchase 75,000 shares of common stock (the "New
Private Placement," discussed in Item 4 below).

The Company plans to use the proceeds from these financings to provide
working capital and capital equipment funding to operate the Company, to expand
the Company's business, to further develop and enhance the ORALscreen drug
screening systems and to pursue the development of in-vitro oral fluid
diagnostic testing products. However, there can be no assurance that these
additional financings will be achieved.

The securities offered in the May 2004 Private Placement, the August 2004
Private Placement and the New Private Placement, all described in this Proxy
Statement have not been registered under the Securities Act and may not be
offered or sold in the United States absent registration or an applicable
exemption from registration requirements. See "Key Terms of The May 2004 Private
Placement, Registration of Shares of Common Stock," below.

SECURITIES ISSUED IN THE MAY 2004 PRIVATE PLACEMENT

In the May 2004 Private Placement, the Company:

- Issued to GCA Strategic Investment Fund 1,000 shares of Series A
Convertible Preferred Stock and warrants to purchase 100,000 shares of
common stock at an initial exercise price of $0.126 (105% of the
closing bid price on the day prior to the closing), all in exchange
for the $1 million in gross proceeds.

- Issued to Global Capital Funding Group, L.P. 1,316 shares of Series A
Convertible Preferred Stock in exchange for cancellation of $1.25
million of long-term debt plus accrued interest.

Preferred Conversion Price.

Each of the shares of the Series A Convertible Preferred Stock is in the
principal amount of $1,000 and all the shares are convertible into common stock
at the Preferred Conversion Price, which is the lesser of (a) the closing bid
price on the day prior to the closing ($0.12 per share for the May 2004 Private
Placement) or (b) 85% of the average of the three lowest closing bid prices, as
reported by Bloomberg, for the ten (10) trading days immediately prior to the
related notice of conversion, provided however, that the Preferred Conversion
Price will have a floor price equal to 50% of the closing price reported by
Bloomberg on the day of the closing. If the price of the common stock is below
said floor for any five (5) out of ten (10) consecutive trading days, then the
floor shall be reduced to 50% of the floor then in effect, on a continuing
basis. However, no shares of common stock may be issued in connection with the
May 2004 Private Placement in excess of 19.9% of the shares outstanding prior to
the closing, that is 21,825,480 shares (19.9% of the shares then outstanding)
without the approval of the shareholders of the Company in accordance with The
American Stock Exchange (AMEX) rules.

Applying the above formula to recent notices of conversion, the Preferred
Conversion Price is $0.09 and the Company is seeking shareholder approval for
the maximum number of shares into which the Series A Convertible Preferred Stock
may be converted at that Preferred Conversion Price. As of August 1, 2004, GCA
Strategic Investment Fund had previously converted 750 shares of Series A
Convertible Preferred Stock into approximately 8.5 million shares of common
stock at an average Preferred Conversion Price of approximately $0.09 per share.

REASONS FOR THIS PROPOSAL

To comply with applicable AMEX rules, the Company is seeking the approval
of its shareholders for the issuance and reservation of all shares of common
stock issued or issuable in connection with the May 2004 Private Placement based
upon the recent Preferred Conversion Price.

The Company's common stock trades on AMEX. According to AMEX Listing
Standard Section 713, the Company is required to obtain stockholder approval of
the sale, issuance or potential issuance of the Company's common stock, or
securities convertible into the Company's common stock, if the aggregate number
of shares to be issued or could be issued in the transaction and related
transactions equals or exceeds 20% of the Company's then outstanding shares of
common stock on the date of issuance (the "Share Limit") and the purchase price
for such securities is less than the greater of the book value or market value
of the common stock on the date of issuance (the "Value Limit").

As of the commencement of the May 2004 Private Placement, the aggregate
number of shares of common stock that may be issuable in the May 2004 Private
Placement upon conversion of the Series A Convertible Preferred Stock, exceeded
the Share Limit and the purchase price was less than the Value Limit. Therefore,
in accordance with AMEX Listing Standard Section 713, the Company is asking its
stockholders to ratify and approve the issuance and reservation of the maximum
number of shares of Common Stock issuable in the May 2004 Private Placement
based upon the recent Preferred Conversion Price.

TOTAL SHARES OF COMMON STOCK THAT COULD BE ISSUED IN THE MAY 2004 PRIVATE
PLACEMENT

Shares that may be issued upon conversion of
2,316 shares of Series A Convertible Preferred Stock at
maximum price ($0.12) 19,300,000

Additional Shares that may be issued upon conversion of
Series A Convertible Preferred Stock at
recent Preferred Conversion Price ($0.09) 6,433,333

Shares underlying warrants that may be issued 100,000

Shares that may be issued for 4% Dividend 166,667

Total Shares To Be Issued and Issuable In Connection
With The May 2004 Private Placement 26,000,000

Based upon the recent Preferred Conversion Price, the maximum number of
shares that could be issued from the May 2004 Private Placement is 26,000,000 or
23.7% of the 109,675,770 shares that were outstanding before the May 2004
Private Placement. However, no shares of common stock may be issued in
connection with the May 2004 Private Placement in excess of 19.9% of the shares
outstanding prior to the closing, that is 21,825,480 shares (19.9% of the shares
then outstanding) without the approval of the shareholders of the Company in
accordance with The American Stock Exchange (AMEX) rules.

The August 2004 Private Placement discussed in Item 3 below also involved
the issuance of Series A Convertible Preferred Stock to GCA Strategic Investment
Fund. When the May 2004 Private Placement is aggregated with the maximum number
of shares from the August 2004 Private Placement (14,100,000), the combined
number of shares issuable would be 40,100,000 or 36.6%. Further, if the number
of shares issuable from the New Private Placement 8,500,000 were aggregated with
both the May 2004 Private Placement and the August 2004 Private Placement, the
combined number of shares issuable would be 48.6 million shares or 44.3%.

KEY TERMS OF THE MAY 2004 PRIVATE PLACEMENT

Registration of Shares of Common Stock.

The Company has agreed to register the shares of common stock issuable in
connection with the May 2004 Private Placement, including shares issuable upon
conversion of the Series A Convertible Preferred Stock and upon exercise of the
Warrants. If the Registration Statement did not become effective by the agreed
Effective Date or if its effectiveness were not maintained during the agreed
period, the Company will be obligated to pay liquidated damages of 1% of the
outstanding principal amount of the Preferred Shares, prorated, for each 30 day
period the Registration Statement is not declared effective.

Optional Conversion of Series A Convertible Preferred Stock.

The shares of Series A Convertible Preferred Stock from the May 2004
Private Placement are convertible, at the option of the holders, into shares of
common stock at the Preferred Conversion Price described above, but in a number
of shares no more than 19.9% of the shares outstanding prior to the closing,
that is 21,825,480 shares, until the receipt of shareholder approval.

CONSEQUENCES IF SHAREHOLDERS DO NOT RATIFY AND APPROVE THE MAY 2004 PRIVATE
PLACEMENT

If ratification and approval of the May 2004 Private Placement is not
obtained, it is possible that the Company may exceed the Share Limit and
therefore be subject to delisting. Further, if shareholder approval is not
obtained for either of Proposal 2 or 3, the Company may exceed the Share Limit
and therefore be subject to delisting.

REQUIRED VOTE

Ratification and approval of the issuance and reservation of the maximum
number of shares of common stock issued or issuable in connection with the May
2004 Private Placement requires the affirmative vote of the holders of a
majority of the Avitar Common Stock and Preferred Stock present in person or by
proxy at the Annual Meeting (assuming a quorum exists) and entitled to vote
thereon.

BOARD RECOMMENDATION

The Board of Directors of Avitar unanimously recommends a vote FOR
ratification and approval of the issuance and reservation of the maximum number
of shares issued or issuable in connection with the May 2004 Private Placement.

ITEM NO. 3

RATIFICATION AND APPROVAL OF THE ISSUANCE OF THE MAXIMUM NUMBER OF SHARES OF THE
COMPANY'S COMMON STOCK ISSUED OR ISSUABLE IN CONNECTION WITH THE AUGUST 2004
PRIVATE PLACEMENT.

BACKGROUND

During fiscal year 2004, the Company's cash requirements include primarily
the funding of operating losses, the payment of outstanding accounts payable,
the funding of operating capital to grow the Company's drugs of abuse testing
products and services, and the continued funding for the development of its
ORALscreen product line. The cash available at June 30, 2004, along with cash
received from the August 2004 Private Placement and anticipated customer
receipts, is expected to be sufficient to fund the operations of the Company
through November 2004.

c) $1,250,000 in a private placement of Series A Convertible Preferred
Stock and Warrants with GCA Strategic Investment Fund held in August
2004 (the "August 2004 Private Placement").

Also during Fiscal 2004, the Company received the initial gross proceeds of
$500,000 from the sale of a subsidiary in December 2003.

SECURITIES ISSUED IN THE AUGUST 2004 PRIVATE PLACEMENT

In the August 2004 Private Placement, the Company issued to GCA Strategic
Investment Fund:

- 1,250 shares of Series A Convertible Preferred Stock, and

- Warrants to purchase 125,000 shares of common stock at an initial
exercise price of $0.095 (105% of the closing bid price on the day
prior to closing),

all in exchange for the $1,250,000 in gross proceeds.

Preferred Conversion Price.

Each of the shares of the Series A Convertible Preferred Stock is in the
principal amount of $1,000 and all the shares are convertible into common stock
at the Preferred Conversion Price, which is the lesser of (a) the closing bid
price on the day prior to the closing ($0.09 per share for the August 2004
Private Placement) or (b) 85% of the average of the three lowest closing bid
prices, as reported by Bloomberg, for the ten (10) trading days immediately
prior to the related notice of conversion, provided however, that the Preferred
Conversion Price will have a floor price equal to 50% of the closing price
reported by Bloomberg on the day of the closing. If the price of the common
stock is below said floor for any five (5) out of ten (10) consecutive trading
days, then the floor shall be reduced to 50% of the floor then in effect, on a
continuing basis. However, no shares of common stock may be issued in connection
with the August 2004 Private Placement, including the shares issued in
connection with the May 2004 Private Placement, in excess of 19.9% of the shares
outstanding prior to the closing of the May 2004 Private Placement, that is
21,825,480 shares, without the approval of the shareholders of the Company in
accordance with AMEX rules.

REASONS FOR THIS PROPOSAL

To comply with applicable AMEX rules, the Company is seeking the approval
of its shareholders for the issuance and reservation of all shares of common
stock issued or issuable in connection with the August 2004 Private Placement
based upon the recent Preferred Conversion Price.

The aggregate number of shares of common stock that may be issuable in
connection with the August 2004 Private Placement exceeded the Share Limit and
the purchase price was less than the Value Limit. Therefore, in accordance with
AMEX Listing Standard Section 713, the Company is asking its stockholders to
ratify and approve the issuance and reservation of the maximum number of shares
of Common Stock issuable in connection with the August 2004 Private Placement
based upon the recent Preferred Conversion Price.

TOTAL SHARES OF COMMON STOCK THAT COULD BE ISSUED IN THE AUGUST 2004 PRIVATE
PLACEMENT

Shares that may be issued upon conversion of 1,250
shares of Series A Convertible Preferred Stock at
recent Preferred Conversion Price ($0.09) 13,888,888

Shares underlying warrants that may be issued 125,000

Shares that may be issued for 4% Dividend 86,112

Total Shares To Be Issued and Issuable In
the August 2004 Private Placement 14,100,000

Based upon the recent Preferred Conversion Price, the maximum number of
shares that could be issued from the August 2004 Private Placement is 14,100,000
or 12.9% of the 109,675,770 shares that were outstanding before the May 2004
Private Placement. When the August 2004 Private Placement is aggregated with the
maximum number of shares from the May 2004 Private Placement (26,000,000), the
combined number of shares issuable would be 40,100,000 or 36.6%. Further, if the
number of shares issuable from the New Private Placement 8,500,000 were
aggregated with both the May 2004 Private Placement and the August 2004 Private
Placement, the combined number of shares issuable would be 48.6 million shares
or 44.3%.

However, no shares of common stock may be issued in connection with the
August 2004 Private Placement in excess of 19.9% of the shares outstanding prior
to the closing of the May 2004 Private Placement, that is 21,825,480 shares
(19.9% of the shares then outstanding) without the approval of the shareholders
of the Company in accordance with AMEX rules.

KEY TERMS OF THE AUGUST 2004 PRIVATE PLACEMENT

Registration of Shares of Common Stock.

The Company has agreed to register the shares of common stock issuable in
connection with the August 2004 Private Placement, including shares issuable
upon conversion of the Series A Convertible Preferred Stock and upon exercise of
the Warrants. If the Registration Statement did not become effective by the
agreed Effective Date or if its effectiveness were not maintained during the
agreed period, the Company will be obligated to pay liquidated damages of 1% of
the outstanding principal amount of the Preferred Shares, prorated, for each 30
day period the Registration Statement is not declared effective.

Optional Conversion of Series A Convertible Preferred Stock.

The shares of Series A Convertible Preferred Stock from the August 2004
Private Placement are convertible, at the option of the holders, into shares of
common stock at the Preferred Conversion Price described above, but in a number
of shares no more than 19.9% of the shares outstanding prior to the closing of
the May 2004 Private Placement, that is 21,825,480 shares, until the receipt of
shareholder approval.

CONSEQUENCES IF SHAREHOLDERS DO NOT RATIFY AND APPROVE THE AUGUST 2004 PRIVATE
PLACEMENT

If ratification and approval of the August 2004 Private Placement is not
obtained, it is possible that the Company may exceed the Share Limit and
therefore be subject to delisting. Further, if shareholder approval is not
obtained for either of Proposal 2 or 3, the Company may exceed the Share Limit
and therefore be subject to delisting.

REQUIRED VOTE

Ratification and approval of the issuance and reservation of the maximum
number of shares of common stock issued or issuable in connection with the
August 2004 Private Placement requires the affirmative vote of the holders of a
majority of the Avitar Common Stock and Preferred Stock present in person or by
proxy at the Annual Meeting (assuming a quorum exists) and entitled to vote
thereon.

BOARD RECOMMENDATION

ITEM NO. 4

APPROVAL OF THE ISSUANCE OF THE MAXIMUM NUMBER OF SHARES OF THE COMPANY'S COMMON
STOCK ISSUED OR ISSUABLE IN CONNECTION WITH THE NEW PRIVATE PLACEMENT.

BACKGROUND

During fiscal year 2004, the Company's cash requirements include primarily
the funding of operating losses, the payment of outstanding accounts payable,
the funding of operating capital to grow the Company's drugs of abuse testing
products and services, and the continued funding for the development of its
ORALscreen product line. The cash available at June 30, 2004, along with cash
received from the August 2004 Private Placement and anticipated customer
receipts, is expected to be sufficient to fund the operations of the Company
through November 2004.

c) $1,250,000 in a private placement of Series A Convertible Preferred
Stock and Warrants with GCA Strategic Investment Fund held in August
2004 (the "August 2004 Private Placement").

Also during Fiscal 2004, the Company received the initial gross proceeds of
$500,000 from the sale of a subsidiary in December 2003.

SECURITIES TO BE ISSUED IN THE NEW PRIVATE PLACEMENT

In the New Private Placement, the Company intends to issue in FISCAL 2005:

- 750 shares of Series A Convertible Preferred Stock, and

- Warrants to purchase 75,000 shares of common stock at an initial
exercise price of $0.095 (105% of the closing bid price on the day
prior to the closing),

all in exchange for the $750,000 in gross proceeds.

Preferred Conversion Price.

Each of the shares of the Series A Convertible Preferred Stock is in the
principal amount of $1,000 and all the shares are convertible into common stock
at the Preferred Conversion Price, which is the lesser of (a) the closing bid
price on the day prior to the closing or (b) 85% of the average of the three
lowest closing bid prices, as reported by Bloomberg, for the ten (10) trading
days immediately prior to the related notice of conversion, provided however,
that the Preferred Conversion Price will have a floor price equal to 50% of the
closing price reported by Bloomberg on the day of the closing. If the price of
the common stock is below said floor for any five (5) out of ten (10)
consecutive trading days, then the floor shall be reduced to 50% of the floor
then in effect, on a continuing basis. However, no shares of common stock may be
issued in connection with the New Private Placement, including the shares issued
in connection with the May 2004 and August 2004 Private Placements, in excess of
19.9% of the shares outstanding prior to the closing of the May 2004 Private
Placement, that is 21,825,480 shares, without the approval of the shareholders
of the Company in accordance with AMEX rules.

REASONS FOR THIS PROPOSAL

To comply with applicable AMEX rules, the Company is seeking the approval
of its shareholders for the issuance and reservation of all shares of common
stock issued or issuable in connection with the New Private Placement based upon
the recent Preferred Conversion Price.

The aggregate number of shares of common stock that may be issuable in
connection with the New Private Placement exceeded the Share Limit and the
purchase price was less than the Value Limit. Therefore, in accordance with AMEX
Listing Standard Section 713, the Company is asking its stockholders to ratify
and approve the issuance and reservation of the maximum number of shares of
Common Stock issuable in connection with the New Private Placement based upon
the recent Preferred Conversion Price.

TOTAL SHARES OF COMMON STOCK THAT COULD BE ISSUED IN THE NEW PRIVATE PLACEMENT

Shares that may be issued upon conversion of
750 shares of Series A Convertible Preferred Stock at
recent Preferred Conversion Price ($0.09) 8,333,333

Shares underlying warrants that may be issued 75,000

Shares that may be issued for 4% Dividend 91,667

Total Shares To Be Issued and Issuable In
the New Private Placement 8,500,000

Based upon the recent Preferred Conversion Price, the maximum number of
shares that could be issued from the New Private Placement is 8,500,000 or 7.8%
of the 109,675,770 shares that were outstanding before the May 2004 Private
Placement. When the number of shares issuable from the New Private Placement
8,500,000 were aggregated with both the May 2004 Private Placement and the
August 2004 Private Placement, the combined number of shares issuable would be
48.6 million shares or 44.3%.

However, no shares of common stock may be issued in connection with the New
Private Placement in excess of 19.9% of the shares outstanding prior to the
closing of the May 2004 Private Placement, that is 21,825,480 shares (19.9% of
the shares then outstanding) without the approval of the shareholders of the
Company in accordance with AMEX rules.

KEY TERMS OF THE NEW PRIVATE PLACEMENT

Registration of Shares of Common Stock.

The Company has agreed to register the shares of common stock issuable in
connection with the New Private Placement, including shares issuable upon
conversion of the Series A Convertible Preferred Stock and upon exercise of the
Warrants. If the Registration Statement did not become effective by the agreed
Effective Date or if its effectiveness were not maintained during the agreed
period, the Company will be obligated to pay liquidated damages of 1% of the
outstanding principal amount of the Preferred Shares, prorated, for each 30 day
period the Registration Statement is not declared effective.

Optional Conversion of Series A Convertible Preferred Stock.

The shares of Series A Convertible Preferred Stock from the New Private
Placement are convertible, at the option of the holders, into shares of common
stock at the Preferred Conversion Price described above, but in a number of
shares no more than 19.9% of the shares outstanding prior to the closing of the
May 2004 Private Placement, that is 21,825,480 shares, until the receipt of
shareholder approval.

CONSEQUENCES IF SHAREHOLDERS DO NOT RATIFY AND APPROVE THE NEW PRIVATE PLACEMENT

If approval of the New Private Placement is not obtained, it would delay
necessary funding and may have an adverse effect upon the financial position of
the Company. If approval of the New Private Placement is not obtained, it is
possible that the Company may exceed the Share Limit and therefore be subject to
delisting. Further, if shareholder approval is not obtained for any of Proposals
2, 3 or 4, the Company may exceed the Share Limit and therefore be subject to
delisting.

REQUIRED VOTE

Ratification and approval of the issuance and reservation of the maximum
number of shares of common stock issued or issuable in connection with the New
Private Placement requires the affirmative vote of the holders of a majority of
the Avitar Common Stock and Preferred Stock present in person or by proxy at the
Annual Meeting (assuming a quorum exists) and entitled to vote thereon.

BOARD RECOMMENDATION

The Board of Directors of Avitar unanimously recommends a vote FOR approval
of the issuance and reservation of the maximum number of shares issued or
issuable in connection with the New Private Placement.

ITEM NO. 5

APPROVAL OF AMENDMENT OF CERTIFICATE OF INCORPORATION TO EFFECT AN INCREASE OF
AUTHORIZED SHARES OF COMMON STOCK FROM 200,000,000 TO 300,000,000

The Board of Directors has unanimously approved, and is hereby soliciting
stockholder approval of, an amendment to the Certificate of Incorporation (the
"Amendment"), effecting an increase in the number of authorized shares of Common
Stock from 200,000,000 to 300,000,000.

The Certificate of Incorporation now provides for 200,000,000 authorized
shares of Common Stock, par value $.01 per share, of which 117,894,840 were
issued and outstanding as of the Record Date; and 5,000,000 shares of Preferred
Stock, par value $.01, of which 47,446 were issued and outstanding as of the
Record Date. The Amendment would increase the number of authorized shares of
Common Stock to 300,000,000.

REASONS FOR THE INCREASE

To comply with applicable rules of The American Stock Exchange (AMEX), the
Company is seeking the approval of its shareholders for the increase in its
authorized shares of common stock, as determined by the Board of Directors, from
200,000,000 to 300,000,000 ("Shareholder Approval").

Subject to Shareholder Approval and in view of adjustments, the outstanding
Preferred Stock will be convertible in the aggregate into approximately 44.6
million shares of common stock. Further, holders of outstanding warrants are
entitled to purchase approximately 12 million shares of common stock at prices
ranging from $.01 to $2.26. Finally, there are outstanding employee stock
options (approximately 45% vested) to purchase approximately 8.6 million shares
of common stock at prices ranging primarily from $.19 to $3.11 and an additional
3.4 million shares have been reserved for future employee stock options and an
additional approximately 850,000 shares of common stock are reserved for the
2001 Employee Stock Purchase Plan. Therefore, on a fully diluted basis and in
view of adjustments and the proposed New Private Placement, the Company may
require approximately 200 million shares.

The proposed increase to 300,000,000 authorized shares of Common Stock will
be shares reserved for future financings to maintain and grow the business and
completion of acquisitions as described below. After Shareholder Approval,
approximately 100 million shares should be available for future financings and
acquisitions.

Proceeds from both any exercises of outstanding warrants and options and
the New Private Placement are anticipated to be used primarily to provide the
necessary working capital to operate Avitar. For the balance of calendar year
2004, Avitar's cash requirements are expected to include primarily the funding
of operating losses, the payment of outstanding accounts payable and, to the
extent available, the funding of operating capital to grow Avitar's rapid
diagnostic testing and other lines of business.

The Board of Directors determined to increase the authorized Common Stock
to 300,000,000 shares to ensure that sufficient shares of Common Stock were
authorized and available to cover the outstanding convertible Preferred Stock,
warrants and options and the New Private Placement and any additional shares of
Common or Preferred Stock and warrants or options, which it may determine to
issue or grant in the future.

Further, Avitar may explore possible acquisitions, which would likely
involve the issuance of some or all of the additional authorized shares of
common stock as all or a portion of the purchase prices of any acquisitions of
companies, businesses and/or assets it may effect in the future. In such an
event, Avitar's stockholders may not need to be solicited for any specific
acquisitions if they approve the current proposal to increase Avitar's
authorized common stock. Accordingly, Avitar's stockholders' only opportunity to
specifically vote on and approve any such acquisitions could be their vote on
the current proposal to increase Avitar's authorized common stock. Except as
disclosed above, Avitar does not believe that the increase in its authorized
common stock will have any significant effects on the stockholders of Avitar,
nor does it believe that such increase will have any significant benefits to the
officers, directors or affiliates of Avitar.

In order to effect the increase, the stockholders are being asked to
approve the Amendment. The Board of Directors believes that the increase is in
the best interests of Avitar and has unanimously approved the increase. The
Board of Directors may make any and all changes to the Amendment that it deems
necessary in order to file the Amendment with the Delaware Secretary of State
and give effect to the increase.

NO DISSENTERS' RIGHTS

Dissenting stockholders have no appraisal rights under Delaware law or
under the Company's Certificate of Incorporation or Bylaws in connection with
the increase.

REQUIRED VOTE

Pursuant to the Delaware General Corporation Law, the approval of the
Amendment to Avitar's Certificate of Incorporation to provide for the increase
in number of authorized shares of Common Stock requires the affirmative vote of
the holders of a majority of the outstanding shares of Avitar Common Stock and
Preferred Stock.

BOARD RECOMMENDATION

The Board of Directors of Avitar unanimously recommends a vote FOR the
Amendment to the Company's Certificate of Incorporation to increase the number
of authorized shares of Common Stock from 200,000,000 to 300,000,000.

ITEM NO. 6
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The Board of Directors of Avitar selected BDO Seidman, LLP as auditors for
the fiscal year ending September 30, 2004, subject to stockholder approval by
ratification. BDO Seidman, LLP has been the independent auditors for Avitar
since December 1992. A representative of BDO Seidman, LLP is expected to be
present at the Annual Meeting, at which time he or she will be afforded an
opportunity to make a statement, and will be available to respond to questions.

The Board of Directors of Avitar may, in its discretion, direct appointment
of new independent auditors at any time during the fiscal year if the Board
believes such change would be in the best interests of Avitar and its
stockholders. No such change is anticipated.

REQUIRED VOTE

Approval of ratification of BDO Seidman, LLP requires the affirmative vote
of the holders of a majority of the Avitar Common Stock and Preferred Stock
present in person or by proxy at the Avitar Annual Meeting (assuming a quorum
exists) and entitled to vote thereon.

BOARD RECOMMENDATION

The Board of Directors of Avitar unanimously recommends a vote FOR the
ratification of BDO Seidman, LLP as auditors for the fiscal year ending
September 30, 2004.

OTHER BUSINESS

The proxy confers discretionary authority on the proxies with respect to
any other business, which may come before the Annual Meeting. The Board of
Directors of Avitar knows of no other matters to be presented at the Annual
Meeting. The persons named in the proxy will vote the shares for which they hold
proxies according to their best judgment if any matters not included in this
Proxy Statement properly come before the meeting.

CODE OF ETHICS

Avitar has adopted a code of ethics that applies to its principal executive
officer, principal financial officer, principal accounting officer or controller
and all persons performing similar functions, if any. The Company will provide
to any person without charge, upon request, a copy of such code of ethics.
Requests should be made in writing to: Corporate Secretary, Avitar, Inc., 65 Dan
Road Canton, MA 02021.

INCORPORATION OF ANNUAL REPORT ON FORM 10-KSB

We are incorporating by reference the information contained in the Annual
Report on Form 10-KSB for the year ended September 30, 2003, including our most
recent audited financial statements and management's discussion and analysis of
financial condition and results of operations. The Annual Report was filed with
the SEC under the Exchange Act and will be delivered to our shareholders with
this Proxy Statement.

STOCKHOLDER PROPOSALS

Any stockholder proposal to be included in the proxy statement and form of
proxy relating to the 2005 Annual Meeting of Avitar Stockholders must be
received by the close of business on April 30, 2005 and must comply in all other
respects with the rules and regulations of the Securities and Exchange
Commission. Proposals should be addressed to: Corporate Secretary, Avitar, Inc.,
65 Dan Road, Canton, Massachusetts 02021.

APPENDIX A

AVITAR, INC.
AUDIT COMMITTEE CHARTER

Organization

There shall be a committee of the board of directors known as the audit
committee. The audit committee shall be comprised of directors, the majority of
whom are independent (as defined in the American Stock Exchange Listing
Standards) of the management of the corporation and are free of any relationship
that, in the opinion of the board of directors, would interfere with their
exercise of independent judgment as a committee member.

Statement of Policy

The audit committee shall provide assistance to the corporate directors in
fulfilling their responsibilities to the shareholders, potential shareholders
and investment community relating to corporate accounting, reporting practices
of the corporation, and the quality and integrity of the financial reports of
the corporation. In so doing, it is the responsibility of the audit committee to
maintain free and open means of communication between the directors, the
independent auditors and the financial management of the corporation.

Responsibilities

The audit committee believes its policies and procedures should remain flexible,
in order to best react to changing conditions and ensure to the directors and
shareholders that the accounting and reporting practices of the corporation are
in accordance with all requirements and are of the highest quality.

In carrying out its responsibilities, the audit committee will:

1. Review and make a recommendation to the directors regarding the independent
auditors to be selected to audit the financial statements of the
corporation and its subsidiaries.

2. Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and to review such audit,
including any comment or recommendations of the independent auditors.

3. Review with the independent auditors and the corporation's internal
financial and accounting personnel the adequacy and effectiveness of the
accounting and financial controls procedures of the corporation, and elicit
any recommendations for the improvement of such internal control procedures
or particular areas where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the adequacy of such
internal controls to expose any payments, transactions or procedures that
might be deemed illegal or otherwise improper.

4. Review the audited financial statements to be included in the annual report
to shareholders and the annual report filed with Securities and Exchange
Commission ("SEC") on Form 10KSB with management and the independent
auditors to determine that the independent auditors are satisfied with the
disclosure and content of the financial statements to be presented to the
shareholders and filed with the SEC. Make a recommendation to the board of
directors regarding the inclusion of the audited financial statements in
such annual reports. Any changes in accounting principles should be
reviewed.

5. Review the financial information included in the corporations' Quarterly
Reports on Form 10QSB prior to the corporation filing such reports with
Securities and Exchange Commission.

6. Provide sufficient opportunity for the independent auditors to meet with
members of the audit committee without members of management present. Among
the items to be discussed in these meetings are the independent auditors'
evaluation of the corporation's financial and accounting personnel, and the
cooperation that the independent auditors received during the course of the
audit.

7. Review the matters discussed at each committee meeting with the board of
directors.

8. Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.

SHARES AVITAR, INC. PROXY NO.
65 Dan Road, Canton, Massachusetts 02021

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Peter P. Phildius and Douglas W. Scott as
Proxies, each with the power to appoint his substitute and hereby authorizes
them to represent and to vote, as designated below and on the reverse hereof,
all shares of common stock of Avitar, Inc. ("Avitar") or shares of Series B, C
or D Preferred Stock of Avitar held of record by the undersigned on August 16,
2004 at the Annual Meeting of stockholders of Avitar to be held on September 28,
2004 or any adjournments thereof.

The undersigned hereby revokes any proxies heretofore given to vote said
shares.

The undersigned hereby acknowledges receipt of Avitar's Annual Report for
2003 and of the Notice of Annual Meeting of Stockholders and attached Proxy
Statement dated August 27, 2004.

This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Items 1, 2, 3, 4, 5 and 6. Please sign exactly as your name appears
to the left hereof. When signing as corporate officer, partner, attorney,
administrator, trustee or guardian, please give your full title as such. Dated ,
2004

Authorized Signature
Title

Please mark boxes on reverse hereof in blue or black ink. Please date, sign and
return this Proxy Card promptly using the enclosed envelope.

1. Election of Directors.

For all nominees listed below (except as marked to the contrary listed below)
[ _ ]

Withhold Authority to vote for all nominees marked to the contrary below [ _ ]

(Instruction: To withhold authority to vote for any individual nominee strike a
line through the nominee's name below.)

Peter P. Phildius Douglas W. Scott Neil R.Gordon
James Groth Charles R. McCarthy, Jr.

2. To ratify and approve the issuance and reservation of shares of common stock
issuable in connection with the May 2004 Private Placement as described in the
Proxy Statement.

For Against Abstain
---------------- ---------------- -------------
3. To ratify and approve the issuance and reservation of shares of common stock
issuable in connection with the August 2004 Private Placement as described in
the Proxy Statement.

For Against Abstain
---------------- ---------------- -------------

4. To ratify and approve the issuance and reservation of shares of common stock
issuable in connection with the New Private Placement as described in the Proxy
Statement.

For Against Abstain
---------------- ---------------- -------------

5. To adopt the Amendment to the Certificate of Incorporation to increase the
number of authorized shares of common stock from 200,000,000 to 300,000,000.

For Against Abstain
-------------- ----------------- --------------

6. To ratify the appointment of BDO Seidman, LLP as independent public
accountants for Avitar for the fiscal year ending September 30, 2004.

For Against Abstain
---------------- ---------------- -------------