SECURITIES AND EXCHANGE COMMISSION

                        Washington, D.C.  20549

                               FORM 10-Q

             QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934

             For Quarter Ended               March 31, 1998
                                             -----------------
             Commission file number                0-26504
                                             -------------

                             DIASENSE, INC.
                             --------------
         (Exact name of registrant as specified in its charter)


     Pennsylvania                                                25-1605848
     ----------------------------------------------------------------------
     (State of other jurisdiction                             (IRS Employer
    of incorporation or organization)                   Identification no.)


        2275 Swallow Hill Road, Bldg. 2500; Pittsburgh, PA 15220
        --------------------------------------------------------
        (Address of principal executive offices)     ( Zip Code)

                             (412) 279-9740
                             --------------
           Registrant's telephone number, including area code


           Indicate by check mark whether the registrant (1) has 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   X    No

         As of March 31, 1998, 22,980,051 shares of Diasense, Inc. common
                stock, par value $.01 were outstanding.

<PAGE>1

                                 DIASENSE, INC.
                         (A Development Stage Company)

                          Consolidated Balance Sheets

                                         March 31,   September 30,
               ASSETS                       1998          1997
                                        (Unaudited)      (Note)
                                        -----------    -----------
Current assets
  Cash and cash equivalents             $    24,986    $ 1,871,070
  Due from BICO                           1,477,896         -
  Notes receivable - related parties        125,000         -
  Interest receivable - related parties       3,225         -
  Inventory deposit - BICO                1,000,000      1,000,000
  Prepaid expenses                            5,018         13,698
                                        -----------    -----------
               Total current assets       2,636,125      2,884,768

Property and equipment - at cost
  Building and improvements                 236,663        236,663
  Furniture and fixtures                     42,750         42,750
                                        -----------    -----------
                                            279,413        279,413
  Less accumulated depreciation              62,729         55,938
                                        ------------   -----------
                                            216,684        223,475
                                        -----------    -----------
               TOTAL ASSETS             $ 2,852,809    $ 3,108,243
                                        ===========    ===========

               LIABILITIES and STOCKHOLDERS' EQUITY

Current liabilities
  Accounts payable                      $    31,872    $     9,433
  Other accrued liabilities                  12,966         12,986
                                        -----------    -----------
               Total current liabilities     44,838         22,419


Stockholders' equity
  Preferred stock, 1,000,000 shares authorized, none issued
  Common stock, 40,000,000 shares of $.01 par value
  authorized; issued and outstanding
  22,980,051 at Mar. 31, 1998 and
  22,979,051 at Sep. 30, 1997               229,801        229,791
  Additional paid-in capital             26,892,071     26,888,581
  Warrants                               17,953,223     17,928,223
  Deficit accumulated during the
  development stage                     (42,267,124)   (41,960,771)
                                        -----------    -----------
                                          2,807,971      3,085,824
               TOTAL LIABILITIES AND    -----------    -----------
                  STOCKHOLDERS' EQUITY  $ 2,852,809    $ 3,108,243
                                        ===========    ===========
[FN]
Note: The Balance Sheet at September 30, 1997 has been derived from audited
financial statement at that date.

See notes to the financial statement.
<PAGE>2
                             DIASENSE, INC.
                     (A Development Stage Company)

<TABLE>
                  Consolidated Statement of Operations
                              (Unaudited)
<CAPTION>
                                            For the six months ended         For the three months ended   From July 5, 1989
                                                    March 31,                          March 31,         (inception) through
                                              1998             1997              1998             1997       March 31, 1998
                                            -------------------------        --------------------------  -------------------
</CAPTION>
<S>                                      <C>              <C>              <C>              <C>            <C>
Research and development expenses        $        -       $      -       $        -        $      -       $ 10,556,405

General and administrative expenses            303,946        633,642          141,234         316,916      11,557,747

Warrant extensions                              25,000      5,287,000              -         3,715,000      17,912,908

Technology and patent rights acquired           13,080            -              7,580            -          2,657,580

Interest expense                                  -               -                -              -             10,529

Other income                                   (35,673)       (29,335)         (13,890)       (13,010)       (495,450)

Other expense                                     -               -                -              -             37,405
					    --------------------------	    --------------------------   -------------------
         Net loss                         $   (306,353)  $ (5,891,307)    $ (  134,924)  $ (4,018,906)   $ (42,237,124)
                                            ===========    ===========      ===========    ===========   ===================
Net loss per common share                   $    (0.01)  $      (0.26)    $      (0.01)  $      (0.17)   $       (2.30)
                                            ===========    ===========      ===========    ===========   ===================

See notes to the financial statements.
</TABLE>
<PAGE>3
<TABLE>
                            DIASENSE, INC.
                     (A Development Stage Company)

                        Statement of Cash Flows
                              (Unaudited)


<CAPTION>

                                                       For the six months ended   For the three months ended  From July 5,1989
                                                              March 31,                     March 31,         (Inception) thru
                                                        1998          1997            1998          1997        March 31, 1998
                                                       ------------------------   --------------------------  ----------------
 <S>                                               <C>             <C>            <C>           <C>           <C>
 Cash flows from operating activities
  Net Loss                                          $   (306,353)  $ (5,891,307)  $  (134,924) $(4,018,906)   $(42,237,124)
  Adjustments to reconcile net loss to net
   cash used by operating activites:
    Depreciation                                           6,791          6,823         3,395        3,396          62,729
    Stock in exchange for services                          -              -             -            -           138,950
    Stock issued for License and Marketing Agreement        -              -             -            -            80,000
    Warrent extensions                                    25,000      5,287,000           -      3,715,000      17,912,908
    Inventory Deposit-BICO                                  -              -             -            -        (1,000,000)
    Decrease in prepaid expenses                           8,680          8,505         2,922        4,426          (5,018)
    Increase in payable due to BICO                         -              -             -            -        10,500,000
    Increase in accounts payable                          22,439         17,780        23,559       19,189          31,872
    Decrease in accrued liabilities                          (20)           (20)           10          (74)         12,966
                                                      ------------ ------------  ------------  ------------  ----------------  
    Net cash (used) in operating activities             (243,463)      (571,219)     (105,038)    (276,969)    (14,502,717)

Cash flows from investing activities:
 Purchase of property and equipment                         -              -              -              -        (279,413)
 Note Receivable			                (125,000)          -	       -              -        (125,000)
 Interest Receivable                                      (3,225)          -           (1,667)           -          (3,225)    
                                                      ------------ ------------  ------------  -------------  ------------
    Net cash used in investing activities               (128,225)          -           (1,667)           -        (407,638)

Cash flows from financing activities:
 Advances to BICO                                     (2,724,903)    (1,521,551)   (1,075,833)    (822,753)     (6,834,764)
 Repayment of advances to BICO                         1,247,007      1,119,461       119,918      393,297       5,923,454
 Proceeds from issuance of common stock                    3,500        (94,500)          -             -       10,968,334
 Proceeds from issuance of common stock to BICO             -              -              -             -        4,203,500
 Proceeds from warrants exercised                           -              -              -             -          118,066
 Proceeds from treasury stock                               -              -              -             -          (35,000)
 Proceeds from Regulation S                                 -              -              -             -          288,751
 Proceeds from issuance of notes payable                    -              -              -             -          303,000
                                                   --------------  -------------- ------------- ------------  -------------
   Net cash provided by financing activities          (1,474,396)       496,590       (955,915)   (429,456)     14,935,341
                                                   --------------  -------------- ------------- ------------  -------------
   Net increase (decrease) in cash and cash equiv.    (1,846,084)    (1,067,809)    (1,062,620)   (706,425)        24,986
   Cash and cash equivalents at beginning of period    1,871,070      1,143,312      1,087,606     781,928           -
                                                   --------------  -------------- ------------- ------------  -------------
   Cash and cash equivalents at end of period         $   24,986   $     75,503   $     24,986  $   75,503   $     24,986
                                                   ==============  ============== ============= ============  =============

See notes to the financial statements.
</TABLE>

<PAGE>4
                       DIASENSE, INC.

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - Basis of Presentation

     The accompanying financial statements of Diasense, Inc.
(the  "Company")  have  been  prepared  in  accordance  with
generally   accepted  accounting  principles   for   interim
financial information, and with the instructions to Form 10-
Q  and  Rule 10-O Regulation S-X.  Accordingly, they do  not
include  all  of the information and footnotes  required  by
generally   accepted  accounting  principles  for   complete
financial  statements.  In the opinion  of  management,  all
adjustments   (consisting  of  normal  recurring   accruals)
considered  necessary  for  a fair  presentation  have  been
included.   For further information, refer to the  financial
statements  and  footnotes included in the Company's  annual
report on Form 10-K for the fiscal year ended September  30,
1997.

NOTE B - Organization

      The  Company  was incorporated on July 5,  1989  as  a
wholly  owned  subsidiary  of  Biocontrol  Technology,  Inc.
(BICO).   BICO  owns 52% of the stock of the Company  as  of
March   31,  1998.   Diasense  is  currently  developing   a
noninvasive glucose sensor (Sensor).  The sensor  would  use
electromagnetic   technology  to   measure   blood   without
requiring the user to take a blood sample.

NOTE C - Net Loss Per Common Share

      Net  loss  per common share is based on  the  weighted
average  number of outstanding common shares which  amounted
to 22,980,051 and 22,979,199 for the periods ended March 31,
1998  and  March 31, 1997, respectively. The loss per  share
does  not include common stock equivalents since the  effect
would be anti-dilutive.

           From  July 5, 1989 (inception) to March 31,  1998,
net  loss  per common share is based on the weighted  average
number  of common shares outstanding and the number of common
shares  issuable on the exercise of 1,708,000 warrants issued
in  1992; reduced by 488,000 common shares that were  assumed
to have been purchased with the proceeds from the exercise of
the  warrants  at an assumed price of $3.50 per  share.   The
inclusion  of the warrants in the loss per share  calculation
is  required  by  the  rules of the Securities  and  Exchange
Commission  relative  to  the initial registration  statement
which included the Company's financial statements through the
period  ended  March  31,  1993.  The registration  statement
became  effective July 19, 1993.  The weighted average number
of  common  shares including the effect of the conversion  of
the  warrants amounted to 18,344,701 for the period from July
5, 1989 (inception) to March 31, 1998.
<PAGE>                              
                              
                       DIASENSE, INC.

   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTE D - Legal Proceedings

During the last quarter, the Company and its affiliates were
served with subpoenas by the U.S. Attorneys' office; the
Company is currently in the process of copying documents for
production in response to such subpoenas.  The class action
suit which names the Company as a defendant remains in the
pre-trial pleading stage pursuant to consent of all the
parties.

<PAGE>                              
 Management's Discussion and Analysis of Financial Condition
                       and Cash Flows


Liquidity and Capital Resources

      Cash  decreased from $1,871,070 at September 30, 1997,
to  $24,986 at March 31, 1998.  This decrease was  primarily
attributable to the Company's $243,463 net cash flow used by
operations and $1,477,896 net advances to BICO.

Results of Operations

           There  were no research and development  expenses
during  the six month period ended March 31, 1998  and  1997
due  to  the agreed-upon suspension of billings by  Diasense
and BICO pursuant to the Research and Development Agreement.

      General  and Administrative expenses decreased  during
the  second quarter from $316,916 for the three month period
ended  March 31, 1997 to $141,234 for the three month period
ended March 31, 1998 and decreased from $633,642 for the six
month  period ended March 31, 1997 to $303,946 for  the  six
month  period  ended  March 31,  1998.    The  decrease  was
primarily  due to reductions in administrative  staff  along
with administrative overhead.

      Other income during the second quarter increased  from
$13,010  for the three month period ended March 31, 1997  to
$13,890 for the three month period ended March 31, 1998  and
increased from $29,335 for the six month period ended  March
31, 1997 to $35,673 for the six month period ended March 31,
1998.   This  increase was due to the Company having  higher
cash reserves to invest for the period ending March 31, 1998
than during the period ending March 31, 1997.

<PAGE>
                PART II -- OTHER INFORMATION

Item 1.   Legal Proceedings
          None.

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.   Reports on Form 8-K
          None.
<PAGE>
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 on this 15th day of May, 1998.


                              DIASENSE, INC.

                              By /s/ Fred E. Cooper
                              ------------------------------ 
                              Fred E. Cooper
                                President and Director
                               (principal executive officer,
                                principal financial officer and principal
                                accounting officer)