UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-QSB
--------------------------------------------------------------------------------

(Mark one)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
    Act of 1934

    For the quarterly period ended December 31, 2007

[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
    Act of 1934

    For the transition period from ______________ to _____________
--------------------------------------------------------------------------------

                        Commission File Number: 33-56574


                                 Diasense, Inc.
        (Exact name of small business issuer as specified in its charter)

       Nevada                                                   25-1605848
(State of incorporation)                                (IRS Employer ID Number)

                     211 West Wall Street, Midland, TX 79701
                    (Address of principal executive offices)

                                 (432) 682-1761
                           (Issuer's telephone number)
--------------------------------------------------------------------------------

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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 [ ]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act): YES [X] NO [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: January 7, 2008: 1,596

Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
<PAGE>
                                 DIASENSE, INC.

                Form 10-Q for the Quarter ended December 31, 2007

                                Table of Contents

                                                                            Page
                                                                            ----
PART I - FINANCIAL INFORMATION

  Item 1 Financial Statements                                                 3

  Item 2 Management's Discussion and Analysis or Plan of Operation           14

  Item 3 Controls and Procedures                                             16

PART II - OTHER INFORMATION

  Item 1 Legal Proceedings                                                   16

  Item 2 Recent Sales of Unregistered Securities and Use of Proceeds         16

  Item 3 Defaults Upon Senior Securities                                     16

  Item 4 Submission of Matters to a Vote of Security Holders                 16

  Item 5 Other Information                                                   16

  Item 6 Exhibits                                                            16

SIGNATURES                                                                   17

                                       2
<PAGE>
                                     PART I

ITEM 1 - FINANCIAL STATEMENTS

                                 DIASENSE, INC.
                          (a development stage company)
                                  BALANCE SHEET
                           December 31, 2007 and 2006

<TABLE>
<CAPTION>
                                                                         December 31,           December 31,
                                                                             2007                   2006
                                                                         ------------           ------------
<S>                                                                      <C>                    <C>
                                     ASSETS
CURRENT ASSETS
   Cash on hand and in bank                                              $      4,552           $     12,071
                                                                         ------------           ------------

      TOTAL CURRENT ASSETS                                                      4,552                 12,071
                                                                         ------------           ------------

TOTAL ASSETS                                                             $      4,552           $     12,071
                                                                         ============           ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
CURRENT LIABILITIES
   Accounts payable - trade                                              $         --           $         --
   Accrued interest payable to current majority stockholder                     2,106                    319
                                                                         ------------           ------------

      TOTAL CURRENT LIABILITIES                                                 2,106                    319
                                                                         ------------           ------------

LONG-TERM LIABILITIES
   Note payable to current majority stockholder                                51,000                 20,000
                                                                         ------------           ------------

      TOTAL LIABILITIES                                                        53,106                 20,319
                                                                         ------------           ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT)
   Preferred stock - $0.001 par value
     1,000,000 shares authorized
     None issued and outstanding                                                   --                     --
   Common stock - $0.001 par value
     100,000,000 shares authorized
     1,596 shares issued and outstanding                                            2                      2
   Additional paid-in capital                                              48,072,682             48,072,682
   Common stock warrants                                                        5,000                  5,000
   Deficit accumulated during the development stage                       (48,126,238)           (48,085,932)
                                                                         ------------           ------------

      TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                    (48,554)                (8,248)
                                                                         ------------           ------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $      4,552           $     12,071
                                                                         ============           ============
</TABLE>
   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
   The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>
                                 DIASENSE, INC.
                          (a development stage company)
                            STATEMENTS OF OPERATIONS
                Three months ended December 31, 2007 and 2006 and
     Period from July 5, 1989 (date of inception) through December 31, 2007

<TABLE>
<CAPTION>
                                                                                                        Period from
                                                                                                        July 5, 1989
                                                            Three months         Three months       (date of inception)
                                                               ended                 ended                through
                                                            December 31,          December 31,          December 31,
                                                                2007                  2006                  2007
                                                            -----------           -----------           ------------
<S>                                                         <C>                   <C>                   <C>
REVENUES                                                    $        --           $        --           $         --
                                                            -----------           -----------           ------------
OPERATING EXPENSES
   General and administrative expenses                           13,678                13,037             17,115,293
   Depreciation expense                                              --                    --                 91,495
   Research and development expense                                  --                    --             10,556,405
   Technology and patent rights acquired                             --                    --              2,650,000
   Expense related to warrant extensions                             --                    --             17,890,676
   Amortization of goodwill                                          --                    --                535,057
                                                            -----------           -----------           ------------
      TOTAL OPERATING EXPENSES                                   13,678                13,037             48,838,926
                                                            -----------           -----------           ------------

LOSS FROM OPERATIONS                                            (13,678)              (13,037)           (48,838,926)

OTHER INCOME (EXPENSE)
   Interest expense                                                (603)                 (312)              (338,711)
   Other income                                                      22                   124              1,043,246
   Other expense                                                     --                    --                (67,405)
   Equity in loss from unconsolidated subsidiaries                   --                    --               (575,412)
   Impairment loss                                                   --                    --               (690,124)
   Gain from sale of Diabecore stock                                 --                    --                 57,242
   Gain from sale fo MicroIslet stock                                --                    --              1,283,852
                                                            -----------           -----------           ------------
      TOTAL OTHER INCOME (EXPENSE)                                 (581)                 (188)               712,688
                                                            -----------           -----------           ------------

LOSS BEFORE PROVISION FOR INCOME TAXES                          (14,259)              (13,255)           (48,126,238)

PROVISION FOR INCOME TAXES                                           --                    --                     --
                                                            -----------           -----------           ------------

NET LOSS                                                    $   (14,259)          $   (13,225)          $(48,126,238)
                                                            ===========           ===========           ============
Earnings per share of common stock
 outstanding computed on net loss -
 basic and fully diluted                                    $     (8.93)          $     (8.29)
                                                            ===========           ===========
Weighted-average number of shares
 outstanding - basic and fully diluted                            1,596                 1,596
                                                            ===========           ===========
</TABLE>
   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
   The accompanying notes are an integral part of these financial statements.

                                       4
<PAGE>
                                 DIASENSE, INC.
                          (a development stage company)
                            STATEMENTS OF CASH FLOWS
                Three months ended December 31, 2007 and 2006 and
     Period from July 5, 1989 (date of inception) through December 31, 2007

<TABLE>
<CAPTION>
                                                                                                              Period from
                                                                                                              July 5, 1989
                                                                Three months          Three months        (date of inception)
                                                                   ended                  ended                 through
                                                                December 31,           December 31,           December 31,
                                                                    2007                   2006                   2007
                                                                ------------           ------------           ------------
<S>                                                         <C>                   <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss) for the period                             $    (14,259)          $    (13,225)          $(48,126,238)
   Adjustments to reconcile net loss to
    net cash provided by operating activities
      Depreciation and amortization                                       --                     --                626,552
      Gain on sale of Diabecore stock                                     --                     --                (57,242)
      Warrants issued for services                                        --                     --                515,515
      Expense related to warrant extensions                               --                     --             17,890,676
      Common stock issued for services                                    --                     --                138,950
      Common stock issued for License and Marketing agreement             --                     --                 80,000
      Impairment loss                                                     --                     --                704,491
      Inventory deposit - BICO                                            --                     --             (1,000,000)
      Gain on MicroIslet stock                                            --                     --             (1,283,852)
      Equity in loss of unconsolidated subsidiaries                       --                     --                575,412
      Accrued interest contributed to equity                              --                     --                324,879
   Increase (Decrease) in
      Accounts payable                                                    --                     --                     --
      Other accrued liabilities                                           --                     --                     --
      Accrued interest payable                                           603                    312                  2,106
                                                                ------------           ------------           ------------
          NET CASH USED IN OPERATING ACTIVITIES                      (13,656)               (12,913)           (29,608,751)
                                                                ------------           ------------           ------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment                                     --                     --               (303,746)
   Proceeds from sale of property and equipment                           --                     --                175,000
   Cash paid for investment in MicroIslet                                 --                     --             (1,600,000)
   Proceeds from sale of MicroIslet stock                                 --                     --              2,070,726
   Cash paid for investment in Diabecore                                  --                     --               (987,468)
   Proceeds from sale of Diabecore stock                                  --                     --                 57,242
   Net activity on notes receivable from related parties                  --                     --               (138,538)
                                                                ------------           ------------           ------------
          NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES             --                     --               (726,784)
                                                                ------------           ------------           ------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Cash received from notes payable to
    Former majority shareholder and others                                --                     --                396,200
   Current majority shareholder                                       16,000                     --                 51,000
   Convertible notes                                                      --                     --                 95,000
   Cash paid on notes payable                                             --                     --                (42,500)
   Cash received from sale of common stock                                --                     --             11,096,834
   Cash received on Regulation S sale of common stock                     --                     --                288,751
   Cash received on sale of common stock to BICO                          --                     --              4,200,000
   Cash received on warrant exercises                                     --                     --                118,066
   Net activity on cash advanced to/received from BICO                    --                     --             14,160,060
   Cash paid to acquire treasury stock                                    --                     --                (35,001)
   Cash contributed as capital to support operations                      --                     --                 11,677
                                                                ------------           ------------           ------------
          NET CASH PROVIDED BY FINANCING ACTIVITIES                   16,000                     --             30,340,087
                                                                ------------           ------------           ------------
INCREASE (DECREASE) IN CASH                                            2,344                (12,913)                 4,552
Cash at beginning of period                                            2,208                 24,984                     --
                                                                ------------           ------------           ------------
CASH AT END OF PERIOD                                           $      4,552           $     12,071           $      4,552
                                                                ============           ============           ============
</TABLE>
   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
   The accompanying notes are an integral part of these financial statements.

                                       5
<PAGE>
                                 DIASENSE, INC.
                          (a development stage company)
                      STATEMENTS OF CASH FLOWS - CONTINUED
                Three months ended December 31, 2007 and 2006 and
     Period from July 5, 1989 (date of inception) through December 31, 2007

<TABLE>
<CAPTION>
                                                                                                              Period from
                                                                                                              July 5, 1989
                                                                Three months          Three months        (date of inception)
                                                                   ended                  ended                 through
                                                                December 31,           December 31,           December 31,
                                                                    2007                   2006                   2007
                                                                ------------           ------------           ------------
<S>                                                           <C>                   <C>                   <C>
SUPPLEMENTAL DISCLOSURE OF INTEREST AND INCOME TAXES PAID
   Interest paid for the year                                    $       --             $       --            $    11,725
                                                                 ==========             ==========            ===========
   Income taxes paid for the year                                $       --             $       --            $        --
                                                                 ==========             ==========            ===========

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
   Issuance of 371,000 shares of common stock
    to satisfy $303,000 note payable                             $       --             $       --            $   303,000
                                                                 ==========             ==========            ===========
   Issuance of 3,000,000 shares of common stock
    to BICO in payment of intercompany debt                      $       --             $       --            $10,500,000
                                                                 ==========             ==========            ===========
</TABLE>


   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
   The accompanying notes are an integral part of these financial statements.

                                       6
<PAGE>
                                 DIASENSE, INC.
                          (a development stage company)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2007 and 2006

NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

Diasense, Inc. (Company) was incorporated on July 5, 1989 in accordance with the
Laws of the  Commonwealth of Pennsylvania as a wholly-owned  subsidiary of BICO,
Inc. (BICO) (formerly Biocontrol Technology, Inc.).

On January 22,  2007,  the Company  filed  Articles of Merger and Plan of Merger
with the  Commonwealth  of  Pennsylvania  and the State of Nevada to change  the
Company's  domicile  from  Pennsylvania  to Nevada by means of a merger with and
into a Nevada  corporation  formed on November 3, 2006 solely for the purpose of
effecting the  reincorporation.  The Articles of Incorporation and Bylaws of the
Nevada corporation are the Articles of Incorporation and Bylaws of the surviving
corporation.  Such Articles of Incorporation  maintained the Company's corporate
name of Diasense, Inc. and modified the Company's capital structure to allow for
the issuance of up to 100,000,000 shares of $0.001 par value common stock and up
to 50,000,000  shares of $0.001 par value preferred  stock.  Although the merger
documents  were filed in both  Pennsylvania  and Nevada on January 22, 2007, the
Commonwealth of Pennsylvania  required  completion of certain documents in order
to issue a tax clearance  certificate  to complete the merger.  The required tax
clearance  was not issued until March 22,,  2007 which  formally  completed  the
domicile  relocation  to Nevada.  The effect of this action is  reflected in the
accompanying  financial  statements  as of the  first  day of the  first  period
presented.

The  Company was  approximately  52% owned by BICO until July 23, 2004 when BICO
sold its entire ownership interest to Dominion Assets, LLC (Dominion). On August
29, 2006, the Company entered into a Voluntary Surrender Agreement with Dominion
whereby  all of the  Company's  assets,  which had  previously  been  pledged as
collateral to secure loan agreements by and between the Company and Dominion and
under which the Company was then in default, were repossessed.  Dominion was, at
that time,  the majority  shareholder  of the  Company.  Keith R. Keeling owns a
majority  interest in  Dominion  and was also a former  member of the  Company's
Board of Directors and the Company's former Chief Executive Officer (CEO) of the
Company through his resignation from both positions on August 4, 2006.

Thorough the date of the Voluntary Surrender  Agreement,  the Company's business
efforts were focused on developing a noninvasive  glucose sensor  (Sensor).  The
Sensor  was  proposed  to  use   electromagnetic   technology   to  measure  the
concentration  of glucose in human tissue  without  requiring the user to take a
blood sample.

The Company's current principal  business activity is to seek a suitable reverse
acquisition  candidate  through  acquisition,  merger or other suitable business
combination method.

The Company has never fully  implemented any business plan(s) and,  accordingly,
is considered to be in the development stage.

NOTE B - PREPARATION OF FINANCIAL STATEMENTS

The  Company  follows  the  accrual  basis  of  accounting  in  accordance  with
accounting principles generally accepted in the United States of America and has
a year-end of September 30.

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

Management further acknowledges that it is solely responsible for adopting sound
accounting  practices,   establishing  and  maintaining  a  system  of  internal
accounting  control and preventing and detecting  fraud. The Company's system of
internal  accounting  control is designed to assure,  among other items, that 1)
recorded  transactions  are valid; 2) valid  transactions  are recorded;  and 3)
transactions  are  recorded in the proper  period in a timely  manner to produce
financial  statements which present fairly the financial  condition,  results of
operations  and cash  flows of the  Company  for the  respective  periods  being
presented.

                                       7
<PAGE>
                                 DIASENSE, INC.
                          (a development stage company)
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE B - PREPARATION OF FINANCIAL STATEMENTS - CONTINUED

During interim periods, the Company follows the accounting policies set forth in
its annual  audited  financial  statements  filed with the U. S.  Securities and
Exchange Commission on its Annual Report on Form 10-KSB containing the Company's
financial  statements  for the year ended  September 30, 2007.  The  information
presented  within  these  interim  financial  statements  may  not  include  all
disclosures  required by generally accepted accounting  principles and the users
of financial information provided for interim periods should refer to the annual
financial information and footnotes when reviewing the interim financial results
presented herein.

In the opinion of management,  the accompanying  interim  financial  statements,
prepared in  accordance  with the U. S.  Securities  and  Exchange  Commission's
instructions for Form 10-Q, are unaudited and contain all material  adjustments,
consisting only of normal recurring  adjustments necessary to present fairly the
financial condition, results of operations and cash flows of the Company for the
respective interim periods  presented.  The current period results of operations
are not necessarily  indicative of results which ultimately will be reported for
the full fiscal year ending September 30, 2008.

NOTE C - GOING CONCERN UNCERTAINTY

On August 29, 2006,  the Company  entered into a Voluntary  Surrender  Agreement
(Voluntary Surrender Agreement) with Dominion Assets, LLC (Dominion) whereby all
of the  Company's  assets,  which had  previously  been pledged as collateral to
secure  loan  agreements  under  which the  Company  was then in  default,  were
repossessed.  Dominion  was,  at that  time,  the  majority  shareholder  of the
Company.

The Company's current principal  business activity is to seek a suitable reverse
acquisition  candidate  through  acquisition,  merger or other suitable business
combination method.

The  Company's  continued  existence is  dependent  upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.

The Company  anticipates  future sales of equity securities to facilitate either
the  consummation  of a business  combination  transaction  or to raise  working
capital to support and preserve the integrity of the corporate entity.  However,
there is no assurance that the Company will be able to obtain additional funding
through the sales of additional  equity  securities  or, that such  funding,  if
available, will be obtained on terms favorable to or affordable by the Company.

If no additional  operating  capital is received  during the next twelve months,
the  Company  will be  forced  to rely on  existing  cash in the  bank  and upon
additional  funds  loaned  by  management  and/or  significant  stockholders  to
preserve the integrity of the corporate  entity at this time. In the event,  the
Company  is  unable to  acquire  advances  from  management  and/or  significant
stockholders, the Company's ongoing operations would be negatively impacted.

It  is  the  intent  of  management  and  significant  stockholders  to  provide
sufficient  working  capital  necessary to support and preserve the integrity of
the corporate entity.  However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional future funding.

While the Company is of the opinion that good faith  estimates of the  Company's
ability to secure additional  capital in the future to reach our goals have been
made, there is no guarantee that the Company will receive  sufficient funding to
sustain operations or implement any future business plan steps.

                                       8
<PAGE>
                                 DIASENSE, INC.
                          (a development stage company)
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Cash and cash equivalents

     For  Statement of Cash Flows  purposes,  the Company  considers all cash on
     hand  and  in  banks,  certificates  of  deposit  and  other  highly-liquid
     investments with maturities of three months or less, when purchased,  to be
     cash and cash equivalents.

2. Property and Equipment

     Property and equipment were recorded at historical  cost.  These costs were
     depreciated over the estimated useful lives of the individual  assets using
     the straight-line method, generally seven to thirty-nine years.

     Gains and losses from  disposition of property and equipment are recognized
     as incurred and are included in operations.

     In accordance  with  Statement of Financial  Accounting  Standards No. 144,
     "Accounting  for the  Impairment  or Disposal of  Long-Lived  Assets",  the
     Company  follows the policy of evaluating  all property and equipment as of
     the end of each reporting  quarter.  At September 30, 2006, the Company had
     no assets subject to this accounting prononcement.

3. Income Taxes

     The Company uses the asset and liability  method of  accounting  for income
     taxes. At December 31, 2007 and 2006, respectively,  the deferred tax asset
     and deferred  tax  liability  accounts,  as recorded  when  material to the
     financial  statements,  are entirely  the result of temporary  differences.
     Temporary  differences  represent  differences in the recognition of assets
     and  liabilities  for  tax  and  financial  reporting  purposes,  generally
     consisting of  accumulated  depreciation  and  amortization,  allowance for
     doubtful accounts and vacation accruals.

     As of December 31, 2007 and 2006,  the  deferred  tax asset  related to the
     Company's net operating loss  carryforward  is fully  reserved.  Due to the
     provisions  of Internal  Revenue  Code Section 338, the Company may have no
     net operating loss carryforwards available to offset financial statement or
     tax  return  taxable  income in future  periods  as a result of a change in
     control   involving  50  percentage  points  or  more  of  the  issued  and
     outstanding securities of the Company.

4. Earnings (loss) per share

     Basic  earnings  (loss) per share is computed  by  dividing  the net income
     (loss) available to common stockholders by the  weighted-average  number of
     common shares  outstanding  during the respective  period  presented in our
     accompanying financial statements.

     Fully diluted earnings (loss) per share is computed similar to basic income
     (loss) per share  except that the  denominator  is increased to include the
     number of common  stock  equivalents  (primarily  outstanding  options  and
     warrants).

     Common  stock  equivalents  represent  the  dilutive  effect of the assumed
     exercise of the outstanding stock options and warrants,  using the treasury
     stock method, at either the beginning of the respective period presented or
     the date of  issuance,  whichever  is later,  and only if the common  stock
     equivalents  are  considered  dilutive  based upon the Company's net income
     (loss) position at the calculation date.

     At  December  31, 2007 and 2006,  and  subsequent  thereto,  all issued and
     outstanding warrants are considered  anti-dilutive due to the Company's net
     operating loss position.

                                       9
<PAGE>
                                 DIASENSE, INC.
                          (a development stage company)
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

5. Treasury Stock

     The Company accounts for treasury stock  acquisitions and sales pursuant to
     the tenets of Accounting Principles Board Opinion 6, whereby treasury stock
     acquisitions  are first charged  against par value and any excess  purchase
     price is first charged to additional  paid-in  capital and then to retained
     earnings.  Any  subsequent  sale of treasury stock is first credited to par
     value and any excess is credited to additional paid-in capital.

6. Research and development costs

     Research and  development  expenses were charged to operations as incurred.
     Patents,  Licenses and  Marketing  Agreements  acquired from BICO were also
     charged to operations as acquired.

NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash,  accounts  receivable,  accounts  payable and notes
payable, as applicable,  approximates fair value due to the short term nature of
these items  and/or the current  interest  rates  payable in relation to current
market conditions.

Interest  rate risk is the risk  that the  Company's  earnings  are  subject  to
fluctuations  in interest  rates on either  investments  or on debt and is fully
dependent  upon  the  volatility  of  these  rates.  The  Company  does  not use
derivative instruments to moderate its exposure to interest rate risk, if any.

Financial  risk  is  the  risk  that  the  Company's  earnings  are  subject  to
fluctuations in interest rates or foreign exchange rates and are fully dependent
upon the  volatility  of  these  rates.  The  company  does  not use  derivative
instruments to moderate its exposure to financial risk, if any.

NOTE F - CALCULATION OF COMPREHENSIVE INCOME (LOSS)

<TABLE>
<CAPTION>
                                                                                       Period from
                                                                                       July 5, 1989
                                          Three months           Three months       (date of inception)
                                             ended                  ended                 through
                                          December 31,           December 31,           December 31,
                                              2007                   2006                   2007
                                          ------------           ------------           ------------
<S>                                       <C>                    <C>                    <C>
Net Loss                                  $   (14,259)           $   (13,225)           $(48,126,238)

Comprehensive Income items: None                   --                     --                      --
                                          -----------            -----------            ------------

Comprehensive Loss                        $   (14,259)           $   (13,225)           $(48,126,238)
                                          ===========            ===========            ============
</TABLE>

NOTE G - NOTE PAYABLE TO OFFICER/DIRECTOR

On September 29, 2006, the Company and it's sole officer and director,  Glenn A.
Little,  acknowledged  that outside funds are necessary to support the corporate
entity and comply with the periodic  reporting  requirements  of the  Securities
Exchange Act of 1934,  as amended.  To this end, Mr.  Little  agreed to lend the
Company  up to $50,000  with a maturity  period not to exceed two (2) years from
the initial funding date at an interest rate of 6.0% per annum. Through December
31, 2007,  Mr. Little has advanced  approximately  $51,000 under this  agreement
with an initial maturity date of September 30, 2008.

                                       10
<PAGE>
                                 DIASENSE, INC.
                          (a development stage company)
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE H - INCOME TAXES

The  components  of income tax  (benefit)  expense  for each of the three  month
periods  ended  December  31, 2007 and 2006 and for the period from July 5, 1989
(date of inception) through December 31, 2007, are as follows:

                                                                Period from
                                                               July 5, 1989
                       Three months         Three months     (date of inception)
                           ended               ended              through
                        December 31,        December 31,        December 31,
                           2007                2006                2007
                         -------             -------             -------
Federal:
  Current                $    --             $    --             $    --
  Deferred                    --                  --                  --
                         -------             -------             -------
                              --                  --                  --
                         -------             -------             -------
State:
  Current                     --                  --                  --
  Deferred                    --                  --                  --
                         -------             -------             -------
                              --                  --                  --
                         -------             -------             -------

  Total                  $    --             $    --             $    --
                         =======             =======             =======

Concurrent  with a  September  2006  change in  control,  the  Company has a net
operating loss  carryforward  for future periods of approximately  $53,000.  The
ultimate amount and availability of any future net operating loss  carryforwards
may be subject to limitations  set forth by the Internal  Revenue Code.  Factors
such as the number of shares  ultimately  issued  within a three year  look-back
period;  whether there is a deemed more than 50 percent  change in control;  the
applicable  long-term tax exempt bond rate;  continuity of historical  business;
and  subsequent  income of the Company all enter into the annual  computation of
allowable annual utilization of the carryforwards.

The Company's  income tax expense  (benefit) for each of the three month periods
ended  December  31, 2007 and 2006 and for the period from July 5, 1989 (date of
inception) through December 31, 2007, respectively,  differed from the statutory
federal rate of 34 percent as follows:

<TABLE>
<CAPTION>
                                                                                                        Period from
                                                                                                       July 5, 1989
                                                         Three months            Three months        (date of inception)
                                                             ended                  ended                 through
                                                          December 31,           December 31,           December 31,
                                                             2007                   2006                   2007
                                                         ------------           ------------           ------------
<S>                                                      <C>                    <C>                    <C>
Statutory rate applied to income before income taxes     $     (4,800)          $     (4,500)          $(16,363,000)
Increase (decrease) in income taxes resulting from:
  State income taxes                                               --                     --                     --
  Other, including reserve for deferred tax asset
   and application of net operating loss carryforward           4,800                  4,500             16,363,000
                                                         ------------           ------------           ------------

      Income tax expense                                 $         --           $         --           $         --
                                                         ============           ============           ============
</TABLE>

                                       11
<PAGE>
                                 DIASENSE, INC.
                          (a development stage company)
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE H - INCOME TAXES - CONTINUED

Temporary  differences,  consisting primarily of statutory deferrals of expenses
for organizational costs,  statutory differences in the  depreciable/amortizable
lives for  property and  equipment  and patents and the  recognition  of expense
charges  related to the issuance of warrants,  between the  financial  statement
carrying  amounts and tax bases of assets and liabilities  give rise to deferred
tax assets and/or liabilities.  As of September 30, 2007 and 2006, respectively,
after taking the September 2006 change in control into consideration:

                                              September 30,        September 30,
                                                  2007                 2006
                                                --------             -------
Deferred tax assets
  Net operating loss carryforwards              $ 13,000             $    --
  Less valuation allowance                       (13,000)                 --
                                                --------             -------

Net Deferred Tax Asset                          $     --             $    --
                                                ========             =======

NOTE I - COMMON STOCK TRANSACTIONS

On September 18, 2006, the Company entered into a unit purchase  agreement (Unit
Purchase Agreement) to sell 1,000 Units to Glenn A. Little (Little) for $125,000
cash.  Each Unit consisted of 11,100 shares of common stock and 500 common stock
purchase  warrants or an  aggregate  of  11,100,000  shares of common  stock and
500,000   common  stock  purchase   warrants.   There  were  no  commissions  or
underwriting discounts paid in conjunction with this transaction and the Company
believes  that the shares and  warrants  were  exempt  from  registration  under
Section 4(2) of the Securities Act of 1933 as amended.

The common  stock  purchase  warrants  can be  exercised  at any time from their
issuance on September 18, 2006 through  September 18, 2011 at an exercise  price
of $0.10 per share.  The  Company  assigned a value of $5,000 to these  warrants
from the $125,000 aggregate purchase price, which is equivalent to the par value
of the underlying common stock supporting the warrants.

On September 18, 2006,  connected with yet separate from the aforementioned Unit
Purchase  Agreement,  the Company  entered into a Share Purchase  Agreement with
Dominion, the Company's then-majority shareholder, whereby the Company purchased
from  Dominion  11,975,000  shares of common stock of the Company for a purchase
price of $1.00.  The shares  were  cancelled  upon  receipt by the  Company  and
returned to unissued status.

On November 14, 2006, the Company filed a Definitive  Schedule 14C - Information
Statement Pursuant to Section 14C of the Securities  Exchange Act of 1934 noting
actions to be taken without a meeting upon the written consent of the holders of
a majority of the outstanding shares of the voting capital stock of the Company.
The actions at this meeting  included 1) to reverse split the  currently  issued
and outstanding  common stock (Reverse Split) of the Company on a 100,000 shares
for one (1) share basis, with no stockholder being reversed to less than a round
lot of 100 shares;  and 2) to change the Company's state of  incorporation  from
Pennsylvania to Nevada. On January 19, 2006,  shareholders holding a majority of
the  Company's  common stock voted to rescind the reverse  stock  portion of the
previous approval.

On  March  16,  2007,  the  Company  filed  a  new  Preliminary  Schedule  14C -
Information  Statement Pursuant to Section 14C of the Securities Exchange Act of
1934 noting  actions to be taken  without a meeting upon the written  consent of
the holders of a majority of the outstanding  shares of the voting capital stock
of the Company.  The actions at this meeting include a 12,500 shares for 1 share
reverse  stock  split of the  currently  issued  and  outstanding  common  stock
(Reverse Split) of the Company,  with fractional  shares being paid in cash at a
rate of $0.05 for each fractional share.

                                       12
<PAGE>
                                 DIASENSE, INC.
                          (a development stage company)
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE I - COMMON STOCK TRANSACTIONS - CONTINUED

On  June  20,  2007,  the  Company  filed  another  Preliminary  Schedule  14C -
Information  Statement Pursuant to Section 14C of the Securities Exchange Act of
1934  noting  the  following  actions  to be  taken  by the  Company's  Board of
Directors  pursuant  to actions  taken by a written  consent  of a  majority  of
stockholders  without  meeting  "1. To reverse  split the  currently  issued and
outstanding  common stock (the "Common Stock") of the Company on a 12,500 shares
for 1 share  basis,  with  fractional  shares paid in cash at the rate of ($.05)
cents for each  fractional  share and 2. To  increase  the  number of shares the
Company is authorized to issue to  100,000,000  shares of common stock par value
$.001 and 50,000,000  shares of preferred  stock par value $.001 to be issued in
such services and  designations  as determined from time to time by the Board of
Directors.  The Company's Board of Directors initially approved Item No. 1 above
on February 28, 2008 and  recommended  that the Company effect the reverse split
of its currently  issued and  outstanding  Common Stock.  The Board of Directors
approved Item No. 2 above on December 1, 2006 in  connection  with the Company's
change of  domicile  from  Pennsylvania  to Nevada at which  time the  Company's
authorized  capital stock was increased from  40,000,000  shares of common stock
par value  $0.01 to  100,000,000  shares of Common  Stock par value  $0.001  and
50,000,000  shares of  Preferred  Stock  par  value  $0.001 to be issued in such
series and  designations  as may be determined  by the Board of Directors.  That
approval was adopted at the same time as a proposed  100,000 to 1 reverse  split
with fractional  shares rounded up to the nearest whole share and no shareholder
rounded to less than a round lot of 100 shares. The Company's Board of Directors
decided not to proceed  with that  reverse  split as  announced  in its Form 8 K
filed on January 19, 2007. The change in domicile, however, from Pennsylvania to
Nevada  was  completed  and as a result the  Company's  authorized  capital  was
increased as stated above.

On or about December 2, 2007, the Company completed the  aforementioned  reverse
stock  split on the basis of one (1) share for each  12,500  shares  issued  and
outstanding,  with  fractional  shares  paid in cash at the rate of five  ($.05)
cents for each  fractional  share.  This action reduced the number of issued and
outstanding  shares  from  22,105,051  to 1,596.  The  effect of this  action is
presented in the  accompanying  financial  statements as of the first day of the
first period presented.

On  January  2,  2008,  the  Company  filed  a new  Preliminary  Schedule  14C -
Information  Statement Pursuant to Section 14C of the Securities Exchange Act of
1934 with respect to the proposed  reverse stock split.  The proposal is for a 5
for 1 reverse split with fractional shares rounded up to the nearest whole share
and no  shareholder's  position  rounded to less than a round lot of 100 shares.
This Preliminary Schedule 14C - Information Statement Pursuant to Section 14C of
the  Securities  Exchange Act of 1934 with  respect to the new proposed  reverse
stock split remains in the  regulatory  review phase and no  definitive  actions
have been commenced.

NOTE J - STOCK WARRANTS

During August 2006, the Company reached termination  agreements with all holders
of the Company's Common Stock Warrants and terminated all issued and outstanding
warrants. As of September 30, 2007 and 2006, respectively,  the only outstanding
warrants relate to the aforementioned  September 18, 2006 transaction with Glenn
A. Little.

                                                Number of          Weighted
                                              Warrant shares     Average Price
                                              --------------     -------------

     Balance at September 30, 2005               700,000
       Issued                                    500,000            $0.10
       Exercised                                      --              -
       Expired                                  (700,000)
                                                --------
     Balance at September 30, 2006               500,000            $0.10
       Issued                                         --
       Exercised                                      --
       Expired                                        --
                                                --------
     Balance at September 30, 2007               500,000            $0.10
                                                ========
       Issued                                         --
       Exercised                                      --
       Expired                                        --
                                                --------
     Balance at December 31, 2007                500,000            $0.10
                                                ========

                                       13
<PAGE>
PART I - ITEM 2

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS

(1) CAUTION REGARDING FORWARD-LOOKING INFORMATION

Certain  statements  contained  in this  quarterly  filing,  including,  without
limitation, statements containing the words "believes", "anticipates", "expects"
and  words  of  similar  import,  constitute  forward-looking  statements.  Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause the actual results,  performance or achievements of
the Company,  or industry  results,  to be materially  different from any future
results,   performance   or   achievements   expressed   or   implied   by  such
forward-looking statements.

Such factors include, among others, the following:  international,  national and
local general economic and market conditions:  demographic  changes; the ability
of the Company to sustain,  manage or  forecast  its growth;  the ability of the
Company to successfully make and integrate acquisitions;  raw material costs and
availability;  new product  development and  introduction;  existing  government
regulations  and  changes  in,  or  the  failure  to  comply  with,   government
regulations;  adverse publicity;  competition; the loss of significant customers
or suppliers;  fluctuations  and  difficulty in forecasting  operating  results;
changes in business strategy or development  plans;  business  disruptions;  the
ability  to attract  and  retain  qualified  personnel;  the  ability to protect
technology; and other factors referenced in this and previous filings.

Given  these  uncertainties,  readers  of this Form  10-QSB  and  investors  are
cautioned not to place undue reliance on such  forward-looking  statements.  The
Company  disclaims  any  obligation  to update any such  factors or to  publicly
announce the result of any  revisions to any of the  forward-looking  statements
contained herein to reflect future events or developments.

(2) RESULTS OF OPERATIONS

The Company had no revenue for either of the three month periods ended  December
31, 2007 and 2006, respectively.

General  and  administrative  expenses  for each of the  respective  three month
periods ended December 31, 2007 and 2006 were nominal,  principally professional
fees,  incurred with the maintenance of the Company's filing  requirements under
the Securities  Exchange Act of 1934. It is anticipated that future  expenditure
levels will  increase as the Company  intends to fully comply with it's periodic
reporting requirements.

Earnings per share for the  respective  three month periods  ended  December 31,
2007 and 2006 were $(8.93) and $(8.29) based on the adjusted, post-reverse split
weighted-average  shares issued and  outstanding  at the end of each  respective
period.

The  Company  does not  expect  to  generate  any  meaningful  revenue  or incur
operating  expenses for purposes  other than  fulfilling  the  obligations  of a
reporting  company  under the  Securities  Exchange Act of 1934 unless and until
such time that the Company's operating subsidiary begins meaningful operations.

At December 31, 2007, the Company had working capital of approximately $2,446.

It is the belief of management  and  significant  stockholders  that  sufficient
working capital necessary to support and preserve the integrity of the corporate
entity  will be  present.  However,  there is no  legal  obligation  for  either
management or significant  stockholders  to provide  additional  future funding.
Should this pledge fail to provide financing, the Company has not identified any
alternative  sources.  Consequently,   there  is  substantial  doubt  about  the
Company's ability to continue as a going concern.

The Company's need for working  capital may change  dramatically  as a result of
any business acquisition or combination  transaction.  There can be no assurance
that the Company will identify any such business, product, technology or company
suitable for acquisition in the future.  Further, there can be no assurance that
the Company would be successful in  consummating  any  acquisition  on favorable
terms  or that it will be able  to  profitably  manage  the  business,  product,
technology or company it acquires.

PLAN OF BUSINESS

GENERAL

The  Company  intends to locate and  combine  with an  existing,  privately-held
company which is profitable  or, in  management's  view,  has growth  potential,
irrespective of the industry in which it is engaged.  However,  the Company does
not  intend  to  combine  with a  private  company  which may be deemed to be an
investment  company subject to the Investment Company Act of 1940. A combination
may be structured as a merger,  consolidation,  exchange of the Company's common

                                       14
<PAGE>
stock for stock or assets or any other form which  will  result in the  combined
enterprise's becoming a publicly-held corporation.

Pending  negotiation and consummation of a combination,  the Company anticipates
that it will have, aside from carrying on its search for a combination  partner,
no business  activities,  and, thus, will have no source of revenue.  Should the
Company incur any significant  liabilities prior to a combination with a private
company, it may not be able to satisfy such liabilities as are incurred.

If the Company's management pursues one or more combination opportunities beyond
the  preliminary  negotiations  stage and those  negotiations  are  subsequently
terminated,  it is  foreseeable  that such efforts  will  exhaust the  Company's
ability to continue to seek such combination opportunities before any successful
combination can be consummated.  In that event,  the Company's common stock will
become  worthless  and  holders of the  Company's  common  stock will  receive a
nominal distribution, if any, upon the Company's liquidation and dissolution.

COMBINATION SUITABILITY STANDARDS

In its pursuit for a combination  partner,  the Company's  management intends to
consider only  combination  candidates  which are profitable or, in management's
view, have growth potential.  The Company's management does not intend to pursue
any  combination  proposal  beyond the  preliminary  negotiation  stage with any
combination  candidate which does not furnish the Company with audited financial
statements  for at least its most  recent  fiscal year and  unaudited  financial
statements for interim periods  subsequent to the date of such audited financial
statements, or is in a position to provide such financial statements in a timely
manner.  The Company will, if necessary  funds are available,  engage  attorneys
and/or accountants in its efforts to investigate a combination  candidate and to
consummate a business  combination.  The Company may require  payment of fees by
such combination  candidate to fund the investigation of such candidate.  In the
event such a combination candidate is engaged in a high technology business, the
Company may also obtain  reports from  independent  organizations  of recognized
standing  covering the technology  being developed and/or used by the candidate.
The  Company's  limited  financial  resources may make the  acquisition  of such
reports  difficult  or even  impossible  to obtain  and,  thus,  there can be no
assurance  that the Company  will have  sufficient  funds to obtain such reports
when considering combination proposals or candidates.  To the extent the Company
is  unable to  obtain  the  advice or  reports  from  experts,  the risks of any
combined enterprise's being unsuccessful will be enhanced.  Furthermore,  to the
knowledge of the Company's officers and directors, neither the candidate nor any
of  its  directors,   executive  officers,  principal  stockholders  or  general
partners:

     (1)  will not have been  convicted of  securities  fraud,  mail fraud,  tax
          fraud, embezzlement,  bribery, or a similar criminal offense involving
          misappropriation  or theft of funds,  or be the  subject  of a pending
          investigation or indictment involving any of those offenses;
     (2)  will not have been subject to a temporary or permanent  injunction  or
          restraining  order arising from unlawful  transactions  in securities,
          whether as issuer, underwriter, broker, dealer, or investment advisor,
          may be the subject of any pending  investigation  or a defendant  in a
          pending  lawsuit  arising from or based upon  allegations  of unlawful
          transactions in securities; or
     (3)  will not have been a defendant in a civil  action which  resulted in a
          final judgement against it or him awarding damages or rescission based
          upon unlawful practices or sales of securities.

The Company's  officers and directors will make these  determinations  by asking
pertinent  questions of the  management of prospective  combination  candidates.
Such persons will also ask pertinent  questions of others who may be involved in
the combination proceedings.  However, the officers and directors of the Company
will not generally take other steps to verify independently information obtained
in this manner which is favorable.  Unless  something  comes to their  attention
which  puts  them on  notice  of a  possible  disqualification  which  is  being
concealed  from them,  such persons will rely on  information  received from the
management of the prospective  combination  candidate and from others who may be
involved in the combination proceedings.

(4)  LIQUIDITY AND CAPITAL RESOURCES

It is the belief of management  and  significant  stockholders  that  sufficient
working capital necessary to support and preserve the integrity of the corporate
entity  will be  present.  However,  there is no  legal  obligation  for  either
management or significant  stockholders  to provide  additional  future funding.
Should this pledge fail to provide financing, the Company has not identified any
alternative  sources.  Consequently,   there  is  substantial  doubt  about  the
Company's ability to continue as a going concern.

The Company has no current plans, proposals, arrangements or understandings with
respect to the sale or issuance of additional  securities  prior to the location
of a merger or  acquisition  candidate.  Accordingly,  there can be no assurance
that sufficient  funds will be available to the Company to allow it to cover the
expenses related to such activities.

                                       15
<PAGE>
The Company does not currently contemplate making a Regulation S offering.

Regardless of whether the  Company's  cash assets prove to be inadequate to meet
the Company's  operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.

ITEM 3 - CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

   Under the supervision and with the participation of our management, including
   our principal executive officer and principal financial officer, we conducted
   an  evaluation of our  disclosure  controls and  procedures,  as such term is
   defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of
   1934,  as amended  (Exchange  Act),  as of December 31,  2007.  Based on this
   evaluation,  our principal  executive officer and principal financial officer
   concluded  that our  disclosure  controls  and  procedures  are  effective in
   alerting  them on a timely  basis to  material  information  relating  to our
   Company  required to be included in our reports filed or submitted  under the
   Exchange Act.

(b) Changes in Internal Controls

   There were no significant  changes (including  corrective actions with regard
   to significant  deficiencies or material weaknesses) in our internal controls
   over financial reporting that occurred during the three months ended December
   31, 2007 that has materially affected,  or is reasonably likely to materially
   affect, our internal control over financial reporting.

                          PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

None

ITEM 2 - RECENT SALES OF UNREGISTERED SECURITIES AND USE OF PROCEEDS

None

ITEM 3 - DEFAULTS ON SENIOR SECURITIES

None.

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

The  Company  has held no  regularly  scheduled,  called or special  meetings of
stockholders during the reporting period.

ITEM 5 - OTHER INFORMATION

On  November  13,  2007,  the  Company  filed a  Revised  Final  Schedule  14C -
Information  Statement Pursuant to Section 14C of the Securities Exchange Act of
1934  noting  the  following  actions  to be  taken  by the  Company's  Board of
Directors  pursuant  to actions  taken by a written  consent  of a  majority  of
stockholders  without  meeting  "1. To reverse  split the  currently  issued and
outstanding  common stock (the "Common Stock") of the Company on a 12,500 shares
for 1 share  basis,  with  fractional  shares paid in cash at the rate of ($.05)
cents for each  fractional  share." On or about  December  2, 2007,  the Company
completed the  aforementioned  reverse stock split on the basis of one (1) share
for each 12,500 shares issued and  outstanding,  with fractional  shares paid in
cash at the rate of five ($.05)  cents for each  fractional  share.  This action
reduced the number of issued and outstanding shares from 22,105,051 to 1,596.

ITEM 6 - EXHIBITS

31.1  Certification  pursuant  to  Section  302 of  Sarbanes-Oxley  Act of 2002
32.1  Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002


                        (Signatures follow on next page)

                                       16
<PAGE>
                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.
                                         DIASENSE, INC.


Dated: January 7, 2008                   By: /s/ Glenn A. Little
       ---------------                       -----------------------------------
                                                                 Glenn A. Little
                                              Chairman, Chief Executive Officer,
                                            Chief Financial Officer and Director

                                       17