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                  December 31, 2002

    Commission file number             33-56574


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



   Pennsylvania                                25-1605848
  (State or 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 December 31, 2002, 22,980,051 shares of Diasense,
Inc. common stock, par value $.01 were outstanding.



<PAGE>2
                               Diasense, Inc.
                         (A Development Stage Company)

                          CONSOLIDATED BALANCE SHEETS

                                                    (Unaudited)
                                                    December 31,  September 30,
     ASSETS                                            2002           2002
                                                    ------------   ------------
Current assets
  Cash and cash equivalent                           $       887    $         0
  Prepaid expenses                                         1,260            868
                                                     -----------    -----------
               Total current assets                        2,147            868

Property and equipment-at cost
  Furniture and fixtures                                  42,750         42,750
                                                     -----------    -----------
                                                          42,750         42,750
  Less accumulated depreciation                           42,750         42,709
                                                     -----------    -----------
                                                               0             41
                                                     -----------    -----------
Other assets
 Investment                                                    0        160,461
 Security deposit                                              0            238
                                                     -----------    -----------
                                                               0        160,699
                                                     -----------    -----------
     TOTAL ASSETS                                    $     2,147    $   161,608
                                                     ===========    ===========

     LIABILITIES and STOCKHOLDERS' EQUITY (DEFICIENCY)

Current liabilities
  Accounts payable                                   $   106,507    $    43,099
  Due to BICO                                          1,954,936      2,630,184
  Accrued payroll and withholdings                       167,942        167,942
                                                     -----------    -----------
            Total current liabilities                  2,229,385      2,841,225

Commitments and Contingencies

Stockholders' equity (deficiency)
  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 Dec. 31, 2002 and
  Sep. 30, 2002                                          229,801        229,801
  Additional paid-in capital                          31,553,353     30,018,353
  Warrants                                            13,783,624     15,318,624
  Deficit accumulated during the
  development stage                                  (47,794,016)   (48,246,395)
                                                     -----------    -----------
                                                      (2,227,238)    (2,679,617)
            TOTAL LIABILITIES AND                    -----------    -----------
              STOCKHOLDERS' EQUITY (DEFICIENCY)      $     2,147    $   161,608
                                                     ===========    ===========
<FN>
The accompanying notes are an integral part of this statement.
<PAGE>3

                                 Diasense, Inc.
                         (A Development Stage Company)

                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                      For the                 For the               From July 5, 1989
                                      three months ended      three months ended    (inception) through
                                      December 31, 2002       December 31, 2001     December 31, 2002
                                     --------------------     ------------------    -----------------
<S>                                  <C>                      <C>                  <C>
Research and development expenses         $      -               $       -            $  10,556,405

General and administrative expenses            94,025                 217,075            16,874,612

Warrant extensions                               -                       -               17,890,676

Technology and patent rights acquired            -                       -                2,650,000

Interest expense                                 _                       -                   11,725

Loss on unconsolidated subsidiaries              -                     73,982               575,412

Impairment Loss                                  -                       -                  690,124

Amortization on Goodwill                         -                       -                  535,057

Other income                                  (15,525)                (15,525)             (773,548)

Other expense                                    -                       -                   37,405

Gain from sale of MicroIslet Stock           (530,880)                   -               (1,283,852)

                                           --------------          -------------        --------------
  Net income (loss)                       $   452,380            $   (275,532)        $ (47,764,016)
                                           ==============          ==============       ==============
Net income (loss) per common share        $      0.02            $      (0.01)        $       (2.37)
                                           ==============          ==============       ==============

<FN>
The accompanying notes are an integral part of this statement.

</TABLE>

<PAGE>4
<TABLE>

                                 Diasense, Inc.
                         (A Development Stage Company)

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)
<CAPTION>
                                                              For the               For the           From July 5, 1989
                                                          three months ended    three months ended   (Inception) through
                                                          December 31, 2002      December 31, 2001     December 31, 2002
                                                          ------------------    ------------------    ------------------
<S>                                                       <C>                   <C>                  <C>
Cash flows from operating activities:
   Net income (loss)                                       $      452,380        $     (275,532)       $  (47,764,015)
   Adjustments to reconcile net loss to net
     cash used by operating activities:
        Depreciation                                                   41                 1,413                90,046
        Amorization                                                  -                     -                  535,057
        Impairment loss                                              -                     -                  704,491
        Gain on sale of MicroIslet stock                         (530,880)                 -               (1,283,852)
        Loss on unconsolidated subsidiaries                          -                   73,982               575,412
        Stock issued in exchange for services                        -                     -                  138,950
        Stock issued for License and Marketing Agreement             -                     -                   80,000
        Warrants issued for services                                 -                     -                  513,915
        Warrant extensions                                           -                     -               17,890,676
        Inventory Deposit - BICO                                     -                     -               (1,000,000)
        (Increase) in prepaid expenses                               (392)              (12,639)               (1,260)
        Increase in accounts payable                               63,408                 1,731               106,507
        Increase (decrease) in accrued payroll & withholdings        -                  122,359               167,942
        (Increase) decrease in other assets                           238                  -                     -
                                                          ------------------    ------------------    ----------------
         Net cash provided by (used in) operating activities      (15,205)              (88,686)          (29,246,131)

 Cash flows from investing activities:

   Disposal of property and equipment                                -                     -                  175,000
   Purchase of property and equipment                                -                     -                 (279,413)
   Investment - MicroIslet                                           -                     -               (1,600,000)
   Investment - Diabecore                                            -                     -                 (987,468)
   Proceeds from sale of MicroIslet stock                         691,340                  -                2,070,726
   (Increase) in notes receivable-related parties                    -                     -                 (125,000)
   (Increase) in interest receivable-related parties                 -                     -                  (13,538)
                                                          ------------------    ------------------   -----------------
      Net cash used in investing activities                       691,340                  -                 (759,693)

 Cash flows from financing activities:

   Advances to BICO                                                  -                     -               (7,498,369)
   Repayment of advances to BICO                                     -                     -                9,203,493
   Advances from BICO, net                                           -                   88,686            14,496,167
   Repayment of advances from BICO                               (675,248)                 -               (2,041,231)
   Proceeds from issuance of common stock                            -                     -               10,971,834
   Proceeds from issuance of common stock to BICO                    -                     -                4,200,000
   Proceeds from warrants exercised                                  -                     -                  118,066
   Purchase of treasury stock                                        -                     -                  (35,000)
   Proceeds from Regulation S                                        -                     -                  288,751
   Proceeds from issuance of notes payable                           -                     -                  303,000
                                                          ------------------    ------------------   -----------------
      Net cash (used in) provided by financing activities        (675,248)               88,686            30,006,711
                                                          ------------------    ------------------   -----------------
      Net increase in cash & cash equivalents                         887                   -                     887
      Cash and cash equivalents at beginning of period               -                      -                    -
                                                          ------------------    ------------------   -----------------

      Cash and cash equivalents at end of period           $          887         $         -         $           887
                                                          ==================    ==================   ==================

The accompanying notes are an integral part of this statement.
</TABLE>




                    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
Article 10-01 of 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,
2002.

NOTE B - Organization

The  Company was incorporated on July 5, 1989 as  a  wholly-
owned   subsidiary  of  BICO,  Inc.  (parent).   BICO   owns
approximately 52% of the stock of the Company as of December
31,  2002.   Diasense's  activities  have  been  focused  on
developing  a  noninvasive  glucose  sensor  (Sensor).   The
sensor  would use electromagnetic technology to measure  the
concentration  of glucose in human tissue without  requiring
the user to take a blood sample.

NOTE C - Income (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 22,980,051 for the periods ended December 31,
2002 and December 31, 2001, respectively. The loss per share
does not include common stock equivalents since the effect
would be anti-dilutive.

From July 5, 1989 (inception) to December 31, 2002, 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 20,418,416 for the period from July
5, 1989 (inception) to December 31, 2002.

NOTE D - Operations

The ability of Diasense to continue in existence is
dependent on its ability to obtain sufficient financial
resources to maintain operations, to complete the research
and development necessary to successfully bring the Sensor
to market, and for marketplace acceptance. Diasense has no
other commercial products and is dependent on the successful
development of the Sensor technology.  Diasense has had no
sales of its common stock over the last three fiscal years.
For the last three fiscal years Diasense's operations were
funded by advances from BICO. The proceeds from the sales of
MicroIslet stock, during the year ended September 30, 2002
and quarter ended December 31, 2002, were used almost
entirely to reduce the amount payable to BICO.

Since 1997, Diasense has been financially dependent upon
BICO and therefore BICO's ability to raise money through its
stock sales to support its operations.  Management believes
that Diasense will remain dependent upon BICO to fund its
operations through the year ending September 30, 2003.  If
BICO is not able to raise enough money, Diasense will be
required to find other funding in order to continue as a
going concern.

BICO has experienced, and continues to experience,
substantial losses and financial difficulties.  The
consolidated financial statements for BICO for the year
ended December 31, 2001 included disclosures, which referred
to the existence of substantial doubt about BICO's ability
to continue as a going concern. BICO had a net loss for the
nine month period ended September 30, 2002 of  $17,518,464
(unaudited) and for the fiscal year ended December 31, 2001
of $30,942,310, compared to a net loss for the fiscal year
ended December 31, 2000 of $42,546,303.  As of December 31,
2001, and September 30, 2002, BICO's accumulated deficit was
$254,663,071 and $272,181,535 (unaudited) respectively.

In the past, BICO has financed its own operations from
proceeds generated from private and public sales of its
securities, the issuance of debt in the form of convertible
debentures, from funds paid by Diasense to BICO for research
and development of the Noninvasive Glucose Sensor, from
repayment of intercompany advances by Diasense and from
intercompany advances from Diasense and other BICO
subsidiaries.  The failure of BICO to continue to exist as a
going concern would have a material adverse effect on
Diasense's business and ability to continue operations.

If BICO does not continue as a going concern, or generate
sufficient cash flow, Diasense would need to rely on other
arrangements to develop and manufacture the Sensor or to
perform that work itself.  There can be no assurance that
Diasense would be able to find acceptable alternatives,
negotiate acceptable collaborative arrangements with any
alternative organizations, or to perform the work itself.

NOTE E - Investments

In December 2002, Diasense sold its remaining 706,679 shares
of MicroIslet common stock for $691,340. A gain of $530,879
was recognized as a result of this sale. $561,340 of the
proceeds from the sale was used to reduce the amount owed by
Diasense to BICO.

NOTE F - Lease

In December 1998 Diasense sold its building and leased it
back under an agreement which requires monthly rent of
$5,750 for five years beginning on January 1, 1999.  Future
minimum rental payments under this lease are $69,000 for
each of the fiscal years ending on September 30, 2002 and
2003 and $17,250 for the final three months of the lease
concluding December 31, 2003.  Diasense paid a security
deposit of $17,250 upon entering into this lease agreement.
At September 30, 2002 the security deposit was used to
partially offset the amount due on this lease. No payments
have been made since August 2002. Although this lease contains
acceleration provisions, the landlord has not exercised his
right to demand payment of the remaining lease obligations
to date.

Management's Discussion and Analysis of Financial Condition
and Cash Flows

Liquidity and Capital Resources

        BICO  utilizes a centralized cash management  policy
whereby  funds are transferred to Diasense on a daily  basis
to  meet Diasense's actual cash needs.  As a result of  this
policy, Diasense had a cash balance of zero at September 30,
2002.  In  the  quarter ended December  31,  2002,  Diasense
opened  new checking accounts which had balances of $887  at
December 31, 2002.

      Prepaid expenses increased from $868 to $1,260  during
the  three  months  ended December 31, 2002.   The  increase
represents  insurance  premiums  paid  in  advance  of   the
coverage period.

      The Company's investment in MicroIslet, Inc. decreased
from  $160,461 as of September 30, 2002, to zero at December
31, 2002.  The decrease in this investment resulted from the
sale of the Company's remaining 706,679 shares of MicroIslet
stock in December 2002.

     Amounts  due  to  BICO from the Company decreased  from
$2,630,184  as  of  September 30, 2002 to $1,954,936  as  of
December 31, 2002.  This decrease is due to the repayment of
amounts  due  to  BICO  with  proceeds  received  from   the
MicroIslet stock sale.

Results of Operations

     There  were no research and development expenses during
the  three-month period ended December 31, 2002 and 2001 due
to the agreed-upon suspension of charges by BICO pursuant to
the  research and development agreement between the  Company
and its parent.

      General  and  Administrative expenses  decreased  from
$217,075 for the three month period ended December 31,  2001
to  $94,025  for the three month period ended  December  31,
2002.  The  decrease  was primarily due  to  a  decrease  in
salaries,  administrative staff and administrative  overhead
when Diasense's former officers resigned in July 2002.

     Other income was $15,525 during the three-month periods
ended  December  31, 2002 and 2001. These amounts  represent
rental income, which is charged to BICO and its subsidiaries
for their share of the Company's office space.

       Diasense  realized  a  gain  of  $530,880  when   the
MicroIslet stock was sold in December 2002; no similar  sale
occurred  in the quarter ended December 31, 2001. Similarly,
the  loss  on  unconsolidated subsidiaries recorded  in  the
quarter  ended  December 31, 2001 was  eliminated  when  the
MicroIslet stock was sold.

                PART II -- OTHER INFORMATION

Item 1.        Legal Proceedings

               In  May  1996,  we,  along with  BICO  and  BICO's
               individual directors, including David Purdy,  Fred
               Cooper,  and Anthony J. Feola, who were  also  our
               officers and directors, were served with a federal
               class    action   lawsuit   based    on    alleged
               misrepresentations  and  violations   of   federal
               securities  laws.  In 2000, even though  we  don't
               believe  any  violations of  the  securities  laws
               occurred,  we  agreed to settle the lawsuit.   The
               parties  reached a settlement, and  BICO  paid  an
               aggregate of $3,475,000.  The final payments  were
               made  in  2002,  and we consider the  case  to  be
               closed.

               In April 1998, we, along with our corporate
               affiliates, were served with subpoenas requesting
               documents in connection with an investigation by
               the U.S. Attorneys' office for the U.S. District
               Court for the Western District of Pennsylvania.
               In July 2002, we received notice that the
               investigation was concluded with no charges
               brought against us, BICO or its other
               subsidiaries.  Fred E. Cooper, our former CEO and
               a director, plead guilty to individual violations
               and will be sentenced during the first quarter of
               2003.

               We are approximately six months behind on our
               rent, and our landlord has listed our space in
               order to find a new tenant.  No formal legal
               proceedings have begun, but our landlord does have
               the right to evict us, to accelerate the remaining
               amounts due on our lease, which would total
               approximately $94,208, and to bring suit against
               us.  So far, we have been able to work with our
               landlord, but we don't know how much longer that
               will continue.

               BICO is the subject of many lawsuits, and although
               we are not named in those lawsuits, there are
               enough creditors to put BICO into bankruptcy.  If
               they do, or if BICO files for bankruptcy - and we
               don't have any control over whether that will
               happen or not - we will probably end up in
               bankruptcy as well.


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.



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 14th day of February 2002.


                              DIASENSE, INC.

                              By /s/ Stan Cottrell
                                     Stan Cottrell
                                     Chief Executive Officer,
                                     Chief Financial Officer
                                     (principal executive officer,
                                      principal financial officer
                                      and principal accounting
                                      officer)