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                  June 30, 2004

      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) 279-1059
     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            No   X

     As  of  June  30, 2004, 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


<TABLE>
<CAPTION>

                                                  (Unaudited)
                                                    June 30,     September 30,
               ASSETS                                 2004           2003
                                                   -----------    -----------
Current assets                                     $         -    $         -

Other Assets
  Investment                                                 -              -
                                                   -----------     ----------
               TOTAL ASSETS                        $         -    $         -
                                                   ===========     ==========

               LIABILITIES and STOCKHOLDERS' EQUITY (DEFICIENCY)

Current liabilities
  Accounts payable                                 $     5,000     $    5,000
  Due to BICO                                        1,954,936      1,954,936
                                                     -----------    -----------
               Total current liabilities             1,959,936      1,959,936

Commitment 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 June 30, 2004 and
   Sep. 30, 2003                                       229,801        229,801
  Additional paid-in capital                        39,464,068     33,327,775
  Warrants                                           5,872,909     12,009,202
  Deficit accumulated during the  development stage(47,526,714)   (47,526,714)
                                                    -----------    -----------
                                                    (1,959,936)    (1,959,936)
                                                    -----------    -----------
TOTAL LIABILITIES AND
  STOCKHOLDERS'EQUITY (DEFICIENCY)                 $         -    $         -
                                                    ===========    ===========
<FN>

The accompanying notes are an integral part of this statement.

<PAGE>3
                                 Diasense, Inc.
                         (A Development Stage Company)

                      CONSOLIDATED STATEMENTS OF OPERATIONS


<CAPTION>

                                         For the nine months ended   For the three months ended         From July 5, 1989
                                               June 30,                     June 30,                    (inception) thru
                                          2004        2003            2004             2003              June 30, 2004
                                       ---------    ---------     -----------       -----------         ----------------
<S>                                   <C>         <C>            <C>                <C>                <C>

Research and development expenses     $    -       $     -        $      -          $      -             $ 10,556,405

General and administrative expenses        -           96,173            -                 -               16,876,759

Warrant extensions                         -             -               -                 -               17,890,676

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

Interest expense                           -             -               -                 -                   11,725

Loss on unconsolidated subsidiaries        -             -               -                 -                  575,412

Impairment Loss                            -             -               -                 -                  690,124

Amortization of Goodwill                   -             -               -                 -                  535,057

Other income                               -         (284,974)           -                 -               (1,042,997)

Other expense                              -             -               -                 -                   37,405

Gain from sale of MicroIslet Stock         -         (530,880)           -                 -               (1,283,852)
                                       ----------   ---------     -----------       -----------         ---------------
Net income (loss)                     $    -       $  719,682     $      -          $      -             $(47,496,714)
                                       ==========   =========     ===========       ===========         ===============
Net income (loss) per common share    $    -       $     0.03     $      -          $      -             $      (2.28)
                                       ==========   =========     ===========       ===========         ===============

<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

<CAPTION>

                                         For the nine months ended    For the three months ended   From July 5, 1989
                                         June 30,         June 30,    June 30,           June 30,  (inception) thru
                                          2004              2003        2004                2003      June 30, 2004
                                         -------------------------   ----------------------------  ------------------
<S>                                     <C>          <C>            <C>             <C>            <C>

Cash flows from operating activities:
 Net income (loss)                       $       -    $   719,681    $       -       $        -     $  (47,496,714)
 Adjustments to reconcile net loss to net
 cash used by operating activities:
  Depreciation                                   -             41            -                -             90,047
  Amortization                                   -              -            -                -            535,057
  Impairment loss                                -              -            -                -            704,491
  Gain on sale of MicroIslet stock               -       (530,880)           -                -         (1,283,852)
  Loss on unconsolidated subsidiaries            -              -            -                -            575,412
  Stock issued in exchange for services          -              -            -                -            138,950
  Stk issued for License & Marketing Agreement   -              -            -                -             80,000
  Warrants issued for services                   -              -            -                -            513,915
  Warrant extensions                             -              -            -                -         17,890,676
  Inventory deposit - BICO                       -              -            -                -         (1,000,000)
  (Increase) decrease in prepaid expenses        -            868            -                -                  -
  Decrease (increase) in rec. due from
    BICO subsidiaries                            -              -            -                -                  -
  Increase (decrease)in accounts payable         -        (38,099)           -                -              5,000
  Increase (decrease) in accrued payroll
    and withholdings                             -       (167,942)           -                -                  -
  Increase in other assets                       -            239            -                -                  -
                                          ----------     ---------     ---------      -----------  ----------------
Net cash provided for (used in)
    operating activities                         -        (16,092)           -                -        (29,247,018)

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
  Increasein notes rec-related parties           -              -            -                -           (125,000)
  Increasein interest rec-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                        -              -            -                -         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 stk to BICO   -              -            -                -          4,200,000
  Proceeds from warrants exercised               -              -            -                -            118,066
  Purchase from treasury stock                   -              -            -                -            (35,000)
  Proceeds from Regulation S                     -              -            -                -            288,751
  Proceeds from issuance of notes payable        -              -            -                -            303,000
                                          ----------     ---------     ---------      -----------  ----------------
Net cash provided by (used in)financing
    activities                                   -       (675,248)           -                -         30,006,711
                                          ----------     ---------     ---------      -----------  ----------------
Net decrease in cash and cash equiv.             -              -            -                -                  -
Cash and cash equivalents at beg of period       -              -            -                -                  -
                                          ----------     ---------     ---------      -----------  ----------------
Cash and cash equivalents at end
    of period                             $      -       $      -      $     -        $       -     $            -
                                          ==========     =========     =========      ===========   ===============

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 Rule 10-01 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,
2003.

NOTE B - Organization

The  Company  was incorporated on July 5,  1989  as  a
wholly-owned subsidiary of BICO, Inc. (parent).  BICO  owned
approximately 52% of the stock of the Company until July 23,
2004  when  BICO  sold  its  entire  ownership  interest  to
Dominion  Assets, LLC.  The Company's activities  have  been
focused on developing a noninvasive glucose sensor (Sensor).
The  sensor would use electromagnetic technology to  measure
glucose levels in blood without requiring the user to take a
blood   sample.  However,  all  of  these  activities   were
curtailed when BICO ceased operations and filed for  Chapter
11 bankruptcy in March 2003.

NOTE C - Net Loss Per Common Share

Net  loss  per common share is based on  the  weighted
average  number of outstanding common shares, which amounted
to  22,980,051 and 22,980,051 for the periods ended June 30,
2004  and June, 2003, respectively. The loss per share  does
not  include common stock equivalents since the effect would
be anti-dilutive.

From  July 5, 1989 (inception) to June 30,  2004,  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 20,798,884 for the period from July
5, 1989 (inception) to June 30, 2004.

NOTE D - Operations

Diasense has discontinued development of the Sensor and has
not, as yet, achieved a commercially marketable product. The
ability of Diasense to continue in existence is dependent on
its having sufficient financial resources to restore and
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 five fiscal years.
Until BICO's bankruptcy in March 2003, Diasense's operations
were funded by advances from BICO. The proceeds from the
sale of MicroIslet stock, during the nine months ended June
30, 2003, were used to reduce the amount payable to BICO.

Diasense is in the development stage, and accordingly, it
has presented cumulative information on results of
operations, cash flows, and changes in stockholders' equity
since inception.

Diasense has incurred significant losses and negative cash
flows from operations from inception through June 30, 2004
and has a significant accumulated deficit as of June 30,
2004, raising substantial doubt about its ability to
continue as a going concern. 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. With the curtailment of funding from BICO due to
BICO's bankruptcy in March 2003, Diasense will be required
to find other funding in order to continue as a going
concern. The Company plans to liquidate assets to the extent
necessary to continue operations.

NOTE E - Investments

In December 2002, Diasense sold its remaining 706,679 shares
of  MicroIslet common stock for $691,340. Again 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 - Other Income

Other income for the nine months ended June 30, 2003
includes $269,449 in forgiveness of debt and $15,525 of
rental income from BICO for office space.

NOTE G - Subsequent Events

On July 23, 2004, BICO sold its entire ownership interest
(approximately 52%) to Dominion Assets, LLC.

In connection with this transaction, the intercompany
payable from Diasense to BI"CO was assigned to Dominion
Assets, LLC. This liability was documented by a note payable
on demand without interest.

After demand for payment was made by Dominion Assets, LLC
the demand note was amended effective September 28, 2004.
Under the terms of the amended demand note Diasense now owes
a principle amount of $1,954,936 with interest calculated at
a rate of 8% per annum. The indebtedness is collateralized
by all of Diasense's assets. Dominion Assets, LLC agreed to
the amendment.

On September 29, 2004, Diasense entered into a non-
circumvention and consulting fee agreement with Keith R.
Keeling, President of Dominion Assets, LLC (Diasense's
majority shareholder). Under the terms of the agreement Mr.
Keeling will assist in the sale of Diasense assets and will
receive upon funding of any such sale a fee equal to 5% of
the sale proceeds. Diasense agreed to work exclusively
through Mr. Keeling in connection with its sales of assets.


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

Liquidity and Capital Resources

     Our entire funding for the nine months ended June 30,
2003 of $691,340 came from the sale of our remaining shares
of MicroIslet stock in the three months ended December 31,
2003. We used $675,248 to repay advances previously received
from BICO. The remaining cash was used to pay accounts
payable.

     Because we still don't have any revenue sources, we
will have to find additional financing that we'll use to
finance development of, and proceed to manufacture, our
noninvasive glucose sensor. In prior years, we were
dependent upon BICO to support all our sensor-related
activity, but BICO discontinued our funding in 2002, filed
bankruptcy in March 2003 and sold its interest in our
Company in May 2004. We've had to stop all our activity, and
we won't be able to re-start it unless we can raise our own
money. If we are not able to obtain additional financing of
approximately $100,000 we will not be able to resume
operations.

Results of Operations

      We  did not have any operations during the nine months
ended June 30, 2004.

      General  and  administrative expenses totaled  $96,172
during  the  nine months ended June 30, 2003.  The  decrease
resulted primarily from the cessation of our operations  due
to cash shortages.

     In the nine months ended June 30, 2003, we recognized a
gain  of  $530,880  when  we sold our  remaining  MicroIslet
stock. Those funds were used primarily to offset the amounts
we owe BICO.

     Other  income for the nine months ended June  30,  2003
includes  $269,449  in forgiveness of debt  and  $15,225  of
rental income from BICO.

Other Significant Events

     In connection with the purchase of the 52% ownership of
Diasense on July 23, 2004 by Dominion Assets, LLC from BICO.
The intercompany payable from Diasense to BICO was assigned
to Dominion Assets, LLC. This liability was documented by a
note payable on demand without interest.

     After demand for payment was made by Dominion Assets,
LLC. The demand note was amended effective September 28,
2004. Under the terms of the amended demand note, Diasense
now owes a principle amount of $1,954,936 with interest
calculated at a rate of 8% per annum. The indebtedness is
collateralized by all of Diasense's assets. Dominion Assets,
LLC agreed not to demand payment for a period of 180 days
following the effective date of the amendment.


                PART II -- OTHER INFORMATION

Item 1.        Legal Proceedings
               None.

Item 2.        Changes in Securities
               None.

Item 3.        Defaults Upon Senior Securities
               None.

Item 4.        Submission of Matters to a Vote of Security
Holders
               None.

Item 5.        Other Information
               None.

Item 6.        Reports on Form 8-K
               None.








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 7th day of January 2005.


                              DIASENSE, INC.

                              By /s/ Anthony Paterra
                                   Anthony Paterra
                                   CEO and Director
                                   (principal
                                   executive officer,
                                   principal financial
                                   officer and principal
                                   accounting officer)