SECURITIES AND EXCHANGE COMMISSION

                        Washington, D.C.  20549


                               FORM 10-Q

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

For Quarter Ended                                March 31, 1997

                Commission file number             0-26504


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


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


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

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


     Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
                                   Yes   X        No

     As of March 31, 1997, 22,979,051 shares of Diasense, Inc. common
stock, par value $.01 were outstanding.
<PAGE>1

PART I FINANCIAL STATEMENTS

                                 DIASENSE, INC.
                         (A  Development Stage Company)

                          Consolidated Balance Sheets

                                        March 31, 1997   September 30, 1996
                                           (Unaudited)          (Note)
                                        --------------   ------------------
     ASSETS
Current assets
   Cash and cash equivalents              $     75,503         $  1,143,312
   Due from BICO                             2,179,287            1,777,197
   Inventory deposit-BICO                    1,000,000            1,000,000
   Prepaid expenses                              5,808               14,313
                                          ------------         ------------
       Total current assets                  3,260,598            3,934,822


Property and equipment - net
   Property and equipment                      230,265              237,088
                                          ------------         ------------
             TOTAL ASSETS                 $  3,490,863         $  4,171,910
                                          ============         ============

           LIABILITIES and STOCKHOLDERS' EQUITY
Current Liabilities
   Accounts payable                       $     37,875         $     20,095
   Other accrued liabilities                       509                  529
                                          ------------         ------------
       Total current liabilites                 38,384               20,624
                                          ------------         ------------

  Stockholders' equity
    Preferred stock, 1,000,000 shares authorized, none issued
    Common stock, 40,000,000 shares of
    $.01 par value authorized;issued and
    outstanding 22,979,051 at Mar. 31, 1997    229,791              230,061
    and 23,006,051 at Sep. 30, 1996
    Additional paid-in capital              26,888,581           26,982,811
    Warrants                                17,621,348           12,334,348
    Deficit accumulated during
    develompment stage                     (41,287,241)         (35,395,934)
                                          -------------        -------------
                                             3,452,479            4,151,286
                                          -------------        -------------
    TOTAL LIABILITIES AND
      STOCKHOLDERS' EQUITY                $  3,490,863         $  4,171,910
                                          =============        =============

________________________________________________________________________
   Note: The Balance Sheet at September 30, 1996 has been derived from
         audited financial statement at that date.
------------------------------------------------------------------------
See notes to the financial statements.

<PAGE>2
<TABLE>
                             DIASENSE, INC.
                     (A Development Stage Company)

                        Statement of Operations
                              (Unaudited)
<CAPTION>

                                            For the six months ended         For the three months ended   From July 5, 1989
                                                    March 31,                          March 31,         (inception) through
                                              1997             1996              1997             1996       March 31, 1997
                                            -------------------------        --------------------------  -------------------
<S>                                      <C>              <C>              <C>              <C>            <C>
Research and development expenses        $        -       $        -       $        -       $        -     $   10,556,405

General and administrative expenses            633,642          720,269          316,916          338,265      10,857,982

Warrant extensions                           5,287,000        4,104,000        3,715,000        3,459,000      17,581,033

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

Interest expense                                  -                 732             -                 284          10,529

Other income                                   (29,335)         (87,128)         (13,010)         (32,055)       (436,113)

Other expense                                     -                -                -                -             37,405

         Net loss                           (5,891,307)    $ (4,737,873)    $ (4,018,906)    $ (3,765,494)  $ (41,257,241)
                                           ------------    -------------    -------------    -------------  --------------
Net loss per common share                  $     (0.26)    $      (0.21)    $      (0.17)    $      (0.16)  $       (2.35)
                                           ============    =============    =============    =============  ==============

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

                        Statement of Cash Flows
                              (Unaudited)


<CAPTION>

                                                            For the six months ended   For the three months ended  From July 5,1989
                                                                   March 31,                     March 31,         (Inception) thru
                                                             1997          1996            1997          1996        March 31, 1997
                                                            ------------------------   --------------------------  ----------------
 <S>                                                    <C>             <C>            <C>           <C>           <C>
 Cash flows from operating activities
 Net Loss                                               $  (5,891,307)  $ (4,737,873)  $ (4,018,906) $(3,765,494)  $(41,257,241)
 Adjustments to reconcile net loss to net
  cash used by operating activites:
   Depreciation                                                 6,823          5,797          3,396        2,604         49,148
   Stock in exchange for services                                -            52,500           -           7,000        138,950
   Stock issued for License and Marketing Agreement              -              -              -              -          80,000
   Warrent extensions                                       5,287,000      4,104,000      3,715,000    3,459,000     17,581,033
   Inventory Deposit-BICO                                        -              -              -              -      (1,000,000)
   Increase (decrease) prepaid expenses                         8,505        (16,238)         4,426      (22,229)        (5,808)
   Increase (decrease) in payable due to BICO                    -        (1,287,012)          -              -      10,500,000
   Increase (decrease) in accounts payable                     17,780          1,046         19,189      (11,352)        37,875
   Increase (decrease) in accrued liabilities                     (20)        (3,635)           (74)      (1,812)           509
                                                        --------------  -------------- ------------- ------------  -------------
    Net cash (used) in operating activities                  (571,219)     (1,881,415)     (276,969)    (332,283)   (13,875,534)

Cash flows from investing activities:
 Purchase of property and equipment                              -              -              -              -        (279,413)
                                                        --------------  -------------- ------------- ------------  -------------
    Net cash used in investing activities                        -              -              -              -        (279,413)

Cash flows from financing activities:
 Advances to BICO                                          (1,521,551)    (2,333,582)      (822,753)  (1,048,375)    (3,817,120)
 Repayment of advances to BICO                              1,119,461        731,354        393,297      729,429      2,204,419
 Proceeds from issuance of common stock                       (94,500)     1,603,041           -         160,071     10,968,334
 Proceeds from issuance of common stock to BICO                  -              -              -             -        4,200,000
 Proceeds from warrants exercised                                -            26,000           -             -          118,066
 Proceeds from treasury stock                                    -              -              -             -          (35,000)
 Proceeds from Regulation S                                      -              -              -             -          288,751
 Proceeds from issuance of notes payable                         -              -              -             -          303,000
                                                        --------------  -------------- ------------- ------------  -------------
Net cash provided by financing activities                    (496,590)        26,813       (429,456)    (158,875)    14,230,450
                                                        --------------  -------------- ------------- ------------  -------------
Net increase (decrease) in cash and cash equivalents       (1,067,809)    (1,854,602)      (706,425)    (491,158)        75,503
Cash and cash equivalents at beginning of period            1,143,312      4,149,163        781,928    2,785,719           -
                                                        --------------  -------------- ------------- ------------  -------------
Cash and cash equivalents at end of period              $      75,503   $  2,294,561   $     75,503  $ 2,294,561   $     75,503
                                                        ==============  ============== ============= ============  =============

See notes to the financial statements.
</TABLE>
<PAGE>4

                       NOTES TO FINANCIAL STATEMENTS

                              DIASENSE, INC.


NOTE A - Basis of Presentation

       The   accompanying  financial  statements  of  Diasense,  Inc.  (the
"Company")  have  been  prepared  in  accordance  with  generally  accepted
accounting  principles  for  interim financial information,  and  with  the
instructions to Form 10-Q and Rule 10-O Regulation S-X.  Accordingly,  they
do  not  include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.   In  the
opinion  of  management, all adjustments (consisting  of  normal  recurring
accruals)  considered necessary for a fair presentation have been included.
For  further  information, refer to the financial statements and  footnotes
included  in  the Company's annual report on Form 10-K for the fiscal  year
ended September 30, 1996.

NOTE B - Organization

      The  Company  was  incorporated on July 5, 1989  as  a  wholly  owned
subsidiary  of Biocontrol Technology, Inc. (BICO).  BICO owns  52%  of  the
stock  of  the  Company  as  of  March 31,  1997.   Diasense  is  currently
developing  a non invasive glucose sensor (Sensor).  The Sensor  would  use
electromagnetic technology to measure blood without requiring the  user  to
take a blood sample.

NOTE C - Net Loss Per Common Share

      Net loss per common share is based on the weighted average number  of
outstanding  common shares which amounted to 22,979,199 and 22,943,906  for
the six months ended March 31, 1997, and for the six months ended March 31,
1996,  respectively.   The  loss per share does not  include  common  stock
equivalents since the effect would be anti-dilutive.

      From  July 5, 1989 (inception) to March 31, 1997, 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 17,580,841 for the period from  July
5, 1989 (inception) to March 31, 1997.

NOTE D - Stockholders Equity

      During the period ending March 31, 1997, Diasense Inc., extended  the
exercise  date of warrants to purchase 1,486,000 shares of common stock  to
certain officers, directors, employees and consultants.  The warrants  were
originally granted at an exercise price of $1.00 per share and extended  at
the  same  price.  The fair market value of the stock when  the  extensions
were  granted was $3.50.  Diasense Inc. recorded a $3,715,000  expense  for
the  difference between the fair market value and the warrant  price  times
the number of shares.
<PAGE>5

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

Liquidity and Capital Resources

      Cash  decreased from $1,143,312 at September 30, 1996, to $75,503  at
March  31, 1997.  This decrease was primarily attributable to the Company's
$571,219  net  cash flow used by operations and $402,090  net  advances  to
BICO.

Results of Operations

      There were no research and development expenses during the six  month
periods  ended March 31, 1997 and 1996 due to the agree-upon suspension  of
billings  by  Diasense  and BICO pursuant to the Research  and  Development
Agreement.

      General  and  administrative  expenses decreased  during  the  second
quarter  from $338,265 for the three month period ended March 31,  1996  to
$316,916 for the three month period ended March 31, 1997 and decreased from
$720,269 for the six month period ended March 31, 1996 to $633,642 for  the
six  month period ended March 31, 1997.  These decreases were primarily due
to minor administrative changes.

      Other income during the second quarter decreased from $32,055 for the
three  month  period ended March 31, 1996 to $13,010 for  the  three  month
period  ended March 31, 1997 and decreased from $87,128 for the  six  month
period ended March 31, 1996 to $29,335 for the six month period ended March
31,  1997.   These  decreases  were due to the Company  having  lower  cash
reserves  to invest for the periods ending March 31, 1997 than  during  the
periods ended March 31, 1996.


                       PART II -- OTHER INFORMATION

Item 1.   Legal Proceedings
          None.

Item 2.   Changes in Securities
          None.

Item 3.   Defaults Upon Senior Securities
          None.

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

Item 5.   Other Information
          None.

Item 6.   Reports on Form 8-K
          None
<PAGE>6

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized on this 15th day of May, 1997.


                                   DIASENSE, INC.

                                   By /s/ Fred E. Cooper
                                        Fred E. Cooper
                                        President and Director (principal
                                        executive officer, principal
                                        financial officer and principal
                                        accounting officer)
<PAGE>7