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, 2005

    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   X        No

     As of December 31, 2005, 22,980,051 shares of Diasense,
Inc. common stock, par value $.01 were outstanding.






				   DIASENSE,INC.
                         (A Development Stage Company)

                          Consolidated Balance Sheets


<TABLE>
<CAPTION>

                                                  (Unaudited)
                                                  December 31,   September 30,
               ASSETS                                 2005           2005
                                                   -----------    -----------
Current assets
   Cash                                            $     2,226    $     1,545
   Due from Diabecore                                        -         14,887

Other assets
  Investment                                                 -              -
                                                   -----------    -----------

               TOTAL ASSETS                        $     2,226    $    16,432
                                                   ===========     ==========

               LIABILITIES and STOCKHOLDERS' EQUITY (DEFICIENCY)

Current liabilities
  Accounts payable                                 $    13,513     $   19,479
  Accrued interest payable to majority shareholder     208,820        164,933
  Demand notes payable to majority shareholder       1,984,936      1,996,936
                                                   -----------    -----------
                                                     2,207,269      2,181,348

Long Term Debt
  Convertible notes payable                             50,000              -
  Accrued interest on convertible notes payable            378              -
                                                    ----------     ----------
                                                        50,378              -

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 Dec. 31, 2005 and
   Sep. 30, 2005                                       229,801        229,801
  Additional paid-in capital                        44,793,915     44,612,895
  Warrants                                             548,523        725,682
  Deficit accumulated during the  development stage(47,827,660)   (47,733,294)
                                                    -----------    -----------
                                                    (2,255,421)    (2,164,916)
                                                    -----------    -----------
TOTAL LIABILITIES AND
  STOCKHOLDERS'EQUITY (DEFICIENCY)                 $     2,226    $    16,432
                                                    ===========    ===========
<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                 For the              From July 5, 1989
                                          three months ended      three months ended        (inception) thru
                                           December 31, 2005       December 31, 2004         December 31, 2005
                                          ------------------      ------------------        ------------------

<S>                                      <C>                     <C>                       <C>

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

General and administrative expenses          50,101                        6,418                 17,025,749

Warrant extensions                             -                            -                    17,890,676

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

Interest expense                             44,265                       40,347                    220,923

Loss on unconsolidated subsidiaries            -                            -                       575,412

Impairment Loss                                -                            -                       690,124

Amortization of Goodwill                       -                            -                       535,057

Other income                                   -                            -                    (1,042,997)

Other expense                                  -                            -                        37,405

Gain from sale of Diabecore stock              -                            -                       (57,242)

Gain from sale of MicroIslet Stock             -                            -                    (1,283,852)
                                          ---------------         -----------------         ------------------
Net income (loss)                         $ (94,366)               $     (46,765)              $(47,797,660)
                                          ===============         =================         ==================
Net income (loss) per common share        $  (0.00)                $      (0.00)               $      (2.26)
                                          ===============         =================         ==================

<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               For the               From July 5, 1989
                                            three months ended      three months ended       (inception) thru
                                            December 31, 2005       December 31, 2004        December 31, 2005
                                           -------------------     -------------------      -------------------
<S>                                          <C>                     <C>                      <C>

Cash flows from operating activities:
 Net income (loss)                         $     (94,366)             $     (46,765)          $  (47,797,660)
 Adjustments to reconcile net loss to net
 cash used by operating activities:
  Depreciation                                      -                          -                      90,047
  Amortization                                      -                          -                     535,057
  Impairment loss                                   -                          -                     704,491
  Gain on sale of Diabecore stock                   -                          -                     (57,242)
  Gain on sale of MicroIslet stock                  -                          -                  (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                     3,861                       -                     519,376
  Warrant extensions                                -                          -                  17,890,676
  Inventory deposit - BICO                          -                          -                  (1,000,000)
  Increase in accrued interest                    44,265                     40,347                  209,198
  Increase (decrease) in accounts payable         (5,966)                      -                      13,513
  (Increase) decrease in other assets               -                          -                      -
                                           -------------------     -------------------      -------------------
Net cash used in operating activities            (52,206)                    (6,418)             (29,382,034)

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 Diabecore stock           14,887                       -                      57,242
  Proceeds from sale of MicroIslet stock            -                          -                   2,070,726
  (Increase) in notes rec-related parties           -                          -                    (125,000)
  (Increase) in interest rec-related parties        -                          -                     (13,538)
                                           -------------------     -------------------      -------------------
Net cash provided by (used in) investing
    activities                                    14,887                       -                    (702,451)

Cash flows from financing activities:
  Proceeds from (payments on) demand notes
    from majority shareholder                    (12,000)                     7,000                   30,000
  Proceeds from convertible notes payable         50,000                       -                      50,000
  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                   -                          -                  (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 (used in) provided by
    financing activities                          38,000                      7,000               30,086,711
                                           -------------------     -------------------      -------------------
Net increase in cash and cash equiv.                 681                        582                    2,226
Cash and cash equivalents at beg of period         1,545                          -                        -
                                           -------------------     -------------------      -------------------
Cash and cash equivalents at end
    of period                              $       2,226           $            582         $          2,226
                                           ===================     ===================      ===================

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  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, 2005.

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.

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,
2005 and December 31, 2004, 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, 2005, 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 21,109,826 for the period from July
5, 1989 (inception) to December 31, 2005.


NOTE D - Operations

In April 2005, Diasense resumed development of the Sensor
but 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
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. Since the sale of BICO's
interest in Diasense to Dominion Assets, LLC (Dominion)
funding has been provided by demand loans from Dominion,
proceeds from the sale of Diasense's interest in Diabecore
and proceeds from convertible notes payable.

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 since inception and has a significant
accumulated deficit raising substantial doubt about its
ability to continue as a going concern. Since 1997, Diasense
had been financially dependent upon BICO and 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. Limited funding has been provided by Dominion and
by convertible notes payable but it is uncertain to what
extent Dominion and outside investors will be able and /or
willing to continue such funding.

NOTE E - Note Payble to Majority Shareholder

In connection with the purchase of the 52% ownership of
Diasense by Dominion Assets, LLC. from BICO, an intercompany
payable of $1,954,936 from Diasense to BICO was assigned to
Dominion Assets, LLC. (Dominion). 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 has since loaned
Diasense an additional net $30,000 to provide funding for
general and administrative expenses. This amount is also
payable on demand with interest accrued at a rate of 8%.


NOTE F - Convertible Notes Payable

On November 15, 2005, the Company issued 6% secured
convertible notes ("Convertible Notes") in principal amounts
of $25,000 to each of St. Claire Capital Management and Lisa
A. Paterra (a related party) (each, a "Holder"), in
consideration of the loans of equal amount made to the
Company by each such Holder as of such date.  Each of the
convertible Notes issued on November 15, 2005 is due
October 31, 2010 (the "Maturity Date"), and will accrue
interest at a rate of 6% per annum. Each Convertible Note
is secured by all assets of the Company and ranks pari
passu in such security interest with (A) each of the other
Convertible Notes that may be issued by the Company from
time to time and (B) the demand note dated July 23, 2004
issued by the Company to BICO, Inc. and assigned to Dominion
Assets, LLC. Each Convertible Note is convertible in whole
(not in part) into common stock of the Company at a conversion
price of $0.10 per share under the following circumstances:

     (i)  Optional Conversion:  The Convertible Note is
          convertible at the Holder's option upon either (A) the
          receipt by the Holder of a notice of prepayment of the
          principal of the Convertible Note by the Company, or (B) in
          the event all outstanding principal and accrued interest due
          and owing on the Convertible Note is not paid in full as of
          the Maturity Date.

     (ii) Mandatory Conversion:  The Convertible Note, including
          all accrued and unpaid interest thereon, must be converted
          by the Holder if the Company raises a minimum of $3,000,000
          in gross proceeds from the private offering and sale of its
          equity securities on or before March 31, 2006 at a price per
          share of at least $0.10.

NOTE G - Warrants

The two five-year warrant certificates that the Company had
issued under Consulting Agreements have been amended and
restated and reissued as of November 11, 2005. The amended
and restated warrant certificates grant each of the
consultants rights to acquire an additional 2,773,000 shares
(4,000,000 shares in total) of the common stock of Diasesnse
prior to the expiration date under the original warrant
certificates granted on May 19, 2010.

On November 11, 2005, Diasense issued to Anthony Paterra a
warrant certificate representing Mr. Paterra's right to
purchase 3,250,000 shares of the Company's common stock. The
certificate was issued in conjunction with, and as part of
the consideration for, Mr. Paterra's acceptance of
employment with Diasense beginning October 25, 2005. An
expense of $3,861 was recognized as a result of these
warrants. The warrants represented thereby have an
expiration date of November 11, 2010 and an exercise price
of $0.01 per share. The warrants vest (and become
exercisable) according to the following schedule:

  (i)  1,000,000 warrants are exercisable immediately on or
       after the issuance date; and

  (ii) an additional 93,750 warrants will become exercisable
       on the first day of each month for twenty-four (24)
       consecutive months beginning December 1, 2005 and ending
       November 1, 2007, provided that Mr. Paterra is employed by
       the Company during such period.

In addition, all warrants represented by the certificate
granted to Mr. Paterra will vest and become exercisable
immediately upon either (x) a change of control of Diasense
or (y) the sale or license of the Company's non-invasive
glucose sensor intellectual property.

On November 14, 2005, in conjunction with the Company's
entry into an Independent Consulting Agreement with Dr.
Stuart A. Fine and as consideration paid by the Company for
Dr. Fine's services thereunder, the Company issued a warrant
certificate to Dr. Fine, representing Dr. Fine's right to
acquire 150,000 shares of the Company's common stock. The
warrants represented by the certificate have an exercise
price of $0.10 per share and expire on November 14, 2015.
The warrants vest (and become exercisable) according to the
following schedule:

     (i)  35,000 warrants are exercisable immediately on or after
          the issuance date;


     (ii) 35,000 warrants are exercisable at such time as a
          working prototype of the Company's non-invasive glucose
          sensor is complete and functional; and

     (iii)     80,000 warrants are exercisable at such time as
          the Diasensor non-invasive glucose sensor is approved by the
          FDA.

In addition, all warrants represented by the certificate
granted to Dr. Fine will vest and become exercisable
immediately upon either (x) a change of control of Diasense
or (y) the sale or license of the Company's non-invasive
glucose sensor intellectual property.

NOTE  H - Subsequent Event

Effective February 14, 2006 the Board of Directors approved
annual salaries of $300,000 and $100,000 for the Company's
CEO and Executive Vice President respectively. Until such
time that the Company has sufficient funding, all salaries
earned will be accrued for future payment.




                       DIASENSE, INC.

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

Liquidity and Capital Resources

     Our funding for the three months ended December 31,
2005 came from $50,000 proceeds from convertible notes
payable and the remaining $14,887 proceeds from the sale of
our Diabecore stock.

     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. If we are not able to obtain additional
financing of approximately $100,000 we will not be able to
continue operations and we estimate we will need
approximately $6,000,000 to complete our prototype and enter
clinical trials.  In January of 2006, we received an
additional $15,000 from convertible notes payable. We do not
know if Dominion and other investors will continue to be
willing or able to continue financing our operations.

Results of Operations

     General  and  administrative  expenses  totaled  $6,418
during  the three months ended December 31, 2004 and $50,101
for  the  three months ended December 31, 2005. The increase
resulted  primarily from increased efforts  to  develop  the
Sensor and patent expenses.

     Interest  expense of $40,347 and $44,265 was recognized
in   the   quarters  ended  December  31,  2004  and   2005,
respectively as a result of the accrual of interest  on  our
demand   note   obligations  to  our  majority   shareholder
(Dominion Assets, LLC.) and on our convertible notes payable
issued on November 2005.






                       DIASENSE, INC.


                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

               (1)  Incorporated by reference from Exhibit with
               this title filed with the Company's Form 8-K filed
               October 31, 2005

               (2)  Incorporated by reference from Exhibit with
               this title filed with the Company's Form 8-K filed
               November 16, 2005




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 2006.


                              DIASENSE, INC.

                              By /s/ Keith R Keeling
                                    Keith R. Keeling
                                Chief Executive Officer and
                                Director (principal
                                executive officer, principal
                                financial officer and
                                principal accounting
                                    officer)