| $50,000 | 8/27/2003 |
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| **1.** | **Repayment.** Repayment of      principal and accrued interest on this Convertible Promissory Note ("Note")      prior to demand shall be in such amount and at such times in the sole discretion      of Maker. Payments hereunder shall be applied first to accrued and unpaid      interest and then to the unpaid principal balance of this Note.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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| **2.** | **Payment of Interest.** Interest      payable on this Note shall be calculated on the basis of one year of three      hundred sixty five (365) days for the number of days elapsed from the date      hereon except to the extent included in the "Amount" as set forth in paragraph      3, below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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| **3.** | **Conversion.** At any time,      Payee may elect ("Election") to have the outstanding principal amount under      this Note plus such amount of any accrued but unpaid interest thereon ("Amount")      converted into that number of shares of Common Stock of Maker having a conversion      rate of $0.40 per share ("Conversion Option"). At any time prior to full      payment of this Note, Payee may make an Election by providing written notice      to Maker ("Election Notice"). The Election Notice shall (i) specify the      Amount for which Payee desires to make the Election for the Conversion Option      and (ii) be accompanied by this Note. Upon consummation of the conversion,      Maker shall cause to be issued and delivered to Payee the requisite number      of shares of Common Stock of Maker. If the Amount for which an Election      is made represents a portion of the principal and interest then due and      owing under this Note, upon consummation of the conversion, Maker shall      deliver to Payee a replacement Convertible Promissory Note (in form and      substance similar to this Note) for amount of principal and interest which      remains owed to Payee as of the date of the Election. If the Amount for      which an Election is made represents the total principal and interest then      due and owing under this Note, upon consummation of the conversion, this      Note shall be deemed cancelled and paid in full, and the Common Stock issued      shall be deemed fully paid and non assessable. |
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| **4.** | **Conversion Privilege.** The      Conversion Privilege set forth in Paragraph 4 shall remain in full force      and effect immediately from the date hereof and until the Note is paid in      full.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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| **5.** | **Prepayment.**Maker shall      have the right to prepay this Note without penalty or premium at any time,      including by means of Payee's cancellation of all or a portion of amounts      owed by Maker pursuant to this Note.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

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| **6.** | **Events of Default and Remedies.**Anyone or more of the following events shall be an "Event of Default"      under this Note: |
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|   | (a)    | failure of Maker to make any payment      of principal or interest under this Note as and when the same becomes due      and payable in accordance with the terms hereof, which failure is not cured      within ten (10) business days after notice thereof to Maker;                                                                                                                                                                                                                                                                       |
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|   | (b)    | maker applies for, consents to      or acquiesces in the appointment of, a trustee, receiver or other custodian      for itself or a substantial part of its property; or makes an assignment      for the benefit of creditors; or in the absence of such application, consent      or acquiescence, a trustee, receiver or other custodian is appointed for      Maker or for a substantial part of its property, and the continuance of      such decree or order remains in effect for a period of ninety (90) consecutive      days; or |
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|   | (c)    | relief is sought by Maker by legal      action pursuant to any insolvency or bankruptcy law; or any dissolution      or liquidation proceeding is commenced in respect to Maker; or Maker takes      any action to authorize, or in furtherance of, any of the foregoing.                                                                                                                                                                                                                                                                    |
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| ****   | In case anyone or more Event of      Default hereunder shall happen and be continuing for a period of ten (10)      days following the mailing or personal delivery by Payee to Maker of written      notice specifying that an Event of Default. has occurred: (i) the entire      unpaid principal balance hereof and all accrued and unpaid interest thereon      shall, at the option of the Payee, immediately become due and payable; and      (ii) Payee may proceed to protect and enforce Payee's rights either by suit      in common law or by action at law, or both, whether for the specific performance      of any covenant, condition, or agreement contained in this Note, or in the      aid of the exercise of any power granted in this Note to enforce any other      legal or equitable right of Payee. |
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| **7.** | **Voting Rights.**Payee shall      not, solely by virtue of ownership of this Note, be entitled to any rights      whatsoever, of a stockholder of Maker, including but not limited to voting      rights.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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| **8.** | **Purchase for Investment.**      Payee has advised Maker that if Payee acquires Common Stock of Maker on      account of a conversion as provided in paragraph 3, Payee is acquiring such      other securities for investment and not with a view to, or for sale in connection      with, the distribution of any such other securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| **9.** | **Restricted Securities.**      Payee understands and acknowledges that any shares of Common Stock of Maker      received by Payee upon an Election will be characterized as "restricted      securities" under the federal securities laws inasmuch as they are being      acquired from Maker in transactions not involving a public offering and      that under such laws and applicable regulations such securities may be resold      without registration under the Securities Act of 1933 (the "Act"), only      in certain limited circumstances. Payee represents that he is familiar with      Rule 144 of the Act, as presently in effect, and                                                                                                                                                                     |

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| ****    | understands the resale limitations      imposed thereby and by the Act. Payee understands the certificates evidencing      the Common Stock may bear one or all of the following legends:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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| ****    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| ****    | THE SECURITIES EVIDENCED BY THIS      CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS      AMENDED (THE "1933 ACT"), OR THE LAWS OF ANY ST ATE OR OTHER JURISDICTION      AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE      IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT IN THE VARIOUS      STATES OR OTHER JURISDICTIONS OR AN EXEMPTION FROM REGISTRATION EXISTS OR      THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IN      ITS SOLE DISCRETION STATING THAT THE SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION      IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF      THE 1933 ACT AND THE LAWS OF THE VARIOUS STATES AND OTHER JURISDICTIONS.                                                                      |
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| **10.** | **Transfer.**Payee covenants      that this Note has been acquired for investment. The Note cannot be sold      or otherwise transferred by Payee or any other person, including a pledgee,      in the absence of a registration of the Note under the Securities Act of      1933, as amended, or an opinion of counsel satisfactory of Maker that an      exemption from registration is then available. No transfer of the Note shall      be effective unless Maker is notified of such transfer, and unless such      transfer is registered on the records of Maker. The Note is not a negotiable      instrument and any transferee is not a holder in due course within the meaning      of the Illinois Uniform Commercial Code, and shall be subject to any and      all defenses that would be assertable against any transferor. |
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| **11.** | **Notices.** All notices or      other communications hereunder to either party shall be in writing and,      if mailed, shall be deemed to be given on the third business day after the      date when deposited in the United States mail, by registered or certified      mail, postage prepaid, addressed as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

|   | (a)    | If to Maker: | DIASYS CORPORATION            |
|--------|--------|--------------|-------------------------------|
|   |   |         | 81 West Main St., Fifth Floor |
|   |   |         | Waterbury, Connecticut 06702  |
|   |   |         |                          |
|   | (b)    | If to Payee: | Howard Bloom                  |
|   |   |         |                          |

| **12.** | **Presentment; Demand; Dishonor.**Maker hereby waives presentment for payment, demand, notice of non-payment,      notice of dishonor, protest of any dishonor, notice of protest and protest      of this Note.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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| **13.** | **Waiver.** No delay or omission      on the part of Payee in exercising any rights or remedies contained herein      shall operate as a waiver of such right or remedy or of any other right      or remedy, and no singular or partial exercise of any right or remedy shall      preclude any other further exercise thereof, or the exercise of any other      right or remedy. A waiver of any right or remedy on anyone occasion shall      not be construed as a bar or waiver of any right or remedy on future occasions,      and no delay, omission, waiver or partial exercise shall be deemed to establish      a custom or course of dealing or performance between the parties hereto. |

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| **14.** | **Severability.** In the event      that any provision of this Note is deemed to be invalid by reason of the      operation of any law, this Note shall be construed as not containing such      provision and the invalidity of such provision shall not affect the validity      of any other provisions hereof, and any other provisions hereof which otherwise      are lawful and valid shall remain in full force and effect. |
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| **15.** | **Binding Effect.**This Note      shall be binding upon and inure to the benefit of and be enforceable by      the respective successors and assigns of Payee and Maker.                                                                                                                                                                                                                                                            |
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| 16.     | **Amendment.** This Note may      not be changed of amended orally, but only by an instrument in writing signed      by the party against whom enforcement of the change or amendment is sought.                                                                                                                                                                                                                                    |
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| 17.     | **Governing Law.** This Note      shall be governed and controlled by the laws of the State of Illinois as      to interpretation, enforcement, validity, construction, effect, choice of      law and in all other respects. The parties hereto consent to the state or      federal courts located in Illinois as the sole and exclusive forum for resolution      of disputes hereunder.                                         |
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|   | DIAYSYS CORPORATION  |
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|   |                 |
|   |                 |
|   | S/MORRIS SILVERMAN   |
|   | By: Morris Silverman |
|   | Its: Chairman        |