SecProbe.io

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      March 18, 2005

Gregory Witchel
Chief Executive Officer
DiaSys Corporation
81 West Main Street
Waterbury, CT 06702

Re:	DiaSys Corporation
	Annual Report on Form 10-KSB for the fiscal year ended June
30,
2004
	Quarterly Report on Form 10-QSB for the quarters ended
       September 30, 2004 and December 31, 2004
 	File No. 1-16285

Dear Mr. Witchel:

      We have reviewed your filings and have the following
comments.
Where indicated, we think you should revise your documents in
response to these comments.  If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a revision is
unnecessary.  Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

Item 1,  Description of Business - Page 1
1. Please ensure that you discuss all material developments in
your
business during the period addressed, including changes in
control.
2. Please provide us independent, objective evidence supporting
the
cost claims in the first paragraph.
3. Please file the agreements evidencing your strategic
relationships
and material distribution agreements.  Also, disclose the material
terms of the agreements, including duration and termination
provisions and the material obligations of the parties.
4. Please revise your Form 10-KSB to use the correct Item headings
and update the disclosure to the extent required by Regulation S-
B.
We note reports of developments regarding your products, patents
and
distribution agreements that do not appear to be reflected in your
document.  To the extent that you believe that your announcements
of
developments during the year do not require disclosure in your 10-
KSB, supplementally explain your conclusions.
5. Please discuss the production problems in 2004 related to the
paracep tube.

Workstation Systems - Page 3
6. With a view toward clarified disclosure, please tell us the
dates
of the evaluations and publications mentioned in the third
paragraph.

Competition - Page 7
7. Please ensure that you have fully described your competitive
advantages and disadvantages.  From your existing disclosure, it
is
unclear why your products have not yet achieved wider penetration.

Patents - Page 8
8. Please discuss in greater detail your material patents, such as
the duration of specific patents that are material to your
business.

Government Regulation - Page 9
9. With a view toward disclosure, please tell us why your R/S and
F/E
products are exempt from FDA pre-market notification.

Equity Compensation Plan Information - Page 14
10. Provide the disclosure required by Regulation S-B Item
201(d)(3).

Issuance of Unregistered Securities - Page 14
11. Please provide all required details in this section.
* Provide more specific disclosure than shares issued to "four
persons" or as "compensation for services."
* Explain who the people were and the nature of the services.
* More specifically indicate the date of the issuances.
* Indicate the amount involved in each transaction separately.
* Disclose the terms of exercise of the warrants.

Item 6.  Management`s Discussion and Analysis of Financial
Condition
and Results of Operations

12. Please tell us the rule that permits you to incorporate by
reference as you appear to do in the last sentence of the second
paragraph.

13. Please expand to provide critical accounting policy
disclosure.
Refer to FR-60 and FR-72 for guidance. Please note that critical
accounting policy disclosure should provide insight about complex
judgments and estimates that underlie the accounting policies you
identify as critical.  Disclosure that merely repeats basic
accounting policies will not generally satisfy the objectives of
the
disclosure.

Liquidity and Capital Resources - Page 15

14. We see that your operations consume significant cash.  We also
see negative operating cash flows are continuing in 2005. Please
expand to present an analysis of cash flows from operating
activities.  That analysis should fully reflect the guidance set
forth in FR-72 (Exchange Act release 34-48960).  As noted in the
Release, we believe that this discussion should focus on the
underlying drivers of operating cash flows.  Please note that the
form of the cash flow statement should not drive the substance of
the
analysis and that it is not sufficient to merely recite the line
items from the cash flow statement.

15. Additionally, please discuss any material commitments for
capital
and R&D expenditures and the expected sources of funding for such
expenditures.  Apply in future filings.
16. Provide sufficient disclosure for investors to appreciate your
cost of capital and the trends during the period addressed.  For
example, discuss the terms of the securities issued or issuable,
including any discounts to the market price of your securities.
Results of Operations - Page 16

17. Under Net Sales, please expand to describe why the factors
listed
resulted in a decrease in sales over the prior year.  For example,
describe the nature of the transition in the Company`s sales force
and why that transition produced decreased sales.  Additionally,
disclose why your largest client reduced orders during the year.
In
general, MD&A both should identify factors responsible for

changes in financial statement items and describe why those
factors
arose or occurred.

18. We see that interest expense increased from approximately
$6,000
to more than $450,000 from fiscal 2003 to fiscal 2004. Please add
distinct MD&A discussion about this item.  Describe the nature of
and
accounting for any unusual factors or items included in the fiscal
2004 amount.

Item 9.  Directors and Executive Officers of the Registrant
19. Please clarify the business experience for the last five years
for Messrs. Silverman, Grossman and Bloom.
20. Please provide the disclosure required by Item 401 of
Regulation
S-B for your executive officers, such as your chief financial
officer.
21. Please provide the disclosure required by Item 401(e) of
Regulation S-B.
22. Please provide the disclosure required by Items 402 of
Regulation
S-B, including information for the fiscal year ended June 30,
2004.
Likewise, update the information throughout the disclosure
incorporated from your proxy statement so that is current at least
as
of the date you filed the Form 10-KSB.
23. Please provide the disclosure required by Item 406 of
Regulation
S-B.

Item 12.  Certain Relationships and Related-Party Transactions
24. Please disclose any discounts to the market price indicated in
the issuance or conversion rates of securities issued to related
parties.
25. Please reconcile the disclosure in this section with the
applicable disclosure in your proxy materials.  Also, tell us
where
you have filed the documents evidencing the transactions mentioned
in
your related-party disclosure.  Identify the exhibits with
specificity.

Section 16(a) Beneficial Ownership Reporting Compliance
26. Please tell us whether the Forms 4 that you disclose as having
not been filed were ever filed.
27. Please tell us whether you have the right to recover any
profit
under Section 16.  In this regard, we note the series of
transactions
mentioned in clause (viii) of your disclosure.

Controls and Procedures

28. We see that your principal executive officer and principal
financial officer evaluated disclosure controls and procedures as
of
a date within 90 days of the end of the period.  Please amend to
disclose management`s conclusion regarding the effectiveness of
disclosure controls and procedures as of the end of the period
covered by the annual report.  Refer to Item 307 of Regulation S-B
and Part III.F of Management`s Reports on Internal Control over
Financial Reporting and Certification of Disclosure in Exchange
Act
Periodic Reports, Release No. 33-8238, available on our website at
www.sec.gov/rules/final/33-8238.htm.

29. Additionally, we note that your chief executive officer and
chief
financial officer concluded  that the Company`s "disclosure
controls
and procedures are effective for gathering analyzing and
disclosing
the information the Company is required to disclose in its reports
filed under the Securities Exchange Act of 1934".  Amend to
clarify,
if true, that your officers concluded that disclosure controls and
procedures are also effective to ensure that information required
to
be disclosed in the reports filed or submitted under the Exchange
Act
is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and
Exchange Commission and is accumulated and communicated to
management
to allow timely decisions regarding required disclosure.  Refer to
Exchange Act Rule 13a-15(e).

30. Please revise the disclosure concerning changes in internal
control over financial reporting to also indicate whether there
was
any change in internal control over financial reporting that
occurred
during the last fiscal quarter that has materially affected or is
reasonably likely to materially affect internal control over
financial reporting.  Refer to Item 308(c) of Regulation S-K as
amended effective August 13, 2003.

Principal Accountant Fees and Services
31. Please provide the information required by Item 9(c) of
Schedule
14A.
Consolidated Financial Statements

Consolidated Statement of Cash Flows - Page 26

32. Tell us why you have included cash flows from financing
receivables as an investing activity.  As set forth in paragraph
22
to FAS 95, if these cash flows are derived from the sale of goods
and
services, it then it appears that they should be classified as
operating.    Revise or advise.

33. We see that the item "effect of foreign currency translation
on
cash" is the same amount as the "foreign currency translation
adjustment" for each period.  That fact suggests that the impact
of
exchange rates on cash has not been properly determined.  Under
FAS
95, those items are not similarly determined and should not
normally
be the same amounts. Tell us how your cash flow statement and the
calculation of the impact of exchange rates on cash considers the
guidance from Example 2 to Appendix C to FAS 95.  Advise and
revise
as necessary.
Note 2.  Summary of Significant Accounting Policies - Page 27

Management`s Plan

34. The basis for the last sentence of this disclosure is not
clear
since your balance sheet includes a $200,000 item titled "loans
payable from shareholders."

35. Please expand to more fully describe the terms and conditions
of
the arrangement with ICON Investors.  Also describe any applicable
restrictions or conditions on your rights under the arrangement.
For
instance, are there limitations or conditions that restrict the
amount of stock you may sell during any particular period?

Revenue Recognition

36. Supplementally provide details of your specific revenue
recognition policies for all significant products and services.
The
response should also address, where significant, customer
acceptance
protocols, post shipment obligations, incentives and discounts,
rebates, or similar privileges and how these matters impact
revenue
recognition.  Show us that your policies are SAB 104 compliant.

37. Please note that the revenue policy disclosure should be
specific
to your significant products and services.  Either expand or show
us
supplementally that your policy disclosure addresses all of your
significant revenue generating activities.

38. You disclose that revenue is recognized for merchandise when
shipped and you have "no further obligation to provide services
related to such merchandise."  Does this mean that your
arrangements
never entail post-shipment obligations?  If so, please revise to
clarify.  If not, please make clarifying disclosure about the
nature
and extent of post-shipment obligations and the impact on your
revenue practices.  Customer acceptance protocols, if any, should
also be addressed in expanded disclosure.

39. Supplementally describe the significant terms of your
agreements
with distributors, including payment, price protection, return,
exchanges, and other significant matters.  Please explain and
support
the timing of revenue recognition for distributor transactions.
Show
us that your accounting is appropriate under SAB 104 and FAS 48.

40. We see from page 7 that you sell products under a Federal
supply
contract on a "cost per test" basis.  Supplementally tell us how
you
account for revenue under these arrangements.  Show us that your
accounting is appropriate.

Financing Transactions

41. Supplementally describe the nature of the transactions where
you
apply sales-lease accounting.  Show us that your use of that
method
is appropriate in the circumstances.

Patent Costs

42. Expand future filings to disclose the nature of the
expenditures
capitalized as "patent costs."  Please also make specific
disclosure
about actual useful lives employed and expected future
amortization.
The expanded disclosure should conform to the requirements of FAS
142.   Also respond supplementally.  Show us that the nature of
the
costs capitalized and related useful lives are appropriate.

43. We see that patents comprise more than half of your assets. In
light of your losses and the accumulated deficit, please make
detailed and specific disclosure about how you assess the patent
asset for recoverability.  Disclose how impairment would be
identified, measured and presented in the financial statements.

44. As a related matter, tell us why you should not make critical
accounting policy disclosure about patent recoverability.  Refer
to
FR-60 and FR-72.

Inventory

45. Tell us the amounts of inventory impairment charges in fiscal
2003, fiscal 2004 and to date in fiscal 2005.  Supplementally
describe your policies and practices for identifying and recording
inventory impairment.  As set forth in SAB Topic 5-BB, inventory
charges are permanent reductions to inventory cost that may not be
reversed until the related inventory is sold or disposed.  The
supplemental narrative should show us that your methods are
faithful
to the accounting requirements of the SAB.

Stock Options

46. Please expand to clarify that the intrinsic value method is
applicable only to employee stock-based compensation.  Also add
policy disclosure addressing how you both value and account for
non-
employee stock-based compensation.  We see a brief statement about
non-employee stock compensation on page 33; however, you should
expand to describe how you apply FAS 123 and EITF 96-18 in valuing
and accounting for non-employee transactions.  In general, if you
make literature references in identifying accounting policies, you
should also describe how you apply the cited literature.

47. Unless there is no employee stock-based compensation in either
fiscal 2004 or 2003, please revise the SFAS 148 disclosure to more
fully conform to the presentation required by paragraph 2(e) of
SFAS
148. As required by that guidance, the table should separately
present any employee stock-based compensation cost, net of related
tax effects, included in net income.

Note 10, Stock Option Plans - Page 32

48. Either revise the tables at the top of page 33 to include all
option plans or provide separate roll-forwards for the NQSO plan.
Regardless, you should expand to provide a clear tabular
reconciliation between the 956,371 and the 1,327,000.

49. You disclose th