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DiaSys Corporation - CORRESP

LEVY & DRONEY, P. C.

  Pond View Corporate Center

  74 Batterson Park Road

  Farmington, CT 06032

    July 14, 2005

Mr. Russell Mancuso, Branch Chief

United States Securities and Exchange Commission

450 Fifth Street, Northwest

Washington, D.C. 20549

RE:  DiaSys Corporation - SEC File No. 1-16285

Dear Mr. Mancuso:

                      This
letter is in response to your letter of March 18, 2005 addressed to Mr. Gregory
Witchel, Chief Executive Officer of DiaSys Corporation (the "Company"). This firm
represents DiaSys Corporation.

                      We
have reviewed the matters addressed in your letter with Company management and
representatives of the Company's independent registered public accountant and
our responses are based upon such discussions.

                      Please
note that the individual responses are numbered to correspond with the comments
raised in your letter.

                      On
June 30, 2005 the Company filed with the Securities and Exchange Commission, Amendment
No. 1 to its Annual Report on form 10-KSB for its fiscal year ended June 30, 2004
(the "amended Form 10-KSB") and its Quarterly Report of Form 10-QSB for the period
ended March 31, 2005.

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.

The Company will make every effort to ensure that matters of material development
are properly addressed in future filings.

Mr. Russell Mancuso, Branch Chief

July 14, 2005

Page 2 of 22

2. Please provide us independent, objective evidence supporting the cost claims
in the first paragraph.

The Company has no independent, objective evidence supporting the cost claims
referred to; however, management believes that by automating the laboratory analysis
processes, its customers will save labor expense in handling the separate steps
of the analytical processes involved.

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.

Copies of agreements evidencing continuing material strategic relationships were
filed with the amended Form 10-KSB. The term of the agreement has been added to
the disclosure but management believes that disclosing additional information
with filings provide competitive information.

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.

The Company has reviewed the headings and made adjustments as appropriate in the
amended Form 10-KSB. The Company has reviewed the completeness of its disclosures
regarding updates to products, patents and distribution agreements and made adjustments
as appropriate in Item 1 of the amended Form 10-KSB.

Adjustments to item headings.

    1.
    amended Form 10-KSB changes the heading of
      Item 2 from "Properties" to "Description of Property."

    2.
    amended Form 10-KSB changes the heading of
      Item 5 from "MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
      MATTERS" to "MARKET FOR COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND SMALL
      BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES."

    3.
    amended Form 10-KSB changes the heading of
      Item 6 from "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS" to "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
      OF OPERATIONS."

    4.
    amended Form 10-KSB adds Item 8A "Controls
      and Procedures."

 2

Mr. Russell Mancuso, Branch Chief

July 14, 2005

Page 3 of 22

    5.
    amended Form 10-KSB changes the heading of
      Item 13 from "EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
      8K" to "EXHIBITS, LISTS AND REPORTS ON FORM 8-K."

    6.
    amended Form 10-KSB changes the heading of
      Item 14 from "CONTROLS AND PROCEDURES" to "PRINCIPAL ACCOUNTANT FEES AND
      SERVICES."

5. Please discuss the production problems in 2004 related to
the paracep tube.

The production problems related to the maintenance of the equipment and protocol
used by the plastic injection mould manufacturer. A maintenance routine of quality
control checks resulted in a higher than acceptable failure rate. After investigation
the manufacturer made adjustments to the moulds to cure all issues. Additional
information provided in the Net Sales section of amended Form 10-KSB.

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.

The following articles have been considered:

                      "Comparing
Slide Systems for Microscopic Urinalysis" G. Barry Schumann, MD and Sheryl K.
Friedman, MT (ASCP) Laboratory Medicine April 1990.

                      "Evaluation
of Parasep ® Faecal Parasite Concentrator" M. Kettelhut, A. Moody, H. Edwards
and P.L. Chiodini Hospital for Tropical Diseases Tooley, Street, London, England
July 2003.

                      "Searching
for a Better Way to Perform Urinalysis" Frank Bailey, MT (ASCP) Clinical Lab
Products April 1999.

                      "Wet
Urinalysis" G. Barry Schumann and Sheryl K. Friedman 2003, American Society for
Clinical Pathology.

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.

 3

Mr. Russell Mancuso, Branch Chief

July 14, 2005

Page 4 of 22

Additional disclosure has been made regarding the disadvantages of the Company's
products under the heading "Disposable Diagnostic Products and Test Kits in amended
Form 10-KSB on page 8.

Patents

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

Additional disclosure has been made regarding the expiration of the Company's
patents under the heading "Patents and Trademarks" on page 9 in amended Form 10-KSB.

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.

The primary function of the Company's R/S and F/E products are to move bodily
fluid for direct microscopic viewing by laboratory technicians without diagnostic
prompting. The products are thus exempt from FDA pre-market notification because
they merely assist laboratory technicians in preparing the materials for microscopic
analysis and no direct medical function is performed.

Equity Compensation Plan Information - Page 14

10. Provide the disclosure required by Regulation S-B Item 201(d)(3).

The Company believes that it has furnished the required information on page 14
in the amended Form 10-KSB.

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 services.

        More specifically indicate the date of the issuances.

 4

Mr. Russell Mancuso, Branch Chief

July 14, 2005

Page 5 of 22

        Indicate the amount involved in each transaction
          separately.

        Disclose the terms of exercise of the warrants.

Additional disclosure has been provided on this item in Part II,
Item 5 of the amended Form 10-KSB. The transactions in discussion were disclosed
in greater detail in the Company's proxy statement filed with the commission on
July 20, 2004.

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.

The statement in question was not intended to incorporate other material by reference.
It has been removed from Item 6 of the amended Form 10-KSB.

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.

Additional material regarding critical accounting policy disclosures has been
added to the amended Form 10-KSB.

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.

Additional material has been added. The Company added additional disclosure in
the Financial Condition section on page 15 in the amended Form 10-KSB.

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.

 5

Mr. Russell Mancuso, Branch Chief

July 14, 2005

Page 6 of 22

The Company does not have material commitments for capital and
warranty expenditures; however, it continues to lose money from operations and
requires funding for such losses.

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.

Additional material has been added under the heading "Financial Condition" on
page 17 in the amended Form 10-KSB.

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.

Additional disclosure has been provided in the Net Sales section of the amended
Form 10-KSB.

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.

Additional information has been added under the heading "Interest Expense" in
the amended Form 10-KSB.

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.

Additional disclosure has been provided in this area in Item 9 of the amended
Form 10-KSB.

20. Please provide the disclosure required by Item 401 of Regulation S-B for
your executive officers, such as your chief financial officer.

Additional disclosure has been provided in this area in Item 9 of the amended
Form 10-KSB.

 6

 Mr. Russell Mancuso, Branch Chief

July 14, 2005

Page 7 of 22

21. Please provide the disclosure required by Item 401(e) of
Regulation S-B.

Additional disclosure has been provided in this area in Item 9 of the amended
Form 10-KSB.

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.

These matters will be addressed in connection with the next proxy statement or,
if required, in the Company's next Annual Report on Form 10-KSB.

23. Please provide the disclosure required by Item 406 of Regulation S-B.

The Board of Directors has adopted a code of ethics, a copy of which has been
filed with the amended Form 10-KSB.

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.

All securities issued to related parties, including conversion prices and exercise
prices, were valued at current market prices at the time the respective agreements
or commitments were made.

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.

The Proxy Statement provided required disclosure of transactions occurring prior
to its filing; Item 12 of the 10-KSB incorporated by reference the disclosures
contained in the Proxy Statement and provided the required disclosure of transactions
occurring during the reporting period covered by the 10-KSB which were not included
in the Proxy Statement. The material documents evidencing the transactions described
in the 10-KSB were filed with the 10-KSB as the following specific exhibits:

    Exhibit #      Document
      Description

 7

Mr. Russell Mancuso, Branch Chief

July 14, 2005

Page 8 of 22

    10.6
    Loan and Security Agreement dated as of August
      12, 2004 between the Registrant and Morris Silverman

    10.7
    Indemnification and Mutual Contribution Agreement
      dated as of August 12, 2004 among Morris Silverman, Gregory Witchel, Robert
      M. Wigoda, Howard M. Bloom, Jeffrey B. Aaronson and the Registrant

    10.8
    Convertible Promissory Note dated as of August
      12, 2004 payable to Morris Silverman in the amount of $475,000

    10.9
    Convertible Promissory Note dated as of September
      9, 2004 payable to Morris Silverman in the amount of $120,316.47

    10.10
    Personal Guaranty Agreement of Gregory Witchel
      dated as of August 13, 2004

    10.11
    Personal Guaranty Agreement of Robert M. Wigoda
      dated as of August 13, 2004

    10.12
    Personal Guaranty Agreement of Howard Bloom
      dated as of August 13, 2004

    10.13
    Personal Guaranty Agreement of Jeffrey B. Aaronson
      dated as of August 13, 2004

                      We
believe that all required disclosure has been appropriately made in the Company's
Proxy Statement and in the Company's 10-KSB, to the extent required.

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.

The Company has noted that several reports on Forms 4 for periods prior to the
involvement of present management and counsel were not filed. Management believes
that from and after January 1, 2004, all information currently on file with the
commission has correctly reflected the stock ownership of the officers, directors
and ten percent shareholders.

27. Pleas