##### Table of Contents

---

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-K



---



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



For the fiscal year ended December 31, 2003



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from  to



Commission file number: 1-13563



---



LASER MORTGAGE MANAGEMENT, INC.

(Exact name of the Registrant as specified in its charter)



---



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 22-3535916                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



c\o Mariner
Investment Group, Inc.

780 Third Avenue, 16th Floor, New York, New York 10017

(Address of principal executive offices) (Zip Code)



Registrants telephone number, including area code: (212) 758-2024



Securities registered pursuant to Section 12(b) of the Act: None



Securities registered pursuant to Section 12(g) of the Act:



Common Stock, par value $0.001



---



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 ̈



Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  x



Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ̈No  x



State the aggregate market value of the voting and non-voting common equity held by non affiliates computed by reference to the price at which the
common equity was last sold, or the average bid and asked prices of such common equity, as of the last business day of the registrants most recently completed second quarter: $10,424,905



Documents Incorporated by Reference



None.



---



---

##### Table of Contents

LASER Mortgage Management, Inc.



TABLE OF CONTENTS



|                                        |  |                                                                                        |  |   
|--------------------------------------- |  | -------------------------------------------------------------------------------------- |  | --
|PART I                                  |  |                                                                                        |  |   
|                                        | 
|Items 1. and 2.
Business and Properties |  | 1                                                                                     
|                                        |  |                                                                                       
|Item 3.                                 |  | Legal Proceedings.                                                                     |  | 5 
|                                        |  |                                                                                       
|Item 4.                                 |  | Submission of Matters to a Vote of Security Holders.                                   |  | 5 
|                                        |  |                                                                                       
|PART II                                 |  |                                                                                        |  |   
|                                        |  |                                                                                       
|Item 5.                                 |  | Market for Registrants Common Equity and Related Stockholder Matters.                 |  | 7 
|                                        |  |                                                                                       
|Item 6.                                 |  | Selected Financial Data.                                                               |  | 7 
|                                        |  |                                                                                       
|Item 7.                                 |  | Managements Discussion and Analysis of Financial Condition and Results of Operations. |  | 9 
|                                        |  |                                                                                       
|Item 7A.                                |  | Quantitative and Qualitative Disclosures About Market Risk.                            |  | 15
|                                        |  |                                                                                       
|Item 8.                                 |  | Financial Statements and Supplementary Data.                                           |  | 15
|                                        |  |                                                                                       
|Item 9.                                 |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.  |  | 15
|                                        |  |                                                                                       
|Item 9A.                                |  | Controls and Procedures.                                                               |  | 15
|                                        |  |                                                                                       
|PART III                                |  |                                                                                        |  |   
|                                        |  |                                                                                       
|Item 10.                                |  | Directors and Executive Officers of the Registrant.                                    |  | 16
|                                        |  |                                                                                       
|Item 11.                                |  | Executive Compensation.                                                                |  | 17
|                                        |  |                                                                                       
|Item 12.                                |  | Security Ownership of Certain Beneficial Owners and Management.                        |  | 18
|                                        |  |                                                                                       
|Item 13.                                |  | Certain Relationships and Related Transactions.                                        |  | 19
|                                        |  |                                                                                       
|Item 14.                                |  | Principal Accountant Fees and Services                                                 |  | 20
|                                        |  |                                                                                       
|PART IV                                 |  |                                                                                        |  |   
|                                        |  |                                                                                       
|Item 15.                                |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                        |  | 21
|                                        | 
|Financial Statements                    |  | F-1                                                                                   



i



---

##### Table of Contents

PART I



Items 1. and 2. Business and Properties.



General



LASER Mortgage Management, Inc. (the
Company) was incorporated in Delaware on May 1, 2001, as a wholly-owned subsidiary of LASER Mortgage Management, Inc., a Maryland corporation (LASER Maryland), and is the successor by merger to LASER Maryland. LASER Maryland
was incorporated in Maryland on September 3, 1997 and commenced its operations on November 26, 1997. On May 30, 2001, the Companys Board of Directors and sole stockholder, LASER Maryland, approved the liquidation and dissolution of the Company
under the terms and conditions of the Plan of Liquidation and Dissolution, subject to the approval of the Plan of Liquidation and Dissolution by the stockholders of LASER Maryland. On July 27, 2001, the stockholders of LASER Maryland, at the annual
meeting, approved the reincorporation of LASER Maryland in Delaware (the Reincorporation), through the merger of LASER Maryland with and into the Company, and the subsequent liquidation and dissolution of the Company under the terms and
conditions of the Plan of Liquidation and Dissolution. On July 31, 2001, LASER Maryland completed the Reincorporation by merging with and into the Company. As of the effective date of the Reincorporation, LASER Maryland ceased to exist. On August 3,
2001, the Company filed a certificate of dissolution with the Secretary of State of the State of Delaware, and the dissolution of the Company was effective upon such filing. The Company has ceased to conduct normal business operations and now
operates solely for the purpose of providing for the satisfaction of its obligations, adjusting and winding-up its business and affairs and distributing its remaining net assets. References herein to LASER or the Company
include LASER Maryland prior to the date of the Reincorporation, as applicable.



In accordance with the Plan of Liquidation and Dissolution, receiving the approval of the Delaware Court of Chancery, the Company made distributions of $0.50 and $3.00 per outstanding share of common stock on April 8, 2003 and December 28,
2001, respectively, to stockholders of record as of March 31, 2003 and December 17, 2001, respectively. As of December 31, 2003, the estimated net realizable value of the Companys net assets in liquidation was $0.86 per share. After providing
for expenses and subject to court approval, the Company expects to distribute the remaining net assets in liquidation before the end of the 2004 fiscal year, in accordance with the timing set forth in the Plan of Liquidation and Dissolution. The
total amount of distributions to stockholders is subject to change based on numerous factors, including operating expenses, the Delaware Court of Chancery modifying the distribution amounts and timing currently envisioned by the Board of Directors
under the Plan of Liquidation and Dissolution, unanticipated claims or expenses, as well as other factors beyond the control of the Company.



At its inception, the Company elected to be taxed as a real estate investment trust (a REIT) under the Internal Revenue Code of 1986, as
amended (the Code), commencing with its short taxable year ended December 31, 1997. The Company qualified as a REIT for the taxable years ended December 31, 1997 through 2001. The Company did not qualify as a REIT for the year beginning
January 1, 2002. See Federal Income Tax Considerations.



As described above, stockholders approved the Plan of Liquidation and Dissolution of the Company on July 27, 2001. As a result, the Company adopted liquidation basis accounting on July 28, 2001. Prior to July 28,
2001, the Companys operating results were presented in accordance with historical cost (or going concern) basis accounting. Under liquidation basis accounting, the Companys income, expenses and other comprehensive income are reported as
changes in net assets in liquidation in lieu of a statement of operations and comprehensive income. Additionally, under liquidation basis accounting, the Companys assets are carried at their estimated net realizable values and the
Companys liabilities are reported at their expected settlement amounts in a statement of net assets in liquidation in lieu of a balance sheet.



The Company has conducted its operations so as not to become regulated as an investment company under the Investment Company Act of 1940 (the
Investment Company Act). As a result of applicable provisions



1



---

##### Table of Contents

of the Investment Company Act, the Company will not engage in any transactions except those which are merely
incidental to its dissolution so as to avoid having to register as an investment company under the Investment Company Act.



Properties



The Companys executive offices are located within the offices of Mariner Investment Group, Inc. (Mariner Investment Group) at 780 Third
Avenue, 16th Floor, New York, NY 10017.



Prior Investment Strategy



The Company was organized to create and manage an
investment portfolio of primarily mortgage-backed securities and mortgage loans that, in combination with financing and hedging activities, would generate income for distribution to its stockholders while preserving the Companys capital base.
The mortgage-backed securities included mortgage pass-through certificates, collateralized mortgage obligations, other securities representing interests in, or obligations backed by, pools of mortgage loans and mortgage derivative securities
(collectively, the Mortgage Securities). The mortgage loans were secured by first or second liens on single-family residential, multi-family residential, commercial or other real property (the Mortgage Loans and, together
with the Mortgage Securities, the Mortgage Assets).



The Company maintained a portfolio at its peak of approximately $3.8 billion of Mortgage Assets in June 1998. From June 1998 through March 2000, the Company delivered its portfolio by selling certain securities and repaying borrowings in an
attempt to reduce the portfolios susceptibility to basis and interest rate risk and to create additional liquidity. In November 1999, the Company announced that its Board of Directors authorized management to conduct a competitive sale of its
less liquid portfolio assets as part of its ongoing program to reduce the volatility of the Companys assets.



In order to maximize stockholder value, the Board of Directors continuously reviewed the Companys strategic position and its short-term and
long-term prospects. The Board of Directors determined that adverse developments in the markets for mortgage-backed securities, REIT stocks in general and the Companys shares in particular made it more difficult for the Company to enhance
stockholder value by growing its business as an independent entity and that the Company would continue to experience difficulties in obtaining new debt or equity financing at a reasonable cost. Therefore, the Board of Directors unanimously agreed in
April 2001 that the liquidation and dissolution of the Company was the best alternative available to maximize stockholder value.



From time to time before the adoption by the stockholders of the Plan of Liquidation and Dissolution, the Company received inquiries from third parties
concerning a possible acquisition of the Company or its outstanding shares of common stock. Some of those inquiries concerned a possible acquisition only after an initial liquidating distribution had been made to stockholders. None of those
inquiries resulted in a transaction proposal that the Board of Directors viewed as being as favorable to stockholders as the liquidation and dissolution of the Company.



During 2002, in connection with its liquidation and dissolution, the Company completed the liquidation of its portfolio of
Mortgage Assets that were not previously determined to be other-than-temporarily impaired and repaid all of the leverage financing used to maintain its portfolio.



Management Arrangements



From November 1, 1999 to November 1, 2001, Mariner Mortgage Management, L.L.C. (Mariner) served as the external manager of the Company and was
responsible for the day-to-day management of the Companys investments and operations. Under the management agreement then in effect, Mariner became entitled to be paid an incentive fee on the date on which the Board of Directors adopted
resolutions approving the liquidation and dissolution. Pursuant to the terms of the management agreement, an incentive fee of $1,219,285 was paid to Mariner on May 1, 2001. Mariner was not entitled to receive any other fee in connection with the
Plan of Liquidation and Dissolution. In accordance with the terms of the management agreement, Mariner continued to receive its base management fee of $50,000 per month until the termination of the management agreement on November 1, 2001. For



2



---

##### Table of Contents

the period from January 1, 2001 through July 27, 2001, the Company incurred base management fees of $350,000 and for the
period from July 28, 2001 through December 31, 2001, the Company incurred base management fees of $150,000.



Other than the $1,219,285 incentive fee paid to Mariner as described above, no incentive fees were paid to Mariner at any time.



Upon the termination of the management agreement on November 1, 2001, the
Company became self managed and entered into employment agreements with William J. Michaelcheck, the President and Chief Executive Officer of the Company, and Charles R. Howe, II, the Vice President, Treasurer and Secretary of the Company, each at a
salary of $10,000 per month. Effective October 1, 2002, the employment agreement with Mr. Howe was amended to reduce his salary to $5,000 per month. Messrs. Michaelcheck and Howe previously were responsible for managing the Companys portfolio
at Mariner and continue to have significant responsibilities at Mariner.



On November 1, 2001, the Company also entered into a support services agreement with Mariner Investment Group, an affiliate of Mariner, under which Mariner Investment Group will provide the Company with office space
and services, bookkeeping and accounting services and such other services as may be agreed upon from time to time by the Company and Mariner Investment Group for a fee of $30,000 per month. Effective July 1, 2002, the fee under the support services
agreement was reduced to $20,000 per month.



All of the
management arrangements discussed above have been ratified and approved by the Compensation Committee of the Board of Directors.



Federal Income Tax Considerations



Taxation of the Company



At its inception, the Company elected to be taxed for federal income tax purposes as a REIT under the REIT Provisions of the Code. As such, the Company
generally was entitled to a deduction for all dividends it paid to its stockholders for a taxable year. As a result, the Company was not subject to federal income taxation with respect to its distributed income. Because less than 75% of the
Companys gross income for the 2002 taxable year derived from real estate sources prescribed in the Code, the Company did not qualify as a REIT for the year beginning January 1, 2002.



For any taxable year in which the Company does not qualify as a REIT, the
Company would be subject to federal income tax at corporate rates (including any applicable alternative minimum tax) with respect to gains from liquidating sales of assets and income from operations for that year and for subsequent taxable years. In
addition, the Company may no longer deduct dividends paid to stockholders in computing its income. Any corporate level taxes generally would reduce amounts available for distribution by the Company.



Revenue Procedure 99-17 provided securities and commodities traders with the
ability to elect mark-to-market treatment for 1998 by including a statement with their timely filed 1998 tax return. The election applies for all future years as well unless revoked with the consent of the Internal Revenue Service (the
IRS). The Company elected mark-to-market treatment as a securities trader, and, accordingly, recognizes gains and losses prior to the actual disposition of its securities. Moreover, some if not all of these constructive gains and losses,
as well as some if not all gains or losses from actual dispositions of securities, for both 1998 and beyond, are being treated as ordinary in nature, and not capital, as they would be in the absence of this election. There is no assurance, however,
that the Companys election will not be challenged on the ground that it was not in fact a trader in securities, or that it was only a trader with respect to some, but not all, of its securities. As such, there is a risk that the Company will
be limited in its ability to recognize certain losses.



The
Company believes that during 1999 it experienced an ownership change within the meaning of Section 382 of the Code. Consequently, the Companys use of net operating losses (NOLs) generated before the ownership change to
reduce taxable income after the ownership change will be subject to limitations under Code Section 382. Generally, Code Section 382 limits the use of NOLs in any year to the value of the Companys common stock on the date of the ownership
change multiplied by the long-term tax-exempt rate (published by the IRS) with respect to that date.



3



---

##### Table of Contents

Tax Consequences of Liquidating Distributions to Stockholders



The Company has been advised that the distributions of proceeds of sales of
assets to stockholders pursuant to the Plan of Liquidation and Dissolution should be treated as distributions in a complete liquidation. In this case, distributions should not be treated as dividends received by a stockholder, but rather as if the
stockholder had sold its shares. Also in this case, a stockholder should recognize gain or loss with respect to each share held by the stockholder, measured by the difference between:



| |  | the total amount of cash and fair market value of other property, if any, received by the stockholder with respect to such share pursuant to the Plan of Liquidation and Dissolution;
and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the stockholders basis in that share.
| | - | --------------------------------------



If a stockholder holds blocks of shares acquired at different times or at different costs, each liquidating distribution would be allocated ratably among
the various blocks of shares, and gain or loss would be computed separately with respect to each block of shares.



Gain or loss recognized by a stockholder would be capital gain or loss if the shares are held by the stockholder as capital assets. Capital gain or loss
would be long-term if the shares were held for more than 12 months. Corporate stockholders may deduct capital losses in the year recognized only to the extent of capital gains recognized during such year. Unused capital losses of a corporation may
generally be carried back three years and forward for five years, but may not be carried to any year in which they would create or increase a net operating loss. Individual stockholders may deduct capital losses each year to the extent of their
capital gains, plus $3,000. Any unused capital loss may be carried forward indefinitely by individual taxpayers until the individual recognizes sufficient capital gains to absorb them or recognizes such losses at the rate of up to $3,000 per year.
Capital losses may not be carried back by an individual.



The
liquidation and dissolution will result in more than one liquidating distribution to the stockholders. Each liquidating distribution would be first applied against the adjusted tax basis of each of a stockholders shares and gain would be
recognized with respect to a share only after an amount equal to the adjusted tax basis of such share has been fully recovered. Any losses with respect to a share could be recognized by a stockholder only after the Company has made its final
distribution, if any, or after the last substantial liquidating distribution was determinable with reasonable certainty. As a consequence of the foregoing, stockholders that would realize losses under the Plan of Liquidation and Dissolution would
likely be prevented from recognizing such losses until the receipt of the final distribution.



Stockholders should consult their own tax advisors regarding the U.S. federal income tax consequences to them of receiving liquidation distributions.



Tax Consequences of Liquidating Distributions to Non-United States Stockholders



Because liquidating distributions pursuant to the Plan of Liquidation and
Dissolution should be treated as paid in exchange for a stockholders shares and not as dividends, no withholding on liquidating distributions should generally be required.



Although the Company will not be required to withhold against liquidating distributions to any non-U.S. stockholder (the
term non-U.S. stockholder, as used herein, refers to a stockholder that is not a U.S. person as defined in Section 7701(a)(30) of the Code), a non-U.S. stockholder nevertheless will be subject to U.S. federal income tax with
respect to liquidating distributions under the following circumstances. First, if a non-U.S. stockholders investment in the Companys shares is effectively connected with the non-U.S. stockholders U.S. trade or business, the
non-U.S. stockholder generally will be subject to the same treatment as U.S. stockholders with respect to liquidating distributions, and if the non-U.S. stockholder is a corporation, it may also be subject to the



4



---

##### Table of Contents

branch profits tax. Second, if the non-U.S. stockholder is a nonresident alien individual who is present in the United
States for 183 days or more during the taxable year in which the liquidating distributions are received and certain other conditions apply, the nonresident alien individual will be subject to a 30% tax on the individuals capital gains.



Non-U.S. stockholders should consult their own tax advisors
regarding the U.S. federal income tax consequences to them of receiving liquidating distributions.



Information Reporting Requirements and Backup Withholding



The Company reports to its U.S. stockholders and to the IRS the amount of distributions paid during each calendar year, and the amount of tax withheld,
if any. Under the backup withholding rules, a stockholder may be subject to backup withholding at the rate of 30% with respect to distributions paid unless such holder (i) is a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact, or (ii) provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules. A stockholder
who does not provide the Company with his correct taxpayer identification number also may be subject to penalties imposed by the IRS. Any amount paid as backup withholding will be creditable against the stockholders income tax liability. The
Treasury Department has issued regulations regarding the backup withholding rules as applied to non-U.S. stockholders that unify and tighten current certification procedures and forms and clarify reliance standards.



State and Local Taxes



The Company and its stockholders may be subject to state and local tax in
various states and localities, including those states and localities in which it or they transact business, own property, or reside. The state and local tax treatment of the Company and its stockholders in such jurisdictions may differ from the
federal income tax treatment described above. Consequently, stockholders should consult their own tax advisors regarding the effect of state and local tax laws on their ownership of the Common Stock.



Employees



The Company currently has two employees. Mariner Investment Group provides various support services to the Company pursuant
to a support services agreement described in Management Arrangements above.



Item 3. Legal Proceedings.



On October 23, 2000, the Company filed suit in federal court in the Southern District of New York against Asset Securitization Corporation (ASC), Nomura Asset Capital Corporation (Nomura Asset) and Nomura Securities
International, Inc. (Nomura), alleging that the defendants defrauded the Company into purchasing over $19.0 million worth of mortgage pass-through certificates by failing to disclose among other things, that one of largest loans in the
mortgage pool was seriously troubled. On December 8, 2000, the defendants filed a motion to dismiss the action. On September 5, 2001, defendants motion to dismiss the action was granted with respect to the claims brought under Sections
12(a)(2) and 15 of the Securities Act of 1933 and denied with respect to the common law fraud claims and claims brought under Sections 10(b) and 20(a) of Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On February 4, 2003, the
Company withdrew the lawsuit and all claims were dismissed with prejudice and without costs.



In accordance with the Plan of Liquidation and Dissolution, receiving the approval of the Delaware Court of Chancery, the Company made distributions of $0.50 and $3.00 per outstanding share of common stock on April 8,
2003 and December 28, 2001, respectively, to stockholders of record as of March 31, 2003 and December 17, 2001, respectively.



Item 4. Submission of Matters to a Vote of Security Holders.



None.



5



---

##### Table of Contents

Executive Officers of the Registrant



The Companys executive officers are as follows:



|                        |  |     |  |              |  |                                                 
|----------------------- |  | --- |  | ------------ |  | ------------------------------------------------
|Name                    |  | Age |  | OfficerSince |  | Position                                        
|William J. Michaelcheck |  | 57  |  | 1999         |  | Chief Executive Officer, President and Director 
|Charles R. Howe, II     |  | 42  |  | 2000         |  | Chief Financial Officer, Treasurer and Secretary



The Companys
officers are elected by the Board of Directors and serve at the discretion of the Board of Directors.



William J. Michaelcheck has been the President and Chief Executive Officer of the Company since November 1999 and the Chairman and sole member of
Mariner since its inception in October 1999. Mr. Michaelcheck has been the Chairman and sole stockholder of Mariner Investment Group since 1992. Formerly, he was Executive Vice President of the Bear Stearns Companies Inc. and a Senior Managing
Director of Bear, Stearns & Co. Inc., where he was co-head of the Fixed-Income Department and also responsible for a large segment of the firms trading activities and risk management. Mr. Michaelcheck joined Bear Stearns in 1979 as
co-creator of the Government Bond Department, becoming a General Partner in 1981 and a Senior Managing Director when Bear Stearns became a publicly-held corporation. He was named Executive Vice President in 1987, and served on the firms
Executive Committee and Management and Compensation Committee until leaving Bear Stearns in October 1992.



Charles R. Howe, IIhas been the Chief Financial Officer, Treasurer and Secretary of the Company since January 2000 and the Chief Financial Officer
of Mariner since its inception and of Mariner Investment Group for more than five years.



6



---

##### Table of Contents

PART II



Item 5. Market for Registrants Common Equity and Related Stockholder Matters.



The New York Stock Exchange (NYSE) announced on May 15, 2002, that, as a consequence of the Companys adoption of the Plan of Liquidation
and Distribution, it would take action to delist the Companys common stock. The Company did not challenge the NYSEs actions and the NYSE suspended trading in the common stock on May 24, 2002. The common stock of the Company trades on the
Over-The-Counter Bulletin Board (OTCBB) under the symbol LSMM.OB. The following table sets forth, for the periods indicated, the range of high and low bid information on the OTCBB or the high and low sales prices per share of
common stock as reported on the NYSE composite tape and the cash dividends and distributions declared per share. The OTCBB quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent
actual transactions.



|                                 |  |                   |      |                                                  |   |      |  |   |     
|-------------------------------- |  | ----------------- | ---- | ------------------------------------------------ | - | ---- |  | - | ----
|                                 |  | NYSE Stock Prices |      | Cash Dividends/ Distributions Declared Per Share
|                                 |  | High              |      | Low                                              |  
|2002                             |  |                   |      |                                                  |   |      |  |   |     
|First Quarter                    |  | $                 | 1.18 |                                                  | $ | 1.04 |  |   |    
|March 30  May 23                |  | $                 | 1.33 |                                                  | $ | 1.19 |  |   |    
|                                 |  |                  
|                                 |  | OTCBB BidPrices   |      |                                                 
|                                 |  | High              |      | Low                                              |   |     
|May 28- June 30                  |  | $                 | 1.20 |                                                  | $ | 1.10 |  |   |    
|Third Quarter                    |  | $                 | 1.30 |                                                  | $ | 1.20 |  |   |    
|Fourth Quarter                   |  | $                 | 1.30 |                                                  | $ | 1.20 |  |   |    
|                                 |  |                   |     
|2003                             |  |                   |      |                                                  |   |      |  |   |     
|First Quarter                    |  | $                 | 1.35 |                                                  | $ | 1.05 |  | $ | 0.50
|Second Quarter                   |  | $                 | 1.35 |                                                  | $ | 0.76 |  |   |     
|Third Quarter                    |  | $                 | 0.80 |                                                  | $ | 0.77 |  |   |     
|Fourth Quarter                   |  | $                 | 0.81 |                                                  | $ | 0.78 |  |   |     
|                                 |  |                   |     
|2004                             |  |                   |      |                                                  |   |      |  |   |     
|First Quarter (through March 11) |  | $                 | 0.85 |                                                  | $ | 0.80 |  |   |     



As of March 3, 2004,
the Company had 14,038,983 shares of Common Stock issued and outstanding which were held by 34 holders of record.



Future Distributions



As of December 31, 2003, the estimated net realizable value of the Companys net assets in liquidation was $0.86 per share. After providing for
expenses and subject to court approval, the Company expects to distribute the remaining net assets in liquidation before the end of the 2004 fiscal year, in accordance with the timing set forth in the Plan of Liquidation and Dissolution. The total
amount of distributions to stockholders is subject to change based on numerous factors, including operating expenses, the Delaware Court of Chancery modifying the distribution amounts and timing currently envisioned by the Board of Directors under
the Plan of Liquidation and Dissolution, unanticipated claims or expenses, as well as other factors beyond the control of the Company.



Item 6. Selected Financial Data.



The information set forth below should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations and all of the financial statements and the
notes thereto and other financial information included elsewhere herein.



7



---

##### Table of Contents

|                                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|---------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------ | ---------- | - | -------------------------- | - | ---------- | -------------------------- |  | - | ---------- | -
|                                                                       |  | Period fromJanuary 1, 2001through July 27,2001 (the dateimmediately priorto the date ofadoption
ofliquidation basisaccounting) |            |   | Year EndedDecember 31,2000 |   |            | Year EndedDecember 31,1999 | 
|                                                                       |  | (in thousands, except share and per share data)                                                                                |           
|Statements of Operations and Comprehensive Income Data:                |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Interest income:                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Securities and mortgage loans                                          |  | $                                                                                                                              | 7,231      |   |                            | $ | 17,194     |                            |  | $ | 28,139     |  
|Cash and cash equivalents                                              |  |                                                                                                                                | 526        |   |                            |   | 1,250      |                            |  |   | 1,805      |  
|                                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Total interest income                                                  |  |                                                                                                                                | 7,757      |   |                            |   | 18,444     |                            |  |   | 29,944     |  
|                                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Interest expense:                                                      |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Repurchase agreements                                                  |  |                                                                                                                                | 4,060      |   |                            |   | 10,654     |                            |  |   | 16,812     |  
|Other                                                                  |  |                                                                                                                                |           |   |                            |   | 21         |                            |  |   |           |  
|                                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Total interest expense                                                 |  |                                                                                                                                | 4,060      |   |                            |   | 10,675     |                            |  |   | 16,812     |  
|                                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Net interest income                                                    |  |                                                                                                                                | 3,697      |   |                            |   | 7,769      |                            |  |   | 13,132     |  
|Net realized loss on sale of securities and swaps.                     |  |                                                                                                                                | (4,218     | ) |                            |   | (1,125     | )                          |  |   | (19,829    | )
|Net loss on interest rate agreement                                    |  |                                                                                                                                | (120       | ) |                            |   | (2,580     | )                          |  |   |           |  
|Impairment loss on securities                                          |  |                                                                                                                                |           |   |                            |   | (17,597    | )                          |  |   |           |  
|General and administrative expenses                                    |  |                                                                                                                                | 2,528      |   |                            |   | 1,617      |                            |  |   | 4,325      |  
|                                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Net loss                                                               |  | $                                                                                                                              | (3,169     | ) |                            | $ | (15,150    | )                          |  | $ | (11,022    | )
|                                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Other Comprehensive Income:                                            |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Unrealized net gain on securities:                                     |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Unrealized holding loss arising during the period                      |  |                                                                                                                                | (3,017     | ) |                            |   | (9,973     | )                          |  |   | (17,506    | )
|Reclassification adjustment for net realized loss included in net loss |  |                                                                                                                                | 4,218      |   |                            |   | 18,722     |                            |  |   | 19,829     |  
|                                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Other comprehensive income                                             |  |                                                                                                                                | 1,201      |   |                            |   | 8,749      |                            |  |   | 2,323      |  
|                                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Comprehensive loss                                                     |  | $                                                                                                                              | (1,968     | ) |                            | $ | (6,401     | )                          |  | $ | (8,699     | )
|                                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Net loss per share:                                                    |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Basic                                                                  |  | $                                                                                                                              | (0.23      | ) |                            | $ | (1.05      | )                          |  | $ | (0.65      | )
|                                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Diluted                                                                |  | $                                                                                                                              | (0.23      | ) |                            | $ | (1.05      | )                          |  | $ | (0.65      | )
|                                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Weighted average number of shares outstanding:                         |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Basic                                                                  |  |                                                                                                                                | 14,038,983 |   |                            |   | 14,369,081 |                            |  |   | 16,925,143 |  
|                                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  
|Diluted                                                                |  |                                                                                                                                | 14,038,983 |   |                            |   | 14,369,081 |                            |  |   | 16,925,143 |  
|                                                                       |  |                                                                                                                                |            |   |                            |   |            |                            |  |   |            |  



8



---

##### Table of Contents

|                          |  |                                                        |        |                                   |   |                       |  |                    |        |                       |   |         |  |   |        
|------------------------- |  | ------------------------------------------------------ | ------ | --------------------------------- | - | --------------------- |  | ------------------ | ------ | --------------------- | - | ------- |  | - | -------
|                          |  | Statements of Net Assets in Liquidation (in thousands) |        | Balance Sheet Data (in thousands)
|                          |  | As ofDecember 31,2003                                  |        | As ofDecember 31,2002             |   | As ofDecember 31,2001 |  | As of July 27,2001 |        | As ofDecember 31,2000
|Cash and cash equivalents |  | $                                                      | 9,570  |                                   | $ | 18,942                |  | $                  | 2,960  |                       | $ | 22,592  |  | $ | 3,542  
|Total assets              |  |                                                        | 12,503 |                                   |   | 18,942                |  |                    | 21,919 |                       |   | 109,391 |  |   | 327,928
|Total liabilities         |  |                                                        | 498    |                                   |   | 608                   |  |                    | 3,476  |                       |   | 47,919  |  |   | 264,488
|Stockholders equity      |  |                                                        |       |                                   |   |                      |  |                    |       |                       |   | 61,472  |  |   | 63,440 
|Net assets in liquidation |  |                                                        | 12,005 |                                   |   | 18,334                |  |                    | 18,443 |                       |   |        |  |   |       



As a result of the
stockholders approving the Plan of Liquidation and Dissolution, the Company adopted liquidation basis accounting effective July 28, 2001. Accordingly, the Companys assets are stated at their estimated net realizable values and liabilities are
stated at their estimated settlement amounts, including an accrual for estimated expenses associated with the liquidation of the Company. This information should also be read in conjunction with Items 1. and 2. Business and Properties
and Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations, as well as the audited financial statements and notes thereto included in Item 8. Financial Statements and Supplementary
Data.



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.



You should read the following discussion in conjunction with Selected Financial Data and the financial statements and notes thereto included
elsewhere herein.



General



On July 27, 2001, the stockholders of LASER Maryland, at the annual meeting,
approved the Reincorporation of LASER Maryland in Delaware, through the merger of LASER Maryland with and into the Company, and the subsequent liquidation and dissolution of the Company under the terms and conditions of the Plan of Liquidation and
Dissolution. On July 31, 2001, LASER Maryland completed the Reincorporation by merging with and into the Company. As of the effective date of the Reincorporation, LASER Maryland ceased to exist. On August 3, 2001, the Company filed a certificate of
dissolution with the Secretary of State of the State of Delaware, and the dissolution of the Company was effective upon such filing. The Company has ceased to conduct normal business operations and now operates solely for the purpose of providing
for the satisfaction of its obligations, adjusting and winding-up its business and affairs and distributing its remaining net assets.



In accordance with the Plan of Liquidation and Dissolution, receiving the approval of the Delaware Court of Chancery, the Company made distributions of
$0.50 and $3.00 per outstanding share of common stock on April 8, 2003 and December 28, 2001, respectively, to stockholders of record as of March 31, 2003 and December 17, 2001, respectively. As of December 31, 2003, the estimated net realizable
value of the Companys net assets in liquidation was $0.86 per share. After providing for expenses and subject to court approval, the Company expects to distribute the remaining net assets in liquidation before the end of the 2004 fiscal year,
in accordance with the timing set forth in the Plan of Liquidation and Dissolution. The total amount of distributions to stockholders is subject to change based on numerous factors, including operating expenses, the Delaware Court of Chancery
modifying the distribution amounts and timing currently envisioned by the Board of Directors under the Plan of Liquidation and Dissolution, unanticipated claims or expenses, as well as other factors beyond the control of the Company.



As a result of the stockholders approving the Plan of Liquidation and
Dissolution, the Company adopted liquidation basis accounting effective July 28, 2001. Accordingly, the Companys assets are stated at their estimated net realizable values and liabilities are stated at their estimated settlement amounts,
including an accrual for estimated expenses associated with the liquidation of the Company. Before the adoption of liquidation basis accounting, the Company operated as a continuing business and followed going concern basis accounting. Because



9



---

##### Table of Contents

substantially all of the existing assets and liabilities of the Company were carried at approximate fair value in
accordance with generally accepted accounting principles (GAAP), the adoption of liquidation basis accounting did not have a material impact on the Companys financial statements other than requiring the Company to charge
stockholders equity for: the reduction in the carrying value of securities to reflect their estimated net realizable value, the write-off of the remaining balance of prepaid expenses, and the reserve for estimated expenses associated with the
liquidation of the Company. However, the valuation of assets and liabilities at their estimated net realizable values and estimated settlement amounts, respectively, necessarily requires estimates and assumptions. Changes in market conditions,
actual costs associated with the liquidation, and other factors may affect the amounts ultimately realized or settled, and those amounts may differ, perhaps materially, from the carrying values on the Companys financial statements.



At its inception, the Company elected to be taxed as a REIT under the
Code, commencing with its short taxable year ended December 31, 1997. The Company qualified as a REIT for the taxable years ended December 31, 1997 through 2001. The Company did not qualify as a REIT for the year beginning January 1, 2002. See
BusinessFederal Income Tax Considerations.



Changes in Net
Assets in Liquidation



For the Year Ended December 31,
2003



Under liquidation basis accounting, the Company
reported an increase in net assets in liquidation from operating activities of $0.7 million for the year ended December 31, 2003. The Companys cash equivalents and securities earned interest income of $0.2 million for the year then ended. In
addition, during the first quarter of 2003, the Company recorded an increase of $2.0 million comprised primarily of the proceeds from the sale of securities previously determined to be other-than-temporarily impaired and estimated to have no net
realizable value. General and administrative expenses during the year ended December 31, 2003 amounted to $(1.5) million and consisted of $(0.8) million paid for directors and officers insurance during the first quarter of 2003, $(0.2) million of
fees paid pursuant to the support services agreement and $(0.5) million of professional fees, payroll and other expenses.



The cash liquidation distribution of $0.50 per outstanding share of common stock that was declared during the first quarter of 2003 offset the
Companys increase in net assets in liquidation from operating activities for the year ended December 31, 2003 by $(7.0) million. At December 31, 2003, the Companys net assets in liquidation amounted to $12.0 million.



During the year ended December 31, 2003, a net $(1.4) million of cash was
used in the Companys operating activities, primarily for the extension of the insurance coverage for the directors and officers during the first quarter of 2003. Cash generated by the proceeds from the previously mentioned sale of securities
during the first quarter of 2003 amounted to $2.0 million. During 2003, the Company purchased two U.S. Treasury Notes for $(5.9) million and sold one generating proceeds of $2.9 million. During April 2003, the Company paid the $(7.0) cash
liquidation distribution to stockholders. At December 31, 2003, the balance of cash and cash equivalents amounted to $9.6 million.



For the Year Ended December 31, 2002



Under liquidation basis accounting, net assets in liquidation decreased by $(0.1) million for the year ended December 31, 2002 to $18.3 million at
December 31, 2002. The Companys portfolio of interest earning assets, net of interest bearing liabilities, earned $0.5 million of net interest income. In addition, the Company recorded a net gain of $0.3 million from securities for the year
ended December 31, 2002 comprised primarily of payments received on a security previously determined to be impaired. General and administrative expenses for the year ended December 31, 2002 amounted to $(0.8) million and consisted of $(0.3) million
of fees paid pursuant to the support services agreement and $(0.5) million of professional fees, payroll and other expenses.



During the year ended December 31, 2002, net cash used in operating activities amounted to $(0.6) million. Cash generated from sales of, and principal
payments on, securities amounted to $18.6 million and was used to repay the remaining outstanding repurchase agreement of $(2.0) million. At December 31, 2002, the balance of cash and cash equivalents amounted to $18.9 million.



10



---

##### Table of Contents

For the Period From July 28, 2001 Through December 31, 2001



Under liquidation basis accounting, net assets in liquidation increased by
$1.8 million for the period July 28, 2001 through December 31, 2001, excluding the $(42.1) million cash liquidation distribution paid on December 28, 2001. At December 31, 2001, net assets in liquidation amounted to $18.4 million. The Companys
portfolio of interest earning assets, net of interest bearing liabilities, earned $1.8 million of net interest income. In addition, the Company recorded a net increase of $0.6 million from gains on sales of securities and changes in the estimated
net realizable value of the portfolio. General and administrative expenses during that period amounted to $(0.6) million and consisted of $(0.2) million of management fees and $(0.4) million of professional fees, payroll and other expenses.



During the period July 28, 2001 through December 31, 2001, a
net $66.8 million of cash was generated from the Companys operating and investing activities, including $66.0 million of proceeds from sales of, and principal payments on, securities. Additionally, the Company paid $(44.4) million to
substantially reduce its outstanding repurchase agreements and paid a cash liquidation distribution of $(42.1) million. Cash and cash equivalents amounted to $3.0 million at December 31, 2001.



At adoption of liquidation basis accounting, certain adjustments were made to
stockholders equity, as determined under going concern basis accounting, to reflect more accurately the estimated net realizable values of the remaining net assets of the Company. In that regard, reductions in the aggregate amount of $(2.7)
million were charged to stockholders equity of $61.4 million at that time. These adjustments consist of a $(0.9) million reduction in the carrying value of securities, the immediate write-off of the remaining balance of all prepaid expenses
and the recognition of the estimated costs associated with the liquidation. However, the valuation of assets and liabilities at their estimated net realizable values and estimated settlement amounts, respectively, necessarily requires estimates and
assumptions. Changes in market conditions, actual costs associated with the liquidation, and other factors may affect the amounts ultimately realized or settled, and those amounts may differ, perhaps materially, from the carrying values on the
Companys financial statements.



Results of Operations



For the Period From January 1, 2001 through July 27, 2001.



Net Income (Loss) Summary



General.For the period January 1, 2001 through July 27, 2001, the
Company had net income of $2.3 million, or $0.17 per weighted average share, excluding aggregate net losses from investment activities and the interest rate agreement of $(4.3) million, or $(0.31) per share, and the incentive fee of $(1.2) million,
or $(0.09) per share. For the period January 1, 2001 through July 27, 2001, the weighted average number of shares of common stock outstanding was 14,038,983; no distributions or dividends were declared or paid and return on average
stockholders equity was (4.87%) on an actual basis.



Gains/Losses from Investment Activities.For the period January 1, 2001 through July 27, 2001, the Company sold securities and recorded a net realized loss of $(4.2) million, or $(0.30) per share. Also during this period, the Company
recorded a $1.2 million increase in other comprehensive income from the unrealized net gain on securities resulting in an overall net loss in stockholders equity from securities of $(3.0) million.



Interest Income and Average Interest Earning Asset Yields



Historically, the Company earned interest income primarily from its
portfolio of investments and cash equivalents. The table below shows, for the period January 1, 2001 through July 27, 2001, the Companys average balance of cash equivalents, investments, the yields earned on each type of interest earning
asset, the yield on average interest earning assets and total interest income.



11



---

##### Table of Contents

|                                                     |  |                        |        |                                    |   |                                   |  |                                |         |  |                                            |   |  |                                      |   |  |                      |   |  |   |      
|---------------------------------------------------- |  | ---------------------- | ------ | ---------------------------------- | - | --------------------------------- |  | ------------------------------ | ------- |  | ------------------------------------------ | - |  | ------------------------------------ | - |  | -------------------- | - |  | - | -----
|                                                     |  | AverageCashEquivalents |        | AverageAmortizedCost ofInvestments |   | TotalAverageInterestEarningAssets |  | Yield onAverageCashEquivalents |         |  | Yield onAverageAmortizedCost ofInvestments |   |  | Yield onAverageInterestEarningAssets |   |  | Total InterestIncome
|                                                     |  | (dollars in thousands)
|For the period January 1, 2001 through July 27, 2001 |  | $                      | 19,109 |                                    | $ | 169,793                           |  | $                              | 188,902 |  | 4.67                                       | % |  | 7.30                                 | % |  | 7.04                 | % |  | $ | 7,757



During 2001, the
Company reduced its portfolio of Mortgage Securities and Mortgage Derivatives and the leverage financing used to maintain the portfolio in connection with the liquidation or sale of the Company



Interest Expense and the Average Cost of Funds



Historically, the Company incurred interest expense primarily from borrowed
funds under short-term repurchase agreements that finance most of its portfolio of investments. Interest expense is calculated in the same manner for tax and GAAP purposes. The Company generally structured its borrowings to closely correlate the
Companys cost of borrowed funds with changes in one-month LIBOR.



The table below shows, for the period January 1, 2001 through July 27, 2001, the Companys average borrowed funds, interest expense and average cost of funds compared to average one and six-month LIBOR.



|                                                     |  |                        |         |                 |   |                     |  |      |                       |  |      |                       |  |      |                                                      |  |      |                                                    |  |      |                                                    |  |      |  
|---------------------------------------------------- |  | ---------------------- | ------- | --------------- | - | ------------------- |  | ---- | --------------------- |  | ---- | --------------------- |  | ---- | ---------------------------------------------------- |  | ---- | -------------------------------------------------- |  | ---- | -------------------------------------------------- |  | ---- | -
|                                                     |  | AverageBorrowedFunds   |         | InterestExpense |   | AverageCost ofFunds |  |      | AverageOne-MonthLIBOR |  |      | AverageSix-MonthLIBOR |  |      | AverageOne-MonthLIBORRelativetoAverageSix-MonthLIBOR |  |      | AverageCost ofFundsRelativetoAverageOne-MonthLIBOR |  |      | AverageCost ofFundsRelativetoAverageSix-MonthLIBOR | 
|                                                     |  | (dollars in thousands) |        
|For the period January 1, 2001 through July 27, 2001 |  | $                      | 126,104 |                 | $ | 4,060               |  | 5.47 | %                     |  | 4.74 | %                     |  | 4.53 | %                                                    |  | 0.21 | %                                                  |  | 0.72 | %                                                  |  | 0.94 | %



During 2001, interest
rates decreased due primarily to the effect of interest rate setting actions taken by the Federal Reserve Board.



Interest Rate Agreement



The Company followed an interest-rate risk-management strategy designed to protect against the adverse effects of major interest rate changes and used a
derivative interest rate cap agreement (cap).



As a
result of the reduction in interest rates in January 2001, the Company closed out the existing cap for $0.3 million in cash and recognized a net loss of $(0.1) million, or $(0.01) per share in the statement of operations that is comprised of a
realized loss of $(2.7) million and an unrealized gain of $2.6 million from the reversal of the unrealized loss on the cap at December 31, 2000 due to its sale.



Effective January 1, 2001, the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities as amended by SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities - an Amendment of Statement No. 133. The adoption of the
provisions of these accounting pronouncements with respect to the Companys sole derivative instrument at that time, the interest rate agreement, had no impact on the Companys financial condition or results of operations.



12



---

##### Table of Contents

The Company did not enter into any interest rate agreements during 2001.



General and Administrative Expenses



General and administrative expenses (operating expense or
G&A expense) consisted of management and incentive fees incurred to Mariner and professional and other expenses.



|                                                     |  |                        |     |               |   |                  |  |                   |     |  |   |      
|---------------------------------------------------- |  | ---------------------- | --- | ------------- | - | ---------------- |  | ----------------- | --- |  | - | -----
|                                                     |  | ManagementFees         |     | IncentiveFees |   | Other G&AExpense |  | Total G&A Expense
|                                                     |  | (dollars in thousands)
|For the period January 1, 2001 through July 27, 2001 |  | $                      | 350 |               | $ | 1,219            |  | $                 | 959 |  | $ | 2,528



Net Loss and Return
on Average Stockholders Equity



Net loss was $(3.2)
million for the period January 1, 2001 through July 27, 2001. Return on average stockholders equity for the period January 1, 2001 through July 27, 2001 was (4.87)%. The table below shows, on an actual basis, for the period January 1, 2001
through July 27, 2001, the Companys net interest income, losses from investment activities, losses from impairment charges and G&A expense each as a percentage of average stockholders equity and the return on average
stockholders equity.



|                                                     |  |                    |   |  |                                 |    |  |                              |  |            |    |  |                                       |   
|---------------------------------------------------- |  | ------------------ | - |  | ------------------------------- | -- |  | ---------------------------- |  | ---------- | -- |  | ------------------------------------- | --
|                                                     |  | Net InterestIncome |   |  | Losses fromInvestmentActivities |    |  | Losses fromImpairmentCharges |  | G&AExpense |    |  | Return on AverageStockholders Equity |   
|For the period January 1, 2001 through July 27, 2001 |  | 5.67               | % |  | (6.66                           | )% |  |                             |  | (3.88      | )% |  | (4.87                                 | )%



Financial Condition



Investments



At December 31, 2003, the Company holds a $2.9 million principal amount U.S.
Treasury Note with a net realizable value of $2.9 million carrying an annual coupon interest rate of 2.125% that matures on October 31, 2004. On March 21, 2003, the Company sold substantially all of the mortgage securities previously determined to
be other-than-temporarily impaired, which were estimated to have no net realizable value, for $2,000,000. The remaining mortgage securities owned and previously determined to be other-than-temporarily impaired are estimated to have no net realizable
value as of December 31, 2003.



Liquidity and Capital Resources



Liquidity measures the Companys ability to turn
non-cash assets into cash during the liquidation period to satisfy its commitments to pay ongoing general and administrative expenses and estimated costs of liquidation, and to make distributions to stockholders. As of December 31, 2003, the Company
holds a highly liquid, readily marketable U.S. Treasury Note and combined with its balance of cash and cash equivalents of $9.6 million, liquidity amounts to $12.5 million. The Company believes that this amount and its resultant earnings will be
adequate to support the Company and pay its obligations during the liquidation period



13



---

##### Table of Contents

Taxable Income and REIT Status; Distributions



At its inception, the Company elected to be taxed as a REIT under the Code commencing with its short taxable year ended
December 31, 1997. The Company qualified as a REIT for the taxable years ended December 31, 1997 through 2001. As such, the Company would have normally distributed substantially all of its taxable income for each year to stockholders, including
income resulting from gains on sales of securities, and generally would have been entitled to a deduction for all dividends it paid to its stockholders for a taxable year. Because the Company did not meet certain requirements, the Company did not
qualify as a REIT for the year beginning January 1, 2002. As a consequence, the Company will no longer be entitled to deduct dividends paid to stockholders from its taxable income. The Company is subject to federal income tax at corporate rates
(including any applicable alternative minimum tax) with respect to gains from liquidating sales of assets and income from operations for the year ended December 31, 2002 and for subsequent taxable years. The federal income taxes would reduce the
amounts otherwise distributable to its stockholders.



For the
year ended December 31, 2003, the Company estimates that taxable income before utilizing its carried forward NOLs amounted to approximately $0.5 million. To the extent that the Company generates taxable income, the Company will utilize its NOLs to
reduce its taxable income and adjust its deferred tax assets and related valuation allowance accordingly. In that regard, the Company offset its taxable income for the year ended December 31, 2003 with NOLs and correspondingly reduced its deferred
tax assets and related valuation allowance each by $(0.3) million resulting in no effect on net assets in liquidation.



For the tax years ended December 31, 2002 and 2001, operating losses as calculated for tax purposes were approximately $(0.7) million and $(1.3) million,
respectively. Prior to 2001, the Company experienced approximately $(118.8) million of aggregate NOLs. In 2002, the Company recognized its NOLs by recording $56.5 million of deferred tax assets and recorded a corresponding charge of $(56.5) million
to a related valuation allowance due to the continuing liquidation of the Company and the expectation that the Company will not have sufficient earnings to utilize these deferred tax assets.



NOLs generally may be carried forward for 20 years. The Company believes that
during 1999 it experienced an ownership change within the meaning of Section 382 of the Code. Consequently, the Companys use of NOLs generated before the ownership change to reduce taxable income after the ownership change will be
subject to limitations under Code Section 382. Generally, Code Section 382 limits the use of NOLs in any year to the value of the Companys common stock on the date of the ownership change multiplied by the long-term tax-exempt rate (published
by the IRS) with respect to that date. The Company believes that the annual limitation with respect to the use of its NOLs is approximately $3.0 million and that as of December 31, 2003, approximately $90.7 million of the estimated cumulative NOL of
$120.3 million is subject to the annual limitation.



In
accordance with the Plan of Liquidation and Dissolution, receiving the approval of the Delaware Court of Chancery, the Company made distributions of $0.50 and $3.00 per outstanding share of common stock on April 8, 2003 and December 28, 2001,
respectively, to stockholders of record as of March 31, 2003 and December 17, 2001, respectively. As of December 31, 2003, the estimated net realizable value of the Companys net assets in liquidation was $0.86 per share. After providing for
expenses and subject to court approval, the Company expects to distribute the remaining net assets in liquidation before the end of the 2004 fiscal year, in accordance with the timing set forth in the Plan of Liquidation and Dissolution. The total
amount of distributions to stockholders is subject to change based on numerous factors, including operating expenses, the Delaware Court of Chancery modifying the distribution amounts and timing currently envisioned by the Board of Directors under
the Plan of Liquidation and Dissolution, unanticipated claims or expenses, as well as other factors beyond the control of the Company.



14



---

##### Table of Contents

Cautionary Statement Regarding Forward-Looking Statements



Certain statements contained under Items 1. and 2. Business and
Properties and Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations, and other statements contained herein regarding matters that are not historical facts, are forward-looking
statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such forward-looking statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, those described below:



| |  | On August 3, 2001, the Company filed a certificate of dissolution with the Secretary of State of the State of Delaware, and the dissolution of the Company was effective upon such
filing. The Company no longer conducts normal business operations and now operates solely for the purpose of providing for the satisfaction of its obligations, adjusting and winding-up its business and affairs and distributing its remaining net
assets.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Company does not qualify as a REIT; therefore it no longer is entitled to deduct dividends paid to stockholders from its taxable income. In this case, the Company would be
subject to federal income tax at corporate rates (including any applicable alternative minimum tax) with respect to gains from liquidating sales of assets and income from operations for that year and for subsequent taxable years. These federal
income taxes would reduce the amounts otherwise distributable to its stockholders.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The amount and timing of the liquidation proceeds depends largely on factors beyond the control of the Company, including, without limitation, the approval of the Delaware Court of
Chancery, and the amount and nature of any unknown contingent liabilities.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Item 7A. Quantitative and Qualitative Disclosures About Market Risk.



Market Risk



Market
risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, commodity prices and equity prices. The primary market risk exposure that the Company had been subject to is the movement in interest rates with
respect to its portfolio of Mortgage Assets, which were highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond the control of the
Company.



The Company is exposed to interest rate risk as an
investor in a U.S. Treasury Note and in an overnight reverse repurchase agreement. Due to their short-term maturity, the interest rate risk to the Company is not significant.



Additionally, the Company is a party to certain other financial instruments, including interest receivable, accounts payable
and other accrued expenses that are not interest rate sensitive.



Item 8. Financial Statements and Supplementary Data.



The financial statements of the Company and the related notes, together with the Independent Auditors Report thereon, are set forth beginning on page F-1 of this Form 10-K.



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.



Not Applicable.



Item 9A. Controls and Procedures.



The Company maintains a system of internal controls and procedures designed to provide reasonable assurance that information required to be disclosed in its filings under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms. The Companys principal executive and financial officers have evaluated the disclosure controls and
procedures prior to the filing of this Annual Report on Form 10-K and have determined that such disclosure controls and procedures were effective as of December 31, 2003.



15



---

##### Table of Contents

PART III



Item 10. Directors and Executive Officers of the Registrant.



Directors



The
Companys Certificate of Incorporation and bylaws provide that the Board of Directors will consist of five directors, divide the Board of Directors into three classes, Class I, II and III, with the classes serving staggered three-year terms,
and provide that the number of directors may be changed by a majority vote of the entire Board of Directors. The Companys bylaws provide that, except in the case of a vacancy, a majority of the members of the Board of Directors will at all
times be independent directors that are not affiliated directly or indirectly with any person or entity, if any, responsible for directing or performing the day-to-day business affairs of the Corporation, and that any vacancies may be filled by a
majority vote of the remaining directors.



The Companys
directors are as follows:



|                        |  |     |  |                                                            |  |               
|----------------------- |  | --- |  | ---------------------------------------------------------- |  | --------------
|Name                    |  | Age |  | Position                                                   |  | Director Since
|                        |  |     | 
|Ronald J. Artinian      |  | 55  |  | Director - Class II                                        |  | 2000          
|Mark W. Hobbs           |  | 48  |  | Director - Class I                                         |  | 2000          
|Arthur House            |  | 61  |  | Director - Class II                                        |  | 2000          
|Jonathan Ilany          |  | 50  |  | Director - Class III                                       |  | 1998          
|William J. Michaelcheck |  | 57  |  | Chief Executive Officer, Chairman and Director - Class III |  | 1999          



The Company is not
aware of any family relationship between any director or executive officer.



Ronald J. Artinian is a private investor in First Real Estate Investment Trust of New Jersey and, since 1992, has been a member of its Board of Trustees and a member of its Executive and Audit Committees.
Before his involvement with First Real Estate Investment Trust of New Jersey, Mr. Artinian held various positions at Smith Barney Inc. from 1989 to 1998, including Senior Managing Director - National Manager of Taxable Fixed Income, and was the
Executive Vice President - National Manager of Taxable Fixed Income for Lehman Brothers Inc. from 1976 to 1989.



Mark W. Hobbs has been a director of LASER since October 2000, and is currently a private investor. From 1995 until his appointment to J Net
Enterprises in June 2000, Mr. Hobbs was a partner in Mariner Investment Group, an affiliate of Mariner. Prior to Mariner Investment Group, Mr. Hobbs was involved in private investing and financial consulting from 1991 to 1995. From 1982 to 1991, Mr.
Hobbs was President of Rosewood Financial, Inc., a private investment management company.



Arthur House has been a director of LASER since October 2000, and is currently Principal of Meridian Public Affairs, a communications and government relations firm specializing in financial communications. Mr.
House was formerly Senior Vice President, Corporate Affairs at Tenneco Inc., from June 1992 to September 1997.



Jonathan Ilany has been a director of the Company since 1998 and an employee of Mariner Investment Group since September 2000. Prior to joining
Mariner Investment Group, Mr. Ilany was the Chief Executive Officer and a director of Angiosonics, Inc., a private medical device company with operations in the United States and Israel. Before joining Angiosonics, Inc. in 1996, Mr. Ilany had been,
since 1987, a Senior Managing Director of Bear, Stearns & Co. Inc. (Bear Stearns) and served on the Board of Directors of The Bear Stearns Companies Inc. until 1995.



16



---

##### Table of Contents

William J. Michaelcheck has been the President and Chief Executive Officer of the Company since
November 1999 and the Chairman and sole member of Mariner since its inception in October 1999. Mr. Michaelcheck has been the Chairman and sole stockholder of Mariner Investment Group since 1992. Formerly, he was Executive Vice President of The Bear
Stearns Companies and a Senior Managing Director of Bear Stearns, where he was co-head of the Fixed-Income Department and also responsible for a large segment of the firms trading activities and risk management. Mr. Michaelcheck joined Bear
Stearns in 1979 as co-creator of the Government Bond Department, becoming a General Partner in 1981 and a Senior Managing Director when Bear Stearns became a publicly-held corporation. He was named Executive Vice President in 1987, and served on the
firms Executive Committee and Management and Compensation Committee until leaving Bear Stearns in October 1992.



Executive Officers



See the information appearing under the caption Executive Officers of the Registrant in Part I of the Form 10-K.



Compliance with Section 16(a) of the Securities Exchange Act of 1934



Section 16(a) of the Securities Exchange Act of 1934 (the Exchange
Act) requires the Companys executive officers and directors, and persons who own more than 10% of the Companys common stock to file reports of ownership and changes in ownership with the SEC and any national securities exchange on
which such securities are registered. Officers, directors and greater than ten-percent stockholders are required by SEC regulations to furnish the Company with copies of all such reports they file.



Based solely on a review of the copies of such reports furnished to the
Company, or written representations that no Form 5 was required, the Company believes that all Section 16(a) filing requirements applicable to its officers, directors and greater than ten-percent beneficial owners were complied with through December
31, 2003.



Audit Committee Financial Expert Code of Ethics



Because the Company expects to distribute the remaining net assets in
liquidation before the end of the 2004 fiscal year, in accordance with the timing set forth in the Plan of Liquidation and Dissolution, the Company does not have an audit committee financial expert serving on its audit committee and has not adopted
a code of ethics that applies to the Company Chief Executive Officer, Chief Financial Officer or controller.



Item 11. Executive Compensation.



From November 1, 1999 to November 1, 2001, Mariner served as the external manager of the Company. Under the management agreement with Mariner then in effect, which was entered into on November 1, 2000 and terminated
on November 1, 2001, LASER did not pay any compensation to the Companys executive officers for their services, as they were employed by Mariner. Upon the termination of the management agreement on November 1, 2001, the Company became self
managed and entered into employment agreements with William J. Michaelcheck, the President and Chief Executive Officer of the Company, and Charles R. Howe, II, the Vice President, Treasurer and Secretary of the Company, each at a salary of $10,000
per month. Effective October 1, 2002, the employment agreement with Mr. Howe was amended to reduce his salary to $5,000 per month. The Company paid no other compensation to its executive officers in 2001. Messrs. Michaelcheck and Howe continue to
have significant responsibilities at Mariner. All of the management arrangements discussed above have been ratified and approved by the Compensation Committee of the Board of Directors.



17



---

##### Table of Contents

Compensation of Directors



The Company pays each independent director compensation of $10,000 per annum and a fee of $500 for each meeting of the Board
of Directors that he attends. The Company reimburses each director for ordinary and necessary expenses related to such directors attendance at Board of Directors and committee meetings.



Compensation Committee Interlocks and Insider Participation



Messrs. Artinian, Hobbs and House currently are independent directors and
serve on the Compensation Committee. No interlocking relationship exists between members of the Companys Board of Directors or the Compensation Committee or officers responsible for compensation decisions and the Board of Directors or
compensation committee of any other company, nor has such interlocking relationship existed in the past.



Item 12. Security Ownership of Certain Beneficial Owners and Management.



Security Ownership of Certain Beneficial Owners and Management



The following table sets forth certain information known to the Company with respect to beneficial ownership of its common stock as of March 11, 2004, by
(i) each executive officer and director, (ii) any person known to the Company to be the beneficial owner of five percent or more of the common stock and (iii) all directors and executive officers as a group. Unless otherwise indicated in the
footnotes to the table, the beneficial owners named have, to the knowledge of the Company, sole voting and investment power with respect to the shares beneficially owned, subject to community property laws where applicable.



|                                                            |  |                           |  |         |  
|----------------------------------------------------------- |  | ------------------------- |  | ------- | -
|                                                            |  | Shares Beneficially Owned | 
|Name and Address of Beneficial Owner (1)                    |  | Number ofShares           |  | Percent |  
|William J. Michaelcheck (2)                                 |  | 836,900                   |  | 5.96    | %
|Charles R. Howe, II (2)                                     |  | 836,900                   |  | 5.96    | %
|Jonathan Ilany (2)                                          |  | 836,900                   |  | 5.96    | %
|Ronald J. Artinian                                          |  | 6,000                     |  | *       |  
|Mark W. Hobbs                                               |  | 0                         |  | 0       |  
|Arthur House                                                |  | 0                         |  | 0       |  
|Highfields Capital Management L.P. (3)                      |  | 3,275,900                 |  | 23.33   | %
|Legg Mason, Inc. (4)                                        |  | 1,938,330                 |  | 13.81   | %
|Warren E. Buffett (5)                                       |  | 1,360,000                 |  | 9.69    | %
|Loeb Arbitrage Fund; Loeb Partners Corporation (6)          |  | 1,072,300                 |  | 7.64    | %
|SLS Management, LLC (7)                                     |  | 923,300                   |  | 6.6     | %
|Jay Buck (8)                                                |  | 899,500                   |  | 6.41    | %
|Mariner Investment Group, Inc. (2)                          |  | 836,900                   |  | 5.96    | %
|Lloyd I. Miller, III (9)                                    |  | 741,400                   |  | 5.3     | %
|All directors and executive officers as a group (6 persons) |  | 842,900                   |  | 6.00    | %



18



---

##### Table of Contents

---

|* | Less than one percent
|- | ---------------------

|(1) | The address of each of the executive officers, and directors of LASER is c/o LASER Mortgage Management, Inc., c/o Mariner Investment Group, Inc. 780 Third Avenue, 16th Floor, New
York, New York, 10017. The address of Highfields Capital Management L.P. is 200 Clarendon Street, 51stFloor,
Boston, Massachusetts 02117. The address of Legg Mason, Inc. is 100 Light Street, Baltimore, Maryland 21202. The address of Warren E. Buffett is 1440 Kiewit Plaza, Omaha, Nebraska 68131. The address of Loeb Partners Corporation and Loeb Arbitrage
Fund is 61 Broadway, New York, New York 10006. The address of SLS Management, LLC is 140 West 57thStreet, New York,
New York 10019. The address of New Ellington Partners LP is 53 Forest Avenue, Old Greenwich, Connecticut 06870. The address of Jay Buck is 104 Field Point Road, Greenwich, Connecticut 06830. The address of Mariner Investment Group, Inc. is 780 Third
Avenue, 16th Floor, New York, New York 10017. The address of Lloyd I. Miller is 4550 Gordon Drive, Naples, Florida 34102.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Based on Schedule 13D filed on November 12, 1999. Includes all of the shares of common stock owned beneficially by clients advised by Mariner Investment Group, Inc., of which Mr.
Michaelcheck is the sole stockholder, Mr. Howe is the Chief Financial Officer and Mr. Ilany is an employee.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Based on Schedule 13G filed on February 16, 1999. Includes all of the shares of common stock owned beneficially by Highfields Capital Ltd., Highfields Capital I LP and Highfields
Capital II LP. Mr. Richard L. Grubman and Jonathon S. Jacobson are the managing members of Highfields Associates, which directs the affairs of Highfields Capital I LP and Highfields Capital II LP, and Highfields GP LLC, the general partner of
Highfields Capital Management LP.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Based on Schedule 13G filed on February 12, 1999. Includes all of the shares of common stock owned beneficially by certain mutual funds advised by Legg Mason, Inc.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Based on Schedule 13G/A filed on February 14, 2002.
|--- | ---------------------------------------------------

|(6) | Based on Schedule 13D filed on November 15, 2002. Includes all of the shares of common stock owned beneficially by Loeb Partners Corporation, Loeb Arbitrage Fund and shares of
common stock purchased for the accounts of two customers or Loeb Partners Corporation as to which it has investment discretion.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Based on Schedule 13G/A filed on February 17, 2004. Includes all of the shares of common stock owned beneficially by other entities.
|--- | ------------------------------------------------------------------------------------------------------------------------------------

|(8) | Based on Schedule 13G filed on July 24, 2000. Includes all of the shares of common stock owned beneficially by Rockwood Asset Management Inc., Rockwood Partners and Demeter Asset
Management, controlled by Mr. Buck.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Based on Schedule 13G/A filed on February 20, 2004. Includes all of the shares of common stock owned beneficially by certain family trusts. Mr. Miller is the investment advisor to
the trustee of the trusts.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Item 13. Certain Relationships and Related Transactions.



Upon the termination of the most recent management agreement on November 1, 2001, the Company became self managed and entered into employment agreements
with William J. Michaelcheck, the President and Chief Executive Officer of the Company, and Charles R. Howe, II, the Vice President, Treasurer and Secretary of the



19



---

##### Table of Contents

Company, each at a salary of $10,000 per month. Effective October 1, 2002, the employment agreement with Mr. Howe was
amended to reduce his salary to $5,000 per month. Messrs. Michaelcheck and Howe previously were responsible for managing the Companys portfolio at Mariner and continue to have significant responsibilities at Mariner.



On November 1, 2001, the Company also entered into a support services
agreement with Mariner Investment Group, an affiliate of Mariner, under which Mariner Investment Group will provide the Company with office space and services, bookkeeping and accounting services and such other services as may be agreed upon from
time to time by the Company and Mariner Investment Group for a fee of $30,000 per month. Effective July 1, 2002, the fee under the support services agreement was reduced to $20,000 a month. All of the management arrangements discussed above have
been ratified and approved by the Compensation Committee of the Board of Directors.



William J. Michaelcheck, the Chairman of Mariner, and the Chairman and sole stockholder of Mariner Investment Group, is LASERs President and Chief Executive Officer. Charles R. Howe, II, is the Chief Financial
Officer of Mariner, and Mariner Investment Group, is LASERs Vice President, Treasurer and Secretary. Jonathan Ilany, a Director of LASER, is an employee of Mariner Investment Group.



Item 14. Principal Accountant Fees and Services



Audit Fees



Deloitte
& Touche LLP billed us $71,000 for the year ended December 31, 2003 and $76,000 for the year ended December 31, 2002 for professional services rendered for the audit of our annual financial statements and the review of financial statements
included in statutory and regulatory filings.



Tax Fees



Deloitte & Touche LLP billed us $10,000 for the year ended December 31,
2003 and $10,500 for the year ended December 31, 2002 for professional services rendered for tax compliance, tax advice, and tax planning. The taxation advisory services provided related primarily to the preparation of corporate tax returns.



Other than the audit and tax fees described above, Deloitte
& Touche LLP did not provide any other services to us for the years ended December 31, 2003 and 2002. All non-audit services provided by Deloitte & Touche LLP must be approved by the Audit Committee. The Audit Committee pre-approves all
services, including both audit and non-audit services, provided by Deloitte & Touche LLP.



20



---

##### Table of Contents

PART IV



Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.



(a) The following documents are filed as a part of this report on Form 10-K:



1. Financial Statements. The financial statements of the Company and the related notes, together with the
Independent Auditors Report thereon, are set forth beginning on page F-1 of this Form 10-K.



2. Schedules to Financial Statements: All financial statement schedules have been omitted because they are either inapplicable or the
information required is provided in the Companys Financial Statements and Notes thereto, included in Part II, Item 8 of this Annual Report on Form 10-K.



3. Exhibits: See Exhibit Index.



(b) The Company did not file any current reports on Form 8-K during the quarter ended December 31, 2003.



21



---

##### Table of Contents

LASER MORTGAGE MANAGEMENT, INC.



INDEX TO FINANCIAL STATEMENTS



|                                                                                                                                                                                      |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                                                                      |  | Page
|INDEPENDENT AUDITORS REPORT                                                                                                                                                          |  | F-2 
|                                                                                                                                                                                      | 
|FINANCIAL STATEMENTS:                                                                                                                                                                 |  |     
|                                                                                                                                                                                      | 
|Statements of Net Assets in Liquidation as of December 31, 2003 and 2002 (Liquidation Basis)                                                                                          |  | F-3 
|                                                                                                                                                                                      | 
|Statements of Changes in Net Assets in Liquidation for the years ended December 31, 2003 and 2002 and for the period from July 28, 2001 through December 31, 2001 (Liquidation Basis) |  | F-4 
|                                                                                                                                                                                      | 
|Statement of Operations and Comprehensive Income for the period from January 1, 2001 through July 27, 2001 (Going Concern Basis)                                                      |  | F-5 
|                                                                                                                                                                                      | 
|Statement of Stockholders Equity for the period from January 1, 2001 through July 27, 2001 (Going Concern Basis)                                                                     |  | F-6 
|                                                                                                                                                                                      | 
|Statements of Cash Flows for years ended December 31, 2003 and 2002 and for the period from July 28, 2001 through December 31, 2001 (Liquidation Basis)                               |  | F-7 
|                                                                                                                                                                                      | 
|Statement of Cash Flows for the period from January 1, 2001 through July 27, 2001 (Going Concern Basis)                                                                               |  | F-8 
|                                                                                                                                                                                      | 
|Notes to Financial Statements                                                                                                                                                         |  | F-9 



F-1



---

##### Table of Contents

INDEPENDENT AUDITORS REPORT



To the Stockholders of

LASER Mortgage Management, Inc.



We have audited the accompanying statements of net assets in liquidation of LASER Mortgage
Management, Inc. (the Company) as of December 31, 2003 and 2002 and the related statements of changes in net assets in liquidation and cash flows for the years ended December 31, 2003 and 2002 and for the period from July 28, 2001
through December 31, 2001. In addition, we have audited the accompanying statements of operations and comprehensive income, stockholders equity and cash flows for the period from January 1, 2001 through July 27, 2001. These financial
statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.



As discussed in Note 1 to the financial statements, on
July 27, 2001, the stockholders of LASER Maryland (as defined in Note 1 to the financial statements), at the annual meeting, approved the reincorporation of LASER Maryland in Delaware, through the merger of LASER Maryland with and into the Company,
and the subsequent liquidation and dissolution of the Company under the terms and conditions of the Plan of Liquidation and Dissolution. As a result, the Company changed its basis of accounting from the going concern basis to the liquidation basis
effective as of July 28, 2001.



In our opinion, such financial statements
present fairly, in all material respects, the net assets in liquidation of the Company as of December 31, 2003 and 2002, the changes in its net assets in liquidation and its cash flows for the years ended December 31, 2003 and 2002 and for the
period from July 28, 2001 through December 31, 2001, and the results of its operations and its cash flows for the period from January 1, 2001 through July 27, 2001, in conformity with accounting principles generally accepted in the United States of
America.



Deloitte & Touche LLP

New York, New York

March 26, 2004



F-2



---

##### Table of Contents

LASER Mortgage Management, Inc.



STATEMENTS OF
NET ASSETS IN LIQUIDATION (LIQUIDATION BASIS)



|                                        |  |                   |            |                   |   |           
|--------------------------------------- |  | ----------------- | ---------- | ----------------- | - | ----------
|                                        |  | AS OF            
|                                        |  | DECEMBER 31, 2003 |            | DECEMBER 31, 2002
|ASSETS                                  |  |                   |            |                   |   |           
|Cash and cash equivalents               |  | $                 | 9,569,678  |                   | $ | 18,941,547
|Investment in security                  |  |                   | 2,922,649  |                   |   |          
|Interest receivable                     |  |                   | 10,562     |                   |   | 594       
|                                        |  |                   |            |                   |   |           
|Total assets                            |  |                   | 12,502,889 |                   |   | 18,942,141
|                                        |  |                   |            |                   |   |           
|LIABILITIES                             |  |                   |            |                   |   |           
|Accounts payable and accrued expenses   |  |                   | 103,262    |                   |   | 197,444   
|Reserve for estimated liquidation costs |  |                   | 395,004    |                   |   | 410,759   
|                                        |  |                   |            |                   |   |           
|Total liabilities                       |  |                   | 498,266    |                   |   | 608,203   
|                                        |  |                   |            |                   |   |           
|Net assets in liquidation               |  | $                 | 12,004,623 |                   | $ | 18,333,938
|                                        |  |                   |            |                   |   |           



See notes to financial
statements.



F-3



---

##### Table of Contents

LASER Mortgage Management, Inc.



STATEMENTS OF
CHANGES IN NET ASSETS IN LIQUIDATION (LIQUIDATION BASIS)



|                                                                           |  |                                     |            |   |                                     |   |            |                                                          |  |   |             |  
|-------------------------------------------------------------------------- |  | ----------------------------------- | ---------- | - | ----------------------------------- | - | ---------- | -------------------------------------------------------- |  | - | ----------- | -
|                                                                           |  | FOR THE YEARENDED DECEMBER 31, 2003 |            |   | FOR THE YEARENDED DECEMBER 31, 2002 |   |            | FOR THE PERIODFROM JULY 28, 2001THROUGHDECEMBER 31, 2001 | 
|Interest Income:                                                           |  |                                     |            |   |                                     |   |            |                                                          |  |   |             |  
|Securities and mortgage loans                                              |  | $                                   | 15,477     |   |                                     | $ | 174,757    |                                                          |  | $ | 1,963,752   |  
|Cash and cash equivalents                                                  |  |                                     | 141,646    |   |                                     |   | 301,273    |                                                          |  |   | 225,897     |  
|                                                                           |  |                                     |            |   |                                     |   |            |                                                          |  |   |             |  
|Total interest income                                                      |  |                                     | 157,123    |   |                                     |   | 476,030    |                                                          |  |   | 2,189,649   |  
|                                                                           |  |                                     |           
|Interest Expense:                                                          |  |                                     |            |   |                                     |   |            |                                                          |  |   |             |  
|Repurchase agreements                                                      |  |                                     |           |   |                                     |   | 19,662     |                                                          |  |   | 419,590     |  
|                                                                           |  |                                     |            |   |                                     |   |            |                                                          |  |   |             |  
|Net interest income                                                        |  |                                     | 157,123    |   |                                     |   | 456,368    |                                                          |  |   | 1,770,059   |  
|                                                                           |  |                                     |           
|Net gain on securities                                                     |  |                                     | 2,002,603  |   |                                     |   | 274,407    |                                                          |  |   | 607,650     |  
|                                                                           |  |                                     |           
|General and administrative expenses                                        |  |                                     | 1,469,549  |   |                                     |   | 840,070    |                                                          |  |   | 552,796     |  
|                                                                           |  |                                     |            |   |                                     |   |            |                                                          |  |   |             |  
|Increase (decrease) in net assets in liquidation from operating activities |  |                                     | 690,177    |   |                                     |   | (109,295   | )                                                        |  |   | 1,824,913   |  
|                                                                           |  |                                     |            |   |                                     |   |            |                                                          |  |   |             |  
|Cash liquidation distribution to stockholders                              |  |                                     | (7,019,492 | ) |                                     |   |           |                                                          |  |   | (42,116,949 | )
|                                                                           |  |                                     |            |   |                                     |   |            |                                                          |  |   |             |  
|Adjustments to reflect the change to liquidation basis accounting:         |  |                                     |            |   |                                     |   |            |                                                          |  |   |             |  
|Reduction to reflect estimated net realizable value of securities          |  |                                     |           |   |                                     |   |           |                                                          |  |   | (938,188    | )
|Write-off of prepaid expenses                                              |  |                                     |           |   |                                     |   |           |                                                          |  |   | (1,098,222  | )
|Reserve for estimated liquidation costs                                    |  |                                     |           |   |                                     |   |           |                                                          |  |   | (700,000    | )
|                                                                           |  |                                     |            |   |                                     |   |            |                                                          |  |   |             |  
|Adjustment to liquidation basis accounting                                 |  |                                     |           |   |                                     |   |           |                                                          |  |   | (2,736,410  | )
|                                                                           |  |                                     |            |   |                                     |   |            |                                                          |  |   |             |  
|Net assets in liquidation at beginning of period                           |  |                                     | 18,333,938 |   |                                     |   | 18,443,233 |                                                          |  |   | 61,471,679  |  
|                                                                           |  |                                     |            |   |                                     |   |            |                                                          |  |   |             |  
|Net assets in liquidation at end of period                                 |  | $                                   | 12,004,623 |   |                                     | $ | 18,333,938 |                                                          |  | $ | 18,443,233  |  
|                                                                           |  |                                     |            |   |                                     |   |            |                                                          |  |   |             |  



See notes to financial
statements.



F-4



---

##### Table of Contents

LASER Mortgage Management, Inc.



STATEMENT OF
OPERATIONS AND COMPREHENSIVE INCOME

(GOING CONCERN BASIS)



|                                                                            |  |                                                         |            |  
|--------------------------------------------------------------------------- |  | ------------------------------------------------------- | ---------- | -
|                                                                            |  | FOR THE PERIODFROM JANUARY 1,2001 THROUGH JULY 27, 2001 |           
|Interest Income:                                                            |  |                                                         |            |  
|Securities and mortgage loans                                               |  | $                                                       | 7,231,003  |  
|Cash and cash equivalents                                                   |  |                                                         | 525,563    |  
|                                                                            |  |                                                         |            |  
|Total interest income                                                       |  |                                                         | 7,756,566  |  
|                                                                            |  |                                                         |            |  
|Interest Expense:                                                           |  |                                                         |            |  
|Repurchase agreements                                                       |  |                                                         | 4,059,974  |  
|Other                                                                       |  |                                                         |           |  
|                                                                            |  |                                                         |            |  
|Total interest expense                                                      |  |                                                         | 4,059,974  |  
|                                                                            |  |                                                         |            |  
|Net interest income                                                         |  |                                                         | 3,696,592  |  
|                                                                            | 
|Net realized loss on securities                                             |  |                                                         | (4,218,425 | )
|                                                                            | 
|Net loss on interest rate agreement                                         |  |                                                         | (120,000   | )
|                                                                            | 
|General and administrative expenses                                         |  |                                                         | 2,527,690  |  
|                                                                            |  |                                                         |            |  
|Net loss                                                                    |  | $                                                       | (3,169,523 | )
|                                                                            |  |                                                         |            |  
|Other Comprehensive Income:                                                 |  |                                                         |            |  
|Unrealized net gain on securities:                                          |  |                                                         |            |  
|Unrealized holding loss arising during the period                           |  |                                                         | (3,016,779 | )
|Add: reclassification adjustment for net realized loss included in net loss |  |                                                         | 4,218,425  |  
|                                                                            |  |                                                         |            |  
|Other comprehensive income                                                  |  |                                                         | 1,201,646  |  
|                                                                            |  |                                                         |            |  
|Comprehensive loss                                                          |  | $                                                       | (1,967,877 | )
|                                                                            |  |                                                         |            |  
|NET LOSS PER SHARE:                                                         |  |                                                         |            |  
|Basic                                                                       |  | $                                                       | (0.23      | )
|                                                                            |  |                                                         |            |  
|Diluted                                                                     |  | $                                                       | (0.23      | )
|                                                                            |  |                                                         |            |  
|WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:                              |  |                                                         |            |  
|Basic                                                                       |  |                                                         | 14,038,983 |  
|                                                                            |  |                                                         |            |  
|Diluted                                                                     |  |                                                         | 14,038,983 |  
|                                                                            |  |                                                         |            |  



See notes to financial
statements.



F-5



---

##### Table of Contents

LASER Mortgage Management, Inc.



STATEMENT OF
STOCKHOLDERS EQUITY

FOR THE PERIOD FROM JANUARY 1, 2001 THROUGH JULY 27, 2001

(GOING CONCERN BASIS)



|                                                                       |  |              |        |                            |   |                                               |  |   |                                     |   |  |                        |              |   |                            |   |             |   |  |   |            |  
|---------------------------------------------------------------------- |  | ------------ | ------ | -------------------------- | - | --------------------------------------------- |  | - | ----------------------------------- | - |  | ---------------------- | ------------ | - | -------------------------- | - | ----------- | - |  | - | ---------- | -
|                                                                       |  | Common Stock |        | Additional Paid-in Capital |   | Accumulated Other Comprehensive Income (Loss) |  |   | Accumulated Distributions andLosses |   |  | Treasury Stock at Cost |              |   | Total Stockholders Equity |  
|BALANCE, DECEMBER 31, 2000                                             |  | $            | 20,119 |                            | $ | 283,012,967                                   |  | $ | (3,673,678                          | ) |  | $                      | (183,071,421 | ) |                            | $ | (32,848,431 | ) |  | $ | 63,439,556 |  
|                                                                       |  |              |        |                            |   |                                               |  |   |                                     |   |  |                        |              |   |                            |   |             |   |  |   |            |  
|Comprehensive loss:                                                    |  |              |        |                            |   |                                               |  |   |                                     |   |  |                        |              |   |                            |   |             |   |  |   |            |  
|Net loss                                                               |  |              |       |                            |   |                                              |  |   |                                    |   |  |                        | (3,169,523   | ) |                            |   |            |   |  |   | (3,169,523 | )
|                                                                       |  |              |        |                            |   |                                               |  |   |                                     |   |  |                        |              |   |                            |   |             |   |  |   |            |  
|Other comprehensive income:                                            |  |              |        |                            |   |                                               |  |   |                                     |   |  |                        |              |   |                            |   |             |   |  |   |            |  
|Unrealized holding loss arising during the period                      |  |              |       |                            |   |                                              |  |   | (3,016,779                          | ) |  |                        |             |   |                            |   |            |   |  |   | (3,016,779 | )
|Reclassification adjustment for net realized loss included in net loss |  |              |       |                            |   |                                              |  |   | 4,218,425                           |   |  |                        |             |   |                            |   |            |   |  |   | 4,218,425  |  
|                                                                       |  |              |        |                            |   |                                               |  |   |                                     |   |  |                        |              |   |                            |   |             |   |  |   |            |  
|Other comprehensive income                                             |  |              |       |                            |   |                                              |  |   | 1,201,646                           |   |  |                        |             |   |                            |   |            |   |  |   | 1,201,646  |  
|                                                                       |  |              |        |                            |   |                                               |  |   |                                     |   |  |                        |              |   |                            |   |             |   |  |   |            |  
|Comprehensive loss                                                     |  |              |        |                            |   |                                               |  |   |                                     |   |  |                        |              |   |                            |   |             |   |  |   | (1,967,877 | )
|                                                                       |  |              |        |                            |   |                                               |  |   |                                     |   |  |                        |              |   |                            |   |             |   |  |   |            |  
|BALANCE, JULY 27, 2001                                                 |  | $            | 20,119 |                            | $ | 283,012,967                                   |  | $ | (2,472,032                          | ) |  | $                      | (186,240,944 | ) |                            | $ | (32,848,431 | ) |  | $ | 61,471,679 |  
|                                                                       |  |              |        |                            |   |                                               |  |   |                                     |   |  |                        |              |   |                            |   |             |   |  |   |            |  



See notes to financial
statements



F-6



---

##### Table of Contents

LASER Mortgage Management, Inc.



STATEMENTS OF
CASH FLOWS (LIQUIDATION BASIS)



|                                                                                                                                                            |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------- | ---------- | - | ---------------------------------- | - | ---------- | --------------------------------------------------- |  | - | ----------- | -
|                                                                                                                                                            |  | FOR THE YEARENDED DECEMBER 31,2003 |            |   | FOR THE YEARENDED DECEMBER 31,2002 |   |            | FOR THE PERIODJULY 28, 2001THROUGHDECEMBER 31, 2001 | 
|Cash Flows From Operating Activities                                                                                                                        |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Increase (decrease) in net assets in liquidation from operating activities                                                                                  |  | $                                  | 690,177    |   |                                    | $ | (109,295   | )                                                   |  | $ | 1,824,913   |  
|Adjustments to reconcile increase (decrease) in net assets in liquidation from operating activities to net cash (used in) provided by
operating activities: |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Amortization of mortgage premiums and discounts, net                                                                                                        |  |                                    | 24,495     |   |                                    |   | (8,766     | )                                                   |  |   | (44,472     | )
|Net (gain) loss on securities                                                                                                                               |  |                                    | (2,001,133 | ) |                                    |   | 33,614     |                                                     |  |   | (607,650    | )
|(Increase) decrease in interest receivable                                                                                                                  |  |                                    | (9,968     | ) |                                    |   | 317,684    |                                                     |  |   | 416,991     |  
|Decrease in accrued interest payable                                                                                                                        |  |                                    |           |   |                                    |   | (30,576    | )                                                   |  |   | (671,397    | )
|(Decrease) increase in accounts payable and accrued expenses                                                                                                |  |                                    | (94,182    | ) |                                    |   | (695,069   | )                                                   |  |   | 66,500      |  
|Decrease in reserve for estimated liquidation costs                                                                                                         |  |                                    | (15,755    | ) |                                    |   | (114,178   | )                                                   |  |   | (175,063    | )
|                                                                                                                                                            |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Net cash (used in) provided by operating activities                                                                                                         |  |                                    | (1,406,366 | ) |                                    |   | (606,586   | )                                                   |  |   | 809,822     |  
|                                                                                                                                                            |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Cash Flows From Investing Activities                                                                                                                        |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Purchases of securities                                                                                                                                     |  |                                    | (5,875,001 | ) |                                    |   |           |                                                     |  |   |            |  
|Proceeds from sales of securities.                                                                                                                          |  |                                    | 4,928,990  |   |                                    |   | 16,105,648 |                                                     |  |   | 45,069,534  |  
|Principal payments on securities and mortgage loans                                                                                                         |  |                                    |           |   |                                    |   | 2,510,300  |                                                     |  |   | 20,969,010  |  
|                                                                                                                                                            |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Net cash (used in) provided by investing activities                                                                                                         |  |                                    | (946,011   | ) |                                    |   | 18,615,948 |                                                     |  |   | 66,038,544  |  
|                                                                                                                                                            |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Cash Flows From Financing Activities                                                                                                                        |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Repayments of repurchase agreements                                                                                                                         |  |                                    |           |   |                                    |   | (2,028,000 | )                                                   |  |   | (44,363,576 | )
|Cash liquidation distribution to stockholders                                                                                                               |  |                                    | (7,019,492 | ) |                                    |   |           |                                                     |  |   | (42,116,949 | )
|                                                                                                                                                            |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Net cash used in financing activities                                                                                                                       |  |                                    | (7,019,492 | ) |                                    |   | (2,028,000 | )                                                   |  |   | (86,480,525 | )
|                                                                                                                                                            |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Net (decrease) increase in cash and cash equivalents                                                                                                        |  |                                    | (9,371,869 | ) |                                    |   | 15,981,362 |                                                     |  |   | (19,632,159 | )
|Cash and cash equivalents at beginning of period                                                                                                            |  |                                    | 18,941,547 |   |                                    |   | 2,960,185  |                                                     |  |   | 22,592,344  |  
|                                                                                                                                                            |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Cash and cash equivalents at end of period                                                                                                                  |  | $                                  | 9,569,678  |   |                                    | $ | 18,941,547 |                                                     |  | $ | 2,960,185   |  
|                                                                                                                                                            |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Supplemental Disclosure of Cash Flow Information:                                                                                                           |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Interest paid                                                                                                                                               |  | $                                  |           |   |                                    | $ | (50,238    | )                                                   |  | $ | (1,090,987  | )
|                                                                                                                                                            |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Supplemental Disclosure of Non-Cash Operating Activities:                                                                                                   |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  
|Adjustment to liquidation basis accounting                                                                                                                  |  | $                                  |           |   |                                    | $ |           |                                                     |  | $ | (2,736,410  | )
|                                                                                                                                                            |  |                                    |            |   |                                    |   |            |                                                     |  |   |             |  



See notes to financial
statements



F-7



---

##### Table of Contents

LASER Mortgage Management, Inc.



STATEMENT OF
CASH FLOWS (GOING CONCERN BASIS)



|                                                                                |  |                                                   |                |  
|------------------------------------------------------------------------------- |  | ------------------------------------------------- | -------------- | -
|                                                                                |  | FOR THEPERIODJANUARY 1, 2001THROUGH JULY 27, 2001 |               
|Cash Flows From Operating Activities:                                           |  |                                                   |                |  
|Net loss                                                                        |  | $                                                 | (3,169,523     | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                                                   |                |  
|Amortization of mortgage premiums and discounts, net                            |  |                                                   | (186,354       | )
|Unrealized gain on interest rate agreement                                      |  |                                                   | (2,580,000     | )
|Net realized loss on sale of securities and interest rate agreement             |  |                                                   | 6,918,425      |  
|Change in assets and liabilities:                                               |  |                                                   |                |  
|Decrease in interest receivable                                                 |  |                                                   | 2,280,392      |  
|Decrease in prepaid expenses                                                    |  |                                                   | 318,570        |  
|Increase in accrued interest payable                                            |  |                                                   | 141,843        |  
|Increase in accounts payable and accrued expenses                               |  |                                                   | 96,310         |  
|                                                                                |  |                                                   |                |  
|Net cash provided by operating activities                                       |  |                                                   | 3,819,663      |  
|                                                                                |  |                                                   |                |  
|Cash Flows From Investing Activities:                                           |  |                                                   |                |  
|Purchases of securities                                                         |  |                                                   | (55,048,842    | )
|Decrease in payable for securities acquired                                     |  |                                                   | (23,321,844    | )
|Proceeds from sales of securities                                               |  |                                                   | 255,982,732    |  
|Proceeds from sale of interest rate agreement                                   |  |                                                   | 260,000        |  
|Principal payments on securities and mortgage loans                             |  |                                                   | 30,843,850     |  
|                                                                                |  |                                                   |                |  
|Net cash provided by investing activities                                       |  |                                                   | 208,715,896    |  
|                                                                                |  |                                                   |                |  
|Cash Flows From Financing Activities:                                           |  |                                                   |                |  
|Proceeds from repurchase agreements                                             |  |                                                   | 1,960,972,986  |  
|Repayments of repurchase agreements                                             |  |                                                   | (2,154,458,410 | )
|                                                                                |  |                                                   |                |  
|Net cash used in financing activities                                           |  |                                                   | (193,485,424   | )
|                                                                                |  |                                                   |                |  
|Net increase in cash and cash equivalents                                       |  |                                                   | 19,050,135     |  
|Cash and cash equivalents at beginning of period                                |  |                                                   | 3,542,209      |  
|                                                                                |  |                                                   |                |  
|Cash and cash equivalents at end of period                                      |  | $                                                 | 22,592,344     |  
|                                                                                |  |                                                   |                |  
|Supplemental Disclosure Of Cash Flow Information:                               |  |                                                   |                |  
|Interest paid                                                                   |  | $                                                 | (3,918,131     | )
|                                                                                |  |                                                   |                |  
|Non-cash financing activities:                                                  |  |                                                   |                |  
|Net change in unrealized gain on available-for-sale securities                  |  | $                                                 | 1,201,646      |  
|                                                                                |  |                                                   |                |  



See notes to
financial statements.



F-8



---

##### Table of Contents

LASER Mortgage Management, Inc.



NOTES TO
FINANCIAL STATEMENTS

December 31, 2003



1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES



LASER Mortgage Management, Inc. (the Company) was incorporated in Delaware on May 1, 2001, as a wholly-owned subsidiary of LASER Mortgage
Management, Inc., a Maryland corporation (LASER Maryland), and is the successor by merger to LASER Maryland. LASER Maryland was incorporated in Maryland on September 3, 1997 and commenced its operations on November 26, 1997. On May 30,
2001, the Companys Board of Directors and sole stockholder, LASER Maryland, approved the liquidation and dissolution of the Company under the terms and conditions of the Plan of Liquidation and Dissolution, subject to the approval of the Plan
of Liquidation and Dissolution by the stockholders of LASER Maryland. On July 27, 2001, the stockholders of LASER Maryland, at the annual meeting, approved the reincorporation of LASER Maryland in Delaware (the Reincorporation), through
the merger of LASER Maryland with and into the Company, and the subsequent liquidation and dissolution of the Company under the terms and conditions of the Plan of Liquidation and Dissolution. On July 31, 2001, LASER Maryland completed the
Reincorporation by merging with and into the Company. As of the effective date of the Reincorporation, LASER Maryland ceased to exist. On August 3, 2001, the Company filed a certificate of dissolution with the Secretary of State of the State of
Delaware, and the dissolution of the Company was effective upon such filing. The Company has ceased to conduct normal business operations and now operates solely for the purpose of providing for the satisfaction of its obligations, adjusting and
winding-up its business and affairs and distributing its remaining net assets. References herein to LASER or the Company include LASER Maryland prior to the date of the Reincorporation, as applicable.



In accordance with the Plan of Liquidation and Dissolution, receiving the
approval of the Delaware Court of Chancery, the Company made distributions of $0.50 and $3.00 per outstanding share of common stock on April 8, 2003 and December 28, 2001, respectively, to stockholders of record as of March 31, 2003 and December 17,
2001, respectively. As of December 31, 2003, the estimated net realizable value of the Companys net assets in liquidation was $0.86 per share. After providing for expenses and subject to court approval, the Company expects to distribute the
remaining net assets in liquidation before the end of the 2004 fiscal year, in accordance with the timing set forth in the Plan of Liquidation and Dissolution. The total amount of distributions to stockholders is subject to change based on numerous
factors, including operating expenses, the Delaware Court of Chancery modifying the distribution amounts and timing currently envisioned by the Board of Directors under the Plan of Liquidation and Dissolution, unanticipated claims or expenses, as
well as other factors beyond the control of the Company.



The
Company was organized to create and manage an investment portfolio of primarily mortgage-backed securities and mortgage loans that, in combination with financing and hedging activities, would generate income for distribution to its stockholders
while preserving the Companys capital base. At its inception, the Company elected to be taxed as a real estate investment trust (a REIT) under the Internal Revenue Code of 1986, as amended (the Code), commencing with
its short taxable year ended December 31, 1997. The Company qualified as a REIT for the taxable years ended December 31, 1997 through 2001. The Company did not qualify as a REIT for the year beginning January 1, 2002.



Basis of Presentation  As described above, stockholders
approved the Plan of Liquidation and Dissolution of the Company on July 27, 2001. As a result, the Company adopted liquidation basis accounting effective July 28, 2001. Accordingly, the Companys assets are stated at their estimated net
realizable values and liabilities are stated at their estimated settlement amounts, including an accrual for estimated expenses associated with the liquidation of the Company. Before the adoption of liquidation basis accounting, the Company operated
as a continuing business and followed going concern basis accounting. Because substantially all of the existing assets and liabilities of the Company were carried at approximate fair value in accordance with generally accepted accounting principles
(GAAP), the adoption of liquidation basis accounting did not have a material impact on the Companys financial statements other than requiring the Company to charge stockholders equity for the reduction in the carrying value
of securities to reflect their estimated net realizable value, the write-off of the remaining balance of prepaid expenses, and the reserve for estimated expenses associated with the liquidation of the Company. However, the valuation of assets and
liabilities at their estimated net realizable values and estimated settlement amounts,



F-9



---

##### Table of Contents

respectively, necessarily requires estimates and assumptions. Changes in market conditions, actual costs associated with
the liquidation, and other factors may affect the amounts ultimately realized or settled, and those amounts may differ, perhaps materially, from the carrying values on the Companys financial statements.



A summary of the Companys significant accounting policies follows:



Cash Equivalents  Cash equivalents
consist of an overnight reverse repurchase agreement. The amount reported on the statements of net assets in liquidation represents the amount advanced under the agreement.



Investments  The Company invested primarily in mortgage-backed securities and mortgage loans. The
mortgage-backed securities included privately issued or U.S. government or agencies issued mortgage pass-through certificates, collateralized mortgage obligations and other securities representing interests in, or obligations backed by, pools of
mortgage loans (collectively, Mortgage Securities). The mortgage loans were secured by first or second liens on single-family residential, multi-family residential, commercial or other real property (Mortgage Loans, and
together with Mortgage Securities, Mortgage Assets). The Company also invested in other debt and equity securities (together with Mortgage Securities, Securities, and together with Mortgage Assets, Investments).



Before the adoption of liquidation basis accounting and in
accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities, the Company classified its Securities as available-for-sale. The
available-for-sale classification required that those Securities be carried at estimated fair value, with unrealized gains and losses reported on the balance sheet as a separate component of stockholders equity within accumulated other
comprehensive income (loss). This classification was appropriate since the Company may have needed to sell, from time to time, any of its Securities as part of its overall management of its balance sheet even though the Company generally intended to
hold most of its Securities until maturity.



After the adoption
of liquidation basis accounting, the Companys Investments have been carried at estimated net realizable value on the statements of net assets in liquidation, with unrealized gains and losses reported on the statements of changes in net assets
in liquidation.



The Companys Mortgage Loans were carried
at estimated net realizable value on the statements of net assets in liquidation, with unrealized gains and losses reported on the statement of changes in net assets in liquidation. Before the adoption of liquidation basis accounting, the
Companys Mortgage Loans were carried on the balance sheet at their unpaid principal balance, net of unamortized discount or premium.



Interest income has been accrued based on the outstanding principal or notional amount of the Investments and cash equivalents and their contractual
terms. Premiums and discounts associated with the purchase of the Investments have been amortized into interest income over the lives of the Investments using the effective yield method.



Realized gains and losses on Investment transactions have been determined on the specific identification basis and were
recorded on the statement of changes in net assets in liquidation or the statement of operations, as appropriate.



Interest Rate Agreement  The Company followed an interest-rate risk-management strategy designed to protect against the adverse
effects of major interest rate changes and used a derivative interest rate cap agreement (cap).



A cap is a contractual agreement for which the Company pays an initial premium in return for subsequent cash flows to the Company to the extent that a
specific interest rate index exceeds the contractual fixed rate, applied to a notional amount. The amount of the risk of loss on a cap is the premium paid. The cap was carried at estimated fair value with changes in fair value reported on the
statement of operations. Interest payments received were recorded as a component of net interest income on the statement of operations.



F-10



---

##### Table of Contents

Effective January 1, 2001, the Company adopted the provisions of SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities as amended by SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities - an Amendment of Statement No. 133. The adoption of the provisions of these
accounting pronouncements with respect to the Companys sole derivative instrument at that time, the interest rate agreement, had no impact on the Companys financial condition or results of operations.



Repurchase Agreements  The Company utilized repurchase
agreements to finance most of its Investments. The repurchase agreements were collateralized by certain of the Companys Investments and carried interest rates that generally moved in close relation to the one-month London Interbank Offered
Rate (LIBOR). Repurchase agreements were reported on the statement of net assets in liquidation or balance sheet, as appropriate, at the contractual amount to be repaid under such agreement.



Reserve for Estimated Liquidation Costs  Under
liquidation basis accounting, the Company is required to estimate and accrue the costs directly associated with the liquidation. The amount recorded in the statements of net assets in liquidation represents estimated professional fees and other
expenses expected to be incurred in connection with liquidation activities and paid out over the course of the liquidation. The ongoing general and administrative expenses related to operating the Company until its liquidation is completed have not
been included in this reserve. The ultimate amount paid might vary significantly due to, among other things, the timing of the liquidation.



Fair Value of Financial Instruments  The fair values of the Companys Investments and interest rate agreement were based on
prices and valuations provided by dealers who make markets in these financial instruments. The fair values reported reflected estimates and were not necessarily indicative of the amounts the Company could have realized in a current market exchange.
The carrying values of cash equivalents and other financial assets and liabilities approximated their estimated fair value because of the short-term nature of these financial instruments. Estimated net realizable value approximates estimated fair
value as presented in these financial statements.



Income Taxes  At its inception, the Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, commencing with its short taxable year ended December 31, 1997. As such, the Company
generally had been entitled to a deduction for all dividends it paid to its stockholders for a taxable year. As a result, the Company had not been subject to federal income taxation with respect to its distributed income. Qualification as a REIT
requires that the Company satisfy a number of asset, income and distribution tests. The Company qualified as a REIT for the taxable years ended December 31, 1997 through 2001. The Company did not qualify as a REIT for the year beginning January 1,
2002.



The Company follows the provisions of SFAS No. 109,
Accounting for Income Taxes, which provides for the recognition of deferred tax assets and liabilities relating to the future tax consequences of net operating loss carryforwards and the differences between the financial reporting
amounts and the tax bases of assets and liabilities, measured using the enacted tax rates and laws that are expected to be in effect when the taxes are actually paid or recovered. When the Company determines that it is more likely than not that the
measured amount of the deferred tax assets will not be realized, the Company will reduce the deferred tax assets through a valuation allowance.



Use of Estimates  The preparation of financial statements in conformity with GAAP requires the Company to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.



2. INVESTMENTS



At December 31, 2003, the Company owned a $2,900,000 principal amount
U.S. Treasury Note with an estimated net realizable value of $2,922,649. The Security matures October 31, 2004 and carries an annual coupon interest rate of 2.125%.



On October 23, 2000 the Company filed suit in the Southern District of New York against Asset Securitization Corporation
(ASC), Nomura Asset Capital Corporation (Normura Asset) and Nomura Securities International, Inc. (Nomura), alleging that the defendants defrauded the Company into purchasing approximately



F-11



---

##### Table of Contents

$19.0 million worth of ASC Securities by failing to disclose, among other things, that one of the largest loans in a
trust fund of which the Company owned subordinated interests was seriously troubled. On February 4, 2003, the Company withdrew the lawsuit and all claims were dismissed with prejudice and without costs.



On March 21, 2003, the Company sold all of the ASC Securities, which
previously were estimated to have no net realizable value, for $2,000,000.



3. RESERVE FOR ESTIMATED LIQUIDATION COSTS



At
the time of the adoption of liquidation basis accounting, the Company recorded $700,000 for estimated professional fees and other expenses directly related to the liquidation that are anticipated to be incurred over the course of the liquidation.
The ongoing general and administrative expenses related to operating the Company until its liquidation is completed have not been included in this reserve. At December 31, 2003 and 2002, the reserve for estimated liquidation costs amounted to
$395,004 and $410,759, respectively. During the year ended December 31, 2003 and 2002, the Company paid $15,755 and $114,178, respectively, of liquidation costs.



4. STOCKHOLDERS EQUITY



Common Stock  At each of December 31, 2003 and 2002, the Company had 100,000,000 common shares authorized and 20,118,749 common shares
issued.



Distributions  On April 8, 2003
and December 28, 2001, cash liquidation distributions of $0.50 and $3.00 per outstanding share of common stock, respectively, were made in accordance with the Companys Plan of Liquidation and Dissolution.



Treasury Stock  No shares of common stock were
repurchased during 2003 and 2002. At December 31, 2003 and 2002, an aggregate 6,079,766 shares of the Companys issued common stock had been reacquired at an aggregate cost of $32,848,431.



5. LONG-TERM STOCK INCENTIVE PLAN



LASER Maryland had adopted a Long-Term Stock Incentive Plan for directors,
executive officers and key employees (the Incentive Plan). The Incentive Plan authorized the Compensation Committee of the Board of Directors to grant awards, including incentive stock options as defined under Section 422 of the Code,
options not so qualified and deferred common stock. The Incentive Plan authorized an aggregate of 2,066,666 shares of LASER Marylands common stock for the granting of options or other awards. Upon the effectiveness of the Reincorporation, the
Incentive Plan was terminated.



There were no outstanding
awards under the Incentive Plan during the years ended December 31, 2003 and 2002 and none were outstanding or reserved for issuance at December 31, 2001.



6. LOSS PER SHARE (LPS)



Basic LPS is computed by dividing the net loss attributable to common shares by the weighted average number of common shares outstanding during the
period. The calculation of diluted LPS considered the effect of all dilutive potential common shares that were outstanding during the period under the Companys Incentive Plan. Basic and diluted LPS for the period January 1, 2001 through July
27, 2001 was as follows:



F-12



---

##### Table of Contents

|            |  |                                                     |            |   |                      |            |                  |   |       |  
|----------- |  | --------------------------------------------------- | ---------- | - | -------------------- | ---------- | ---------------- | - | ----- | -
|            |  | For the Period January 1, 2001 ThroughJuly 27, 2001 |           
|            |  | Net Loss (Numerator)                                |            |   | Shares (Denominator) |            | Per-Share Amount |  
|Basic LPS   |  | $                                                   | (3,169,523 | ) |                      | 14,038,983 |                  | $ | (0.23 | )
|            |  |                                                     |            |   |                      |            |                  |   |       |  
|Diluted LPS |  | $                                                   | (3,169,523 | ) |                      | 14,038,983 |                  | $ | (0.23 | )
|            |  |                                                     |            |   |                      |            |                  |   |       |  



For the period January
1, 2001 through July 27, 2001, there were no deferred common shares reserved for issuance and there were no outstanding options to purchase common shares of the Company.



7. MANAGEMENT ARRANGEMENTS



From November 1, 1999 to November 1, 2001, Mariner Mortgage Management, L.L.C. (Mariner) served as the external manager of the Company and was
responsible for the day-to-day management of the Companys investments and operations. Under the management agreement then in effect, Mariner became entitled to be paid an incentive fee on the date on which the Board of Directors adopted
resolutions approving the liquidation and dissolution. Pursuant to the terms of the management agreement, an incentive fee of $1,219,285 was paid to Mariner on May 1, 2001. Mariner was not entitled to receive any other fee upon the adoption of the
Plan of Liquidation and Dissolution. In accordance with the terms of the management agreement, Mariner continued to receive its base management fee of $50,000 per month until the termination of the management agreement on November 1, 2001. For the
period from January 1, 2001 through July 27, 2001, the Company incurred base management fees of $350,000 and for the period from July 28, 2001 through December 31, 2001, the Company incurred base management fees of $150,000. Other than the
$1,219,285 incentive fee paid to Mariner as described above, no incentive fees were paid to Mariner at any time.



Upon the termination of the management agreement on November 1, 2001, the Company became self-managed and entered into employment agreements with William
J. Michaelcheck, the President and Chief Executive Officer of the Company, and Charles R. Howe, II, the Vice President, Treasurer and Secretary of the Company, each at a salary of $10,000 per month. Effective October 1, 2002, the employment
agreement with Mr. Howe was amended to reduce his salary to $5,000 per month. Messrs. Michaelcheck and Howe previously were responsible for managing the Companys portfolio at Mariner and continue to have significant responsibilities at
Mariner.



On November 1, 2001, the Company also entered into a
support services agreement with Mariner Investment Group, Inc. (Mariner Investment Group), an affiliate of Mariner, under which Mariner Investment Group will provide the Company with office space and services, bookkeeping and accounting
services and such other services as may be agreed upon from time to time by the Company and Mariner Investment Group for a fee of $30,000 per month. Effective July 1, 2002, the fee under the support services agreement was reduced to $20,000 per
month.



For the years ended December 31, 2003 and 2002, the
Company incurred $180,000 and $225,000, respectively, of expenses under the employment agreements and $240,000 and $300,000, respectively, of expenses under the support services agreement.



All of the management arrangements discussed above have been ratified and
approved by the Compensation Committee of the Board of Directors.



8. INCOME
TAXES



At its inception, the Company elected to be taxed
as a REIT under the Internal Revenue of 1986, as amended, commencing with its short taxable year ended December 31, 1997. As such, the Company generally had been entitled to a deduction for all dividends it paid to its stockholders for a taxable
year. As a result, the Company had not been subject to federal income taxation with respect to its distributed income. Qualification as a REIT



F-13



---

##### Table of Contents

requires that the Company satisfy a number of asset, income and distribution tests. The Company qualified as a REIT for
the taxable years ended December 31, 1997 through 2001. Because less than 75% of the Companys gross income for the 2002 taxable year did not derive from certain required REIT investments, the Company did not qualify as a REIT for the year
beginning January 2002. As a consequence, the Company will no longer be entitled to deduct dividends paid to stockholders from its taxable income. The Company is subject to federal income tax at corporate rates (including any applicable alternative
minimum tax) with respect to gains from liquidating sales of assets and income from operations for the year ended December 31, 2002 and for subsequent taxable years. The federal income taxes would reduce the amounts otherwise distributable to its
stockholders.



For the year ended December 31, 2003, the
Company estimates that taxable income before utilizing its carried forward net operating losses as calculated for tax purposes (NOLs) amounted to approximately $0.5 million. To the extent that the Company generates taxable income, the
Company will utilize its NOLs to reduce its taxable income and adjust its deferred tax assets and related valuation allowance accordingly. In that regard, the Company offset its taxable income for the year ended December 31, 2003 with NOLs and
correspondingly reduced its deferred federal and state tax assets by approximately $241,000 and $80,000, respectively. The aggregate gross deferred federal and state tax assets amounted to approximately $56,222,000 at December 31, 2003 and
represented $55,938,000 for NOLs and $284,000 for the reserve for estimated liquidation costs and other prepaid expenses. Due to the continuing liquidation of the Company and the expectation that the Company will not have sufficient earnings to
utilize these deferred tax assets, the existing valuation allowance for the aggregate gross deferred tax assets was reduced by $321,000 to $56,222,000 at December 31, 2003.



No current income tax expense was reported for the year ended December 31, 2002 due to an operating loss as calculated for
tax purposes of approximately $(0.7) million. The deferred federal and state income tax benefits from operating activities for the year ended December 31, 2002 amounted to approximately $38,000 and $13,000, respectively. Additionally, the deferred
federal and state income tax benefits from prior NOLs that were recognized during 2003 amounted to approximately $42,521,000 and $13,971,000, respectively. The aggregate gross deferred tax asset recorded as a result of the recognition of these
income tax benefits was $56,543,000. The components of the aggregate gross deferred tax asset at December 31, 2002 were as follows: NOLs were $56,201,000 and the reserve for estimated liquidation costs and other prepaid expenses was $342,000. Due to
the continuing liquidation of the Company and the expectation that the Company will not have sufficient earnings to utilize these deferred tax assets, the entire gross deferred tax asset was fully offset by a $56,543,000 valuation allowance
established at December 31, 2002.



For the tax year ended
December 31, 2001, the operating loss as calculated for tax purposes was approximately $(1.3) million. Prior to 2001, the Company experienced approximately $(118.8) million of aggregate NOLs. NOLs generally may be carried forward for 20 years. The
Company believes that during 1999 it experienced an ownership change within the meaning of Section 382 of the Code. Consequently, the Companys use of NOLs generated before the ownership change to reduce taxable income after the
ownership change will be subject to limitations under Code Section 382. Generally, Code Section 382 limits the use of NOLs in any year to the value of the Companys common stock on the date of the ownership change multiplied by the long-term
tax-exempt rate (published by the IRS) with respect to that date. The Company believes that the annual limitation with respect to the use of its NOLs is approximately $3.0 million and that as of December 31, 2003, approximately $90.7 million of the
estimated cumulative NOL of $120.3 million is subject to the annual limitation.



F-14



---

##### Table of Contents

9. SUMMARIZED QUARTERLY RESULTS (UNAUDITED)



The quarterly results of operations for the period January 1, 2001 through July 27, 2001 follow:



|                                                                                     |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|------------------------------------------------------------------------------------ |  | ----------------------------------------------- | ---------- | - | --------------------------- | - | ---------- | ----------------------------------------- |  | - | ---------- | -
|                                                                                     |  | Quarter Ended March 31, 2001                    |            |   | Quarter Ended June 30, 2001 |   |            | Period July 1, 2001 Through July 27, 2001 | 
|                                                                                     |  | (in thousands, except share and per share data) |           
|Statements of Operations and Comprehensive Income Data:                              |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Interest income:                                                                     |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Securities and mortgage loans                                                        |  | $                                               | 5,099      |   |                             | $ | 1,659      |                                           |  | $ | 473        |  
|Cash and cash equivalents                                                            |  |                                                 | 209        |   |                             |   | 254        |                                           |  |   | 63         |  
|                                                                                     |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Total interest income                                                                |  |                                                 | 5,308      |   |                             |   | 1,913      |                                           |  |   | 536        |  
|                                                                                     |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Interest expense:                                                                    |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Repurchase agreements                                                                |  |                                                 | 3,204      |   |                             |   | 703        |                                           |  |   | 153        |  
|                                                                                     |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Net interest income                                                                  |  |                                                 | 2,104      |   |                             |   | 1,210      |                                           |  |   | 383        |  
|Net realized loss on sale of securities                                              |  |                                                 | (2,294     | ) |                             |   | (1,900     | )                                         |  |   | (24        | )
|Net loss on interest rate agreement                                                  |  |                                                 | (120       | ) |                             |   |           |                                           |  |   |           |  
|General and administrative expenses                                                  |  |                                                 | 1,787      |   |                             |   | 570        |                                           |  |   | 171        |  
|                                                                                     |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Net (loss) income                                                                    |  | $                                               | (2,097     | ) |                             | $ | (1,260     | )                                         |  | $ | 188        |  
|                                                                                     |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Other Comprehensive Income :                                                         |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Unrealized net gain on securities:                                                   |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Unrealized holding (loss) gain arising during period                                 |  |                                                 | (2,206     | ) |                             |   | (870       | )                                         |  |   | 60         |  
|Add: reclassification adjustment for net realized loss included in net (loss) income |  |                                                 | 2,293      |   |                             |   | 1,900      |                                           |  |   | 24         |  
|                                                                                     |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Other comprehensive income                                                           |  |                                                 | 87         |   |                             |   | 1,030      |                                           |  |   | 84         |  
|                                                                                     |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Comprehensive (loss) income                                                          |  | $                                               | (2,010     | ) |                             | $ | (230       | )                                         |  | $ | 272        |  
|                                                                                     |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Net (loss) income per share:                                                         |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Basic                                                                                |  | $                                               | (0.15      | ) |                             | $ | (0.09      | )                                         |  | $ | 0.01       |  
|                                                                                     |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Diluted                                                                              |  | $                                               | (0.15      | ) |                             | $ | (0.09      | )                                         |  | $ | 0.01       |  
|                                                                                     |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Weighted average number of shares outstanding:                                       |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Basic                                                                                |  |                                                 | 14,038,983 |   |                             |   | 14,038,983 |                                           |  |   | 14,038,983 |  
|                                                                                     |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  
|Diluted                                                                              |  |                                                 | 14,038,983 |   |                             |   | 14,038,983 |                                           |  |   | 14,038,983 |  
|                                                                                     |  |                                                 |            |   |                             |   |            |                                           |  |   |            |  



F-15



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) 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, in the City of New York, State of New York.



LASER MORTGAGE MANAGEMENT, INC.By:

/s/ Charles R. Howe, IIName: Charles R. Howe, IITitle: Vice President, Chief Financial Officer and Treasurer




Dated: March 29, 2004



Pursuant to the requirements of the Securities Exchange Act of
1934, this Annual Report on Form 10-K has been signed below by the following persons in the capacities and on the date indicated.



|                                                   |  |                                                                                                    |  |               
|-------------------------------------------------- |  | -------------------------------------------------------------------------------------------------- |  | --------------
|SIGNATURE                                          |  | TITLE                                                                                              |  | DATE          
|                                                   |  |                                                                                                   
|/s/ William J. MichaelcheckWilliam J. Michaelcheck |  | Chief Executive Officer, Chairman and Director (Principal Executive Officer)                       |  | March 29, 2004
|                                                   |  |                                                                                                   
|/s/ Charles R. Howe, IICharles R. Howe, II         |  | Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |  | March 29, 2004
|                                                   |  |                                                                                                   
|/s/ Ronald J. ArtinianRonald J. Artinian           |  | Director                                                                                           |  | March 29, 2004
|                                                   |  |                                                                                                   
|/s/ Mark HobbsMark Hobbs                           |  | Director                                                                                           |  | March 29, 2004
|                                                   |  |                                                                                                   
|/s/ Arthur HouseArthur House                       |  | Director                                                                                           |  | March 29, 2004
|                                                   |  |                                                                                                   
|Jonathan Ilany                                     |  | Director                                                                                           |  |               



---

##### Table of Contents

EXHIBIT INDEX



|               |  |                                                                                                                                                                                                                                                              
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Exhibit                                                                                                                                                                                                                                                      
|2.1            |  | The Articles of Merger (Incorporated by reference to Exhibit 2.1 to Registrants Quarterly Report on Form 10-Q dated June 30, 2001.)                                                                                                                         
|               | 
|2.2            |  | The Certificate of Ownership and Merger (Incorporated by reference to Exhibit 2.2 to Registrants Quarterly Report on Form 10-Q dated June 30, 2001.)                                                                                                        
|               | 
|2.3            |  | Plan of Liquidation and Dissolution of LASER Mortgage Management, Inc. (Incorporated by reference to Exhibit 2.3 to Registrants Quarterly Report on Form 10-Q dated June 30,
2001.)                                                                         
|               | 
|3.1            |  | Restated Certificate of Incorporation of LASER Mortgage Management, Inc., a Delaware corporation (Incorporated by reference to Exhibit 3.1 to Registrants Quarterly Report on Form 10-Q
dated June 30, 2001.)                                               
|               | 
|3.2            |  | Bylaws of LASER Mortgage Management, Inc., a Delaware corporation (Incorporated by reference to Exhibit 3.2 to Registrants Quarterly Report on Form 10-Q dated June 30,
2001.)                                                                              
|               | 
|10.1           |  | Management Agreement between the Registrant and LASER Advisers, Inc. (Incorporated by reference to Exhibit 10.2 to the Registrants Annual Report on Form 10-K for the year ending
December 31, 1997.)                                                       
|               | 
|10.2           |  | Consulting Agreement dated as of February 28, 1999 between the Registrant and BlackRock Financial Management, Inc. (Incorporated by reference to Exhibit 10.2 to the Registrants Current
Report on Form 8-K dated February 28, 1999.)                       
|               | 
|10.3           |  | Management Agreement between the Registrant and Mariner Mortgage Management, L.L.C. (Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K dated
November 5, 1999.)                                                       
|               | 
|10.4           |  | First Amendment to the Management Agreement dated as of November 1, 2000 by and between the Registrant and Mariner Mortgage Management, L.L.C. (Incorporated by reference to Exhibit 10.1 to
Registrants Current Report on Form 8-K dated November 3, 2000.)
|               | 
|10.5           |  | Support Services Agreement dated as of November 1, 2001 between the Registrant and Mariner Investment Group, Inc. (Incorporated by reference to Exhibit 10.1 to Registrants Quarterly
Report on Form 10-Q dated September 30, 2001.)                        
|               | 
|10.6           |  | Employment Agreement dated as of November 1, 2001 between the Registrant and William J. Michaelcheck (Incorporated by reference to Exhibit 10.2 to Registrants Quarterly Report on Form
10-Q dated September 30, 2001.)                                     



---

##### Table of Contents

|     |  |                                                                                                                                                                                                                                                                                                                                                                     
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.7 |  | Employment Agreement dated as of November 1, 2001 between the Registrant and Charles R. Howe, II (Incorporated by reference to Exhibit 10.3 to Registrants Quarterly Report on Form 10-Q
dated September 30, 2001.)                                                                                                                                                
|     | 
|10.8 |  | Form of Indemnification Agreement between the Registrant and each of Ronald J. Artinian, Mark Hobbs, Arthur House, Jonathan Ilany, William J. Michaelcheck, Charles R. Howe, II, Thomas Arleo,
A. George Kallop, William Petersen, and Dennis Winter (Incorporated by reference to Exhibit 10.9 to Registrants Annual Report on Form 10-K dated December 31, 2002.)
|     | 
|31.1 |  | Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.*                                                                                                                                                                                                                                                                                             
|     | 
|31.2 |  | Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.*                                                                                                                                                                                                                                                                                             
|     | 
|32.1 |  | Section 1350 Certification of the Chief Executive Officer.*                                                                                                                                                                                                                                                                                                         
|     | 
|32.2 |  | Section 1350 Certification of the Chief Financial Officer.*                                                                                                                                                                                                                                                                                                         
|     | 
|99.1 |  | Certificate of Dissolution (Incorporated by reference to Exhibit 99.1 to Registrants Quarterly Report on Form 10-Q dated September 30, 2001.)                                                                                                                                                                                                                      

---

|* | Filed herewith.
|- | ---------------