SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                ________________
                                    Form 10-K

(MARK  ONE)

[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT  OF  1934

                   For the fiscal year ended December 31, 1999

                                       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 0-27212
                                 ENDOCARE, INC.
             (Exact name of registrant as specified in its charter)

                            Delaware     33-0618093
             (State or other jurisdiction of     (I.R.S. Employer
            incorporation or organization)     Identification No.)

                  7 Studebaker, Irvine, California     92618
            (Address of principal executive offices)     (Zip code)

       Registrant's telephone number, including area code: (949) 595-4770

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

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

                         Common Stock, $.001 par value
                                (Title of Class)

     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  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-10K.  [X]

     The  number  of  shares  of the registrant's common stock outstanding as of
February  29,  2000  was  11,297,531.

The  aggregate  market  value  of  the  registrant's  common  stock  held  by
non-affiliates  of  the  registrant was $149,228,865 (computed using the average
bid  and  asked  prices  quoted  on  the Nasdaq Small Cap Market on February 29,
2000).

The  information  required  to  be  included  in  Part  III of this Form 10-K is
incorporated  by  reference  to  the  definitive  proxy  statement  for  the
registrant's  annual  meeting  of  stockholders to be filed by the registrant no
later  than  120  days  after  December 31, 1999, the close of its fiscal year.




                                 ENDOCARE, INC.
                       INDEX TO ANNUAL REPORT ON FORM 10-K
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

ITEM  NUMBER  AND  CAPTION
--------------------------
<TABLE>
<CAPTION>


                                                      PAGE
 PART I                                              NUMBER
------------  -------------------------------------------------------------------------------------
<S>           <C>                                                                                   <C>
    Item 1.   Business                                                                                3
    Item 2.   Properties                                                                             14
    Item 3.   Legal Proceedings                                                                      14
    Item 4.   Submission of Matters to a Vote of Security Holders                                    14

    PART II
------------

    Item 5.   Market for Registrant's Common Equity and Related Shareholder Matters                  15
    Item 6.   Selected Financial Data                                                                16
    Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations  16
    Item 7A.  Quantitative and Qualitative Disclosures about Market Risk                             20
    Item 8.   Financial Statements and Supplementary Data                                            21
    Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   21

    PART III
------------

    Item 10.  Directors and Executive Officers of the Registrant                                     21
    Item 11.  Executive Compensation                                                                 21
    Item 12.  Security Ownership of Certain Beneficial Owners and Management                         21
    Item 13.  Certain Relationships and Related Transactions                                         21

    PART IV
------------

    Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K                       22
</TABLE>



<PAGE>

                                     PART I


ITEM  1.     BUSINESS

GENERAL

     Endocare,  Inc.,  a  Delaware  corporation  ("Endocare"  or the "Company"),
develops,  manufactures  and  markets  an array of innovative, temperature-based
minimally  invasive surgical devices and technologies to treat prostate disease.
The  Company  has  focused  its efforts on the continued clinical development of
surgical  devices  for  the  treatment  of  the  two most common diseases of the
prostate,  Prostate  Cancer  and  Benign Prostate Hyperplasia ("BPH").  Prostate
cancer  affects  one  in six men over the age of fifty, while BPH affects one in
two  men  over  the  age  of  fifty.

     Endocare  has  developed  and  recently  introduced  an  innovative, second
generation  cryosurgical  system  for  the  treatment  of  prostate  cancer. The
Cryocare  System  (TM)  offers the advantage of controlled, targeted freezing of
the tumor with the benefit of faster patient recovery and minimal complications.
The  system  was  launched  in  July  1999  following the initiation of national
Medicare coverage for cryosurgical procedures as a primary treatment alternative
for  localized  prostate cancer.  The Company also operates a mobile cryosurgery
business  in  Florida which provides cryosurgical equipment for the treatment of
prostate  and  liver  cancer  on  a  per  procedure  basis.

     Endocare  has  also  developed  new therapies for the improved treatment of
BPH.  The  Company's initial product development efforts for BPH involve the use
of  stent  technology  to  provide  both  immediate  and long-term relief to BPH
patients. Endocare has implemented a two-part strategy for the commercialization
of  its  stent-based  BPH  therapies.  The first stage is the development of the
Company's  Horizon  Prostatic  Stent  (TM).  This  nitinol-based stent has shape
memory  characteristics  for  easy  placement  via a catheter following surgical
intervention  of  the  prostate  and  convenient atraumatic removal of the stent
following  the  healing process. The Company believes that its Horizon Prostatic
Stent  (TM)  will  address one of the major issues of BPH therapy, the immediate
relief  of  patients  following  thermotherapy  and surgical resection. In 1999,
Endocare  completed  phase two of the Horizon Prostatic Stent (TM) FDA study and
received  approval to expand the trial to the pivotal study. The Company expects
to  complete the FDA study the second half of 2000.  In addition, the Company is
exploring  the use of the stent for long-term relief of BPH without the need for
thermotherapy  in  a  subset  of  the  patient  population.

     The  second stage in developing the Company's stent technology will combine
a  nitinol  stent  with  a catheter system to deliver thermotherapy. The Company
believes that this ThermaStent (TM) will provide immediate and long-term therapy
in  a  one-step  process.  The  Company believes that its ability to perform BPH
therapy  in  this  manner  could  result  in  an  increase  in the number of BPH
sufferers  who  will  seek  curative  surgical  procedures.

     Since  its  formation  in  1990,  Endocare operated first as a research and
development department, then later as a division of Medstone International, Inc.
("Medstone").  Effective  January  1,  1996,  Endocare  became  an  independent,
publicly-owned  corporation  upon  being  spun-out  to  existing  Medstone
shareholders.

PROSTATE  CANCER

MARKET  BACKGROUND

     The  incidence  of  prostate cancer has risen steadily since 1980 to become
the  second  most  common cause of cancer-related deaths among men. The dramatic
increase  in  prostate  cancer  cases  has  led  to  heightened awareness of the
disease,  which  has  led  to increased rates of testing and improved diagnostic
methods.

     Therapeutic  alternatives  for patients with prostate cancer have been both
limited  and  unattractive.  Current  treatment options include radical surgery,
radiation  therapy,  hormone  therapy, cryotherapy and "watchful waiting." These
options  are  evaluated using a number of criteria, including the patient's age,
physical  condition  and  stage  of  the  disease.  However,  due  to  the  slow
progression  of  the disease, the decision for treatment typically is based upon
the  severity  of  the  condition  and  the  resulting  quality  of  life.

     Radical  prostatectomy  is most often the therapy of choice due to the high
degree  of  confidence in surgically removing the cancerous tissue, particularly
for  patients  having  more advanced stages of the disease and those who fail to
respond  to  less invasive alternatives. The procedure is dependent on the skill
of  the  surgeon  and  is  highly  morbid,  often  associated with high rates of
impotence,  incontinence  and  operative  mortality.

     Radiation therapy for prostate cancer includes both external radiation beam
and  interstitial  radioactive  seed therapies.  External beam radiation therapy
emerged  as  one  of  the  first alternatives to radical prostatectomy; however,
studies  have shown that the success rate of this procedure is not comparable to
that  of  radical  prostatectomy.  Interstitial  radioactive  seed therapy, also
referred to as brachytherapy, is the permanent placement of radioactive seeds in
the  prostate.  Brachytherapy  has been shown to be most effective for localized
tumors  caught  in  the  early  stage  of  disease  development.

     Cryosurgery, freezing tissue to destroy tumor cells, was first developed in
the  1960's.  During  this  period, the use of "cold probes," or cryoprobes, was
explored  as  a  method  to  kill  prostate tissue without having to use radical
surgery.  Although  effective in killing cancer cells, the lack of control as to
the  amount  of tissue frozen prevented broad use and development of cryotherapy
for  prostate  cancer.

     In the late 1980's, progress in ultrasound imaging allowed for a revival in
the  use  of  cryosurgery.  Using ultrasound, the cryoprobe may be guided to the
targeted  tissue  from  outside the body through a small incision. The physician
activates  the cryoprobe and uses ultrasound to monitor the growth of ice in the
prostate  as  it is occurring. When the ice encompasses the entire prostate, the
probe  is  turned  off. This feedback mechanism of watching the therapy as it is
administered  allows  the  physician  precise control during application. Recent
published  studies  suggest that cryosurgery may be able to deliver disease free
rates  comparable  to  radical  surgery,  but with the benefit of lower rates of
incontinence  and  mortality.

CRYOCARE  SYSTEM  (TM)

     Endocare  has  developed  the  Cryocare  System  (TM),  a second-generation
cryosurgery  system designed to overcome the limitations of existing systems and
to  allow  the urologist to treat prostate cancer in a minimally invasive manner
in  an  outpatient setting. The Cryocare System (TM) has been designed to freeze
tissue  much  faster  and  with  more  control  than  existing  systems.

     The  Company  believes  the  Cryocare  System  (TM)  is  significantly more
efficient  than  current  competitive  cryosurgical  technology  in creating the
lethal  temperatures  in  the  cryoprobe necessary to kill cancer cells. Current
cryosurgical  technology  employs  a  tank  of liquid nitrogen, which is at -186
degrees Celcius (C), and pumps it through a tube to the cryoprobe. The challenge
for  current  liquid  nitrogen  technology  is  to  not "leak" the cold prior to
delivering  it  to the tumor site. Liquid nitrogen technology starts out coldest
at  the  storage  tank and can only get warmer and less effective by the time it
reaches  the  tumor  site  and  attempts  to  freeze  the  tissue.

     Endocare's  Cryocare  System (TM) utilizes a system that converts argon gas
to  a liquid form at the tip of the probe. The gas itself is at room temperature
until  reaching  the tip, making it easier to handle and eliminating the need to
store  liquid nitrogen. In addition, a temperature of -150 degrees C is achieved
at  the  tip  of  the Cryoprobe (TM), considerably colder than the -90 degrees C
achieved  using  liquid  nitrogen systems, which results in substantially faster
tissue  freezing  rates.

     The  Cryocare  System  (TM)  incorporates  enhanced  control  mechanisms to
minimize  the risk of unintended damage to tissue surrounding the prostate. Most
significantly, the Cryocare probes stop freezing instantly, whereas probes using
liquid  nitrogen  take  up to one minute to stop freezing tissue. Use of four to
six  temperature  probes  selectively  placed  in  the  prostate near the rectal
tissue,  sphincter  muscles (which control continence) and neurovascular bundles
(which  control potency) enables the physician to monitor temperatures of tissue
adjacent  to the prostate. Combining these control features allows the physician
to  treat  prostate  cancer with a high degree of control and precision that was
not  previously  possible. The Cryocare System (TM) is approximately one quarter
of the size of currently available nitrogen systems and one tenth of the weight.

     The  Cryocare System (TM) has been cleared for marketing by the FDA and was
commercially launched in July 1999 following the initiation of national Medicare
coverage  for  cryosurgical  procedures  as  a primary treatment alternative for
localized  prostate cancer. Through direct sales of cryosurgical systems and its
cryosurgical  system  placement  program,  the  Company  has  installed Cryocare
Systems  (TM)  primarily  in  North America, with over 1,000 patients treated to
date.  Endocare's  Cryocare  System  (TM)  is  the  only  temperature-monitored,
cryosurgical  system  specifically  cleared  by  the  FDA  for  the treatment of
prostate  cancer.

     The  Company has received issued patents relating to the technology used to
create  the  freezing  process  and to precisely control the shape of the freeze
zone  produced  by the Cryoprobes (TM) and covering the Company's Cryoprobe (TM)
technology.  The technology may also allow for expanded therapeutic applications
by tailoring the Cryoprobe (TM) performance to other anatomical targets, such as
liver  cancer  and  gynecology  applications.

BENIGN  PROSTATE  HYPERPLASIA

MARKET  BACKGROUND

     BPH,  which  affects  a  large  number  of  adult  men,  is a non-cancerous
enlargement  of  the innermost part of the prostate. BPH frequently results in a
gradual  squeezing  of  the part of the urethra which runs through the prostate.
This  causes  patients  to  experience a frequent urge to urinate because of the
incomplete emptying of the bladder and a burning sensation or similar discomfort
during  urination.  The  obstruction  of urinary flow can also lead to a general
lack  of  control over urination, including difficulty initiating urination when
desired  as  well  as difficulty preventing urinary flow because of the residual
volume  of urine in the bladder (a condition known as urinary incontinence). BPH
symptoms  may  disturb sleep by causing the BPH sufferer to awaken frequently to
urinate.  Although  symptoms  occasionally  stabilize  or  diminish  without
intervention,  they generally become more severe over the course of the disease.
Left  untreated,  the  obstruction  caused  by  BPH  can  lead  to acute urinary
retention  (complete inability to urinate), serious urinary tract infections and
permanent  bladder  and  kidney  damage.

     Most males will eventually suffer from BPH. The incidence of BPH for men in
their  fifties is approximately 50% and rises to approximately 80% by the age of
80.  The  general  aging  of the United States population, as well as increasing
life  expectancies,  is anticipated to contribute to the continued growth in the
number  of  BPH  sufferers.

     Patients  diagnosed with BPH generally have four options for treatment: (i)
"watchful  waiting,"  (ii)  drug therapy; (iii) surgical intervention, including
transurethral  resection  of  the  prostate  ("TURP")  and  laser  assisted
prostatectomy;  and  (iv)  new,  less  invasive thermal therapies. Currently the
number  of  patients  who  are  actually  treated  by  surgical  approaches  is
approximately  25%  of  patients  with  BPH. Treatment is generally reserved for
patients  with intolerable symptoms or those with significant potential symptoms
if  treatment  were  withheld. A large number delay discussing their symptoms or
elect  "watchful waiting" to see if the condition remains tolerable. The Company
believes  the development of less invasive procedures for treatment of BPH could
result  in  a  substantial  increase  in the number of BPH patients who elect to
receive  interventional  therapy.

     Drug  Therapies:  Some  drugs  are  designed  to  shrink  the  prostate  by
inhibiting  or slowing the growth of prostate cells. Other drugs are designed to
relax  the  muscles  in  the  prostate  and  bladder  neck  to  relieve urethral
obstruction.  Current  drug  therapy generally requires daily administration for
the  duration  of  the  patient's  life.

     Surgical  Interventions:  The most common surgical procedure, transurethral
resection  of  the  prostate  ("TURP"),  involves  the removal of the prostate's
innermost  core in order to reduce pressure on the urethra. TURP is performed by
introducing  an  electrosurgical  cutting  loop  through  a  cystoscope into the
urethra  and  "chipping out" both the prostatic urethra and surrounding prostate
tissue  up to the surgical capsule, thereby completely clearing the obstruction.
The  average TURP procedure requires a hospital stay of approximately four days.

     Less  Invasive  Thermal  Therapies:  Other  technologies developed or under
development  are  non-surgical, catheter-based therapies that use thermal energy
to  preferentially  heat  diseased  areas  of  the  prostate  to  a  temperature
sufficient  to  cause  cell  death.  Thermal energy forms being utilized include
microwave,  radio  frequency  ("RF")  and  ultrasound energy. The procedures are
typically  performed  in  an  outpatient  setting  under  local anesthesia. Both
microwave  and  RF  therapy  systems  are  currently  being  marketed worldwide,
including the United States, where the first FDA clearances were obtained in May
and  October  1996,  for  microwave  and  RF,  respectively.

     HORIZON  PROSTATIC  STENT

Endocare has developed a new urological stent which has been designed to provide
immediate  relief  for  BPH  patients  who  undergo thermotherapy. The Company's
Horizon Prostatic Stent (TM) is made of nitinol, a new titanium metal alloy that
employs  a  feature  called  shape  memory. This shape memory feature allows the
Horizon  Prostatic  Stent  (TM)  to  be  soft and flexible in its relaxed state,
allowing  the  device  to be introduced in a relatively pain-free manner using a
catheter.  When  the  device is heated to its transition temperature, the device
self-expands  to  a  pre-determined  shape. In the case of the Horizon Prostatic
Stent  (TM),  the  predetermined  shape  is  that of a rigid tube, or stent. The
catheter  is  inserted  using a local anesthetic and positioned in the prostatic
urethra  under  direct  vision. The stent is activated by body heat, causing the
shape memory to open to its tube-like position. After approximately 30 days, the
stent  is  removed by the physician by flushing cool water through an endoscope,
causing  the stent to return to its soft, relaxed state. The stent is removed by
retrieving  it  through  the  working  channel  of  the  endoscope.

     Endocare  has completed the early stage FDA clinical trials for the Horizon
Prostatic  Stent  (TM)  and  has  received  approval  to expand the trial to the
pivotal  study,  which  is  the final study before clearance can be obtained for
broader  use.  Because  the stent will be removed from the patients within 30 to
60  days,  the Company expects that the trials can be completed quickly and that
the regulatory process may be expedited. However, there can be no assurance that
the  FDA  will  not  require more time consuming and extensive clinical studies.

     THERMASTENT

Endocare's  ThermaStent  (TM) is expected to be the second product developed for
the  Company's  office-based therapy product line. The ThermaStent (TM) is being
designed  to  combine  thermotherapy  with  the  Company's  nitinol  stent.  The
ThermaStent  is  currently  in  development  and  in  pre-clinical studies.  The
Company  secured  a  patent  position  on the ThermaStent (TM) device whereby in
April  1996,  Endocare  licensed from the Brigham and Women's Hospital ("BW") an
issued patent covering urological applications of the delivery of thermal energy
by  a  stent.

LEVERAGING  CORE  TECHNOLOGIES

     The Company views its cryosurgical technology as a core technology that can
be  applied  in  the  treatment of other types of cancers.  In 1999, the Company
entered  into  an  alliance  with  Sanarus  Medical,  Inc., a women's healthcare
company,  to  develop market applications in breast cancer, benign breast tumors
and gynecological diseases.  The Company is also exploring clinical applications
in  cryoablation  of  kidney  and  liver  tumors.

PRODUCTS

     Endocare  has  developed  the  following  products:

<TABLE>
<CAPTION>


                                                                      COMMERCIAL
    PRODUCT NAME                 TARGETED INDICATION       STATUS     LAUNCH DATE
<S>                        <C>                      <C>           <C>
    Cryocare-4 Probe System   General Surgery           Marketing       May 1996
    Cryocare-8 Probe System   Prostate Cancer           Marketing       July 1999
    Horizon Prostatic Stent   Acute Urinary Retention   FDA Trials         ------
    ThermaStent               BPH                       Pre-Clinical       ------
                                                        Studies
</TABLE>


PATENTS  AND  INTELLECTUAL  PROPERTY

     The  Company's policy is to secure and protect intellectual property rights
relating  to  its  technology.  While  Endocare  believes that the protection of
patents  and  licenses  is  important  to  its business, it also relies on trade
secrets,  know-how  and  continuing  technological  innovation  to  maintain its
competitive  position. The Company has received two issued patents from the U.S.
Patent  and  Trademark  Office covering the Company's Cryoprobe (TM) technology.
The  Company  entered into worldwide licensing agreements relating to urological
applications  of  a patent from BW for the ThermaStent (TM) product and a method
patent  covering  treatment  of obstructive portions of urinary passageways from
Beth Israel Deaconess Medical Center ("BI") for the Horizon Prostatic Stent (TM)
product.  The  BW  patent  covers  the  concept  of a variety of methods to heat
occluded  body  passageways  by  use  of  a stent. The BI issued patent covers a
method  for  the treatment of an obstructive portion of a urinary passageway via
the  placement  of  a  temperature-activated nitinol stent. The Company has also
received  a  patent which focuses on the use of a combination therapy of a stent
for  short-term  relief  of the occlusion and thermotherapy for long-term relief
and  licensed  a  patent  covering the delivery mechanism of a nitinol stent for
hollow body conduits. Patent applications for some of the new products described
above  under  "Products"  have  been filed or are in the process of being filed.
The  Company  has a patent portfolio consisting of 13 issued patents and patents
under  license  and  8 patent applications pending issuance from the U.S. Patent
and  Trademark  Office.

     No  assurance  can  be given that Endocare's processes or products will not
infringe  patents  or  proprietary rights of others or that any license required
would  be  made available under any such patents or proprietary rights, on terms
acceptable  to  Endocare  or at all. From time to time, the Company has received
correspondence  alleging infringement of proprietary rights of third parties. No
assurance  can  be  given that any relevant claims of third parties would not be
upheld  as  valid  and enforceable, and therefore the Company could be prevented
from  practicing  the  subject  matter  claimed  or  would be required to obtain
licenses  from  the owners of any such proprietary rights to avoid infringement.

     The  Company  seeks  to  preserve  the confidentiality of its technology by
entering  into  confidentiality  agreements  with  its  employees,  consultants,
customers  and  key  vendors  and  by  other  means.  No assurance can be given,
however,  that these measures will prevent the unauthorized disclosure or use of
such  technology.

SALES  AND  MARKETING

     The  Company  derives a majority of its revenues from the sales of Cryocare
Systems (TM), which includes the sales of associated disposable Cryoprobes (TM),
and  from  the sale of disposable Cryoprobes (TM) to sites where the Company has
placed  cryosurgical  systems.  The Company expects that sales of these products
will  continue  to  constitute  the  majority  of  net sales for the foreseeable
future.  Accordingly,  any  factor  adversely  affecting  the  sales of Cryocare
Systems  (TM)  and  Cryoprobes  (TM) would have a material adverse effect on the
Company's  business,  financial  condition  and  results of its operations.  The
Company  also  operates  a regional mobile cryosurgery business in Florida which
provides  cryosurgical  equipment for the treatment of prostate and liver cancer
on  a  procedural  basis.  In  July  1999,  HCFA  implemented  national Medicare
coverage  for cryosurgical ablation of the prostate, one of the approved uses of
the  Company's  eight  probe Cryocare System (TM).  Although HCFA's decision has
been implemented, reimbursement codes and corresponding rates are in the process
of  being established.  No assurance can be given that health care professionals
will  adopt  the  technology  or that reimbursement will be sufficient enough to
induce  the  physicians  to  perform  the  procedure.

     In  March  1999,  the  Company  exercised  an  option  to  terminate  its
distribution  agreement with Boston Scientific Corporation ("Boston Scientific")
under  which  Boston  Scientific  had exclusive worldwide distribution rights to
market  the  Cryocare  System  (TM)  for  urology  except  in Canada where it is
distributed  under  a distribution agreement with Mentor Medical Systems Canada.
As  a result of the termination of the Boston Scientific agreement, future sales
of  the Cryocare System (TM) and Cryoprobes (TM), will largely be dependent upon
the  marketing  efforts  of the Company and/or new distributorship relationships
which  the  Company  may  enter  into.

     Until  March  1999,  Endocare's  Cryocare  System  (TM)  for  urological
applications  was  distributed  worldwide  by  Boston  Scientific (other than in
Canada).  For  the  years  ended  December  31,  1997,  1998,  and  1999, Boston
Scientific  accounted  for  59%,  41%,  and  0%,  respectively, of the Company's
consolidated  revenues.  The  Company  is  evaluating  additional  international
distribution  partners  for its Cryocare System (TM) for urological applications
as  an  alternative  to  establishing  an  international sales force to sell the
product.  The  Company  currently  sells  its  products domestically through its
direct  sales  force  which  consists of a senior vice president of sales, seven
regional  sales  managers  and  three  clinical  application  specialists.
Internationally,  products  are sold primarily through independent distributors.
Overall,  international  sales for urological applications were insignificant in
1997 and 1998 and represented approximately 12% of consolidated revenue in 1999.
The  Company's  distributor  agreements  typically  provide the distributor with
exclusive  selling rights to certain products in a particular territory, and are
terminable by either party generally on 60 days notice. Each party bears its own
expenses  in performing under the agreement. The Company's ability to distribute
its  products  depends  substantially  on  the capabilities of its distributors.
There  can  be  no assurance that the Company will be able to maintain or expand
its relationships with its distributors or to replace a distributor in the event
any  such  relationships  were  terminated.  In  the  event  that  the Company's
relationships  with  any of its distributors were terminated and the Company was
unable  to  replace  the  distribution  capability,  the  Company's  ability  to
distribute its products could be materially adversely affected, which could have
a  material  adverse  effect  on the Company's business, financial condition and
results  of  operations. In addition, in such event, the Company's current sales
and  marketing  personnel  and  financial  resources  might not be sufficient to
enable  the  Company  to establish its own distribution capability to market and
sell  its  products.

BACKLOG

     As of December 31, 1999, the Company maintained minimal backlog. Endocare's
policy  is to stock enough inventory to be able to ship most orders within a few
days  of  receipt of order. Historically, most of the Company's orders have been
for  shipment  within  30 days of the placement of the order. Therefore, backlog
information  as  of the end of a particular period is not necessarily indicative
of  future  levels  of  the  Company's  revenue.

MANUFACTURING

     The  Company  uses  internal  manufacturing  capacity  in its manufacturing
efforts.  Most of the Company's purchased components and processes are available
from  more  than  one  vendor.  However,  certain  components  and processes are
currently  available  from or performed by a single vendor. The ability of third
party  manufacturing sources to deliver components or finished goods will affect
the  Company's  ability  to  commercialize  its  products,  and  the  Company's
dependence  on  third  party  sources  may adversely affect the Company's profit
margins.  Further,  although  the  Company  continuously  evaluates  alternative
vendors,  the  qualification  of  additional  or replacement vendors for certain
components  or  services  is  a  lengthy process. Any supply interruption from a
single  source  vendor  would  have  a  material adverse effect on the Company's
ability  to  manufacture its products until a new source of supply was qualified
and,  as  a  result,  could  have  a  material  adverse  effect on the Company's
business,  financial  condition  and  results  of  operations.

     Additionally, the Company's success will depend in part upon its ability to
manufacture its products in compliance with the FDA's current Good Manufacturing
Practices  ("GMP")  regulations and other regulatory requirements, in sufficient
quantities  and  on  a  timely  basis,  while  maintaining  product  quality and
acceptable  manufacturing  costs.  Failure  to  increase production volumes in a
timely  or  cost  effective manner or to maintain compliance with current GMP or
other  regulatory  requirements  could  have  a  material  adverse effect on the
Company's business, financial condition and results of operations. Endocare also
has  obtained  from  the  California  Department of Health Services a license to
manufacture  medical  devices  and  is subject to periodic inspections and other
regulation  by  that  agency.

     Manufacturers  often encounter difficulties in scaling up production of new
products,  including  problems  involving production yields, quality control and
assurance,  component supply and shortages of qualified personnel. The Company's
failure  to  overcome these manufacturing problems could have a material adverse
effect on the Company's business, financial condition and results of operations.

GOVERNMENT  REGULATION

     Governmental  regulation  in  the  United  States  and other countries is a
significant  factor  affecting  the  research  and  development, manufacture and
marketing  of  the  Company's  products. In the United States, the FDA has broad
authority  under  the  Federal Food, Drug and Cosmetic Act and the Public Health
Service  Act  to  regulate  the  distribution,  manufacture  and sale of medical
devices.  Foreign  sales  of medical devices are subject to foreign governmental
regulation  and  restrictions  which  vary  from  country  to  country.

Medical  devices intended for human use in the United States are classified into
one  of  three  categories,  depending  upon the degree of regulatory control to
which  they  will  be  subject.  Such  devices are classified by regulation into
either class I (general controls), class II (performance standards) or class III
(pre-market approval) depending upon the level of regulatory control required to
provide reasonable assurance of the safety and effectiveness of the device. Good
Manufacturing  Practices,  labeling, maintenance of records and filings with the
FDA  also  apply  to  medical  devices.

     A  subset of medical devices categorized as class I or II devices that were
commercially  distributed  before March 28, 1976 or are substantially equivalent
to a device that was in commercial distribution before that date may be marketed
after  the  acceptance  of the pre-market notification under a 510(k) exemption.
Section  510(k)  of  the Federal Food, Drug and Cosmetic Act allows an exemption
from the requirement of pre-market notification. Generally, devices that have an
existing  history  or  track  record  are  included  in  this  category.

     The  process  of  obtaining FDA and other required regulatory clearances or
approvals is lengthy and expensive. There can be no assurance that Endocare will
be  able to obtain necessary clearances or approvals for clinical testing or for
manufacturing  or  marketing  of its products. Failure to comply with applicable
regulatory  approvals can, among other things, result in warning letters, fines,
suspensions of regulatory approvals, product recalls, operating restrictions and
criminal  prosecution.  In  addition, governmental regulation may be established
which  could  prevent, delay, modify or rescind regulatory clearance or approval
of  Endocare's  products.

     Regulatory  clearances  or  approvals,  if granted, may include significant
limitations  on  the  indicated  uses  for  which  the Company's products may be
marketed.  In  addition,  to  obtain  such  clearances or approvals, the FDA and
foreign  regulatory  authorities  may  impose numerous other requirements on the
Company.  FDA  enforcement  policy  strictly prohibits the marketing of approved
medical  devices  for  unapproved  uses.  In  addition, product approvals can be
withdrawn  for  failure to comply with regulatory standards or the occurrence of
unforeseen  problems following initial marketing. There can be no assurance that
the  Company  will  be able to obtain regulatory clearances or approvals for its
products  on  a  timely  basis or at all, and delays in receipt of or failure to
receive such approvals, the loss of previously obtained approvals, or failure to
comply  with  existing  or  future regulatory requirements would have a material
adverse  effect  on  the  Company's business, financial condition and results of
operations.

     Endocare's  Cryocare System (TM) has received FDA clearance for sale in the
United  States  for  approved  urological  and  general  surgery, gynecology and
oncology  uses. Endocare's manufacturing facility was subject to an FDA audit in
September  1999,  and the Company received no notice that it did not comply with
the  FDA's  current GMP regulations. In addition, Endocare has obtained from the
California  Department  of  Health  Services  a  license  to manufacture medical
devices,  subject  to  periodic inspections and other regulation by that agency.

COMPETITION

     Currently,  the  Company  markets cryosurgical systems and other urological
products.  Significant  competitors  in  the  area  of prostate cancer therapies
include Cryomedical Sciences, Inc., Galil Medical, Ltd., Theragenics Corporation
and  North American Scientific, Inc.  Significant competitors in the area of BPH
therapies include Urologix, Inc., VidaMed, Inc., EDAP/TMS, S.A., C.R. Bard, Inc.
and  ACMI/Circon  Corporation.

     Many of the Company's competitors are significantly larger than the Company
and  have greater financial, technical, research, marketing, sales, distribution
and  other  resources than the Company. Additionally, the Company believes there
will  be  intense  price  competition  for  products  developed in the Company's
market.  There  can  be  no  assurance  that  the Company's competitors will not
succeed  in  developing  or  marketing  technologies  and products that are more
effective  or  commercially  attractive  than  any  that  are being developed or
marketed  by the Company, or that such competitors will not succeed in obtaining
regulatory  approval,  introducing or commercializing any such products prior to
the  Company.  Such  developments  could  have  a material adverse effect on the
Company's  business,  financial  condition  and  results of operations. Further,
there  can  be  no  assurance  that,  even  if  the  Company  is able to compete
successfully,  that  it  would  do  so  in  a  profitable  manner.

EMPLOYEES

     As  of  December  31, 1999, Endocare had a total of 56 employees. Of the 56
employees,  8  are engaged directly in research and development activities, 5 in
regulatory  affairs/quality  assurance,  14  in  manufacturing,  20 in sales and
marketing, and 9 in general and administrative positions. The Company expects to
increase  employment  in  conjunction with the commercial launch of the Cryocare
System (TM)and expanded research, development and clinical activities related to
the  Horizon Prostatic Stent (TM) and ThermaStent (TM) programs. The Company has
never  experienced  a  work stoppage, none of its employees are represented by a
labor organization, and the Company considers its employee relations to be good.

     Although  Endocare  conducts most of its research and development using its
own employees, the Company occasionally has funded and plans to continue to fund
research  using  consultants.  Consultants  provide  services  under  written
agreements  and  are  paid based on the amount of time spent on Company matters.
Under their consulting agreements, such consultants are required to disclose and
assign to the Company any ideas, discoveries and inventions developed by them in
the  course  of  providing  consulting  services.

FACTORS  THAT  MAY  AFFECT  FUTURE  RESULTS  AND  TRADING  PRICE OF COMMON STOCK

     This  report  for the year ended December 31, 1999 contains forward-looking
statements  that involve risks and uncertainties including those discussed below
and  in  the  Management's  Discussion  and  Analysis of Financial Condition and
Results  of  Operations  section and Notes to Consolidated Financial Statements.
The  actual  results  that  the  Company achieves may differ materially from any
forward-looking  statements  due  to  such  risks  and  uncertainties.  All such
factors  should  be  considered  by  investors  in  the  Company.

WE  HAVE  A  LIMITED  OPERATING  HISTORY  AND  A  HISTORY  OF  LOSSES

     We  have  a  limited history of operations as an independent entity.  Since
our  inception,  we  have engaged primarily in research and development and have
minimal  experience  in  manufacturing,  marketing  and  selling our products in
commercial  quantities.  We  have  incurred  annual  operating  losses  since
inception, and expect to continue to incur operating losses because new products
will  require  substantial  development,  clinical,  regulatory,  manufacturing,
marketing  and  other  expenditures.     For the fiscal years ended December 31,
1997,  1998  and  1999,  we  had net losses of approximately $4.0 million,  $4.9
million  and  $9.3  million,  respectively.  As  of  December  31,  1999,  our
accumulated  deficit  was  approximately  $19.8  million.  We may not be able to
successfully  develop  or  commercialize our current or future products, achieve
significant  revenues  from  sales  or  procedures,  or  achieve  or  sustain
profitability.  Successful  completion  of  our  development  program  and  its
transition  to  attaining  profitable  operations  is dependent upon achieving a
level  of  revenues  adequate  to  support  our  cost  structure  and  obtaining
additional financing adequate to fulfill our research and development activities
to  continue  refining  our existing products and developing and commercializing
new  products.


<PAGE>
OUR  NEW  PRODUCTS MAY NOT BE ACCEPTED IN THE MARKET AND INSURANCE REIMBURSEMENT
MAY  NOT  BE  SUFFICIENT

     Certain  of  our  products, including our Cryocare Systems (TM), are in the
early  stages  of  development  or market introduction.  Our products may not be
accepted  by  potential  customers.  Our  ability  to  successfully  market  our
Cryocare  System (TM) is dependent upon acceptance of cryosurgical procedures in
the  United  States  and certain international markets.  Cryosurgery has existed
for many years, but has not been widely accepted due to cost, competing products
and  limited  reimbursement  by third party payers.  Effective July 1, 1999, the
Health  Care  Financing  Administration  implemented  approved uses of our eight
probe  Cryocare  System (TM), however, reimbursement rates are in the process of
being  established.  Certain  private  health  insurance  companies  pay  for
procedures in which our products are used in certain areas of the United States,
but  private  insurance  reimbursement  may  not  be  adopted  nationally  or by
additional insurers.  Reimbursement from Medicare or private insurers may not be
sufficient  to  induce  physicians  to  perform,  and  patients  to  elect,  our
procedure.  The  acceptance  of  cryosurgery  by  the  general population may be
negatively  affected by its price, concerns relating to its safety and efficacy,
the  accepted  effectiveness  of  alternative  methods  of correcting urological
disorders,  and  the  level  of reimbursement from private insurers.  Any future
reported  adverse  events  or  other  unfavorable  publicity  involving  patient
outcomes  from the use of cryosurgery, whether from our products or the products
of our competitors, could also adversely affect acceptance and reimbursement for
cryosurgery.  Emerging new technologies and procedures to treat cancer, prostate
enlargement  and  other prostate disorders also may negatively affect the market
acceptance  of  cryosurgery.  Our  Cryocare  Systems  (TM)  may  not  gain  any
significant  degree  of  market acceptance among physicians, patients and health
care  payers.

THE  DEVELOPMENT  OF  OUR  PRODUCTS  IS  UNCERTAIN

     Our  growth  depends  in  large  part  on continued ability to successfully
develop,  commercialize and market new products.  Several of our products are in
varying  stages  of  development.  We  may  not  be successful in developing and
commercializing  new products that achieve market acceptance.  We may experience
difficulties  that  could  delay  or  prevent  the  successful  development,
introduction and marketing of new products.  Our products in development may not
prove  safe  and  effective  in  clinical  trials  under  regulatory guidelines.
Clinical  trials may identify significant technical or other obstacles that must
be  overcome prior to obtaining necessary regulatory or reimbursement approvals.
Even if our products overcome these obstacles, they will not be used unless they
present  an attractive alternative to other treatments and the clinical benefits
to  the patient and cost savings achieved through their use outweigh the cost of
the  products.  We  believe  that recommendations and endorsements of physicians
and  patients  and  sufficient  reimbursement  by  health  care  payers  will be
essential  for  market  acceptance  of  our  products,  and  recommendations,
endorsements  or  sufficient  reimbursement may not be obtained.  Our failure to
successfully  develop,  commercialize  and  market  new  products  or to achieve
significant  market  acceptance  would have a significant negative effect on our
financial  condition.

WE  HAVE  LIMITED  SALES  AND  MARKETING  EXPERIENCE

     We  have  limited experience marketing and selling our products, and do not
have experience marketing and selling our products in commercial quantities.  In
March  1999,  we  exercised  our  right  to  terminate  our  exclusive worldwide
distribution  agreement  with  Boston  Scientific  pursuant  to  which  Boston
Scientific  had  agreed  to  market and distribute our Cryocare Systems (TM) for
urology  worldwide,  except  Canada.  As  a result, future sales of the Cryocare
System (TM) and Cryoprobes (TM), will be dependent on our marketing efforts.  We
derive a majority of our revenues from the sales of Cryocare Systems (TM), which
includes  the  sales  of  associated disposable Cryoprobes (TM), and expect that
sales  of  Cryocare  Systems (TM) and Cryprobes (TM) will continue to constitute
the  majority  of  sales  for  the  foreseeable  future.  Any  factor negatively
impacting  the sales or usage of Cryocare Systems (TM) and Cryoprobes (TM) would
have  a  significant  effect  on  our  business.

     We  believe that to become and remain competitive, we will need to continue
to  develop  third  party international distribution channels and a direct sales
force  for  our  products.  Establishing  marketing  and  sales  capabilities
sufficient  to  support  sales in commercial quantities will require significant
resources.  We  may  not  be  able to recruit and retain direct sales personnel,
succeed  in  establishing and maintaining any third party distribution channels,
or  succeed  in  our  future  sales  and  marketing  efforts.

WE  WILL  NEED  ADDITIONAL  LONG  TERM  FINANCING

     We  believe that our existing cash resources and anticipated cash flow from
future  operations  and  our  exercise  of the put options discussed below, will
provide  sufficient resources to meet present and reasonably foreseeable working
capital  requirements  and other cash needs for the next twelve months.  In June
1999  and  July  1999, we received $5,000,000 and $3,000,000, respectively, from
the sale of 7% convertible debentures due three years from their respective sale
dates.  Under  the  corresponding  financing arrangements, the purchasers of the
convertible  debentures  have  options to purchase additional debentures for the
aggregate  principal  amounts  of  $5,000,000  and $3,000,000 and, under certain
circumstances, we may require the purchasers to exercise these purchase options.
We  entered into a line of credit in July 1999, which provides for a non-formula
revolving  line of credit of $2,000,000 and up to an additional $1,000,000 based
on our eligible accounts receivable.  The line of credit expires and all amounts
thereunder  must  be  repaid  in  July  2001.  If  we  undertake  or  accelerate
significant  research  and  development  projects  for  new  products  or pursue
corporate  acquisitions, it may require additional outside financing.  We expect
that  to  meet  our long-term needs we will need to raise substantial additional
funds  through  the  sale of our equity securities, the incurrence of additional
debt or through collaborative arrangements.  Any additional equity financing may
be  dilutive  to  shareholders,  and  debt  financing, if available, may involve
restrictive  covenants.  Collaborative  arrangements,  if  necessary  to  raise
additional  funds,  may  require  us  to  relinquish  rights  to  certain of our
technologies,  products  or marketing territories.  Our failure to raise capital
when needed could have a significant negative effect on our financial condition.

WE  ARE  FACED  WITH  INTENSE  COMPETITION  AND RAPID TECHNOLOGICAL AND INDUSTRY
CHANGE

     There is intense competition in our field of surgical device manufacturers.
Many  of  our  competitors  are  significantly  larger  than us and have greater
financial,  technical,  research,  marketing,  sales,  distribution  and  other
resources  than  us.  We  believe  there  will  be intense price competition for
products  developed  in  our  markets.  Our  competitors  may  develop or market
technologies  and  products,  including  drug-based  treatments,  that  are more
effective  or  commercially  attractive  than  any  that  we  are  developing or
marketing.  Our  competitors  may  succeed in obtaining regulatory approval, and
introducing  or  commercializing products before we do.  Such developments could
have  a  significant negative effect on our financial condition.  Even if we are
able  to  compete  successfully,  we  may  not  be able to do so in a profitable
manner.  The  medical  device  industry  generally,  and  the urological disease
treatment market in particular, are characterized by rapid technological change,
changing  customer  needs,  and  frequent new product introductions.  Our future
success will depend upon our ability to develop and introduce new cost-effective
products  in a timely manner.  Our products may be rendered obsolete as a result
of  future  innovations.

WE  HAVE  LIMITED  MANUFACTURING  EXPERIENCE

     We  have  limited  experience  in  producing  our  products  in  commercial
quantities.  Manufacturers often encounter difficulties in scaling up production
of new products, including problems involving production yields, quality control
and  assurance,  component  supply  and  shortages  of qualified personnel.  Our
failure  to  overcome  these  manufacturing problems could negatively impact our
business and financial condition.  We use internal manufacturing capacity in our
manufacturing  efforts.  Most  of  our  purchased  components  and processes are
available  from more than one vendor.  However, certain components and processes
are  currently  available  from  or  performed  by  a single vendor.  Any supply
interruption  from  a  single  source  vendor  would have a significant negative
effect  on  our ability to manufacture our products until a new source of supply
is  qualified  and, as a result, could have a significant negative effect on our
business  and  financial  condition.  Further,  the  ability  of  third  party
manufacturing  sources  to  deliver  components  will  affect  our  ability  to
commercialize our products, and our dependence on third party sources may have a
negative  effect on our profit margins. Our success will depend in part upon our
ability  to  manufacture  our  products  in  compliance  with  the  FDA's  Good
Manufacturing  Practices  regulations  and  other  regulatory  requirements  in
sufficient  quantities  and on a timely basis, while maintaining product quality
and acceptable manufacturing costs.  Failure to increase production volumes in a
timely  or  cost-effective  manner or to maintain compliance with the FDA's Good
Manufacturing  Practices  or  other  regulatory  requirements  could  have  a
significant  negative  effect  on  our  financial  condition.

WE  ARE  DEPENDENT  ON  KEY  PERSONNEL

     Our  future  success  depends  to  a  significant degree upon the continued
service  of  key  technical  and  senior management personnel, including Paul W.
Mikus,  the  President  of  Endocare,  none  of  whom are bound by an employment
agreement  or  covered  by  an insurance policy of which we are the beneficiary.
Our future success also depends on our continuing ability to attract, retain and
motivate  highly  qualified  technical,  managerial  and  sales  personnel.  The
inability  to  retain  or  attract  qualified personnel could have a significant
negative  effect  upon  our  financial  condition.

GOVERNMENT  REGULATION  CAN  HAVE  A  SIGNIFICANT  IMPACT  ON  OUR  BUSINESS

     Government  regulation  in  the  United  States  and  other  countries is a
significant  factor  affecting  the  research  and  development, manufacture and
marketing  of  our  products.  In the United States, the FDA has broad authority
under  the Federal Food, Drug and Cosmetic Act and the Public Health Service Act
to  regulate the distribution, manufacture and sale of medical devices.  Foreign
sales  of  drugs  and  medical  devices  are  subject  to  foreign  governmental
regulation  and restrictions which vary from country to country.  The process of
obtaining  FDA and other required regulatory approvals is lengthy and expensive.
We may not be able to obtain necessary approvals for clinical testing or for the
manufacturing  or  marketing of our products.  Failure to comply with applicable
regulatory  approvals  can,  among  other things, result in fines, suspension of
regulatory  approvals,  product  recalls,  operating  restrictions, and criminal
prosecution.  In  addition,  governmental  regulations  may be established which
could  prevent,  delay,  modify  or rescind regulatory approval of our products.
Any  such  position  by the FDA, or change of position by the FDA, may adversely
impact  our business and financial condition.  Regulatory approvals, if granted,
may include significant limitations on the indicated uses for which our products
may  be  marketed.  In  addition,  to obtain such approvals, the FDA and foreign
regulatory  authorities  may  impose  numerous  other  requirements  on us.  FDA
enforcement  policy strictly prohibits the marketing of approved medical devices
for  unapproved  uses.  In  addition,  product  approvals  can  be withdrawn for
failure  to  comply  with  regulatory  standards or the occurrence of unforeseen
problems  following  initial marketing.  We may not be able to obtain regulatory
approvals  for  our products on a timely basis, or at all, and delays in receipt
of  or  failure  to  receive  such  approvals,  the  loss of previously obtained
approvals,  or failure to comply with existing or future regulatory requirements
would  have  a  significant  negative  effect  on  our  financial  condition.

THERE  IS UNCERTAINTY RELATING TO THIRD PARTY REIMBURSEMENT WHICH IS CRITICAL TO
MARKET  ACCEPTANCE  OF  OUR  PRODUCTS

     In  the  United  States,  health  care  providers,  such  as  hospitals and
physicians,  that  purchase  our  products generally rely on third party payers,
principally Federal Medicare, state Medicaid and private health insurance plans,
to  reimburse  all  or  part  of  the  cost  of medical procedures involving our
products.  Effective  July  1,  1999,  the  Health Care Financing Administration
implemented  national  Medicare  coverage  for  cryosurgical  ablation  of  the
prostate,  one  of  the  approved  uses of our eight probe Cryocare System (TM),
however,  reimbursement  rates are in the process of being established.  Certain
private  health insurance companies pay for the procedures in which our products
are  used  in  certain  areas  of  the  United  States,  but  private  insurance
reimbursement  may  not  be  adopted  nationally  or by additional insurers.  We
anticipate that under the prospective payment system used by private health care
payers,  the  cost of our products will be incorporated into the overall cost of
the  procedure  and that there will be no separate, additional reimbursement for
our  products.  Separate  reimbursement  for  our products is not expected to be
available  in  the  United States although reimbursement for our products may be
available  in  international  markets  under  either  governmental  or  private
reimbursement  systems.  This  may  discourage  the  use  of  our  products.
Furthermore,  we  could  be  negatively  affected  by  changes  in reimbursement
policies of government or private health care payers, particularly to the extent
any  such  changes affect reimbursement for procedures in which our products are
used.  Failure  by  physicians,  hospitals  and  other  users of our products to
obtain sufficient reimbursement from health care payers for procedures involving
our  policies toward reimbursement for such procedures, could have a significant
negative  effect  on  our  financial  condition.

OUR  BUSINESS  IS  EXPOSED  TO  RISKS  RELATED  TO  ACQUISITIONS  /  MERGERS

     As  part of our strategy to develop and market our products, we may acquire
a  business  or  businesses  that  we  believe  might  enhance  and speed up the
development  of  our products through clinical trials, such as a surgical center
or  related  company  that  would use our products in clinical applications.  In
June  1999,  we  merged with Advanced Medical Procedures, LLC, a regional mobile
cryosurgery  service  company  that trains surgeons and others in the use of our
products  and  supplies our products to them.  We may not be able to effectively
integrate our business with Advanced Medical Procedures or any other business we
may  acquire  or  merge  with,  or  effectively utilize the business acquired to
develop  and  market  our products. The failure to integrate an acquired company
into our operations may cause a drain on our financial and managerial resources,
and  thereby  have  a  significant negative effect on our business and financial
results.

WE  MAY  BE  NEGATIVELY  IMPACTED  BY  PRODUCT  LIABILITY  AND  PRODUCT  RECALL

     The  manufacture  and  sale of medical products entails significant risk of
product  liability  claims  or product recalls.  Our existing insurance coverage
limits  may not be adequate to protect us from any liabilities we might incur in
connection  with  the  clinical trials or sales of our products.  We may require
increased  product  liability  coverage  as  our  products  are  commercialized.
Insurance  is expensive and may not be available on acceptable terms, if at all.
A  successful  product liability claim or series of claims brought against us in
excess  of  our  insurance  coverage,  or a recall of our products, could have a
significant  negative  effect  on  our  business  and  financial  condition.

WE  ARE  EXPOSED  TO  RISKS  RELATED  TO  HEALTH  CARE  REFORM

     Political,  economic  and  regulatory  influences are subjecting the health
care  industry  in  the  United States to fundamental change.  We anticipate the
Congress,  state legislatures and the private sector will continue to review and
assess  alternative  health  care  delivery  and  payment  systems.  Potential
approaches  that  have  been  considered  include  mandated  basic  health  care
benefits,  controls on health care spending through limitations on the growth of
private  purchasing groups, price controls, and other fundamental changes to the
health  care delivery system.  Legislative debate is expected to continue in the
future,  and  market  forces  are  expected  to demand reduced costs.  We cannot
predict  what  impact  the  adoption  of any Federal or state health care reform
measures,  future  private  sector  reform  or  market  forces  may  have on our
business.

WE  ARE  DEPENDENT  ON  ADEQUATE PROTECTION OF OUR PATENT AND PROPRIETARY RIGHTS

     Our  success  will  depend  in  part  on  our ability to secure and protect
intellectual  property rights relating to our technology.  While we believe that
the protection of patents or licenses is important to our business, we also rely
on  trade  secrets, know-how and continuing technological innovation to maintain
our competitive position.  We face the following risks:  our patent applications
may  not  be  approved, we may not be able to develop any additional proprietary
products  that  are  patentable,  issued  patents  may  not  provide  us  with a
competitive  edge or may be challenged by third parties, and/or our processes or
products may infringe patents or proprietary rights of others, and we may not be
able  to  obtain  licenses  to  use such patents or proprietary rights, on terms
acceptable  to us or at all.  From time to time, we have received correspondence
alleging infringement of proprietary rights of third parties.  Certain claims of
third  parties  may  be upheld as valid and enforceable, and therefore we may be
prevented  from  practicing  the  subject matter claimed or would be required to
obtain  licenses  from  the  owners  of  any  such  proprietary  rights to avoid
infringement.  We  try  to  preserve  the  confidentiality  of our technology by
entering  into  confidentiality  agreements  with  our  employees,  consultants,
customers,  and key vendors and by other means. These measures may not, however,
prevent  the  unauthorized  disclosure  or  use  of  such  technology.

OUR  COMMON  STOCK  HAS  A  LIMITED  MARKET  AND  TRADING  HISTORY

     Our  common  stock began trading on the Nasdaq Small Cap Market on February
28,  1997  and has a limited trading history. From February 20, 1996 to February
28,  1997,  trading  was  conducted in the over-the-counter market on the Nasdaq
Electronic  Bulletin  Board.  If  we  are  unable  to maintain the standards for
quotation on the Nasdaq Small Cap Market, the ability of our investors to resell
their  shares  may  be limited.  In addition, our securities may be subjected to
"penny  stock"  rules  that  impose  additional sales practice and market making
requirements  on  broker-dealers  who  sell or make a market in such securities.
This could affect the ability or willingness of broker-dealers to sell or make a
market  in  our  securities and the ability of holders of our securities to sell
their  securities  in the secondary market.  The market prices for securities of
emerging companies have historically been highly volatile.  The following future
announcements  concerning us or our competitors may have a significant impact on
the  market  price  of  our  common stock:  our operating results, technological
innovations  or  new  commercial  products, corporate collaborations, government
regulations,  developments  concerning  proprietary rights, litigation or public
concern  as  to  safety  of  our  products,  investor  perception  of us and our
industry,  and  general  economic and market conditions.  In addition, the stock
market is subject to price and volume fluctuations that affect the market prices
for  companies in general and small-capitalization, high-technology companies in
particular,  which  are  often  unrelated  to  their  operating  performance.

FUTURE  SALES  OF  OUR  COMMON  STOCK  MAY  HAVE  DILUTIVE  EFFECTS

     Future sales of our common stock (including shares issued upon the exercise
of  outstanding  options  and  warrants  and  the  conversion  of  convertible
debentures)  could have a significant negative effect on the market price of our
common  stock.  Such  sales  also  might  make  it more difficult for us to sell
equity securities or equity-related securities in the future at a time and price
that  we  would  deem  appropriate.  As  of February 29, 2000, we had 11,297,531
shares  of  common  stock  outstanding, substantially all of which may be freely
traded  (unless  held by an affiliate of ours).  In addition, as of February 29,
2000,  1,253,814  shares  could  be  issued upon the conversion of the principal
amount  and  payment  of  a  portion  of the interest on convertible debentures,
warrants  to purchase 482,753 shares of common stock were outstanding, and stock
options  to purchase 3,140,226 shares of common stock were outstanding under our
stock  option  plans,  subject  to  various vesting schedules.  Stock options to
purchase  an  additional 308,533 shares of common stock may be issued by us from
time  to  time  under such option plans and up to 250,000 shares of common stock
may be purchased under our Employee Stock Purchase Plan.  In addition, under our
1995  Stock  Option Plan, there is an automatic annual increase in the number of
shares  reserved for issuance under the plan of 3% of the total number of shares
outstanding  on the last trading day of the immediately preceding calendar year,
up  to  a  maximum  increase  of 500,000 shares per year.  Additionally, 300,000
shares  of  common  stock  may  be  issued  under our 1995 Director Option Plan.
Exercise of options or warrants to purchase our common stock and the issuance of
common  stock  upon  the  conversion  of  convertible  debentures  may result in
substantial  dilution  to  investors.


ANTI-TAKEOVER  PROVISION  IN  OUR CHARTER MAY HAVE A POSSIBLE NEGATIVE EFFECT ON
OUR  STOCK  PRICE

     Certain  provisions of our certificate of incorporation and Bylaws may have
the  effect  of  making  it  more  difficult for a third party to acquire, or of
discouraging  a third party from attempting to acquire, control of us.  In March
1999,  our  board  of  directors  adopted  a  stockholder  rights  plan in which
preferred  stock purchase rights were distributed as a dividend.  The rights are
designed  to  guard against partial tender offers and other abusive and coercive
tactics  that  may be used in an attempt to gain control of us.  Such provisions
could  limit  the  price  that  certain investors might be willing to pay in the
future  for  shares  of  our  common  stock.  These  provisions may make it more
difficult  for  stockholders  to take certain corporate actions and may have the
effect  of  delaying  or  preventing  a  change  in  control.

WE  FACE  "YEAR  2000"  RISKS

     The Year 2000 problem refers to the potential for information systems to be
unable  to  correctly  recognize  and  process calendar dates and date-sensitive
information  involving dates on or after January 1, 2000.  We did not experience
any material Year 2000 problems as the date changed and through the date of this
report.  We  attribute  this to our Year 2000 readiness efforts.  As of December
31,  1999,  systems  remediation  and integration testing and development of our
contingency  plans  had  been  completed.  Supplier  management  is  an  ongoing
process,  and  no material impact has been felt from lack of supplier readiness.
Although  we  did  not experience any material problems related to the Year 2000
issue,  there can be no assurances that problems relating to the Year 2000 issue
will  not  manifest  themselves  in the future.  Historical amounts spent on the
Year  2000  project  have  not  been  material to the results of operations.  In
addition,  we  do  not  believe  that we will incur material costs in the future
because  of  date  related  problems.

ITEM  2  PROPERTIES

     The  Company currently occupies approximately 16,000 square feet of office,
manufacturing,  engineering,  warehouse,  and  research and development space in
Irvine,  California.  The  property is leased through February 2002. The Company
had  subleased  its  previously  occupied  facility  and  the original lease and
sublease  expired  in  August  1998.

ITEM  3.  LEGAL  PROCEEDINGS

     The  Company, in the normal course of business, is subject to various legal
matters.  While  the  results  of litigation and claims cannot be predicted with
certainty, the Company believes that the final outcome of these matters will not
have  a  material  adverse  effect  on  the  Company's  results of operations or
financial  condition.

From time to time, the Company has received correspondence alleging infringement
of  proprietary  rights  of  third  parties.  No assurance can be given that any
relevant  claims  of third parties would not be upheld as valid and enforceable,
and  therefore the Company could be prevented from practicing the subject matter
claimed  or  would  be  required  to obtain licenses from the owners of any such
proprietary  rights  to  avoid  infringement.  Management  does  not  expect any
material  adverse  effect  on  financial  condition or the results of operations
because  of  such  actions.

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     No  matters  were  submitted  to  a vote of security holders of the Company
during  the  fourth  quarter  of 1999, as required to be disclosed in this item.

                                     PART II

ITEM  5.  MARKET  FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

     Endocare's  common  stock  began  trading  on the Nasdaq SmallCap Market on
February 28, 1997.  Between February 20, 1996 and February 27, 1997, trading was
conducted in the over-the-counter market on the Nasdaq Electronic Bulletin Board
under  the  symbol  "ENDO."  The following table sets forth the high and low bid
prices for Endocare's common stock during the periods indicated as quoted on the
Nasdaq  SmallCap  Market  or  Nasdaq  Electronic  Bulletin  Board:















<TABLE>
<CAPTION>

                            FISCAL YEAR ENDED DECEMBER 31,
                            -------------------------------
                                         1997            1998             1999
                                        -----            -----            -----
<S>                                 <C>    <C>       <C>    <C>       <C>    <C>
                                      HIGH   LOW       HIGH   LOW       HIGH   LOW
                                    ------  -----     -----  -----     -----  -----

Fourth quarter.                      $6.63  $3.50     $3.25  $1.63     $9.12  $5.12

Third quarter .                       3.88   3.69     $3.63  $1.81     $8.19  $4.62

Second quarter                        3.88   3.69     $4.13  $2.75     $6.00  $2.87

First quarter .                       4.63   3.94     $3.94  $2.75     $6.87  $1.94
</TABLE>


     Endocare's  common  stock  first traded publicly on February 20, 1996, at a
price  of  $0.375  per  share. As of February 29, 2000, the closing price of the
Company's  common  stock  was  $18.063.  Also,  as  of  that  date, Endocare had
approximately  329  stockholders  of  record.  On  February  29, 2000 there were
11,297,531  shares  of  Endocare  common  stock  issued  and  outstanding.

In  March  1999,  the  Company's Board of Directors adopted a Stockholder Rights
Plan  ("Plan")  in  which  preferred  stock  purchase  rights  ("Rights")  were
distributed  as  a  dividend  at  the rate of one Right for each share of Common
Stock  held  as  of  the  close  of  business on April 15, 1999.  The Rights are
designed  to guard against partial tender offers and other coercive tactics that
might  be  used  in  an  attempt  to  gain  control of the Company or to deprive
stockholders  of  their  interest  in  the  long-term value of the Company.  The
Rights will be exercisable only if a person or group acquires 15% or more of the
Company's  Common  Stock  (subject  to certain exceptions stated in the Plan) or
announces a tender offer, the consummation of which would result in ownership by
a  person  or  a group of 15% or more of the Company's Common Stock.  Each Right
will  entitle  stockholders to buy one one-thousandth of a share of a new series
of junior participating preferred stock at an exercise price of $25 upon certain
events.  If  a person or group acquires 15% or more of the Company's outstanding
Common  Stock (subject to certain exceptions stated in the Plan), or a holder of
15%  or  more  of  the  Company's  Common  Stock engages in certain self-dealing
transactions  or  a  merger  transaction  in  which the Company is the surviving
corporation  and its Common Stock remains outstanding, then each Right not owned
by  such  person  or group or certain related parties will entitle its holder to
purchase,  at  the  Right's  then-current exercise price, units of the Company's
Series  A  Preferred  Stock (or, in certain circumstances, Company Common Stock,
cash,  property or other securities of the Company) having  a market value equal
to  twice  the  then-current  exercise price.  In addition, if, after the Rights
become  exercisable,  Endocare  is  acquired  in  a  merger  or  other  business
combination  transaction,  or sells 50% or more of its assets or earnings power,
each  Right  will  entitle  its  holder to purchase, at the Right's then-current
price,  a  number of the acquiring company's common shares having a market value
at the time of twice the Right's exercise price.  At any time on or prior to the
close  of  business  on the first date of a public announcement that a person or
group  has  acquired beneficial ownership of 15% or more of the Company's Common
Stock  (subject  to  certain  exceptions  stated  in  the  Plan), the Rights are
redeemable  for one cent per Right at the option of the Board of Directors.  The
Rights are intended to enable all stockholders to realize the long-term value of
their  investment  in  the  Company.  The  Rights  will  not  prevent a takeover
attempt, but should encourage anyone seeking to acquire the Company to negotiate
with the Board prior to attempting to a takeover.  The dividend distribution was
made  on  April 15, 1999 to the stockholders of record on that date.  The Rights
will  expire  on  April  15,  2009.

     Endocare  has  not paid any cash dividends on its common stock and does not
intend  to  pay  any  cash  dividends  in  the  foreseeable  future.

<PAGE>

ITEM  6.  SELECTED  FINANCIAL  DATA

     The  following  table  presents selected financial data of Endocare for the
years  ended  December  31,  1996,  1997, 1998 and 1999 and for its predecessor,
Endocare  Division  of  Medstone, for the year ended December 31, 1995. Prior to
1996,  Endocare  was  not  an  independent  company with publicly traded shares.
Hence,  no  earnings  per  share  data  is  presented  for  1995.









<TABLE>
<CAPTION>

                                          YEARS ENDED DECEMBER 31,
                                         --------------------------

                                           1995         1996           1997           1998           1999
                                          ------       -------        -------        -------       -------
                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                      <C>         <C>           <C>           <C>           <C>
Statement of Operations Data:
Revenues:
Net product sales . . . . . . . . . . .  $    951     $    1,878    $     1,918    $    1,363     $   2,329
Mobile cryosurgical procedures. . . . .        --           148             347           490         1,133
Revenue from collaborative agreements .        --            250             83           642            --
Research revenue from related party . .       377              1             --            --            --
                                         --------     ----------    -----------   -----------    ----------
Total revenues. . . . . . . . . . . . .     1,328          2,277          2,348         2,495         3,462
                                         --------     ----------    -----------   -----------    ----------
Costs and expenses:
Cost of product sales . . . . . . . . .       380            994          1,271           974         1,255
Cost of mobile cryosurgical procedures.        --             59            151           209           429
Research and development. . . . . . . .       852          1,023          1,596         1,920         2,574
Selling, general and administrative . .       673          1,410          3,553         4,653         7,992
Impairment loss on long-lived assets. .        --            325             --            --            --
                                         --------     ----------    -----------    ----------    -----------
Total costs and expenses. . . . . .         1,905          3,811          6,571         7,756        12,250
                                         --------     ----------    -----------   -----------    ----------
Loss from operations. . . . . . . . . .      (577)        (1,534)        (4,223)       (5,261)       (8,788)
Interest income (expense), net. . . . .        --            (29)           201           336          (476)
                                         ---------    ----------    -----------   -----------    ----------
Net loss. . . . . . . . . . . . . . . .  $   (577)    $   (1,563)    $   (4,022)   $   (4,925)  $    (9,264)
                                         =========    ==========   ===========   ============    ==========
Net loss per share. . . . . . . . . . .               $     (.27)    $     (.48)   $     (.49)  $      (.86)
                                         =========    ==========    ===========   ============   ==========
Weighted average shares outstanding . .                5,895,000      8,307,000     10,062,000   10,838,000
                                         =========    ==========    ===========   ============   ==========
</TABLE>

<TABLE>
<CAPTION>


                               BALANCES AT DECEMBER 31,
                               ------------------------


                                1995      1996        1997       1998       1999
                              -------    -------    --------   ---------   ---------
                                                 (IN THOUSANDS)
<S>                            <C>       <C>        <C>        <C>         <C>
Balance Sheet Data:
------------------
Working capital . . . . . . .  $ 328      $  595     $3,718     $5,544      $ 6,445
Total assets. . . . . . . . .    806       1,952      5,691      7,992       12,996
Long-term debt. . . . . . . .     --         771         44        201       10,153
Total shareholders'/division
equity (deficiency) . . . . .    803         (17)     3,960      6,011         (480)
</TABLE>


ITEM  7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

GENERAL

     Endocare,  Inc.  ("Endocare"  or  the "Company") develops, manufactures and
markets  an  array  of innovative, temperature-based minimally invasive surgical
devices and technologies to treat prostate disease.  The Company has focused its
efforts  on  the  continued  clinical  development  of  surgical devices for the
treatment  of  the two most common diseases of the prostate, Prostate Cancer and
Benign  Prostate  Hyperplasia  ("BPH").  Prostate  cancer affects one in six men
over  the  age of fifty, while BPH affects one in two men over the age of fifty.
Endocare  has developed and recently introduced an innovative, second generation
cryosurgical  system  for the treatment of prostate cancer.  The Cryocare System
(TM) offers the advantage of controlled, targeted freezing of the tumor with the
benefit  of  faster  patient recovery and minimal complications.  The system was
launched in July 1999 following the initiation of national Medicare coverage for
cryosurgical  procedures  as  a  primary  treatment  alternative  for  localized
prostate  cancer.

     The  Company  derives  revenues  primarily  from  the  sale of its Cryocare
Systems  (TM),  related  disposable  Cryoprobes  (TM)  and  revenue  from mobile
cryosurgical  procedures.  Revenue  is recognized upon the shipment of products,
or  in  the  case  of  mobile  cryosurgical  procedures,  upon the completion of
procedures.  Under the Company's cryosurgical system placement program, a system
is  placed  at  a customer site for use with the Company's disposable Cryoprobes
(TM).  The  cost of the system is depreciated into product cost of sales over an
estimated  useful  life  of  three  years.

The  Company  has incurred losses since its inception.  As of December 31, 1999,
the  Company  has  an  accumulated  deficit  of $19.8 million.  These losses and
accumulated  deficit  have  resulted  from  significant  costs  incurred  in the
development  of the cryosurgery and stent technology platforms, clinical studies
and  establishing  the  Company's  infrastructure  to  launch its products.  The
Company intends to continue to invest heavily in research, development, clinical
studies,  sales  and marketing, and general administrative infrastructure.  As a
result,  the  Company  does  not  expect  to  be  profitable in the near future.
Although the Company has experienced revenue growth in recent periods, operating
results for future periods are subject to numerous uncertainties. In view of the
rapidly  evolving  nature  of  the  business and the Company's limited operating
history,  period-to-period  comparisons of operating results are not necessarily
meaningful and should not be relied upon as an indication of future performance.
There  can  be  no assurance that the Company will be able to achieve or sustain
profitability.

On  June  30,  1999,  the Company acquired all the outstanding units of Advanced
Medical  Procedures,  LLC,  a  Florida  limited  liability company ("AMP").  AMP
operates a mobile cryosurgery business which provides cryosurgical equipment for
the treatment of prostate and liver cancer on a per procedure basis.  The merger
was  accounted  for  as a pooling-of-interests for financial reporting purposes.
The  historical  financial  statements  for  the periods prior to the merger are
restated  as  though  the  companies  had  been  combined.  The  AMP unitholders
received  an  aggregate  of  260,000  shares  of  the  Company's common stock in
exchange  for  all  of  their  AMP  units.

Since  its  formation  in  1990,  Endocare  operated  first  as  a  research and
development department, then later as a division of Medstone International, Inc.
In  this form, Endocare shared facilities and certain personnel with its parent.
Effective  January  1,  1996,  Endocare  began  operating  as  an  independent
corporation.

RESULTS  OF  OPERATIONS

The  following  table  sets  forth, for the periods indicated, certain financial
data  as  a  percentage  of  total  revenues.

<TABLE>
<CAPTION>


                               YEARS ENDED DECEMBER 31,
                               ------------------------

                                         1997    1998    1999
                                        ------  ------  ------
<S>                                     <C>     <C>     <C>
Revenues:
Net product sales. . . . . . . . . . .     82%     55%     67%
Mobile cryosurgical procedures . . . .     15      20      33
Revenue from collaborative agreements.      3      25      --
                                        ------  ------  ------
Total revenues . . . . . . . . . . . .    100%    100%    100%
                                        ------  ------  ------

Costs and expenses:
Cost of product sales. . . . . . . . .     54%     39%     36%
Cost of mobile cryosurgical procedures      7       8      13
Research and development . . . . . . .     68      77      74
Selling, general and administrative. .    151     187     231
Total costs and expenses . . . . . . .    280     311     354
                                        ------  ------  ------
Loss from operations . . . . . . . . .   (180)   (211)   (254)
Interest income (expense), net . . . .      9      14     (14)
                                        ------  ------  ------
Net loss . . . . . . . . . . . . . . .  (171)%  (197)%  (268)%
                                        ======  ======  ======
</TABLE>


     Year  Ended  December  31,  1999  Compared  to Year Ended December 31, 1998

     Product  revenue  for  the  year  ended  December 31, 1999 increased 71% to
$2,329,000  compared  to  $1,363,000 in 1998.   The increase was attributable to
the  third  quarter  1999  launch  of  the  Company's cryosurgical technology in
conjunction with Medicare's July 1, 1999 implementation of national coverage for
this  treatment  protocol  for  localized  prostate  cancer.

     Revenue from mobile cryosurgical procedures for the year ended December 31,
1999  increased  131%  to $1,133,000 compared to $490,000 in 1998.  The increase
corresponds  to  a greater number of procedures performed in 1999 as a result of
increased  sales  and  marketing  efforts.

     Revenue  from collaborative agreements for the year ended December 31, 1999
was  zero compared to $642,000 in 1998.  The 1998 amount represented a licensing
fee  and the respective quarters' amortization of a lump-sum payment from Boston
Scientific  Corporation ("Boston Scientific") based upon a previous distribution
agreement entered into in November 1996.  The distribution agreement with Boston
Scientific  was  terminated  by  Endocare  in  March  1999.

     Gross  margins  on  product  sales were 46% for the year ended December 31,
1999  compared  to  29%  in 1998.  The increase is due to a mix of higher margin
cryosurgical  probe and system sales in 1999 coupled with a reduction in product
costs  due  to  increased  manufacturing  efficiencies.

Gross  margin  on  mobile  cryosurgical  procedures  was  62% for the year ended
December  31,  1999  compared  to  57%  in  1998.  The  change  in  margins  is
attributable  to  procedure  mix  and  higher  surgery  rental  rates  in  1998.

     Research  and  development expense increased 34% to $2,574,000 for the year
ended  December  31,  1999 compared to $1,920,000 in 1998. The increase reflects
the  investment  the  Company  has  made in the form of additional personnel and
related  infrastructure  to  support  general  product  improvement, new product
development  efforts  and  clinical  costs associated with the Horizon Prostatic
Stent  (TM).

     Selling, general and administrative expense increased 72% to $7,992,000 for
the  year  ended December 31, 1999 compared to $4,653,000 in 1998. This increase
reflects  increased  sales  and  marketing  costs  associated with the launch of
Endocare's  cryosurgical  product  for prostate cancer and an almost doubling of
Endocare's  direct  sales  and  marketing  personnel  between  periods.

     Interest  income  (expense), net was ($476,000) for the year ended December
31,  1999  compared to $337,000 in 1998.  The change was due to interest expense
associated  with  the  issuance  of convertible debentures and a note payable in
1999,  including  corresponding amortization of deferred financing costs, offset
by  interest  income.

     Endocare's net loss for the year ended December 31, 1999 was $9,264,000, or
86  cents  per share on 10,838,000 weighted average shares outstanding, compared
to  a  net  loss  of  $4,925,000,  or  49 cents per share on 10,062,000 weighted
average shares outstanding for the same period in 1998. The increase in net loss
resulted from higher research and development costs, higher selling, general and
administrative  expenses  and  increased  interest  expense  partially offset by
increased  revenues  and  lower  cost  of  sales  as  a  percentage  of  sales.

     Year  Ended  December  31,  1998  Compared  to Year Ended December 31, 1997

     Product  revenue  for  the  year  ended  December 31, 1998 decreased 29% to
$1,363,000  compared  to  $1,918,000 in 1997.  The decline in 1998 product sales
was  attributed  primarily to reduced purchases of Cryocare surgical systems for
urological  applications  by  Boston Scientific in exchange for higher licensing
payments.  The  majority  of product sales in 1998 resulted from direct sales by
the  Company.

Revenue from mobile cryosurgical procedures for the year ended December 31, 1998
increased  41%  to  $490,000  compared  to  $347,000  in  1997.  The  increase
corresponds  to  a  greater  number  of  procedures  performed  in  1998.

Revenue  from  collaborative agreements for the year ended December 31, 1998 was
$642,000  compared  to  $83,000  in  1997.  The  increase  in  1998 revenue from
collaborative  agreements  reflects $475,000 in non-refundable Boston Scientific
licensing  payments and recognition of the remaining deferred revenue associated
with  a  Boston  Scientific  milestone  payment  upon  fulfilling  corresponding
obligations.  The  1997  revenue  from  collaborative  agreements represents one
year's  amortization of the lump-sum milestone payment from Boston Scientific to
Endocare  associated  with  a  former  distribution  agreement which gave Boston
Scientific  exclusive worldwide marketing rights for the Cryocare System (TM) in
urological  applications.

     Gross  margins  on  product  sales were 29% for the year ended December 31,
1998 compared to 34% in 1997.  This difference was due to a change in Endocare's
product  revenue  mix  along  with additional infrastructure and personnel costs
associated  with  the  Company's  new  manufacturing  facility.

Gross  margin  on  mobile  cryosurgical  procedures was 57% for both years ended
December  31,  1998  and  1997.

Research  and development expense increased 20% to $1,920,000 for the year ended
December  31, 1998 compared to $1,596,000 in 1997.  The increase was primarily a
result  of  additional personnel and costs to support the further development of
the  Cryocare  System  (TM),  including  one  and  four  probe  platforms,  and
development  of  the  Horizon  Prostatic  Stent  (TM)  and  other  new products.

Selling,  general and administrative expense increased 31% to $4,653,000 for the
year  ended  December  31,  1998  compared to $3,553,000 in 1997.  This increase
reflects  the increased sales and marketing effort associated with the Company's
Cryocare products, in addition to the increases in personnel and operating costs
as  the  Company  continued  to  build its infrastructure to support its product
lines.

Interest income (expense), net was $336,000 for the year ended December 31, 1998
compared  to  $201,000  in  1997.  The  increase  in  1998  was due to increased
interest  income  on  a  higher  balance  of  cash  and  cash  equivalents.

     Endocare's  net loss for the year ended December 31, 1998 was $4,925,000 or
49  cents  per share on 10,062,000 weighted average shares outstanding, compared
to  a net loss of $4,022,000 or 48 cents per share on 8,307,000 weighted average
shares outstanding for the same period in 1997.  This increase was primarily due
to  lower  gross  margins and the increase in research and development costs and
selling,  general  and  administrative  expenses  described  above.

LIQUIDITY  AND  CAPITAL  RESOURCES

     Endocare  has  funded  its  operations  since  inception  primarily through
private  placements of equity securities, loans that were subsequently converted
into  equity  securities,  convertible debentures, sales to customers, licensing
fees  from a former distributor, a credit facility, interest on investments, and
the  proceeds  from  the  exercise  of  outstanding  options  and  warrants.

At  December  31,  1999,  Endocare's  cash  and  cash  equivalents  balance  was
$7,365,000,  compared  to  $6,286,000  at  December  31, 1998. This increase was
provided  primarily by the 1999 financing transactions discussed below offset by
cash  used  in  operating activities.  At December 31, 1999, net working capital
was  $6,445,000,  and the ratio of current assets to current liabilities was 2.9
to  1.

     For the year ended December 31, 1999, net cash used by operating activities
was  approximately  $8.4  million  compared to $4.3 million and $3.6 million for
years  ended December 31, 1998 and 1997, respectively.  Working capital has been
used  as  Endocare's operations have increased in 1999.  Net accounts receivable
increased to $958,000 at December 31, 1999, compared to $408,000 at December 31,
1998.  The  increase resulted primarily from a corresponding increase in product
sales  and revenue from mobile cryosurgical procedures.  In conjunction with the
commercial  launch  of the Company's cryosurgical technology for prostate cancer
in  1999,  inventories  increased to $1,279,000 at December 31, 1999 compared to
$543,000  at  December  31,  1998.  Property and equipment additions during 1999
were  approximately  $339,000  as  compared to $351,000 and $218,000 in 1998 and
1997,  respectively.  Additionally,  $490,000  of  inventory  was transferred to
property  and  equipment  during  1999  under  the Company's cryosurgical system
placement  program.  Working  capital was provided as accounts payable and other
current  liabilities  grew to approximately $3,324,000 compared to $1,779,000 at
December  31,  1998  due  to  an increase in operating activities.  In 1999, the
Company invested $300,000 in Sanarus Medical Inc., a women's healthcare company.

     In  June  and  July  1999, Endocare received a total of $8,000,000 from the
sale  to  institutional  investors of 7% convertible debentures which are due in
three  years.  Under  the  financing  arrangements,  the  purchasers  of  the
convertible  debentures  have  options to purchase additional debentures for the
aggregate  principal  amounts of $5,000,000 and $3,000,000 prior to June 7, 2002
and  July  29,  2002, respectively.  The additional debentures will mature three
years from the date they are issued, will bear interest at 7% per annum and will
be  convertible  in  whole  or  in part at a conversion price of $6.75 per share
(subject to certain anti-dilution adjustments).  The Company has a put option to
require  the  purchasers  to  buy  the $5,000,000 principal amount of additional
debentures if the closing bid price for the common stock as listed for quotation
is  more that $10.00 per share for the twenty (20) trading days in a consecutive
thirty  (30)  trading  day period and on the date the Company elects to exercise
the put option, and if certain other conditions are met.  The Company also has a
put  option  to require the purchasers to buy the $3,000,000 principal amount of
additional  debentures  if  the closing bid price for the common stock as listed
for  quotation  is  more  that $9.00 per share for twenty (20) trading days in a
consecutive thirty (30) trading day period and on the date the Company elects to
exercise  the  put option, and if certain other conditions are met. In addition,
in  July  1999,  the  Company  entered  into a Loan and Security Agreement which
provides  for  a revolving credit line in the amount of $2,000,000 plus up to an
additional $1,000,000 based on eligible accounts receivable for the Company (the
"Loan").  As  of  December 31, 1999, $2,000,000 of the Loan is outstanding.  The
Loan  matures  and  all amounts must be repaid on July 31, 2001.  The Loan bears
interest at the highest prime or equivalent rate announced by certain designated
banks,  plus 2% or 3.5%.  The Loan is secured by a first priority lien on all of
the assets of the Company, except for intellectual property, is fully guaranteed
by  the  Company's  subsidiary,  and  contains  certain  restrictive  covenants.

The  Company  believes  that  its  existing  cash resources, credit facility and
access  to additional working capital under the financing arrangements discussed
above  will  provide  sufficient  resources  to  meet  present  and  reasonably
foreseeable working capital requirements and other cash needs for the next year.
If  the  Company  elects  to  undertake  or  accelerate significant research and
development  projects  for new products or pursue corporate acquisitions, it may
require  additional  outside  financing prior to such time.  The Company expects
that  to  meet  its long-term needs it will need to raise substantial additional
funds  through the sale of its equity securities, the incurrence of indebtedness
or  through  funds  derived  through entering into collaborative agreements with
third  parties.

This  document  contains forward-looking statements.  The Company's business and
results  of operations are subject to risks and uncertainties including, but not
limited  to,  those  discussed under the caption "Factors That May Affect Future
Results  and  Trading  Price of Common Stock" included elsewhere in this report,
and  in  risk  factors  contained  in  other  periodic  reports  filed  with the
Securities  and  Exchange  Commission.  Such  risk  factors include, but are not
limited  to,  limited operating history of the Company with a history of losses;
fluctuations  in  the  Company's  order  levels;  uncertainty  regarding  market
acceptance of the Company's new products; uncertainty of product development and
the associated risks related to clinical trials; the rapid pace of technological
change  in  the  Company's  industry; the Company's limited sales, marketing and
manufacturing  experience;  uncertainty  regarding  the  impact Year 2000 system
failures  may  have  if experienced by the Company, its suppliers and customers;
the  ability to convince health care professionals and third party payers of the
medical  and  economic  benefits  of  the  Company's  Cryocare  System (TM), and
uncertainty  as  to  whether  payers  will  reimburse  health care providers who
perform  prostate  cancer  cryosurgical procedures and whether reimbursement, if
provided,  will  be  adequate.  The actual results that the Company achieves may
differ  materially  from  any  forward-looking  statements due to such risks and
uncertainties.


OTHER  MATTERS

     ACCOUNTING  PRINCIPLES

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and  Hedging Activities" ("SFAS No. 133").  The Statement establishes accounting
and  reporting  standards  for  derivative  financial  instruments  and  hedging
activities related to those instruments as well as other hedging activities.  It
requires  an entity to recognize all derivatives as either assets or liabilities
in  the  statement  of financial position and measures those instruments at fair
value.  In  June  1999,  the  FASB  issued  Statement  of  Financial  Accounting
Standards  No.  137,  "Accounting  for  Derivative  Instruments  and  Hedging
Activities-Deferral  of  the  Effective  Date  of  FASB  Statement  No. 133 - an
amendment  of FASB Statement No. 133" ("SFAS No. 137").  SFAS No. 137 delays the
effective  date  of  SFAS  No. 133 to fiscal quarters and fiscal years beginning
after  June  15,  2000.  The  Company does not typically enter into arrangements
that  would  fall  under  the  scope  of  Statement No. 133 and thus, management
believes  that  Statement No. 133 will not significantly affect its consolidated
financial  condition  and  results  of  operations.

     YEAR  2000

     The Year 2000 problem refers to the potential for information systems to be
unable  to  correctly  recognize  and  process calendar dates and date-sensitive
information  involving  dates  on or after January 1, 2000.  The Company did not
experience  any  material Year 2000 problems as the date changed and through the
date  of  this  report.  The  Company attributes this to our Year 2000 readiness
efforts.  As  of  December 31, 1999, systems remediation and integration testing
and development of the Company's contingency plans had been completed.  Supplier
management is an ongoing process, and no material impact has been felt from lack
of  supplier  readiness.  Although  the  Company did not experience any material
problems  related  to  the  Year  2000  issue,  there  can be no assurances that
problems  relating  to  the  Year 2000 issue will not manifest themselves in the
future.  Historical  amounts  spent  on  the  Year  2000  project  have not been
material  to  the  results  of  operations.  In  addition,  the Company does not
believe  that it will incur material costs in the future because of date related
problems.

     OTHER

The  Company  is  not aware of any issues related to environmental concerns that
have  or  are  expected  to  materially  effect  its  business.

ITEM  7A.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

     The  Company's  financial  instruments  include cash, cash equivalents, and
notes  receivable.  At  December  31, 1999, the carrying values of the Company's
financial  instruments  approximated  their  fair  values.

     It  is  the  Company's  policy  not  to  enter  into  derivative  financial
instruments.  The  Company  does  not  have  any  significant  foreign  currency
exposure  since it does not transact business in foreign currencies.  Therefore,
the  Company  does not have significant overall currency exposure.  In addition,
the  Company  does not enter into any futures or forward contracts and therefore
does not have significant market risk exposure with respect to commodity prices.

The  Company  maintains  a  $3,000,000  credit  facility bearing interest at the
highest  prime  rate  or  equivalent rate announced by certain designated banks,
plus  2%  or  3.5%.  The  current  rate  of  interest  on the credit facility is
approximately  12%.  This  is the only debt of the Company which does not have a
fixed-rate  of  interest.  A  significant  change  in  interest  rates would not
materially  impact  the Company's consolidated financial statements.  The credit
facility  expires  in  July  2001.

ITEM  8.  FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

     See  Item 14, "Exhibits, Financial Statement Schedules, and Reports on Form
8-K."

ITEM  9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
FINANCIAL
     DISCLOSURE

     Not  applicable.


                                    PART III

ITEM  10.  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT  *

ITEM  11.  EXECUTIVE  COMPENSATION  *

ITEM  12.      SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT *

ITEM  13.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS  *

_  _  _  _  _  _  _  _  _  _  _  _  _  _  _  _  _  _


     *The information called for by items 10, 11, 12 and 13 is omitted from this
Report  and is incorporated by reference to the definitive Proxy Statement to be
filed  by  the Company no later than 120 days after December 31, 1999, the close
of  its  fiscal  year.

                                     PART IV

ITEM  14.  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES,  AND  REPORTS ON FORM 8-K

(a)    DOCUMENTS  FILED  AS  A  PART  OF  THIS  REPORT


(1)    Index  to  Financial  Statements

       Independent  Auditors'  Report

       Consolidated  Statements  of  Operations  for  the  years  ended
       December  31,  1997,  1998  and  1999

       Consolidated  Balance  Sheets  at  December  31,  1998  and  1999

       Consolidated  Statements  of  Shareholders'  Equity  (Deficiency)
       for  the  years  ended  December  31,  1997,  1998  and  1999

       Consolidated  Statements  of  Cash  Flows  for  the  years  ended
       December  31,  1997,  1998  and  1999

       Notes  to  Consolidated  Financial  Statements

(2)    Financial  Statement  Schedules
       Schedule II--Valuation and Qualifying Accounts -for the years ended
       December  31,  1997,  1998  and  1999

       (All other schedules are omitted because they are not applicable or the
       required information is included in the financial statements or notes
       thereto)

(3)    Exhibits

2.1    Distribution  Agreement  between  the  Registrant  and  Medstone
       International,  Inc.,  dated  October  31,  1995(1)

3.1    Certificate  of  Incorporation  of  the  Company(2)

3.2    Amended  and  Restated  Bylaws  of  the  Company(3)

4.1    Specimen  Certificate  of  the  Company's  Common  Stock(4)

10.1   Form  of  Indemnification  Agreement(2)

10.2   1995  Stock  Plan(1)

10.3   1995  Director  Option  Plan(1)

10.4   Patent  License  Agreement  between the Company and Brigham and Women's
       Hospital Inc. dated April 17, 1996(5)

10.5   Form  of  Warrant  to purchase an aggregate of 150,000 shares of common
       stock, dated  August  26,  1996(6)

10.6   Common  Stock  Purchase  Agreement  by  and  among  the Company and the
       persons listed on the Schedule of Investors attached thereto as Exhibit
       A, dated January  21,  1997(7)

10.7   Facility  Lease  dated  January  31,  1997  for  7  Studebaker(8)

10.8   Common  Stock  Purchase  Agreements  by  and  among the Company and the
       persons  indicated  therein,  dated  April  15  and  April  11,  1998(3)

10.9   Rights  Agreement,  dated as of March 31, 1999, between the Company and
       U.S.  Stock  Transfer  Corporation,  which  includes  the form of
       Certificate of Designation  for the Series A Junior Participating
       Preferred Stock as Exhibit A, the  form  of  Rights  Certificate  as
       Exhibit  B  and the Summary of Rights to Purchase  Series A Preferred
       Shares as Exhibit C (filed as Exhibit 4 to Form 8-K filed  on  June  3,
       1999)  (9)

10.10  Debenture  dated  June  7,  1999 between the Company and Brown Simpson
       Strategic  Growth Fund, Ltd. (filed as Exhibit 4.1 to Form 8-K filed on
       June 14, 1999)  (10)

10.11  Debenture  dated  June  7,  1999 between the Company and Brown Simpson
       Strategic  Growth Fund, L.P. (filed as Exhibit 4.2 to Form 8-K filed on
       June 14 1999)  (10)

10.12  Securities Purchase Agreement dated June 7, 1999 among the Company and
       the  Purchasers. (filed as Exhibit 10.1 to Form 8-K filed on June 14,
       1999) (10)

10.13  Registration Rights Agreement dated June 7, 1999 among the Company and
       the  Purchasers. (filed as Exhibit 10.2 to Form 8-K filed on June 14,
       1999) (10)

10.14  Debenture  dated  July  29, 1999 between the Company and Brown Simpson
       Strategic Growth Fund, Ltd. (filed as Exhibit 4.1 to Form 8-K filed on
       August 6, 1999)  (11)

10.15  Debenture  dated  July  29,  1999  between  the Company and Brown
       Simpson  Strategic  Growth Fund, L.P. (filed as Exhibit 4.2 to Form
       8-K filed on August  6,  1999)  (11)

10.16  Securities  Purchase  Agreement  dated  July  29,  1999 among the
       Company  and  the Purchasers. (filed as Exhibit 10.1 to Form 8-K
       filed on August 6,  1999)  (11)

10.17  Registration  Rights  Agreement  dated  July  29,  1999 among the
       Company  and  the Purchasers. (filed as Exhibit 10.2 to Form 8-K
       filed on August 6,  1999)  (11)

10.18  Loan  and  Security  Agreement  dated  July  29, 1999 between the
       Company  and  TBCC.  (filed  as  Exhibit  10.3  to  Form  8-K  filed
       on  August  6,  1999)  (11)

10.19  Streamlined Facility Agreement dated July 29, 1999 between the Company
       and  TBCC.  (filed  as  Exhibit  10.3  to Form 8-K filed on August 6,
       1999) (11)

10.20  Continuing  Guaranty  dated July 29, 1999 by the AMP in favor of TBCC.
       (filed  as  Exhibit  10.3  to  Form  8-K  filed  on  August  6,
       1999)  (11)

10.21  Security  Agreement  dated July 29, 1999 between AMP and TBCC. (filed
       as  Exhibit  10.3  to  Form  8-K  filed  on  August  6,  1999)  (11)

23.1   Consent  of  KPMG  LLP*

27.1   Financial  Data  Schedule*

__________

(1)    Previously filed with the Company's Application for Registration on Form
10-SB under the Securities Exchange Act of 1934, filed on November 14, 1995, and
incorporated  herein by reference. Each such exhibit had the same exhibit number
in  that filing, except that the 1995 Stock Plan was exhibit number 10.6 and the
1995  Director  Option  Plan  was  exhibit  10.7.

(2)    Previously  filed  with  Amendment number 1 to Company's Application for
Registration  on Form 10-SB, filed on December 21, 1995, and incorporated herein
by  reference.

(3)    Previously  filed with the Company's current report on Form 8-K as filed
with  the Securities and Exchange Commission on April 23, 1998, and incorporated
herein  by  reference.

(4)    Previously  filed  with the Company's Annual Report on Form 10-K for the
year  ended  December  31,  1995,  and  incorporated  herein  by  reference.

(5)    Previously  filed  with  the  Company's  Current  Report on Form 8-K, as
amended, as filed with the Securities and Exchange Commission on April 26, 1996,
and  incorporated  herein  by  reference.

(6)    Previously  filed with the Company's Current Report on Form 8-K as filed
with  the  Securities  and  Exchange  Commission  on  September  10,  1996,  and
incorporated  herein  by  reference.

(7)    Previously  filed with the Company's Current Report on Form 8-K as filed
with  the  Securities  and  Exchange  Commission  on  January  31,  1997,  and
incorporated  herein  by  reference.

(8)    Previously  filed  with  the  Company's  Annual  Report  on  Form 10-K/A
(Amendment  No. 3) for the year ended December 31, 1996, and incorporated herein
by  reference.

(9)    Previously  filed with the Company's current report on Form 8-K as filed
with  the  Securities  and Exchange Commission on June 3, 1999, and incorporated
herein  by  reference.

(10)   Previously filed with the Company's current report on Form 8-K as filed
with  the  Securities and Exchange Commission on June 14, 1999, and incorporated
herein  by  reference.

(11)   Previously filed with the Company's current report on Form 8-K as filed
with  the Securities and Exchange Commission on August 6, 1999, and incorporated
herein  by  reference.

*      Filed  herewith.

(b)    REPORTS  ON  FORM  8-K

           None



<PAGE>



REPORT  OF  INDEPENDENT  AUDITORS

To  the  Board  of  Directors
Endocare,  Inc.:

We  have audited the accompanying consolidated financial statements of Endocare,
Inc.  (the  Company)  and  subsidiary  as  listed  in the accompanying index. In
connection with our audits of the financial statements, we also have audited the
financial  statement  schedule  as  listed  in  the  accompanying  index.  These
consolidated  financial  statements  and  financial  statement  schedule are the
responsibility  of the Company's management. Our responsibility is to express an
opinion  on  these  consolidated  financial  statements  and financial statement
schedule  based  on  our  audits.

We  conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards.  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.

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all material respects, the financial position of Endocare, Inc. and
subsidiary as of December 31, 1998 and 1999, and the results of their operations
and  their  cash  flows  for  each  of  the years in the three year period ended
December  31, 1999, in conformity with generally accepted accounting principles.
Also  in  our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly,
in  all  material  respects,  the  information  set  forth  therein.

KPMG  LLP

Orange  County,  California
February  10,  2000



<PAGE>



                          ENDOCARE, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>


                                           FOR  THE  YEARS  ENDED  DECEMBER  31,
                                          --------------------------------------

                                            1997          1998           1999
                                        ------------  -------------  -------------
<S>                                     <C>           <C>            <C>
Revenues:
  Net product sales. . . . . . . . . . .  $ 1,917,707   $  1,363,112   $  2,328,973
  Mobile cryosurgical procedures . . . .      346,758        490,066      1,132,901
  Revenue from collaborative agreements.       83,328        641,672             --
                                          ------------  -------------  -------------
     Total revenues . . . . . . . . . . .   2,347,793      2,494,850      3,461,874
                                          ------------  -------------  -------------
Costs and expenses:
  Cost of product sales. . . . . . . . .    1,270,838        974,308      1,254,917
  Cost of mobile cryosurgical procedures      151,442        208,685        429,751
  Research and development . . . . . . .    1,596,242      1,919,527      2,573,518
  Selling, general and administrative. .    3,552,329      4,653,487      7,991,885
                                          ------------  -------------  -------------
     Total costs and expenses . . . . . . . 6,570,851      7,756,007     12,250,071
                                          ------------  -------------  -------------
Loss from operations . . . . . . . . .     (4,223,058)    (5,261,157)    (8,788,197)
Interest income (expense), net . . . .        201,317        336,593       (475,978)
                                          ------------  -------------  -------------
Net loss . . . . . . . . . . . . . . .    $(4,021,741)  $ (4,924,564)  $ (9,264,175)
                                          ============  =============  =============
Net loss per share of common stock -
  basic and diluted. . . . . . . . . . .  $      (.48)  $       (.49)  $       (.86)
                                          ============  =============  =============
Weighted average shares of
  common stock outstanding . . . . . . .    8,307,000     10,062,000     10,838,000
                                          ============  =============  =============
</TABLE>


    The accompanying notes are an integral part of these consolidated financial
                                   statements.


<PAGE>

                                     ENDOCARE, INC. AND SUBSIDIARY
                                      CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>


                                                                                    DECEMBER  31
                                                                                    -------------

                                                                                 1998           1999
                                                                             -------------  -------------
<S>                                                                          <C>            <C>
                                 ASSETS
                                --------
Current assets:
  Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .  $  6,285,799   $  7,364,951
  Accounts receivable, less allowances of $86,000
    and $270,000 at December 31, 1998 and 1999,
    respectively. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     407,602        958,145
  Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       542,610      1,278,785
  Prepaid expenses and other current assets . . . . . . . . . . . . . . . .        87,397        166,969
                                                                             -------------  -------------
    Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . .     7,323,408      9,768,850
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . .       498,240        962,720
Deferred financing costs and other assets, net of accumulated amortization
    of $0 and $413,394 at December 31, 1998 and 1999, respectively. . . . .       170,206      2,264,803
                                                                             -------------  -------------
       Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . ..  $  7,991,854   $ 12,996,373
                                                                             =============  =============

              LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
              -------------------------------------------------

Current liabilities:
  Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $    653,548   $  1,517,470
  Accrued compensation. . . . . . . . . . . . . . . . . . . . . . . . . . .       604,628        910,103
  Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . .       521,204        896,210
                                                                             -------------  -------------
    Total current liabilities . . . . . . . . . . . . . . . . . . . . . . .     1,779,380      3,323,783

Convertible debentures. . . . . . . . . . . . . . . . . . . . . . . . . . .            --      8,000,000
Note payable and other liabilities. . . . . . . . . . . . . . . . . . . . .       201,274      2,153,082
                                                                             -------------  -------------
    Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .     1,980,654     13,476,865

Shareholders' equity (deficiency):
  Preferred stock, $.001 par value; 1,000,000 shares
    authorized; none issued and outstanding . . . . . . . . . . . . . . . . .          --             --
  Common stock, $.001 par value; 20,000,000 shares
    authorized;  10,698,354 and 11,248,323 issued and
    outstanding at December 31, 1998 and 1999, respectively . . . . . . . . .      10,698         11,248
  Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . .    16,509,952     20,310,010
  Note receivable from stock sale . . . . . . . . . . . . . . . . . . . . .            --     (1,028,125)
  Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . .   (10,509,450)   (19,773,625)
                                                                             -------------  -------------
    Total shareholders' equity (deficiency) . . . . . . . . . . . . . . . .     6,011,200       (480,492)
                                                                             -------------  -------------
Commitments and contingencies
    Total liabilities and shareholders' equity (deficiency) . . . . . . . .  $  7,991,854   $ 12,996,373
                                                                             =============  =============
</TABLE>


    The accompanying notes are an integral part of these consolidated financial
                                   statements.


<PAGE>


                                  ENDOCARE, INC. AND SUBSIDIARY
              CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY  (DEFICIENCY

<TABLE>
<CAPTION>
                                                                               NOTE                          TOTAL
                                                             ADDITIONAL     RECEIVABLE                 SHAREHOLDERS'/
                                          COMMON  STOCK        PAID-IN         FROM       ACCUMULATED        EQUITY
                                        SHARES    CAPITAL       AMOUNT      STOCK SALE      DEFICIT      (DEFICIENCY)
                                      ----------  --------  -----------  --------------  -------------  -------------
<S>                                   <C>         <C>       <C>          <C>             <C>            <C>
BALANCE AT DECEMBER 31, 1996 . . . .   5,905,139  $  5,905  $ 1,540,344  $          --   $ (1,563,145)  $    (16,896)

Common stock issued in
  private placement
  and note conversion, net . . . . . . 2,550,714     2,551    7,885,100             --             --      7,887,651
Stock options exercised. . . . . . .     182,501       182       32,668             --             --         32,850
Equity provided by
  warrant amortization . . . . . . . .        --        --       78,235             --             --         78,235
Net loss . . . . . . . . . . . . . .          --        --           --             --     (4,021,741)    (4,021,741)
                                      ----------  --------  -----------  --------------  -------------  -------------
BALANCE AT DECEMBER 31, 1997 . . . .   8,638,354     8,638    9,536,347             --     (5,584,886)     3,960,099

Common stock issued in
  private placement, net . . . . . . . 2,000,000     2,000    6,883,820             --             --      6,885,820
Stock options exercised. . . . . . .      60,000        60       10,741             --             --         10,801
Equity provided by
  warrant amortization . . . . . . . .        --        --       79,044             --             --         79,044
Net loss . . . . . . . . . . . . . .          --        --           --             --     (4,924,564)    (4,924,564)
                                      ----------  --------  -----------  --------------  -------------  -------------
BALANCE AT DECEMBER 31, 1998 . . . .  10,698,354    10,698   16,509,952             --   $(10,509,450)  $  6,011,200

Common stock issued. . . . . . . . .     210,988       211    1,316,535     (1,028,125)            --        288,621
Stock options and warrants exercised     338,981       339      750,023             --             --        750,362
Equity provided by
  warrant amortization . . . . . . . .        --        --      133,500             --             --        133,500
Fair value of convertible debenture
  purchase options . . . . . . . . . .        --        --    1,600,000             --             --      1,600,000
Net loss . . . . . . . . . . . . . .          --        --           --             --     (9,264,175)    (9,264,175)
                                      ----------  --------  -----------  --------------  -------------  -------------
BALANCE AT DECEMBER 31, 1999 . . . .  11,248,323  $ 11,248  $20,310,010  $  (1,028,125)  $(19,773,625)  $   (480,492)
                                      ==========  ========  ===========  ==============  =============  =============
</TABLE>



                          ENDOCARE, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                 FOR  THE  YEARS  ENDED  DECEMBER  31,
                                                 -------------------------------------

                                                   1997          1998           1999
                                               ------------  -------------  ------------
<S>                                            <C>           <C>            <C>

Cash flows from operating activities:
---------------------------------------------
  Net loss. . . . . . . . . . . . . . . . . .  $(4,021,741)  $ (4,924,564)  $(9,264,175)
  Adjustments to reconcile net loss to net
  cash used in operating activities:
  Depreciation and amortization . . . . . . . .    175,319        164,629       365,925
  Amortization of warrant value . . . . . . . .     78,235         79,044       133,500
  Amortization of deferred financing costs. . .         --             --       378,695
  Common stock issued for interest payable. . .         --             --       288,621
Changes in operating assets and liabilities:
  Accounts receivable . . . . . . . . . . . . .    168,304         12,039      (550,543)
  Inventories . . . . . . . . . . . . . . . . .   (528,867)       382,982    (1,226,412)
  Prepaid expenses and other current
    assets. . . . . . . . . . . . . . . . . . .    (29,450)       (23,160)      (79,572)
  Other assets. . . . . . . . . . . . . . . . .     28,445       (112,922)       26,778
  Accounts payable. . . . . . . . . . . . . . .    131,402       (169,015)      863,922
  Accrued compensation. . . . . . . . . . . . .    212,637        370,798       305,475
  Other accrued liabilities . . . . . . . . . .    287,519         90,286       373,656
  Deferred revenue. . . . . . . . . . . . . . .   (118,328)      (166,672)           --
                                               ------------  -------------  ------------
Net cash used in operating activities . . . .   (3,616,525)   ( 4,296,555)   (8,384,130)
                                               ------------  -------------  ------------
Cash flows from investing activities:
---------------------------------------------
  Purchases of property and equipment . . . . .   (217,727)      (350,645)     (338,818)
  Investment in Sanarus . . . . . . . . . . . .         --             --      (300,061)
                                               ------------  -------------  ------------
Net cash used in investing activities . . . .     (217,727)      (350,645)     (638,879)
                                               ------------  -------------  ------------
Cash flows from financing activities:
---------------------------------------------
  Issuance of convertible debentures
    and other debt. . . . . . . . . . . . . . .         --             --    10,000,000
  Issuance of common stock, other . . . . . . .  7,170,501      6,896,621       750,362
  Financing costs and other . . . . . . . . . .         --        124,000      (648,201)
                                               ------------  -------------  ------------
Net cash provided by financing activities . .    7,170,501      7,020,621    10,102,161
                                               ------------  -------------  ------------
Net increase in cash and cash equivalents . .    3,336,249      2,373,421     1,079,152
Cash and cash equivalents, beginning of year.      576,129      3,912,378     6,285,799
                                               ------------  -------------  ------------
Cash and cash equivalents, end of year. . . .  $ 3,912,378   $  6,285,799   $ 7,364,951
                                               ============  =============  ============
Non-cash activities:
---------------------------------------------
  Conversion of note payable and accrued
    interest to common stock, net of
    origination fees paid by issuance
    of common stock . . . . . . . . . . . . . .$   820,250   $         --   $        --
  Fair value of convertible debenture
    purchase options credited to additional
    paid-in-capital . . . . . . . . . . . . . . .       --             --     1,600,000
  Note receivable from stock sale . . . . . . .         --             --     1,028,125
  Transfer of inventory to property
    and equipment for placement at customer sites       --             --       490,237
                                               ------------  -------------  ------------
      Total non-cash activities . . . . . . .  $   820,250   $         --   $ 3,118,362
                                               ============  =============  ============
</TABLE>


    The accompanying notes are an integral part of these consolidated financial
                                   statements.



<PAGE>

                          ENDOCARE, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     ORGANIZATION  AND  OPERATIONS  OF  THE  COMPANY

Endocare,  Inc.  (the  "Company") designs, manufactures, and markets an array of
innovative,  temperature-based  surgical  devices  and technologies primarily to
treat  prostate  diseases,  including  prostate cancer and prostate enlargement.
The  Company also operates a mobile cryosurgery business. Since its formation in
1990,  Endocare  operated  first  as a research and development department, then
later  as  a  division  of  Medstone International, Inc. ("Medstone"). Effective
January  1,  1996,  Endocare  became  a  totally  independent,  publicly-owned
corporation.


2.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

Principles  of Consolidation:  The consolidated financial statements include the
accounts  of  Endocare,  Inc.  and  its wholly-owned subsidiary Advanced Medical
Procedures,  Inc.  All  intercompany  balances  and  transactions  have  been
eliminated.

Use  of  Estimates:  The  preparation of financial statements in conformity with
generally  accepted  accounting principles requires management to make estimates
and  assumptions  that  affect the reported amounts of assets and liabilities at
the  date  of  the financial statements and the reported amounts of revenues and
expenses  during  the  reporting period.  Actual results could differ from those
estimates.

Cash  and  Cash  Equivalents:  All  highly  liquid investments purchased with an
original maturity of three months or less are considered to be cash equivalents.

Inventories:  Inventories  are  stated  at  the  lower of actual cost (first-in,
first-out)  or  net  realizable  value.

Property  and  Equipment:  Property  and  equipment  are  stated at cost and are
depreciated  on  a  straight-line  basis  over the estimated useful lives of the
respective  assets,  which  range from two to five years. Leasehold improvements
are  amortized  over  the shorter of the estimated useful lives of the assets or
the related lease term.  Cryosurgical equipment placed at customer sites for use
with  the  Company's disposable Cryoprobes (TM) is depreciated into product cost
of  sales  over  an  estimated  useful  life  of  three  years.

Long-Lived  Assets:  The  Company  reviews  property,  equipment, and intangible
assets  for  possible  impairment whenever events or circumstances indicate that
the  carrying  amounts may not be recoverable. If the sum of the expected future
undiscounted  cash  flows  is  less  than  the  carrying  amount of an asset, an
impairment  loss  is recognized as the excess of the carrying value of the asset
over  its  fair  value.

Deferred  Financing  Costs:  Deferred  financing costs are amortized to interest
expense  over  the  lives  of  the  respective  assets.

Revenue Recognition: The Company recognizes product revenue upon the shipment of
its  products,  including  the shipment of disposable products to customer sites
where  the  Company  has  placed  cryosurgical  systems.  Revenue  from  mobile
cryosurgical  procedures  is  recognized upon completion of procedures.  Revenue
from  collaborative  agreements  are  recognized  as  the related activities are
performed  or  milestones  are  met.  Realizability  of  accounts  receivable is
determined  based upon an understanding of the financial condition of, and prior
history  with,  the  buyer  and  overall  historical  experience.

Warranty  Costs:  Certain  of  the  Company's products are covered by warranties
against  defects in material and workmanship for periods of up to twelve months.
The  estimated  warranty  cost  is  recorded at the time of sale and is adjusted
periodically  to  reflect  actual  experience.

Research  and Development: Research and development costs relate to both present
and  future  products  and  are  expensed  as  incurred.

Net  Loss  Per  Share: The Company has adopted Statement of Financial Accounting
Standards  No. 128, "Earnings Per Share" ("SFAS 128"). Under SFAS 128, basic EPS
is  calculated  by  dividing  net earnings (loss) by the weighted-average common
shares  outstanding  during  the  period.  Diluted  EPS  reflects  the potential
dilution  to  basic  EPS  that  could  occur  upon  conversion  or  exercise  of
securities,  options,  convertible  debentures,  or  other such items, to common
shares  using  the  treasury  stock  method based upon the weighted-average fair
value  of the Company's common shares during the period. In accordance with SFAS
128,  the  consolidated  loss  (numerator),  shares  (denominator) and per-share
amount  for  fiscal  1997 are $(4,021,741), 8,307,000 and $(0.48), respectively.
The consolidated loss (numerator), shares (denominator) and per-share amount for
fiscal  1998  are  $(4,924,564),  10,062,000  and $(0.49), respectively, and the
consolidated  loss  (numerator),  shares  (denominator) and per-share amount for
fiscal  1999  are  $(9,264,175),  10,838,000  and  $(0.86), respectively. As the
Company  has  been  in  a net loss position for the fiscal years 1997, 1998, and
1999,  the  potential  dilution  from  the  conversion  of options, warrants and
convertible debentures to common stock of 1,715,000, 2,549,000 and  3,953,000 in
fiscal years 1997, 1998 and 1999, respectively, were not used to compute diluted
loss  per share as the effect was antidilutive. Consequently, diluted EPS equals
basic  EPS  for  all  periods  presented.

Fair  Value  of  Financial  Instruments:  The  carrying  amount of cash and cash
equivalents  approximates  fair  value  for all periods presented because of the
short-term  maturity of these financial instruments. The carrying amounts of all
other financial instruments on the consolidated balance sheets approximate their
fair  values.

Comprehensive  Income:  The  Company  has  adopted  SFAS  NO.  130 ("SFAS 130"),
"Reporting  Comprehensive  Income."  This  statement  establishes  rules for the
reporting  of comprehensive income and its components.  The adoption of SFAS 130
did  not  impact  the  Company's  consolidated  financial  statements or related
disclosures  as  the Company does not have any components of other comprehensive
income.  Therefore,  comprehensive  income  (loss) equaled net income (loss) for
all  periods  presented.

Segment  Disclosures:  The  Company  has  adopted  SFAS  No.  131  ("SFAS 131"),
"Disclosure  about Segments of an Enterprise and Related Information."  SFAS 131
establishes  standards  for reporting information about operating segments.  The
Company operates in one industry segment - the design, manufacture and marketing
of  surgical  devices  and  related  procedures  to  treat  prostate  diseases.

3.     MERGER

On  June  30,  1999,  Endocare  acquired  all  the outstanding units of Advanced
Medical  Procedures,  LLC,  a  Florida  limited  liability company ("AMP").  AMP
operates a mobile cryosurgery business which provides cryosurgical equipment for
the  treatment  of  prostate  and  liver  cancer  on  a  procedural  basis.  The
acquisition  was  consummated  pursuant  to  a  Plan  of Merger (the "AMP Merger
Agreement")  by  and  among AMP, Endocare, and Advanced Medical Procedures, Inc.
("AMPI"),  a  Delaware  corporation  and  wholly-owned  subsidiary  of Endocare.
Pursuant  to  the Merger Agreement, AMP was merged with and into AMPI, with AMPI
surviving  as  a  wholly-owned  subsidiary  of  Endocare.  The  AMP  unitholders
received an aggregate of 260,000 shares of Endocare Common Stock in exchange for
all  of  their  AMP  units.  The  acquisition  was  accounted  for  as  a
pooling-of-interests for financial reporting purposes.  The pooling-of-interests
method  of  accounting  is  intended to present as a single interest two or more
common  stockholders'  interests which were previously independent; accordingly,
the  historical  financial  statements  for the periods prior to the merger have
been  restated  as  though  the  companies had been combined.  Fees and expenses
related  to  the  merger were expensed as incurred and amounted to approximately
$50,000.

The  results of operations previously reported by the separate companies and the
combined amounts presented in the accompanying consolidated financial statements
are  summarized  below:

<TABLE>
<CAPTION>


                                                                                       Six Months
                                                              Years Ended                Ended
                                                              December  31,             June  30,
                                                             -------------
                                                          1997            1998            1999
                                                      ------------  ---------------  ------------
<S>                                                   <C>           <C>              <C>
Net Revenue:
  Endocare
    Net product sales. . . . . . . . . . . . . . . .  $ 1,917,707   $    1,476,112   $   741,903
    Revenue from collaborative agreements. . . . . .       83,328          641,672            --
  AMP. . . . . . . . . . . . . . . . . . . . . . .
    Procedures . . . . . . . . . . . . . . . . . . .      346,758          490,066       573,638
  Adjustments - elimination of intercompany activities         --         (113,000)      (51,910)
                                                      ------------  ---------------  ------------
  Combined . . . . . . . . . . . . . . . . . . . . .  $ 2,347,793   $    2,494,850   $ 1,263,631
                                                      ============  ===============  ============
Net Loss:
  Endocare . . . . . . . . . . . . . . . . . . . . .  $(3,899,860)   . $(4,837,346)  $(4,405,759)
  AMP. . . . . . . . . . . . . . . . . . . . . . . .     (121,881)         (49,218)       36,956
  Adjustments - elimination of intercompany activities         --          (38,000)      (51,910)
                                                      ------------  ---------------  ------------
  Combined . . . . . . . . . . . . . . . . . . . . .  $(4,021,741)  $   (4,924,564)  $(4,420,713)
                                                      ============  ===============  ============
</TABLE>


Adjustments  have  been  made to eliminate the impact of intercompany sales from
Endocare  to  AMP.  Additionally, a previously existing note payable from AMP to
Endocare  of  $135,000  at  December  31,  1998,  has  been  eliminated  in  the
accompanying  consolidated  balance  sheets.  There  were  no  other significant
transactions  between  Endocare  and  AMP  prior  to  the  combination.

4.     SUPPLEMENTAL  FINANCIAL  STATEMENT  DATA


<TABLE>
<CAPTION>


                                                                  YEARS ENDED DECEMBER 31,
                                                                  ------------------------
                                                              1997         1998         1999
                                                           -----------  -----------  ----------
<S>                                                        <C>          <C>          <C>
Interest income (expense), net
  Interest income . . . . . . . . . . . . . . . . . . . .  $  204,675   $  338,710   $ 315,864
  Interest Expense. . . . . . . . . . . . . . . . . . . .     (3,358)      (2,117)   (791,842)
                                                           -----------  -----------  ----------
    Interest income (expense), net. . . . . . . . . . . .  $  201,317   $  336,593   $(475,978)
                                                           ===========  ===========  ==========

  Cash paid for interest. . . . . . . . . . . . . . . . .  $    3,358   $    2,117   $  17,580
                                                           ===========  ===========  ==========

Inventories:
  Raw materials . . . . . . . . . . . . . . . . . . . . .              $  260,222   $  481,141
  Work in process . . . . . . . . . . . . . . . . . . . .                  86,375      310,651
  Finished goods. . . . . . . . . . . . . . . . . . . . .                 196,013      486,993
                                                                      -----------  -----------
    Total inventories . . . . . . . . . . . . . . . . . .              $  542,610   $1,278,785
                                                                      ===========  ===========

Property and Equipment:
  Equipment . . . . . . . . . . . . . . . . . . . . . . .              $  554,516   $  488,000
  Equipment -cryosurgical systems placed at customer sites                     --      490,237
  Furniture and fixtures. . . . . . . . . . . . . . . . .                 275,371      442,531
  Leasehold improvements. . . . . . . . . . . . . . . . .                  82,740       86,440
  Assets held for disposal (net of reserves) (see note 5)                 167,947           --
                                                                      -----------  -----------
    Total property and equipment, at cost . . . . . . . .               1,080,574    1,507,208
  Accumulated depreciation and amortization . . . . . . .                (582,334)    (544,488)
                                                                      -----------  -----------
    Net property and equipment. . . . . . . . . . . . . .              $  498,240   $  962,720
                                                                      ===========  ===========
</TABLE>



5.     LONG-LIVED  ASSETS

In  1996,  the  Company  reduced  the value of certain property and equipment to
their  estimated fair market values. The identification and measurement of these
impaired  assets was primarily a result of the post spin-out business operations
of  the  Company,  and  the  provisions  of  Statement  of  Financial Accounting
Standards  No.  121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived  Assets to Be Disposed Of" were utilized in determining the amount of
the  impairment  charge.  The  majority of the property and equipment adjustment
pertained  to  laser  machines  which  were  no  longer  generating sales of the
Company's  laser  catheters.  Prior  to 1998, the net book value of these assets
were  fully  reserved  and  in  1999  the  assets  were  disposed  of.

6.     DEBT

     Convertible  Debentures

     On  June  7,  1999  and  July 30, 1999, the Company received $5,000,000 and
$3,000,000,  respectively, from the sale of its 7% convertible debentures due in
three years (the "Debentures").  Interest is payable annually in cash or, at the
Company's  option,  in  common  stock  at  a price per share based on recent bid
prices  prior  to  the date interest is paid.  Under the financing arrangements,
the  purchasers have options to purchase additional debentures for the aggregate
principal  amounts  of  $5,000,000  and  $3,000,000.   Under  the  circumstances
described  below,  the  Company  may  require  the  purchasers to exercise these
purchase  options.  The  $5,000,000  principal  amount of the Debentures must be
repaid  in full in cash on June 7, 2002, but may be converted into the Company's
common  stock  in  whole  or in part at the purchasers' option at any time on or
prior to June 7, 2002 at a conversion price of $5.125 per share.  The $3,000,000
principal  amount  of  the debentures must be repaid in full in cash on July 29,
2002,  but  may be converted into the Company's common stock in whole or in part
at  the  purchasers'  option at any time, subject to certain restrictions, on or
prior to July 29, 2002 at a conversion price of $6.00 per share.  The conversion
prices  are  subject  to  certain  anti-dilution  adjustments.

     In  addition  to the purchasers' option to convert the $5,000,000 principal
amount  of  the  Debentures, the Company may require that the purchasers convert
the  debentures  into  common  stock  at  a conversion price of $5.125 per share
(subject  to  certain anti-dilution adjustments) if the bid price for the common
stock  as  listed for quotation is above $8.00 per share for twenty (20) trading
days  during  a  consecutive  thirty  (30) trading day period, and certain other
conditions  are  met.  Subject  to  certain  restrictions,  the Company may also
require  that  the  purchasers  convert  the  $3,000,000 principal amount of the
debentures  into  common stock at a conversion price of $6.00 per share (subject
to  certain  anti-dilution adjustments) if the bid price for the common stock as
listed  for  quotation  is  above  $9.00  per share for twenty (20) trading days
during  a  consecutive  thirty  (30)  trading  day  period,  and  certain  other
conditions are met.  Subsequent to December 31, 1999, the share price conditions
have  been  met.

     Under  a  securities  purchase agreement, the purchasers have a call option
exercisable  at  any time prior to June 7, 2002 to require that the Company sell
to  the purchasers an additional $5,000,000 principal amount of debentures.  The
additional  debentures  will  mature  three years from the date they are issued,
will  bear  interest at 7% per annum and will be convertible in whole or in part
at  a  conversion  price  of  $6.75  per share (subject to certain anti-dilution
adjustments).  The Company has a put option to require the purchasers to buy the
$5,000,000  principal  amount  of additional debentures if the closing bid price
for  the  common stock as listed for quotation is more that $10.00 per share for
the twenty (20) trading days in a consecutive thirty (30) trading day period and
on  the date the Company elects to exercise the put option, and if certain other
conditions  are  met.  The purchasers also have a call option exercisable at any
time  prior  to July 29, 2002 to require that the Company sell to the purchasers
an  additional  $3,000,000  principal  amount  of  debentures.  The  additional
debentures  will  mature  three  years  from the date they are issued, will bear
interest  at  7%  per  annum  and will be convertible in whole or in part at the
option  of  the  purchasers at any time prior to maturity into common stock at a
conversion  price  of  $6.75  per  share  (subject  to  certain  anti-dilution
adjustments).  The Company has a put option to require the purchasers to buy the
$3,000,000  principal  amount  of additional debentures if the closing bid price
for  the  common  stock as listed for quotation is more that $9.00 per share for
twenty  (20) trading days in a consecutive thirty (30) trading day period and on
the  date  the  Company  elects  to  exercise  the put option, and certain other
conditions are met.  Subsequent to December 31, 1999, the share price conditions
for  both  put  options  have  been  met.

     The fair value of the purchasers' two call options described above totaling
$1,600,000,  has  been  estimated  using  the Black-Scholes pricing model and is
reflected  in  deferred  financing  costs  and  other assets in the accompanying
consolidated  balance  sheet  as  of  December  31,  1999.  This amount is being
amortized  to  interest  expense  over  the  lives  of  the call options.  As of
December  31,  1999, the Company issued 35,988 shares of its common stock to the
purchasers  for  payment  of  $289,000  in  accrued  Debenture  interest through
December  31,  1999.

     Convertible  Loan  Payable

In  August 1996, Endocare obtained a two-year $1,500,000 borrowing facility from
four  partnerships  (the  "Partnerships")  managed by Technology Funding Inc., a
venture  capital  firm.  Peter F. Bernardoni is an officer of Technology Funding
Inc.  and has served as a member of Endocare's Board of Directors since November
1995.  At  December  31,  1996,  $750,000  was  outstanding  under  this  loan.

In  connection  with  entering  into  this  loan,  Endocare  issued  to the four
partnerships 10,000 shares of common stock as an origination fee and warrants to
purchase  an  aggregate  of  up  to 150,000 shares of Endocare common stock. The
warrants  are  exercisable  at  any  time between August 26, 1996 and August 26,
2001,  at  an  exercise  price  of  $3.00  per  share,  subject  to  adjustment.

The loan accrued interest at the rate of 16% per year, which was due and payable
in  arrears  on  the maturity date. The outstanding principal and interest under
the  loan was convertible into common stock of Endocare at a conversion price of
$2.50 per share, subject to certain conditions. All of the obligations under the
loan  were  secured  by  a  security  interest in all present and after acquired
personal  property  of  Endocare.

On  January 27, 1997, the Partnerships converted their $750,000 principal amount
and  accrued  interest  of  $50,000  into  320,000 shares of common stock. Also,
12,000  additional  shares of common stock were issued to the partnerships as an
inducement  to  convert at that time which were valued at fair value of $50,250.
The  Convertible  Loan,  which  provided  an  additional  $750,000  in borrowing
capacity,  was  cancelled  as  of  the  conversion.  In  conjunction  with  the
conversion,  approximately  $30,000  in  unamortized  note origination fees were
reclassified  against  additional  paid-in  capital.

     Credit  Facility

     On  July  29,  1999, the Company entered into a Loan and Security agreement
with  a  lender  which  provides  for  a  revolving credit line in the amount of
$2,000,000  plus  up  to  an  additional  $1,000,000  based on eligible accounts
receivable  of the Company (the "Loan").  As of December 31, 1999, $2,000,000 of
the  loan  is  outstanding.  The  Loan matures and all amounts must be repaid on
July  31, 2001.  The Loan bears interest at the highest prime or equivalent rate
announced by certain designated banks, plus 2% for the portion of the loan based
on  eligible  account  receivables  or  3.5%.  The  Loan  is  secured by a first
priority  lien  on  all  of  the  assets of the Company, except for intellectual
property,  is fully guaranteed by the Company's subsidiary, and contains certain
restrictive  covenants.  The  Company  is  in  compliance  with  the restrictive
covenants  of  the  agreement  as  of  December  31,  1999.

Aggregate  maturities  of long-term debt are zero, $2,000,000 and $8,000,000 for
the years ending December 31, 2000, 2001 and 2002, respectively.  Long-term debt
is comprised of the credit facility's note payable and convertible debentures as
of December 31, 1999.  The balance of the long-term liabilities of approximately
$153,000  as  of  December  31,  1999  consists  primarily  of  a  capital lease
obligation  and  equipment  loan.

7.     PRIVATE  PLACEMENTS

In  January  1997,  the  Company sold 2,218,714 common stock at a price of $3.50
per  share  in a private placement, with Oppenheimer & Co., Inc. ("Oppenheimer")
acting as placement agent. After expenses, the net contribution to the Company's
capital  was  approximately  $7,067,000.  Expenses  deducted  from  the proceeds
include  a  commission  to  Oppenheimer  of  approximately  $540,000  and legal,
accounting,  and  other  professional  expenses  of  approximately  $155,000. In
addition,  Oppenheimer received a warrant to purchase 177,497 shares of Endocare
common  stock  for  a  period  of  five years at a price of $4.20 per share. The
warrants  are  exercisable  at  any  time  through  January  27,  2002.

In  April  1998, the Company sold 2,000,000 shares of common stock at a price of
$3.50  per share in a direct private placement.  After legal, accounting, filing
fees  and  other  associated  expenses  of  approximately  $150,000,  the  net
contribution  to  the  Company's  capital  was  approximately  $6,886,000.

8.     STOCK  OPTIONS  AND  WARRANTS

At  December  31,  1999,  Endocare  had  two  stock-based compensation plans, as
described  below.  Per  FASB Statement No. 123, the Company has elected to apply
APB  Opinion  No.  25  and  related Interpretations in accounting for its plans.
Accordingly,  no compensation expense has been recognized for these plans in the
Consolidated  Statements  of  Operations.

The  1995  Stock  Plan  authorizes the Board or one or more committees which the
Board  may appoint from among its members (the "Committee") to grant options and
rights  to  purchase  common  stock  to  employees  and  certain consultants and
distributors. Options granted under the 1995 Stock Plan may be either "incentive
stock  options"  as defined in Section 422 of the Internal Revenue Code of 1986,
as  amended,  or  nonstatutory  stock options, as determined by the Board or the
Committee.  The  exercise  price of options granted under the 1995 Stock Plan is
equal  to  the  fair market value of Endocare common stock on the date of grant.
Options  generally vest 25% on the one year anniversary date, with the remaining
75%  vesting monthly over the following three years. Options are exercisable for
ten  years.  A  total of 3,312,000 shares of common stock have been reserved for
issuance  under  the  1995  Stock  Plan,  subject  to  an automatic annual share
increase  to  which  the  number of shares available for issuance under the plan
will automatically increase on the first trading day of each calendar year by 3%
of  the  total number of shares of the Company's common stock outstanding at the
end of the preceding calendar year, to a maximum of 500,000 shares each year. As
of  December  31,  1999,  options to purchase a total of 3,299,416 shares of the
Company's  common  stock  have  been  granted  under  the  1995  Stock  Plan.

The  1995 Director Option Plan (the "Director Plan") was adopted by the Board of
Directors  (the  "Board")  in  October  1995 and approved by the shareholders in
November  1995.  It  provides  automatic,  nondiscretionary grants of options to
Endocare's  non-employee  directors  ("Outside  Directors").  The  Director Plan
provides  that  each  Outside  Director  is granted an option to purchase 20,000
shares  of  Endocare  common stock vested over a two-year period upon his or her
initial  election  or  appointment  as  an  Outside Director. Subsequently, each
Outside  Director  who  has  served  for  at least six months will be granted an
additional  option to purchase 5,000 shares of Endocare common stock, on January
1  of  each  year,  or  the  first  trading day thereafter, so long as he or she
remains  an  Outside  Director. The exercise price of options granted to Outside
Directors  must be the fair market value of Endocare common stock on the date of
grant.  Options  granted to Outside Directors have ten-year terms, subject to an
Outside  Director's  continued  service  as  a  director. The Subsequent Options
granted  to  the  Outside  Directors  become  fully  exercisable  on  the  first
anniversary  of the date of grant. A total of 300,000 shares of common stock has
been  reserved  for  issuance  under the Director Plan. As of December 31, 1999,
options to purchase a total of 105,000 shares of the Company's common stock have
been  granted  under  the  Director  Plan.


<PAGE>
The  following  tables  summarize  Endocare's  option activity under both plans:

<TABLE>
<CAPTION>


                                          1997                    1998                     1999
                                         -----                    -----                    -----
                                                                     WEIGHTED  AVG.          WEIGHTED  AVG.
                                           WEIGHTED  AVG.              EXERCISE                 EXERCISE
                               NUMBER OF   EXERCISE PRICE NUMBER OF     PRICE      NUMBER OF      PRICE
                                 OPTIONS    PER OPTION     OPTIONS    PER OPTION    OPTIONS    PER OPTION
                                ----------  -----------   ----------  -----------  ----------  -----------
<S>                             <C>         <C>          <C>         <C>          <C>         <C>
Outstanding, beginning of year  1,506,000   $      0.84  1,499,916   $      1.36  2,657,553   $      1.96
Granted during year. . . . . .    363,500   $      3.25  1,463,000   $      2.70    749,500   $      3.31
Cancelled during year. . . . .   (187,083)  $      2.05   (245,363)  $      2.84   (245,138)  $      3.04
Exercised. . . . . . . . . . .   (182,501)  $      0.18    (60,000)  $      0.18   (202,731)  $      1.60
                                ----------  -----------  ----------  -----------  ----------  -----------
Outstanding, end of year . . .  1,499,916   $      1.36  2,657,553   $      1.96  2,959,184   $      2.24
                                ==========  ===========  ==========  ===========  ==========  ===========
</TABLE>


<TABLE>
<CAPTION>

                               OPTIONS OUTSTANDING                                    OPTIONS EXERCISABLE
                               -------------------                                    --------------------
                           NUMBER                                                  NUMBER
                        OUTSTANDING         WEIGHTED-AVG.                        EXERCISABLE
   RANGE OF                 AT               REMAINING        WEIGHTED-AVG.           AT           WEIGHTED-AVG.
EXERCISE PRICES    DECEMBER 31, 1999     CONTRACTUAL LIFE    EXERCISE PRICE   DECEMBER 31,  1999  EXERCISE PRICE
----------------  -------------------  --------------------  ---------------  ------------------  ---------------
<S>               <C>                  <C>                   <C>              <C>                 <C>
$         0.18                779,186            5.9  years  $          0.18             775,022  $          0.18
$1.88  -  2.31 .              698,083            8.9  years  $          2.03             236,479  $          2.05
$2.50  -  4.00 .            1,188,415            8.0  years  $          2.98             596,019  $          3.09
$4.25  -  5.06 .              233,500            9.6  years  $          4.93               1,625  $          4.50
$6.19  -  7.44 .               60,000            9.8  years  $          6.23                  --  $            --
                  -------------------  --------------------  ---------------  ------------------  ---------------
$0.18  to 7.44              2,959,184            7.8  years  $          2.24           1,609,145  $          1.54
                                                             ===============  ==================  ===============
</TABLE>


The  following  table  presents  consolidated  pro  forma  information as if the
Company  recorded  compensation  cost  using  the fair value of the issued stock
options  using  the  Black-Scholes  valuation  model:

<TABLE>
<CAPTION>



                                               1997          1998          1999
                                           ------------  ------------  -------------
<S>                                      <C>           <C>           <C>
Net loss:
---------
  As reported . . . . . . . . . . . . . .  $(4,021,741)  $(4,924,564)  $ (9,264,175)
  Assumed stock compensation cost . . . .     (157,000)     (363,000)      (896,000)
                                           ------------  ------------  -------------
  Pro forma, adjusted . . . . . . . . . .  $(4,178,741)  $(5,287,564)  $(10,160,175)
                                           ============  ============  =============
Net loss per share - basic and diluted:
---------------------------------------
  As reported . . . . . . . . . . . . . .  $     (0.48)  $     (0.49)  $      (0.86)
  Pro forma, adjusted . . . . . . . . . .  $     (0.50)  $     (0.53)  $      (0.94)
</TABLE>


The  weighted  average fair value of the Company's options at the grant date was
approximately  $1.01  in  1997,  and  $1.35 in 1998, and $1.90 in 1999. The fair
value  of  each  option  grant  is  estimated  on  the  date  of grant using the
Black-Scholes  option  pricing  model,  with  the  following  assumptions:

<TABLE>
<CAPTION>



                           1997         1998         1999
                         ---------    ---------    ---------
<S>                      <C>         <C>          <C>
Stock volatility. . . .        .1           .1           .5
Risk-free interest rate      6.00%      6.00%        6.00%
Option term in years. .  10 years     10 years     10 years
Stock dividend yield. .        --           --           --
</TABLE>


The  Company  issued  warrants to purchase 222,497, 5,000, and 176,506 shares of
the  Company's  common  stock in 1997, 1998, and 1999, respectively (see notes 6
and  7).  Warrants  generally  vest over a one to four year period and have been
provided in conjunction with financing transactions, patent licenses and service
contracts.  As  of  December  31,  1999,  the  Company  had  427,753  warrants
outstanding,  of  which  352,000 are exercisable.  Warrant exercise prices range
from  $2.31  to  $5.13 per share.  During 1999, 136,250 warrants were exercised,
and  no  warrants  had been exercised in prior years.  The Company amortizes the
fair  values  of  these  warrants,  as determined using the Black-Scholes option
pricing  method,  to  expense  over  the service period of the related warrants.

9.     STOCKHOLDER  RIGHTS  PLAN

On  March 5, 1999, the Company's Board of Directors adopted a Stockholder Rights
Plan  ("Plan") in which preferred stock purchase rights will be distributed as a
dividend  at the rate of one Right for each share of Common Stock held as of the
close  of  business  on April 15, 1999.  Each Right will entitle Stockholders to
buy  one one-thousandth of a share of Series A Preferred Stock of the Company at
an  Exercise  Price  of  $25.  The  Rights are designed to guard against partial
tender  offers  and  other  coercive tactics that might be used in an attempt to
gain control of the Company or to deprive Stockholders of their interests in the
long-term value of the Company.  The Rights will be exercisable only if a person
or  group acquires 15% or more of the Company's Common Stock (subject to certain
exceptions  stated in the Plan) or announces a tender offer, the consummation of
which  would  result  in  ownership  by  a person or group of 15% or more of the
Company's  Common  Stock.  Each  Right  will  entitle  stockholders  to  buy one
one-thousandth  of a share of new series of junior participating preferred stock
at  an exercise price of $25 upon certain events.  If a person or group acquires
15%  or  more  of  the  Company's  outstanding  Common Stock (subject to certain
exceptions  stated  in  the  Plan),  or a holder of 15% or more of the Company's
Common  Stock  engages  in  certain  self-dealing  transactions  or  a  merger
transaction  in  which  the  Company is the surviving corporation and its Common
Stock  remains  outstanding, then each Right not owned by such person or certain
related parties will entitle its holder to purchase, at the Right's then-current
exercise  price, units of the Company's Series A Preferred Stock (or, in certain
circumstances,  Company  Common Stock, cash, property or other securities of the
Company)  having  a market value equal to twice the then-current exercise price.
In addition, if, after the Rights become exercisable, Endocare, Inc. is acquired
in  a  merger or other business combination transaction, or sells 50% or more of
its assets or earnings power, each Right will entitle its holder to purchase, at
the  Right's  then-current  price,  a  number  of the acquiring company's common
shares  having  a  market value at the time of twice the Right's exercise price.
At  any  time on or prior to the close of business on the first date of a public
announcement  that a person or group has acquired beneficial ownership of 15% or
more  of the Company's Common Stock (subject to certain exceptions stated in the
Plan),  the  Rights  are  redeemable for one cent per Right at the option of the
Board  of  Directors.  The  Rights  are  intended  to enable all stockholders to
realize the long-term value of their investment in the Company.  The Rights will
not  prevent  a takeover attempt, but should encourage anyone seeking to acquire
the  Company to negotiate with the Board prior to attempting to a takeover.  The
dividend  distribution  was  made  on  April 15, 1999 payable to stockholders of
record  on  that  date.  The  Rights  will  expire  on  April  15,  2009.

10.     INCOME  TAXES

     Income  tax  expense  consisted  of:


<TABLE>
<CAPTION>


               YEARS  ENDED  DECEMBER  31,
              ----------------------------
                            1998     1999
                           ------    -----
<S>                     <C>        <C>
Current:  Federal        $   --     $   --
      State and local     3,400      3,600
Deferred:  Federal           --         --
      State and local        --         --
                       --------     ------
          Total . . .  $  3,400     $3,600
                       ========     ======
</TABLE>


The  following  table  summarizes the tax effects of temporary differences which
give  rise  to  significant  portions of the deferred tax assets at December 31:

<TABLE>
<CAPTION>



                                       1998             1999
                                   -------------   ------------
<S>                               <C>            <C>
Deferred tax assets:
 Product and other reserves
  established for book purposes.   $     19,000   $     42,000
 Property and equipment reserve .        84,000         96,000
 Inventory obsolescence reserve .        80,000         52,000
 Accounts receivable reserve. . .        16,000        107,000
 Recognition of deferred revenue.            --         15,000
 Net operating loss carryforwards     3,738,000      7,373,000
 Other. . . . . . . . . . . . . .       203,000        267,000
                                   -------------  -------------
  Gross deferred tax assets. . .      4,140,000      7,952,000
 Valuation allowance. . . . . . .   ( 4,140,000)   ( 7,952,000)
                                   -------------  -------------
  Net deferred tax assets. . . . . $         --   $         --
                                  =============  =============
</TABLE>


The  valuation allowance increased by $1,992,000 and $3,812,000 during the years
ended  December  31,  1998  and  1999,  respectively.

Actual  income  tax  expense  differs from amounts computed by applying the U.S.
federal  income  tax  rate  of  34% to pretax loss as a result of the following:



<TABLE>
<CAPTION>

                                 YEARS ENDED DECEMBER 31,
                                -------------------------

                                               1997          1998          1999
                                           ------------  ------------  ------------
<S>                                        <C>           <C>           <C>
Computed expected tax benefit . . . . . .  $(1,326,000)  $(1,644,000)  $(3,150,000)
State income taxes net of federal benefit     (214,000)     (282,000)     (541,000)
Nondeductible expenses. . . . . . . . . .        6,000        13,000        19,400
Change in valuation allowance . . . . . .    1,797,000     1,992,000     3,812,000
Change in tax rate with respect to
  net operating loss. . . . . . . . . . .     (259,000)           --            --
Provision to return adjustment. . . . . .           --            --      (114,000)
Other . . . . . . . . . . . . . . . . . .        1,000       (75,600)      (22,800)
                                           ------------  ------------  ------------
    Actual tax expense. . . . . . . . . .  $     5,000   $     3,400   $     3,600
                                           ============  ============  ============
</TABLE>


As  of  December  31, 1999, the Company has net operating loss carryforwards for
federal  income tax purposes of approximately $18,524,000 which are available to
offset  future  federal taxable income, if any, through the year 2019. For state
income  tax  purposes,  the  Company  has  net operating losses of approximately
$8,640,000  which  are  available to offset future state taxable income, if any,
through  the  year  2004.

In  accordance with Internal Revenue Code Section 382, the annual utilization of
net  operating  loss  carryforwards  and  credits  existing prior to a change in
control  may  be  limited.

11.     COLLABORATIVE  AGREEMENTS

Boston  Scientific:  In  March 1999, Endocare exercised its right, at no cost to
the Company, to terminate a distribution agreement with Boston Scientific, which
was  originally  entered  into  in  November 1996. This agreement granted Boston
Scientific  exclusive  worldwide marketing rights for Endocare's Cryocare System
(TM)  for  urology  and  a purchase right on the technology.  Under the original
distribution  agreement,  Boston  Scientific guaranteed Endocare certain minimum
purchases  of  Cryocare Systems (TM) over a five-year period, subject to certain
conditions  and  renegotiations. In addition, Boston Scientific committed to pay
Endocare  four  payments  of $250,000 each, based upon meeting certain specified
milestones.  The  first  milestone  payment,  based  upon  contract signing, was
received  in  November 1996, and revenue was recognized in the fourth quarter of
1996.  Due  to  continuing obligations of the Company to Boston Scientific, cash
related  to  the  second milestone of $250,000 was received in December 1996 and
was  being  recognized  as  earned.  The  remaining obligations relating to this
second  milestone  were  fulfilled in 1998 and the remaining deferred revenue of
$166,672  recognized.  In  1998, Boston Scientific paid additional nonrefundable
licensing  payments  of  $475,000  to  Endocare.

Sanarus  Medical,  Inc.:  In  October 1999, the Company entered into a strategic
alliance  with  Sanarus  Medical,  Inc.  ("Sanarus") to commercialize Endocare's
proprietary  cryosurgical  technology  in  the  treatment  of  breast tumors and
gynecological  diseases.  The terms of the related agreements included an equity
investment  by  Endocare  in Sanarus totaling $300,000 and a warrant received by
Endocare  to  acquire approximately 57% of Sanarus common stock in consideration
for  entering  into  a manufacturing supply and license agreement.  In the event
Endocare  were  to  exercise  the warrant, the Company would then own a majority
equity position in Sanarus.  As of December 31, 1999, the Company owns less than
5% of the outstanding shares in Sanarus and the investment is reflected at cost,
which  approximates fair market value, as it does not have significant influence
over  the  operations of Sanarus.  The investment is included in other assets in
the  accompanying  consolidated  balance  sheet  as  of  December  31,  1999.

12.     COMMITMENTS  AND  CONTINGENCIES

     Commitments

In  September  1995,  the  Company  moved  from  Medstone's  facility to its own
facility  in  Irvine,  California.  Gross rent expense was $40,872 in 1997. This
facility lease, and a related sublease, expired on August 31, 1998.  In February
1997,  the  Company signed a new five-year lease for a larger 16,100 square foot
facility in Irvine, California. Rent expense on this lease was $119,383 in 1997,
$153,860  in  1998  and  $157,727  in  1999.  Future minimum commitments on this
operating  lease  are  $161,593  in 2000, $165,460 in 2001, and $34,639 in 2001.

The  Company  also  leases various office equipment under operating leases, with
lease  commitments  totaling  $17,658  in  2000  and  $3,075  in  2001.

As  of  December  31,  1999,  the  Company has no other facility leases, capital
leases,  or  other  long-term  commitments.

     Contingencies

The  Company,  in  the  normal  course  of business, is subject to various legal
matters.  While  the  results  of litigation and claims cannot be predicted with
certainty, the Company believes that the final outcome of these matters will not
have  a  material  adverse  effect  on  the  Company's  consolidated  results of
operations  or  financial  condition.

From time to time, the Company has received correspondence alleging infringement
of  proprietary  rights  of  third  parties.  No assurance can be given that any
relevant  claims  of third parties would not be upheld as valid and enforceable,
and  therefore  that  the Company could be prevented from practicing the subject
matter  claimed  or  would be required to obtain licenses from the owners of any
such  proprietary  rights  to avoid infringement. Management does not expect any
material  adverse  effect  on  its  consolidated  financial  condition  or  the
consolidated  results  of  operations  because  of  such  actions.

13.     MAJOR  CUSTOMERS  AND  CONCENTRATION  OF  CREDIT  RISK

The Company currently operates in one industry segment - the design, manufacture
and  marketing  of  surgical  devices  and  related procedures to treat prostate
diseases. The Company markets and sells its devices worldwide to distributors of
medical  devices  and  directly  to  hospitals  and  other  medical professional
organizations.  Until  the  Company  exercised  its  right  to  terminate  the
distribution  agreement  with Boston Scientific in March 1999 (see Note 11), the
Company's  Cryocare System (TM) was distributed exclusively by Boston Scientific
for  urological  applications.

Customer  credit  may  be  extended  based  upon  evaluation  of  the customer's
financial  condition.  The  Company  maintains  reserves  for credit losses, and
Company  management considers such reserves to be adequate based upon historical
experience.  International  shipments are billed and collected by the Company in
U.S.  dollars.

During the year ended December 31, 1999, no customer accounted for more than 10%
of the Company's total revenues. As of December 31, 1999, one customer accounted
for  approximately  11%  of net accounts receivable.  The Company derived 12% of
its  total  revenues  from  foreign customers during the year ended December 31,
1999.  By  significant geographic area, approximately 9%, 3% and 88% of revenues
were  from  Asia,  other  foreign countries and the United States, respectively.

During  the  year  ended December 31, 1998, 9 customers accounted for 40% of the
Company's  total  revenues.  During  the  year  ended  December 31, 1998, Boston
Scientific  accounted  for  41%  of  the Company's revenues.  As of December 31,
1998, four customers accounted for approximately 98% of net accounts receivable.
The  Company  derived 8% of its total revenues from foreign customers during the
year  ended  December  31,  1998.

During  the year ended December 31, 1997, Boston Scientific accounted for 59% of
total  revenues.  As  of  December  31, 1997, one customer and Boston Scientific
accounted  for  approximately  44%  and  48%,  respectively,  of  net  accounts
receivable.  The  Company  derived  approximately  5% of its total revenues from
foreign  customers  during  the  year  ended  December  31,  1997.

14.     RELATED  PARTY  TRANSACTIONS

     Relationship  with  AMP

As  of December 31, 1998, the Company had a $135,000 note payable from AMP.  The
loan  bore  interest  at  prime  plus  1% and was originally repayable beginning
September  30, 2000 in equal monthly installments of principal and interest over
a  twelve month period.  The loan was secured by the assets of AMP and Robert F.
Byrnes,  a  former  member of AMP and a member of Endocare's Board of Directors.
In  June 1999, Endocare acquired all of the outstanding units of interest in AMP
in  exchange  for  260,000  shares of common stock.  Mr. Byrnes received 102,413
shares  of  common  stock  for  his  ownership  interest  in  AMP.

Loan  to  Officers

     In  November 1999, the Company received a full recourse promissory note for
$1,028,125  in connection with the sale of 175,000 shares of its common stock to
Jerry  W.  Anderson,  the  Company's Senior Vice President, Sales and Marketing.
The  note bears interest at 5.99% per annum, payable annually, and the principal
is  payable  in  September 2003.  The stock was sold at the fair market value of
the  common  stock  on  the date of sale.  As of December 31, 1998 and 1999, the
Company  had  loans and related accrued interest due from various other officers
totaling  $104,228  and $93,725, respectively, which is included in other assets
in  the  accompanying  consolidated balance sheet.  The loans accrue interest at
5.41%  and  all  interest  and  principal  are  payable  on  August  25,  2000.


<PAGE>
15.     QUARTERLY  RESULTS  OF  OPERATIONS  (UNAUDITED)

<TABLE>
<CAPTION>


                        TOTAL                    NET  LOSS
                       REVENUE      NET LOSS     PER SHARE
                      ----------  ------------  -----------
<S>                   <C>         <C>           <C>
Quarter Ended:
  December 31, 1999.  $1,169,023  $(2,332,833)  $    (0.21)
  September 30, 1999   1,029,220   (2,510,629)       (0.23)
  June 30, 1999. . .     606,510   (2,577,036)       (0.24)
  March 31, 1999 . .     657,121   (1,843,677)       (0.17)

  December 31, 1998.  $  601,788  $(1,463,302)  $    (0.14)
  September 30, 1998     538,666   (1,191,229)       (0.11)
  June 30, 1998. . .     821,306   (1,221,940)       (0.12)
  March 31, 1998 . .     533,090   (1,048,093)       (0.12)

  December 31,1997 .  $  595,157  $(1,013,902)  $    (0.12)
  September 30, 1997     606,164   (1,131,074)       (0.13)
  June 30, 1997. . .     466,804   (1,137,311)       (0.13)
  March 31, 1997 . .     679,668     (739,454)       (0.10)
</TABLE>



<PAGE>


                          ENDOCARE, INC. AND SUBSIDIARY
                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>


                                ALLOWANCE  FOR            RESERVE  FOR
                             DOUBTFUL  RECEIVABLES   INVENTORY  OBSOLESCENCE
                               AND SALES RETURNS    AND NET REALIZABLE VALUE
                              -------------------  --------------------------
<S>                           <C>                  <C>
Balance at December 31, 1996  $           58,139   $                  77,236
 Charges to operations. .  .             249,983                      62,764
 Deductions . . . . . . .  .            (116,122)                         --
 Other. . . . . . . . . .  .                  --                          --
                              -------------------  --------------------------
Balance at December 31, 1997             192,000                     140,000
 Charges to operations. .  .              34,736                      87,000
 Deductions . . . . . . .  .            (140,736)                    (25,000)
 Other. . . . . . . . . .  .                  --                          --
                              -------------------  --------------------------
Balance at December 31, 1998              86,000                     202,000
 Charges to operations. .  .             254,238                     109,059
 Deductions . . . . . . .  .             (70,238)                   (181,059)
 Other. . . . . . . . . .  .                  --                          --
                              -------------------  --------------------------
Balance at December 31, 1999  $          270,000   $                 130,000
                              ===================  ==========================
</TABLE>



<PAGE>

                                   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.

ENDOCARE,  INC.

By:     /s/     PAUL  W.  MIKUS
        ---     ---------------
                         Paul  W.  Mikus
               Chief  Executive  Officer  and
          President

Dated:  March  28,  2000

     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by  the  following  persons  on  behalf of the
registrant  and  in  the  capacities  indicated  on  March  28,  2000.


<TABLE>
<CAPTION>




 SIGNATURE                          TITLE
----------                          -----
<S>                              <C>

 /s/  PAUL W. MIKUS . . . . . .  Chief Executive Officer, President,
-------------------------------
      Paul W. Mikus . . . . . . . . .  and Chairman of the Board




 /s/  WILLIAM R. HUGHES . . . .  Senior Vice President and
-------------------------------
      William R. Hughes . . . . .  Chief Financial Officer
                                  (Principal Financial and
                                     Accounting Officer)

 /s/  PETER F. BERNARDONI
-------------------------------
      Peter F. Bernardoni . . . . . .  Director


 /s/  ROBERT F. BYRNES
-------------------------------
      Robert F. Byrnes. . . . . . . .  Director


 /s/  BENJAMIN GERSON, M.D.
-------------------------------
      Benjamin Gerson, M.D. . . . . .  Director


 /s/  ALAN L. KAGANOV, SC.D
-------------------------------
      Alan L. Kaganov, Sc.D . . . . .  Director


 /s/  MICHAEL J. STRAUSS, M.D.
-------------------------------
      Michael J. Strauss, M.D.. . . .  Director
</TABLE>



<PAGE>

                                 ENDOCARE, INC.
                                INDEX TO EXHIBITS

2.1     Distribution  Agreement  between  the  Registrant  and  Medstone
        International,  Inc.,  dated  October  31,  1995(1)

3.1     Certificate  of  Incorporation  of  the  Company(2)

3.2     Amended  and  Restated  Bylaws  of  the  Company(3)

4.1     Specimen  Certificate  of  the  Company's  Common  Stock(4)

10.1    Form  of  Indemnification  Agreement(2)

10.2    1995  Stock  Plan(1)

10.3    1995  Director  Option  Plan(1)

10.4    Patent  License  Agreement  between the Company and Brigham and Women's
Hospital,  Inc.,  dated  April  17,  1996(5)

10.5    Form  of  Warrant  to purchase an aggregate of 150,000 shares of common
stock,  dated  August  26,  1996(6)

10.6    Common  Stock  Purchase  Agreement  by  and  among  the Company and the
persons listed on the Schedule of Investors attached thereto as Exhibit
A, dated January  21,  1997(7)

10.7    Facility  Lease  dated  January  31,  1997  for  7  Studebaker(8)

10.8    Common  Stock  Purchase  Agreements  by  and  among the Company and the
persons  indicated  therein,  dated  April  15  and  April  11,  1998(3)

10.9    Rights  Agreement,  dated as of March 31, 1999, between the Company and
U.S.  Stock  Transfer  Corporation,  which  includes  the form of Certificate of
Designation  for the Series A Junior Participating Preferred Stock as Exhibit A,
the  form  of  Rights  Certificate  as  Exhibit  B  and the Summary of Rights to
Purchase  Series  A  Preferred Shares as Exhibit C.  (filed as Exhibit 4 to Form
8-K  filed  on  June  3,  1999)  (9)

10.10   Debenture  dated  June  7,  1999 between the Company and Brown Simpson
Strategic Growth Fund, Ltd.  (filed as Exhibit 4.1 to Form 8-K filed on June 14,
        1999)  (10)

10.11   Debenture  dated  June  7,  1999 between the Company and Brown Simpson
Strategic Growth Fund, L.P.  (filed as Exhibit 4.2 to Form 8-K filed on June 14,
1999)  (10)

10.12   Securities Purchase Agreement dated June 7, 1999 among the Company and
the Purchasers.  (filed as Exhibit 10.1 to Form 8-K filed on June 14, 1999) (10)

10.13   Registration Rights Agreement dated June 7, 1999 among the Company and
the Purchasers.  (filed as Exhibit 10.2 to Form 8-K filed on June 14, 1999) (10)

10.14   Debenture  dated  July  29, 1999 between the Company and Brown Simpson
Strategic  Growth  Fund, Ltd., (filed as Exhibit 4.1 to Form 8-K filed on August
6,  1999)  (11)

10.15   Debenture  dated  July  29, 1999 between the Company and Brown Simpson
Strategic  Growth  Fund, Ltd.  (filed as Exhibit 4.1 to Form 8-K filed on August
6,  1999)  (11)

10.16   Securities  Purchase  Agreement  dated July 29, 1999 among the Company
and the Purchasers.  (filed as Exhibit 10.1 to Form 8-K filed on August 6, 1999)
(11)

10.17   Registration  Rights  Agreement  dated July 29, 1999 among the Company
and the Purchasers.  (filed as Exhibit 10.2 to Form 8-K filed on August 6, 1999)
(11)

10.18   Loan  and  Security  Agreement dated July 29, 1999 between the Company
and  TBCC.  (filed  as  Exhibit  10.3  to Form 8-K filed on August 6, 1999) (11)

10.15   Streamlined Facility Agreement dated July 29, 1999 between the Company
and  TBCC.  (filed  as  Exhibit  10.3  to Form 8-K filed on August 6, 1999) (11)

10.16   Continuing  Guaranty  dated July 29, 1999 by the AMP in favor of TBCC.
(filed  as  Exhibit  10.3  to  Form  8-K  filed  on  August  6,  1999)  (11)

10.17   Security  Agreement  dated July 29, 1999 between AMP and TBCC.  (filed
as  Exhibit  10.3  to  Form  8-K  filed  on  August  6,  1999)  (11)

23.1    Consent  of  KPMG  LLP*

27.1    Financial  Data  Schedule*
__________

(1)     Previously filed with the Company's Application for Registration on Form
10-SB under the Securities Exchange Act of 1934, filed on November 14, 1995, and
incorporated  herein by reference. Each such exhibit had the same exhibit number
in  that filing, except that the 1995 Stock Plan was exhibit number 10.6 and the
1995  Director  Option  Plan  was  exhibit  10.7.

(2)     Previously  filed  with  Amendment number 1 to Company's Application for
Registration  on Form 10-SB, filed on December 21, 1995, and incorporated herein
by  reference.

(3)     Previously  filed  with  the  Company's current report on Form 8-K dated
April 15, 1998 as filed with the Securities and Exchange Commission on April 23,
1998,  and  incorporated  herein  by  reference.

(4)     Previously  filed  with the Company's Annual Report on Form 10-K for the
year  ended  December  31,  1995,  and  incorporated  herein  by  reference.

(5)     Previously  filed  with  the  Company's  Current  Report on Form 8-K, as
amended, as filed with the Securities and Exchange Commission on April 26, 1996,
and  incorporated  herein  by  reference.

(6)     Previously  filed with the Company's Current Report on Form 8-K dated as
filed  with  the  Securities  and Exchange Commission on September 10, 1996, and
incorporated  herein  by  reference.

(7)     Previously  filed with the Company's Current Report on Form 8-K as filed
with  the  Securities  and  Exchange  Commission  on  January  31,  1997,  and
incorporated  herein  by  reference.

(8)     Previously  filed  with  the  Company's  Annual  Report  on  Form 10-K/A
(Amendment  No. 3) for the year ended December 31, 1996, and incorporated herein
by  reference.

(9)     Previously  filed with the Company's current report on Form 8-K as filed
with  the  Securities  and Exchange Commission on June 3, 1999, and incorporated
herein  by  reference.

(10)    Previously filed with the Company's current report on Form 8-K as filed
with  the  Securities and Exchange Commission on June 14, 1999, and incorporated
herein  by  reference.

(11)    Previously filed with the Company's current report on Form 8-K as filed
with  the Securities and Exchange Commission on August 6, 1999, and incorporated
herein  by  reference.

*       Filed  herewith.

(b)     REPORTS  ON  FORM  8-K

     None



<PAGE>