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U. S. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

Form 10-Q

|(Mark One)
|----------
|x         

For the quarterly period ended September 30, 2002

OR

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

Commission File Number 0-27264

GenStar Therapeutics Corporation(Exact name of registrant as specified in its
charter)

|DELAWARE                                                           
|-------------------------------------------------------------------
|                                                                   
|(State or other jurisdiction of incorporation or organization)     
|                                                                   
|33-0687976                                                         
|                                                                   
|(I.R.S. Employer Identification no.)                               
|                                                                   
|10865 Altman Row, 2nd Floor, San Diego, CA,                        
|(Address of principal executive offices)                           
|                                                                   
|Registrants Telephone Number, including area code:  (858) 450-5949

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 | o
|--- | - | -- | -

The number of shares of the Common Stock of the registrant outstanding as of November 11, 2002, was
24,020,584.



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GenStar Therapeutics Corporation (A development stage enterprise)

INDEX TO FORM 10-Q

|                               |                                                                                                                                                                                        | Page No.
|------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------
|                               |                                                                                                                                                                                        |         
|PART I.  FINANCIAL INFORMATION |                                                                                                                                                                                       
|                               |                                                                                                                                                                                       
|Item 1.                        | Financial Statements                                                                                                                                                                   |         
|                               |                                                                                                                                                                                        |         
|                               | Condensed Consolidated Balance Sheets September 30, 2002 (Unaudited) and  December 31, 2001                                                                                            | 2       
|                               |                                                                                                                                                                                        |         
|                               | Condensed Consolidated Statements of Operations (Unaudited) Three and Nine months Ended September 30, 2002 and 2001 and the period from July 1, 1991 (inception) to September 30, 2002 | 3       
|                               |                                                                                                                                                                                        |         
|                               | Condensed Consolidated Statements of Cash Flows (Unaudited) Nine months Ended September 30, 2002 and 2001 and the period from July 1, 1991 (inception) to September 30, 2002           | 4       
|                               |                                                                                                                                                                                        |         
|                               | Notes to Unaudited Condensed Consolidated Financial Statements                                                                                                                         | 5       
|                               |                                                                                                                                                                                        |         
|Item 2.                        | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                                  | 7       
|                               |                                                                                                                                                                                        |         
|Item 3.                        | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                             | 12      
|                               |                                                                                                                                                                                        |         
|Item 4.                        | Controls and Procedures                                                                                                                                                                | 12      
|                               |                                                                                                                                                                                        |         
|PART II.  OTHER INFORMATION    |                                                                                                                                                                                       
|                               |                                                                                                                                                                                        |         
|Item 1.                        | Legal Proceedings                                                                                                                                                                      | 13      
|Item 2.                        | Changes in Securities and Use of Proceeds                                                                                                                                              | 13      
|Item 3.                        | Defaults Upon Senior Securities                                                                                                                                                        | 13      
|Item 4.                        | Submission of Matters to a Vote of Security Holders                                                                                                                                    | 13      
|Item 5.                        | Other Information                                                                                                                                                                      | 13      
|Item 6.                        | Exhibits and Reports on Form 8-K                                                                                                                                                       | 13      
|                               | Signatures                                                                                                                                                                             | 14      
|                               | Certifications Required by Section 302(a) of Sarbanes-Oxley Act of 2002                                                                                                                | 15      

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GENSTAR THERAPEUTICS CORPORATION (A development stage enterprise)CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                 |                                                                                                                                                                                                    | September 30, 2002 |            | December 31, 2001 |  
|------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | ---------- | ----------------- | -
|                                                 |                                                                                                                                                                                                    |                    |            |                   |  
|                                                 |                                                                                                                                                                                                    | (unaudited)        |            |                   |  
|ASSETS                                           |                                                                                                                                                                                                    |                    |            |                   |  
|Current assets:                                  |                                                                                                                                                                                                    |                    |            |                   |  
|                                                 | Cash and cash equivalents                                                                                                                                                                          |                    | $          | 1,745,751         |  
|                                                 | Short-term investments                                                                                                                                                                             |                    |            | 5,858,397         |  
|                                                 | Accounts receivable                                                                                                                                                                                |                    |            | 276,566           |  
|                                                 | Other current assets                                                                                                                                                                               |                    |            | 290,694           |  
|                                                 |                                                                                                                                                                                                    |                    |            |                   |  
|                                                 | Total current assets                                                                                                                                                                               |                    |            | 8,171,408         |  
|Property and equipment, net                      |                                                                                                                                                                                                    |                    | 3,242,702  |                   |  
|Restricted cash                                  |                                                                                                                                                                                                    |                    | 447,361    |                   |  
|Deferred loan fee                                |                                                                                                                                                                                                    |                    | 112,623    |                   |  
|Deferred merger expenses                         |                                                                                                                                                                                                    |                    | 619,082    |                   |  
|Other assets                                     |                                                                                                                                                                                                    |                    | 826,457    |                   |  
|                                                 |                                                                                                                                                                                                    |                    |            |                   |  
|                                                 |                                                                                                                                                                                                    | $                  | 13,419,633 |                   | $
|                                                 |                                                                                                                                                                                                    |                    |            |                   |  
|LIABILITIES AND STOCKHOLDERS EQUITY             |                                                                                                                                                                                                    |                    |            |                   |  
|Current liabilities:                             |                                                                                                                                                                                                    |                    |            |                   |  
|                                                 | Accounts payable                                                                                                                                                                                   |                    | $          | 589,734           |  
|                                                 | Accrued employee benefits                                                                                                                                                                          |                    |            | 227,979           |  
|                                                 | Other accrued liabilities                                                                                                                                                                          |                    |            | 558,262           |  
|                                                 | Deferred revenue                                                                                                                                                                                   |                    |            | 102,632           |  
|                                                 | Current portion of notes payable                                                                                                                                                                   |                    |            | 217,604           |  
|                                                 | Current portion of capital lease obligation                                                                                                                                                        |                    |            | 554,205           |  
|                                                 |                                                                                                                                                                                                    |                    |            |                   |  
|                                                 | Total current liabilities                                                                                                                                                                          |                    |            | 2,250,416         |  
|Notes payable, net of current portion            |                                                                                                                                                                                                    |                    | 85,095     |                   |  
|Capital lease obligation, net of current portion |                                                                                                                                                                                                    |                    | 575,848    |                   |  
|Other long-term liabilities                      |                                                                                                                                                                                                    |                    | 544,103    |                   |  
|Deferred compensation                            |                                                                                                                                                                                                    |                    | 273,005    |                   |  
|Commitments                                      |                                                                                                                                                                                                    |                    |            |                   |  
|Stockholders equity:                            |                                                                                                                                                                                                    |                    |            |                   |  
|                                                 | Convertible Preferred Stock - $0.001 par value, 5,000,000 shares authorized:                                                                                                                       |                    |            |                   |  
|                                                 | Series A Preferred Stock, 5,830 shares issued and outstanding, liquidation preference of $58,300                                                                                                   |                    |            | 6                 |  
|                                                 | Series B Preferred Stock, 12,890 shares issued and outstanding, liquidation preference of $12,890,000 prior to any distribution to holders of Series A Preferred Stock and holders
of Common Stock |                    |            | 13                |  
|                                                 | Series C Preferred Stock, 2,000 shares issued and outstanding, liquidation preference of $2,000,000 prior to any distribution to holders of Series A Preferred Stock and holders of
Common Stock   |                    |            | 2                 |  
|                                                 | Common Stock - $0.001 par value, 50,000,000 shares authorized; 23,949,804 and 23,738,990 issued and outstanding                                                                                    |                    |            | 23,950            |  
|                                                 | Unrealized gain on short-term investments                                                                                                                                                          |                    |            | 29,799            |  
|                                                 | Additional paid-in capital                                                                                                                                                                         |                    |            | 51,197,488        |  
|                                                 | Deficit accumulated during development stage                                                                                                                                                       |                    |            | (41,560,092       | )
|                                                 |                                                                                                                                                                                                    |                    |            |                   |  
|                                                 | Total stockholders equity                                                                                                                                                                         |                    |            | 9,691,166         |  
|                                                 |                                                                                                                                                                                                    |                    |            |                   |  
|                                                 |                                                                                                                                                                                                    | $                  | 13,419,633 |                   | $
|                                                 |                                                                                                                                                                                                    |                    |            |                   |  

See accompanying notes.

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GENSTAR THERAPEUTICS CORPORATION(A development stage enterprise)CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

|                                                                             |                                             | Three Months Ended |            | Nine months Ended  |   | July 1, 1991 (inception) toSeptember 30, 2002 |          
|---------------------------------------------------------------------------- | ------------------------------------------- | ------------------ | ---------- | ------------------ | - | --------------------------------------------- | ---------
|                                                                             |                                             |                    |            |                    |   |                                              
|                                                                             |                                             | September 30, 2002 |            | September 30, 2001 |   | September 30, 2002                            |          
|                                                                             |                                             |                    |            |                    |   |                                               |          
|Revenue                                                                      |                                             | $                  | 422,565    |                    | $ | 89,898                                        |          
|                                                                             |                                             |                    |            |                    |   |                                               |          
|Costs and expenses:                                                          |                                             |                    |            |                    |   |                                               |          
|                                                                             | Cost of sales                               |                    |            |                   |   |                                               |         
|                                                                             | Research and development                    |                    |            | 2,282,487          |   |                                               | 2,401,584
|                                                                             | Write-off of acquired in-process technology |                    |            |                   |   |                                               |         
|                                                                             | General and administrative                  |                    |            | 776,978            |   |                                               | 803,266  
|                                                                             |                                             |                    |            |                    |   |                                               |          
|Total costs and expenses                                                     |                                             |                    | 3,059,465  |                    |   | 3,204,850                                     |          
|                                                                             |                                             |                    |            |                    |   |                                               |          
|Loss from operations                                                         |                                             |                    | (2,636,900 | )                  |   | (3,114,952                                    | )        
|Other income (expense)                                                       |                                             |                    |           |                    |   | (1,626                                        | )        
|Interest expense                                                             |                                             |                    | (119,162   | )                  |   | (111,002                                      | )        
|Interest income                                                              |                                             |                    | 67,503     |                    |   | 249,540                                       |          
|                                                                             |                                             |                    |            |                    |   |                                               |          
|Net loss                                                                     |                                             | $                  | (2,688,559 | )                  | $ | (2,978,040                                    | )        
|                                                                             |                                             |                    |            |                    |   |                                               |          
|Basic and diluted loss per share                                             |                                             | $                  | (0.11      | )                  | $ | (0.13                                         | )        
|                                                                             |                                             |                    |            |                    |   |                                               |          
|Number of shares used in the computation of basic and diluted loss per share |                                             |                    | 23,898,949 |                    |   | 23,176,047                                    |          
|                                                                             |                                             |                    |            |                    |   |                                               |          

See accompanying notes.

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GENSTAR THERAPEUTICS CORPORATION (A development stage enterprise)CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

|                                                                             |                                                                              | For the nine months ended September 30, |            | July 1, 1991 (inception) to September 30,2002 |  
|---------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | --------------------------------------- | ---------- | --------------------------------------------- | -
|                                                                            
|2002                                                                         |                                                                              | 2001                                   
|                                                                             |                                                                              |                                         |            |                                               |  
|Net loss                                                                     |                                                                              | $                                       | (8,331,152 | )                                             | $
|Adjustments to reconcile net loss to net cash used  in operating activities: |                                                                              |                                         |            |                                               |  
|                                                                             | Write-off of in-process technology acquired with stock                       |                                         |            |                                              |  
|                                                                             | Expenses paid via advances from related party                                |                                         |            |                                              |  
|                                                                             | Depreciation and amortization                                                |                                         |            | 698,859                                       |  
|                                                                             | Stock, warrants and options issued for services and other                    |                                         |            | 448,404                                       |  
|                                                                             | Loss (Gain) on disposal of fixed assets                                      |                                         |            | 9,623                                         |  
|                                                                             | Amortization of debt discount and loan fee                                   |                                         |            | 202,723                                       |  
|                                                                             | Deferred rent                                                                |                                         |            | 175,478                                       |  
|                                                                             | Change in assets and liabilities:                                            |                                         |            |                                               |  
|                                                                             | Accounts receivable                                                          |                                         |            | 258,693                                       |  
|                                                                             | Other current assets                                                         |                                         |            | (15,980                                       | )
|                                                                             | Other assets                                                                 |                                         |            | (623,921                                      | )
|                                                                             | Accounts payable                                                             |                                         |            | (17,718                                       | )
|                                                                             | Other current liabilities                                                    |                                         |            | 385,196                                       |  
|                                                                             | Other long-term liabilities                                                  |                                         |            | 40,332                                        |  
|                                                                             | Deferred compensation                                                        |                                         |            | (229,001                                      | )
|                                                                             |                                                                              |                                         |            |                                               |  
|Net cash used in operating activities                                        |                                                                              |                                         | (6,998,464 | )                                             |  
|Cash flows from investing activities:                                        |                                                                              |                                         |            |                                               |  
|                                                                             | Purchase of short-term investments                                           |                                         |            | (5,451,003                                    | )
|                                                                             | Sale of short-term investments                                               |                                         |            | 13,260,390                                    |  
|                                                                             | Purchase of property and equipment                                           |                                         |            | (1,361,300                                    | )
|                                                                             |                                                                              |                                         |            |                                               |  
|Net cash provided by (used in) investing activities                          |                                                                              |                                         | 6,448,087  |                                               |  
|Cash flows from financing activities:                                        |                                                                              |                                         |            |                                               |  
|                                                                             | Advances from related party                                                  |                                         |            |                                              |  
|                                                                             | Repayment of note receivable from stockholder                                |                                         |            |                                              |  
|                                                                             | Proceeds from investors short-swing profit                                  |                                         |            |                                              |  
|                                                                             | Proceeds from capital leases and other                                       |                                         |            | 428,519                                       |  
|                                                                             | Repayment of capital lease and notes payable                                 |                                         |            | (615,003                                      | )
|                                                                             | Proceeds from issuance of common stock upon exercise of options and warrants |                                         |            | 45,321                                        |  
|                                                                             | Proceeds from sale of common stock, net of issuance costs                    |                                         |            |                                              |  
|                                                                             | Proceeds from issuance of Series C preferred stock                           |                                         |            |                                              |  
|                                                                             | Repurchase of restricted shares                                              |                                         |            |                                              |  
|                                                                             | Net advances from Medstone                                                   |                                         |            |                                              |  
|                                                                             | Capital contribution by Medstone                                             |                                         |            |                                              |  
|                                                                             |                                                                              |                                         |            |                                               |  
|Net cash (used in) provided by financing activities                          |                                                                              |                                         | (141,163   | )                                             |  
|                                                                             |                                                                              |                                         |            |                                               |  
|Net (decrease) increase in cash and equivalents                              |                                                                              |                                         | (691,540   | )                                             |  
|Cash and equivalents, beginning of period                                    |                                                                              |                                         | 2,437,291  |                                               |  
|                                                                             |                                                                              |                                         |            |                                               |  
|Cash and equivalents, end of period                                          |                                                                              | $                                       | 1,745,751  |                                               | $
|                                                                             |                                                                              |                                         |            |                                               |  
|                                                                             |                                                                              |                                         |            |                                               |  

See accompanying notes.

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GENSTAR THERAPEUTICS CORPORATION (A development stage enterprise)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002

|1. | The unaudited financial information furnished herein, in the opinion of management, reflects all adjustments, consisting only of normal recurring adjustments, which are necessary to
state fairly the consolidated financial position, results of operations, and cash flows of GenStar Therapeutics Corporation as of and for the periods indicated. GenStar presumes that users of the interim financial information have read or have
access to the Companys audited consolidated financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2001 and that the adequacy of additional disclosure
needed for a fair presentation, except in regard to material contingencies or recent significant events, may be determined in that context.  Accordingly, footnote and other disclosures which would substantially duplicate the disclosures
contained in Form 10-KSB for the year ended December 31, 2001 filed on March 29, 2002 by the Company have been omitted. The financial information herein is not necessarily representative of a full years operations.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | Cash and cash equivalents consist primarily of highly liquid investments with original maturities of 90 days or less when purchased.  Short-term investments consist of debt and
equity securities with maturities in excess of 90 days when purchased.  In accordance with the Financial Accounting Standards Boards Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities, management determines the appropriate classification of short-term investment securities at the time of purchase and reevaluates such designation as of each balance sheet date.  Securities classified
as available-for-sale are carried at fair value, with gains and losses, if any, reported as a separate component of stockholders equity and included in comprehensive loss.                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3. | In accordance with the Financial Accounting Standards Boards (FASB) SFAS No. 128, Earnings per Share,  net loss per share is based on the average number of shares of
common stock outstanding during the three and nine-month periods ended September 30, 2002 and 2001.  Equivalent shares arising from convertible preferred stock, convertible debt, warrants for Common Stock and outstanding stock options have not
been included in the computation of net loss per share as their effect would be antidilutive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4. | Certain amounts in the prior year financial statements have been reclassified to conform with current year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|5. | In February 2001, the Company entered into a capital lease agreement under which up to $2,325,000 in equipment could be leased.  The Company financed $672,000 and $653,000 of
equipment under this lease agreement during the nine months ended September 30, 2002 and 2001, respectively, and has financed a total of $1,534,000 of equipment under this lease since inception.  Under the original terms of the lease, the lease
was to expire in February 2002, however the Company was granted an extension of the lease term through June 30, 2002.  No additional extension of the lease term was requested and the lease term expired June 30, 2002.  Therefore, no
additional assets can be financed under this facility.  The capital lease has varying maturities beginning in January 2004 and ending in May 2005.                                                                                                                                                                                                                                                                                                                                

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|6. | In April 2002, the Company entered into a research agreement with a corporate partner whereby the two companies will collaborate on certain research projects.  Under this
agreement GenStar will be reimbursed for expenses incurred during the 19 month term of the agreement, which are estimated to be $250,000.  An initial payment of $150,000 was due upon signing of the agreement and was recorded as deferred revenue
upon receipt.  In accordance with the provisions of the Securities and Exchange Commissions Staff Accounting Bulletin No. 101 (SAB 101), the revenue is recognized on a straight-line basis over the term of the agreement. 
A total of $47,000 was recognized as contract revenue during the nine months ended September 30, 2002.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|7. | Cash paid for interest during the nine months ended 2002 and 2001 was $115,000 and $149,000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|8. | SFAS No. 130, Reporting Comprehensive Income, requires reporting and displaying comprehensive income (loss) and its components which, for the Company, includes net loss and
unrealized gains and losses on investments.  In accordance with SFAS No. 130, the accumulated balance of other comprehensive income is disclosed as a separate component of stockholders equity.  For the three and nine months ended
September 30, 2002 and 2001, respectively, the comprehensive loss consisted of:                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                                      |  | Three months ended September 30, |            | Nine months ended September 30, |  
|------------------------------------- |  | -------------------------------- | ---------- | ------------------------------- | -
|                                      |  |                                  |            |                                 |  
|                                      |  | 2002                             |            | 2001                            |  
|                                      |  |                                  |            |                                 |  
|Net loss                              |  | $                                | (2,688,559 | )                               | $
|Other comprehensive loss:             |  |                                  |            |                                 |  
|Unrealized gain (loss) on investments |  |                                  | 23,473     |                                 |  
|                                      |  |                                  |            |                                 |  
|Comprehensive loss                    |  | $                                | (2,665,086 | )                               | $
|                                      |  |                                  |            |                                 |  



|9.  | In September 2002, the Company entered into a definitive merger agreement with Vascular Genetics Inc.  The agreement is expected to result in the shareholders of each company
owning approximately 50% of the fully-diluted ownership of the combined organization, which plans to change its name to CorAutus Genetics Inc.  Under the terms of the merger agreement, Vascular Genetics stockholders will receive, in exchange
for all of the outstanding capital stock of Vascular Genetics, newly issued shares of GenStar common stock equal to the fully-diluted outstanding capitalization of GenStar, which is expected to be approximately 38 million shares.  The
transaction is subject to approval by the GenStar and Vascular Genetics shareholders, as well as other closing conditions.  The merger is expected to close in early 2003.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10. | In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, which provides guidance on the recognition and measurement
of liabilities associated with exit and disposal activities.  Under SFAS No. 146, liabilities for costs associated with exit or disposal activities should be recognized when the liabilities are incurred and measured at fair value.  This
statement is effective prospectively for exit or disposal activities initiated after December 31, 2002.  It is not anticipated that the financial impact of this statement will have a material effect on our consolidated financial
statements.                                                                                                                                                                              

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Item 2.    
Managements Discussion and Analysis of Financial Condition and Results of Operations

This Managements Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements that are subject to a variety of risks and uncertainties, including those set forth in our Annual Report on Form 10-KSB for the year ended December 31, 2001 under Risks and
Uncertainties. The statements that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including without limitation
statements regarding the Companys expectations, beliefs, intentions or strategies regarding the future. All forward-looking statements included in this document are based on information available to the Company on the date hereof, and the
Company assumes no obligation to update any such forward-looking statements. The Companys actual results could differ materially from those anticipated in these forward-looking statements. The following information should be read in
conjunction with the condensed consolidated financial statements and the notes thereto included in Item 1 of this quarterly report.  We also urge readers to review and consider our disclosures describing various factors that affect our business
in our Annual Report on Form 10-KSB for the year ended December 31, 2001, including the disclosures under the captions Managements Discussion and Analysis of Financial Condition and Results of Operations, Cautionary Factors
that May Affect Future Results and Risks and Uncertainties, as well as the audited financial statements and notes thereto contained in such report.

OVERVIEW

GenStar Therapeutics Corporation is a biotechnology company dedicated to the development of innovative gene therapy products utilizing advanced gene delivery
technologies for the treatment of serious medical disorders.  To date, the Company's research and development efforts, utilizing advanced gene therapy technologies have focused on hemophilia, cancer and vaccines. In the future, the Company
plans to concentrate its research and development efforts on the later-stage cardiovascular VEGF-2 products, which will be the focus of the Company following the planned merger with Vascular Genetics Inc. (VGI). The company has research agreements
with Baxter Healthcare and with Centocor, a Johnson & Johnson company. GenStar's hemophilia, prostate cancer and HIV/AIDS product development programs are supported, in part, by grants from the National Cancer Institute and the National
Institutes of Health.

GenStar commenced operations as a stand-alone entity in January 1996 and has been in the development stage since inception.  Our original mission was to develop products to
treat diseases in urology, with a particular interest in prostate cancer. We had licensed technology that uses the IL-3 gene to treat several types of cancer, but did not have technology to deliver the gene.  On July 8, 1998, we entered into an
agreement with Baxter Healthcare Corporation in which we acquired the exclusive rights to certain gene delivery technologies and laboratory equipment.

In May 2000, we acquired all of the outstanding
shares of Allegro Cell Systems, Inc. (Allegro) in exchange for 288,000 shares of GenStar Common stock and an obligation to issue an additional 12,000 shares of common stock once approved by the University of California Regents (the
Regents).  In September 2002, the Regents approved the issuance of the additional 12,000 shares of common stock, and the shares were issued.  Allegros sole asset was a license to certain technologies for the treatment and
prevention of AIDS and for lentiviral gene therapy.  Allegro had no products, revenues, employees, facilities or other assets.  Based upon the very early stage of development of the technology and the lack of alternative future uses for
it, the value of the technology was charged to acquired in-process technology.

In September 2002, the Company entered into a definitive merger agreement with Vascular Genetics Inc.  The
agreement is expected to result in the shareholders of each company owning approximately 50% of the fully-diluted ownership of the combined organization, which plans to change its name to CorAutus Genetics Inc.  Under the terms of the merger
agreement, Vascular Genetics stockholders will receive, in exchange for all of the outstanding capital stock of Vascular Genetics, newly issued shares of GenStar common stock equal to the fully-diluted outstanding capitalization of GenStar, which is
expected to be approximately 38

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million shares.  The transaction is subject to approval by the GenStar and Vascular Genetics shareholders, as well as other
closing conditions.  The merger is expected to close in early 2003.

Upon completion of the merger, the combined companys development efforts will focus on the development of Vascular
Genetics' VEGF-2, a gene-based therapy for the treatment of severe cardiovascular disease.  In order to conserve resources and concentrate remaining resources on the VEGF-2 product, during November 2002, we introduced several cost reduction
initiatives including the reduction of research and administrative staff by approximately 30 percent. We also have plans to combine all of our current operations into our Barnes Canyon facility, which includes our manufacturing operations, and then
sublet our executive administrative and laboratory space, as well as implement certain other cost containment initiatives.

Although we will be reducing our expenditures in the near term, we
expect to incur increasing costs related to conducting late-stage clinical trials for the VEGF-2 product.  We expect that GenStar will have no product revenues and will incur significant losses for at least the next five years.  We may
never be profitable. Also, there can be no assurance that the merger will be successfully completed, or that the combined organization will realize the expected synergies of the merger.

CRITICAL
ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon the Companys consolidated
financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, patent costs and income taxes. We
base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following
critical accounting policies affect the significant judgments and estimates used in the preparation of our consolidated financial statements.

Revenue recognition

We recognize revenue when all four of the following criteria are met:  (i) persuasive evidence that an arrangement exists; (ii) delivery of services has occurred; (iii) the selling price is
fixed or determinable; and (iv) collectibility is reasonably assured.  In addition, we follow the provisions of the Securities and Exchange Commissions Staff Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in
Financial Statements, which sets forth guidelines in the timing of revenue recognition.  Amounts received for upfront product and technology license fees under multiple-element arrangements are deferred and recognized over the period of such
services or performance if such arrangements require ongoing services or performance.  Amounts received for milestones are recognized upon achievement of the milestone, unless the amounts received are creditable against royalties or we have
ongoing performance obligations.  Royalty revenue will be recognized upon sale of the related products, provided the royalty amounts are fixed and determinable and collection of the related receivable is probable.  Grant revenue is
recognized as the research expenses related to the grants are incurred. All amounts received under the collaborative research agreements or research grants are not refundable, regardless of the success of the underlying research.  Any amounts
received prior to satisfying our revenue recognition criteria will be recorded as deferred revenue in the accompanying balance sheets.

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Patent costs

We expense the costs related
to filing and pursuing patent applications as the costs are incurred because the recoverability of such expenditures is uncertain.

Income taxes

We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. While we have considered future taxable income and ongoing prudent and
feasible tax planning strategies in assessing the need for the valuation allowance, in the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of its net recorded amount, an adjustment to the
deferred tax asset would increase income in the period such determination was made. Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset
would be charged to income in the period such determination was made.  The Companys policy is record a valuation allowance equal to the net deferred tax asset.

Stock based
compensation

The Company grants stock options for a fixed number of shares to employees in accordance with Accounting Principles Board Opinion No. 25 (APB 25),
Accounting for Stock Issued to Employees, and accordingly, recognizes no compensation expense for the stock option grants to employees provided that the option exercise price is not less than the fair market value of the underlying stock on
the date of the grant.  The value of options, warrants, or stock awards issued to non-employees have been determined in accordance with SFAS No. 123, Accounting for Stock Based Compensation, and Emerging Issues Task Force No. 96-18,
Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services, and are periodically remeasured as the options vest.  Warrants for Common Stock are valued at the
date of issuance and are recorded to the expense category related to the services provided.

RESULTS OF OPERATIONS

Revenues

GenStar has generated revenues to date of $2,285,000 from contract research agreements and grants.   Total revenues for the nine months ended September 30, 2002 and 2001 were $863,000 and $162,000,
respectively, and for the three months ended September 30, 2002 and 2001 were $423,000 and $90,000, respectively.  Revenues for the three and nine months ended September 30, 2002 include $24,000 and $23,000 related to a research agreement with
a corporate partner whereby the two companies will collaborate on certain research projects (see Note 6 to the Financial Statements).  There were no such research agreement revenues during the three and nine months ended September 30,
2001.  We anticipate seeking additional research agreements and grants to help fund research and development efforts.  We do not anticipate revenues from products for at least five years.

Research and development

Research and development expenses increased $329,000 to $7,017,000 during the nine months ended September 30, 2002 compared to $6,688,000 for
the nine months ended September 30, 2001.  During the three months ended September 30, 2002, research and development expenses decreased $120,000 to $2,282,000 compared to $2,402,000 for the three months ended September 30, 2001.  Research
and development expenses increased in the nine-month period ended September 30, 2002 compared to the same periods of 2001 due to higher occupancy costs which are the result of an upgrade in the capacity of our manufacturing capabilities.  This
increase is offset by a decline in employee related expenses, which is the result of fewer research and development employees in the current year compared to the same period

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of last year.  Research and development expenses for the three months ended September 30, 2002 declined compared to the same
period of 2001 due to lower employee related expenses which is the result of fewer research and development employees in the current year compared to same three month period of the prior year.  This decline is offset by an increase in occupancy
costs due to an upgrade in the capacity of our manufacturing capabilities.  We anticipate research and development expenditures to decline in the near term due to cost-containment measures, but to increase in the future as we conduct
pre-clinical and clinical testing necessary to bring our products to market and to establish additional manufacturing capabilities.

General and administrative expense

General and administrative expense decreased $110,000 during the nine months ended September 30, 2002, to $2,394,000 compared to $2,504,000 for the nine months ended September 30, 2001.  During the three months
ended September 30, 2002 general and administrative expense decreased $26,000 to $777,000 compared to $803,000 for the three months ended September 30, 2001.  General and administrative expenses include the costs of our administrative personnel
and consultants, office lease expenses and other overhead costs, including legal and accounting costs. General and administrative expenses have decreased due to managements efforts to reduce expenses in this area.

Interest income and expense

Interest income decreased $346,000 during the nine months ended September 30, 2002 to $513,000 compared to $859,000 for the nine months ended
September 30, 2001.  During the three months ended September 30, 2002, interest income decreased $182,000 to $68,000 compared to $250,000 for the three months ended September 30, 2001.  Interest income is a result of the investment of
excess cash in money market accounts, corporate bonds and certificates of deposit.  Interest expense decreased $14,000 for the nine months ended September 30, 2002 to $350,000 compared to $364,000 for the nine months ended September 30,
2001.  During the three months ended September 30, 2002, interest expense increased $8,000 to $119,000 compared to $111,000 for the three months ended September 30, 2001.  Interest expense in both 2001 and 2002 relates to equipment
financing and interest accrued on the deferred compensation liability.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used by operating activities
during the nine months ended September 30, 2001 and 2002 was $7,922,000 and $6,998,000, respectively. Net cash used by operating activities consists of expenditures for research and development and general and administrative expenses. Net cash
provided by investing activities during the nine months ended September 30, 2001 and September 30, 2002 was $2,990,000 and $6,448,000, respectively, and consists of net sales of short-term investments further reduced by purchases of furniture and
equipment.  Net cash provided by financing activities during the nine months ended September 30, 2001 of $6,681,000 consists primarily of $3,873,000 paid by Baxter under the credit agreement, proceeds from the sale of Series C Preferred Stock
to Baxter of  $2,000,000, proceeds from our capital lease facility of $653,000 and proceeds from the issuance of common stock upon exercise of options and warrants for common stock of $420,000, offset by repayments of the capital lease facility
and notes payable of $386,000. Net cash used in financing activities of $141,000 for the nine months ended September 30, 2002 consists primarily of proceeds from our capital lease facility of $429,000, offset by repayments of the capital lease
facility and notes payable of $615,000.

Over the course of the next year, we plan to focus our activities on later stage cardiovascular products following the completion of the planned merger with
Vascular Genetics Inc., which will require significant capital resources.  GenStars future capital requirements will depend on many factors, including and the time and costs involved in obtaining regulatory approvals and
effective

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commercialization activities, our ability to establish collaborative arrangements with others for drug development and scientific
progress in our research and development programs.

As of September 30, 2002, the Company had cash, cash equivalents and short-term investments totaling $7,604,000 and working capital of
$5,921,000.  GenStar has incurred net losses of $45.3 million since its inception through September 30, 2002 and has never been profitable during its existence. We expect to incur significant additional operating losses over the next several
years as our clinical trials progress and research and development efforts expand. Our ability to achieve profitability depends upon our ability, alone or with others, to successfully complete development of products, obtain required regulatory
approvals and manufacture and market products. We may not be successful and we may never attain significant revenues or profitability. Our operations to date have consumed substantial amounts of cash. The negative cash flow from operations is
expected to continue and to accelerate for at least the next five years. The development of our products will require a commitment of substantial funds to conduct the costly and time-consuming research, preclinical and clinical testing necessary to
bring our products to market and to establish manufacturing and marketing capabilities. GenStar does not have any commitments or arrangements assuring it of any additional funds in the future, and there can be no assurance that it will be able to
obtain additional capital on acceptable terms, or at all.

Under the terms of our Developmental Collaboration Agreement and Credit Agreements with Baxter, Baxter was required to provide funding for
development of the MAX-AD FVIII hemophilia product.  Total funding received from Baxter under the agreement was $12,890,000, which was converted into 12,890 Shares of Series B Preferred Stock.  When we treated the first patient in a Phase
I clinical trial for the hemophilia product, a milestone payment of $2,000,000 was due from Baxter. In June 2001, the first patient was treated using the hemophilia product and Baxter paid the $2,000,000 milestone payment in exchange for 2,000
shares of Series C Preferred Stock.  The Series B Preferred Stock is convertible into 2,010,920 shares of common stock.  The Series C Preferred Stock is convertible at Baxters option upon the earlier of (i) the first business day
following the approval by the FDA of the right to market, sell or distribute any product using the MAXIMUM-AD Vector Technology for treatment of blood clotting disorders in humans relating to Hemophilia A, which product has been developed pursuant
to the Developmental Collaboration Agreement between Baxter and the Company and (ii) the date seven years after the achievement of the most recently achieved Series C Milestone, the last milestone was achieved in June 2001.

We anticipate our existing capital resources will enable us to maintain our current and planned operations through the middle of 2003.  However, no assurance can be given that we will not need additional funds
prior to the middle of 2003.  We will need to raise substantial additional capital to fund future operations. We intend to seek additional funding either through collaborative arrangements or through public or private equity or debt financings.
Additional financing may not be available on acceptable terms or at all.  Failure to successfully address ongoing liquidity requirements will have a material adverse effect upon the business of GenStar. In the event that GenStar is unable to
obtain additional capital, it will be required to take actions that may harm its business and its ability to achieve positive cash flow in the future, including potentially ceasing certain or all of our operations. To the extent that GenStar raises
additional cash by issuing equity securities, existing stockholders of GenStar will be diluted. If additional funds are raised through issuance of debt securities, these securities are likely to have rights, preferences and privileges senior to
holders of common stock and preferred stock.

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Item 3.    
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary objective of our investment activities is to preserve principal while at the same time maximizing the
income we receive from our investments without significantly increasing risk. Some of the securities that we invest in may have market risk. This means that a change in prevailing interest rates may cause the fair value of the principal amount of
the investment to fluctuate. For example, if we hold a security that was issued with a fixed interest rate at the then-prevailing rate and the prevailing interest rate later rises, the fair value of the principal amount of our investment will
probably decline. To minimize this risk, we maintain our portfolio of cash equivalents and short-term investments in a variety of securities, including commercial paper, money market funds, government and non-government debt securities. The average
duration of all of our investments has generally been less than one year. Due to the short-term nature of these investments, we believe we have no material exposure to interest rate risk arising from our investments. Therefore, no quantitative
tabular disclosure is required.

The Company does not conduct business with foreign entities, and does not have any foreign exchange risk.

Item
4.    
CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Within the 90-day period prior to the date
of this report, the Company carried out an evaluation, under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Companys disclosure controls and procedures pursuant to Rule 13a-14 of the Securities Exchange Act of 1934 (the Exchange Act).  Based upon that evaluation, the Chief Executive Officer and Chief
Finanical Officer concluded that the Companys disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Companys Exchange Act
filings.

Changes in Internal Controls

There have been no significant changes in the Companys internal controls or in other factors that
could significantly affect internal controls subsequent to the date the Company carried out its evaluation.

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PART II.  OTHER INFORMATION

Item 1.  
LEGAL PROCEEDINGS         None.

Item 2.  
CHANGES IN SECURITIES AND USE OF PROCEEDS         None.

Item 3.  
DEFAULTS UPON SENIOR SECURITIES         None.

Item 4.  
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS         None.

Item 5.  
OTHER INFORMATION         None.

Item 6.  
EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

| | Exhibit 99.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| | ------------ | ----------------------------------------------------------------------------------------------------------------------
| |              |                                                                                                                       
| | Exhibit 99.2 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)  Reports on Form 8-K

On September 16, 2002, GenStar filed a Current Report on Form 8-K dated September 12, 2002 regarding the execution of an Agreement and Plan of Reorganization,
dated September 12, 2002, by and among the Company, Genesis Acquisition Corporation ("Merger Sub"), a wholly-owned subsidiary of the Company, and Vascular Genetics Inc. pursuant to Item 5 of Form 8-K.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant has caused this Report to be signed on its behalf
by the undersigned, hereunto duly authorized.

|                         | GENSTAR THERAPEUTICS CORPORATION                                                                                    | 
|------------------------ | ------------------------------------------------------------------------------------------------------------------- | 
|                         |                                                                                                                     | 
|                         | A Delaware Corporation                                                                                              | 
|                         |                                                                                                                     | 
|                         |                                                                                                                     | 
|Date:  November 14, 2002 | /s/  CARIN D. SANDVIK                                                                                               | 
|                         |                                                                                                                     | 
|                         | Carin D. Sandvik Sr. Director of Finance and Administration Chief Accounting Officer (Principal accounting officer) | 
|                         |                                                                                                                     | 

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CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Robert E.
Sobol, M.D., certify that:

| | 1. | I have reviewed this quarterly report on Form 10-Q of GenStar Therapeutics Corporation;                                                                                                                                                                                                                                                                                                 
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| | 2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| | 3. | Based on my knowledge, the financial statements and other financial information included in this quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| | 4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| | 5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors:                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| | 6. | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



|Dated: November 14, 2002 | /s/  ROBERT E. SOBOL                          | 
|------------------------ | --------------------------------------------- | 
|                         |                                               | 
|                         | Robert E. Sobol, M.D. Chief Executive Officer | 

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CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Paul D.
Quadros., certify that:

| | 1. | I have reviewed this quarterly report on Form 10-Q of GenStar Therapeutics Corporation;                                                                                                                                                                                                                                                                                                 
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| | 2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| | 3. | Based on my knowledge, the financial statements and other financial information included in this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| | 4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    | a.                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    | b.                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    | c.                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| | 5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors:                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    | a.                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| |    | b.                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                         
| | 6. | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



|Dated: November 14, 2002 | /s/  PAUL D. QUADROS                    | 
|------------------------ | --------------------------------------- | 
|                         |                                         | 
|                         | Paul D. Quadros Chief Financial Officer | 

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