SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB
                                   (Mark One)

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended September 30, 2003

                                       OR

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

                         Commission file number: 1-11642
                             LASER TECHNOLOGY, INC.
                 (Name of small business issuer in its charter)

                     Delaware                             84-0970494
         (State or other jurisdiction of               (I.R.S. employer
          incorporation or organization)              identification no.)
              7070 South Tucson Way,                         80112
                Englewood, Colorado
    (Address of principal executive offices)               (Zip code)

                                 (303) 649-1000
                 (Issuer's telephone number including area code)

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

        Title of each class             Name of exchange on which registered
        -------------------             ------------------------------------
   Common Stock, $.01 par value                American Stock Exchange

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

                                      None

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

State the issuer's revenues for its most recent fiscal year. $10,917,568

State the aggregate market value of the voting and non-voting common stock held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked prices of such common equity, as of a
specified date within 60 days:

As of December 24, 2003, the aggregate market value of the registrant's common
stock held by non-affiliates of the registrant was $11,137,021.

At December 24, 2003, 5,486,217 shares of common stock of the registrant were
outstanding.

Documents Incorporated by Reference:  None

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                             LASER TECHNOLOGY, INC.
                            FORM 10-KSB ANNUAL REPORT
                                TABLE OF CONTENTS

                                                                        Page No.
                                                                        --------

                                     PART I
Item 1.   Description of Business .....................................     3
Item 2.   Description of Properties ...................................    18
Item 3.   Legal Proceedings ...........................................    18
Item 4.   Submission of Matters to a Vote of Security Holders .........    19
                                    PART II
Item 5.   Market for Common Equity and Related Stockholder Matters ....    20
Item 6.   Management's Discussion and Analysis or Plan of Operations ..    21
Item 7.   Financial Statements ........................................    26
Item 8.   Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure ........................    26
                                   PART III
Item 9.   Directors and Executive Officers, Promoters and Control
           Persons: Compliance with Section 16(a) of the Exchange
           Act ........................................................    27
Item 10.  Executive Compensation ......................................    29
Item 11.  Security Ownership of Certain Beneficial Owners and
           Management .................................................    30
Item 12.  Certain Relationships and Related Transactions ..............    32
Item 13.  Controls and Procedures .....................................    32
                                    PART IV
Item 14.  Exhibits, and Reports on Form 8-K ...........................    32
          Signatures ..................................................    34

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                                     PART I.

ITEM 1. DESCRIPTION OF BUSINESS

Forward-Looking and Cautionary Statements

This report contains certain forward-looking statements. These statements relate
to future events or our future financial performance and involve known and
unknown risks and uncertainties. These factors may cause our company's, or our
industry's actual results, levels of activity, performance or achievements to be
materially different from those expressed or implied by the forward-looking
statements. In some cases, you can identify forward-looking statements by
terminology such as "may," "will" "should," "expects," "intends," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential," "continue," or
the negative of these terms or other comparable terminology.

These statements are only predictions. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements.

INTRODUCTION

We are engaged in the business of developing, manufacturing and marketing
laser-based measurement instruments. Our instruments employ proprietary
technology developed by us.

In fiscal 2000, we received an ISO 9001 certification for our manufacturing and
operating facilities. ISO certification reflects our compliance with standards
recognized by the Geneva-based International Organization for Standardization, a
worldwide federation of approximately 130 countries. ISO certification also
provides a framework for quality management and quality assurance recognized by
most developed countries. Having received certification, our operating
facilities and manufacturing procedures are recognized as providing an optimal
environment for the design, manufacture, and service of quality products. In
fiscal 2002 we were re-certified for ISO 9001 compliance. In fiscal 2003 we were
certified for the revised ISO 9001:2000 standard for years 2003 to 2006.

Our proprietary technology permits a laser to measure to a non-cooperative, or
low reflective surface, using a very low power source. As a result, our products
operate within the requirements of eye safety promulgated by the United States
Food and Drug Administration. Despite a very low power source, our laser
instruments measure more rapidly and at longer ranges than corresponding
conventional devices. We have also developed proprietary, patented software and
circuitry integral to each of our products.

Our corporate offices are located at 7070 South Tucson Way, Englewood, Colorado
80112, and our telephone number is (303) 649-1000.

PRINCIPAL PRODUCTS

Historically, our primary product lines have been the Marksman Laser Speed
Detection Systems and Criterion Series of Survey Lasers. Since fiscal 1995, we
have expanded these product lines through new product development including the
introduction of second generation instrumentation. Because of enhancements to
our existing products, new product development and expanding markets for our
technology, we currently organize and market our products in four categories:
Traffic Safety, Professional Measurement, Industrial Control and Consumer
products.

The following table provides a breakdown of the percentage of net sales of our
product lines. Revenues realized from sales of our less significant revenue
producing products are classified as Consumer products for presentation
purposes.

                                         Year Ended September 30,
                                         ------------------------
                                         2003      2002      2001
                                         ----      ----      ----
Traffic Safety.....................        68%       68%       61%
Professional Measurement...........        21        20        29
Industrial Controls................         1         1         2
Consumer...........................        10        11         8

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The following table provides a breakdown of domestic and foreign revenues as a
percentage of net sales of our products for the periods presented:

                                         Year Ended September 30,
                                         ------------------------
                                         2003      2002      2001
                                         ----      ----      ----
North American.....................        68%       66%       67%
Foreign............................        32        34        33

We include sales in the U.S. and Canada under North American Sales, and sales in
all other countries as foreign or international.

TRAFFIC SAFETY PRODUCTS

Hand-Held Laser Speed Detection Systems

In 1991, we developed and commenced commercial manufacturing and marketing of
the LTI 20-20 laser speed detection system, the first of it's kind in the
traffic safety marketplace. In 1993, we introduced an enhanced version of the
LTI 20-20, called the Marksman. In fiscal 1997, we introduced the UltraLyte
second-generation laser speed detection device. The UltraLyte was designed to
reduce the size, weight and manufacturing cost of the previous model design.
Soon after, we developed the UltraLyte 200 which incorporates an inclinometer,
enhancing the surveying capabilities for use in accident reconstruction and
investigation. In fiscal 1998, we developed longer-range versions of the
UltraLyte; the UltraLyte 100LR and the UltraLyte 200LR.

Our hand-held laser speed measurement devices have several advantages over radar
speed measurement devices. As distinguished from radar devices, the UltraLyte
can be aimed directly at a specific vehicle, thus eliminating the difficulty
that radar measurement devices have in distinguishing one vehicle from another.
Also, the UltraLyte measures speed in less than one-half a second with a laser
beam that spans to only three feet at a distance of 1,000 feet and produces
almost no detectable energy beyond the target vehicle. Radar guns, on the other
hand, are generally required to track vehicle speed for several seconds in an
attempt to positively identify a vehicle. In addition, a radar gun produces a
wider beam width of approximately 200 to 400 feet at a range of 1,000 feet.

The beam from a radar gun can be readily detected by the targeted vehicle as
well as other oncoming vehicles equipped with radar detectors. Conventional
radar detectors, which cannot detect the light beam from the UltraLyte, have
been effective against radar because of the wide beam width produced by radar
devices. This radar beam continues to widen as the distance from the gun
increases and can easily be picked up by a radar detector as much as a mile away
from the radar gun. This will give the driver of a vehicle advance warning and
time to slow down, thus potentially avoiding a speeding ticket.

Consumer laser detectors exist that will detect the UltraLyte only when the
vehicle equipped with such a detection device is being targeted. However,
because the measurement period of the UltraLyte is less than one-half a second,
there is no reaction time for the driver to reduce speed before the police
officer obtains a positive speed reading. As laser speed enforcement has become
more widely used, a number of consumer laser jamming devices have also been
marketed. Such laser jammers have limited effectiveness against our products due
to the sophisticated nature of the UltraLyte's internal targeting software. To
combat the use of laser jamming devices, we developed the capability within our
products to detect when a jamming device is potentially in use. This feature has
proven to be very useful to speed enforcement officials in certain jurisdictions
where the use of jamming devices is prohibited.

In 1995 we introduced a patented measurement feature known as
distance-between-cars, or DBC. This is an optional feature that can be
integrated into the UltraLyte and is used to measure the distance and/or time
between two traveling vehicles. This

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capability has primarily been of interest in international markets where
governments closely monitor vehicle separation to improve traffic safety.
Domestically, with the increased occurrence of road rage, the ability to
accurately measure the trailing distance of a vehicle may become desirable as
police agencies seek hard evidence for enforcement. Management believes that the
DBC feature addresses this application and increases the utility and efficiency
of our hand-held laser speed measurement products.

UltraLyte LR B and Compact

During fiscal 2002 we developed two new models of the UltraLyte laser speed
detection system, the LR B and the Compact. The UltraLyte 100 LR B is a
reconfiguration of our current UltraLyte 100LR, with a simplified user interface
and basic operating features. The development of the LR B was based upon
customer feedback, which indicated a need for a product that is easier to use.

The UltraLyte Compact is another modification of the UltraLyte 100LR designed to
minimize overall product build cost, providing the lowest possible price point
to the market. The configuration of the Compact eliminates the traditional
handle and shoulder stock of our other laser speed detection systems, as well as
the in-scope display of measurement data. While the absence of these features
reduces functionality, the cost savings associated with eliminating them creates
a price point that is competitive for customer purchases that are based strictly
upon cost. This low price point also creates the opportunity to attract new
customers that previously couldn't afford laser speed measurement technology.

Micro DigiCam Photo Laser System

In 1995, we began commercial production of the Laser DigiCam photo laser system
which integrated a video camera and associated equipment with the Marksman. In
fiscal 2001, we released a second generation, lower cost photo laser system
known as the Micro DigiCam. The Micro DigiCam system is designed to operate with
the UltraLyte and is a custom integration of the latest low-cost technology in
data acquisition and management. The Micro DigiCam system monitors the speed of
vehicles in a specific traffic lane. When a speeding vehicle is detected, the
Micro DigiCam takes a digital picture of the vehicle and prints the speed, time
and date on the picture. This produces positive evidence for the generation of a
speeding ticket, which if desired, can be mailed to the violator.

In an effort to continually increase the utility of the Micro DigiCam, various
features have been developed for the product since its initial market release.
The Micro DigiCam "Dual Speed Package" allows the system to identify commercial
vehicles from passenger vehicles and impose different speed limits for each.
This is a desirable option in foreign markets where dual speed limits on
motorways are enforced. Another expanded feature is "Auto Mode" operation. This
allows the system to be set up to monitor a specific section of roadway and
automatically capture an image of any vehicle that exceeds a pre-determined
speed limit, without operator intervention. An additional accessory is the night
illumination system. This system provides the Micro DigiCam with the ability to
capture images at night, increasing productivity by allowing speeding violations
to be registered around the clock.

The Micro DigiCam system has historically been sold into international markets,
where conventional photo-radar systems have been accepted as a standard form of
traffic enforcement. We believe there is a growing demand in international
markets to combine visual evidence with a speed measurement system to support
speed violations. Although domestically the acceptance of photo enforcement
systems has historically been limited, there appears to be a growing interest in
this technology as we continue to promote the product to our traditional
domestic customers. The low price point and simplified operation of the Micro
DigiCam should make it an ideal solution for domestic municipalities that wish
to test the waters of automated traffic enforcement. This system takes advantage
of the increased capabilities of current handheld PC platforms, which use
Windows CE operating systems, to produce the lowest-cost solution for a photo
laser product. The original Laser DigiCam was discontinued in fiscal 2001.

Traffic Data Collection Modules

In 1995, we introduced QuickMap, a system that allows the use of our laser
distance measurement capability for accident investigation and reconstruction.
QuickMap is a software module integrated into a data collector, which can be
used in conjunction with our hand-held laser devices. This system with the
UltraLyte 200 expedites the collection and processing of data at accident sites
and crime scenes. Currently over 900 QuickMap systems are in use by agencies and
private companies.

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During 1999, we introduced QuickMap 3D, a substantially enhanced software
version which provides three-dimensional data collection and presentation. This
upgrade incorporates the MapStar Angle Encoder, or Electronic Compass Module
into the QuickMap system, increasing overall utility by providing horizontal
angle information into the logged data. We believe this upgrade addresses the
needs of an expanding accident investigation market and offers compelling
capabilities, including elevation mapping and automatic map creation, to
existing users. In fiscal 2003, we released a new version of QuickMap 3D that
operates on a Palm(R) computing device, providing additional functionality by
utilizing a state-of-art, low cost processing platform. QuickMap Palm has
initially been well received in the Traffic Safety marketplace.

Another element of traffic safety that our technology addresses is the gathering
of statistical data. Traffic engineers and law enforcement officials are able to
conduct and document traffic speed surveys more efficiently using the UltraLyte
laser speed detection system than with conventional methods. In 1993, we
introduced a statistical compilation software package known as SpeedStat. This
product gathered and formatted traffic survey data on a portable laptop computer
by using a data communications interface with our laser speed detection systems.

In 1996, we improved our statistical data product by introducing SpeedStat DC, a
companion to QuickMap. This improved the efficiency of the system by replacing
the laptop computer with a hand-held data collector. During fiscal 2000, we
upgraded SpeedStat to operate on a Windows CE platform. This improvement allows
the package to be to be operated on the most recently available handheld PC
platforms, improving the operator interface and increasing general utility.

Impulse Accident Investigation Laser

In fiscal 1996, we introduced a new generation of lasers for general distance
measurement known as the Impulse series. Although marketed primarily to the
survey and mapping industry, the Impulse gained quick acceptance in the accident
investigation segment of the law enforcement community. The Impulse is smaller
in size and weight and lower in cost than the UltraLyte system. Like the
UltraLyte 200 model, the Impulse 200 also features an integrated inclinometer
that provides the operator with three dimensional mapping capabilities. The
Impulse is compatible with the QuickMap 3D accident investigation tool,
providing a lower cost solution for users that don't require speed measurement
capability.

MPH Industries

In fiscal 2002, we initiated a relationship with MPH Industries Incorporated, a
leading designer, manufacturer and marketer of radar-based speed measurement
products. Although we have historically promoted the benefits of laser speed
measurement over radar-based measurement, there are specific instances where
laser cannot replace radar. These include moving-mode traffic enforcement, where
an officer monitors traffic speed from a moving vehicle, and situations where
ultimate low cost is a customer necessity. Our agreement with MPH provides us
with domestic distribution rights for MPH products in 20 different states. The
addition of radar-based instrumentation to our product offerings allows our
sales representatives to provide "one stop" shopping to customers for all their
speed enforcement needs. This is a benefit that has previously been provided by
many of our competitors in the domestic traffic safety market.

To date, the MPH relationship has been reasonably successful. A factor to
consider is that the distribution territory we are selling into has had minimal
activity over the last several years due to a lack of MPH representation. We
believe it will take some time to develop MPH product presence in these areas
once again, but we are optimistic of the ultimate results that can be achieved.
As part of the relationship, both parties are co-promoting the others' products,
with MPH taking on the primary marketing expenses for promoting their products
in our designated distribution region.

Stinger Spikes Systems

During fiscal 2001, we entered into an exclusive agreement, for the United
States and Canada, to sell and manage the distribution channels of the Stinger
Spike System for Federal Signal Corporation. The Stinger Spike System is a
compact, lightweight, easy to use tire-deflating device that is extremely safe
and effective when used by law enforcement agencies in stopping high-speed
pursuits. While early indications were that this product would be very
complimentary to our laser speed detection systems, we have found that the sales
processes for each are quite different. This has created difficulties for our
direct sales force and thus we have discontinued our representation of the
product.

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PROFESSIONAL MEASUREMENT PRODUCTS

Previously this market segment was identified as Survey and Mapping. Due to
continuing expansion of field applications for our general measurement products,
we began designating this area as Professional Measurement in fiscal 2002.

Hand-Held Survey Lasers

In 1992 we released the Criterion, a small, portable laser measurement system
consisting of a laser range finder, an electronic compass and an electronic
inclinometer. This product line was developed to collect three-dimensional
spatial information for surveying and mapping applications. During fiscal 1996,
we developed the Impulse, a second-generation surveying instrument. The Impulse,
weighing approximately two pounds, can be carried on a belt clip and its
ergonomic design allows full operation of the instrument with only one hand.
Although the Impulse does not include an integrated electronic compass, the
increased demand for a lower cost instrument caused us to discontinue the
Criterion line in 1999.

In fiscal 1997, we expanded the Impulse product line to include four new models.
The original product line included the Impulse 100, the standard distance-only
model, and the Impulse 200, the standard model with an electronic inclinometer.
The Impulse 100 LR and Impulse 200 LR versions were engineered with the ability
to measure longer distances to low reflective targets than what is possible with
our standard Impulse line. In 1997, we also introduced the Impulse 100 XL for
longer range, lower accuracy applications. The Impulse 100 XL has the ability to
measure distances in excess of 2,000 meters. In 1999, we introduced the Impulse
200 XL, which offers the same range capability as the 100 XL model, but includes
an inclinometer for elevation measurements. Due to historical sales trends, the
Impulse 100 LR and 100 XL models were discontinued in 2002 as there has been
greater customer demand for the expanded capabilities of the Impulse 200 LR and
200 XL.

MapStar Digital Compass Module

In fiscal 1998 we developed and released the MapStar Digital Compass Module, or
MSCM. The MSCM uses flux-gate technology to measure absolute heading information
relative to magnetic north, and represents a deviation from our traditional
pulse-laser products. The modular configuration of the MSCM facilitates an easy
interface to most of the Impulse and UltraLyte models. The MSCM completes the
last component (horizontal angle) required for the Impulse to become a complete
three-dimensional mapping instrument. With the addition of the MSCM, the Impulse
provides all of the basic measurement capabilities of the original Criterion, at
a lower price. During fiscal 2003, we release the MSCM II, an improved version
of the original MSCM. The MSCM II utilizes the latest in magnetic measurement
components, incorporating integrated circuit-based magneto resistive technology.
The MSCM II also has additional features to the MSCM, while maintaining a
simpler operator interface.

MapStar Angle Encoding Module

In the third quarter of fiscal 2000, we began production of the MapStar
Angle-Encoding Module, or MSAE. The MSAE is a relative angle measurement device
which produces horizontal angle readings to a greater accuracy than the MSCM.
Although the MSAE is not susceptible to magnetic interference like the MSCM, it
does require an angular reference in order to translate measurements into
absolute headings. This module enables our laser products to better penetrate
Professional Measurement applications that require higher accuracy such as
stockpile surveys and mine face profiling. The MSAE also offers additional
capabilities for traffic safety applications including crush analysis, a concern
in accident investigation. Like the MSCM, the MSAE's modular configuration
facilitates an easy interface to most Impulse and UltraLyte product models.

Professional Measurement Software Modules

In fiscal 1998, we introduced the Transmission and Distribution (T&D) Utility
Pac, a software package used to measure critical parameters related to overhead
power lines. This system is comprised of a field module, a handheld data
collector and a Windows based office-processing module, which downloads and
formats the collected data. The field module links directly to any of our
Impulse model lasers and is designed to assist transmission and distribution
engineers with a variety of measurement and design tasks. The T&D Utility Pac
allows one operator to gather the amount of information it would normally take
two people to do, in about half the time. Further, the reflectorless laser
capability of the Impulse increases the safety of gathering this data in
difficult environments.

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In fiscal 1999, we released en Campo, a Professional Measurement module designed
for use in a variety of applications including measuring stock pile volumes,
preliminary site surveys, and natural resource mapping. This module operates on
a hand held data collector and provides a low cost, portable field mapping
solution. The en Campo module was designed as a complement to our laser
instruments to provide a full mapping solution for users that have not already
purchased and adopted a software product for mapping in the aforementioned
areas.

In fiscal 2001, due to market demands from the mining industry, we developed a
software module known as LTI Face Profiler. Face Profiler is a laser-based
system designed to collect positional information to measure the profile of a
rock face for calculation of critical blasting information. This system offers
high accuracy and simplified operation in a low-cost, portable package.

Integrated Data Collection Solutions

Many market applications require our Professional Measurement lasers to be
integrated with other hardware and software to provide a complete turnkey
system. To facilitate this integration, we began in 1994 to establish
relationships with manufacturers of complementary hardware and software
products. These relationships include the sharing of distribution channels and
new product development. In 2000, we entered into an agreement with Tripod Data
Systems to market and sell its Solo CE product, a Geographical Information
System mapping module that can be used with a GPS and/or a laser to map assets
quickly. The Solo CE product provides a complementary solution that is helping
us gain market share in the GPS offset market. Tripod Data Systems, a subsidiary
of Trimble Navigation Limited, is the largest third-party software manufacturer
and distributor in the Professional Measurement industry. In fiscal 2003, we
became a Trimble Authorized Business Partner which provides us with improved
communication and overall exposure to the worldwide Trimble dealer network.

We believe that the need for mapping and field data collection is increasing as
utility companies, foresters and government agencies seek more efficient ways to
manage their assets. We plan to continue working with outside software and
hardware firms to provide comprehensive solutions to customer needs.

INDUSTRIAL CONTROL PRODUCTS

Industrial Laser Distance Measurement Sensors

In fiscal 1996, we made our first entry into the industrial measurement market
with the release of a low cost, industrial laser distance measurement sensor.
This laser sensor was developed and manufactured pursuant to a sales contract
with Telemotive Industrial Controls, Inc., a leading manufacturer of radio
controls for material handling cranes and industrial vehicles, for use in
collision avoidance and positioning systems. As part of the contract, the
product was sold exclusively under Telemotive's brand name in their specific
market. In early 2002, our agreement with Telemotive was terminated, ending
their exclusive rights and allowing us to freely market the product. Due to the
application specific design of this sensor, we have had limited success in
promoting it for general measurement applications, however, Telemotive continued
to place limited orders for the product in fiscal 2002 and 2003.

We have also developed several modified versions of our Impulse sensor line for
use in industrial applications. Historically, sales of these sensors have been
for specialized applications to a limited customer base. Research into this
market has indicated a need for a more generic product that can be used in a
broad range of applications. As a result, in late fiscal 2002 we developed a
product known as the Bridge Industrial Sensor, or BIS. This product is unique
from our traditional laser sensor products as it is capable of being custom
configured by an end user to optimize it for a given measurement application or
condition. The flexibility of the BIS should provide for increased sales
opportunities into broader market applications.

Ship Docking and Marine Applications

Since fiscal 1997, ship docking system sales have primarily been to system
integrators who purchase our laser sensors and associated interface components
for inclusion into more complex dock management systems. We also provide a
hand-held laser measurement instrument for marine applications known as the
Mariner, which measures the speed and distance of an approaching or departing
vessel. The Mariner is a derivative of the Marksman product line. Ship docking
sales in fiscal 2003 were limited.

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OTHER APPLICATIONS

The National Aeronautics and Space Administration, or NASA, utilizes a modified
version of the Marksman on space shuttle missions involving close proximity
operations. The laser is used to determine the distance and closing speed of
remote objects during satellite deployment or retrieval, or during docking
maneuvers. While NASA is a relatively small customer we believe that NASA's use
of the technology adds to our credibility as a leader in the laser-based
measurement industry. We continue to pursue other potential military, security
and defense applications of our pulse laser technology.

CONSUMER PRODUCTS

Bushnell Yardage Pro Laser Rangefinders

In 1995, we completed development of a consumer related laser range finding
product, in conjunction with the Bushnell Performance Optics, formerly the
Sports Optics Division of Bausch and Lomb. Since that time, we have continued to
work with Bushnell to produce new and improved products, having greater
performance and lower price points. These new products continue to build
Bushnell's presence in the market, and over time have replaced models of the
initial product line.

In fiscal 2001, we worked with Bushnell to complete the development of the
Yardage Pro Sport. This product utilizes our custom Application Specific
Integrated Circuit. The benefits provided by the ASIC have made the Yardage Pro
Sport the lowest cost, highest performing consumer laser range finder on the
market. The ASIC incorporates our proprietary technology into a small, low cost
semiconductor package, providing for optimal performance at the lowest cost. We
anticipate that the ASIC will be a key component in the development of any
future consumer products.

We receive running royalties on cumulative net sales of these products. We also
received reimbursement of certain development costs for the initial development
and design, and we retain the right to pursue consumer markets outside the
sports technology area. We market the Yardage Pro product line to price
conscious customers within our Professional Measurement business and to law
enforcement customers for SWAT applications. We retain all ownership of patents
and trade secrets of the technology underlying the development of the Yardage
Pro product line. Our royalty and licensing income related to this agreement was
approximately $830,637 and $996,486 for the fiscal years ended September 30,
2003 and 2002, respectively.

SEASONALITY

Management believes that seasonal effects on sales of our Traffic Safety
products are non-existent. However, Traffic Safety sales may vary between
financial periods based upon the capital procurement processes and fiscal year
budgeting cycles of state and municipal law enforcement agencies. Historically,
we have realized a moderate decline in Professional Measurement products sales
in areas affected by colder weather during the winter months. Royalties
resulting from consumer product sales are seasonal in nature, with the third and
fourth quarters of the calendar year producing increased results due to the
holiday buying season.

MANUFACTURING OPERATIONS

Our manufacturing operations primarily consist of the assembly, calibration and
testing of products. Currently, most raw components used in our products are
procured from external manufacturers who supply to our specifications.

We maintain certain supply arrangements on long lead time items to purchase
inventory as dictated by product sales. Also, we believe that there are adequate
alternative suppliers for our foreseeable needs. Most of our products carry a
one year limited warranty against manufacturing defects. The UltraLyte product
sold domestically carries a two year standard warranty for competitive market
reasons. To date, there have been no material expenditures on warranty claims.

PRODUCT RESEARCH AND DEVELOPMENT

Research and development costs related to our instrumentation and proprietary
technology are booked as incurred and included in operating expenses. During
fiscal 2003, we continued to direct research and development activities toward
developing new products and improving current product lines. Research and
development costs totaled approximately $1,334,178 and $1,353,104 for the fiscal
years ended September 30, 2003 and 2002, respectively.

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Development efforts in fiscal 2003 were focused primarily on next generation
product development. Research activities on new optical / mechanical product
platforms and electronic hardware architectures incorporating our new ASIC chip
are progressing. These efforts are providing the foundation for our future
handheld laser instruments, which will be designed for optimum package size and
performance at the lowest possible cost. Our primary research and development
focus will continue to be the advancement of our core sensor technology, and its
placement in our current and emerging markets.

During fiscal 2003, we released a new version of our Mapstar Compass Module
(MSCM), the MSCM II. This redesign of the original MSCM involved incorporating
the latest state-of-the-art sensing technology into the core electronics of the
instrument, requiring a significant restructuring of its internal processing
algorithms. The MSCM II provides additional features to the original MSCM, while
maintaining a simpler operator interface. These modifications were driven by
direct feedback from existing MSCM customers.

Also in 2003, we released QuickMap Palm, the next generation of our accident
investigation and reconstruction software package, QuickMap 3D. This new design
operates on the latest Palm computing platforms, providing added functionality
while maintaining a low price-point. The release of QuickMap Palm was
significant in continuing the promotion of our speed measurement lasers for
alternative law enforcement applications.

MARKETING, DISTRIBUTION AND CUSTOMERS

We presently market products to three major classes of customers; International,
North American Traffic Safety and North American Professional Measurement. For
fiscal year 2003, our total foreign shipments accounted for 32% of overall
sales, of which Asian and European shipments comprised 81% collectively. North
American Traffic Safety, including state and local law enforcement agencies
comprised approximately 45% of total sales. Sales to our North American
Professional Measurement dealer network comprised 11% of total sales. We
primarily market our products by on-site demonstrations, attendance at trade
conferences, advertising in trade magazines and direct mail.

Traffic Safety Products

We primarily market our Traffic Safety products domestically to law enforcement
agencies of state, county and municipal governments. Presently, our domestic
sales force includes six direct field sales representatives, inside sales
support personnel and a national sales manager who also covers a field sales
territory. Distribution of domestic Traffic Safety products is accomplished
primarily through direct representation. For fiscal 2003, our largest domestic
customer for our Traffic Safety products was the State of Ohio. Other high
volume customers in 2003 included Florida, New Jersey, California, Colorado,
Michigan, Connecticut, Texas, Oregon, Wisconsin and Vermont.

Internationally, we market our Traffic Safety product line through local foreign
distributors to agencies of foreign governments, including municipal law
enforcement agencies and transportation ministries. We have established
distribution channels for Traffic Safety products in most industrialized
countries. To date, our foreign distributors in the United Kingdom, Australia,
Italy, Norway and Brazil account for the highest volume of hand-held laser speed
detection systems and photo laser systems purchased internationally. As of
September 30, 2003, we have established Traffic Safety distribution in
forty-three foreign countries.

In April 1996, the Marksman was certified by the International Association of
Chiefs of Police (IACP) to meet the federal standard for laser speed measurement
devices. Upon receiving IACP certification, the Marksman was subsequently placed
on the IACP Approved Products List (APL). Products on this list are more readily
purchased with federal funding available from the U.S. Department of
Transportation. This allows easier access to law enforcement agencies who wish
to procure such devices. In fiscal 1998, initial compliance testing of the
UltraLyte was completed and both the UltraLyte 100 and UltraLyte 100 LR models
were added to the IACP APL. IACP approval of the UltraLyte 200 models was
completed during fiscal 1999, and the UltraLyte LRB and UltraLyte Compact were
tested and approved in fiscal 2003. To date, we have more laser speed
measurement devices on the IACP APL than any other manufacturer.

Various foreign standards have also been established for laser speed enforcement
equipment. The Marksman and the UltraLyte have been subject to foreign approvals
in certain areas where such standards exist. To date, the Marksman has been
approved in Germany, the United Kingdom, Austria, Switzerland, Sweden, the
Netherlands, France, Italy, South Africa, South Korea, Brazil

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and Chile. The Marksman has also been tested and approved for use in Canada by
the Royal Canadian Mounted Police. In fiscal 1997, the second generation
UltraLyte was also approved by the RCMP

In fiscal 1998, the UltraLyte was approved in Germany and Austria. The UltraLyte
received approval in the United Kingdom and the Netherlands during fiscal 1999.
In fiscal 2000, the UltraLyte was approved in Italy, Chile and Brazil. In fiscal
2001 the UltraLyte received approval in Poland, South Africa and France. In
fiscal 2003, the UltraLyte LR was approved in Germany. The UltraLyte continues
to be tested in several other European countries where national approvals are
required. Similar to the domestic market, the UltraLyte is expected to achieve
foreign acceptance based upon previously set performance standards.

Our Micro DigiCam photo laser system is promoted primarily to our international
markets. Management feels that the low cost of this system will continue to open
up new markets, both domestically and internationally, for photographic traffic
enforcement. We further believe that we will be able to access a customer base
previously untouched by the existing higher-priced systems. In addition, we are
aware of a trend occurring in some foreign countries where it may soon be a
requirement to present an image of the violator, together with the results of a
speed measurement device, in order to prosecute a speeding case. In fiscal 2002,
the Micro DigiCam received national approvals in Spain and Switzerland. In
fiscal 2003, the Micro DigiCam was approved in Italy and South Africa.

Professional Measurement Products

Our Professional Measurement products are primarily sold domestically through
our established dealer network, and internationally through our foreign
distributors and dealers. Currently, our domestic sales force includes five
regional field sales representatives who manage and support the dealer network,
and inside sales support personnel. In fiscal 2003, the number of dealers in our
domestic network, which market and support Professional Measurement products,
was approximately 74. Internationally the number of dealers was approximately
73.

The introduction of the Impulse series of survey lasers in 1996 has provided
significant marketing benefits to the Professional Measurement area. First, the
Impulse provides an entry-level, broad use product for the already identified
Professional Measurement market segments, at a reduced size, weight, and price
point. Secondly, these same improvements allow us to access broad general
measurement markets that previously did not consider laser measurement to be a
viable option. These markets include commercial material measurement and
estimation, engineering construction, forestry, and landscape design. Additional
market opportunities for our Professional Measurement product line include the
mapping, mining, environmental, telecommunication, and utility industries.
Domestically, we currently market to such industries through our dealer network
which is directed by regional sales managers.

Presently, our distributors in Hong Kong, Malaysia, Japan, United Kingdom Italy
and Germany account for the highest volume of Professional Measurement products
purchased internationally. We currently market our Professional Measurement
products through foreign distribution channels to similar industries as those
noted above for domestic distribution. As of September 30, 2003, we have
established distributors for our Professional Measurement product line in
approximately 36 foreign countries.

Although our Professional Measurement products have historically not been
required to meet any type of national standards approval, in fiscal 2003 the
Impulse was submitted and approved for general distance measurement in Germany.
This approval was initiated to meet the requirements of a specific international
customer.

Consumer Products

We currently participate in the consumer products market primarily through our
relationship with Bushnell. The Yardage Pro product line is marketed by Bushnell
through sporting retail outlets and mass merchandisers. We receive royalty
payments pursuant to our licensing agreement with Bushnell. We also market the
Yardage Pro products within our own business segments as a low cost option for
low accuracy distance measurement applications.

Industrial Control Products

Pursuant to our contract with Telemotive, laser sensors developed and
manufactured by us were integrated into systems marketed under the Telemotive
brand name. In exchange for minimum purchase commitments, Telemotive had
received exclusive rights to sell the sensors within the material handling
market. In fiscal 2002, our agreement with Telemotive was

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terminated, ending their exclusive rights and allowing us to freely market the
product. Telemotive did, however, continue to place limited orders for the
product in late fiscal 2002 and through fiscal 2003.

As part of our acquisition of Multiwave Sensors in 1999, certain marketing
personnel had contracted with us to build a distribution network for industrial
products. The industrial market is traditionally served through a network of
manufacturers' representatives and dealers, which we plan to utilize more
effectively for future industrial product sales. We currently are researching
potential industrial sensor configurations as we continue ongoing product
development in this area.

International Service Center

During Fiscal 2001, we officially certified Tele-Traffic (UK) Ltd. in Warwick,
England as a designated full service center for all of our traffic safety
products. Tele-Traffic was one of the first authorized dealers for Laser
Technology and has now become one of our top-ranked European dealers. While we
have trained and authorized many dealers and customers worldwide to do most
repairs, this is the first center authorized to perform full service.
Tele-Traffic can service both warranty and non-warranty traffic safety products
for customers in Europe, Middle East and North Africa. Service time and shipping
costs are typically reduced because of their proximity to the market. Also, the
inconvenience of customs clearance is eliminated in many cases due to
cooperative trade agreements among European countries.

Internet Marketing Initiative

We have maintained an Internet presence through our website since 1995, and have
taken full advantage of the expanding e-commerce and marketing capabilities of
the World Wide Web. Our website address is www.lasertech.com. By providing
current and potential customers with 24-hour, seven-days-a-week access to
technical support, product updates, and training tools over the Internet, we
have expanded our role as a value-added provider of measuring solutions and
technology in our identified markets.

Management expects to develop Internet marketing tools that will allow us to
more effectively prospect for new customers and to work with existing customers
on a pro-active basis. Of equal importance, it is anticipated that this
e-channel will provide us with the ability to more efficiently manage certain
aspects of our customer relationships and to better serve customers at a lower
cost. Although management does not expect that the Internet will replace our
existing sales force or distribution networks, we do believe the Internet will
enable us to off-load certain tasks from individuals, allowing marketing
personnel to focus on such key activities as account relationships and the
pursuit of new customers.

During fiscal 2003, we initiated development of a new Internet website. This new
site will allow our customers to more readily locate us and our products on the
World Wide Web, and provide an improved and more comprehensive overview of our
products and distribution outlets. Management expects the new website to go live
in early to mid fiscal 2004.

BACKLOG

As of September 30, 2003 and 2002 we had a backlog in sales of approximately
$897,943 and $717,396, respectively. This backlog is primarily attributed to
sales of our ASIC and Traffic Safety products. Fiscal 2003 back orders are
scheduled for delivery during fiscal 2004.

COMPETITION

Our hand-held Marksman and UltraLyte laser speed detection systems compete
primarily with hand-held radar speed measurement devices. Although most radar
competitors sell their instruments at prices lower than the Marksman and
UltraLyte, we believe that the Marksman and UltraLyte compete primarily because
of their greater effectiveness and versatility compared to radar speed
measurement devices.

Management believes that the the UltraLyte enables us to better penetrate the
radar market due to its lower price point as compared to the Marksman. The
UltraLyte is half the size and weight of the Marksman, has an internal power
source and, as an optional feature, a patented integrated inclinometer enhancing
the UltraLyte's surveying and mapping functions.

The ranging capabilities of our hand-held laser speed detection systems are also
used by law enforcement agencies to gather

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<PAGE>

measurement information during accident reconstruction and investigation. In
1995, we introduced QuickMap, which enhanced the Marksman's use by law
enforcement agencies for quickly collecting and processing information at
accident sites and crime scenes. With the introduction of the UltraLyte 200, we
further enhanced the surveying capabilities of the laser speed detection device
by integrating an electronic inclinometer. When used with the QuickMap product,
the UltraLyte 200 becomes both a speed measurement and mapping instrument.

Our laser speed detection instruments provide additional capabilities distinct
from market competitors. SpeedStat, a statistical compilation software package,
automatically gathers and formats traffic survey data on a portable computer
when used with the Marksman or UltraLyte. This allows traffic engineers and law
enforcement officials to conduct and document traffic speed surveys more
efficiently than with previous methods. The Distance Between Cars option, or
"DBC", allows our laser speed detection systems to measure the distance and time
between two moving vehicles. Additionally, the Marksman and UltraLyte
incorporate features to detect when a laser jamming device is in use, which has
proven valuable to law enforcement agencies in jurisdictions where the use of
such devices is prohibited. The ranging capabilities of the Marksman and
UltraLyte are also used by SWAT teams to measure target distances, and in drug
interdiction to measure tractor trailers for false compartments.

We are aware of six other companies that market commercial laser speed
measurement devices. Kustom Signal, Inc., a Kansas company, markets a device
pursuant to a license from the original developers, Laser Atlanta, Inc. and
LaserCraft, Inc. Laser Atlanta also began to market its own laser speed
measurement device in 1999. Applied Concepts, Inc., a Texas-based company, and
Monitron International, a United Kingdom company, have introduced laser speed
measurement devices. Additionally, Riegl, an Austrian company, and Jenoptik, a
German company, market laser speed measurement devices in Europe.

We believe that our hand-held laser speed detection systems are able to compete
within this market based upon their proven measurement accuracy, positive
vehicle identification, limited court challenges and difficulty in detection by
motorists. We further believe that our ancillary Traffic Safety products address
applications that provide a competitive advantage over other laser speed
measurement devices. In addition, our second generation technology provides a
significant competitive advantage by providing lower cost, better ergonomics and
greater durability.

Management is aware of competitive photo laser systems developed by Kustom
Signals, Inc., by Oshung, a Korean company, by Sodi, an Italian company, and by
Poltech, an Australian company. These systems are similar in functionality to
the original Laser DigiCam system. Our DigiCam systems also compete in similar
markets as conventional photo-radar systems. Because the DigiCam system has a
much narrower beam than photo-radar systems on the market, we believe it
provides better target identification and increased accuracy. The release of the
Micro DigiCam system has provided us with an even greater competitive advantage
due to a significantly lower price point. In Brazil there are several very small
companies that market a Micro DigiCam type product. They combine several types
of competitive lasers that are used in conjunction with various data collectors.
Because of privacy laws within the U.S., management believes that primary sales
opportunities for the Micro DigiCam will continue to be in international
markets, however, we feel there is growing potential in the domestic market as
we are seeing more interest from U.S. customers.

We are aware of only a few competing products to the QuickMap 3D accident
investigation system. A speed laser mapping system developed and marketed by
Laser Atlanta was released in fiscal 2002, but currently we are aware of only
limited sales of this product to date. There are also several field mapping
systems developed for general purpose applications which include data interfaces
for several existing laser speed measurement instruments. In addition, QuickMap
3D competes with traditional accident mapping methods which include measuring
wheels and surveying total stations.

Historically, our Professional Measurement products compete with traditional
measurement devices. In the domestic market there are two known competitors with
laser measurement devices specifically designed for Professional Measurement
applications. One by Laser Atlanta, and a second device recently released by
LaserCraft. Management also believes that we may compete in international
markets with instruments developed and marketed by Riegl, Jenoptik, Leica
Geosystems AG, from Switzerland, and MDL, a U.K. company. Due to the recent
introduction of reflectorless total stations, several new companies are in
direct competition with our Impulse product line. Manufacturers of these
products include Pentax, Nikon, Sokkia, Topcon, Trimble and Leica Geosystems AG.
We compete within this market based upon the quality of information generated by
our Professional Measurement products and the time saving features they provide
as compared to traditional instruments. Also, management believes that the
Impulse series competes within this market because of their reduced size, weight
and price point as compared to other systems.

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<PAGE>

Our MapStar Compass Module II competes with a similar product marketed by MDL,
but we believe the MapStar provides greater accuracy and functionality as
compared to the competing unit. In addition, several companies produce laser
distance measurement instruments which incorporate an integrated electronic
compass, similar to our previous Criterion laser. These include Laser Atlanta,
LaserCraft and Leica Geosystems AG. The only known competition for the Mapstar
Angle Encoder Module is similar products marketed by Laser Atlanta and MDL.

The industrial laser distance sensors marketed through Telemotive were developed
to replace existing radio frequency based distance measuring devices. Pursuant
to the terms of the former contract, Telemotive had exclusive rights to the
material handling market for any laser sensors developed under the contract by
us, in return for minimum guaranteed purchases of the sensors. The Telemotive
contract was terminated during fiscal 2002, however, they did continue to place
limited orders for the product in late fiscal 2002 and through fiscal 2003.

We believe that our industrial sensors will continue to compete with traditional
measuring devices. This includes radar and RF based systems and, in certain
international markets, primarily Europe, with laser distance measurement
instruments. Management intends to compete in these markets based on the unique
measurement capabilities of our industrial laser sensors and because of their
reduced size, weight and lower price point.

Our consumer products marketed by Bushnell compete primarily with products sold
by Nikon Inc., a Japan-based company, some of which are developed by Asia
Optical Co., Inc., a Taiwan-based company. We are also aware of consumer
products sold by Leica Camera AG, NewCon International LTD., a Canadian company,
and Leupold & Stevens, Inc. and OptiLogic of the United States.

PATENTS

Certain processes by which we are able to produce our products are largely
proprietary. We believe that patent protection of our technology and products
that result from internal research and development efforts is important to the
potential commercialization of our technology. We continually attempt to protect
our proprietary technology by obtaining patent application protection, relying
on trade secret laws and executing non-disclosure and confidentiality agreements
with our employees and persons that have access to our proprietary technology.

Costs associated with patents are capitalized and amortized over their estimated
useful life of 15 to 17 years. Patent costs capitalized totaled approximately
$67,400 and $66,500 for the fiscal years ended September 30, 2003 and 2002,
respectively.

We currently have 37 United States patents granted which relate to our various
product lines and protect our proprietary technology. Two of these patents
relate to rights acquired as part of the Multiwave transaction.

One patent, expiring in March 2011, relates to the Criterion series of survey
lasers providing coverage of forestry applications that include height and
diameter measurement of trees. We have also been issued two patents, expiring in
October 2011, on our original laser speed detection instrument.

In fiscal 1996, a fifth patent was issued, expiring in June 2013, relating to
our Professional Measurement product line, specifically proprietary software
that enables an interface between our laser products and GPS for field data
collection in the G.I.S. mapping process. Additionally, we were granted a patent
on our technology providing the capability of transmitting data using pulses of
light generated from our laser range-finders. This patent expires in July 2013.
A seventh patent was issued, expiring in November 2013, related to the low cost
design aspects of the consumer product developed for Bushnell.

During fiscal 1997, two patents were issued on our proprietary technology
related to the consumer range-finding instrumentation developed for Bushnell.
These patents expire in March 2014 and July 2014. Additionally, we were issued a
patent, expiring in April 2014, related to our Traffic Safety product line
associated with the method for measuring distance and time between traveling
vehicles. We were also granted a patent, expiring in December 2014, related to
our QuickMap accident investigation system.

During fiscal 1998, one patent was issued, expiring in December 2014, which was
a continuation on an existing patent related to our consumer range-finder. Three
patents were issued related to the design and proprietary technology developed
for the

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<PAGE>

Impulse. These patents expire in February 2014, July 2014 and August 2014. Two
patents were issued related to the UltraLyte. One patent, which expires in
February 2014, relates to the laser jammer detection feature. The second patent
notes the incorporation of tilt sensing capabilities within a laser speed
measuring device and subsequently conducting three-dimensional accident
reconstruction. This patent will expire in September 2014. Another patent was
issued related to increased range performance in fog for marine applications and
will expire in July 2014.

During fiscal 1999, a patent was issued, expiring in January 2015, which is
related to circuit design within our consumer range-finder products. Another
patent was issued, expiring August 2016, related to our industrial laser
range-finder currently used for in-plant collision avoidance applications. One
patent was issued, expiring August 2016, related to the design of the Impulse
product. Two patents were issued, expiring in August 2016, related to the design
and operation of the MapStar modular measurement system. We were also granted a
patent, expiring in March 2016, related to the Laser DigiCam system used for
speed detection and image capture of moving vehicles.

During fiscal 2000, one patent was issued, expiring in August of 2017, relating
to our low-cost consumer product design technology. Another patent, expiring in
August 2017, relates to a lower cost technique for producing an industrial
sensor. We were issued a third patent, expiring in July 2017, related to an
industrial sensor design. A fourth patent issued, expiring in January 2017,
relates to performance improvements for a laser sensor shooting through fog. A
patent was also issued, expiring in March 2018, relating to a laser consumer
product. Another patent issued, expiring in July 2018, relates to a method for
remotely measuring target reflectivity. A seventh patent, expiring in April
2018, relates to technology acquired in the Multiwave Sensor transaction,
referencing a remote sensor head.

During fiscal 2001, a patent was issued, expiring in 2018, relating to a
level-indicating mounting system for a laser instrument. Another patent,
expiring in 2015, relates to our low-cost consumer product design technology. We
were issued a third patent, expiring in 2018, related to our MapStar Digital
Compass Module. A fourth patent issued, expiring in 2018, relates to a method
for remotely measuring target reflectivity.

During fiscal 2002, a patent was issued relating to a remote sensor head design
and will expire in April 2020. Another patent, expiring in 2017, relates to an
industrial positioning sensor. A third patent, expiring in 2017, is a
continuation of one of our patents relating to the low-cost consumer design
technology.

To date, three additional United States patent applications have been filed. Two
of these relate to our Traffic Safety Micro DigiCam product, and the other to a
forestry application of our Professional Measurement technology. During fiscal
2003 one patent, which related to a mechanical interface between one of the
Criterion hand-held survey lasers and an electronic theodolite, was allowed to
lapse as it was no longer used in practice and provided limited future benefit
to the Company.

We extend many of our domestic patent filings into foreign applications.
Currently we have been issued eleven foreign patents in various countries.
During fiscal 2003, one foreign patent, expiring in 2019, was issued. This
patent relates to our remote sensor head design. We also have fifteen patents
pending in foreign countries related to U.S. patents issued or applications
filed. In fiscal 2003, eight pending foreign patent filings were discontinued in
consideration of limited strategic value versus the continuing cost of
prosecution and the uncertainty of final issuance.

PATENT LICENSING AGREEMENTS

In 1995, we completed, together with Bushnell, development of the Yardage Pro
400 consumer laser range finder. This product, formerly known as the LyteSpeed
400, initiated a whole line of consumer products which are manufactured and
marketed by Bushnell to certain sporting markets, primarily the hunting and
golfing industries. Pursuant to our agreement with Bushnell, we receive ongoing
royalties on cumulative net sales of these products, while retaining all
ownership of patents and trade secrets of the technology underlying their
development.

In September 1996, we agreed to license to Kustom Signals and LaserCraft, a
patent relating to our hand-held laser speed detection system. Kustom markets a
laser speed measurement device along with radar speed measurement devices and
other traffic safety equipment. In fiscal 1996, we gave notice to Kustom that it
was potentially infringing our patent by making and selling laser-based speed
measurement devices manufactured for them by LaserCraft. Although Kustom and
LaserCraft did not acknowledge infringement of our patent, they entered into a
license agreement with us. The agreement granted Kustom and LaserCraft the
nonexclusive rights to manufacture and sell laser-based speed measurement
devices incorporating features

                                       15
<PAGE>

covered by our patent. In consideration for the license agreement, we received a
prepayment of licensing fees for a predetermined number of licensed devices sold
by Kustom and receive license fees for each licensed device sold by Kustom.
Additionally, we will receive running license fees for each licensed device sold
by LaserCraft, except for those devices that are manufactured for Kustom for
resale.

In November 1997, together with Bushnell, we entered into a licensing agreement
with Tasco Sales, Inc. Under the agreement, we and Bushnell agreed to license
certain patents related to the Yardage Pro consumer laser range-finder. Tasco
marketed a laser range-finder, developed by Asia Optical, a Taiwanese company,
that competes with the Yardage Pro series of range-finders. We and Bushnell have
agreed to provide Tasco with the nonexclusive rights to market a laser
range-finder incorporating certain features covered by claims of patents held by
us and Bushnell. Pursuant to this agreement, we and Bushnell receive licensing
fees based on a percentage of Tasco's gross sales. We believe Tasco has
discontinued sales of the licensed product.

In June 1997, we licensed to Applied Concepts, Inc. a patent relating to our
hand-held laser speed detection system. Under this agreement, we granted Applied
Concepts the nonexclusive right to manufacture and sell laser-based speed
measurement devices incorporating features covered by the claims of the patent.
In consideration for the license agreement, we receive licensing fees as a
percentage of net sales on each licensed device sold by Applied Concepts.
Applied Concepts has never acknowledged infringement of the patent in question
and is currently contesting payment of said fees.

In January 1998, we entered into a license agreement with Bushnell and Blount,
Inc. whereby we and Bushnell agreed to license certain patents related to the
Yardage Pro product line. This enables Blount to market a competitive product
into the consumer sports market. This product is manufactured by Asia Optical.
Together, we and Bushnell receive running royalties on the net sales of Blount
products. We believe Blount has discontinued sales of the licensed product.

In September 1998, we licensed to MPH Industries, Inc. a patent relating to our
hand-held laser speed detection system. MPH has added a laser speed measurement
device to their current line of radar instruments. Pursuant to the agreement, we
granted MPH the nonexclusive rights to manufacture and sell laser-based speed
measurement devices incorporating features covered by the claims of the patent.
In consideration for the license agreement, we receive license fees as a
percentage of sales on each licensed device sold by MPH.

In 1999, we entered into a license agreement with Laser Atlanta Optics, Inc.
involving a patent relating to our hand-held laser speed detection system. Under
this agreement, we granted Laser Atlanta the nonexclusive right to manufacture
and sell laser-based speed measurement devices incorporating features covered by
the claims of the patent. In consideration for the license agreement, we receive
licensing fees as a percentage of net sales on each licensed device sold by
Laser Atlanta.

In July 2003, we reached settlement agreements with Asia Optical Co., Inc. and
Nikon, Inc., which resolved our patent infringement lawsuit against Asia Optical
and Nikon. As part of the settlement, we entered into a license agreement with
Asia Optical for the domestic sale of products covered by several of our patents
related to low cost, consumer laser rangefinders. The specific terms of the
license agreement are confidential.

GOVERNMENT REGULATION

Our laser products emit optical energy in a narrow spectrum and are regulated by
the FDA and subject to approval by certain foreign governments. FDA regulations
impose eye safety requirements on our products and governments of most foreign
countries have similar regulations. All of our standard production products
comply with FDA Class 1 eye safety regulations. In addition, some of our Traffic
Safety products have been given similar international ratings by laboratories in
Austria and Germany.

Due to FDA involvement in international standardization efforts for laser
products with the International Electrotechnical Commission, we are aware of
certain changes under consideration by the FDA that may affect current FDA
regulated emission limits of Class 1 pulsed lasers. Although there is no
assurance of this, management does not believe that such proposed changes will
impact our sales or results of operations.

In 1995, the National Highway Traffic Safety Administration, working in
conjunction with the National Institute of Standards

                                       16
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and Technology, completed a national standard for performance specifications for
laser speed measurement devices. They also established a laboratory testing
facility at the University of California-Davis. In April 1996, the Marksman was
certified by the International Association of Chiefs of Police (IACP) to meet
the federal standard for laser speed measurement devices and, was subsequently
placed on the IACP Approved Products List (APL). During fiscal 1998, the
UltraLyte 100 and UltraLyte 100 LR completed compliance testing and were added
to the IACP APL. IACP approval of the UltraLyte 200 models was completed during
fiscal 1999, and the UltraLyte LRB and UltraLyte Compact were tested and
approved in fiscal 2003.

Historically, there were four states within the U.S. that required the passage
of specific state legislation to enable the use of new technological
developments in speed enforcement. As of September 30, 2002, legislation has
been passed approving the use of laser-based speed measurement devices as an
acceptable means of speed enforcement in Florida, North Carolina and Virginia.
Management is currently unable to ascertain when legislation will be passed in
Pennsylvania and there is no assurance that such legislation will be passed.

Management recognizes that many foreign countries have centralized law
enforcement and purchasing regulations requiring stringent performance and
accuracy standards. Management primarily acknowledges that Western Europe
purchasing authorities adhere to such performance and accuracy standards. Our
laser speed detection products are subject to approval by certain foreign
governments where regulatory controls exist for speed enforcement equipment.

Some international government agencies, primarily in Europe, are beginning to
require ISO 9000 certification of their equipment suppliers. This certification
reflects a manufacturer's compliance with quality standards recognized by the
Geneva-based International Organization for Standardization, a worldwide
federation of approximately 130 countries. ISO certification also provides a
framework for quality management and quality assurance recognized by most
developed countries. In fiscal 2000, we received our initial ISO 9001
certification of our manufacturing and operating facilities, and in fiscal 2002,
we were re-certified for ISO 9001 compliance. In fiscal 2003 we were certified
for the revised ISO 9001:2000 standard for years 2003 to 2006. Currently, only
one of our international customers, Italy, requires ISO 9000 certification
specifically for manufacturers of Traffic Safety products. We believe the trend
in the future will be that more government agencies will begin to require ISO
9000 certification of suppliers.

Over the last few years, many countries in Europe have begun to require
"Electromagnetic Compliance" testing of any electronic product imports. The
guidelines for this testing verify compliance in the areas of interfering signal
emission and immunity, as well as protection against electrostatic discharge
damage. A product that has successfully passed this testing receives a special
marking known as a "CE" mark. This marking is universally recognized and
identifiable by participating countries in the European Union. To date, the
Marksman, UltraLyte and Impulse product families, as well as the MapStar Compass
and Angle Encoder Modules, have all successfully passed compliance testing and
are marked with the "CE" label as required for shipments to Europe.

Our laser speed measurement devices have been subject to court acceptance as a
viable means of speed measurement in jurisdictions where they are used. To date,
the Marksman has been accepted by courts in over forty states and in over
fifteen foreign countries. The UltraLyte has also been accepted in numerous
courts, as customers are transitioning to the newer product over time.

EMPLOYEES

Management considers our employees to be a valuable asset to our continuing
success, and feels the relations between management and employees are good. As
of September 30, 2003, we employed seventy-eight persons, consisting of eleven
management personnel, twenty-three employees engaged in the sales and marketing
activities, thirteen engineering personnel, twenty-two production related
personnel, three employees in customer service and six administrative and office
personnel. In addition to our full-time employees, we use the services of three
contractual engineers and one contractual marketing representative. Due to an
anticipated economic slowdown in fiscal 2001, the Board of Directors imposed a
hiring and wage freeze in the second fiscal quarter. Although limited exceptions
have been made, this directive is still in place.

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RECENT EVENTS

On July 31, 2003 we entered into a definitive merger agreement with LTI
Acquisition Corp., a private company whose shareholders include an LSR officer,
certain directors and shareholders. Under the terms of the merger agreement, LTI
Acquisition would acquire 100% of LSR common stock for $2.06 per share. The
transaction is subject to approval by the holders of two-thirds of LSR's
outstanding shares of common stock, excluding those shares owned by LTI
Acquisition and its affiliates, and other customary closing conditions. It is
anticipated that the transaction would close in the fourth calendar quarter of
2003.

We initially received a proposal from a shareholder group headed by David
Williams, former President and CEO of Laser Technology, Inc., to acquire the
assets of LSR in September 2002. The shareholder group subsequently formed LTI
Acquisition Corp., which made the proposal described above. In addition to Mr.
Williams, LTI Acquisition's shareholders include Pamela Sevy, LSR's former CFO,
current Board members Jeremy G. Dunne, H. Deworth Williams, and Edward F. Cowle,
and Kama-Tech Corporation and Kama-Tech (HK) Ltd., manufacturers of sports
optics equipment.

In response to the September 2002 proposal, the Special Committee of
non-participating directors was formed to examine the merits and feasibility of
any acquisition proposals or other alternatives that might arise. The Committee
retained independent legal counsel and Andersen, Weinroth & Co., L.P., a New
York based merchant banker, to act as its financial advisor.

Subsequently, the Special Committee received indications of interest and
proposals from several alternative sources. The Committee reviewed all serious
proposals and, after extensive negotiations with interested parties and a
lengthy due diligence process, the Committee, in conjunction with its investment
advisor, Andersen, Weinroth & Co., L.P., recommended to the LSR Board that it
accept the enhanced proposal from LTI Acquisition.

We filed with the SEC and mailed to our shareholders a proxy statement in
connection with the acquisition, which contained important information about the
merger transaction and related matters. We are holding a special meeting of
shareholders on December 30, 2003 to secure shareholder approval of the merger
transaction. Upon successful completion of the Merger, our shareholders,
excluding those persons affiliated with LTI Acquisition, will receive $2.06 per
share merger consideration for their Laser Technology shares and we will become
a private company.

ITEM 2. DESCRIPTION OF PROPERTIES

As of September 30, 2003, our Englewood, Colorado facilities provided
approximately 22,000 square feet, with a lease agreement expiring in February
2008. In total, our facilities comprise of approximately 11,000 square feet of
production space, 5,500 square feet allocated to research and development
activities and 5,500 square feet is allocated to marketing and administrative.

ITEM 3. LEGAL PROCEEDINGS

On February 8, 2000, we filed a complaint against Nikon, Inc. ("Nikon") in U.S.
District Court for the District of Colorado (Civ. No. 00-B-272) for selling and
using a product infringing one of our patents. On July 26, 2000, we amended the
complaint to include allegations that Nikon's conduct infringed a second patent
obtained by us. On January 23, 2001, we amended the complaint to add
manufacturer Asia Optical Co., Inc. ("Asia Optical") as a defendant. On May 24,
2001, we amended the complaint to include allegations that Nikon and Asia
Optical infringed a third patent obtained by us.

On April 17, 2003, after an eight-day trial, a jury found Asia Optical and Nikon
liable for infringing all three patents. Additionally, the jury found that Asia
Optical's infringement was willful as to all three patents, and that Nikon's
infringement was willful as to one of the patents. The jury awarded us $1.205
million in damages for past infringement. The Court entered a permanent
injunction against Asia Optical and Nikon regarding continued sales of the
product. In post-trial motions, we sought enhanced damages, prejudgment interest
and attorneys fees. Asia Optical and Nikon sought a new trial.

Prior to judicial resolution of the post-trial motions, on July 3, 2003, we
announced that we reached settlement agreements with Asia Optical Co., Inc. and
Nikon, Inc., which resolved Laser Technology's patent infringement lawsuit
against Asia Optical and Nikon. The settlement agreement with Asia Optical
includes a one-time cash payment of $2.4 million, which was received July 3,
2003 and will be subject to corporate income taxes, and an ongoing royalty
license agreement, the specific terms of which are confidential. Laser
Technology entered into a mutual release with Nikon based upon the settlement
with Asia Optical.

                                       18
<PAGE>

Management estimates that the costs and expenses associated with the litigation
through this fiscal 2003 were approximately $783,000. All other litigation costs
have been expensed in prior years.

In March 2002, Bushnell Performance Optics of Overland Park, Kansas filed a
lawsuit against us in the District Court of Johnson County, Kansas (Case No. 02
CV 1498). The lawsuit alleges breach of contract and unauthorized surcharges on
a certain technical component. Bushnell is asking for $350,000 in damages. We
have filed with the Court an answer containing several counterclaims whereby we
allege, among other claims, a breach of contract by Bushnell, fraud and
defamation, and also ask for an injunction against Bushnell.

On August 11, 2003, Bushnell and the Company filed a joint motion to stay
proceedings in this suit in order to give the Company time to complete the
merger announced on July 31, 2003.

Notwithstanding the lawsuit, we continue to conduct business with Bushnell under
the terms of our current contract.

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

No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during our fourth quarter ended September
30, 2003.

                                       19
<PAGE>

                                    PART II.

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

We currently have an authorized capitalization of 25,000,000 shares of common
stock, par value $0.01 per share, and 2,000,000 shares of preferred stock, par
value $0.01 per share. The preferred shares may be issued in various series and
shall have preference as to dividends and to liquidation of our company. Our
Board of Directors may establish the specific rights, preferences, voting
privileges and restrictions of such preferred stock, or any series thereof. To
date, no shares of preferred stock have been issued.

Our common stock is listed on the American Stock Exchange under the symbol LSR.
As of September 30, 2003, 5,486,217 common shares were outstanding and we had
approximately 885 shareholders of record. The number of shareholders does not
take into account those shareholders whose certificates are held by nominees.
The following table sets forth the range of high and low sale prices of our
common stock for each calendar annual period as reported on the American Stock
Exchange.

                                                   High            Low
                                                  ------         ------
2003
  First Quarter.........................          $ 1.30         $ 1.01
  Second Quarter........................            1.40           1.25
  Third Quarter.........................            2.01           1.33
  Fourth Quarter*.......................            2.05           1.99

2002
  First Quarter.........................          $ 1.20         $  .85
  Second Quarter........................             .95            .62
  Third Quarter.........................             .92            .41
  Fourth Quarter........................            1.08            .80

*       The 2003 fourth quarter reflects the high and low sale prices through
        December 20, 2003.

Following the completion of the proposed merger whereby we will be acquired by
LTI Acquisition, we will be a privately owned entity and our shares will no
longer be traded in the public market. Laser Technology stock will be delisted
from the American Stock Exchange and the sole shareholder of our shares will be
LTI Acquisition. In addition, the registration of our common stock and our
reporting obligations under the Exchange Act, will be terminated upon
application to the SEC after the merger.

Dividends

We have never declared or paid any cash dividends on our common stock. We
presently intend to retain earnings to finance future operations, expansion and
capital investments. We do not anticipate paying any cash dividends on our
common stock in the foreseeable future.

                                       20
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Results of Operations

The following table sets forth, for the two most recent fiscal years, the
percentage relationship to net sales of principal items in our statement of
operations. It should be noted that percentages discussed throughout this
analysis are stated on an approximate basis.

                                                     Years Ended September 30,
                                                     -------------------------
                                                      2003              2002
                                                     ------            ------

Net sales..........................................     100%              100%
Cost of goods sold.................................      48                50
Gross profit.......................................      52                50
Royalty and licensing income.......................       7                 9
Total operating income.............................      59                59
Operating expenses.................................      70                64
Income (loss) from operations......................     (11)               (5)
Interest and other income, net.....................       0                 0
Settlement Income..................................      22                 0
Income tax (benefit) on income.....................       4                (2)
                                                     ------            ------
Net income (loss)..................................       7%               (3)%
                                                     ======            ======

The following table provides a breakdown of the net sales and respective
percentages of net sales of our various product lines.

                                                    Years Ended September 30,
                                                   ---------------------------
                                                       2003           2002
                                                   ------------   ------------
Traffic Safety.................................    $  7,391,252   $  7,147,874
Percentage of revenues.........................              68%            68%
Professional Measurement.......................       2,277,063      2,111,526
Percentage of revenues.........................              21%            20%
Industrial Controls............................         111,690         77,500
Percentage of revenues.........................               1%             1%
Consumer/Other.................................       1,137,563      1,240,317
Percentage of revenues.........................              10%            11%
Total Revenues.................................      10,917,568     10,577,217

Fiscal Year Ended September 30, 2003 Compared to Fiscal Year Ended September 30,
2002

Net sales for the fiscal year ended September 30, 2003 were $10,917,568 compared
to $10,577,217 realized during the fiscal year ended September 30, 2002,
representing a 3% increase. In 2003, increases in our domestic Traffic Safety
and international Professional Measurement sales had the greatest impact on
total revenues. These increases offset a decrease in Consumer and other product
sales.

Sales of our Traffic Safety products increased 3% to $7,391,252 in 2003 from
$7,147,874 in 2002. North American Traffic Safety product sales increased 8.5%
to $4,894,756 in 2003 from $4,512,664 in 2002. Domestic government agencies
shifted spending priorities more toward community safety related activities
which benefited sales. This increase was partially offset by a 5% decrease in
international Traffic Safety sales to $2,496,496 in 2003 from $2,635,210 in 2002
reflecting delays in certain

                                       21
<PAGE>

government spending internationally.

Overall sales of our Professional Measurement products increased 8% to
$2,277,063 in 2003 from $2,111,526 in 2002. North American Professional
Measurement product sales decreased 12% to $1,243,246 in 2003 from $1,412,681 in
2002. Interruptions caused by the reorganization of the sales force was the
primary reason for this decline. International sales of our Professional
Measurement products increased 48% to $1,033,817 in 2003 from $698,845 in 2002.
As the international sales force has matured, it has more effectively
communicated the value of our products which has strengthened sales.

International sales in 2003 were $3,548,014 compared to $3,619,040 realized in
2002 representing a 2% decline. Sales internationally comprised approximately
32% of total revenues in 2003 compared to 34% of our total revenues in 2002.

Gross profit as a percentage of sales grew to 52% for 2003 compared to 50% in
2002. Higher sales volume positively impacted our gross margins.

Royalty income earned is derived primarily from our agreement with Bushnell for
sales of the Yardage Pro series of consumer laser range finders. Royalty income
decreased 17% to $830,637 in 2003 from $998,392 in 2002 resulting primarily from
lower per unit pricing and increased competition.

Total operating expenses increased approximately 13% to $7,673,091 in 2003 from
$6,820,174 in 2002. Higher legal fees incurred in conjunction with the Asia
Optical/Nikon patent suit, additional expenses associated with the formation of
the Special Committee of the Board of Directors, their legal fees, and outside
financial appraisal advice increased operating expenses. Litigation expenses
associated with the patent suit were approximately $783,000 and expenses
associated with the Special Committee were approximately $570,000 for the fiscal
year. As a percentage of net sales, total operating expenses increased to 70% in
2003 from 64% in 2002.

A loss from operations of $1,191,130 was offset by $2,400,000 of income derived
from our litigation settlement and other income of $42,806 in 2003 resulted in a
net income before taxes of $1,251,676 in 2003 compared to a loss before taxes of
$469,022 in 2002. After taxes on income, we realized net income of $777,605 or
$.14 basic earnings per share in 2003 compared to a net loss of $285,377 or $.05
basic loss per share in 2002.

Fiscal Year Ended September 30, 2002 Compared to Fiscal Year Ended September 30,
2001

Net sales for the fiscal year ended September 30, 2002 were $10,577,217 compared
to $11,472,459 realized during the fiscal year ended September 30, 2001,
representing an 8% decrease. In 2002, significant decreases in our Professional
Measurement sales had the greatest impact on total revenues. These decreases
offset increases in Traffic Safety sales and Consumer product sales.

Sales of our Traffic Safety products increased 3% to $7,147,874 in 2002 from
$6,957,280 in 2001. North American Traffic Safety product sales increased 8% to
$4,512,664 in 2002 from $4,162,020 in 2001. Improvements reflected increased
production by our new salespeople in two regions that were previously
underdeveloped. International Traffic Safety product sales decreased 6% to
$2,635,210 in 2002 from $2,795,259 in 2001. Redesign of the upgraded
MicroDigicam required new approvals in various government agencies causing
delays that negatively impacted sales.

Overall sales of our Professional Measurement products decreased 36% to
$2,111,526 in 2002 from $3,294,255 in 2001. North American Professional
Measurement product sales decreased 40% to $1,412,681 in 2002 from $2,365,198 in
2001, primarily due to a decline in demand from the telecom industry for GIS
equipment and poor sales and marketing performance in some of our regions.
International sales of our Professional Measurement products decreased 25% to
$698,845 in 2002 from $929,057 in 2001 reflecting competition from conventional
survey equipment and low cost consumer range finders.

International sales in 2002 were $3,619,040 compared to $3,760,799 realized in
2001 representing a 4% decline. Sales internationally comprised approximately
34% of total revenues in 2002 compared to 33% of our total revenues in 2001.

Gross profit as a percentage of sales was 50% for 2002 compared to 53% in 2001.
The decrease in gross profit margins in 2002 was primarily due to lower sales
volume and a write down of unusable inventory.

                                       22
<PAGE>

Royalty income earned in 2002 is derived primarily from our agreement with
Bushnell for sales of the Yardage Pro series of consumer laser range finders.
Royalty income decreased approximately 3% to $998,392 in 2002 from $1,033,129 in
2001. The decrease during 2002 was due primarily to higher sales of the lower
cost Yardage Pro Sport and a decrease of reported cross over sales into the
professional market by Bushnell.

Total operating expenses increased approximately 1% to $6,820,174 in 2002 from
$6,769,882 in 2001. The 2002 increase is attributed to increased legal and
research and development expenses. The increase in legal expenses was primarily
associated with prosecuting the patent infringement claims. Increased research
and development costs were due to a decrease in reimbursable special projects
with an increased focus on mainstream product development for next generation
projects. These increases were partially offset by a decrease in sales,
marketing and administrative expenses.

Increased operating expenses combined with the decrease in overall sales and
royalties in 2002 resulted in a net loss for the year. A loss before taxes of
$469,022 in 2002 compared to an income before taxes of $522,727 in 2001. After
taxes on income, we realized net loss of $285,377 or $.05 basic loss per share
in 2002 compared to a net income of $409,113 or $.07 basic earnings per share in
2001.

Foreign Sales

Foreign sales of our products were 32% and 34% for the fiscal years ended
September 30, 2003 and 2002, respectively. Management believes that our foreign
sales will continue to comprise a significant portion of revenues. Any
fluctuation in the U.S. dollar relative to any foreign currency would have an
impact on our competition in those markets.

Research and Development Costs

Research and development costs related to the continual development of our
products are expensed as incurred and included in operating expenses. Research
and development costs totaled approximately $1,334,178 and $1,353,104 for the
years ended September 30, 2003 and 2002, respectively. Management anticipates a
continued commitment to research and development as the engineering department
is positioned to support and facilitate future growth.

Cost associated with our patents are capitalized and amortized over their
estimated useful life of 15 to 17 years. Patent costs capitalized totaled
approximately $67,000 for each of the fiscal years ended September 30, 2003 and
2002.

Income Taxes

The Company follows the liability method of accounting for income taxes. Under
this method, deferred tax liabilities and assets are recognized for the expected
future tax consequences of temporary differences between the carrying amount and
the tax basis of assets and liabilities at each year-end based on enacted tax
laws and statutory tax rates applicable to the periods in which the differences
are expected to affect taxable income. A valuation allowance is established when
necessary to reduce deferred tax assets to the amount expected to be realized.
As a result of timing differences associated with the carrying value of
depreciable assets the Company has recorded a deferred tax asset of $203,500.

Our policy is to provide deferred income taxes related to depreciation and other
items that result in differences between the financial reporting and tax basis
of assets and liabilities. As a result, at September 30, 2003, we recorded a
$203,500 deferred tax asset.

Liquidity and Capital Resources

Our net working capital at September 30, 2003 was $9,167,879 as compared to
working capital of $8,196,231 at September 30, 2002, an increase of $971,648.
Current assets exceeded current liabilities by a ratio of 7.6 to 1. Furthermore,
the acid test ratio (ratio of current assets minus inventories and prepaid
expenses to liabilities) exceeded 5 to 1. Thus, the present working capital is
expected to adequately meet our needs for at least the next twelve months.
Working capital was positively impacted in 2003 by our litigation settlement.

Patent costs and purchases of fixed assets were the only items that funding
totaling $182,931. Adjustments to reconcile net

                                       23
<PAGE>

income to cash provided by operating activities were bad debt expense of
$27,070, depreciation and amortization of $368,616, a reduction in deferred
income tax of $33,403 with a loss on impaired and disposed assets of $8,358. The
largest operating activities that provided cash were a net income of $777,605, a
reduction in trade accounts and royalty receivable of $492,255 and an increase
in accounts payable and accrued expenses of $464,428. The other items that
increased cash were a reduction in inventory of $127,844 and a reduction of
other assets of $4,139.

For the twelve months ended September 30, 2003, a net cash decrease of $182,931
from investing activities was due to the purchase of property and equipment of
$115,570 and patent costs of $67,361. The increase from operating activities of
$2,303,718 reduced by cash used from investing activities produced a net
increase in cash and equivalents of $2,120,787. When added to cash on hand at
the beginning of the fiscal year, total cash and equivalents at September 30,
2003 stood at $5,733,424. Thus, cash and equivalents alone exceeded total
liabilities by $4,348,924 at the end of the period.

Our net working capital at September 30, 2002 was $8,196,231 as compared to
working capital of $8,201,411 at September 30, 2001, a decrease of $5,180.
Current assets exceeded current liabilities by a ratio of 10 to 1. Furthermore,
the acid test ratio was 6 to 1.

An increase in deferred income tax of $236,903 and a net loss of $285,377 were
the largest items that required funding. Patent costs and purchases of fixed
assets required an additional $222,368 of cash. Adjustments to reconcile net
income to cash provided by operating activities were bad debt expense of
$43,195, depreciation and amortization of $454,109, a write down of Patents of
$14,945 with a loss on impaired, contributed and disposed assets of $33,511. The
operating activities that provided cash were a reduction of inventory of
$1,646,560, a reduction of other assets of $85,426 and a reduction in accounts
receivable of $484,389. The other material item that decreased cash was a net
decrease of accounts payable, accrued expenses and notes payable of $14,903.

For the twelve months ended September 30, 2002, a net cash decrease of $222,368
from investing activities was due to the purchase of property and equipment of
$155,863 and patent costs of $66,505. After repayments of $14,611 on short term
debt and capital leases, the increase from operating activities of $2,208,030
produced a net increase in cash and equivalents of $1,971,051. When added to
cash on hand at the beginning of the fiscal year, total cash and equivalents at
September 30, 2002 stood at $3,612,637. Thus, cash and equivalents alone
exceeded total liabilities by $2,692,565 at the end of the period.

Other

In August 2002, we terminated our lease on 23,000 square feet adjacent to our
facilities leaving us with approximately 22,000 leased square footage under a
new lease agreement expiring in February 2008. We believe that our current
facilities are adequate to meet our needs throughout the foreseeable future.

In order to reduce the impact of currency fluctuations, all of our foreign sales
are made in U.S. currency. We generally enforce the use of letters of credit and
wire transfers in most of our credit arrangements with most foreign distributors
to reduce the risk of uncollected accounts receivable. In fiscal 2003 we
increased our accrual for doubtful accounts to $34,836 to cover the risk of
uncollectable accounts receivable.

Effect of Inflation

We believe that we will experience increased costs due to the effect of
inflation on the cost of labor, material and supplies, and equipment
acquisitions. However, such inflationary effects are not expected to have a
material impact on our revenues, gross profit or results of operations for at
least the next twelve months.

New Accounting Pronouncements

On August 16, 2001, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards (SFAS) No. 143, "Accounting for
Asset Retirement Obligations," which is effective for fiscal years beginning
after June 15, 2002. It requires that obligations associated with the retirement
of a tangible long-lived asset be recorded as a liability when those obligations
are incurred, with the amount of the liability initially measured at fair value.
Upon initially recognizing an accrued retirement obligation, an entity must
capitalize the cost by recognizing an increase in the carrying amount of the
related

                                       24
<PAGE>

long-lived asset. Over time, the liability is accreted to its present value each
period, and the capitalized cost is depreciated over the useful life of the
related asset. Upon settlement of the liability, an entity either settles the
obligation for its recorded amount or incurs a gain or loss upon settlement.
Although we have not completed the process of determining the effect of this
accounting pronouncement, we believe the adoption of SFAS 143 will not have a
significant effect on our consolidated financial statements.

In October 2001, the FASB issued SFAS 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. Although SFAS 144
supersedes SFAS 121, it retains many of the fundamental provisions of SFAS 121.
SFAS 144 also supersedes the accounting and reporting provisions of Accounting
Principles Board Opinion No. 30, Reporting-the Results of Operations-Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions, for the disposal of a
segment of a business. However, it retains the requirement in APB 30 to report
separately discontinued operations and extends that reporting to a component of
an entity that either has been disposed of, by sale, abandonment, or in a
distribution to owners, or is classified as held for sale. SFAS 144 is effective
for fiscal years beginning after December 15, 2001 and interim periods within
those fiscal years. We believe the adoption of SFAS 144 will not have a
significant effect on our consolidated financial statements.

SFAS No. 145 -- On April 30, 2002, the FASB issued FASB Statement No. 145 (SFAS
145), "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections." SFAS 145 rescinds both FASB
Statement No. 4 (SFAS 4), "Reporting Gains and Losses from Extinguishment of
Debt," and the amendment to SFAS 4, FASB Statement No. 64 (SFAS 64),
"Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." Through
this rescission, SFAS 145 eliminates the requirement (in both SFAS 4 and SFAS
64) that gains and losses from the extinguishment of debt be aggregated and, if
material, classified as an extraordinary item, net of the related income tax
effect. However, an entity is not prohibited from classifying such gains and
losses as extraordinary items, so long as it meets the criteria in paragraph 20
of Accounting Principles Board Opinion No. 30, Reporting the Results of
Operations Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions.
Further, SFAS 145 amends paragraph 14(a) of FASB Statement No. 13, "Accounting
for Leases", to eliminate an inconsistency between the accounting for
sale-leaseback transactions and certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. The amendment requires
that a lease modification (1) results in recognition of the gain or loss in the
9 financial statements, (2) is subject to FASB Statement No. 66, "Accounting for
Sales of Real Estate," if the leased asset is real estate (including integral
equipment), and (3) is subject (in its entirety) to the sale-leaseback rules of
FASB Statement No. 98, "Accounting for Leases: Sale-Leaseback Transactions
Involving Real Estate, Sales-Type Leases of Real Estate, Definition of the Lease
Term, and Initial Direct Costs of Direct Financing Leases." Generally, FAS 145
is effective for transactions occurring after May 15, 2002. The adoption of SFAS
145 did not have a material effect on the Company's financial performance or
results of operations.

SFAS No. 146 -- In June 2002, the FASB issued SFAS No. 146, "Accounting for Exit
or Disposal Activities" (SFAS 146). SFAS 146 addresses significant issues
regarding the recognition, measurement, and reporting of costs that are
associated with exit and disposal activities, including restructuring activities
that are currently accounted for under EITF No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." The scope of SFAS 146
also includes costs related to terminating a contract that is not a capital
lease and termination benefits that employees who are involuntarily terminated
receive under the terms of a one-time benefit arrangement that is not an ongoing
benefit arrangement or an individual deferred-compensation contract. SFAS 146
will be effective for exit or disposal activities that are initiated after
December 31, 2002 and early application is encouraged. The provisions of EITF
No. 94-3 shall continue to apply for an exit activity initiated under an exit
plan that met the criteria of EITF No. 94-3 prior to the adoption of SFAS 146.
The effect on adoption of SFAS 146 will change on a prospective basis the timing
of when the restructuring charges are recorded from a commitment date approach
to when the liability is incurred. The Company does not expect that the adoption
of SFAS 146 will have a material effect on its financial performance or results
of operations.

SFAS No. 147 -- In October 2002, the FASB issued Statement No. 147 "Acquisitions
of Certain Financial Institutions - an amendment of FASB Statements No. 72 and
144 and FASB Interpretation No. 9" (SFAS 147). SFAS 147 removes acquisitions of
financial institutions from the scope of both Statement 72 and Interpretation 9
and requires that those transactions be accounted for in accordance with FASB
Statements No. 141, Business Combinations, and No. 142, Goodwill and Other
Intangible Assets. Thus, the requirement in paragraph 5 of Statement 72 to
recognize (and subsequently amortize) any excess of

                                       25
<PAGE>

the fair value of liabilities assumed over the fair value of tangible and
identifiable intangible assets acquired as an unidentifiable intangible asset no
longer applies to acquisitions within the scope of this Statement. In addition,
this Statement amends FASB Statement No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, to include in its scope long-term
customer-relationship intangible assets of financial institutions such as
depositor- and borrower-relationship intangible assets and credit cardholder
intangible assets. Consequently, those intangible assets are subject to the same
undiscounted cash flow recoverability test and impairment loss recognition and
measurement provisions that Statement 144 requires for other long-lived assets
that are held and used. SFAS 147 is effective October 1, 2002. The adoption of
SFAS 147 did not have a material effect on the Company's consolidated financial
statements.

SFAS No. 148 -- In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation -- Transition and Disclosure"(SFAS 148"). SFAS 148
amends SFAS No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123"), to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. SFAS 148 is effective for fiscal years
beginning after December 15, 2002. The interim disclosure provisions are
effective for financial reports containing financial statements for interim
periods beginning after December 15, 2002. The adoption of SFAS 148 did not have
a material effect on the Company's results of operations and financial
condition.

SFAS No. 149 - In April 2003, the FASB issued Statement of Financial Accounting
Standards No. 149 ("SFAS 149"), "Amendment of Statement 133 on Derivative
Instruments and Hedging Activities", to provide clarification on the meaning of
an underlying, the characteristics of a derivative that contains financing
components and the meaning of an initial net investment that is smaller than
would be required for other types of contracts that would be expected to have a
similar response to changes in market factors. This statement will be applied
prospectively and is effective for contracts entered into or modified after June
30, 2003. The statement will be applicable to existing contracts and new
contracts relate to forward purchases or sales of when-issued securities or
other securities that do not yet exist. The adoption of SFAS 149 did not have a
material effect on the Company's consolidated financial statements.

SFAS No. 150 - In May 2003, the FASB issued Statement of Financial Accounting
Standards No 159 ("SFAS 150"), Accounting for certain financial instruments with
characteristics of both liabilities and equity. This statement establishes
standards for how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity. This statement
will be effective for financial instruments entered into or modified after May
31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. It is to be implemented by reporting the
cumulative effect of a change in an accounting principal for financial
instruments created before the issuance date of the statement and existing at
the beginning of the interim period of adoption. The adoption of SFAS 150 did
not have a material effect on the Company's consolidated financial statements.

ITEM 7.  FINANCIAL STATEMENTS

Information with respect to this item is contained in the consolidated financial
statements appearing in Item 14 of this report. Such information is incorporated
by reference.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

This item is not applicable.

                                       26
<PAGE>

                                    PART III.

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

As of December 20, 2003, our executive officers and directors are as follows:

Eric A Miller.....................  37      President, Chief Executive Officer
                                             and Director
Jeremy G Dunne....................  46      Vice President and Director
Roosevelt Rogers..................  44      Vice President
H Deworth Williams................  68      Director
Walter R Keay.....................  66      Director
Edward F Cowle....................  47      Director
William P Behrens.................  65      Director
Nicholas J Cooney.................  68      Director
Elizabeth A Hearty................  36      Chief Financial Officer, Vice
                                             President, Treasurer and Secretary

Our directors hold office until the next annual meeting of stockholders and
until their successors have been duly elected and qualified. Pursuant to our
Stock Option Plan for Non-Employee Directors, as of September 30, 2003, options
to purchase 30,000 shares were granted and are outstanding to each of five
non-employee directors at exercise prices ranging from $1.31 to $1.75 per share.
Non-employee directors are compensated for their service on the Board or any
committee thereof by an annual retainer of $10,000. Additionally, each director
receives $2,000 for each meeting attended in person and $500 for each meeting
attended telephonically. Any non-employee director is reimbursed for expenses
incurred in connection with their duties as directors and for attendance at
Board or committee meetings. Under the Directors Plan, each non-employee
director and each newly elected non-employee director is entitled to an option
to purchase 30,000 shares of our common stock. The exercise price of each option
is the fair market value of our common stock at the date of grant.

Officers serve at the discretion of the Board. There are three committees of the
Board. As of September 30, 2003, the Audit Committee consisted of Mr. Walter R.
Keay, Mr. Edward F. Cowle and Mr. William P. Behrens, the Compensation Committee
consisted of Mr. H. Deworth Williams, Mr. William P. Behrens and Mr. Nicholas J.
Cooney and the Special Committee consisted of Mr. Walter R. Keay, Mr. William P.
Behrens and Mr. Nicholas J. Cooney.

Eric A. Miller. Mr. Miller has been employed by Laser Technology since 1988 and
has served on Laser Technology's Executive Committee since 1993. He was
appointed as President and Chief Executive Officer of Laser Technology in March
2000. Mr. Miller served as Laser Technology's Engineering Manager from 1993 to
2000 and was an engineer from 1988 to 1993. In 2001, Mr. Miller became a
principal investor in Noteworthy Enterprises, LLC, which owned and operated a
restaurant/bar establishment that was sold in 2002 . Mr. Miller graduated in
1987 from DeVry Institute of Technology in Phoenix, Arizona with a B.S. Degree
in Electronics.

Jeremy G. Dunne. Mr. Dunne has been employed by Laser Technology since 1986 and
currently serves as Vice President and Chief Technical Officer. From 1981 to
1986, Mr. Dunne was chief engineer for Hydrographic Services, International in
Southborough Kent, England, a company that performs software and system design
for the hydrographic surveying industry. Mr. Dunne earned a B.A. Degree in
Electrical Engineering from the University of Cambridge, Cambridge, England. Mr.
Dunne agreed to an SEC order issued on March 20, 2000 to not cause any
violations of Section 13(a) of the Securities Exchange Act of 1934. Mr. Dunne is
a shareholder of LTI Acquisition.

Roosevelt Rogers. Mr. Rogers has been employed by Laser Technology since 1996
and is currently Vice President. From 1992 to 1996, Mr. Rogers was a Product
Manager with MPH Industries, Inc., a subsidiary of MPD, Inc. in Owensboro,
Kentucky. From 1990 to 1992, he was Regional Sales Manager with Tech Systems,
Inc.; Mobile Video Recording Systems in Atlanta, Georgia. Mr. Rogers was a State
Trooper with the Georgia State Patrol in Atlanta, Georgia from 1982 to 1990, and
was a police officer with the Roswell Police Department in Roswell, Georgia from
1977 to 1982. Mr. Rogers attended Brescia College in Owensboro, Kentucky
studying Business Administration.

                                       27
<PAGE>

H. Deworth Williams. Mr. Williams is a director of Laser Technology. Mr.
Williams is the owner of Williams Investment Company and has been a financial
consultant for more than thirty years. During this time, Mr. Williams has been
instrumental in facilitating and completing several mergers, acquisitions,
business consolidations and underwritings. Mr. Williams agreed to a SEC order
issued on March 20, 2000 to not cause any violations of Section 13(a) of the
Securities Exchange Act of 1934. Mr. Williams is a shareholder of LTI
Acquisition and the brother of David Williams, a principal of LTI Acquisition.

Walter R. Keay. Mr. Keay is a director of Laser Technology. Mr. Keay has been
employed for over 35 years in the securities industry. He is presently President
of Knickerbocker Capital, Inc., an investment banking consulting firm in
Pennsylvania. From 1987 through 1999, he was founder and President of
Knickerbocker Securities, Inc., a member of the NASD. Knickerbocker Securities
was Laser Technology's underwriter when it initially listed on the American
Stock Exchange in 1993. Prior to engaging in investment banking, Mr. Keay was a
partner of a New York Stock Exchange member firm and a securities analyst,
working extensively with large conglomerate type corporations, both as an
analyst and in the area of mergers and acquisitions. He graduated from Brown
University with a B.A. Degree in Economics and did graduate work at New York
University School of Business Administration.

Edward F. Cowle. Mr. Cowle is a director of Laser Technology. Mr. Cowle has been
self employed in financial public relations from 1994 to the present, assisting
public companies with financial and investment banking activities. From 1992 to
1994, Mr. Cowle was a Senior Vice President -- Investments with Paine Webber in
New York City and from 1991 to 1992, he was a Registered Representative with
Bear Stearns & Company, also in New York City. Mr. Cowle graduated from
Fairleigh Dickinson University in Madison, New Jersey in 1978 with a B.A. Degree
in English, American Studies. Mr. Cowle also attended Vermont Law School in
South Royalton, Vermont from 1978 to 1979. Mr. Cowle is a principal shareholder
of LTI Acquisition.

William P. Behrens. Mr. Behrens is a director of Laser Technology. Mr. Behrens
is Vice Chairman of Northeast Securities, Inc. where he manages client assets
and is responsible for the general brokerage division. From 1965 through
September 2001 Mr. Behrens was respectively General Partner, Senior Managing
Director and then Chairman and CEO of Ernst & Company and its successor company
Investec Ernst & Company. In other securities industry capacities, Mr. Behrens
has served as an Exchange Official of the American Stock Exchange since 1985;
Director of Options Clearing Corporation and Vice Chairman of NASD District 10
Business Conduct Committee. Mr. Behrens graduated from Bernard Baruch College --
City University of New York.

Nicholas J. Cooney. Mr. Cooney is a director of Laser Technology. Mr. Cooney is
self-employed as an attorney concentrating in corporate and finance law. He has
also served as a professional arbitrator and mediator and as an investment
banker. Since 1982, Mr. Cooney has been engaged as a sole proprietor in the
practice of law in New York, where he was licensed to practice law in 1960. From
1994 to 1999, Mr. Cooney was affiliated as an investment banking executive with
Knickerbocker Securities, Inc. Mr. Cooney was involved for over 25 years in the
legal affairs of three major corporations. Prior to his corporate affiliations,
Mr. Cooney was associated with a Wall Street law firm. Since 1994, Mr. Cooney
has served as a contract arbitrator for the Building Service Industry in the New
York City area. Mr. Cooney is also an active arbitrator for the Commercial Panel
of the American Arbitration Association and for the National Association of
Securities Dealers. Mr. Cooney received his Juris Doctorate degree from Fordham
University School of Law in 1960, and his Bachelor of Science degree from
Fordham College in 1957.

Elizabeth Hearty. Ms. Hearty joined Laser Technology in September 1999 as the
Controller. In March 2000, Ms. Hearty was elected Corporate Secretary of Laser
Technology and in September 2002 was elected to Vice President and Treasurer. In
January 2003, she was elected as Chief Financial Officer of Laser Technology.
Prior to joining Laser Technology, Ms. Hearty was President and Director of
DataVision Security Services in Englewood, Colorado from 1996 to 1999. From 1990
to 1996, she served as Controller of InterCap Funds, Joint Venture. Ms. Hearty
received a B.S. degree in accounting from the University of Colorado in 1989.

                                       28
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

Employment Agreements

We currently do not have any employment agreements with any of our officers,
directors or employees. In April 2002, we renewed a consulting agreement with
Knickerbocker Capital, Inc., whose principle is Walter R. Keay, one of our
directors and a member of the special committee. Pursuant to the agreement, Mr.
Keay provided certain consulting services to us. This agreement expired in 2003
and will not be in effect following the merger.

Cash Compensation

The following table provides summary information concerning compensation earned
by or paid to our chief executive officer and other executive officers whose
total annual salary and bonus exceed $100,000, for services rendered for the
last three fiscal years. These individuals are referred to as the named
executive officers. Other than as described below, we did not pay any executive
officer greater than $100,000 annually for any of the periods depicted.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                 Other Annual   Restricted     All Other
Name and Principal Position           Year    Salary     Bonus   Compensation   Stock Award   Compensation
----------------------------------    ----   ---------   -----   ------------   -----------   ------------
<S>                                   <C>    <C>         <C>     <C>            <C>           <C>
Eric A Miller.....................    2003   $ 100,000
President, CEO and Director.......    2002   $ 100,000   $  --   $         --   $        --   $         --

Jeremy Dunne,.....................    2003   $ 122,500
Vice President and Director.......    2002     122,500      --             --            --             --

Roosevelt Rogers..................    2003   $  55,000                 65,320
Vice President....................    2002      55,000      --         60,850            --             --
</TABLE>

The preceding table does not include any amounts for non-cash compensation,
including personal benefits. We believe that the value of such non-cash benefits
and compensation paid during the periods presented did not exceed the lesser of
$50,000 or 10% of the cash compensation reported.

Equity Incentive Plan

In 1994, we adopted an equity incentive plan. This employee plan provided for
the issuance of options to our key employees and consultants to purchase up to
an aggregate of 530,000 shares of our common stock at the fair market value at
the date of grant. Fair market value is based on the closing sale price of the
common stock on the American Stock Exchange on such date. The employee plan also
allows for the grant of stock options, restricted stock awards, stock units,
stock appreciation rights and other grants to all of our eligible employees and
consultants.

On February 24, 1998, stockholders approved a proposal to amend the employee
plan. For each fiscal year beginning October 1, 1997 and through the fiscal year
beginning October 1, 2003 (seven years), a number of shares of stock equal to
two percent of the total number of issued and outstanding shares of stock as of
September 30 of the fiscal year immediately preceding such year, shall become
available for issuance under the plan. In addition, any unused portion of shares
of stock remaining from those reserved as of September 30, 1997 and any unused
portion of the two percent limit for any fiscal year shall be added to the
aggregate number of shares of stock available for issuance in each fiscal year
under the plan. In no event, subject to certain adjustments, will more than
1,000,000 shares of stock be cumulatively available for issuance pursuant to the
exercise of incentive options.

As of September 30, 2003, the total number of shares of common stock subject to
all awards under the employee plan could not exceed 1,000,000.

As of September 30, 2003, options to purchase 783,100 shares of our common stock
were outstanding, at exercise prices ranging from $1.38 to $5.25 per share of
which 740,567 options were exercisable at September 30, 2003. The options are
non-transferable and primarily vest annually in three equal installments over a
three year period. The options expire five or ten years

                                       29
<PAGE>

from the date of grant or, if sooner, three months after the holder ceases to be
an employee (subject to certain exceptions contained in the employee plan).

Non-Employee Director Stock Option Plan

In 1994, we adopted a stock option program for non-employee directors. The
director plan provides for the grant of options to purchase 30,000 shares of our
common stock at the effective date of the plan to each member of our Board of
Directors who is not an employee, and a grant of options to purchase 30,000
shares to each non-employee director who is newly elected to the Board after the
effective date of the plan. The maximum number of shares that may be subject to
options issued under the director plan was initially 120,000. The exercise price
is the fair market value, or in some cases 10% in excess of the fair market
value, of the common stock on the date of grant, determined in the same manner
as under the employee plan.

On April 21, 2000 the shareholders approved the amendment to the director plan
to increase the number of shares available for issuance under the plan by
120,000 shares. As of September 30, 2003, pursuant to the amended plan, options
to purchase 30,000 shares have been granted to each outside director at exercise
prices ranging from $1.31 to $1.75 per share. Options granted under the director
plan vest one-third each year for three years and expire five or ten years after
the date of grant, or, if sooner, three months after the holder ceases to be a
director (subject to certain exceptions contained in the plan). At September 30,
2003, 150,000 options were outstanding and 140,000 were exercisable pursuant to
the director plan.

Pursuant to the merger with LTI Acquisition and immediately prior to the
completion of the merger, all outstanding options to purchase shares under the
plans will become exercisable in full, except for such options held by LTI
Acquisition or its affiliates. Upon effectiveness of the merger, all outstanding
options that have not been exercised, except for those held by LTI Acquisition
or its affiliates, will automatically be converted into the right to receive a
cash payment and shall be cancelled by virtue of the merger without any action
on the part of the holder thereof. The cash payment to be received with respect
to each unexercised option will be equal to the product obtained by multiplying
(i) the excess, if any, of the merger consideration of $2.06 over the applicable
exercise price per share for such option by (ii) the number of shares of common
stock covered by such unexercised option had such option been exercised in full,
without regard to exercisability, immediately prior to the effective time of the
merger. Upon completion of the merger both plans will be terminated.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table provides information, to the best of our knowledge as of
December 12, 2003, regarding beneficial ownership of our common stock by:

.. each person known to us to own beneficially more than 5% of our common stock;

.. each of the named executive officers;

.. each or our directors; and

.. all executive officers and directors as a group.

<TABLE>
<CAPTION>
Name and Address of                                                            Number of Shares      Percentage of
Beneficial Owner                                                             Beneficially Owned(1)     Ownership
------------------------------------------------------------------------     -------------------------------------
<S>                                                                                        <C>                 <C>
Jeremy G. Dunne (2).....................................................                   467,001             8.3%
  6246 Red Canyon Dr, Apt H
  Highlands Ranch, Colorado 80130
Eric A. Miller (3)......................................................                   105,500             1.9%
  4540 S. Jason Street
  Englewood, Colorado 80110
H. Deworth Williams (4).................................................                   609,007            11.0%
  P.O. Box 2148
  Park City, Utah 84060
David Williams (5)......................................................                   388,686             7.0%
  1501 W. Dry Creek Road
  Littleton, Colorado 80210
Walter R. Keay (6)......................................................                    30,000              .5%
  4593 Newhope Road
  Pineville, PA 18946
Edward F. Cowle (7).....................................................                   132,220             2.4%
  6 East 45th Street 10th Floor
  New York, NY 10017
William P. Behrens (8)..................................................                    40,000             0.7%
  100 Wall Street
  New York, NY 10005
Nicholas J. Cooney (9)..................................................                    45,000             0.8%
  116 Central Park South
  New York, NY 10019
Roosevelt Rogers (10)...................................................                    36,000             0.7%
  22165 Pebble Brook
  Parker, CO 80138
Elizabeth A. Hearty (11)................................................                    10,000             0.2%
  334 Lincoln Street
  Denver, CO 80203
Loeb Partners Corporation...............................................                   419,300            7.64%

Directors and officers as a group (9 persons) (12)......................                 1,474,133            25.6%
</TABLE>

                                       30
<PAGE>

    (1)   Percentage ownership is calculated separately for each person on the
    basis of the actual number of outstanding shares as of December 12, 2003 and
    assumes the exercise of options held by such person (but not by anyone else)
    exercisable within sixty days.

    (2)   Includes 118,251 shares, which may be acquired by Mr. Dunne pursuant
    to the exercise of stock options exercisable within sixty days.

    (3)   Includes 72,000 shares, which may be acquired by Mr. Miller pursuant
    to the exercise of stock options exercisable within sixty days.

    (4)   Includes 30,000 shares, which may be acquired by Mr. Williams pursuant
    to the exercise of stock options exercisable within sixty days.

    (5)   Includes 68,250 shares, which may be acquired by Mr. Williams pursuant
    to the exercise of stock options exercisable within sixty days.

    (6)   Includes 30,000 shares, which may be acquired by Mr. Keay pursuant to
    the exercise of stock options exercisable within sixty days.

    (7)   Includes 30,000 shares, which may be acquired by Mr. Cowle pursuant to
    the exercise of stock options exercisable within sixty days.

    (8)   Includes 30,000 shares, which may be acquired by Mr. Behrens pursuant
    to the exercise of stock options exercisable within sixty days.

    (9)   Includes 30,000 shares, which may be acquired by Mr. Cooney pursuant
    to the exercise of stock options exercisable within sixty days.

    (10)  Includes 36,000 shares, which may be acquired by Mr. Rogers pursuant
    to the exercise of stock options exercisable within sixty days.

    (11)  Includes 10,000 shares, which may be acquired by Ms. Hearty pursuant
    to the exercise of stock options exercisable within sixty days.

    (12)  Includes 386,251 shares, which may be acquired by officers or
    directors within sixty days pursuant to the exercise of stock options at
    various prices.

                                       31
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We currently have a marketing and consulting agreement with Laser Innovations
International, Inc., whose principal is David Williams. Mr. Williams is the
beneficial owner of more than 5% of our outstanding common stock and was
formerly our President, CEO and director. Laser Innovations sells our products
to certain international markets and its sales comprised 18% and 17% of our
total sales during fiscal years 2003 and 2002, respectively.

Two members of our Board of Directors, H. Deworth Williams and Edward F. Cowle
have entered into a joint venture relationship with GHF International Trading,
Ltda, a Brazilian company. GHF is associated with Laser Technology as a dealer
for our Traffic Safety products and has been distributing the products in Brazil
for approximately the last seven years. During fiscal years 2003 and 2002, GHF
purchased products from us in the amounts of approximately $45,000 and $57,000,
respectively. GHF has been seeking investment capital to further develop the
market for our products in Brazil and Messrs. Williams and Cowle have provided
such capital.

ITEM 13. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of management,
including our chief executive officer and chief financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934. Based upon that evaluation, our chief executive officer
and chief financial officer concluded that our disclosure controls and
procedures are effective to cause the material information required to be
disclosed by us in the reports that we file or submit under the Exchange Act to
be recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms. There have been no significant changes
in our internal controls or in other factors which could significantly affect
internal controls subsequent to the date we carried out our evaluation.

                                    PART IV.

ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K

        (a) The following documents are filed as a part of this report:

        1. Financial statements.

        The consolidated financial statements included in this item are indexed
        on page F-1, Index to Consolidated Financial Statements.

        2. Financial statement schedules and supplementary information required
        to be submitted.

        Schedules other than those listed above are omitted for the reason that
        they are not required or are not applicable, or the required information
        is shown in the financial statements or notes thereto.

        3. Exhibit list.

        The following exhibits are filed herewith or are incorporated by
        reference to exhibits previously filed with the SEC. We will furnish
        copies of exhibits for a reasonable fee (covering the expense of
        furnishing copies) upon request.

Exhibit No.        Exhibit Name

      3.3 (6)      Articles of Incorporation for the State of Delaware
      3.4 (6)      By-Laws of Registrant
      3.5 (6)      Certificate of Merger
      4.1 (1)      Specimen Common Stock Certificates of Registrant
     10.1 (1)      Promissory Note, Secured Note and Warrant Agreement dated as
                   of February 21, 1991

                                       32
<PAGE>

                   between Registrant and Plaza Resources Company
     10.2 (1)      Amendment to the Promissory Note, Secured Note and Warrant
                   Agreement dated as of October 24, 1991 between the Registrant
                   and Plaza Resources Company
     10.3 (1)      Letter Agreement dated July 17, 1992 between Registrant and
                   Plaza Resources Company Including Amendments dated September
                   23, 1992, December 1, 1992, December 22, 1992, and January 7,
                   1993
     10.4 (1)      Lease Agreement for Registrant's Principal Place of Business
     10.5 (1)      Non-Competition and Secrecy Agreement dated July 15, 1990
                   between Registrant and David Williams, President of
                   Registrant
     10.6 (1)      Non-Competition and Secrecy Agreement dated July 15, 1990
                   between Registrant and Jeremy Dunne, Vice President of
                   Registrant
     10.8 (1)      Employment Agreement between Registrant and Jeremy Dunne
     10.9 (1)      Non-Disclosure/Confidentiality Agreement between Registrant
                   and Certain Other Key Employees
    10.14 (2)      Amendment to Lease to Include New Facility
    10.15 (3)      Employee Stock Option Plan
    10.16 (3)      Non-Employee Director Plan
    10.17 (7)      Employment Agreement between Registrant and Blair Zykan
    10.18 (7)      Employment Agreement between Registrant and Brian Abeel
     16.0 (4)      Letter from BDO Seidman, LLP
     17.1 (5)      Resignation of Director Letter -- Richard D. Sayford
     17.2 (5)      Resignation of Director Letter -- F. James Lynch
     17.3 (5)      Resignation of Director Letter -- William R. Carr
     21.1 (7)      Subsidiaries

     Exhibit 31.1       Certification of C.E.O. Pursuant to Section 302 of the
                        Sarbanses-Oxley Act of 2002.

     Exhibit 31.2       Certification of C.F.O. Pursuant to Section 302 of the
                        Sarbanses-Oxley Act of 2002.

     Exhibit 32.1       Certification of C.E.O. Pursuant to 18 U.S.C. Section
                        1350, as Adopted Pursuant to Section 906 of the Sarbanes
                        -Oxley Act of 2002.

     Exhibit 32.2       Certification  of C.F.O.  Pursuant  to 18 U.S.C. Section
                        1350,  as Adopted  Pursuant to Section 906 of the
                        Sarbanes-Oxley Act of 2002.

(1)     Incorporated by reference to the Company's Form S-1 registration
        statement, file no. 1-11642.

(2)     Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended September 30, 1993.

(3)     Incorporated by reference to the Company's Form 10-Q for the period
        ended June 30, 1994.

(4)     Incorporated by reference to the Company's amended Form 8-K January 4,
        1999.

(5)     Incorporated by reference to the Company's Form 8-K January 19, 1999.

(6)     Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended September 30, 1997.

(7)     Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended September 30, 1999.

         (b) Reports on Form 8-K:

         The Registrant filed a report on Form 8-K on December 23, 2002, July 3,
         2003 and August 4,2003.

                                       33
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                        Laser Technology, Inc.

                                                 By: /s/ Eric A. Miller
                                                     ------------------

                                                     Eric A. Miller

                                                     President and Chief
                                                     Executive Officer
                                                     December 29, 2003

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated:

      Signature                         Title                       Date
      ---------                         -----                       ----

/s/ Eric A. Miller          President and Chief Executive
------------------------    Officer                           December 29, 2003
Eric A. Miller

/s/ Jeremy G. Dunne         Vice President and Director       December 29, 2003
------------------------
Jeremy G. Dunne

/s/ Elizabeth Hearty        Chief Financial Officer
------------------------    Vice President, Treasurer and
Elizabeth Hearty            Secretary                         December 29, 2003

/s/ H. Deworth Williams     Director                          December 29, 2003
------------------------
H. Deworth Williams

/s/ Edward F. Cowle         Director                          December 29, 2003
------------------------
Edward F. Cowle

/s/ Walter R. Keay          Director                          December 29, 2003
------------------------
Walter R. Keay

/s/ William P. Behrens      Director                          December 29, 2003
------------------------
William P. Behrens

/s/ Nicholas J. Cooney      Director                          December 29, 2003
------------------------
Nicholas J. Cooney

                                       34
<PAGE>

                             LASER TECHNOLOGY, INC.
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2003 and 2002

<PAGE>

                                 C O N T E N T S

Independent Auditors' Report...........................................  3

Consolidated Balance Sheets............................................  4

Consolidated Statements of Operations..................................  6

Consolidated Statements of Stockholders' Equity........................  7

Consolidated Statements of Cash Flows..................................  8

Notes to the Consolidated Financial Statements......................... 10

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Shareholders and Board of Directors
Laser Technology, Inc. and Subsidiaries
Englewood, Colorado

We have audited the accompanying consolidated balance sheets of Laser
Technology, Inc. and Subsidiaries as of September 30, 2003 and 2002 and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the years ended September 30, 2003 and 2002. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the consolidated financial statements
based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Laser
Technology, Inc. and Subsidiaries at September 30, 2003 and 2002 and the
consolidated results of their operations and their cash flows for the years
ended September 30, 2003 and 2002 in conformity with accounting principles
generally accepted in the United States of America.


HJ & Associates, LLC
Salt Lake City, Utah
November 14, 2003

<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets

                                     ASSETS

                                                                  September 30
                                                                       2003
                                                                  -------------
CURRENT ASSETS

   Cash and cash equivalents                                      $   5,733,424
   Trade accounts receivable (Note 8)                                 1,791,561
   Inventories (Note 3)                                               2,719,036
   Deferred income tax benefit (Note 6)                                 203,500
   Prepaids and other current assets                                    104,858
                                                                  -------------
     Total Current Assets                                            10,552,379
                                                                  -------------

PROPERTY AND EQUIPMENT, (NET) (Note 4)                                  371,997
                                                                  -------------

OTHER ASSETS

   Other assets                                                       1,011,305
                                                                  -------------
     Total Other Assets                                               1,011,305
                                                                  -------------
     TOTAL ASSETS                                                 $  11,935,681
                                                                  =============

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

                                        4
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                     Consolidated Balance Sheets (Continued)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                  September 30,
                                                                       2003
                                                                  -------------

CURRENT LIABILITIES

   Accounts payable                                               $     542,581
   Accrued expenses                                                     841,919
                                                                  -------------
     Total Current Liabilities                                        1,384,500
                                                                  -------------
     Total Liabilities                                                1,384,500
                                                                  -------------

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS' EQUITY (Note 5)

   Preferred stock; par value $0.01; 2,000,000 shares
    authorized; -0- shares issued and outstanding                             -
   Common stock; par value $0.01; 25,000,000 shares
    authorized, 5,710,867 shares issued and 5,486,217
    outstanding                                                          57,109
   Additional paid-in capital                                        10,314,226
   Treasury stock at cost, 224,650 shares                              (194,259)
   Retained earnings                                                    374,105
                                                                  -------------
     Total Stockholders' Equity                                      10,551,181
                                                                  -------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $  11,935,681
                                                                  =============

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

                                        5
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations

                                                       For the Years Ended
                                                           September 30,
                                                   ----------------------------
                                                       2003            2002
                                                   ------------    ------------
SALES, NET (Note 8)                                $ 10,917,568    $ 10,577,217

COST OF GOODS SOLD                                    5,266,244       5,249,501
                                                   ------------    ------------
     Gross Profit                                     5,651,324       5,327,716
                                                   ------------    ------------

OTHER REVENUES

   Royalty and licensing revenues                       830,637         998,392
                                                   ------------    ------------
TOTAL OPERATING INCOME                                6,481,961       6,326,108

OPERATING EXPENSES

   General and administrative                         7,673,091       6,820,174
                                                   ------------    ------------
INCOME (LOSS) FROM OPERATIONS                        (1,191,130)       (494,066)

OTHER INCOME

   Interest income                                       42,806          25,044
   Settlement income, (Note 9)                        2,400,000               -
                                                   ------------    ------------
     Total Other Income                               2,442,806          25,044
                                                   ------------    ------------

INCOME (LOSS) BEFORE INCOME TAXES                     1,251,676        (469,022)

Income tax expense (benefit) (Note 6)                   474,071        (183,645)
                                                   ------------    ------------
NET INCOME (LOSS)                                  $    777,605    $   (285,377)
                                                   ============    ============
BASIC INCOME (LOSS) PER SHARE                      $       0.14    $      (0.05)
                                                   ============    ============
DILUTED INCOME (LOSS) PER SHARE                    $       0.12    $      (0.05)
                                                   ============    ============
BASIC WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING                                5,486,217       5,486,217
                                                   ============    ============
DILUTED WEIGHTED AVERAGE SHARES                       6,419,317       5,486,217
                                                   ============    ============

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

                                        6
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Consolidated Statements of Stockholders' Equity

<TABLE>
<CAPTION>
                                       Common Stock            Additional                      Retained          Total
                                ---------------------------      Paid-In       Treasury        Earnings      Stockholders'
                                   Shares         Amount         Capital        Stock          (Deficit)        Equity
                                ------------   ------------   ------------   ------------    ------------    -------------
<S>                                <C>         <C>            <C>            <C>             <C>             <C>
Balance, September 30, 2001        5,710,867   $     57,109   $ 10,314,226   $   (194,259)   $   (118,123)   $  10,058,953

Net loss for the year
 ended September 30, 2002                  -              -              -              -        (285,377)        (285,377)
                                ------------   ------------   ------------   ------------    ------------    -------------
Balance, September 30, 2002        5,710,867         57,109     10,314,226       (194,259)       (403,500)       9,773,576

Net Income for the year ended
  September 30, 2003                       -              -              -              -         777,605          777,605
                                ------------   ------------   ------------   ------------    ------------    -------------
Balance, September 30, 2003        5,710,867   $     57,109   $ 10,314,226   $   (194,259)   $    374,105    $  10,551,181
                                ============   ============   ============   ============    ============    =============
</TABLE>

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

                                        7
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                            For the Years Ended
                                                               September 30,
                                                       ----------------------------
                                                           2003            2002
                                                       ------------    ------------
<S>                                                    <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

   Net income (loss)                                   $    777,605    $   (285,377)
   Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
     Depreciation and amortization                          368,616         454,109
     Bad debt expense                                        27,070          43,195
     Deferred income taxes                                   33,403        (236,903)
     (Gain) loss on sale of equipment                         2,083           2,001
     Fixed assets donated to charity                              -           2,174
     Loss on abandonment of patents                                          14,945
     Loss on impairment of fixed assets                       6,275          29,336
   Changes in operating assets and liabilities:
     Trade accounts and other receivables                    17,010         484,389
     Royalties receivable                                   475,245         (31,532)
     Inventories                                            127,844       1,646,560
     Other assets                                             4,139          85,426
     Accounts payable and accrued expenses                  464,428            (293)
                                                       ------------    ------------
       Net Cash Provided (Used) by Operating
        Activities                                        2,303,718       2,208,030
                                                       ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:

   Purchases of property and equipment                     (115,570)       (155,863)
   Patent costs paid                                        (67,361)        (66,505)
                                                       ------------    ------------
       Net Cash Provided (Used) by Investing
        Activities                                         (182,931)       (222,368)
                                                       ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:

   Payments on long-term debt                                     -         (14,611)
                                                       ------------    ------------
       Net Cash (Used) by Financing Activities                    -         (14,611)
                                                       ------------    ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS      2,120,787       1,971,051

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR            3,612,637       1,641,586
                                                       ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR               $  5,733,424    $  3,612,637
                                                       ============    ============
</TABLE>

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

                                        8
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                Consolidated Statements of Cash Flows (Continued)

                                                       For the Years Ended
                                                           September 30,
                                                   ---------------------------
                                                       2003           2002
                                                   ------------   ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS

CASH PAID FOR:

   Interest                                         $         -   $        846
   Income taxes                                     $         -   $     84,467

SCHEDULE OF NON-CASH FINANCING ACTIVITIES:

   Stock issued for debt settlement                 $         -   $          -

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

                                        9
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002

NOTE 1 -  ORGANIZATION AND DESCRIPTION OF BUSINESS

          The consolidated financial statements presented are those of Laser
          Technology, Inc. (the "Company") and its wholly-owned subsidiaries,
          Laser Communications, Inc. and Light Solutions Research, Inc. All
          significant intercompany transactions have been eliminated. Laser
          Technology, Inc. is engaged in the business of developing,
          manufacturing, and marketing laser based measurement instruments.

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          a.   Use of Estimates

          In the U.S.A. the preparation of financial statements in conformity
          with generally accepted accounting principles requires management to
          make estimates and assumptions that affect the reported amounts of
          assets and liabilities and disclosure of contingent assets and
          liabilities at the date of the consolidated financial statements and
          the reported amounts of revenues and expenses during the reporting
          period. Actual results could differ from those estimates.

          b.   Cash and Cash Equivalents

          For purposes of financial statement presentation, the Company
          considers all highly liquid investments with a maturity of three
          months or less, from the date of purchase, to be cash equivalents.

          c.   Concentrations of Risk

          The Company maintains checking accounts at financial institutions
          located in Colorado. The accounts are insured by the Federal Deposit
          Insurance Corporation up to $100,000 each. The amounts held for the
          Company occasionally exceed that amount.

          d.   Fair Value of Financial Instruments

          The carrying amounts of financial instruments including cash and cash
          equivalents, investments, trade accounts receivable, royalties
          receivable, accounts payable and accrued expenses approximated fair
          value because of the immediate or short-term maturity of these
          instruments.

          e.   Inventories

          Inventories are valued at the lower of cost or market. Cost is
          determined by the first-in, first-out (FIFO) method. The Company has
          accrued an allowance for obsolete inventory of approximately $288,000
          at September 30, 2003.

                                       10
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          f.   Property, Equipment and Depreciation

          Property and equipment are stated at cost. Depreciation of property
          and equipment is computed using straight-line method over the
          estimated useful lives of the related assets, ranging from two to ten
          years.

          g.   Patents and Amortization

          In accordance with Financial Accounting Standards Board Statement 142,
          "Goodwill and Other Intangible Assets", patents are carried at cost
          and are amortized over their estimated useful lives of 15 to 17 years.
          There are currently no patents owned for which an indefinite life
          would be expected. The carrying value of patents is reviewed annually
          and when circumstances indicate an impairment may have occurred.
          Identified impairments, if any, are recognized when the expected
          future benefit to be derived from individual intangible assets is less
          than its carrying value.

          h.   Research and Development Costs

          Research and development costs related to the Company's laser
          measurement instruments are expensed as incurred and included in
          operating expenses. Research and development costs totaled $1,334,178
          and $1,353,104, for the years ended September 30, 2003, and 2002,
          respectively.

          i.   Taxes on Income

          Under the provisions of SFAS No. 109, the Company's policy is to
          provide deferred income taxes related to property and equipment,
          inventories, net operating losses and other items that result in
          differences between the financial reporting and tax basis of assets
          and liabilities.

          j.   Basic Income (Loss) Per Share

          SFAS No. 128 provides for the calculation of "Basic" and "Diluted"
          income (loss) per share. Basic income (loss) per share includes no
          dilution and is computed by dividing income available to common
          stockholders by the weighted average number of common shares
          outstanding for the period. Diluted income (loss) per share reflects
          the potential dilution of securities that could share in the earnings
          of an entity that were outstanding for the period. The Company has
          excluded 750,366 common stock equivalents from the calculation of
          diluted basic loss per share for the year ended September 30, 2002 as
          they are antidilutive in nature.

          k.   Stock Options

          The Company applies Accounting Principles Board ("APB") Option 25,
          "Accounting for Stock Issued to Employees," and related
          Interpretations in accounting for all stock option plans. Under APB
          Opinion 25, compensation cost is recognized for stock options granted
          to employees when the option price is less than the market price of
          the underlying common stock on the date of grant.

                                       11
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          k.   Stock Options (Continued)

          SFAS Statement No. 123, "Accounting for Stock-Based Compensation"
          requires the Company to provide pro forma information regarding net
          income (loss) as if compensation cost for the Company's stock option
          plans had been determined in accordance with the fair value based
          method prescribed in SFAS No. 123. To provide the required pro forma
          information, the Company estimates the fair value of each stock option
          at the grant date by using the Black-Scholes option-pricing model.
          There were no stock options granted during the year ended September
          30, 2003.

          l.   Revenue Recognition

          Revenue is recognized upon shipment of goods to the customer.
          International sales primarily require immediate payment or a letter of
          credit, other than to customers deemed creditworthy (see Note 8).
          Royalties and licensing fees are recognized when earned in accordance
          with the specific terms of each agreement.

          m.   Advertising

          Advertising expenses are charged to operations in the period in which
          they are incurred. Advertising expense for the years ended September
          30, 2003 and 2002 was approximately $248,000 and $192,000,
          respectively.

          n.   Reclassifications

          Certain reclassifications have been made to the 2002 financial
          statements to conform to the current year's presentation.

          o.   Newly Issued Accounting Pronouncements

          During the year ended September 30, 2003, the Company adopted the
          provisions of FASB Statement No. 144, "Accounting for the Impairment
          or Disposal of Long-Lived Assets," FASB Statement No. 145, "Rescission
          of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No.
          13, and Technical Corrections," FASB Statement No. 146, "Accounting
          for Costs Associated with Exit or Disposal Activities," FASB Statement
          No. 147, "Acquisitions of Certain Financial Institutions - an
          amendment of FASB Statements No. 72 and 144 and FASB Interpretation
          No. 9," FASB Statement No. 148, "Accounting for Stock-Based
          Compensation-Transition and Disclosure-an amendment of FASB Statement
          No. 123 (SFAS 148)," FASB Statement No. 149, "Amendment of Statement
          133 on Derivative Instruments and Hedging Activities," and FASB
          Statement No. 150, "Accounting for certain financial instruments with
          characteristics of both liabilities and equity." The adoption of these
          newly issued accounting pronouncements has not had a material effect
          on the Company's financial statements.

                                       12
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002

NOTE 3 -  INVENTORIES

          Inventories consisted of the following:

                                                                  September 30,
                                                                       2003
                                                                  -------------
          Finished goods                                          $     663,831
          Work-in-process                                               105,466
          Raw materials and supplies                                  1,949,739
                                                                  -------------
              Total                                               $   2,719,036
                                                                  =============

NOTE 4 -  PROPERTY AND EQUIPMENT

          Property and equipment consisted of the following:

                                                                  September 30,
                                                                       2003
                                                                  -------------
          Shop equipment                                          $     550,411
          Office equipment                                            1,107,519
          Leasehold improvements                                        573,476
          Automobiles                                                    16,613
          Furniture/fixtures                                            311,998
                                                                  -------------
                                                                      2,560,017

          Less accumulated depreciation                              (2,188,020)
                                                                  -------------
          Total                                                   $     371,997
                                                                  =============

          Depreciation expense was $281,572 and $371,250 for the years ended
          September 30, 2003 and 2002, respectively.

NOTE 5 -  STOCKHOLDERS' EQUITY

          Capital Stock

          At September 30, 2003, the Company had 306,900 shares reserved or
          available for issuance as follows:

          Common Shares:
              Equity Incentive Plan                                     216,900
              Non-Employee Director Stock Option Plan                    90,000
                                                                   ------------
                  Total                                                 306,900
                                                                   ============

          Preferred Stock

          Laser Technology is authorized to issue 2,000,000 shares of preferred
          stock by action of the Company's Board of Directors. The Board of
          Directors is authorized, without further action by stockholders, to
          determine the voting rights, dividend rights, dividend rates,
          liquidation preferences, redemption provisions, conversion or exchange
          rights and other rights, preferences, privileges and restriction of
          any unissued series of preferred stock

                                       13
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002

NOTE 5 -  STOCKHOLDERS' EQUITY (Continued)

          Preferred Stock (Continued)

          and the number of shares constituting such series. The Company has no
          current plans to issue any preferred stock.

          Treasury Stock

          The Company accounts for Treasury stock at acquisition cost.

          Equity Incentive Plan

          The Company has an Equity Incentive Plan (the "Employee Plan") for the
          purpose of providing key employees and consultants with added
          incentives to continue in the service of the Company and to create in
          such employees and consultants a more direct interest in the future
          operations of the Company. The Employee Plan permits the grant of
          stock options, restricted stock awards, stock appreciation rights,
          stock units and other grants to all of the Company's eligible
          employees and consultants.

          The Employee Plan is administered by the Compensation Committee of the
          Board of Directors. The committee has the authority to determine the
          employees or consultants to whom awards will be made, the amount of
          the awards, and the other terms and conditions of the awards.

          The grant of stock options under the Employee plan is intended either
          to qualify as "incentive stock options" under the Internal Revenue
          Code or "non-qualified options" not intended to qualify. Stock options
          are granted at a price not less than 100% of the fair market value on
          the date the option is granted.

          Under the Employee Plan, 1,000,000 shares of the Company's common
          stock are reserved for issuance. Options granted to employees vest at
          the rate of one-third per year and are fully vested after three years
          of continuous employment from the date of grant. As of September 30,
          2003, options to purchase 783,100 shares of the Company's common stock
          were outstanding, at exercise prices ranging from $1.38 to $5.25 per
          share of which 740,567 and 660,366 options were exercisable at
          September 30, 2003 and 2002, respectively.

          Non-Employee Director Stock Option Plan

          In 1994, the Company adopted a Non-Employee Director Stock Option Plan
          (the "Director Plan") for the purpose of providing non-employee
          directors with added incentives to continue in the service of the
          Company and a more direct interest in the future operations of the
          Company.

          Under the terms of the Director Plan, non-employee directors on the
          effective date of the Director Plan and each non-employee director
          elected thereafter shall receive options to purchase 30,000 shares of
          common stock. Stock options are granted at a price no less than 100%
          of the fair market value on the date the option is granted.

          Under the Director Plan 240,000 shares of the Company's common stock
          are reserved for issuance. Such options granted to non-employee
          directors of the Company vest at the rate of one-third per year and
          are fully vested after three years of continuous service

                                       14
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002

NOTE 5 -  STOCKHOLDERS EQUITY (Continued)

          from the date of grant. As of September 30, 2003 and 2002, options to
          purchase 150,000 and 150,000 shares, respectively, of the Company's
          common stock were outstanding at exercise prices ranging from $1.31 to
          $1.75 per share of which 140,000 options were exercisable at September
          30, 2003.

          A summary of the status of the Company's stock option plans as of
          September 30, 2003 and 2002 and changes during the years ending on
          those dates is presented below:

<TABLE>
<CAPTION>
                                                      2003                         2002
                                             -----------------------    ------------------------
                                                           Weighted                    Weighted
                                                           Average                     Average
                                                           Exercise                    Exercise
                                               Shares       Price         Shares        Price
                                             ----------   ----------    ----------    ----------
          <S>                                   <C>       <C>              <C>        <C>
          Outstanding, beginning of year        940,100   $     2.71       955,200    $     3.87
              Granted                                 -            -             -             -
              Canceled                           (7,000)       (1.38)      (15,100)        (1.50)
              Exercised                               -            -             -             -
                                             ----------   ----------    ----------    ----------
          Outstanding, end of year              933,100   $     2.66       940,100    $     2.71
                                             ----------   ----------    ----------    ----------
          Exercisable, end of year              880,567   $     3.82       750,366    $     3.28
                                             ----------   ----------    ----------    ----------
          Weighted average fair value of
           options and warrants granted
           during the year                                $        -                  $        -
                                                          ==========                  ==========
</TABLE>

<TABLE>
<CAPTION>
                                          Outstanding                      Exercisable
                            --------------------------------------   -------------------------
                                           Weighted
                                            Average      Weighted                    Weighted
                               Number      Remaining      Average       Number       Average
             Range of       Outstanding   Contractual    Exercise     Exercisable    Exercise
          Exercise Prices   at 9/30/03        Life         Price      at 9/30/03       Price
          ---------------   -----------   -----------   ----------   ------------   ----------
          <S>                   <C>              <C>    <C>             <C>         <C>
          $ 1.31 - 1.90         567,600          3.50   $     1.67      515,067     $     1.83
            2.00 - 2.87           6,000          5.25         2.87        6,000           2.87
            3.50 - 3.89          30,250          1.00         3.81       30,250           3.81
            4.00 - 4.25         324,750          0.82         4.23      324,750           4.23
            4.36 - 4.39           1,000          2.91         4.39        1,000           4.39
            5.00 - 5.25           3,500          2.33         5.25        3,500           5.25
                            -----------    ----------   ----------   ----------     ----------
          $ 1.31 - 5.25         933,100          3.41   $     2.66      880,567     $     2.82
                            ===========    ==========   ==========   ==========     ==========
</TABLE>

                                       15
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002

NOTE 5 -  STOCK HOLDERS EQUITY (Continued)

          In November 2000, the Company granted employees options to purchase
          176,600 shares of the Company's common stock at an exercise price of
          $1.38 per share. The options are non-transferable and primarily vest
          annually in three equal installments over a three year period. The
          options expire five or ten years from the date of the grant or, if
          sooner, three months after the holder ceases to be an employee of the
          Company, subject to certain exceptions contained in the Employee Plan.

NOTE 6 -  TAXES ON INCOME

          Deferred taxes are provided on a liability method whereby deferred tax
          assets are recognized for deductible temporary differences and
          operating loss and tax credit carryforwards and deferred tax
          liabilities are recognized for taxable temporary differences.
          Temporary differences are the differences between the reported amounts
          of assets and liabilities and their tax basis. Deferred tax assets are
          reduced by a valuation allowance when, in the opinion of management,
          it is more likely than not that some portion or all of the deferred
          tax assets will not be realized. Deferred tax assets and liabilities
          are adjusted for the effects of changes in tax laws and rates on the
          date of enactment.

          The provision (benefit) for income taxes for the years ended September
          30, 2003 and 2002 consists of the following:

                                                          2003          2002
                                                       ----------    ----------
          Federal:
               Current                                 $  405,385    $   29,339
               Deferred                                         -      (215,710)

          State:
               Current                                     68,656         2,726
               Deferred                                         -
                                                       ----------    ----------
                                                       $  474,071    $ (183,645)
                                                       ==========    ==========

          Net deferred tax assets and liabilities consists of the following
          components as of September 30, 2003 and 2002:

                                                         2003          2002
                                                      -----------   -----------
          Deferred tax liabilities:                             -             -

          Deferred tax assets:

               Accumulated Depreciation               $   203,500   $   100,425
               Contribution Carryover                           -         6,348
               NOL Carryover                                    -       130,130
                                                      -----------   -----------
                                                                -       136,478
                                                      -----------   -----------
          Net deferred asset (liability)              $   203,500   $   236,903
                                                      ===========   ===========

                                       16
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002

NOTE 6 -  TAXES ON INCOME (Continued)

          The difference between the consolidated provision (benefit) for income
          taxes computed using income (loss) before income taxes and the U.S.
          federal income tax rate for the years ended September 30, 2003 and
          2002 are as follows:

<TABLE>
<CAPTION>
                                                             2003            2002
                                                         ------------    ------------
          <S>                                            <C>             <C>
          Amount computed using the statutory rate       $    516,685    $   (159,466)
          Increase (decrease) in taxes resulting from:
               Loss on sale of assets                               -         (42,241)
               Meals                                           17,103           9,280
               Officer life insurance                               -           1,442
               Other, net                                     (59,717)         (2,910)
               Actual vs. estimated bad debt                        -          10,250
                                                         ------------    ------------
               Income tax expense (benefit)              $    474,071    $   (183,645)
                                                         ============    ============
</TABLE>

NOTE 7 -  COMMITMENTS AND CONTINGENCIES

          Retirement Plan

          Effective January 1, 1997, the Company adopted a defined contribution
          401k profit sharing plan (the "Plan"). Eligible employees, as defined,
          may contribute up to 15% of their annual compensation. Under the Plan,
          the Company may make discretionary matching contributions up to 100%
          of an employee's contribution and may make discretionary profit
          sharing contributions. For the years ended September 30, 2003 and
          2002, no contributions were made by the Company to the Plan.

          Purchase Commitments

          The Company is committed to purchases of raw materials over the next
          twelve months at the then prevailing market prices. These committed
          purchases aggregated $179,705 and $50,325, based on current market
          prices at September 30, 2003 and 2002, respectively.

          Facility & Automobile Leases

          The Company has various operating lease agreements for automobiles and
          office and manufacturing facilities that expire through May 31, 2008.
          Rent expense under operating lease agreements was $336,030 and
          $360,694 for the years ended September 30, 2003 and 2002.

                                       17
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002

NOTE 7 -  COMMITMENTS AND CONTINGENCIES (Continued)

          As of September 30, 2003, future minimum lease payments under
          operating lease agreements are as follows:

             2004                                                  $    153,999
             2005                                                       151,452
             2006                                                       144,211
             2007                                                       150,892
             2008                                                        64,032
             Thereafter                                                       -
                                                                   ------------
                                                                   $    664,586
                                                                   ============

NOTE 8 -  CUSTOMERS, EXPORT SALES AND CONCENTRATIONS OF RISK

          The Company operates primarily in one industry segment which includes
          the manufacturing and marketing of laser speed and distance
          measurement instruments.

          Financial instruments which potentially subject the Company to
          concentrations of credit risk consist primarily of cash and cash
          equivalents, investments and trade accounts receivable.

          The Company invests temporary cash in demand deposits, certificates of
          deposit, money market accounts and mutual funds with qualified
          financial institutions and in securities backed by the United States
          government. Such deposit accounts at times may exceed federally
          insured limits. The Company has not experienced any loss in such
          accounts. Cash concentration risks at September 30, 2003 and 2002 were
          $5,631,000 and $941,001, respectively.

          The Company markets its laser measurement instruments to three major
          classes of customers. The Company's trade accounts receivable subject
          to credit risk from those customers are as follows at September 30,
          2003 and 2002:

                                                       2003            2002
                                                   ------------    ------------

          Foreign distributors (a)                 $    705,722    $  1,012,237
          State and local municipalities (b)            467,247         348,731
          U.S. government agencies                       13,863         488,433
          Other receivables (c)                         639,565          11,328
                                                   ------------    ------------
                                                      1,826,397       1,860,729
          Less allowance for doubtful accounts          (34,836)        (25,088)
                                                   ------------    ------------
          Total                                    $  1,791,561    $  1,835,641
                                                   ============    ============

          (a)  To date, the Company's foreign sales are transacted primarily
               through distributors.

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<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002

NOTE 8 -  CUSTOMERS, EXPORT SALES AND CONCENTRATIONS OF RISK (Continued)

          (b)  The Company's domestic sales of its laser speed instruments have
               been primarily to state and local law enforcement agencies. These
               agencies are dispersed across geographic areas.

          (c)  Domestically, the Company's sales of its laser distance
               measurement systems are transacted primarily through
               distributors.

          For the year ended September 30, 2003 and 2002, no single customer
          accounted for more than 10% of sales.

          A summary of the Company's sales by geographic area is as follows:

                                                        2003           2002
                                                    ------------   ------------
          Foreign sales:

              Asia                                  $    809,329   $    754,522
              Europe                                   1,896,981      2,145,812
              Australia                                   95,406        547,001
              Other                                      746,298        171,705
                                                    ------------   ------------
          Total foreign sales                          3,548,014      3,619,040
          North American sales                         7,369,554      6,958,177
                                                    ------------   ------------
                                                    $ 10,917,568   $ 10,577,217
                                                    ============   ============

NOTE 9 -  SETTLEMENT INCOME

          In April 2003 a jury ruled in favor of the Company in its patent
          infringement lawsuit against Nikon, Inc. The settlement included
          approximately $2,400,000 for lost royalties and damages. In addition,
          on the effective date, Laser Technology, Inc will begin receiving
          royalty payments on all future units sold, used or disposed of by the
          licensee. The Company has concluded that the settlement meets the
          definition of a gain as discussed in paragraphs 82, 84, and 85 of CON
          No. 6. Accordingly, the entire amount of the settlement has been
          recognized as other income the statement of operations.

                                       19
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002

NOTE 10-  SUBSEQUENT EVENTS

          Subsequent to year end the Board of Directors voted to accept the
          merger offer from LTI Acquistion Corp. and to submit the offer to the
          general shareholders of the Company. The offer would require that each
          issued and outstanding share of Laser Technology common stock will be
          converted into the right to receive $2.06 in cash, except shares held
          in treasury and shares beneficially owned by LTI Acquisition and
          Acquisition Group, or by any holder who properly demands appraisal
          rights under Delaware law will be cancelled. The beneficial owners of
          common stock of LTI Acquisition, who are: David Williams, H. Deworth
          Williams, Pamela J. Sevy, Edward F. Cowle, Jeremy G. Dunne, Kama-Tech
          Corporation and Kama-Tech (HK), Ltd., (together the "Acquisition
          Group"), together being the record owners of 28.4% of Laser
          Technology's common stock. As a result of the proposed Merger Laser
          Technology will cease to be a publicly held company and will become a
          private corporation, all the stock of which will be beneficially owned
          by LTI Acquisition. The Shareholder meeting is schedule for December
          30, 2003.

NOTE 11-  COMMITMENTS AND CONTINGENCIES

          In March 2002, a breach of contract suit was filed against the Company
          in the District Court Johnson County, Kansas. The lawsuit alleges
          breach of contract on certain technical components. The Company has
          filed several counter claims. On August 11, 2003 the parties filed a
          joint motion to stay proceedings until the outcome of the pending
          merger agreement. The Company believes is has meritorious defenses and
          will vigorously defend itself if the case cannot be settled.
          Management is not able at this time to predict the ultimate effect of
          this litigation on the Company's financial position or results of
          operations.

                                       20