..
                       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, 2002

                                       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,
           Englewood, Colorado                                 80112
 (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. $10,577,217

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:

<PAGE>

As of December 20, 2002, the aggregate market value of the registrant's common
stock held by non-affiliates of the registrant was $3,903,241.

At December 20, 2002, 5,486,217 shares of common stock of the registrant were
outstanding.

Documents Incorporated by Reference: None

<PAGE>

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

                                                                        Page No.
                                                                        --------

                                     PART I

Item 1.  Description of Business...........................................    1
Item 2.  Description of Properties.........................................   17
Item 3.  Legal Proceedings.................................................   17
Item 4.  Submission of Matters to a Vote of Security Holders...............   18

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters..........   19
Item 6.  Management's Discussion and Analysis or plan of Operations........   20
Item 7.  Financial Statements..............................................   24
Item 8.  Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure...............................   25

                                    PART III

Item 9.  Directors and Executive Officers, Promoters and Control Persons:
         Compliance with Section 16(a) of the Exchange Act.................   25
Item 10. Executive Compensation............................................   26
Item 11. Security Ownership of Certain Beneficial Owners and Management....   28
Item 12. Certain Relationships and Related Transactions....................   30
Item 13. Controls and Proceedures..........................................   30

                                     PART IV

Item 14. Exhibits, and Reports on Form 8-K.................................   30
         Signatures........................................................   32

<PAGE>

                                     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.

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.


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                                                       Year Ended September 30,
                                                   2002         2001        2000
                                                   ----         ----        ----

Traffic Safety .............................         68%         61%         65%
Professional Measurement ...................         20          29          31
Industrial Controls ........................          1           2           2
Consumer ...................................         11           8           2

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,
                                                   2002         2001        2000
                                                   ----         ----        ----

North American .............................         66%         67%         63%
Foreign ....................................         34          33          37

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


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traveling vehicles. This 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.
To date, the UltraLyte LR B has been well received in the marketplace.

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 we believe will open up new markets, including customers that
previously couldn't afford laser speed measurement technology. Market feedback
on the UltraLyte Compact is limited at this point, as it has only recently been
released for sale.

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 increase the utility of the Micro DigiCam, we developed several
new features for the product in 2002. 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 new 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.
Another accessory developed in 2002 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. 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


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<PAGE>

and processing of data at accident sites and crime scenes. Currently over 900
QuickMap systems are in use by agencies and private companies.

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 late 2002, we began development of a new version of QuickMap
3D that will operate on a Palm(R) computing device, providing additional
functionality by utilizing a state-of-art, low cost processing platform.
QuickMap Palm is scheduled for market release in early to mid fiscal 2003.

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.

The distribution territory we are selling into has had minimal activity over the
last several years due to a lack of sales coverage. We believe it will take some
time to develop MPH product presence in these areas. As part of the
relationship, both parties are co-promoting the others' products, with MPH
taking on the primary marketing responsibility 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


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the distribution channels of the Stinger Spike System for Federal Signal
Corporation. The Stinger Spike System is a tire-deflating device used by law
enforcement agencies in stopping high-speed pursuits. We have found that the
sales process for each are quite different which has created difficulties for
our direct sales force, as a result we are discontinuing sales of this product.

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 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.

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


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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.

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.

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 did
continue to place limited orders for the product in late fiscal 2002.

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. In contrast to our traditional
laser sensor products, this product is unique 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 Bridge Industrial Sensor should provide for
increased sales opportunities in broader market applications. To date, on site
field tests of the product have been positive.


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<PAGE>

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 2002 were limited.

Other Applications

The National Aeronautics and Space Administration uses 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 $996,486, $1,031,669 and $943,422 for the fiscal years ended
September 30, 2002, 2001 and 2000, 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.


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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 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 2002, we continued to direct research and development activities toward
developing new products and improving current product lines. Research and
development costs totaled approximately $1,353,104, $1,159,561 and $1,274,900
the fiscal years ended September 30, 2002, 2001 and 2000, respectively.

During fiscal 2002, we developed additional features and accessories for the
Micro DigiCam photo laser system to further enhance its utility. The Micro
DigiCam "Dual Speed" option was developed to allow the system to identify
commercial vehicles from passenger vehicles and impose different speed limits
for each. This capability is needed in markets where dual speed limits on
motorways exist. Another feature developed in 2002 was the "Auto Mode" function.
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. Another accessory completed in 2002
was the night illumination system. This system provides the Micro DigiCam with
the ability to capture images at night, increasing productivity by allowing
operation in any type of lighting conditions.

Continued product progression for the traffic safety market was a development
focus in 2002. Two new products were created through modifications of an
existing product, the UltraLyte 100 LR, to specifically address definitive
market needs. The UltraLyte LR B was designed to meet the customer's need for an
easier to use product. This instrument provides a simplified operator interface
with dedicated functions, while maintaining the highest level of operational
performance. The UltraLyte Compact is a product design optimized for low cost.
It utilizes our highest performance internal electro-optical system, and has
been repackaged to minimize cost by eliminating the handle, shoulder stock and
in-scope display provided by our traditional instruments. This development
strategy has produced the highest performing, lowest cost laser speed detection
system on the market.

Other market areas were also a focus for continued product progression in 2002.
Due to raw material issues, a partial redesign was required for the MapStar
Compass Module (MSCM). This development 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.
This new design will begin being provided in MSCM shipments in early fiscal
2003. On the industrial product side, the Bridge Industrial Sensor was developed
to address market needs for a flexible, configurable sensor. This product is
based upon our Impulse laser sensor and is provided with configuration software
which allows a customer to custom configure instrument operation for a wide
range of measurement applications and conditions. Also in 2002, we began
development of the next generation of our accident investigation and
reconstruction software package, QuickMap 3D. This new design will operate on
the latest Palm computing platforms, providing added functionality at a low
price-point. QuickMap Palm is scheduled for market release in early to mid
fiscal 2003.

Research and development efforts on the Liquid Level Measurement Sensor (LLMS)
were halted in fiscal 2002 due to technical issues. The LLMS is an industrial
control product which combines a fiber optic delivery system with our
proprietary laser measurement technology. Following the results of beta testing
of initial prototype instruments, it was determined that market requirements for
performance and price point could not be met with currently available
technology. The project has been indefinitely shelved pending future technology
advancement.

As ongoing projects have been completed and transitioned from research and
development into manufacturing, we have increased our efforts toward 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 it's placement in our current and emerging markets.


                                       8
<PAGE>

Marketing, Distribution and Customers

We presently market products to three major classes of customers; International,
North American Traffic Safety and Professional Measurement. For fiscal year
2002, our total foreign shipments accounted for 34% of overall sales, of which
Asian and European shipments comprised 80% collectively. North American Traffic
Safety, including state and local law enforcement agencies comprised
approximately 43% of total sales. Sales to our North American Professional
Measurement dealer network comprised 13% of total sales. Sales of North American
industrial and consumer products comprised approximately 10% 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. For fiscal 2002, our largest domestic customer for our Traffic Safety
products was the State of Ohio. Other high volume customers in 2002 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, 2002, 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 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. 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 Approved Products List. Approval of the UltraLyte 200
models was completed during fiscal 1999 and these products were also added to
the IACP Approved Products List at that time.

Various foreign standards have also been established for laser speed enforcement
equipment. The Marksman and 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 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. 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.

Sales of our Micro DigiCam photo laser system has been concentrated 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.


                                       9
<PAGE>

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 four
regional field sales representatives who manage and support the dealer network,
and inside sales support personnel. In fiscal 2002, the number of dealers in our
domestic network, which market and support Professional Measurement products,
was approximately 68. 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 China, Spain, Japan, Malaysia and the Czech
Republic 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, 2002, we have
established distributors for our Professional Measurement product line in
approximately 44 foreign countries.

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 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.

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 LTI's 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 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.


                                       10
<PAGE>

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.

Backlog

As of September 30, 2002 and 2001 we had a backlog in sales of approximately
$717,396 and $498,061, respectively. This backlog is primarily attributed to
sales of our ASIC and Traffic Safety products. Fiscal 2002 back orders are
scheduled for delivery during fiscal 2003.

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 introduction of the UltraLyte enables us to better
penetrate the radar market due to its lower price point. 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 functions.

The ranging capabilities of our hand-held laser speed detection systems are also
used by law enforcement agencies to gather 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 ,
"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 laser speed measurement devices.
Kustom Signal, Inc., a Kansas


                                       11
<PAGE>

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, also 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 within the U.S.

We are aware of a potential competing product to the QuickMap 3D accident
investigation system. A new speed laser mapping system developed and marketed by
Laser Atlanta has been released, but currently we have limited knowledge of the
product, and are not aware of any significant sales to date. 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. Manufactures 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.

Our MapStar Compass Module 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.

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.


                                       12
<PAGE>

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 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
$66,500, $130,000 and $148,000 for the fiscal years ended September 30, 2002,
2001 and 2000, respectively.

We currently have 38 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. A fourth patent
issued, expiring in May 2012, relates to a mechanical interface between one of
the Criterion hand-held survey lasers and an electronic theodolite, enabling the
instruments to remain precisely aligned while sighting remote targets.

In fiscal 1996, a fifth patent was issued, expiring in June 2013, relating to
our Professional Measurement product line, specifically our 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 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.


                                       13
<PAGE>

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, two additional United States patent applications have been filed. One
of these relates to our Traffic Safety Micro DigiCam product, and the other to a
forestry application of our Professional Measurement technology.

We extend many of our domestic patent filings into foreign applications.
Currently we have been issued ten foreign patents in various countries. During
fiscal 2002, two foreign patents, expiring in 2018, were issued. Both of these
patents relate to our Professional Measurement technology. We also have
twenty-four patents pending in foreign countries related to U.S. patents issued
or applications filed.

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 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.


                                       14
<PAGE>

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.

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 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 to meet the federal standard for
laser speed measurement devices and, was subsequently placed on the IACP
Approved Products List. During fiscal 1998, the UltraLyte 100 and UltraLyte 100
LR completed compliance testing and were added to the IACP Approved Products
List. The UltraLyte 200 and UltraLyte 200 LR completed testing during fiscal
1999 and were also added to the list.

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


                                       15
<PAGE>

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. 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 verifies 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 have all successfully passed
compliance testing and are marked with the "CE" label for most 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.

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, 2002, we employed seventy-seven persons, consisting of thirteen
management personnel, twenty employees engaged in the sales and marketing
activities, twelve engineering personnel, twenty-three 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. To date, this directive is
still in place.

Recent Events

On September 26, 2002, a Schedule 13D was filed with the SEC by David Williams,
former President of Laser Technology, on behalf of a shareholder group. Included
in the group filing the Schedule 13D are three of our current directors, Jeremy
G. Dunne, H. Deworth Williams and Edward F. Cowle, and Pamela Sevy our former
CFO. In its Schedule 13D, the group states that it is exploring the possibility
of acquiring the operating assets, and assuming the indebtedness, of Laser
Technology, or exploring some other alternative for the acquisition of our
operating business.

On September 27, 2002, the group delivered a proposal to us in the form of a
letter of intent. Under the terms of the proposed transaction, the group
proposes to acquire all of our tangible and intangible assets and our
subsidiaries, except for cash and cash equivalent assets. Subject to certain
adjustments, the group proposes to pay us approximately $3,650,000 in cash and
to assume essentially all of our liabilities and those of our subsidiaries,
except liabilities incurred after the date of the letter of intent, which are
not in the ordinary course of business. As a condition of its offer and
concurrent with its purchase of non-cash assets, the group proposes that we will
pay a cash dividend to our common stockholders of $1.10 per share. The group has
also expressed its intent to continue the day-to-day operations of our business
following consummation of a transaction. At September 30, 2002, we had 5,486,217
common shares outstanding and cash and equivalents totaling $3,612,637.


                                       16
<PAGE>

Our Board of Directors has appointed a special committee of nonparticipating
directors to review the proposal and to retain independent legal counsel and
investment advisors as necessary. The special committee has retained Andersen,
Weinroth & Co., L.P., a New York based merchant-banker, as its financial advisor
to assist in evaluating the proposal. The advisors will also participate in
examining any other proposals or strategic alternatives to maximize shareholder
value.

The buyer group has indicated that if the proposed acquisition is completed, it
anticipates asking our current President, Eric Miller, to remain as part of the
management group of the acquired business. The group has agreed to extend the
date for acceptance of its letter of intent until such time as the special
committee and its financial advisor have completed their evaluation of the terms
of the proposal. If the letter of intent is accepted by us, the parties will
then have 30 days thereafter to execute a definitive agreement

On December 9, 2002 we received a proposal from Decatur Electronics, Inc. for
the purchase of all of our issued and outstanding shares of common stock.
Decatur, a manufacturer and marketer of radar-based measurement systems and
accessories located in Decatur, Illinois, is not related to the previous letter
of intent received from the Williams group.

The Decatur proposal is in the form of a letter of intent and proposes to
acquire all of our issued and outstanding shares of common stock at a tentative
price of $1.20 per share. The purchase of shares would be financed by the
prospective buyer's cash assets and potential bank financing. Decatur gave us
until December 20, 2002 to respond to the proposed letter of intent. The
proposed letter of intent is subject to review by the special committee of
nonparticipating directors that is also reviewing the Williams group proposal.
The proposal is also subject to successful completion of adequate due diligence
by the prospective buyer and the purchase price could be subject to adjustment
due to the results of the due diligence by the buyer.

The special committee has notified both Decatur and the Williams group that the
committee deems their offers to be inadequate. Both parties have responded back
to the committee that they are willing to re-evaluate their proposals and
Decatur has indicated that it will continue to work with the committee beyond
the December 20, 2002 deadline set forth in its letter of intent. There can be
no assurance that either proposal will result in a definitive agreement or that
any prospective suitor will be able to secure adequate cash or requisite bank
financing to finalize a purchase or similar transaction. The Special Committee
will incur certain expenses, including legal and investment consultants, in
connection with the evaluation of these proposals.

ITEM 2. DESCRIPTION OF PROPERTIES

As of September 30, 2002, our Englewood, Colorado facilities provided
approximately 22,000 square feet, with a lease agreement expiring in February
2008. In total, our facilities comprise 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. 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 August 9, 2000, Nikon filed an answer and counterclaims,
seeking a declaratory judgment that Nikon did not infringe the patents, that the
patents are invalid and unenforceable, and that Nikon has been damaged by
willful and unfounded assertions of infringement by us. The counterclaims do not
quantify the damages sought.

On January 23, 2001, we amended the complaint to add manufacturer Asia Optical
Co., Inc. 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 the
Company.

We are vigorously prosecuting the lawsuit. Discovery has closed in this matter,
and the Court recently construed the patent claims and ruled on motions for
summary judgment. The Court denied motions for summary judgment with respect to
certain claims and granted Defendants' summary judgment as to literal
non-infringement on certain claims. Additionally, the Court granted summary
judgment in favor of us with respect to Defendants' counterclaims


                                       17
<PAGE>

alleging that the patents in suit are invalid. The case is presently scheduled
for trial as to literal infringement on certain claims and infringement under
doctrine of equivalents as to all claims in April 2003.

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. Although management
believes Bushnell's suit is without merit and that we will prevail, settlement
discussions have been initiated with the possibility of obtaining a business
resolution as an alternative to a lengthy legal proceeding. 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, 2002.


                                       18
<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, 2002, 5,486,217 common shares were outstanding and we had
approximately 967 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 quarterly period as reported on the American
Stock Exchange.

                                                     High             Low
                                                     ----             ---

2002
  First Quarter ........................            $1.20            $ .85
  Second Quarter .......................              .95              .62
  Third Quarter ........................              .92              .41
  Fourth Quarter* ......................             1.08              .80
2001
  First Quarter ........................            $1.38            $ .87
  Second Quarter .......................             1.60             1.01
  Third Quarter ........................             1.27              .92
  Fourth Quarter .......................             1.05              .85
2000
  First Quarter ........................            $4.00            $1.25
  Second Quarter .......................             2.38             1.50
  Third Quarter ........................             1.88             1.12
  Fourth Quarter .......................             1.62              .81

*     The 2002 fourth quarter reflects the high and low sale prices through
      December 20, 2002.

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.


                                       19
<PAGE>

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

Results of Operations

The following table sets forth, for the three 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,
                                                       -------------------------

                                                       2002      2001      2000
                                                       ----      ----      ----

Net sales ......................................       100%       100%      100%
Cost of goods sold .............................        50         47        46
Gross profit ...................................        50         53        54
Royalty and licensing income ...................         9          9         8
Total operating income .........................        59         62        62
Operating expenses .............................        64         59        58
Settlement and Restructuring Costs .............         0          0         0
Income (loss) from operations ..................        (5)         3         4
Interest and other income, net .................         0          2         1
Income tax (benefit) on income .................        (2)         1         2

Net income (loss) ..............................        (3)%        4%        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,
                                             -------------------------

                                        2002           2001             2000
                                        ----           ----             ----

Traffic Safety .................    $ 7,147,874     $ 6,957,280     $ 8,332,207
Percentage of revenues .........             68%             61%             65%
Professional Measurement .......      2,111,526       3,294,255       3,877,196
Percentage of revenues .........             20%             29%             31%
Industrial Controls ............         77,500         240,816         241,810
Percentage of revenues .........              1%              2%              2%
Consumer/Other .................      1,240,317         980,108         269,086
Percentage of revenues .........             11%              8%              2%
Total Revenues .................     10,577,217      11,472,459      12,720,299

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


                                       20
<PAGE>

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 representation 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.

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.

Fiscal Year Ended September 30, 2001 Compared to Fiscal Year Ended September 30,
2000

Net sales for the fiscal year ended September 30, 2001 were $11,472,459 compared
to $12,720,299 realized during the fiscal year ended September 30, 2000,
representing a 9.8% decrease. In 2001, significant decreases in our Foreign
Traffic Safety and Domestic Professional Measurement sales had the greatest
impact on total revenues. These decreases offset increases in Consumer product
sales consisting of sales of the new ASIC.

Sales of our Traffic Safety products decreased 17% from $8,332,207 in 2000 to
$6,957,280 in 2001. North American Traffic Safety product sales increased 4%
from $4,009,206 in 2000 to $4,162,020 in 2001, primarily due to a growing
maturity of the sales force producing greater revenue per salesperson.
International Traffic Safety product sales decreased 35% from $4,323,001 in 2000
to $2,795,259 in 2001. International sales were hurt by a continued strong
dollar, which made the prices of foreign products more competitive.

Overall sales of our Professional Measurement products decreased 15% from
$3,877,196 in 2000 to $3,294,255 in 2001. North American Professional
Measurement product sales decreased 19% from $2,906,542 in 2000 to $2,365,198 in
2001, primarily due to delay in product availability, purchased component
quality problems and an economic slowdown. International sales of our
Professional Measurement products decreased 4% from $970,654 in 2000 to $929,057
in 2001. International sales were negatively impacted by the strong dollar and
increased competition that now has reflectorless capabilities in their products.


                                       21
<PAGE>

International sales in 2000 were $4,759,680 compared to $3,760,799 realized in
2001. Sales internationally comprised approximately 37 % of our total revenues
in 2000 compared to 33% of total revenues in 2001.

Gross profit as a percentage of sales was 54% in 2000 compared to 53% for 2001.
The decrease in gross profit margins in 2001 was primarily due to increased
material cost and decreased output on the production line.

Royalty income earned in 2001 is derived primarily from our agreement with
Bushnell for sales of the Yardage Pro series of consumer laser range finders.
Royalty income increased approximately 8% from $959,015 in 2000 to $1,033,129 in
2001. The increase during 2001 was due primarily to the introduction of the new
Yardage Pro Sport into the Bushnell product line and increased sales into the
professional markets.

Total operating expenses decreased approximately 8% from $ 7,361,190 in 2000 to
$6,769,882 in 2001. The 2001 decrease is attributed to lower sales, marketing
and administrative expenses coupled with the reimbursement of research and
development costs from third parties. These decreases were partially offset by
an increase for legal expenses associated with prosecuting the patent
infringement claims.

Decreased operating expenses combined with the increase in royalties and other
income in 2001 resulted in a net income for the year. Income before taxes of
$522,727 in 2001 compared to $575,212 in 2000. After taxes on income, we
realized a net income of $409,113 or $.07 basic earnings per share in 2001
compared to net income of $341,412 or $.07 basic earnings per share in 2000.

Foreign Sales

Foreign sales of our products were 34%, 33% and 37% for the fiscal years ended
September 30, 2002, 2001 and 2000, 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 $1,353,104, $1,159,561 and
$1,274,900 for the years ended September 30, 2002, 2001 and 2000, respectively.
Year to year increases in research and development expenditures are primarily
attributable to increased product development and investments in pure research
to provide for significant future technology and product advancements. The
ability to recoup research and development costs from third parties decreased
our expense in 2001. 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, $130,000 and $148,000 for the fiscal years ended
September 30, 2002, 2001 and 2000, respectively.

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 and the future benefit of a net operating loss, the Company
has recorded a deferred tax asset of $236,903

Liquidity and Capital Resources

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 (ratio of current assets minus inventories and prepaid
expenses to liabilities) was 6 to 1. Thus, the present working capital is
expected to adequately meet our needs for at least the next twelve months.


                                       22
<PAGE>

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.

Our net working capital at September 30, 2001 was $8,201,411 as compared to
working capital of $6,918,219 at September 30, 2000, an increase of $1,283,192.
The increase is primarily related to an increase in inventory. Current assets
exceeded current liabilities by a ratio of 9.7 to 1. Furthermore, the acid test
ratio was in excess of 4.76 to 1. Thus, the present working capital is expected
to adequately meet our needs for at least the next twelve months.

Inventory, the largest item that required financing, stood at $4,493,440 at
September 30, 2001, up $1,396,578 from September 30, 2000. Inventory expansion
reflected stocking of certain outsourced assemblies and an increase in other raw
materials. Prepaid insurance, fees and expenses required an additional $78,632
of funding. The operating activities that provided cash were a net income of
$409,113, depreciation and amortization of $556,314 and a reduction in accounts
receivable and bad debt of $361,119. The only other items that reduced cash were
a decrease in accounts payable and accrued expenses of $194,917.

For the year ended September 30, 2001, a net cash increase of $512,460 from
investing activities was due to the conversion of investment accounts into
working capital. After expending $811,482 on operating activities and $83,480 on
long term debt and capital leases, there was a net decrease in cash and
equivalents of $382,502. When added to cash on hand at the beginning of the
twelve month period, total cash and equivalents at September 30, 2001 stood at
$1,641,586. Thus, cash and equivalents alone comfortably exceeded total
liabilities of $934,976 at the end of the period.

For the year ended September 30, 2000, cash provided by operating activities was
$1,727,170. Net income of $341,412, a reduction of receivables and bad debt of
$1,182,709 and deferred taxes of $288,000, together with depreciation and
amortization of $563,452, offset the increase in inventories of $249,127 and net
decrease in accounts payable and accrued expenses of $588,488. Cash used in
investing activities in 2000 of $352,228 was primarily used for the purchase of
property and equipment in the amount of $195,967; purchase of investments of
$471,608; and $148,387 used for capitalization of patent costs. This result was
partially offset with proceeds from investment maturities of $450,139 and sale
of property & equipment of $13,595. For fiscal 2000, cash and cash equivalents
increased $1,267,012.

Other

In August 2002, we terminated our lease on 23,000 square feet adjacent to our
facilities leaving us with 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 2001 we
decreased our accrual for doubtful accounts to $55,228 to cover the risk of
uncollectable accounts receivable. In fiscal 2002 we decreased this accrual to
$25,088 which we believe adequately covers our risk of collectability.


                                       23
<PAGE>

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) 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 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 new
accounting pronouncement, we currently expect that the effect of SFAS No. 143 on
our consolidated financial statements, when it becomes effective, will not be
significant.

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.

In April 2002, the FASB issued Statement No. 145 "Rescission of FASB Statements
No. 4, 44, and 62, Amendment of FASB Statement No. 13, and Technical
Corrections" (SFAS 145). SFAS 145 will require gains and losses on
extinguishments of debt to be classified as income or loss from continuing
operations rather than as extraordinary items as previously required under
Statement of Financial Accounting Standards No. 4 (SFAS 4). Extraordinary
treatment will be required for certain extinguishments as provided in APB
Opinion No. 30. SFAS 145 also amends Statement of Financial Accounting Standards
No. 13 to require certain modifications to capital leases be treated as a
sale-leaseback and modifies the accounting for sub-leases when the original
lessee remains a secondary obligor (or guarantor). SFAS 145 is effective for
financial statements issued after May 15, 2002, and with respect to the impact
of the reporting requirements of changes made to SFAS 4 for fiscal years
beginning after May 15, 2002. The adoption of the applicable provisions of SFAS
145 did not have an effect on our financial statements.

In June 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS 146 nullifies Emerging Issues
Task Force Issue No. 94-3 "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." SFAS 146 applies to costs associated with
an exit activity that does not involve an entity newly acquired in a business
combination or with a disposal activity covered by SFAS 144. SFAS 146 is
effective for exit or disposal activities that are initiated after December 31,
2002, with earlier application encouraged. We are currently reviewing SFAS 146
and intend to implement it no later than January 1, 2003.

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.


                                       24
<PAGE>

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

This item is not applicable.

                                   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, 2002, our executive officers and directors are as follows:

Eric A Miller...........   36   President, Chief Executive Officer and Director
Jeremy G Dunne..........   45   Vice President and Director
Roosevelt Rogers........   43   Vice President
H Deworth Williams......   67   Director
Walter R Keay...........   65   Director
Edward F Cowle..........   46   Director
William P Behrens.......   64   Director
Nicholas J Cooney.......   67   Director
Elizabeth A Hearty......   35   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, 2002, options
to purchase 30,000 shares were granted and are outstanding to each of five
non-employee directors at exercise prices ranging from $1.19 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, 2002, 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 us since 1988 and has served on
our Executive Committee since 1993. He was appointed as President and Chief
Executive Officer in March 2000. Mr. Miller served as our 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 us 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.

Roosevelt Rogers. Mr. Rogers has been employed by us since 1996 and is currently
Vice President. From 1992 to


                                       25
<PAGE>

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.

H. Deworth Williams. 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.

Walter R. Keay. 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 our underwriter when we initially listed on
the American Stock Exchange in 1993. Prior to engaging in investment banking,
Mr. Keay was a securities analyst, working extensively with large conglomerates,
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 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.

William P. Behrens. 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 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 our company in September 1999 as our
Controller. In March 2000, Ms. Hearty was elected Corporate Secretary and in
September 2002 elected to Vice President and Treasurer. Prior to joining us, 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.

ITEM 10. EXECUTIVE COMPENSATION

Employment Agreements


                                       26
<PAGE>

We have not entered into any current employment agreements as of September 30,
2002. However, in April 2002, we renewed a consulting agreement with
Knickerbocker Capital, Inc., whose principle is Walter R. Keay, one of our
directors. Pursuant to the agreement, Mr. Keay is to provide certain consulting
services to us.

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 .....................     2002         $100,000
President, CEO and Director .......     2001         $100,000      $    --      $    --          $  --              $ --
                                        2000           83,455       17,664           --             --                --

Jeremy Dunne, .....................     2002         $122,500
Vice President and Director .......     2001          122,500           --           --             --                --
                                        2000           98,116       21,308           --             --                --

Roosevelt Rogers ..................     2002         $ 55,000                    60,850
Vice President ....................     2001           55,000           --       67,359             --                --
                                        2000           53,750                    58,750             --                --

Blair Zykan, ......................     2002
Former President, CEO .............     2001               --           --           --             --                --
                                        2000           82,952           --           --          8,333*               --
</TABLE>

*     During 1999 Mr. Zykan entered into an employment agreement that provided
      for a Deferred Share Award of 25,000 shares of our stock, vesting one
      third at the date of grant and one third each year thereafter until fully
      vested.

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 provides 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.


                                       27
<PAGE>

As of September 30, 2002, 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, 2002, options to purchase 790,100 shares of our common stock
were outstanding, at exercise prices ranging from $1.38 to $5.25 per share of
which 660,366 options were exercisable at September 30, 2002. 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 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
in each case is 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, 2002, pursuant to the amended plan, options
to purchase 30,000 shares have been granted to each outside director at exercise
prices ranging from $1.19 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,
2002, 150,000 options were outstanding and 90,000 were exercisable pursuant to
the director plan.

The total number of shares and type of security subject to these plans and to
any awards under these plans are subject to adjustment in the case of stock
splits, stock dividends and similar actions by us.

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, 2002, regarding beneficial ownership of our common stock by:

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

o     each of the named executive officers;

o     each or our directors; and

o     all executive officers and directors as a group.


                                       28
<PAGE>

<TABLE>
<CAPTION>
Name and Address of                                                                 Number of Shares        Percentage of
Beneficial Owner                                                                 Beneficially Owned(1)        Ownership
----------------                                                                 ---------------------        ---------
<S>                                                                                      <C>                     <C>
Jeremy G. Dunne (2) .......................................................              450,334                  8.1%
  6246 Red Canyon Dr, Apt H
  Highlands Ranch, Colorado 80130

Eric A. Miller (3) ........................................................               95,500                  1.7%
  4540 S. Jason Street
  Englewood, Colorado 80110

H. Deworth Williams (4) ...................................................              599,007                 10.9%
  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) ........................................................               20,000                  0.4%
  4593 Newhope Road
  Pineville, PA 18946

Edward F. Cowle (7) .......................................................              216,625                  3.9%
  6 East 45th Street 10th Floor
  New York, NY 10017

William P. Behrens (8) ....................................................               30,000                  0.5%
  100 Wall Street
  New York, NY 10005

Nicholas J. Cooney (9) ....................................................               35,000                  0.6%
  116 Central Park South
  New York, NY 10019

Roosevelt Rogers (10) .....................................................               26,000                  0.5%
  22165 Pebble Brook
  Parker, CO 80138

Elizabeth A. Hearty (11) ..................................................                6,667                  0.1%
  334 Lincoln Street
  Denver, CO 80203

Directors and officers as a group (9 persons) (12).........................            1,479,133                 25.6%
</TABLE>

      (1) Percentage ownership is calculated separately for each person on the
      basis of the actual number of outstanding shares as of December 12, 2002
      and assumes the exercise of options held by such person (but not by anyone
      else) exercisable within sixty days.

      (2) Includes 101,584 shares, which may be acquired by Mr. Dunne pursuant
      to the exercise of stock options exercisable within sixty days.

      (3) Includes 62,000 shares, which may be acquired by Mr. Miller pursuant
      to the exercise of stock options exercisable within sixty days.

      (4) Includes 20,000 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 20,000 shares, which may be acquired by Mr. Keay pursuant to
      the exercise of stock options exercisable within sixty days.

      (7) Includes 20,000 shares, which may be acquired by Mr. Cowle pursuant to
      the exercise of stock options exercisable within sixty days.

      (8) Includes 20,000 shares, which may be acquired by Mr. Behrens pursuant
      to the exercise of stock options exercisable within sixty days.

      (9) Includes 20,000 shares, which may be acquired by Mr. Cooney pursuant
      to the exercise of stock options exercisable within sixty days.


                                       29
<PAGE>

      (10) Includes 26,000 shares, which may be acquired by Mr. Rogers pursuant
      to the exercise of stock options exercisable within sixty days.

      (11) Includes 6,667 shares, which may be acquired by Ms. Hearty pursuant
      to the exercise of stock options exercisable within sixty days.

      (12) Includes 296,251 shares, which may be acquired by officers or
      directors within sixty days pursuant to the exercise of stock options at
      various prices.

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 17% and 17% of our
total sales during fiscal years 2002 and 2001, 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 six years. During fiscal years 2002 and 2001, GHF
purchased products from us in the amounts of approximately $57,000 and $61,000,
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

Evaluation of Disclosure Controls and Procedures. Based on an evaluation under
the supervision and with the participation of the our management as of a date
within 90 days of the filing date of this Annual Report on Form 10-KSB, our
principal executive officer and principal financial officer have concluded that
our disclosure controls and procedures (as defined in Rules 13a-14(c) and
15d-14(c) under the Securities Exchange Act of 1934, are effective to ensure
that information required to be disclosed in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in SEC rules and forms.

Changes in Internal Controls. There were no significant changes in our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation. There were no significant
deficiencies or material weaknesses, and therefore there were no corrective
actions taken. However, the design of any system of controls is based in part
upon certain assumptions about the likelihood of future events and there is no
certainty that any design will succeed in achieving its stated goal under all
potential future considerations, regardless of how remote.

                                    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.

      Schedule I -- Valuation and Qualifying Accounts

      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.


                                       30
<PAGE>

      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 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

      99.1      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

      99.2      Certification of Principal Accounting Officer 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 September 27, 2002.


                                       31
<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 30, 2002

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:

<TABLE>
<CAPTION>
        Signature                              Title                                  Date
        ---------                              -----                                  ----
<S>                               <C>                                           <C>
 /s/ Eric A. Miller               President and Chief Executive Officer         December 30, 2002
------------------------
 Eric A. Miller


 /s/ Jeremy G. Dunne              Vice President and Director                   December 30, 2002
------------------------
 Jeremy G. Dunne


 /s/ Elizabeth Hearty             Vice President, Treasurer and Secretary       December 30, 2002
------------------------
 Elizabeth Hearty


 /s/ H. Deworth Williams          Director                                      December 30, 2002
------------------------
 H. Deworth Williams


 /s/ Edward F. Cowle              Director                                      December 30, 2002
------------------------
 Edward F. Cowle


 /s/ Walter R. Keay               Director                                      December 30, 2002
------------------------
 Walter R. Keay


 /s/ William P. Behrens           Director                                      December 30, 2002
------------------------
 William P. Behrens


 /s/ Nicholas J. Cooney           Director                                      December 30, 2002
------------------------
 Nicholas J. Cooney
</TABLE>


                                       32
<PAGE>

                                                                  Certifications

                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

      I, Eric A. Miller, Chief Executive Officer of Laser Technology, Inc. (the
"registrant"), certify that:

      1. I have reviewed this annual report on Form 10-KSB of Laser Technology,
      Inc.;

      2. Based on my knowledge, this annual report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this annual report;

      3. Based on my knowledge, the financial statements, and other financial
      information included in this annual report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      annual report;

      4. The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

            a) designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this annual
            report is being prepared;

            b) evaluated the effectiveness of the registrant's disclosure
            controls and procedures as of a date within 90 days prior to the
            filing date of this annual report (the "Evaluation Date"); and

            c) presented in this annual report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

      5. The registrant's other certifying officers and I have disclosed, based
      on our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent function):

            a) all significant deficiencies in the design or operation of
            internal controls which could adversely affect the registrant's
            ability to record, process, summarize and report financial data and
            have identified for the registrant's auditors any material
            weaknesses in internal controls; and

            b) any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

      6. The registrant's other certifying officers and I have indicated in this
      annual report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.

Date: December 30, 2002


/s/ ERIC A. MILLER

Eric A. Miller
Chief Executive Officer


                                       33
<PAGE>

                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Elizabeth Hearty, Principal Accounting Officer of Laser Technology, Inc. (the
"registrant"), certify that:

1. I have reviewed this annual report on Form 10-KSB of Laser Technology, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

      a) designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this annual report is
      being prepared;

      b) evaluated the effectiveness of the registrant's disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      annual report (the "Evaluation Date"); and

      c) presented in this annual report our conclusions about the effectiveness
      of the disclosure controls and procedures based on our evaluation as of
      the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

      a) all significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and

      b) any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
      controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: December 30, 2002


/s/ ELIZABETH HEARTY

Elizabeth Hearty
Principal Accounting Officer


                                       34
<PAGE>

                             LASER TECHNOLOGY, INC.
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001

<PAGE>

                                 C O N T E N T S

Independent Auditors' Report...............................................  F-1

Consolidated Balance Sheets................................................  F-2

Consolidated Statements of Operations......................................  F-4

Consolidated Statements of Stockholders' Equity............................  F-5

Consolidated Statements of Cash Flows......................................  F-6

Notes to the Consolidated Financial Statements.............................  F-8

<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, 2002 and 2001 and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the years ended September 30, 2002, 2001 and 2000. 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, 2002 and 2001 and the
consolidated results of their operations and their cash flows for the years
ended September 30, 2002, 2001 and 2000 in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, the
schedule attached presents fairly, in all material respects, the information set
forth therein.


HJ & Associates, LLC
Salt Lake City, Utah
November 13, 2002


                                      F-1
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets

                                     ASSETS

<TABLE>
<CAPTION>
                                                                  September 30,
                                                           ----------------------------
                                                               2002             2001
                                                           -----------      -----------
<S>                                                        <C>              <C>
CURRENT ASSETS

   Cash and cash equivalents                               $ 3,612,637      $ 1,641,586
   Investments (Note 2)                                             --               --
   Trade accounts receivable (Note 8), less allowance
    of $25,088 and $55,228 for doubtful accounts             1,835,641        2,363,225
   Royalties receivable                                        475,245          443,713
   Inventories (Note 3)                                      2,846,880        4,493,440
   Deferred income tax benefit (Note 6)                        236,903               --
   Income tax prepayment                                        13,787            8,406
   Prepaids and other current assets                            95,210          186,017
                                                           -----------      -----------

     Total Current Assets                                    9,116,303        9,136,387
                                                           -----------      -----------

PROPERTY AND EQUIPMENT, (NET) (Note 4)                         540,085          788,983
                                                           -----------      -----------

OTHER ASSETS

   Other assets                                              1,037,260        1,068,559
                                                           -----------      -----------

     Total Other Assets                                      1,037,260        1,068,559
                                                           -----------      -----------

     TOTAL ASSETS                                          $10,693,648      $10,993,929
                                                           ===========      ===========
</TABLE>

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


                                      F-2
<PAGE>

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

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                         September 30,
                                                                -------------------------------
                                                                    2002               2001
                                                                ------------       ------------
<S>                                                             <C>                <C>
CURRENT LIABILITIES

   Accounts payable                                             $    651,996       $    593,271
   Accrued expenses                                                  268,076            327,094
   Notes payable - current (Note 9)                                       --             14,611
                                                                ------------       ------------

     Total Current Liabilities                                       920,072            934,976
                                                                ------------       ------------

     Total Liabilities                                               920,072            934,976
                                                                ------------       ------------

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS' EQUITY (Note 5)

   Preferred stock; par value $0.01; 2,000,000 shares
    authorized; -0- and -0- shares issued and outstanding,
    respectively                                                          --                 --
   Common stock; par value $0.01; 25,000,000 shares
    authorized, 5,710,867 shares issued and 5,486,217
    outstanding                                                       57,109             57,109
   Additional paid-in capital                                     10,314,226         10,314,226
   Stock subscription receivable                                          --                 --
   Treasury stock at cost, 224,650 and 224,650 shares,
    respectively                                                    (194,259)          (194,259)
   Retained earnings (deficit)                                      (403,500)          (118,123)
                                                                ------------       ------------

     Total Stockholders' Equity                                    9,773,576         10,058,953
                                                                ------------       ------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $ 10,693,648       $ 10,993,929
                                                                ============       ============
</TABLE>

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


                                      F-3
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                          For the Years Ended
                                                              September 30,
                                           -----------------------------------------------
                                                2002             2001              2000
                                           ------------       -----------      -----------
<S>                                        <C>                <C>              <C>
SALES, NET (Note 8)                        $ 10,577,217       $11,472,459      $12,720,299

COST OF GOODS SOLD                            5,249,501         5,416,379        5,802,123
                                           ------------       -----------      -----------

     Gross Profit                             5,327,716         6,056,080        6,918,176
                                           ------------       -----------      -----------

OTHER REVENUES

   Royalty and licensing revenues               998,392         1,033,129          959,015
                                           ------------       -----------      -----------

     Total Other Revenues                       998,392         1,033,129          959,015
                                           ------------       -----------      -----------

TOTAL OPERATING INCOME                        6,326,108         7,089,209        7,877,191

OPERATING EXPENSES

   General and administrative                 6,820,174         6,769,882        7,361,190
                                           ------------       -----------      -----------

     Total Operating Expenses                 6,820,174         6,769,882        7,361,190
                                           ------------       -----------      -----------

INCOME (LOSS) FROM OPERATIONS                  (494,066)          319,327          516,001

INTEREST AND OTHER INCOME, NET                   25,044           203,400           59,211
                                           ------------       -----------      -----------

INCOME (LOSS) BEFORE INCOME TAXES              (469,022)          522,727          575,212

Income tax expense (benefit) (Note 6)          (183,645)          113,614          233,800
                                           ------------       -----------      -----------

NET INCOME (LOSS)                          $   (285,377)      $   409,113      $   341,412
                                           ============       ===========      ===========

BASIC INCOME (LOSS) PER SHARE              $      (0.05)      $      0.07      $      0.07
                                           ============       ===========      ===========

DILUTED INCOME (LOSS) PER SHARE            $      (0.05)      $      0.06      $      0.06
                                           ============       ===========      ===========

BASIC WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING                        5,486,217         5,446,633        5,011,220
                                           ============       ===========      ===========

DILUTED WEIGHTED AVERAGE SHARES               5,486,217         6,401,833        5,642,720
                                           ============       ===========      ===========
</TABLE>

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


                                      F-4
<PAGE>

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

<TABLE>
<CAPTION>
                                           Common Stock         Additional                               Retained         Total
                                      ----------------------      Paid-In      Treasury   Subscription   Earnings      Stockholders'
                                         Shares      Amount       Capital        Stock     Receivable    (Deficit)        Equity
                                      ----------    --------   ------------   ---------   ------------   ---------    -------------
<S>                                    <C>          <C>        <C>            <C>           <C>          <C>          <C>
Balance,
 September 30, 1999                    5,244,201    $ 52,442   $  9,708,245   $(194,259)    $(19,537)    $(868,648)   $  8,678,243

Resolution of deferred award              (8,334)        (83)       (12,943)         --       19,537            --           6,511

Net income for the year ended
 September 30, 2000                           --          --             --          --           --       341,412         341,412
                                      ----------    --------   ------------   ---------     --------     ---------    ------------

Balance,
 September 30, 2000                    5,235,867      52,359      9,695,302    (194,259)          --      (527,236)      9,026,166

Shares issued in settlement              475,000       4,750        618,924          --           --            --         623,674

Net income for the year ended
 September 30, 2001                           --          --             --          --           --       409,113         409,113
                                      ----------    --------   ------------   ---------     --------     ---------    ------------

Balance,
 September 30, 2001                    5,710,867      57,109     10,314,226    (194,259)          --      (118,123)     10,058,953

Net Income (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
                                      ==========    ========   ============   =========     ========     =========    ============
</TABLE>

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


                                      F-5
<PAGE>

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

<TABLE>
<CAPTION>
                                                                     For the Years Ended
                                                                         September 30,
                                                         ---------------------------------------------
                                                             2002            2001              2000
                                                         -----------      -----------      -----------
<S>                                                      <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

   Net income (loss)                                     $  (285,377)     $   409,113      $   341,412
   Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
     Depreciation and amortization                           454,109          556,314          563,452
     Bad debt expense                                         43,195           43,189           24,551
     Stock issued for deferred services                           --               --            6,511
     Deferred income taxes                                  (236,903)          60,000          288,000
     (Gain) loss on sale of equipment                          2,001          (85,885)           3,201
     Fixed assets donated to charity                           2,174               --               --
     Loss on abandonment of patents                           14,945               --               --
     Loss on impairment of fixed assets                       29,336               --               --
   Changes in operating assets and liabilities:
     Trade accounts and other receivables                    484,389          317,930          763,565
     Royalties receivable                                    (31,532)        (442,016)         394,593
     Inventories                                           1,646,560       (1,396,578)        (249,127)
     Other assets                                             85,426          (78,632)         179,500
     Accounts payable and accrued expenses                      (293)        (194,917)        (588,488)
                                                         -----------      -----------      -----------

       Net Cash Provided (Used) by Operating
        Activities                                         2,208,030         (811,482)       1,727,170
                                                         -----------      -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

   Proceeds from sale of property and equipment                   --          110,978           13,595
   Purchases of property and equipment                      (155,863)        (189,912)        (195,967)
   Purchases of investments                                       --         (261,270)        (471,608)
   Proceeds from sale of investments                              --          983,000          450,139
   Patent costs paid                                         (66,505)        (130,336)        (148,387)
                                                         -----------      -----------      -----------

       Net Cash Provided (Used) by Investing
        Activities                                          (222,368)         512,460         (352,228)
                                                         -----------      -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

   Proceeds from note payable                                     --               --               --
   Payments on long-term debt                                (14,611)         (83,480)        (107,930)
                                                         -----------      -----------      -----------

       Net Cash (Used) by Financing Activities               (14,611)         (83,480)        (107,930)
                                                         -----------      -----------      -----------

NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                                          1,971,051         (382,502)       1,267,012

CASH AND CASH EQUIVALENTS AT
 BEGINNING OF YEAR                                         1,641,586        2,024,088          757,076
                                                         -----------      -----------      -----------

CASH AND CASH EQUIVALENTS AT END
 OF YEAR                                                 $ 3,612,637      $ 1,641,586      $ 2,024,088
                                                         ===========      ===========      ===========
</TABLE>

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


                                      F-6
<PAGE>

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

                                                      For the Years Ended
                                                         September 30,
                                               --------------------------------
                                                 2002        2001         2000
                                               -------     --------     -------
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS

CASH PAID FOR:

   Interest                                    $   846     $  3,040     $13,000
   Income taxes                                $84,467     $     --     $ 4,000

SCHEDULE OF NON-CASH FINANCING ACTIVITIES:

   Stock issued for deferred services          $    --     $     --     $ 6,511
   Stock issued for debt settlement            $    --     $623,674     $    --

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


                                      F-7
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       September 30, 2002, 2001, and 2000

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

            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.    Investments

            The Company accounts for marketable securities in accordance with
            Statement of Financial Accounting Standards No. 115, "Accounting for
            Certain Investments in Debt and Equity Securities." All marketable
            equity and debt securities have been categorized as trading
            securities. Trading securities, consist primarily of actively traded
            equity and debt securities, are stated at fair value. Realized and
            unrealized gains and losses are included in income.


                                      F-8
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       September 30, 2002, 2001, and 2000

NOTE 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            e.    Investments (Continued)

            The Company recognized realized gains (losses) of $-0-, $25,310, and
            ($10,074) for the years ended September 30, 2002, 2001, and 2000,
            respectively. Also, as the Company had no investments as of
            September 30, 2002, or 2001, the Company recorded no unrealized
            gains or losses for the years ended September 30, 2002 and 2001. The
            Company recorded unrealized gains of $14,289 for the year ended
            September 30, 2000.

            f.    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
            $150,000.

            g.    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.

            h.    Patents and Amortization

            In accordance with Financial Accounting Standards Board Statement
            142, "Goodwill and Other Intangible Assets", patents are carried at
            cost and when granted, 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.

            i.    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 less costs recouped from third parties. Research
            and development costs totaled $1,353,104, $1,159,561, and
            $1,274,900, for the years ended September 30, 2002, 2001, and 2000,
            respectively.

            j.    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.


                                      F-9
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       September 30, 2002, 2001, and 2000

NOTE 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            k.    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 basic loss per share for the year ended September 30,
            2002 as they are antidilutive in nature.

            l.    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.

            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, 2002.

            m.    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.

            n.    Advertising

            Advertising expenses are charged to operations in the period in
            which they are incurred. Advertising expense for the years ended
            September 30, 2002, 2001, and 2000 was approximately $192,000,
            $298,000, and $322,000, respectively.

            o.    Reclassifications

            Certain reclassifications have been made to the 2001 financial
            statements to conform to the current year's presentation.


                                      F-10
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       September 30, 2002, 2001, and 2000

NOTE 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            p.    Recent Accounting Pronouncements

            On August 16, 2001, the Financial Accounting Standards Board, or
            FASB, issued Statement of Financial Accounting Standards (SFAS) 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
            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 new
            accounting pronouncement, we currently expect that the effect of
            SFAS No. 143 on our consolidated financial statements, when it
            becomes effective, will not be significant.

            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.

            In April 2002, the FASB issued Statement No. 145 "Rescission of FASB
            Statements No. 4, 44, and 62, Amendment of FASB Statement No. 13,
            and Technical Corrections" (SFAS 145). SFAS 145 will require gains
            and losses on extinguishments of debt to be classified as income or
            loss from continuing operations rather than as extraordinary items
            as previously required under Statement of Financial Accounting
            Standards No. 4 (SFAS 4). Extraordinary treatment will be required
            for certain extinguishments as provided in APB Opinion No. 30. SFAS
            145 also amends Statement of Financial Accounting Standards No. 13
            to require certain modifications to capital leases be treated as a
            sale-leaseback and modifies the accounting for sub-leases when the
            original lessee remains a secondary obligor (or guarantor). SFAS 145
            is effective for financial statements issued after May 15, 2002, and
            with respect to the impact of the reporting requirements of changes
            made to SFAS 4 for fiscal years beginning after May 15, 2002. The
            adoption of the applicable provisions of SFAS 145 did not have an
            effect on our financial statements.


                                      F-11
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       September 30, 2002, 2001, and 2000

NOTE 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            p.    Recent Accounting Pronouncements (Continued)

            In June 2002, the FASB issued Statement No. 146, "Accounting for
            Costs Associated with Exit or Disposal Activities." SFAS 146
            nullifies Emerging Issues Task Force Issue No. 94-3 "Liability
            Recognition for Certain Employee Termination Benefits and Other
            Costs to Exit an Activity (including Certain Costs Incurred in a
            Restructuring)." SFAS 146 applies to costs associated with an exit
            activity that does not involve an entity newly acquired in a
            business combination or with a disposal activity covered by SFAS
            144. SFAS 146 is effective for exit or disposal activities that are
            initiated after December 31, 2002, with earlier application
            encouraged. We are currently reviewing SFAS 146 and intend to
            implement it no later than January 1, 2003.

NOTE 3 -    INVENTORIES

            Inventories consisted of the following:

                                                           September 30,
                                                   ----------------------------
                                                      2002              2001
                                                   ----------        ----------

            Finished goods                         $  502,445        $  804,133
            Work-in-process                           511,790           937,166
            Raw materials and supplies              1,832,645         2,752,141
                                                   ----------        ----------

                Total                              $2,846,880        $4,493,440
                                                   ==========        ==========

NOTE 4 -    PROPERTY AND EQUIPMENT

            Property and equipment consisted of the following:

                                                           September 30,
                                                   ----------------------------
                                                      2002              2001
                                                   -----------      -----------

            Shop equipment                         $   539,133      $   500,225
            Office equipment                         1,056,908          978,512
            Leasehold improvements                     541,528          669,455
            Automobiles                                 16,613           16,613
            Furniture/fixtures                         301,389          303,627
                                                   -----------      -----------
                                                     2,455,571        2,468,432

            Less accumulated depreciation           (1,915,486)      (1,679,449)
                                                   -----------      -----------

            Total                                  $   540,085      $   788,983
                                                   ===========      ===========

            Depreciation expense was $371,250, $519,024, and $528,455 for the
            years ended September 30, 2002, 2001, and 2000, respectively.


                                      F-12
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       September 30, 2002, 2001, and 2000

NOTE 5 -    STOCKHOLDERS' EQUITY

            Capital Stock

            At September 30, 2002, the Company had 299,900 shares reserved or
            available for issuance as follows:

            Common Shares:
                Equity Incentive Plan                                    209,900
                Non-Employee Director Stock Option Plan                   90,000
                                                                         -------

                    Total                                                299,900
                                                                         =======

            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
            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.


                                      F-13
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       September 30, 2002, 2001, and 2000

NOTE 5 -    STOCKHOLDERS EQUITY (Continued)

            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, 2002, options to purchase 790,100 shares of the
            Company's common stock were outstanding, at exercise prices ranging
            from $1.38 to $5.25 per share of which 660,366 and 605,500 options
            were exercisable at September 30, 2002 and 2001, 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 from the
            date of grant. As of September 30, 2002 and 2001, options to
            purchase 150,000 and 150,000 shares, respectively, of the Company's
            common stock were outstanding at exercise prices ranging from $1.19
            to $1.75 per share of which 90,000 options were exercisable.


                                      F-14
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       September 30, 2002, 2001, and 2000

NOTE 5 -    STOCKHOLDERS EQUITY (Continued)

            A summary of the status of the Company's stock option plans as of
            September 30, 2002 and 2001 and changes during the years ending on
            those dates is presented below:

<TABLE>
<CAPTION>
                                                           2002                       2001
                                                  ----------------------      -----------------------

                                                                Weighted                    Weighted
                                                                Average                     Average
                                                                Exercise                    Exercise
                                                   Shares         Price        Shares         Price
                                                  --------      --------      --------      ---------
<S>                                                <C>          <C>            <C>          <C>
            Outstanding, beginning of year         955,200      $   3.87       811,500      $    2.99
                Granted                                 --            --       164,500           1.38
                Canceled                           (15,100)        (1.50)      (20,800)          2.39
                Exercised                               --            --            --             --
                                                  --------      --------      --------      ---------

            Outstanding, end of year               940,100      $   2.71       955,200      $    2.86
                                                  --------      --------      --------      ---------

            Exercisable, end of year               750,366      $   3.28       705,500      $    3.87
                                                  --------      --------      --------      ---------

            Weighted average fair value of
             options and warrants granted
             during the year                                    $     --                    $    1.38
                                                                ========                    =========
</TABLE>

<TABLE>
<CAPTION>
                                                                     Outstanding                 Exercisable
                                                            -------------------------      --------------------------
                                                              Weighted
                                                              Average        Weighted                        Weighted
                                             Number          Remaining       Average          Number         Average
               Range of                    Outstanding      Contractual      Exercise       Exercisable      Exercise
            Exercise Prices                at 9/30/02          Life           Price         at 9/30/02         Price
            ---------------                -----------      -----------     ---------       -----------     ----------
<S>                                          <C>                  <C>       <C>               <C>           <C>
            $ 1.19 - 1.90                    574,600              4.50      $    1.65         384,866       $    1.81
              2.00 - 2.87                      6,000              6.25           2.87           6,000            2.87
              3.50 - 3.89                     30,250              2.00           3.81          30,250            3.81
              4.00 - 4.25                    324,750              1.82           4.23         324,750            4.23
              4.36 - 4.39                      1,000              3.91           4.39           1,000            4.39
              5.00 - 5.25                      3,500              3.33           5.25           3,500            5.25
                                             -------          --------      ---------         -------       ---------

            $ 1.19 - 5.25                    940,100              3.41      $    2.70         750,366       $    3.27
                                             =======          ========      =========         =======       =========
</TABLE>


                                      F-15
<PAGE>

                    LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       September 30, 2002, 2001, and 2000

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 thannot 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, 2002, 2001, and 2000 consists of the following:

                                               2002           2001        2000
                                            ---------      --------     --------
            Federal:
                 Current                    $  29,339      $100,844     $     --
                Deferred                     (215,710)           --      230,300

            State:
                 Current                        2,726        12,770        3,500
                 Deferred                          --            --           --
                                            ---------      --------     --------
                                            $(183,645)     $113,614     $233,800
                                            =========      ========     ========

            Net deferred tax assets and liabilities consists of the following
            components as of September 30, 2002, 2001, and 2000:

                                                2002         2001        2000
                                              --------     -------     --------
            Deferred tax liabilities:
            Accumulated Depreciation          $100,425     $    --     $     --

            Deferred tax assets:
                 Contribution Carryover          6,348      13,310           --
                 NOL Carryover                 130,130          --       75,600
                 Other, net                         --          --      (15,600)
                                              --------     -------     --------
                                               136,478      13,310           --
                                              --------     -------     --------

            Net deferred asset (liability)    $236,903     $13,310     $ 60,000
                                              ========     =======     ========

            A valuation allowance against deferred tax asset has not been
            established as it is more likely than not that these assets will be
            realized.


                                      F-16
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       September 30, 2002, 2001, and 2000

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,
            2002, 2001, and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                2002           2001          2000
                                                             ---------      ---------      --------
<S>                                                          <C>            <C>            <C>
            Amount computed using the statutory rate         $(159,466)     $ 207,040      $203,800
            Increase (decrease) in taxes resulting from:
                       Net Operating Loss - Carryforward            --        (96,286)           --
                       Loss on sale of assets                  (42,241)            --            --
                       Meals                                     9,280             --            --
                       Officer life insurance                    1,442             --            --
                       Other, net                               (2,910)        23,500        30,000
                       Actual vs. estimated bad debt            10,250        (20,640)           --
                                                             ---------      ---------      --------

                       Income tax expense (benefit)          $(183,645)     $ 113,614      $233,800
                                                             =========      =========      ========
</TABLE>

            Due to the change in ownership provisions of the Tax Reform Act of
            1986, net operating loss carryforwards for Federal income tax
            reporting purposes are subject to annual limitations. Should a
            change in ownership occur, net operating loss carryforwards may be
            limited as to use in future years.

NOTE 7 -    COMMITMENTS AND CONTINGENCIES

            Legal Proceedings

            In 1999, a class action lawsuit was filed against the Company
            alleging a misrepresentation of the Company's financial results,
            thereby artificially inflating the price of the Company's stock. The
            exposure to liability was approximately $1,474,000. The Company had
            sought a resolution to these lawsuits by agreeing in principle to
            settle pending approval by the shareholders. In April 2000, the
            Company approved a stipulation of settlement. In October 2000, the
            Courts approved the settlement. The settlement required the Company
            to pay $850,000 and issue 475,000 shares of common stock to the
            plaintiffs, for a total cost of $1,453,675. The Company's insurance
            carrier paid $740,000 of the cash settlement. The Company had
            previously accrued for the settlement cost in the fiscal year ending
            September 30, 1999. Associated with this allegation, the Company
            incurred legal and consulting fees of approximately $1,360,000. In
            October 2000, 475,000 shares were issued as stipulated in the
            agreement.

            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 year
            ended September 30, 2002 and 2001, no contributions were made by the
            Company to the Plan.


                                      F-17
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       September 30, 2002, 2001, and 2000

NOTE 7 -    COMMITMENTS AND CONTINGENCIES (Continued)

            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 $50,325 and $0, based on current market prices
            at September 30, 2002 and 2001, respectively.

            Leases

            The Company has an operating lease agreement for its office and
            manufacturing facility that expires February, 2008. Rent expense
            under operating lease agreements was $360,694, $354,852, and
            $312,526, for the years ended September 30, 2002, 2001 and 2000.

            As of September 30, 2002, future minimum lease payments under
            operating lease agreements for facilities and automotives are as
            follows:

                  2003                                           $    175,314
                  2004                                                167,315
                  2005                                                194,176
                  2006                                                201,318
                  2007                                                210,610
                  Thereafter                                           71,236
                                                                 ------------

                                                                 $  1,019,969
                                                                 ============

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, 2002 and 2001
            were $941,001 and $64,667, respectively.


                                      F-18
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       September 30, 2002, 2001, and 2000

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

            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, 2002 and 2001:

                                                         2002            2001
                                                     -----------    -----------
            Foreign distributors (a)                 $ 1,012,237    $   954,451
            State and local municipalities (b)           348,731        610,846
            U.S. government agencies (c)                 488,433         12,738
            Other receivables                             11,328        840,418
                                                     -----------    -----------
                                                       1,860,729      2,418,453
            Less allowance for doubtful accounts         (25,088)       (55,228)
                                                     -----------    -----------

            Total                                    $ 1,835,641    $ 2,363,225
                                                     ===========    ===========

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

            (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, 2002, 2001 and 2000, no single
            customer accounted for more than 10% of sales.

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

                                        2002             2001            2000
                                     -----------     -----------     -----------
            Foreign sales:

                Asia                 $   754,522     $ 1,012,341     $ 1,071,282
                Europe                 2,145,812       1,910,455       2,403,590
                Australia                547,001         474,245         733,415
                Other                    171,705         354,758         551,393
                                     -----------     -----------     -----------

            Total foreign sales        3,619,040       3,760,799       4,759,680
            North American sales       6,958,177       7,711,657       7,960,619
                                     -----------     -----------     -----------

                                     $10,577,217     $11,472,456     $12,720,299
                                     ===========     ===========     ===========


                                      F-19
<PAGE>

                     LASER TECHNOLOGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       September 30, 2002, 2001, and 2000

NOTE 9 -    NOTES PAYABLE

            Notes payable consisted of the following:

<TABLE>
<CAPTION>
                                                                    September 30,
                                                               ----------------------
                                                                 2002          2001
                                                               ---------     --------
<S>                                                            <C>           <C>
            Note payable to a corporation dated April 16,
             1999, 8% interest rate, secured by equipment,
             36 monthly principal and interest payments
             of $2,097                                         $      --     $ 14,611
                                                               ---------     --------

            Total notes payable                                       --       14,611
                                                               ---------     --------

                 Less: current portion                                --      (14,611)
                                                               ---------     --------

            Total Long-Term Debt                               $      --     $     --
                                                               =========     ========
</TABLE>

NOTE 10-    SUBSEQUENT EVENTS

            On September 27, 2002, a stockholder group consisting of current and
            former officers and directors of the Company submitted a proposal to
            the Board of Directors of the Company to acquire all of the
            operating assets, excluding cash and cash equivalents, and to assume
            substantially all of the Company's liabilities in exchange for
            approximately $3,650,000 cash. As a condition of the offer, the
            buyers propose that the Company will pay a cash dividend to its
            common stockholders of $1.10 per share. At September 30, 2002 there
            were 5,486,217 common shares outstanding.

            On December 9, 2002, the Company received a second proposal from
            Decatur Electronics, Inc., an unrelated entity, for the acquisition
            of all of the Company's issued and outstanding common shares in
            exchange for $1.20 per share of common stock outstanding.

            The Company is currently reviewing both proposals and has hired
            various consultants to assist in this process as well as to
            facilitate the evaluation of additional opportunities as they arise.

            The special committee has notified both Decatur and the Williams
            group that the committee deems their offers to be inadequate. Both
            parties have responded back to the committee that they are willing
            to reevaluate their proposals and Decatur has indicated that it will
            continue to work with the committee beyond the Decenber 20, 2002
            deadline set fourth in its letter of intent. There can be no
            assurance that either proposal will result in a definitive agreement
            or that any propective suitor will be able to secure adquate cash or
            requisite bank financing to finalize a purchase or similiar
            transaction.


                                      F-20
<PAGE>

                             LASER TECHNOLOGY, INC.

                 SCHEDULE I - VALUATION AND QUALIFYING ACCOUNTS

                         Allowance for Doubtful Accounts

<TABLE>
<CAPTION>
                                          Additions
                             Balance      Charged to                          Balance
                          at Beginning    Costs and                           at End
                             of Year       Expenses       Deductions          of Year
                           ----------     ---------     --------------      -------------
<S>                        <C>            <C>           <C>                 <C>
Year Ended
    September 30, 2000     $  250,000     $  24,551     $     (161,881)     $     112,670
Year Ended
    September 30, 2001     $  112,670     $  43,189     $     (100,631)     $      55,228
Year Ended
    September 30, 2002     $   55,228     $  43,195     $      (73,335)     $      25,088
</TABLE>


                                      F-21