For the quarterly period ended:        
     March 31, 2000

| | MARYLAND |  | 22-3535916
| | -------- |  | ----------

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

Indicate by
check mark whether the registrant (1) has filed all documents and reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:

Yes  X  No

Indicate the
number of shares outstanding of each of the issuers classes of stock, as
of the last practicable date: 14,538,983 shares of common stock, $0.001 par
value, outstanding as of May 12, 2000.

|PART I.    FINANCIAL INFORMATION |  | 1
|-------------------------------- |  | -

|Item 1.    Financial Statements |  | 1
|------------------------------- |  | -

| | Balance Sheets as of March 31, 2000 (Unaudited) and December 31, 1999
Statements of Operations (Unaudited) for the Three Months Ended March 31, 2000 and March 31, 1999
                            Statements of Stockholders' Equity (Unaudited) for the Three Months Ended March 31, 2000
                        Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2000 and March 31, 1999
                        Notes to Financial Statements (Unaudited) |  | 1
1
2
3
4
5
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------

|Item 2.    Managements Discussion and Analysis
of Financial Condition and Results of
                    Operations |  | 14
|------------------------------------------------------------------------------------------------------------------- |  | --

|PART II.    OTHER INFORMATION |  | 25
|----------------------------- |  | --

|Item 1.    Legal Proceedings
   Item 2.    Changes in Securities and Use of Proceeds
   Item 3.    Defaults Upon Senior Securities
   Item 4.    Submission of Matters to a Vote of Security Holders
   Item 5.    Other Information
   Item 6.    Exhibits and Reports on Form 8-K |  | 25
25
25
25
25
25
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------

LASER MORTGAGE MANAGEMENT, INC.

PART I.   FINANCIAL INFORMATION

Item 1.     Financial Statements

`MARCH 31, 2000       DECEMBER 31, 1999
                                                                         (Unaudited)
ASSETS`

`MARCH 31, 2000       MARCH 31, 1999`

`Accumulated
                                                         Compre-     Other
                               Common     Additional     hensive     Comprehensive   Accumulated   Treasury
                                Stock      Paid-in       Income        Income        Distributions  Stock
                               Par Value    Capital       (Loss)       (Loss)         and Losses    At Cost     Total`

`MARCH 31, 2000         MARCH 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:`

1.     ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

LASER Mortgage Management, Inc. (the "Company") was incorporated in Maryland on
September 3, 1997. The Company commenced its operations on November 26, 1997
(see Note 5).

Basis of Presentation - The accompanying unaudited financial
statements have been prepared in conformity with the instructions to Form 10-Q
and Article 10, Rule 10-01 of Regulation S-X for interim financial statements.
The interim financial statements for the three-month period are unaudited;
however, in the opinion of the Companys management, all adjustments,
consisting only of normal recurring accruals, necessary for a fair statement of
the results of operations have been included. These unaudited financial
statements should be read in conjunction with the audited financial statements
included in the Companys Annual Report on Form 10-K for the year ended
December 31, 1999. The nature of the Companys business is such that the
results of any interim period are not necessarily indicative of results for a
full year. Prior period financial statements have been reclassified, where
appropriate, to conform to the 2000 presentation.

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

Cash and Cash Equivalents - Cash and cash equivalents includes
cash on hand and overnight repurchase agreements. The carrying amounts of cash
equivalents approximate their value.

Investments - The Company invests primarily in mortgage-backed
securities and mortgage loans. The mortgage-backed securities include mortgage
pass-through certificates, collateralized mortgage obligations and other
securities representing interests in, or obligations backed by, pools of
mortgage loans (collectively, Mortgage Securities). The Company also
invests in other debt and equity securities (Other Securities and,
together with Mortgage Securities, Securities). The mortgage loans
are secured by first or second liens on single-family residential, multi-family
residential, commercial or other real property (Mortgage Loans and,
together with Securities, Investments).

Statement of Financial Accounting Standards No. 115, Accounting
for Certain Investments in Debt and Equity Securities (SFAS 115), requires the
Company to classify its securities as either trading investments,
available-for-sale investments or held-to-maturity investments. Although the
Company generally intends to hold most of its Securities until maturity, it may,
from time to time, sell any of its Securities as part of its overall management
of its balance sheet. Accordingly, this flexibility requires the Company to
classify all of its Securities as available-for-sale. All Securities classified
as available-for-sale are reported at fair value, with unrealized gains and
losses reported as a separate component of stockholders equity within
accumulated other comprehensive income (loss).

Unrealized losses on Securities that are considered
other-than-temporary, as measured by the amount of decline in fair value
attributable to factors other than temporary factors, are recognized in income
and the cost basis of the Securities is adjusted. Other-than-temporary
unrealized losses are based on managements assessment of various factors
affecting the expected cash flow from the Securities, including the level of
interest rates, an other-than-temporary deterioration of the credit quality of
the underlying mortgages and/or the credit protection available to the related
mortgage pool and a significant change in the prepayment characteristics of the
underlying collateral. The Companys Mortgage Loans are held as long-term
investments and are carried at their unpaid principal balance, net of
unamortized discount or premium.

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

Investment transactions are recorded on the date the Investments
are purchased or sold. Purchases of newly-issued securities are recorded when
all significant uncertainties regarding the characteristics of the securities
are removed, generally shortly before settlement date. Realized gains and losses
on Investment transactions are determined on the specific identification basis.

Interest Rate Swaps - In
1997 and 1998, the Company entered into interest rate swap agreements
(swaps) to reduce the mismatch in the maturity and repricing
characteristics of its fixed-rate agency pass-through securities and its
short-term repurchase obligations used for funding. The objective was to change
the interest rate characteristics of the securities from fixed to floating rate.
Swaps were designated as hedges of certain of its fixed rate agency pass-through
securities. The Company monitored the correlation and effectiveness for swap
transactions by ensuring that the notional amount of the swap was less than the
principal amount of the assets being hedged, the maturity of the swaps did not
exceed the maturity of the assets being hedged and the interest rate index on
the asset being hedged correlated with the interest rate index for the paying
leg of the swap.

The Company carried the swaps that met
the above criteria and the hedged securities at their fair value and reported
unrealized gains and losses in other comprehensive income. Net payments or
receipts on swaps that qualified for hedge accounting were recognized as
adjustments to interest income as they accrued. Swaps that did not meet these
criteria were carried at fair value with changes reflected in income currently.

The gain or loss on the terminated swaps were deferred and
amortized as a yield adjustment over the shorter of the remaining original term
of the swap or the remaining holding period of the investment securities. Gains
and losses on swaps associated with sold securities were recognized as part of
the gain or loss on sale.

The Company did not enter into any interest rates swaps during the three months
ended March 31, 2000 and 1999.

Income Taxes - The Company has elected to be taxed as a Real
Estate Investment Trust (REIT) and intends to comply with the
provisions of the Internal Revenue Code of 1986, as amended (the
Code) with respect thereto. Accordingly, the Company should not be
subjected to Federal income tax to the extent of its distributions to
stockholders and as long as certain asset, income and stock ownership tests are
met.

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

Comprehensive Income - The Company has adopted SFAS No. 130,
Reporting Comprehensive Income. This statement requires the reporting of
comprehensive income in addition to net income from operations. Comprehensive
income is a more inclusive financial reporting methodology that includes
disclosure of certain financial information (such as unrealized gains or losses
on securities) that historically has not been recognized in the calculation of
net income.

2.     AVAILABLE-FOR-SALE INVESTMENTS

The following tables set forth the fair value of the Company's Securities,
excluding interest-only securities ("IOs"), as of March 31, 2000 and December
31, 1999:

`Agency
                                      Fixed/
                                      Floating
                                      Rate                        Non-
                                      Mortgage       Mortgage     Mortgage
                                      Securities    Subordinates  Subordinates    Total

Securities, principal amount          $62,223,463   $26,229,967   $6,436,914      $94,890,344
Unamortized discount                     (692,213)   (8,703,092)    (662,835)     (10,058,140)
                                       -----------   -----------  -----------     ------------
Amortized cost                         61,531,250    17,526,875    5,774,079       84,832,204

Gross unrealized losses                  (284,695)   (8,477,486)  (1,180,856)      (9,943,037)
                                      ------------   -----------  -----------     ------------
Estimated fair value                  $61,246,555   $ 9,049,389   $4,593,223      $74,889,167
                                      ============  ============  ============    ============`

December 31, 1999

`Agency
                                         Fixed/
                                         Floating
                                         Rate                            Non-
                                         Mortgage       Mortgage        Mortgage
                                         Securities     Subordinates    Subordinates     Total 

Securities, principal amount            $67,029,843    $59,760,702      $6,436,914      $133,227,459

Unamortized discount                     (1,131,485)   (24,333,991)       (661,965)      (26,127,441)
Unamortized premium                         314,971         -                -               314,971
                                        -------------- -------------    -------------   --------------

Amortized cost                           66,213,329     35,426,711        5,774,949      107,414,989

Gross unrealized loses                   (1,411,395)   (16,866,092)        (559,880)     (18,837,367)
                                        -------------- -------------    -------------   --------------

Estimated fair value                    $64,801,934    $18,560,619       $5,215,069      $88,577,622
                                        ============== =============    =============   ==============`

During the three months ended March 31, 2000, the
Company sold IOs with a notional amount of $56,322,389. As of the March 31, 2000
the Company did not own any IOs.

The fair value of the Company's IOs as of December 31, 1999 are summarized as
follows:

December 31, 1999

`Floating
                                            Rate

        Securities, notional amount       $ 56,322,389
                                          ============
        Amortized  cost, after provision
        for impairment                     $ 2,155,466

        Gross unrealized gains               6,414,549
        Gross unrealized losses                  -
                                          ------------
        Estimated fair value              $  8,570,015
                                          ============`

Financial Accounting Standards Board (FASB)
Statement No. 107, Disclosures About Fair Value of Financial Instruments,
defines the fair value of a financial instrument as the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced or liquidation sale.

The fair values of the Companys Investments are based on
prices provided by dealers who make markets in these financial instruments. The
fair values reported reflect estimates and may not necessarily be indicative of
the amounts the Company could realize in a current market exchange. Cash and
cash equivalents, interest receivable, repurchase agreements and other
liabilities are reflected in the financial statements at their fair value
because of the short-term nature of these instruments.

The Company continued to reduce its less liquid portfolio of
investments during the three months ended March 31, 2000.

3.     MORTGAGE LOANS

The following
tables pertain to the Companys Mortgage Loans as of March 31, 2000 and
December 31, 1999 which are carried at their amortized cost:

`March 31, 2000     December 31, 1999


Mortgage Loans, principal amount        $      3,176,434     $     3,653,788
Unamortized premium                              116,302             150,844
                                        -----------------    ----------------
Amortized cost                          $      3,292,736     $     3,804,632
                                        =================    ================`

As of March 31, 2000 and December 31, 1999, the amortized cost
of the Mortgage Loans approximated their fair value.

4.     REPURCHASE AGREEMENTS

The Company has entered into repurchase agreements to finance
most of its Investments. The repurchase agreements are collateralized by the
market value of the Companys Investments and bear interest rates that
generally move in close relation to one-month LIBOR.

As of March 31, 2000, the Company had outstanding $ 50,563,000
of repurchase agreements with a weighted average borrowing rate of 6.00% and a
weighted average remaining maturity of 59 days. At March 31, 2000, Investments
actually pledged had an estimated fair value of $52,507,736.

As of December 31, 1999, the Company had outstanding $44,018,000
of repurchase agreements with a weighted average borrowing rate of 5.90% and a
weighted average remaining maturity of 12 days. At December 31, 1999,
Investments actually pledged had an estimated fair value of $45,400,000.

At March 31, 2000 and December 31, 1999, the repurchase agreements had the
following remaining maturities:

`March 31, 2000       December 31, 1999

Within 30 days               $   2,645,00         $  44,018,000
30 to 90 days                  47,918,000                 -
                             --------------       ---------------
                             $ 50,563,000         $  44,018,000
                             ==============       ===============`

5.     COMMON STOCK

Sales of Common Stock - The Company's common stock was sold through several
transactions as follows:

The Company was initially capitalized with the sale of 6,000 shares of common
stock on September 2, 1997, for a total of $15,005.

The Company received commitments on September 15, 1997 for the purchase, in a
private placement, of 1,014,000 shares of common stock, at $15.00 per share, for
a total of $15,210,000 from certain officers, directors, proposed directors,
employees and affiliates of the Company and the Former Manager (as defined
below). The sale of these shares was consummated at the time of the closing of
the public offering.

The Company received commitments on November 7, 1997 from several mutual funds
under common management (the "Funds") for the purchase, in a private placement,
of 3,333,333 shares of common stock, at $15.00 per share, for a total of
$49,999,995. The sale of these shares was consummated at the time of the closing
of the public offering.

The Company sold 15,000,000 shares of common stock through a public offering for
$225,000,000. Syndication costs of $18,364,795 were deducted from the gross
proceeds of the offerings.

On each of January 2, 1998, April 1, 1998 and July 1, 1998, 25,000 shares
(75,000 shares in the aggregate) of common stock were issued as deferred stock
awards to certain employees of the Company. On each of October 1, 1998 and
January 1, 1999, an additional 5,000 shares were also issued as deferred stock
awards to certain employees of the Company. On February 28, 1999, an additional
13,750 shares were issued as deferred stock awards to an employee of the
Company.

Dividends/Distributions - The Company did not declare or pay any dividends or
distributions during the three months ended March 31, 2000. The Company declared
distributions in cash of $2.00 per share during the three months ended March 31,
1999.

Stock Repurchases - In March 1998, the Board of Directors of the Company
approved the repurchase of up to $20 million of the Company's common stock. In
June 1998 and November 1998, the Board of Directors increased the amount of
common stock authorized to be repurchased to $30 million and $40 million,
respectively. Pursuant to the repurchase program, for the year ended December
31, 1999, the Company used the proceeds of sales of, and payments from, its
portfolio securities to repurchase 2,953,700 shares of Common Stock for $10
million in open market transactions. Such purchases were made at a weighted
average price per share of $3.50 (excluding commission costs costs). During the
three months ended March 31, 2000, the Company repurchased 25,000 shares of
common stock for $97,875 or $3.875 per share (excluding commissions costs). The
repurchased shares have been returned to the Company's authorized but unissued
shares of common stock as treasury shares.

6.     TRANSACTIONS WITH AFFILIATES AND TERMINATION
         OF MANAGEMENT AGREEMENT

Pursuant to the terms of a Management Agreement (the "Management Agreement")
with the Company, LASER Advisers Inc. (the "Former Manager") was responsible for
the day-to-day operations of the Company and performed (or caused to be
performed) such services and activities relating to the assets and operations of
the Company as was appropriate, subject to the supervision of the Company's
Board of Directors. For performing these services, the Former Manager received
an annual base management fee of 1.0% of Average Stockholders' Equity. The term
"Average Stockholders' Equity" for any period meant stockholders' equity,
calculated in accordance with GAAP, excluding any mark-to-market adjustments of
the investment portfolio.

The Former Manager also was entitled to receive a quarterly incentive fee in an
amount equal to 20% of the Net Income of the Company for the preceding fiscal
quarter, in excess of the amount that would produce an annualized Return on
Average Stockholders' Equity for such fiscal quarter equal to the Ten-Year U.S.
Treasury Rate plus 1%. The term "Return on Average Stockholders' Equity" is
calculated for any quarter by dividing the Company's Net Income for the quarter
by its Average Stockholders' Equity for the quarter. For such calculations, the
"Net Income" of the Company means the taxable income of the Company within the
meaning of the Code, less capital gains and capital appreciation included in
taxable income, but before the Former Manager's incentive fees and before
deduction of dividends paid. The incentive fee payments to the Former Manager
were computed before any income distributions were made to stockholders. As used
in calculating the Former Manager's fee, the term "Ten-Year U.S. Treasury Rate"
means the arithmetic average of the weekly yield to maturity for actively traded
current coupon U.S. Treasury fixed interest rate securities (adjusted to
constant maturities of ten years) published by the Federal Reserve Board during
a quarter, or, if such rate is not published by the Federal Reserve Board,
published by any Federal Reserve Bank or agency or department of the federal
government selected by the Company.

The Company and the Former Manager terminated
the Management Agreement effective as of February 28, 1999. In connection
therewith, the Company agreed to pay to the Former Manager: (a) $416,505, which
represented the base management fee payable under the Management Agreement for
the fourth quarters of 1998; (b) $708,495, which the Company and the Former
Manager agreed to as the quarterly incentive fee for the fourth quarter of 1998;
and (c) $500,000 for services performed under the Management Agreement for the
period January 1, 1999 through February 28, 1999 and for certain transition
services with respect to internalizing the advisory function.

On November 1, 1999, the Company announced that Mariner Mortgage Management, LLC
("Mariner") agreed to serve as the external manager of the Company and be
responsible for day-to-day management of the Company's investments. William J.
Michaelcheck, the Chairman of Mariner, was appointed President and Chief
Executive Officer of the Company. The Company terminated its consulting
arrangement with BlackRock Financial Management, Inc. ("BlackRock").

Under the Company's agreement with Mariner,
Mariner is entitled to receive an (1) annual base management fee payable monthly
in cash equal to 0.45% of the aggregate value of the Company's outstanding
equity as of the end of such month and (2) incentive fee payable annually in
newly issued stock of the Company. The incentive fee will equal the number of
shares outstanding on November 1, 2000, multiplied by:

| | o |  | 10% of the difference between the market price of
the Company's common stock (plus any distributions) on November 1, 2000 (or such
earlier date when the agreement is terminated) and $3.63 per share (which
approximates the average closing price of the Company's common stock for the
fifteen days ended October 29, 1999) up to the equivalent of $4.00 per
share;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | 15% of the difference between over $4.00 per share
up to $4.50 per share; and
| | - |  | -----------------------------------------------------------------------------

| | o |  | 20% of the difference between over $4.50 per
share.
| | - |  | ---------------------------------------------------

The agreement has a one-year term, but is
terminable by the Company without cause or penalty on 30 days' notice. Mariner
may terminate the agreement in limited circumstances. In addition, Mariner is
entitled to receive a minimum fee if the Company adopts a plan of liquidation
prior to the expiration of the agreement.

Pursuant to the agreement with Mariner the
Company accrued base management fees of $64,968 and incentive fees of $464,518
for the three months ended March 31, 2000. At December 31, 1999, base management
fees of $42,754 were payable to Mariner under this agreement.

7.     EARNINGS PER SHARE (EPS)

In February 1997, the FASB issued Statement of Financial Accounting No. 128, Earnings Per Share ("SFAS
No. 128") which requires dual presentation of Basic EPS and Diluted EPS on the face of the income statement for
all entities with complex capital structures.  SFAS No. 128 also requires a reconciliation of the numerator and
denominator of the Basic EPS to the numerator and denominator of Basic EPS and Diluted EPS computation.  There
are no differences between Basic EPS and Diluted EPS for March 31, 2000.

`For the Three Months Ended
                                                  March 31, 2000

                            Loss                       Shares            Per-Share
                           (Numerator)                 (Denominator)         Amount

Basic EPS                 $ (1,387,560)                  14,847,825         $  (.09)
                          =============                                     ========
Diluted EPS               $ (1,387,560)                  14,847,825         $  (.09)
                          =============                                     ========`

For the three months ended March 31, 2000, the Company has no deferred common
stock reserved for issuance.

For the three months ended March 31, 2000, options to purchase
72,000 shares were outstanding during the period and were anti-dilutive because
the strike price ($15.00) was greater than the average daily market price of the
Companys common stock for the period. Therefore, these options were
excluded from Diluted EPS.

The reconciliation for the three months ended March 31, 1999 is
as follows:

`For the Three Months Ended
                                                  March 31, 1999

                             Loss                       Shares                 Per-Share
                           (Numerator)                 (Denominator)              Amount

Basic EPS                 $   (13,175,272)               17,806,740             $   (.74)
                          ================                                      =========
Diluted EPS               $   (13,175,272)               17,806,740             $   (.74)
                          ================                                      =========`

For the three months ended March 31, 1999, the Company has no deferred common
stock reserved for issuance.

For the three months ended March 31, 1999, options to purchase
72,000 shares were outstanding during the period and were anti-dilutive because
the strike price ($15.00) was greater than the average daily market price of the
Companys common stock for the period. Therefore, these options were
excluded from Diluted EPS.

8.     LONG-TERM STOCK INCENTIVE PLAN

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

The Company adopted the disclosure-only provisions of Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS No. 123) for the options. Accordingly, no
compensation cost for the Incentive Plan has been determined based on the fair
value at the grant date for awards consistent with the provisions of SFAS No.
123. For the Companys pro forma net earnings, the compensation cost will
be amortized over the four-year vesting period of the options. The
Companys net loss per share would have been increased to the pro forma
amounts indicated below:

`For the Three Months Ended           For the Three Months Ended
                                                       March 31, 2000                       March 31, 1999

   Net earnings (loss) - as reported                 $(1,387,560)                    $(13,175,272)
   Net earnings (loss) - pro forma                   $(1,389,124)                    $(13,176,667)
   (Loss) earnings per share - as reported              $(.09)                          $(0.74)
   (Loss) earnings per share - pro forma                $(.09)                          $(0.74)`

The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option pricing model with the following weighted
average assumptions used for grants for the three months ended March 31, 2000:
dividend yield of 11.47%; expected volatility of 18%; risk-free interest rate of
5.82%; and expected lives of ten years.

The following table summarizes information about stock options
outstanding as of March 31, 2000 and 1999:

`Weighted
                                                                   Average        Weighted
                                                                  Remaining       Average
                              Exercise          Options          Contractual      Exercise
                               Price          Outstanding        Life (Yrs.)       Price

     March 31, 2000         $  15.00             10,000             7.7             $  15.00
                            ========                                                ========
     March 31, 1999         $  15.00             72,000             8.7             $  15.00
                            ========                                                ========`

The options become exercisable at the rate of 25% on each of
January 2, 1998, January 2, 1999, January 2, 2000 and January 2, 2001,
subject to the holders continued employment or service. During the three
months ended March 31, 1999, 148,000 stock options terminated.

9.     TAXABLE INCOME

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

For the years ended 1999 and 1998, a net operating loss as
calculated for tax purposes (NOL) is estimated at approximately
$(30.5) million and $(52.4) million, respectively, or $(1.80) and $(2.65),
respectively, per weighted average share. NOLs generally may be carried forward
for 20 years. The Company believes that during 1999 it experienced an
ownership change within the meaning of Section 382 of the Code.
Consequently, its use of NOLs generated before the ownership change to reduce
taxable income after the ownership change will be subject to limitations under
Section 382. Generally, the use of NOLs in any year is limited to the value of
the Companys stock on the date of the ownership change multiplied by the
long-term tax exempt rate (published by the IRS) with respect to that date. The
Company currently is attempting to determine the amount of the annual
limitation.

Taxable income (loss) requires an annual calculation;
consequently, for the year ended December 31, 1999, taxable income (loss) may be
different from GAAP income (loss) as a result of differing treatment of
unrealized gains and losses on securities transactions. For the Companys
tax purposes, unrealized gains (losses) will be recognized at the end of the
year and will be aggregated with operating gains (losses) to produce total
taxable income (loss) for the year.

10.     RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities (SFAS No. 133), which, as issued, was effective for
all fiscal quarters of fiscal years beginning after June 15, 1999. SFAS No. 133
generally requires that entities recognize all derivative financial instruments
as assets or liabilities, measured at fair value, and include in earnings the
changes in the fair value of such assets and liabilities. SFAS No. 133 also
provides that changes in the fair value of assets or liabilities being hedged
with recognized derivative instruments be recognized and included in earnings.
In June 1999, the FASB issued SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133, which deferred the effective date of FASB No. 133 for
one year to fiscal years beginning after June 15, 2000. The Company has not yet
completed its evaluation of SFAS No. 133, and therefore, at this time, cannot
predict what, if any, effect its adoption will have on the Companys
financial condition or results of operations.

11.     SUBSEQUENT EVENTS

The Company repurchased an additional 300,600 shares of its
common stock on April 20, 2000 for $1,146,037.50 or $3.8125 per share.

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

The following discussion should be read in conjunction with the
Companys financial statements and notes thereto.

Forward-Looking Statements

Safe Harbor statement under the Private Securities
Litigation Reform Act of 1995: Statements in this discussion regarding the
Company and its business, which are not historical facts, are
forward-looking statements that involve risks and uncertainties.
Risks and uncertainties, which could cause results to differ from those
discussed in the forward-looking statements herein, are listed in the
Companys Annual Report filed on Form 10-K.

General

LASER Mortgage Management, Inc. (the Company), a
Maryland corporation, is a specialty finance company, organized in September
1997, that invests primarily in mortgage-backed securities and mortgage loans.
The mortgage-backed securities include mortgage pass-through certificates,
collateralized mortgage obligations, other securities representing interests in,
or obligations backed by, pools of mortgage loans and mortgage derivative
securities (collectively, the Mortgage Securities). The mortgage
loans are secured by first or second liens on single-family residential,
multi-family residential, commercial or other real property (the Mortgage
Loans and, together with the Mortgage Securities, the Mortgage
Assets).

Mariner Mortgage Management, LLC ("Mariner"), an affiliate of Mariner Investment
Group, Inc., manages the Company's day-to-day operations.

The Company is authorized to acquire the following types of
investments:

| | o |  | fixed and adjustable rate mortgage pass-through
certificates ("Pass-Through Certificates"), which are securities collateralized
by pools of Mortgage Loans issued and sold to investors by private,
non-governmental issuers ("Privately-Issued Certificates") or by various U.S.
government agencies or instrumentalities, such as the Federal Home Loan Mortgage
Corporation ("FHLMC"), the Federal National Mortgage Association ("FNMA") and
the Government National Mortgage Association ("GNMA") (collectively, "Agency
Certificates");
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | collateralized mortgage obligations, including
regular interests in real estate mortgage investment conduits ("CMOs"), which
are fixed and adjustable rate debt obligations collateralized by Mortgage Loans
or Pass-Through Certificates;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | Mortgage Loans;
| | - |  | ---------------

| | o |  | mortgage derivative securities ("Mortgage Derivatives"), including interest-only securities ("IOs")
                            which receive only certain interest payments from a pool of Mortgage Securities or Mortgage Loans;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | subordinate interests ("Subordinate Interests"), which are classes of Mortgage Securities junior to
                            other classes of Mortgage Securities in the right to receive payments from the underlying Mortgage
                            Loans; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | other fixed-income securities in an amount not to exceed 5% of total assets.
| | - |  | ----------------------------------------------------------------------------

The Company maintained a portfolio at its peak of approximately
$3.8 billion of Mortgage Assets in June 1998. Since June 1998, the Company has
been delevering its portfolio by selling certain securities and repaying
borrowings in an attempt to reduce the portfolios susceptibility to basis
and interest rate risk and to create additional liquidity. In November 1999, the
Company announced that its Board of Directors authorized management to conduct a
competitive sale of its less liquid portfolio assets as part of its ongoing
program to reduce the volatility of the Companys assets. As of March 31,
2000, the Company had approximately $11 million (based on December 31, 1999
estimated fair value) of these assets remaining to be sold.

The Company has
elected to be taxed and intends to continue to qualify as a real estate
investment trust (a REIT) under the Internal Revenue Code of 1986,
as amended (the Code), commencing with its short taxable year ended
December 31, 1997, and such election has not been revoked. The Company has
qualified as a REIT for the taxable years since its inception, and generally
will not be subject to federal income tax provided that it distributes its
income to its stockholders and maintains its qualification as a REIT.

The Company repurchased an additional 300,600 shares of its
common stock on April 20, 2000 for $1,146,037.50 or $3.8125 per share.

Results of Operations for the Three Months Ended March 31,
2000 Compared to the Three Months Ended March 31, 1999

Net Loss Summary

General. For the three months ended March 31, 2000, the Company
had a net loss of $(1.4) million, or $(0.09) per weighted average share, the
weighted average number of shares of Common Stock outstanding was 14,847,825, no
distributions or dividends were declared or paid and return on average equity
was (1.89)% on an unannualized basis.

For the three months ended March 31, 1999, the Company had a net
loss of $(13.1) million, or $(0.74) per weighted average share, the weighted
average number of shares of Common Stock outstanding was 17,808,740, dividends
declared were $2.00 per weighted average share, $35.6 million in total or paid
and return on average equity was (10.79)% on an unannualized basis.

Losses from investment activities. For the three months ended
March 31, 2000, the Company sold securities with an aggregate historical
amortized cost of $86 million for a net loss of $(2.4) million, compared to
sales of $310 million of securities for an aggregate loss of $(5.0) million for
the three months ended March 31, 1999. In addition, in accordance with SFAS No.
115, an entity should recognize an other-than-temporary impairment when it
intends to sell a specifically identified available-for-sale debt security at a
loss shortly after the balance sheet date. The write-down for the impairment
should be recognized in earnings in the period in which the decision is made.
The Company reclassified an amount of approximately $4.2 million from unrealized
loss to realized loss for securities sold in April 1999, as the decision to sell
them was made in March 1999.

The realized losses during the
three months ended March 31, 2000 were approximately $(2.4) million, or $(0.16)
per weighted average share, compared to approximately $(17.6) million, or
$(0.99) per weighted average share for the three months ended March 31, 1999.
Excluding realized gains and losses, the Companys income for the three
months ended March 31, 2000 was approximately $1.0 million, or $0.07 per
weighted average share, compared to approximately $4.4 million, or $0.25 per
weighted average share, for the three months ended March 31, 1999. This
reduction of income for the first three months of 2000 compared to the first
three months of 1999 is consistent with the Companys substantially reduced
investment portfolio.

Taxable Income (Loss) and GAAP Income (Loss)

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

For the years ended December 31, 1999 and 1998, a net operating
loss as calculated for tax purposes (NOL) is estimated at
approximately $(30.5) million and $(52.4) million, respectively, or $(1.80) and
$(2.65), respectively, per weighted average share. NOLs generally may be carried
forward for 20 years. The Company believes that during 1999 it experienced an
ownership change within the meaning of Section 382 of the Code.
Consequently, its use of NOLs generated before the ownership change to reduce
taxable income after the ownership change will be subject to limitations under
Section 382. Generally, the use of NOLs in any year is limited to the value of
the Companys stock on the date of the ownership change multiplied by the
long-term tax exempt rate (published by the IRS) with respect to that date. The
Company currently is attempting to determine the amount of the annual
limitation.

Taxable income (loss) requires an annual calculation;
consequently, for the year ended December 31, 1999, taxable income (loss) may be
different from GAAP income (loss) as a result of differing treatment of
unrealized gains and losses on securities transactions. For the Companys
tax purposes, unrealized gains (losses) will be recognized at the end of the
year and will be aggregated with operating gains (losses) to produce total
taxable income (loss) for the year.

Taxable income and GAAP income (loss) could also differ for
other reasons. For example, the Company may take credit provisions which would
affect GAAP income whereas only actual credit losses are deducted in calculating
taxable income. In addition, G&A Expenses may differ due to differing
treatment of leasehold amortization, certain stock option expenses and other
items. As of December 31, 1999 and 1998, the Company had not taken credit
provisions because 64% and 82%, respectively, of the Companys Investments
were Agency Certificates.

The distinction between taxable income and GAAP income (loss) is
important to the Companys stockholders because dividends or distributions
are declared on the basis of taxable income. While the Company does not pay
taxes so long as it satisfies the requirements for exemption from taxation
pursuant to the REIT Provisions of the Code, each year the Company completes a
corporate tax form wherein taxable income is calculated as if the Company were
to be taxed. This taxable income level helps to determine the amount of
dividends the Company intends to pay out over time.

Interest Income and Average Earning Asset Yield

The Company had average earning assets of $133.1 million for the
three months ended March 31, 2000 compared to $858.1 million for the three
months ended March 31, 1999. The table below shows, for the three months ended
March 31, 2000 and 1999, the Companys average balance of cash equivalents,
loans and securities, the yields earned on each type of earning asset, the yield
on average earning assets and interest income.

`AVERAGE EARNING ASSET YIELD
                                               (dollars in thousands)

                                                                                               Yield on     Yield on
                                                         Average                  Yield on     Average      Average
                                            Average      Amortized    Average     Average      Amortized    Interest
                                            Cash         Cost of      Earning     Cash         Cost of      Earning   Interest
                                           Equivalents   Securities   Assets      Equivalents  Securities   Assets    Income

For the three  months ended March 31, 2000   $33,250      $ 99,897    $133,147      5.98%       7.55%      7.17%      $ 2,389
For the three  months ended March 31, 1999   $38,718      $819,358    $858,076      5.07%       7.58%      7.47%      $16,018`

Interest Expense and the Cost of Funds

For the three months ended March
31, 2000 and 1999, the Company had average borrowed funds of $39.6 million and
$715.9 million, respectively, and total interest expense of $.6 and $10.1
million, respectively, with an average cost of funds of 5.79% and 5.68%,
respectively. The Company believes that its largest expense is usually the cost
of borrowed funds. Interest expense is calculated in the same manner for tax and
GAAP purposes. The Company expects that changes in the Companys cost of
funds closely correlate with changes in one-month LIBOR, although the Company
may choose to extend the maturity of its liabilities at any time, subject to the
lenders consent. The Companys average cost of funds was 0.13% below
one-month LIBOR for the three months ended March 31, 2000 compared to 0.74%
above one-month LIBOR for the three months ended March 31, 1999. The Company
generally has structured its borrowings to adjust with one-month LIBOR. During
the three months ended March 31, 2000, average one-month LIBOR, which was 5.92%,
was 0.40% lower than average six-month LIBOR, which was 6.32%. During the three
months ended March 31, 1999, average one-month LIBOR, which was 4.94%, was 0.11%
lower than average six month LIBOR, which was 5.05%. The decrease in the
Companys average cost of funds relative to LIBOR in the first quarter of
2000 compared to the first quarter of 1999 was due primarily to the quality of
the Companys portfolio, which was being financed during the first quarter
of 2000 compared to the first quarter of 1999.

The table below shows, for the
three months ended March 31, 2000 and 1999, the Companys average borrowed
funds and average cost of funds compared to average one and six-month LIBOR.

`Average     Average      Average
                                                                           One-Month    Cost of      Cost of
                                                                             LIBOR      Funds        Funds
                                                                          Relative     Relative     Relative
                    Average             Average     Average    Average    to Average   to Average    to Average
                    Borrowed  Interest  Cost of    One-Month   Six-Month   Six-Month    One-Month    Six-Month
                     Funds    Expense   Funds       LIBOR       LIBOR       LIBOR        LIBOR       LIBOR

For the three
months Ended
March 31, 2000     $ 39,615   $   580     5.79%      5.92%       6.32%      (0.40)%     (0.13)%    (0.53)%

For the three
months Ended
March 31, 1999     $715,889   $10,174     5.68%      4.94%       5.05%      (0.11)%      0.74%      0.63%`

Interest Rate Swaps

The Company did not enter into any
swaps during the three months ended March 31, 2000 and 1999.

Net Interest Income

Net interest income, which equals
interest income less interest expense, totaled $1.8 million for the three months
ended March 31, 2000 compared to $5.8 million for the three months ended March
31, 1999. Net interest rate spread, which equals the yield on the Companys
interest earning assets (excluding cash) less the average cost of funds for the
period was 1.38% for the three months ended March 31, 2000 compared to 1.79% for
the three months ended March 31, 1999. The decrease in net interest income for
the three months ended March 31, 2000 compared to the three months ended March
31, 1999 was due to the Companys substantially reduced investment
portfolio. The net interest rate spread decreased for the three months ended
March 31, 2000 compared to the three months ended March 31, 1999 due to the mix
of Mortgage Assets in the Companys investment portfolio, which contained a
lesser percentage of less liquid securities which finance at higher spreads for
the three months ended March 31, 2000 compared to the three months ended March
31, 1999.

The table below shows interest
income by earning asset type, average earning assets by type, total interest
income, interest expense, average repurchase agreements, average cost of funds,
and net interest income for the three months ended March 31, 2000 and 1999.

`Yield
                                                                           on
       Average                            Interest   Net                  Average  Average             Average
       Amortized  Interest    Average     Income on  Income on   Total    Interest Balance of          Cost   Net
       Cost of    Income on   Cash        Cash       Contractual Interest Earning  Repurchase Interest of     Interest
       Investment Investments Equivalents Equivalent Commitments Income   Assets   Agreements Expense  Funds  Income

For
the
three
months
ended
March
31, 2000  $99,897   $  1,884    $33,250      $505      $   -       $  2,389  7.17%   $ 39,615   $   580  5.79%  $1,809

For
the
three
months
ended
March
31, 1999  $819,358   $ 15,553    $38,718      $465      $   -       $ 16,018  7.47%   $715,829  $ 10,174  5.68%  $5,844`

Credit Considerations

The Company has not experienced
credit losses on its investment portfolio to date, but losses may be experienced
in the future. At March 31, 2000 and December 31, 1999, the Company had limited
its exposure to credit losses on its portfolio by holding 79% and 64% of its
investments in Agency Certificates.

General and Administrative Expenses

General and administrative
expenses (operating expense or G&A expense) were
$792,000 for the three months ended March 31, 2000, consisting of management and
incentive fees accrued to Mariner and professional and other miscellaneous fees.
G&A expenses were $1.45 million for the three months ended March 31, 1999,
consisting of management fees paid to the Former Manager of $500,000, consulting
fees paid to BlackRock of $375,000 and professional and other miscellaneous
fees. There were no differences in the calculation of G&A expense for
taxable and GAAP income purposes. The Efficiency Ratio is the
G&A expense divided by the net interest income.

`Total G&A  Total G&A
                                                                           Expense/       Expense/
                                                Deferred  Other    Total   Average        Average       Efficiency
                Management Incentive Consulting Stock     G&A  G&A  Assets         Equity        Ratio
                  Fee        Fee     Fee        Expense   Expense  Expense (Unannualized)(Unannualized)(Unannualized)
For the three
months ended
March 31, 2000   $ 65       464       -           -       $261     $ 792       .59%          1.08%         43.77%

For the three
months ended
March 31, 1999   $500        -       $375        $91      $484    $1,450       .17%          1.19%         24.81%`

Net loss was $(1.4) million for the three
months ended March 31, 2000 compared to net income of $(13.2) million for the
three months ended March 31, 1999. Return on average equity, on an unannualized
basis, for the three months ended March 31, 2000 was (1.89)% compared to
(10.79)% for the three months ended March 31, 1999.

The table below shows, on an unannualized
basis, for the three months ended March 31, 2000 and March 31, 1999 the
Company's net interest income, loss on sale of securities and G&A expense each
as a percentage of average equity, and the return on average equity.

`Net Interest     Loss on Sale of    Impairment Loss
                           Income/Average      Securities/     on Interest-Only   G&A Expense/      Return on
                               Equity         Average Equity      Securities     Average Equity  Average Equity

For the three months
Ended March 31, 2000            2.46%            (3.27)%               -            1.08%          ( 1.89)%

For the three months
Ended March 31, 1999            4.78%           (14.38)%               -            1.19%          (10.79)%`

Distributions and Taxable Income

For the three months ended March
31, 2000, the Company did not make any capital distributions or declare any
dividends. For the three months ended March 31, 1999, the Company declared a
special distribution in cash of $2.00 per share, which was paid on April 30,
1999.

The Company has elected to be
taxed as a REIT under the Code. Accordingly, the Company intends to distribute
substantially all of its taxable income for each year to stockholders, including
income resulting from gains on sales of securities.

Financial Condition

Investments

As of March 31, 2000 and December
31, 1999, the Companys portfolio consisted of:

`As of March 31, 2000                 As of December 31, 1999
                                        Dollar Amount                          Dollar Amount
            Securities                  (in millions)        Percentage        (in millions)       Percentage
Agency Certificates................           $61                79%            $    65                 64%
Subordinate Interests..............             9                11%                 19                 19%
IOs................................             _                 _                   8                  8%
Mortgage Loans.....................             3                 4%                  4                  4%
Other fixed-income assets..........             5                 6%                  5                  5%
                                     -------------------- ----------------- -------------------- ---------------
   Total...........................           $78               100%            $   101                100%
                                     ==================== ================= ==================== ===============`

The Company continued to reduce
its portfolio of less liquid securities during the three months ended March 31,
2000 in an attempt to reduce the portfolios susceptibility to basis and
interest rate risk.

Discount balances are accreted as
an increase in interest income over the life of discount investments and premium
balances are amortized as a decrease in interest income over the life of premium
investments. At March 31, 2000 and December 31, 1999, the Company had on
its balance sheet (excluding IOs) $10.0 million and $26.1 million, respectively,
total unamortized discount (which is the difference between the remaining
principal value and the current historical amortized cost of investments
acquired at a price below principal value) and $.1 million and $.3 million,
respectively, unamortized premium (which is the difference between the remaining
principal amount and the current historical amortized cost of investments
acquired at a price above principal value). The Company also had no unamortized
premium on IOs at March 31, 2000 compared to $54.2 million at December 31, 1999.

Mortgage principal repayments
received were $1.1 million for the three months ended March 31, 2000. Given the
Companys current portfolio composition, if mortgage principal repayment
rates increase over the life of the Mortgage Securities comprising the current
portfolio, all other factors being equal, the Companys net interest income
should decrease during the life of such Mortgage Securities as the Company will
be required to amortize its net premium balance into income over a shorter time
period. Similarly, if mortgage principal prepayment rates decrease over the life
of such Mortgage Securities, all other factors being equal, the Companys
net interest income should increase during the life of such Mortgage Securities
as the Company will amortize its net premium balance over a longer time.

The tables below summarize the
Companys investments at March 31, 2000 and December 31, 1999.

`Amortized                 Estimated     Weighted
                                                                 Cost to                  Fair Value    Average
                          Principal      Net       Amortized   Principal     Estimated    to Principal    Life
                           Amount      Discount       Cost      Amount       Fair Value   Amount        (Years)

March 31, 2000             $ 94,890   $ (10,058)   $ 84,832     89.40%        $ 74,889      78.92%       3.8
December 31, 1999          $133,227   $ (25,822)   $107,415     80.63%        $ 88,578      66.48%       7.1

                                            MORTGAGE LOANS
                                        (dollars in thousands)

                                                                   Amortized                 Estimated    Weighted
                                                                    Cost to                 Fair Value    Average
                            Principal      Net       Amortized     Principal    Estimated   to Principal    Life
                             Amount      Premium        Cost        Amount      Fair Value    Amount      (Years)

March 31, 2000             $  3,176      $  116     $  3,293       103.65%       $  3,293     103.65%       1.0
December 31, 1999          $  3,653      $  151     $  3,804       104.13%       $  3,804     103.27%       1.0`

At March 31, 2000 and December 31,
1999, the Company had borrowings outstanding from two lenders. Such borrowings
are generally short-term (7-day or 60-day terms) and may not be renewed by the
lender at its discretion.

`Amortized                 Estimated   Weighted
                                                                    Cost to                 Fair Value    Average
                            Notional       Net       Amortized     Notional     Estimated   to Notional    Life
                             Amount      Premium        Cost        Amount      Fair Value    Amount      (Years)

March 31, 2000              $  -        $  -         $  -             -         $   -            -           -
December 31, 1999           $ 56,322    $ 54,167     $ 2,155        3.83%       $ 8,570     15.21%          7.1`

The table below shows unrealized
gains and losses on the securities in the Companys portfolio at March 31,
2000 and December 31, 1999.

`At March 31, 2000          At December 31, 1999
Unrealized Gain                                               $          -                  $      6,414
Unrealized Loss                                                      (9,943)                     (18,837)
Net Unrealized Loss                                                  (9,943)                     (12,423)
Net Unrealized Loss as % of  Investments
  Principal/Notional Amount                                          (10.48)%                      (6.43)%
Net Unrealized Loss as % of Investments Amortized Cost               (11.72)%                     (10.96)%`

The following table sets forth a
schedule of Pass-Through Certificates and Mortgage Loans owned by the Company at
March 31, 2000 and December 31, 1999 classified by issuer and by ratings
categories.

`At March 31, 2000                       At December 31, 1999
                                          Carrying Value       Portfolio Mix      Carrying Value       Portfolio Mix
Agency Certificates..............            $    61,247             79%             $    64,801             64%
Privately Issued Certificates:
   BB/Ba Rating and below........                 13,642             17%                  23,776             23%
IOs..............................                    -                 -                   8,570              8%
Mortgage Loans...................                  3,293              4%                   3,804              5%
                                             -----------                             -----------
              Total..............            $    78,182                             $   100,951
                                             ===========                             ===========`

The following tables set forth
information about the Companys portfolio of Subordinate Interests, IOs,
and other fixed-income assets as of March 31, 2000 and December 31, 1999.

`Market Value at
                                             ---------------
        Description               March 31, 2000      December 31, 1999
        -----------               --------------      -----------------
         Commercial               $  9,049              $  18,561`

`Market Value at
                                             ---------------
        Description               March 31, 2000    December 31, 1999
        -----------               --------------      -----------------
        CBO/CLO                     $  4,593         $   5,215`

Borrowings

To date, the Companys debt
has consisted entirely of borrowings collateralized by a pledge of the
Companys investments. These borrowings appear on the balance sheet as
repurchase agreements. Substantially all of the Companys investments are
currently accepted as collateral for such borrowings. The Company has not
established, and currently does not intend to establish, permanent lines of
credit. The Company has obtained, and believes it will be able to continue to
obtain, short-term financing in amounts and at interest rates consistent with
the Companys financing objectives. At March 31, 2000, the Company had
borrowings outstanding from two lenders, the same number of lenders it had at
December 31, 1999. Such borrowings are generally short-term (7-day or 60-day
terms) and may not be renewed by the lender at its discretion. Certain lenders
have reduced the funds made available to the Company for pledges of certain less
liquid securities.

For the three months ended March
31, 2000, the term to maturity of the Companys borrowings has ranged from
one to 90 days, with a weighted average remaining maturity of 59 days at March
31, 2000. At March 31, 2000, the Company had outstanding $50.6 million of
repurchase agreements. The Companys borrowings have a cost of funds which
adjusts based on a fixed spread over or under one-month or three-month LIBOR. At
March 31, 2000, the weighted average cost of funds for all of the Companys
borrowings was 6.00%. At March 31, 2000, investments actually pledged had an
estimated fair value of $52.5 million.

For the year ended December 31,
1999, the term to maturity of the Companys borrowings has ranged from one
day to five years, with a weighted average remaining maturity of 12 days at
December 31, 1999. At December 31, 1999, the Company had outstanding $44 million
of repurchase agreements. All of the Companys borrowings have a cost of
funds which adjusts monthly based on a fixed spread over or under one-month
LIBOR. At December 31, 1999, the weighted average cost of funds for all of the
Companys borrowings was 5.9%. At December 31, 1999, investments actually
pledged had an estimated fair value of $45.4 million.

Liquidity

Liquidity, which is the
Companys ability to turn non-cash assets into cash, allows the Company to
purchase additional securities and to pledge additional assets to secure
existing borrowings should the value of pledged assets decline. Potential
immediate sources of liquidity for the Company include cash balances and unused
borrowing capacity. Unused borrowing capacity varies over time as the market
value of the Companys securities varies. The Companys balance sheet
also generates liquidity on an on-going basis through mortgage principal
repayments and net earnings held prior to payment as dividends. Should the
Companys needs ever exceed these on-going sources of liquidity plus the
immediate sources of liquidity discussed above, management believes that the
Companys securities could in most circumstances be sold to raise cash;
however, if the Company is forced to liquidate Mortgage Assets that qualify as
qualified real estate assets to repay borrowings, there can be no assurance that
it will be able to maintain its REIT status.

The availability of financing for
the Companys portfolio has been stable during the three months ended March
31, 2000.

In November 1999, the Board of
Directors increased the amount of Common Stock authorized to be repurchased
under the Companys stock repurchase program to $40 million. Pursuant to
the repurchase program, for the three months ended March 31, 2000 the Company
repurchased an additional 25,000 shares of Common Stock for $97,875. For the
year ended December 31, 1999, the Company used the proceeds of sales of, and
payments from, its portfolio securities to repurchase 2,953,700 shares of Common
Stock for $10 million in open market transactions. Such purchases were made at a
weighted average price per share of $3.50 (excluding commission costs). The
repurchased shares have been returned to the Companys authorized but
unissued shares of Common Stock as treasury shares.

Stockholders Equity

The Company uses
available-for-sale treatment for its securities; these assets are
carried on the balance sheet at estimated market value rather than historical
amortized cost. Based upon such available-for-sale treatment, the
Companys equity base at March 31, 2000 was $74.0 million, or $4.99 per
share, compared to $72.9 million, or $4.91 per share, at December 31, 1999. If
the Company had used historical amortized cost accounting, the Companys
equity base at March 31, 2000 would have been $84.0 million, or $5.66 per share
compared to $85.4 million, or $5.75 per share, at December 31, 1999.

With the Companys
available-for-sale accounting treatment, unrealized fluctuations in
market values of assets do not impact GAAP net income or taxable income but
rather are reflected on the balance sheet by changing the carrying value of the
assets and reflecting the change in stockholders equity under
Accumulated Other Comprehensive Income (Loss) and in the statement
of operations under Other Comprehensive Income (Loss). By accounting
for its assets in this manner, the Company hopes to provide useful information
to stockholders and creditors and to preserve flexibility to sell assets in the
future without having to change accounting methods.

As a result of this mark-to-market
accounting treatment, the book value and book value per share of the Company are
likely to fluctuate far more than if the Company used historical amortized cost
accounting. As a result, comparison with companies that use historical cost
accounting for some or all of their balance sheet may be misleading.

Unrealized changes in the
estimated net market value of securities have one direct effect on the
Companys potential earnings and dividends: positive mark-to-market changes
will increase the Companys equity base and allow the Company to increase
its borrowing capacity while negative changes in the net market value of the
Companys securities might impair the Companys liquidity position,
requiring the Company to sell assets with the likely result of realized losses
upon sale. Accumulated Other Comprehensive Income (Loss) was $(9.9)
million, or (11.72)% of the amortized cost of securities, at March 31, 2000, and
$(12.4) million, or (10.96)% of the amortized cost of securities, at December
31, 1999.

In accordance with SFAS No. 115,
an entity should recognize an other-than-temporary impairment when it intends to
sell a specifically identified available-for-sale debt security at a loss
shortly after the balance sheet date. The write-down for the impairment should
be recognized in earnings in the period in which the decision is made. The
Company reclassified an amount of approximately $4.2 million from unrealized
loss to realized loss for securities sold in April 1999, as the decision to sell
them was made in March 1999.

The table below shows the
Companys equity capital base as reported and on a historical amortized
cost basis at March 31, 2000 and at December 31, 1999. The historical cost
equity basis is influenced by issuances of Common Stock, the level of GAAP
earnings as compared to dividends declared, and other factors. The GAAP reported
equity base is influenced by these factors plus changes in the Accumulated
Other Comprehensive Income (Loss) account.

`Net Unrealized      GAAP       Historical      GAAP
                                           Historical      Losses on      Reported     Amortized     Reported
                                           Amortized        Assets         Equity         Cost        Equity
                                          Cost Equity      Available        Base         Equity     (Book Value
                                              Base          for Sale    (Book Value)   Per Share    Per Share)

At March 31, 2000                           $ 83,928       $( 9,943)      $ 73,985       $5.66         $4.99
At December 31, 1999                        $ 85,416       $(12,423)      $ 72,993       $5.75         $4.91`

Capital and Leverage Strategies

The Companys operations are
leveraged approximately 1.7 to 1 at March 31, 2000 compared to 1.6 to 1 at
December 31, 1999. At March 31, 2000, the Companys equity-to-assets ratio
was 59%, and has ranged from a high of approximately 62% to a low of
approximately 15% during the past 12 months. Initially, the Company financed its
acquisition of Mortgage Assets through proceeds of its initial public offering
and several concurrent private placements, and currently finances any
acquisitions primarily by borrowing against or leveraging its
existing portfolio and using the proceeds to acquire additional Mortgage Assets.
The Companys target for its equity-to-assets ratio depends on market
conditions and other relevant factors.

The equity-to-assets ratio is
total stockholders equity as a percentage of total assets. The
Companys total stockholders equity, for purposes of this
calculation, equals the Companys stockholders equity determined in
accordance with GAAP. For purposes of calculating the equity-to-assets ratio,
the Companys total assets include the value of the Companys
investment portfolio on a marked-to-market-basis. For purchased Mortgage Assets,
the Company obtains market quotes for its Mortgage Assets from independent
broker-dealers that make markets in securities similar to those in the
Companys portfolio. The Board of Directors has discretion to deviate from
or change the Companys indebtedness policy at any time. However, the
Company endeavors to maintain an adequate capital base to protect against
interest rate environments in which the Companys financing and hedging
costs might exceed interest income from its Mortgage Assets. These conditions
could occur, for example, when, due to interest rate fluctuations, interest
income on the Companys Mortgage Assets (which occur during periods, such
as the first three quarters of 1998, of rapidly rising interest rates or during
periods when the Mortgage Loans in the portfolio are prepaying rapidly) lags
behind interest rate increases in the Companys variable rate borrowings.

Inflation

Virtually all of the
Companys assets and liabilities are financial in nature. As a result,
interest rates are expected to influence the Companys performance more
directly than inflation.

While changes in interest rates do
not necessarily correlate with inflation rates or changes in inflation rates,
interest rates ordinarily increase during periods of high or increasing
inflation and decrease during periods of low or declining inflation.
Accordingly, management believes that the Companys financial condition or
results of operations will be influenced by inflation to the extent interest
rates are affected by inflation.

Recent Accounting Pronouncements

In June 1998, the Financial
Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and
Hedging Activities (SFAS No. 133), which, as issued, was
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
SFAS No. 133 generally requires that entities recognize all derivative financial
instruments as assets or liabilities, measured at fair value, and include in
earnings the changes in the fair value of such assets and liabilities. SFAS No.
133 also provides that changes in the fair value of assets or liabilities being
hedged with recognized derivative instruments be recognized and included in
earnings. In June 1999, the FASB issued SFAS No. 137, Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133, which deferred the effective date of FASB No.
133 for one year to fiscal years beginning after June 15, 2000. The Company has
not yet completed its evaluation of SFAS No. 133, and therefore, at this time,
cannot predict what, if any, effect its adoption will have on the Companys
financial condition or results of operations.

Item 1.   Legal Proceedings

At March 31, 2000, there were no legal proceedings to which the
Company was a party or of which any of its properties were subject.

Item 2.   Changes in Securities and Use of Proceeds

Not applicable.

Item 3.   Defaults Upon Senior Securities

Not
applicable.

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

None.

Item 5.   Other Information

The
Company repurchased an additional 300,600 shares of its common stock on April
20, 2000 for $1,146,037.50 or $3.8125 per share.

Item 6.   Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit 27.1 -  Financial Data Schedule

(b) Reports

None.

SIGNATURES

Pursuant to the requirements of
the Securities Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.

| | LASER MORTGAGE MANAGEMENT, INC.
| | -------------------------------

Dated:  May 12, 2000

| | By:  /s/ Charles R. Howe II
| | ---------------------------

| | Charles R. Howe II
Chief Financial Officer
(principal accounting officer)
(authorized officer of registrant)
| | ------------------------------------------------------------------------------------------------------------

|Exhibit Number | Exhibit
|-------------- | -------

|3.1 | Articles of Incorporation of the Registrant (Incorporated by
reference to Exhibit 3.1 to the Registration Statement on Form S-11 (File No.
333-35673))
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 | Bylaws of the Registrant (Incorporated by reference to Exhibit
3.2 to the Registration Statement on Form S-11 (File No. 333-35673))
|--- | -----------------------------------------------------------------------------------------------------------------------------------

|27.1* | Summary Financial Data
|----- | ----------------------

__________
* Filed herewith.