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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________

FORM 10-Q

|           |  |                                                                                         
|---------- |  | ----------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                         
|[X]        |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|           |  | For the quarterly period ended March 31, 2003                                           
|           |  | or                                                                                      
|[   ]      |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|           |  | For the transition period from      to                                                  

Commission file number 0-18053

LASERSCOPE

(Exact name of Registrant as Specified in Its Charter)

|                                                                          |  |                                                
|------------------------------------------------------------------------- |  | -----------------------------------------------
|CALIFORNIA
(State or Other Jurisdiction
of Incorporation or Organization) |  | 77-0049527
(I.R.S. Employer Identification No.)

|                                                                                            
|--------------------------------------------------------------------------------------------
|3070 ORCHARD DRIVE, SAN JOSE, CALIFORNIA 95134-2011
(Address of Principal Executive Offices)

Registrants Telephone Number, Including Area Code: (408) 943-0636

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

Yes  [X]     No  [   ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). YES  [   ]     NO  [X]

The number of shares of Registrants common stock issued and outstanding as of
April 30, 2003 was 17,162,275.





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TABLE OF CONTENTS



|                                   |                                                                                                |                                                       |  |  |  |  |  | 
|---------------------------------- | ---------------------------------------------------------------------------------------------- | ----------------------------------------------------- |  |  |  |  |  | 
|PART I.     FINANCIAL INFORMATION.
|                                   | Item 1.     Financial Statements. (unaudited)                                                 
|                                   |                                                                                                | Condensed Consolidated Balance Sheets                
|                                   |                                                                                                | Condensed Consolidated Statements of Operations      
|                                   |                                                                                                | Condensed Consolidated Statements of Cash Flows      
|                                   |                                                                                                | Notes to Condensed Consolidated Financial Statements:
|                                   | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|                                   |                                                                                                | Results of Operations.                               
|                                   |                                                                                                | Liquidity and Capital Resources.                     
|                                   |                                                                                                | Risk Factors.                                        
|                                   | Item 3. Quantitative and Qualitative Disclosures About Market Risk.                           
|                                   | Item 4. Controls and Procedures.                                                              
|PART II. OTHER INFORMATION        
|                                   | 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.                                                     
|SIGNATURES                        
|EXHIBIT 99.1                      
|EXHIBIT 99.2                      



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TABLE OF CONTENTS

|                              |  |                                                                                       |    |      |    |  |  |  |  | 
|----------------------------- |  | ------------------------------------------------------------------------------------- | -- | ---- | -- |  |  |  |  | 
|                              |  |                                                                                       |    | Page
|                              |  |                                                                                       |    |     
|PART I. FINANCIAL INFORMATION |  |                                                                                       | 3  |     
|Item 1.                       |  | Financial Statements (unaudited)                                                      |    |      | 3  | 
|                              |  | Condensed Consolidated Balance Sheets                                                 |    |      | 3  | 
|                              |  | Condensed Consolidated Statements of Operations                                       |    |      | 4  | 
|                              |  | Condensed Consolidated Statements of Cash Flows                                       |    |      | 5  | 
|                              |  | Notes to Condensed Consolidated Financial Statements                                  |    |      | 6  | 
|Item 2.                       |  | Managements Discussion and Analysis of
Financial Condition and Results of Operations |    |      | 10 | 
|                              |  | Results of Operations                                                                 |    |      | 11 | 
|                              |  | Liquidity and Capital Resources                                                       |    |      | 12 | 
|                              |  | Risk Factors                                                                          |    |      | 14 | 
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                            |    |      | 22 | 
|Item 4.                       |  | Controls and Procedures                                                               |    |      | 22 | 
|                              |  |                                                                                       |    |      |    | 
|PART II. OTHER INFORMATION    |  |                                                                                       | 23 |     
|Item 1.                       |  | Legal Proceedings                                                                     |    |      | 23 | 
|Item 2.                       |  | Changes in Securities and Use of Proceeds                                             |    |      | 23 | 
|Item 3.                       |  | Defaults upon Senior Securities                                                       |    |      | 23 | 
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                   |    |      | 23 | 
|Item 5.                       |  | Other Information                                                                     |    |      | 23 | 
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                      |    |      | 24 | 
|                              |  |                                                                                       |    |      |    | 
|SIGNATURES                    |  |                                                                                       | 25 |     

2



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PART I.     FINANCIAL INFORMATION.




Item 1.     Financial Statements.




Laserscope
Condensed Consolidated Balance Sheets
(unaudited)

|                                                            |                                                      |                             |                                            |         |           |        |              |         |        |        | 
|----------------------------------------------------------- | ---------------------------------------------------- | --------------------------- | ------------------------------------------ | ------- | --------- | ------ | ------------ | ------- | ------ | ------ | 
|                                                            |                                                      |                             |                                            |         | March 31, |        | December 31,
|(thousands)                                                 |                                                      | 2003                        |                                            | 2002   
|                                                            |                                                      |                             |                                            |        
|Assets                                                      |                                                      |                             |                                            |         |           |        |              |        
|Current assets:                                             |                                                      |                             |                                            |         |           |        |              |        
|                                                            | Cash and cash equivalents                            |                             | $                                          | 4,754   |           |        | $            | 4,661   |       
|                                                            | Accounts receivable, net                             |                             |                                            | 10,963  |           |        |              | 10,287  |       
|                                                            | Inventories, net                                     |                             |                                            | 10,281  |           |        |              | 10,445  |       
|                                                            | Other current assets                                 |                             |                                            | 806     |           |        |              | 1,027   |       
|                                                            |                                                      |                             |                                            |         |           |        |              |        
|                                                            |                                                      | Total current assets        |                                            |         | 26,804    |        |              |         | 26,420 |       
|Property and equipment, net                                 |                                                      |                             | 1,631                                      |         |           |        | 1,808        |        
|Goodwill                                                    |                                                      |                             | 655                                        |         |           |        | 655          |        
|Other assets                                                |                                                      |                             | 246                                        |         |           |        | 280          |        
|                                                            |                                                      |                             |                                            |         |           |        |              |        
|                                                            |                                                      |                             | Total assets                               |         | $         | 29,336 |              |         | $      | 29,163 | 
|                                                            |                                                      |                             |                                            |         |           |        |              |        
|Liabilities and Shareholders Equity                        |                                                      |                             |                                            |         |           |        |              |        
|Current liabilities:                                        |                                                      |                             |                                            |         |           |        |              |        
|                                                            | Accounts payable                                     |                             | $                                          | 3,551   |           |        | $            | 3,989   |       
|                                                            | Accrued compensation                                 |                             |                                            | 1,918   |           |        |              | 2,033   |       
|                                                            | Deferred revenue                                     |                             |                                            | 1,637   |           |        |              | 1,408   |       
|                                                            | Convertible subordinated debentures, current portion |                             |                                            | 232     |           |        |              | 147     |       
|                                                            | Other current liabilities                            |                             |                                            | 3,399   |           |        |              | 3,191   |       
|                                                            |                                                      |                             |                                            |         |           |        |              |        
|                                                            |                                                      | Total current liabilities   |                                            |         | 10,737    |        |              |         | 10,768 |       
|                                                            |                                                      |                             |                                            |         |           |        |              |        
|Convertible subordinated debentures, net of current portion |                                                      |                             | 2,768                                      |         |           |        | 2,853        |        
|Obligations under capital leases                            |                                                      |                             | 47                                         |         |           |        | 60           |        
|                                                            |                                                      |                             |                                            |         |           |        |              |        
|                                                            |                                                      | Total long-term liabilities |                                            |         | 2,815     |        |              |         | 2,913  |       
|                                                            |                                                      |                             |                                            |         |           |        |              |        
|Contingencies (Note 7)                                      |                                                      |                             |                                            |         |           |        |              |        
|Shareholders equity:                                       |                                                      |                             |                                            |         |           |        |              |        
|                                                            | Common stock                                         |                             |                                            | 56,096  |           |        |              | 55,915  |       
|                                                            | Accumulated deficit                                  |                             |                                            | (39,384 | )         |        |              | (39,519 | )     
|                                                            | Accumulated other comprehensive loss                 |                             |                                            | (803    | )         |        |              | (789    | )     
|                                                            | Notes receivable from shareholders                   |                             |                                            | (125    | )         |        |              | (125    | )     
|                                                            |                                                      |                             |                                            |         |           |        |              |        
|                                                            |                                                      |                             | Total shareholders equity                 |         |           | 15,784 |              |         |        | 15,482 | 
|                                                            |                                                      |                             |                                            |         |           |        |              |        
|                                                            |                                                      |                             | Total liabilities and shareholders equity |         | $         | 29,336 |              |         | $      | 29,163 | 
|                                                            |                                                      |                             |                                            |         |           |        |              |        

See Accompanying Notes to Condensed Consolidated Financial Statements

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Laserscope
Condensed Consolidated Statements of Operations
(Unaudited)

|                                              |                                   |                                     |                          |        |                    |       |        |       |       |       | 
|--------------------------------------------- | --------------------------------- | ----------------------------------- | ------------------------ | ------ | ------------------ | ----- | ------ | ----- | ----- | ----- | 
|                                              |                                   |                                     |                          |        | Three months ended
|                                              |                                   |                                     |                          |        | March 31,         
|                                              |                                   |                                     |                          |        |                   
|(thousands, except per share amounts)         |                                   | 2003                                |                          | 2002  
|                                              |                                   |                                     |                          |       
|                                              | Net revenue                       |                                     | $                        | 12,456 |                    |       | $      | 9,420 |      
|                                              | Cost of sales                     |                                     |                          | 6,191  |                    |       |        | 4,799 |      
|                                              |                                   |                                     |                          |        |                    |       |        |      
|                                              | Gross margin                      |                                     |                          | 6,265  |                    |       |        | 4,621 |      
|                                              |                                   |                                     |                          |        |                    |       |        |      
|                                              | Operating expenses:               |                                     |                          |        |                    |       |        |       |      
|                                              |                                   | Research and development            |                          |        | 1,008              |       |        |       | 1,016 |      
|                                              |                                   | Selling, general and administrative |                          |        | 5,064              |       |        |       | 3,547 |      
|                                              |                                   |                                     |                          |        |                    |       |        |      
|                                              |                                   |                                     | Total operating expenses |        |                    | 6,072 |        |       |       | 4,563 | 
|                                              |                                   |                                     |                          |        |                    |       |        |      
|                                              | Operating income                  |                                     |                          | 193    |                    |       |        | 58    |      
|                                              | Interest and other expenses       |                                     |                          | (36    | )                  |       |        | (90   | )    
|                                              |                                   |                                     |                          |        |                    |       |        |      
|                                              | Income (loss) before income taxes |                                     |                          | 157    |                    |       |        | (32   | )    
|                                              | Provision for income taxes        |                                     |                          | 22     |                    |       |        | 15    |      
|                                              |                                   |                                     |                          |        |                    |       |        |      
|                                              | Net income (loss)                 |                                     | $                        | 135    |                    |       | $      | (47   | )    
|                                              |                                   |                                     |                          |        |                    |       |        |      
|Basic and diluted net loss per share          |                                   | $                                   | 0.01                     |        |                    | $     | 0.00   |      
|                                              |                                   |                                     |                          |        |                    |       |        |      
|Shares used in basic per share calculations   |                                   |                                     | 16,899                   |        |                    |       | 16,155 |      
|                                              |                                   |                                     |                          |        |                    |       |        |      
|Shares used in diluted per share calculations |                                   |                                     | 18,858                   |        |                    |       | 16,155 |      
|                                              |                                   |                                     |                          |        |                    |       |        |      

See Accompanying Notes to Condensed Consolidated Financial Statements

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Laserscope
Condensed Consolidated Statements of Cash Flows
(Unaudited)

|                                                     |                                                                                                    |                                    |                           |      |                    |      |       |        |     |      |  
|---------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ---------------------------------- | ------------------------- | ---- | ------------------ | ---- | ----- | ------ | --- | ---- | -
|                                                     |                                                                                                    |                                    |                           |      | Three Months Ended
|                                                     |                                                                                                    |                                    |                           |      | March 31,         
|                                                     |                                                                                                    |                                    |                           |      |                   
|(thousands)                                          |                                                                                                    | 2003                               |                           | 2002
|                                                     |                                                                                                    |                                    |                           |     
|Cash flows from operating activities:                |                                                                                                    |                                    |                           |      |                    |      |       |       
|                                                     | Net income (loss)                                                                                  |                                    | $                         | 135  |                    |      | $     | (47    | )  
|                                                     | Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities: |                                    |                           |      |                    |      |       |        |    
|                                                     |                                                                                                    | Depreciation and amortization      |                           |      | 319                |      |       |        | 318 |     
|                                                     |                                                                                                    | Changes in assets and liabilities: |                           |      |                    |      |       |        |     |     
|                                                     |                                                                                                    |                                    | Accounts receivable, net  |      |                    | (698 | )     |        |     | (742 | )
|                                                     |                                                                                                    |                                    | Inventories               |      |                    | 185  |       |        |     | 466  |  
|                                                     |                                                                                                    |                                    | Other current assets      |      |                    | 222  |       |        |     | 65   |  
|                                                     |                                                                                                    |                                    | Accounts payable          |      |                    | (413 | )     |        |     | (294 | )
|                                                     |                                                                                                    |                                    | Accrued compensation      |      |                    | (116 | )     |        |     | (56  | )
|                                                     |                                                                                                    |                                    | Deferred revenue          |      |                    | 229  |       |        |     | 77   |  
|                                                     |                                                                                                    |                                    | Other current liabilities |      |                    | 220  |       |        |     | 121  |  
|                                                     |                                                                                                    |                                    |                           |      |                    |      |       |       
|Net cash provided by (used in) operating activities  |                                                                                                    |                                    | 83                        |      |                    |      | (92   | )     
|                                                     |                                                                                                    |                                    |                           |      |                    |      |       |       
|Cash flows from investing activities:                |                                                                                                    |                                    |                           |      |                    |      |       |       
|                                                     | Acquisition of property and equipment                                                              |                                    |                           | (107 | )                  |      |       | (187   | )  
|                                                     |                                                                                                    |                                    |                           |      |                    |      |       |       
|Net cash used in investing activities                |                                                                                                    |                                    | (107                      | )    |                    |      | (187  | )     
|                                                     |                                                                                                    |                                    |                           |      |                    |      |       |       
|Cash flows from financing activities:                |                                                                                                    |                                    |                           |      |                    |      |       |       
|                                                     | Payments on obligations under capital leases                                                       |                                    |                           | (72  | )                  |      |       | (52    | )  
|                                                     | Proceeds from the sale of common stock under stock plans                                           |                                    |                           | 182  |                    |      |       | 203    |    
|                                                     | Proceeds from bank loans                                                                           |                                    |                           | 200  |                    |      |       | 3,320  |    
|                                                     | Repayment of bank loans                                                                            |                                    |                           | (200 | )                  |      |       | (3,355 | )  
|                                                     |                                                                                                    |                                    |                           |      |                    |      |       |       
|Net cash provided by financing activities            |                                                                                                    |                                    | 110                       |      |                    |      | 116   |       
|                                                     |                                                                                                    |                                    |                           |      |                    |      |       |       
|Effect of exchange rate changes on cash              |                                                                                                    |                                    | 7                         |      |                    |      | (36   | )     
|Net increase (decrease) in cash and cash equivalents |                                                                                                    |                                    | 93                        |      |                    |      | (199  | )     
|Cash and cash equivalents, beginning of period       |                                                                                                    |                                    | 4,661                     |      |                    |      | 3,408 |       
|                                                     |                                                                                                    |                                    |                           |      |                    |      |       |       
|Cash and cash equivalents, end of period             |                                                                                                    | $                                  | 4,754                     |      |                    | $    | 3,209 |       
|                                                     |                                                                                                    |                                    |                           |      |                    |      |       |       
|Supplemental disclosure of cash flow information:    |                                                                                                    |                                    |                           |      |                    |      |       |       
|                                                     |                                                                                                    | Cash paid during the period for:   |                           |      |                    |      |       |        |     |     
|                                                     |                                                                                                    |                                    | Interest                  |      | $                  | 67   |       |        | $   | 77   |  
|                                                     |                                                                                                    |                                    | Income taxes              |      | $                  | 8    |       |        | $   | 3    |  

See Accompanying Notes to Condensed Consolidated Financial Statements

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Laserscope Notes to Unaudited Condensed Consolidated Financial Statements:



|1. |  | Basis of presentation
|-- |  | ---------------------

The accompanying unaudited condensed consolidated financial statements include
Laserscope (the Company, management, we, us, our) and its wholly owned subsidiaries. All intercompany transactions and balances have
been eliminated. While the financial information in this report is unaudited,
in the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position and
results of operations as of and for the periods indicated have been recorded.
We suggest that these consolidated financial statements be read in conjunction
with the consolidated financial statements and notes for the year ended
December 31, 2002 included in the Companys annual report on Form 10-K for the
year ended December 31, 2002. The results of operations for the three month
period ended March 31, 2003 are not necessarily indicative of the results
expected for the full year.



|2. |  | Accounting for Stock-Based Compensation
|-- |  | ---------------------------------------

The Company has adopted SFAS No. 148, Accounting for Stock-Based Compensation,
Transition and Disclosure. The Company accounts for stock-based employee
compensation arrangements in accordance with the provisions of Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees
(APB No. 25) and its related interpretations and has elected to follow the
disclosure-only provisions of Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation (SFAS No. 123). Under APB No.
25, compensation expense is based on the difference, if any, on the date of the
stock option grant between the fair value of the Companys stock and the
exercise price of the stock option.

Had compensation cost for stock-based employee compensation arrangements been
determined based on the fair value at the date of the awards consistent with
the provisions of SFAS No. 123, the impact on Laserscopes net income (loss)
would be as follows (in thousands, except per share data):

|                                                       |                                                                                                        |  |                    |       |      |  |   |       |  
|------------------------------------------------------ | ------------------------------------------------------------------------------------------------------ |  | ------------------ | ----- | ---- |  | - | ----- | -
|                                                       |                                                                                                        |  | Three months ended
|                                                       |                                                                                                        |  | March 31,         
|                                                       |                                                                                                        |  |                   
|                                                       |                                                                                                        |  | 2003               |       | 2002
|                                                       |                                                                                                        |  |                    |       |     
|Net income (loss) attributable to common
stockholders: |                                                                                                        |  |                    |       |      |  |   |      
|                                                       | As reported                                                                                            |  | $                  | 135   |      |  | $ | (47   | )
|                                                       | Add: Stock-based compensation expense
included in reported net loss                                    |  |                    |      |      |  |   | 3     |  
|                                                       | Deduct: Total stock-based compensation
expense determined under fair value
based method for all awards |  |                    | (240  | )    |  |   | (175  | )
|                                                       |                                                                                                        |  |                    |       |      |  |   |      
|                                                       | Pro forma net loss                                                                                     |  | $                  | (105  | )    |  | $ | (219  | )
|                                                       |                                                                                                        |  |                    |       |      |  |   |      
|Net (income) loss per share:                           |                                                                                                        |  |                    |       |      |  |   |      
|                                                       | Basic  as reported                                                                                    |  | $                  | 0.01  |      |  | $ | 0.00  |  
|                                                       |                                                                                                        |  |                    |       |      |  |   |      
|                                                       | Basic  pro forma                                                                                      |  | $                  | (0.01 | )    |  | $ | (0.01 | )
|                                                       |                                                                                                        |  |                    |       |      |  |   |      
|                                                       | Diluted  as reported                                                                                  |  | $                  | 0.01  |      |  | $ | 0.00  |  
|                                                       |                                                                                                        |  |                    |       |      |  |   |      
|                                                       | Diluted  pro forma                                                                                    |  | $                  | (0.01 | )    |  | $ | (0.01 | )
|                                                       |                                                                                                        |  |                    |       |      |  |   |      

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Laserscope accounts for equity instruments issued to non-employees in
accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force
Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services.



|3. |  | Inventories
|-- |  | -----------

Inventories were comprised of the following (in thousands):

|                                   |  |           |        |              |  |   |        | 
|---------------------------------- |  | --------- | ------ | ------------ |  | - | ------ | 
|                                   |  | March 31, |        | December 31,
|                                   |  | 2003      |        | 2002        
|                                   |  |           |        |             
|Sub-assemblies and purchased parts |  | $         | 4,643  |              |  | $ | 4,304  | 
|Work-in-process                    |  |           | 3,151  |              |  |   | 3,340  | 
|Finished goods                     |  |           | 2,487  |              |  |   | 2,801  | 
|                                   |  |           |        |              |  |   |        | 
|                                   |  | $         | 10,281 |              |  | $ | 10,445 | 
|                                   |  |           |        |              |  |   |        | 



|4. |  | Warranty and Service Contracts
|-- |  | ------------------------------

Warranty

We have a direct field service organization that provides service for our
products. We generally provide a twelve month warranty on our laser systems.
After the warranty period, maintenance and support is provided on a service
contract basis or on an individual call basis. Our warranties and premium
service contracts provide for a 99.0% Uptime Guarantee on our laser systems.
Under provisions of this guarantee, we extend the term of the related warranty
or service contract if specified system uptime levels are not maintained.

The Company currently provides for the estimated cost to repair or
replace products under warranty at the time of sale. The cost
estimate is based on warranty costs experienced in the prior 12
months, and the outstanding warranty liability is revalued on a
quarterly basis.

|                                |  |                                             |       |  |      |  
|------------------------------- |  | ------------------------------------------- | ----- |  | ---- | -
|Warranty Reserve (in thousands) |  | 2003                                       
|                                |  |                                            
|Balance, December 31, 2002      |  | $                                           | 1,127 | 
|Add:                            |  | Accruals for warranties issued in 2003      |       |  | 571  |  
|                                |  | Accruals related to pre-existing warranties |       |  | 14   |  
|Less:                           |  | Settlements made during the period          |       |  | (427 | )
|                                |  |                                             |       | 
|Balance, March 31, 2003         |  | $                                           | 1,285 | 
|                                |  |                                             |       | 

Service Contracts

Deferred service contract revenue is recognized on a pro rata basis
over the period of the applicable service contract. Costs are
recognized as incurred.

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|                                                 |                                        |      |       |      |  
|------------------------------------------------ | -------------------------------------- | ---- | ----- | ---- | -
|Deferred Service Contract Revenue (in thousands) |                                        | 2003
|                                                 |                                        |     
|Balance, December 31, 2002                       |                                        | $    | 1,086 |     
|Add:                                             |                                        |      |       |     
|                                                 | Payments received                      |      |       | 925  |  
|                                                 | Costs incurred under service contracts |      |       | 442  |  
|Less:                                            |                                        |      |       |     
|                                                 | Revenue recognized                     |      |       | (671 | )
|                                                 | Settlements made during the period     |      |       | (442 | )
|                                                 |                                        |      |       |     
|Balance, March 31, 2003                          |                                        | $    | 1,340 |     
|                                                 |                                        |      |       |     



|5. |  | Net income (loss) per share
|-- |  | ---------------------------

Basic net income (loss) per share is computed by dividing net income
(loss) by the weighted average number of common shares outstanding during the
period. Diluted net income (loss) per share is computed by giving effect to
all dilutive potential common shares, including options, warrants, and
convertible debentures. A reconciliation of the numerator and denominator used
in the calculation of historical basic and diluted net income (loss) per share
follows:

|             |                                                                                                          |      |                    |        |  |  |   |        |  
|------------ | -------------------------------------------------------------------------------------------------------- | ---- | ------------------ | ------ |  |  | - | ------ | -
|             |                                                                                                          |      | Three months ended
|             |                                                                                                          |      | March 31,         
|             |                                                                                                          |      |                   
|(thousands)  |                                                                                                          | 2003 |                    | 2002  
|             |                                                                                                          |      |                    |       
|Numerator:   |                                                                                                          |      |                    |        |  |  |   |       
|             | Net income (loss) used in computing
basic and diluted net income (loss)
per share                        |      | $                  | 135    |  |  | $ | (47    | )
|             |                                                                                                          |      |                    |        |  |  |   |       
|Denominator: |                                                                                                          |      |                    |        |  |  |   |       
|             | Weighted average number of common
shares outstanding used in computing
basic net income (loss) per share |      |                    | 16,899 |  |  |   | 16,155 |  
|             | Add: Dilutive potential common shares used
in computing dilutive net income (loss)
per share             |      |                    | 1,959  |  |  |   |       |  
|             |                                                                                                          |      |                    |        |  |  |   |       
|             | Total weighted-average number of shares
used in computing diluted net
income (loss) per share            |      |                    | 18,858 |  |  |   | 16,155 |  
|             |                                                                                                          |      |                    |        |  |  |   |       

The following outstanding options and warrants (prior to the application of the
treasury stock method) and convertible debentures (on an as-converted basis)
were excluded from the
computation of diluted net income (loss) per common share for the periods ended
March 31, 2003 and 2002 because including them would have had an antidilutive
effect:

8



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##### Table of Contents



|                                  |  |                    |       |      |  |  |       | 
|--------------------------------- |  | ------------------ | ----- | ---- |  |  | ----- | 
|                                  |  | Three months ended
|                                  |  | March 31,         
|                                  |  |                   
|(thousands)                       |  | 2003               |       | 2002
|                                  |  |                    |       |     
|Options to purchase common stock  |  |                    | 279   |      |  |  | 225   | 
|Warrants to purchase common stock |  |                    | 444   |      |  |  | 454   | 
|Convertible debentures            |  |                    | 2,400 |      |  |  | 2,400 | 
|                                  |  |                    |       |      |  |  |       | 
|                                  |  |                    | 3,123 |      |  |  | 3,079 | 
|                                  |  |                    |       |      |  |  |       | 



|6. |  | Comprehensive income (loss)
|-- |  | ---------------------------

Total comprehensive income (loss) during the periods ended March 31, 2003 and
2002 consisted of (in thousands):

|                            |  |                    |     |      |  |   |      |   |  |  |  | 
|--------------------------- |  | ------------------ | --- | ---- |  | - | ---- | - |  |  |  | 
|                            |  | Three months ended
|                            |  | March 31,         
|                            |  |                   
|                            |  | 2003               |     | 2002
|                            |  |                    |     |     
|Net income (loss)           |  | $                  | 135 |      |  | $ | (47  | )
|Translation adjustments     |  |                    | (14 | )    |  |   | (90  | )
|                            |  |                    |     |      |  |   |      |  
|Comprehensive income (loss) |  | $                  | 121 |      |  | $ | (137 | )
|                            |  |                    |     |      |  |   |      |  



|7. |  | Contingencies
|-- |  | -------------

The Company is at times a party to legal proceedings and claims arising in the
ordinary course of its business. While it is not feasible to predict or
determine the outcome of the actions brought against the Company, management
believes that the ultimate resolution of these claims will not ultimately have
a material adverse effect on the Companys financial position, results of
operations, or future cash flows.



|8. |  | Recent accounting pronouncements
|-- |  | --------------------------------

In November 2002, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others. FIN 45 requires that a liability be recorded in the guarantors
balance sheet upon issuance of a guarantee. Agreements that we have determined
to be within the scope of FIN 45 include indemnification arrangements with
officer and directors and indemnification arrangements with customers with
respect to intellectual property. To date, we have not incurred material
costs, if any, in relation to any of the above guarantees and, accordingly,
adoption of this standard did not have a material impact on our financial
position, results of operations or cash flows. In addition, FIN 45 requires
disclosures about the guarantees that an entity has issued, including a
reconciliation of changes in the entitys product warranty liabilities. The
initial recognition and initial measurement provisions of FIN 45 are applicable
on a prospective basis to guarantees issued or modified after December 31,
2002, irrespective of the guarantors fiscal year-end. The disclosure
requirements of FIN 45 are effective for financial statements of interim or annual periods ending after
December 15, 2002. The adoption of this standard had no material impact on the
Companys financial statements.

9



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In November 2002, the Emerging Issues Task Force (EITF) reached a consensus
on Issue No. 00-21, Revenue Arrangements with Multiple Deliverables. EITF
Issue No. 00-21 provides guidance on how to account for arrangements that
involve the delivery or performance of multiple products, services and/or
rights to use assets. The provisions of EITF Issue No. 00-21 will apply to
revenue arrangements entered into in fiscal periods beginning after June 15,
2003. The Company adopted this new standard in the first quarter of
2003 although there was no impact on the financial results as of
March 31, 2003. The Company believes that the adoption of this
standard will have no
material impact on its financial statements in subsequent quarters.

In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors in the entity do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 is
effective immediately for all new variable interest entities created or
acquired after January 31, 2003. For variable interest entities created or
acquired prior to February 1, 2003, the provisions of FIN 46 must be applied
for the first interim or annual period beginning after June 15, 2003. The
Company is currently evaluating the impact that the adoption of this standard
will have on its financial statements.




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

INTRODUCTORY STATEMENT

Some of the statements in this Quarterly Report on Form 10-Q, including but not
limited to Managements Discussion and Analysis of Financial Condition and
Results of Operations, and elsewhere in this document are forward-looking
statements within the meaning of the Private Securities Litigation Act of 1995.
These statements relate to future events or our future financial performance
and involve known and unknown risks, uncertainties and other factors that may
cause our actual results, performance or achievements to be materially
different from those expressed or implied by any forward-looking statements. In
some cases, you can identify forward-looking statements by terminology such as
may, will, could, would, should, expect, plan, anticipate,
intend, believe, estimate, predict, potential or continue or the
negative of these terms or other comparable terminology. These statements are
only predictions. Actual events or results may differ materially. We refer you
to the factors described under the heading Risk Factors in this Quarterly
Report on Form 10-Q as well as to our Annual Report on Form 10-K for the year
ended December 31, 2002 under the heading Risk Factors. Readers are
cautioned not to place undue reliance on forward-looking statements. Moreover,
neither we nor any other person assumes responsibility for the accuracy and
completeness of those statements. We are under no duty to publicly release any
revision to the forward-looking statements after the date of this document.

Laserscope designs, manufactures, sells and services, on a worldwide basis, an
advanced line of medical laser systems and related energy devices for the
medical office, outpatient surgical center and hospital markets. The Company is
a pioneer in the development and commercialization of lasers and advanced fiber-optic devices for a wide variety
of applications. Our product portfolio consists of more than 150 products,
including KTP/532, Nd:YAG, Er:YAG, and Dye medical laser systems and related
energy delivery devices.

10



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##### Table of Contents



Our primary medical markets include dermatology, aesthetic surgery and urology.
Our secondary markets include ear, nose and throat surgery, general surgery,
gynecology, photo-dynamic therapy and other surgical specialties.




Results of Operations.

The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and notes included in Part I 
Item 1 of this Quarterly Report and the audited consolidated financial
statements and notes contained in the Companys Annual Report on Form 10-K for
the year ended December 31, 2002 and the accompanying Managements Discussion
and Analysis of Financial Condition and Results of Operations.

The following table contains selected income statement information, which
serves as the basis of the discussion of the Companys results of operations
for the quarters ended March 31, 2003 and 2002 (in thousands, except
percentages):

|                          |                          |   |                    |       |                |  |        |    |      |   |        |       |  |  |     |    |   |  |     |    |  
|------------------------- | ------------------------ | - | ------------------ | ----- | -------------- |  | ------ | -- | ---- | - | ------ | ----- |  |  | --- | -- | - |  | --- | -- | -
|                          |                          |   | Three months ended |       |                |  |       
|                          |                          |   |                    |       |                |  |       
|                          |                          |   | March 31, 2003     |       | March 31, 2002 |  | %     
|                          |                          |   | Amount             |       | %(a)           |  | Amount |    | %(a) |   | Change
|                          |                          |   |                    |       |                |  |        |    |      |   |       
|Revenues from sales of:   |                          |   |                    |       |                |  |        |    |      |   |        |       |  |  |     |    |   |  |     |   
|                          | Lasers & Instrumentation |   | $                  | 8,876 |                |  |        | 71 | %    |   | $      | 6,507 |  |  |     | 69 | % |  |     | 36 | %
|                          | Disposable supplies      |   |                    | 2,108 |                |  |        | 17 | %    |   |        | 1,469 |  |  |     | 16 | % |  |     | 43 | %
|                          | Service                  |   |                    | 1,472 |                |  |        | 12 | %    |   |        | 1,444 |  |  |     | 15 | % |  |     | 2  | %
|                          |                          |   |                    |       |                |  |        |    |      |   |        |       |  |  |     |    |   |  |     |   
|Total net revenues        |                          | $ | 12,456             |       |                |  | 100    | %  |      | $ | 9,420  |       |  |  | 100 | %  |   |  | 32  | % 
|Gross margin              |                          | $ | 6,265              |       |                |  | 50     | %  |      | $ | 4,621  |       |  |  | 49  | %  |   |  | 36  | % 
|Research & development    |                          | $ | 1,008              |       |                |  | 8      | %  |      | $ | 1,016  |       |  |  | 11  | %  |   |  | (1  | %)
|Selling, general & admin. |                          | $ | 5,064              |       |                |  | 41     | %  |      | $ | 3,547  |       |  |  | 38  | %  |   |  | 43  | % 
|Net income (loss)         |                          | $ | 135                |       |                |  | 1      | %  |      | $ | (47    | )     |  |  | (1  | %) |   |  | 387 | % 



---

|(a) |  | expressed as a percentage of total net revenues.
|--- |  | ------------------------------------------------

Revenues from the sales of lasers and instrumentation increased 36% during the
three months ended March 31, 2003 compared to the same period in 2002. The
increase primarily was driven by a higher volume of lasers sold as a result of
the increasing success of the distribution arrangement with McKesson
Corporation. McKesson began distributing our lasers during the first quarter
of 2001. Unit volumes through that channel have generally been increasing each
quarter so that volume was higher in the first quarter of 2003 than in the
comparable quarter of 2002. In addition to the increase in laser units sold,
revenue increased due to an increase in volume of instrumentation that is sold
with lasers, as well as an increase in the volume of aftermarket instruments.
The Company expects that sales of aesthetic lasers will continue to be a major
source of revenue. In addition, as the year progresses, we anticipate
increased sales of GreenLight PV lasers. The GreenLight PV is a surgical
laser used in the treatment of benign prostatic hyperplasia (BPH), a procedure
called Photo Vaporization of the Prostate (PVP). We sold 32 PVP units in
2002. During the first quarter of 2003 we shipped 6 GreenLight PV laser units
for revenue while at the same time building a backlog of 20 units.

Revenues from the sales of disposable supplies increased 43% during the three
months ended March 31, 2003 compared to the corresponding period in 2002. This
increase is driven by a 1,200 unit increase in shipments of GreenLight
fiber-optic devices. This was a direct result of an increase in our GreenLight
PV installed base as well as a higher number of fibers purchased per laser in
the installed base. The Company expects revenues from the sales of disposable
supplies to incrementally increase as we ship more GreenLight PV lasers, which
require a single-use fiber optic energy delivery device.

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Laserscopes service revenues increased marginally during the three months
ended March 31, 2003 compared to the same period in 2002. The Company believes
that increases in future revenues depend on increases to the installed base of
lasers as well as the acceptance of its service contracts by its customers.

Gross margin as a percentage of revenues increased during the quarter ended
March 31, 2003 relative to the corresponding period of 2002. The increase in
gross margin percentage is due primarily to the product mix favoring higher
margin products.

Research and development expenses are the result of activities related to the
development of new laser, instrumentation and disposable products and the
modification and enhancement of Laserscopes existing products. These expenses
decreased marginally as a percentage of sales during the three months ended
March 31, 2003 compared to the same period in 2002 but were essentially
unchanged in absolute terms. The Company expects that amounts spent in
research and development will decline only marginally in the remainder of the
year relative to the level of the quarter ended March 31, 2003 as other
development projects are pursued.

Selling, general and administrative expenses increased during the quarter ended
March 31, 2003 compared to the corresponding period in 2002. The
increase is due primarily to higher variable selling expenses resulting from higher
revenues in the period ended March 31, 2003 relative to the same period last
year and to higher marketing expenses for aesthetic and GreenLight PV products.
We expect amounts spent in selling, general and administrative expenses to
increase during the remainder of 2003 relative to the first quarter of 2003 as
we continue to expand marketing programs related to the GreenLight PV and
aesthetic products.




Liquidity and Capital Resources.

The following table contains selected balance sheet information that serves as
the basis of the discussion of the Companys liquidity and capital resources at
March 31, 2003 and for the three months then ended (in thousands):

|                          |  |           |        |              |  |   |        | 
|------------------------- |  | --------- | ------ | ------------ |  | - | ------ | 
|                          |  | March 31, |        | December 31,
|                          |  | 2003      |        | 2002        
|                          |  |           |        |             
|Cash and cash equivalents |  | $         | 4,754  |              |  | $ | 4,661  | 
|Total assets              |  | $         | 29,336 |              |  | $ | 29,163 | 
|Total liabilities         |  | $         | 13,552 |              |  | $ | 13,681 | 
|Net working capital       |  | $         | 16,067 |              |  | $ | 15,652 | 

The increase in cash and cash equivalents was due primarily to cash provided by
operating and financing activities, partially offset by cash used by investing
activities.

During the three months ended March 31, 2003, cash provided in operating
activities totaled $0.1 million. This was the combined result of the following
sources: depreciation and amortization  $0.3 million; an increase in deferred
revenue  $0.2 million; an increase in other current
liability  $0.2 million; a
decrease in other current assets  $0.2 million; a decrease in inventory  $0.2
million; and a net income of $0.1 million. These sources were offset by: an
increase in accounts receivable  $0.7 million, due to higher revenues in the
quarter ended

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March 31, 2003 versus those of the quarter ended December 31,
2002. Sources of cash were also partly offset by a decrease in accounts
payable  $0.4 million, due to timing of payments to vendors and a decrease in
accrued compensation  $0.1 million

During the three months ended March 31, 2003, cash used in investing activities
consisted of capital expenditures of $0.1 million.

During the three months ended March 31, 2003, cash provided by financing
activities consisted of the sale of common stock under stock plans  $0.2
million; and was partly offset by payments on obligations under capital leases
of $0.1 million.

We have in place an asset-based line of credit that provides for borrowing up
to $5.0 million and expires in September 2003. The line of credit bears annual
interest at a rate equal to the prime rate plus 1.5%. Credit is extended and
collateralized based on eligible accounts receivable and inventory. At March 31,
2003, we had approximately $3 million in borrowing capacity available and $1.1
million in letter of credit reserve requirements. As of March 31, 2003, we had
no outstanding borrowings under the line and were in compliance with all
covenants associated with the line of credit and our convertible debentures.
We anticipate that future changes in cash and working capital will be dependent
on a number of factors including:



| |  | our ability to effectively manage inventory and accounts receivable;                                                         
|- |  | -----------------------------------------------------------------------------------------------------------------------------
| 
| |  | our ability to anticipate and adapt to the changes in our industry
such as new and alternative medical procedures;           
| 
| |  | our level of profitability;                                                                                                  
| 
| |  | our determination to acquire or invest in products and businesses
complementary to ours; and                                 
| 
| |  | the market price for our common stock as it affects the exercise of
stock options and sale of common stock under stock plans.

We have historically financed acquisitions using our existing cash resources.
While we believe our existing cash resources, including our bank line of
credit, will be sufficient to fund our operating needs for the next twelve
months, additional financing may be required for our currently envisioned
long-term needs.

There can be no assurance that any additional financing will be available on
terms acceptable to us, or at all. In addition, future equity financings could
result in dilution to our shareholders, and future debt financings could result
in certain financial and operational restrictions.

13



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Risk Factors.

Our business, financial condition and results of operations have been, and in
the future may be, affected by a variety of factors, including those set forth
below and elsewhere in this report.

Limited Working Capital; Potential Need to Raise Additional Capital.

Current and anticipated demand for our products as well as procurement and
production affect our need for capital. Changes in these or other factors could
have a material impact on capital requirements and may require us to raise
additional capital.

History of Losses; Uncertain Future Profitability.

There can be no assurance that we can achieve or maintain profitability on a
quarterly basis or at all.

Government Regulation; Uncertainty of Obtaining Regulatory Approval.

Government regulation in the United States and other countries is a significant
factor in the development, manufacturing and marketing of many of our products.

Laserscope and its products are regulated in the United States by the FDA under
the Federal Food, Drug and Cosmetic Act (the FDC Act) and the Radiation
Control for Health and Safety Act. There can be no assurance that the FDA will
grant marketing clearance for our future products on a timely basis, or at all.
Delays in receiving such clearances could have a significant adverse impact on
our ability to compete in our industry. The FDA may also require post-market
testing and surveillance programs to monitor certain products.

Certain other countries require medical device manufacturers to obtain
clearances for products prior to marketing the products in those countries. The
requirements vary widely from country to country and are subject to change.

We are also required to register with the FDA and state agencies, such as the
Food and Drug Branch of the California Department of Health Services (CDHS), as
a medical device manufacturer. We are inspected routinely by these agencies to
determine our compliance with the FDAs current Good Manufacturing Practice
regulations. Those regulations impose certain procedural and documentation
requirements upon medical device manufacturers concerning manufacturing,
testing and quality control activities. If these inspections determine
violations of applicable regulations, the continued marketing of any products
manufactured by us may be adversely affected.

In addition, our laser products are covered by a performance standard for laser
products set forth in FDA regulations. The laser performance standard imposes
certain specific record-keeping,
reporting, product testing, and product labeling requirements on laser
manufacturers. These requirements also include affixing warning labels to laser
systems, as well as incorporating certain safety features in the design of
laser products.

Complying with applicable governmental regulations and obtaining necessary
clearances or approvals can be time consuming and expensive. There can be no
assurance that regulatory review will not involve delays or other actions
adversely affecting the marketing and sale of our products. We also cannot
predict the extent or impact of future legislation or regulations.

We are also subject to regulation under federal and state laws regarding, among
other things, occupational safety, the use and handling of hazardous materials
and protection of the environment.

14



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Insurance Reimbursement.

Demand for certain of our products depends on government and private insurance
reimbursement of hospitals and physicians for health care costs, including, but
not limited to, reimbursement of capital equipment costs. Reductions or delays
in such insurance coverage or reimbursement may negatively impact hospitals
and physicians decisions to purchase our products, adversely affecting our
future sales.

A substantial portion of our laser sales are for aesthetic procedures that are
generally not subject to reimbursement by government or private health
insurance. The general absence of insurance coverage for these cosmetic
procedures may restrict the development of this market.

In November 2002, the Centers for Medicare and Medicaid Services (CMS)
announced its final rule with respect to Ambulatory Payment Classification
(APC) reimbursement codes to be implemented in January 2003. One of the APC
codes that was affected is currently being used by hospitals to bill Medicare
for the PVP procedures. In February 2003, CMS issued a technical correction to
this APC code which represents the reimbursement under this code for 2003. The
reimbursement level to the hospital for this code was reduced approximately 19%
for the hospital site of service for Medicare patients compared to the
reimbursement during 2002.

This reduction will likely have a short-term adverse effect on the adoption and
sales growth of the Photo Vaporization of the Prostate (PVP) procedure in the
United States as some hospital-based customers who would normally consider
adopting the PVP procedure delay their purchases or adoption until the
reimbursement climate becomes more attractive. In addition, there are no
assurances that CMS nor other reimbursement setting agencies will not change
the classification of the PVP procedure to a reimbursement code or codes that
further negatively impact the adoption of the procedure in either the hospital
outpatient or other settings.

Uncertainty of Technological Change; Uncertainty of New Product Development and
Acceptance.

We operate in an industry that is subject to rapid technological change. Our
ability to remain competitive and future operating results will depend upon,
among other things,
our ability to anticipate and respond rapidly to such change by developing,
manufacturing and marketing technologically innovative products in sufficient
quantities at acceptable costs to meet such demand. As we introduce new
products this may cause some of our existing products to
become obsolete, which may result in the write-off of inventory. However,
without new products and enhancements, our existing products will likely become
obsolete due to technological advances by other companies, which could result
in the write-off of inventory as well as diminished revenues. Therefore, we
intend to continue to invest significant amounts in research and development.

We anticipate that our ability to compete will require significant research and
development expenditures with a continuing flow of innovative, high-quality
products. We cannot assure that we will be successful in designing,
manufacturing or selling enhanced or new products in a timely manner. Nor can
we assure that a competitor could not introduce a new or enhanced product or
technology that could have an adverse effect on our competitive position.

15



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Our current research and development programs are directed toward the
development of new laser systems and delivery devices. We cannot assure that
these markets will develop as anticipated or that our product development
efforts will prove successful. Nor can we assure that such new products, if
developed and introduced, will be accepted by the market.

Dependence on Single-Source Suppliers and Certain Third Parties.

Certain of the components used in our laser products, including certain optical
components, are purchased from single sources. While we believe that most of
these components are available from alternate sources, an interruption of these
or other supplies could adversely affect our ability to manufacture lasers.

Manufacturing.

We manufacture in the United States
the laser resonators, system chassis and certain accessories
including disposable products and re-usable hand pieces used in our
laser systems. Our laser manufacturing operations concentrate on the
assembly and test of components and subassemblies manufactured to our
designs and specifications by outside vendors. We believe that we
have sufficient manufacturing capacity in our present facilities to
support current operations at least through the end of 2003.

A challenge we have been recently
experiencing relates to some of our component suppliers. Our
commitment to delivering a quality product for the GreenLight
procedure has stretched some of our vendors to the point where we
were unable to fulfill our GreenLight laser backlog during the first
quarter of 2003 due to a shortage of some critical components. During
the first quarter, we made progress on this issue and we are
continuing to work with these suppliers to overcome these issues. In
addition, we have qualified some new suppliers to overcome the
shortages. We expect a resolution to this issue soon, leading to full
production capabilities during the late second or early third quarter
of this year.

Competition.

We compete in the non-ophthalmic surgical segment of the worldwide medical
laser market. In this market, lasers are used in hospital operating rooms,
outpatient surgery centers and individual physician offices for a wide variety
of procedures. This market is highly competitive. Our competitors are numerous
and include some of the worlds largest organizations as well as smaller,
highly-specialized firms. Our ability to compete effectively depends on such
factors as:



| |  |  | market acceptance of our products;                        
| | - |  | ----------------------------------------------------------
|
| |  |  | product performance;                                      
|
| |  |  | price;                                                    
|
| |  |  | customer support;                                         
|
| |  |  | the success and timing of new product development; and    
|
| |  |  | continued development of successful distribution channels.

Some of our current and prospective competitors have or may have significantly
greater financial, technical, research and development, manufacturing and
marketing resources than we have. In 2001, two of our largest competitors, ESC
Medical Systems (ESC) and Coherent Medical, completed a business combination.
To compete effectively, we will need to continue to expand our product
offerings, periodically enhance our existing products and continue to enhance
our distribution.

Certain surgical laser manufacturers have targeted their efforts on narrow
segments of the market, such as angioplasty and lithotripsy. Their products
may compete for the same capital equipment funds as our products, and
accordingly, these manufacturers may be considered our competitors. Generally,
surgical laser manufacturers such as Laserscope compete with standard surgical
methods and other medical technologies and treatment modalities. We cannot
assure that we can
compete effectively against such competitors. In addition, we cannot assure
that these or other companies will not succeed in developing technologies,
products or treatments that are more effective than ours or that would render
our technology or products obsolete or non-competitive.

16



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Reliance on Patents and Licenses.

We hold several patents issued in the United States, generally covering
surgical laser systems, delivery devices, calibration inserts and the laser
resonator. We have also licensed certain technologies from others.

We cannot assure that any patents or licenses that we hold or that may be
issued as a result of our patent applications will provide any competitive
advantages for our products. Nor can we assure that any of the patents that we
now hold or may hold in the future will not be successfully challenged,
invalidated or circumvented in the future. In addition, we cannot assure that
competitors, many of which have substantial resources and have made substantial
investments in competing technologies, will not seek to apply for and obtain
patents that will prevent, limit or interfere with our ability to make, issue,
use and sell our products.

Intellectual Property Infringement Claims.

From time to time we receive notices from others claiming we are infringing
their patent or other intellectual property rights. Responding to any
infringement claim, regardless of its validity, could:



| |  | be time-consuming to defend;                                                                                 
|- |  | -------------------------------------------------------------------------------------------------------------
| 
| |  | result in costly litigation;                                                                                 
| 
| |  | divert managements time and attention from developing our business;                                         
| 
| |  | require us to enter into royalty and licensing agreements that we
would not normally find acceptable;        
| 
| |  | require us to stop selling or to redesign our products; and                                                  
| 
| |  | require us to pay money as damages or to satisfy indemnification
obligations that we have with our customers.

If a successful claim is made against us and we fail to develop or license a
substitute technology, our business, results of operations, financial condition
or cash flows could be materially adversely affected.

Failure to Attract or Retain Key Personnel Can Adversely Affect Results.

We depend upon the efforts and abilities of a number of current key personnel.
If we are unable to attract and retain key employees it would have a material
adverse effect on our business, financial condition and results of operations.

Reliance on Key Customers.

In December 2000, Laserscope and McKesson Corporation (McKesson) entered into
a five year agreement whereby McKesson would obtain exclusive distribution
rights for the Companys aesthetic product lines to doctors offices in the
United States. If we are unable to maintain a favorable relationship with
McKesson or if McKesson encounters financial

17



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##### Table of Contents



difficulties, it would have a
material adverse effect on our business, financial condition, results of
operations, and future cashflows.

Fluctuations in Quarterly Operating Results.

A number of factors affect our quarterly financial results including the timing
of shipments and orders. Our laser products are relatively expensive pieces of
medical capital equipment and the precise shipment date of specific units can
have a marked effect on our results of operations on a quarterly basis. Any
delay in product shipments near the end of a quarter could cause our quarterly
results to fall short of anticipated levels. Furthermore, to the extent we
receive orders near the end of a quarter, we may not be able to fulfill the
order during the balance of that same quarter. Moreover, we typically receive
a disproportionate percentage of orders toward the end of each quarter. To the
extent that we do not receive anticipated orders or orders are delayed beyond
the end of the applicable quarter, our results may be adversely affected and
may be unpredictable from quarter to quarter. In addition, because a
significant portion of our revenues in each quarter result from orders received
in that quarter, we base our production, inventory and operating expenditure
levels on anticipated revenue levels. Thus, if sales do not occur when
expected, expenditure levels could be disproportionately high and operating
results for that quarter and potentially future quarters, would be adversely
affected. We cannot assure that Laserscope will accomplish revenue growth or
profitability on a quarterly or annual basis. Nor can we assure that revenue
growth or profitability will not fluctuate significantly from quarter to
quarter.

Potential of Product Defects.

Laser systems are inherently complex in design and require ongoing regular
maintenance. The manufacture of our lasers, laser products and systems
involves a highly complex and precise process. As a result of the technical
complexity of our products, changes in our or our suppliers manufacturing
processes or the inadvertent use of defective materials by us or our suppliers
could result in a material adverse effect on our ability to achieve acceptable
manufacturing yields and product reliability. To the extent that we do not
achieve such yields or product reliability, our business, operating results,
financial condition and customer relationships would be adversely affected.

Our customers may discover defects in our products after the products have been
fully deployed and operated under peak stress conditions. In addition some of
our products are combined with products from other vendors, which may contain
defects. As a result, should problems occur, it may be difficult to identify
the source of the problem. If we are unable to fix defects or other problems,
we could experience, among other things:



| |  |  | loss of customers;                                            
| | - |  | --------------------------------------------------------------
|
| |  |  | increased costs of product, returns and warranty expenses;    
|
| |  |  | damage to our brand reputation;                               
|
| |  |  | failure to attract new customers or achieve market acceptance;
|
| |  |  | diversion of development and engineering resources; and       
|
| |  |  | legal actions by our customers.                               

The occurrence of any one or more of the foregoing factors could seriously harm
our business, financial condition and results of operations.

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Product Liability Risk; Limited Insurance Coverage.

Our business has significant risks of product liability claims. We have
experienced product liability claims from time to time, which we believe are
ordinary for our business. While we cannot predict or determine the outcome of
the actions brought against us, we believe that these actions will not
ultimately have a material adverse impact on Laserscopes financial position,
results of operations or future cash flows.

At present, we maintain product liability insurance on a claims made basis
with coverage of $10.0 million in the aggregate with a deductible of $0.1
million per occurrence and an annual maximum aggregate deductible of $0.5
million. We cannot assure that such insurance coverage will be available to us
in the future at a reasonable cost, if at all. Nor can we assure that other
claims will not be brought against us in excess of our insurance coverage.

Natural Catastrophic Events; Terrorism and Other Manmade Problems.

Our corporate headquarters, including our research and development operations,
our manufacturing facilities, and our principal sales, marketing and service
offices, are located in the Silicon Valley area of Northern California, a
region known for seismic activity. A significant natural disaster, such as an
earthquake or a flood, could have a material adverse impact on our business,
operating results, and financial condition. In addition, despite our
implementation of network security measures, our servers are vulnerable to
computer viruses, break-ins, and similar disruptions from unauthorized
tampering with our computer systems. Any such event could have a material
adverse effect on our business, operating results, and financial condition. In
addition, the effects of war or acts of terrorism could have a material adverse
effect on our business, operating results, and financial condition. The
terrorist attacks in New York and Washington, D.C. on September 11, 2001
disrupted commerce throughout the world and intensified the uncertainty of the
U.S. and other economies. The continued threat of terrorism and heightened
security and military action in response to this threat, or any future acts of
terrorism, may cause further disruptions to these economies and create further
uncertainties. To the extent that such disruptions or uncertainties result in
delays or cancellations of customer orders, or the manufacture or shipment of
our products, our business, operating results and financial condition could be
materially and adversely affected.

Factors Affecting Financial Results and Stock Price.

A number of factors affect our financial results and stock price including, but
not limited to:



| |  |  | product mix;                                                                                                                                                                
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | competitive pricing pressures;                                                                                                                                              
|
| |  |  | material costs;                                                                                                                                                             
|
| |  |  | revenue and expenses related to new products and enhancements to
existing products;                                                                                         
|
| |  |  | delays in customer purchases in anticipation of new products or
product enhancements by Laserscope or its competitors; and                                                  
|
| |  |  | the risk of loss or interruption to our operations or increased costs
due to earthquakes, the availability of power and energy supplies and other
events beyond our control.

The market price of our common stock may be subject to significant
fluctuations. These fluctuations may be due to factors specific to Laserscope,
such as:



| |  |  | quarterly fluctuations in our financial results;  
| | - |  | --------------------------------------------------
|
| |  |  | changes in analysts estimates of future results; 
|
| |  |  | changes in investors perceptions of our products;

19



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| |  |  | announcement of new or enhanced products by us or our competitors;     
| | - |  | -----------------------------------------------------------------------
|
| |  |  | announcements relating to acquisitions and strategic transactions by us
|
| |  |  | or our competitors;                                                    
|
| |  |  | general conditions in the medical equipment industry; and              
|
| |  |  | general conditions in the financial markets.                           

The stock market has from time to time experienced extreme price and volume
fluctuations, particularly among stocks of high technology companies, which, on
occasion, have been unrelated to the operating performance of particular
companies. Factors not directly related to Laserscopes performance, such as
negative industry reports or disappointing earnings announcements by publicly
traded competitors, may have an adverse impact on the market price of our
common stock.

As of April 30, 2003, we had 17,162,275 shares of outstanding common stock.
The sale of a substantial number of shares of common stock or the perception
that such sales could occur, could adversely affect prevailing market prices
for our common stock.

International Business.

Our international sales are made through international distributors and
wholly-owned subsidiaries with payments to us typically denominated in the
local currencies of the United Kingdom and France, and in U.S. Dollars in the
rest of the world. We intend to continue our operations outside of the United
States and potentially to enter additional international markets, These
activities, require significant management attention and financial resources
and further subject us to the risks of operating internationally. These risks
include, but are not limited to:



| |  |  | changes in regulatory requirements;                                                  
| | - |  | -------------------------------------------------------------------------------------
|
| |  |  | delays resulting from difficulty in obtaining export licenses for certain technology;
|
| |  |  | customs, tariffs and other barriers and restrictions; and                            
|
| |  |  | the burdens of complying with a variety of foreign laws.                             

We are also subject to general geopolitical risks in connection with our
international operations, such as:



| |  |  | differing economic conditions;                        
| | - |  | ------------------------------------------------------
|
| |  |  | changes in political climate;                         
|
| |  |  | differing tax structures; and                         
|
| |  |  | changes in diplomatic and trade relationships and war.

In addition, fluctuations in currency exchange rates may negatively affect our
ability to compete in terms of price against products denominated in local
currencies.

Accordingly, our future results could be materially adversely affected by
changes in these regulatory, geopolitical and other factors.

We do not engage in hedging transactions for speculative or trading purposes.

Legal Proceedings.

Laserscope is a party to a number of legal proceedings and claims arising in
the ordinary course of business. While it is not feasible to predict or
determine the outcome of the actions brought against us, we believe that the
ultimate resolution of these claims will not have a

20



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material adverse effect on
Laserscopes financial position, results of operations, or future cash flows.

Interest Rate Risk.

(See Item 3.-Quantitative and Qualitative Disclosures About Market Risk in this
Quarterly Report on Form 10-Q.)

Warranty Obligations.

We have a direct field service organization that provides service for our
products. We generally provide a twelve month warranty on our laser systems.
After the warranty period, maintenance and support is provided on a service
contract basis or on an individual call basis. Our warranties and premium
service contracts provide for a 99.0% Uptime Guarantee on our laser systems.
Under provisions of this guarantee, we extend the term of the related warranty
or service contract if specified system uptime levels are not maintained.
Although most systems covered by this guarantee have achieved a 99.0% uptime
rate to date, we cannot assure that we can maintain such uptime rates in the
future.

No Dividends.

We have never paid cash dividends on our common stock and do not anticipate
paying cash dividends on the common stock in the foreseeable future. The
payment of dividends on the common stock will depend on our earnings, financial
condition and other business and economic factors affecting us at such time as
the Board of Directors may consider relevant.

Penny Stock Rules.

Our common stock is traded on the National Association of Securities Dealers
Automated Quotation (NASDAQ) National Market System, which requires that a
company have, among other things, a minimum bid price of $1.00 in order to
qualify for continued listing. If we fail to maintain our listing for our
common stock on the NASDAQ National Market System, and no other exclusion from
the definition of penny stock under the Exchange Act is available, any
brokers engaging in transactions in our securities would be required to provide
their customers with a risk disclosure document, the compensation of the
broker/dealer in the transaction and monthly account statements showing the
market values of our securities held in the customers accounts. The bid and
offer quotations and compensation information must be provided prior to
effecting the transaction and must be contained on the customers confirmation.
If brokers become subject to the penny stock rules when engaging in
transactions in our securities, they would become less willing to engage in
such transactions, thereby making it more difficult for shareholders to dispose
of their shares of Laserscope common stock.

Dilution.

Shareholders may experience dilution in the net tangible book value of their
investment upon the exercise of outstanding options and warrants granted under
Laserscopes stock option plans and other options, warrants and outstanding
convertible securities.

Other.

Other risks are detailed from time to time in our press releases and other
public disclosure filings with the United States Securities and Exchange
Commission (SEC), copies of which are available upon request from the
Company.

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Item 3.     Quantitative and Qualitative Disclosures About Market Risk.

Laserscope is exposed to a variety of risks, including changes in interest
rates affecting the return on its investments, outstanding debt balances and
foreign currency fluctuations. In the normal course of business, the Company
employs established policies and procedures to manage its exposure to
fluctuations in interest rates and foreign currency values.

Interest Rate Risk.

Laserscopes exposure to market rate risk for changes in interest rates relates
primarily to our outstanding debt. In 2003 and 2002, we did not use derivative
financial instruments. We invest excess cash in money market funds. Our debt
financing consists of convertible debentures and bank loans requiring either
fixed or variable rate interest payments. Investments in and borrowings under
both fixed-rate and floating-rate interest-earning instruments carry a degree
of interest rate risk. On the investment side, fixed-rate securities may have
their fair market value adversely affected due to a rise in interest rates,
while floating-rate securities may produce less income than expected if
interest rates fall. In addition, our future investment income may fall short
of securities analyst expectations due to changes in interest rates, or we may
suffer losses in principal if forced to sell securities which have declined in
market value due to changes in interest rates. On the debt side, borrowings,
such as our convertible notes, that require fixed-rate interest payments
require greater than current market rate interest payments if interest rates
fall, while floating rate borrowings, such as our line of credit, may require
greater interest payments if interest rates rise. Additionally, our future
interest expense may be greater than expected due to changes in interest rates.

Foreign Currency Risk.

Our International revenues were 23% of total revenues in each of the
quarters ended March 31, 2003 and 2002. Our international sales are made
through international distributors and wholly owned subsidiaries with payments
to the Company typically denominated in the local currencies of the United
Kingdom and France, and in U.S. dollars in the rest of the world. Our
international business is subject to risks typical of an international
business, including, but not limited to, differing economic conditions, changes
in political climate, differing tax structures, other regulations and
restrictions, and foreign exchange rate volatility. Accordingly, our future
results could be materially adversely affected by changes in these or other
factors. We do not engage in hedging transactions for speculative or trading
purposes.




Item 4.     Controls and Procedures.

(a)  Evaluation of disclosure controls and procedures

Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we conducted
an evaluation of our disclosure controls and procedures (as defined in Rule
13a-14(c) under the Securities Exchange Act of 1934) within 90 days of the
filing date of this report. Based on this evaluation, our principal executive
officer and principal financial officer concluded that our disclosure controls
and procedures need improvement. (See Item 4(b) below)

(b)  Changes in internal controls

In connection with the preparation of the Companys financial statements as of
and for the year ended December 31, 2002, management, in conjunction with our
financial advisors, identified significant deficiencies that relate to our
foreign subsidiaries and that were primarily caused by

22



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turnover of accounting
personnel. Since December 31, 2002, we have made significant progress in our
controls and procedures relating to our foreign subsidiaries. While there were
no material misstatements of our consolidated financial results for the first
quarter of 2003 or any quarter of 2002, corrective actions are continuing to be
instituted. These matters have been discussed with our independent
accountants and the Audit Committee of the Board of Directors of the Company.



















|        |  |                                                    
|------- |  | ---------------------------------------------------
|PART II |  | OTHER INFORMATION                                  
|       
|Item 1. |  | Legal Proceedings                                  
|        |  |                                                    
|        |  | Not applicable.                                    
|        |  |                                                    
|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
|        |  |                                                    
|        |  | Not applicable.                                    
|        |  |                                                    
|Item 5. |  | Other Information                                  
|        |  |                                                    
|        |  | Not applicable.                                    
|        |  |                                                    

23



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| |  |         |  |                                                                                  
| |  | ------- |  | ---------------------------------------------------------------------------------
| |  | Item 6. |  | Exhibits and Reports on Form 8-K                                                 
| |  |         |  |                                                                                  
| |  | (a)     |  | Exhibits filed herewith (numbered in accordance with Item 601 of Regulation S-K):

| |  |  |  |         |  |                                                                                 
| |  |  |  | ------- |  | --------------------------------------------------------------------------------
| |  |  |  | Exhibit |  |                                                                                 
| |  |  |  | Number  |  | Description                                                                     
| |  |  |  |         |  |                                                                                 
| |  |  |  | 99.1    |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. section 1350.
| |  |  |  | 99.2    |  | Certification of Principal Financial Officer pursuant to 18 U.S.C. section 1350.

| |  |     |  |                                                                                                                                                                                                                                           
| |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (b) |  | Reports on form 8-K:                                                                                                                                                                                                                      
|
| |  |     |  | On February 25,
2003, the Company filed a current report on Form 8-K reporting the
issuance of a Press Release dated February 13, 2003 announcing
the Company's financial results for the fiscal quarter and year ended
December 31, 2002.

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##### Table of Contents






SIGNATURES

Pursuant to the requirements 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.

|                   |  |                                                                                                                                             
|------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------
|                   |  | LASERSCOPE                                                                                                                                  
|                  
|                   |  | Registrant                                                                                                                                  
|                  
|                   |  | /s/  Dennis LaLumandiereDennis LaLumandiere
Vice President, Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
|                  
|Date: May 13, 2003 |  |                                                                                                                                             

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CERTIFICATIONS

I, Eric M. Reuter, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Laserscope;                                                                                                                                                                                                                                                             
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                      



| | a) |  | 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 quarterly 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 quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly 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 officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (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 officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                   |  |                                                                                       
|------------------ |  | --------------------------------------------------------------------------------------
|Date: May 13, 2003 |  |                                                                                       
|                  
|                   |  | /s/ Eric M. ReuterEric M. Reuter
Chief Executive Officer
(Principal Executive Officer)

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I, Dennis LaLumandiere, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Laserscope;                                                                                                                                                                                                                                                             
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                      



| | a) |  | 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 quarterly 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 quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly 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 officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (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 officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                   |  |                                                                                                 
|------------------ |  | ------------------------------------------------------------------------------------------------
|Date: May 13, 2003 |  |                                                                                                 
|                  
|                   |  | /s/ Dennis LaLumandiereDennis LaLumandiere
Chief Financial Officer
(Principal Financial Officer)

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EXHIBIT INDEX

|        |  |                                                                                  |  |  |  | 
|------- |  | -------------------------------------------------------------------------------- |  |  |  | 
|Exhibit |  |                                                                                  |  |  |  | 
|Number  |  | Description                                                                      |  |  |  | 
|        |  |                                                                                  |  |  |  | 
|99.1    |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. section 1350.
|99.2    |  | Certification of Principal Financial Officer pursuant to 18 U.S.C. section 1350.