##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 Quarterly Report Under section 13 or 15(d) of the
Securities Exchange Act of 1934
 For the Quarterly Period Ended September 30, 2006
 Commission File No. 000-20989
 
 UROPLASTY, INC.
  Minnesota, U.S.A.
    
    41-1719250(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 5420 Feltl Road
Minnetonka, Minnesota, 55343
 (912) 426-6140
   þ o
  o þ
   o þ




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSPART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 6. EXHIBITSSIGNATURESCertificationCertification    Table of Contents  
  
 ITEM 1. FINANCIAL STATEMENTS
   September 30, 2006(unaudited)
    
    
    March 31, 2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    1,983,303
    
    
    $
    1,563,433Short-term investments
    
    
    
    
    
    
    1,137,647Accounts receivable, net
    
    
    1,123,388
    
    
    
    716,587Income tax receivable
    
    
    195,348
    
    
    
    270,934Inventories
    
    
    1,026,045
    
    
    
    757,062Other
    
    
    327,502
    
    
    
    353,178Total current assets
    
    
    4,655,586
    
    
    
    4,798,841Property, plant, and equipment, net
    
    
    1,425,102
    
    
    
    1,079,438Intangible assets, net
    
    
    358,491
    
    
    
    411,604Deferred tax assets
    
    
    159,743
    
    
    
    111,361Total assets
    
    $
    6,598,922
    
    
    $
    6,401,244
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##### Table of Contents



September 30, 2006(unaudited)
    
    
    March 31, 2006Liabilities and Shareholders EquityCurrent liabilities:Current maturities  long-term debt
    
    $
    43,640
    
    
    $
    41,658Deferred
rent  current
    
    
    35,000
    
    
    
    Notes payable
    
    
    64,050
    
    
    
    Accounts payable
    
    
    734,457
    
    
    
    506,793Accrued liabilities
    
    
    799,275
    
    
    
    917,981Warrant liability
    
    
    1,038,036
    
    
    
    665,356Total current liabilities
    
    
    2,714,458
    
    
    
    2,131,788Long-term debt  less current maturities
    
    
    450,000
    
    
    
    389,241Deferred rent  less current portion
    
    
    231,082
    
    
    
    Accrued pension liability
    
    
    641,598
    
    
    
    473,165Total liabilities
    
    
    4,037,138
    
    
    
    2,994,194Shareholders equity:Common stock $.01 par value;
20,000,000
shares authorized, 8,411,188 and
6,937,786 shares issued and
outstanding at September 30 and
March 31, 2006, respectively
    
    
    84,112
    
    
    
    69,378Additional paid-in capital
    
    
    17,305,638
    
    
    
    14,831,787Accumulated deficit
    
    
    (14,434,229
    )
    
    
    (11,034,100
    )Accumulated other comprehensive loss
    
    
    (393,737
    )
    
    
    (460,015
    )Total shareholders equity
    
    
    2,561,784
    
    
    
    3,407,050Total liabilities and shareholders equity
    
    $
    6,598,922
    
    
    $
    6,401,244
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Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    1,760,771
    
    
    $
    1,554,955
    
    
    $
    3,524,980
    
    
    $
    3,200,608Cost of goods sold
    
    
    452,857
    
    
    
    462,317
    
    
    
    1,008,372
    
    
    
    883,145Gross profit
    
    
    1,307,914
    
    
    
    1,092,638
    
    
    
    2,516,608
    
    
    
    2,317,463Operating expensesGeneral and administrative
    
    
    827,290
    
    
    
    744,867
    
    
    
    1,711,399
    
    
    
    1,435,431Research and development
    
    
    658,409
    
    
    
    1,030,808
    
    
    
    1,333,363
    
    
    
    1,661,406Selling and marketing
    
    
    1,303,696
    
    
    
    804,606
    
    
    
    2,536,283
    
    
    
    1,468,6392,789,395
    
    
    
    2,580,281
    
    
    
    5,581,045
    
    
    
    4,565,476Operating loss
    
    
    (1,481,481
    )
    
    
    (1,487,643
    )
    
    
    (3,064,437
    )
    
    
    (2,248,013
    )Other income (expense)Interest income
    
    
    18,308
    
    
    
    27,616
    
    
    
    37,815
    
    
    
    54,996Interest expense
    
    
    (10,483
    )
    
    
    (4,515
    )
    
    
    (16,465
    )
    
    
    (9,324
    )Warrant benefit (expense)
    
    
    (700,412
    )
    
    
    701,718
    
    
    
    (372,680
    )
    
    
    15,423Foreign currency exchange gain
(loss)
    
    
    3,553
    
    
    
    (7,206
    )
    
    
    29,964
    
    
    
    (8,405
    )Other
    
    
    (1,216
    )
    
    
    
    
    
    
    3,585
    
    
    
    (690,250
    )
    
    
    717,613
    
    
    
    (317,781
    )
    
    
    52,690Loss before income taxes
    
    
    (2,171,731
    )
    
    
    (770,030
    )
    
    
    (3,382,218
    )
    
    
    (2,195,323
    )Income tax expense (benefit)
    
    
    (12,841
    )
    
    
    (34,314
    )
    
    
    17,911
    
    
    
    2,706Net loss
    
    $
    (2,158,890
    )
    
    $
    (735,716
    )
    
    $
    (3,400,129
    )
    
    $
    (2,198,029
    )Basic and diluted loss per common share
    
    $
    (0.28
    )
    
    $
    (0.11
    )
    
    $
    (0.46
    )
    
    $
    (0.33
    )Weighted average common shares
outstanding:Basic and diluted
    
    
    7,784,118
    
    
    
    6,853,783
    
    
    
    7,376,900
    
    
    
    6,603,887
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AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    Comprehensive
    
    
    ShareholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Loss
    
    
    EquityBalance at March 31, 2006
    
    
    6,937,786
    
    
    $
    69,378
    
    
    $
    14,831,787
    
    
    $
    (11,034,100
    )
    
    $
    (460,015
    )
    
    $
    3,407,050Proceeds from private
placement, net of costs
of $260,832
    
    
    1,389,999
    
    
    
    13,900
    
    
    
    1,810,317
    
    
    
    
    
    
    
    
    
    
    
    1,824,217Warrant registration costs
    
    
    
    
    
    
    
    
    
    
    (4,351
    )
    
    
    
    
    
    
    
    
    
    
    (4,351
    )Exercise of Stock Options
    
    
    65,649
    
    
    
    656
    
    
    
    146,501
    
    
    
    
    
    
    
    
    
    
    
    147,157Employee Retirement
Savings Plan Contribution
    
    
    17,754
    
    
    
    178
    
    
    
    44,207
    
    
    
    
    
    
    
    
    
    
    
    44,385Share-Based Compensation
    
    
    
    
    
    
    
    
    
    
    477,177
    
    
    
    
    
    
    
    
    
    
    
    477,177Comprehensive Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,400,129
    )
    
    
    66,278
    
    
    
    (3,333,851
    )Balance at September 30,
2006
    
    
    8,411,188
    
    
    $
    84,112
    
    
    $
    17,305,638
    
    
    $
    (14,434,229
    )
    
    
    ($393,737
    )
    
    $
    2,561,784
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Six Months EndedSeptember 30,2006
    
    
    2005Cash flows from operating activities:Net loss
    
    $
    (3,400,129
    )
    
    $
    (2,198,029
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    147,989
    
    
    
    116,565Gain on disposal of furniture
    
    
    (3,584
    )
    
    
    Warrant expense (benefit)
    
    
    372,680
    
    
    
    (15,423
    )Stock-based consulting expense
    
    
    29,524
    
    
    
    Stock-based compensation expense
    
    
    447,652
    
    
    
    Deferred income taxes
    
    
    (42,976
    )
    
    
    (48,160
    )Deferred rent
    
    
    (14,583
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (368,428
    )
    
    
    47,762Inventories
    
    
    (221,587
    )
    
    
    (195,071
    )Other current assets and income tax receivable
    
    
    121,808
    
    
    
    (58,945
    )Accounts payable
    
    
    216,037
    
    
    
    212,759Deferred rent
    
    
    280,666
    
    
    
    Accrued liabilities
    
    
    (86,062
    )
    
    
    271,288Accrued pension liability
    
    
    142,780
    
    
    
    39,226Net cash used in operating activities
    
    
    (2,378,213
    )
    
    
    (1,828,028
    )Cash flows from investing activities:Proceeds from sale of short-term investments
    
    
    1,137,647Payments for property, plant and equipment
    
    
    (406,740
    )
    
    
    (170,602
    )Proceeds from sale of property, plant and equipment
    
    
    4,294
    
    
    
    Payments for intangible assets
    
    
    
    
    
    
    (329,167
    )Net cash provided by (used in) investing activities
    
    
    735,201
    
    
    
    (499,769
    )Cash flows from financing activities:Proceeds from financing obligations
    
    
    210,999Repayment of long-term obligations
    
    
    (104,656
    )
    
    
    (21,650
    )Proceeds from issuance of common stock and warrants
    
    
    1,967,023
    
    
    
    6,768,191Net cash provided by financing activities
    
    
    2,073,366
    
    
    
    6,746,541Effect of exchange rates on cash and cash equivalents
    
    
    (10,484
    )
    
    
    (88,451
    )Net increase in cash and cash equivalents
    
    
    419,870
    
    
    
    4,330,293Cash and cash equivalents at beginning of period
    
    
    1,563,433
    
    
    
    1,492,684Cash and cash equivalents at end of period
    
    $
    1,983,303
    
    
    $
    5,822,977Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    14,615
    
    
    $
    9,803Cash paid during the period for income taxes
    
    
    58,335
    
    
    
    37,598Supplemental disclosure of non-cash financing and investing activities:Shares issued for 401(k) plan profit sharing contribution
    
    $
    44,385
    
    
    $
    Property, plant and equipment additions funded by lessor allowance and
classified as deferred rent
    
    
    280,000
    
    
    
    
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1. Basis of Presentation
    2. Nature of Business, Sales of Common Stock and Corporate Liquidity
 TM ® ®
  Page 7




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
  3. Short-term Investments
  4. Inventories
  September 30, 2006
    
    
    March 31, 2006Raw materials
    
    $
    368,435
    
    
    $
    340,268Work-in-process
    
    
    46,806
    
    
    
    26,183Finished goods
    
    
    610,804
    
    
    
    390,611$
    1,026,045
    
    
    $
    757,062
 5. Intangible Assets
  September 30, 2006GrossEstimated
    
    Carrying
    
    
    AccumulatedLives (Years)
    
    Amount
    
    
    Amortization
    
    
    Net valueLicensed technology
    
    5
    
    $
    501,290
    
    
    $
    160,874
    
    
    $
    340,416Patents and inventions
    
    6
    
    
    237,900
    
    
    
    219,825
    
    
    
    18,075Totals
    
    
    
    $
    739,190
    
    
    $
    380,699
    
    
    $
    358,491
 March 31, 2006Licensed technology
    
    5
    
    $
    501,290
    
    
    $
    111,183
    
    
    $
    390,107Patents and inventions
    
    6
    
    
    237,900
    
    
    
    216,403
    
    
    
    21,497Totals
    
    
    
    $
    739,190
    
    
    $
    327,586
    
    
    $
    411,604
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Remainder of fiscal 2007
    
    $
    50,3992008
    
    
    100,7562009
    
    
    100,6522010
    
    
    98,3692011
    
    
    8,315$
    358,491
 6. Comprehensive Loss
  Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net loss
    
    $
    (2,158,890
    )
    
    $
    (735,716
    )
    
    $
    (3,400,129
    )
    
    $
    (2,198,029
    )Items of other comprehensive
income (loss):Translation adjustment
    
    
    (18,492
    )
    
    
    (6,713
    )
    
    
    78,097
    
    
    
    (214,872
    )Additional pension liability
    
    
    (416
    )
    
    
    203
    
    
    
    (11,819
    )
    
    
    4,612Comprehensive loss
    
    $
    (2,177,798
    )
    
    $
    (742,226
    )
    
    $
    (3,333,851
    )
    
    $
    (2,408,289
    )
 7. Basic and Diluted Net Loss per Common Share.
  Number of
    
    Range of ExerciseOptions/Warrants
    
    PricesFor the three and six months ended
September 30:2006
    
    
    4,967,380
    
    
    $  0.90 to $5.302005
    
    
    3,597,705
    
    
    $0.90 to $10.50
 8. Shareholders Equity
 Warrants
  Page 9




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Authorized Common Shares
  9. Share-based Compensation
     Page 10




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Three Months Ended
    
    
    Six Months EndedSeptember 30, 2006
    
    
    September 30, 2006Proforma
    
    
    
    
    
    
    ProformaUnder
    
    
    
    
    
    
    UnderAs Reported
    
    
    APB 25
    
    
    As Reported
    
    
    APB 25Loss before taxes
    
    $
    (2,171,731
    )
    
    $
    (2,171,731
    )
    
    $
    (3,382,218
    )
    
    $
    (3,382,218
    )Add back compensation expense
    
    
    
    
    
    
    148,056
    
    
    
    
    
    
    
    447,652Adjusted loss before taxes
    
    
    (2,171,731
    )
    
    
    (2,023,675
    )
    
    
    (3,382,218
    )
    
    
    (2,934,566
    )Income tax expense (benefit)
    
    
    (12,841
    )
    
    
    (12,841
    )
    
    
    17,911
    
    
    
    17,911Net loss
    
    $
    (2,158,890
    )
    
    $
    (2,010,834
    )
    
    $
    (3,400,129
    )
    
    $
    (2,952,477
    )Net loss per common share 
basic and diluted
    
    $
    (0.28
    )
    
    $
    (0.26
    )
    
    $
    (0.46
    )
    
    $
    (0.40
    )
   Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net loss  As reported
    
    $
    (2,158,890
    )
    
    $
    (735,716
    )
    
    $
    (3,400,129
    )
    
    $
    (2,198,029
    )Deduct: Pro forma
stock-based employee
compensation expense
determined under fair
value-based method
    
    
    
    
    
    
    (424,902
    )
    
    
    
    
    
    
    (858,333
    )Net loss
 Pro forma
    
    $
    (2,158,890
    )
    
    $
    (1,160,618
    )
    
    $
    (3,400,129
    )
    
    $
    (3,056,362
    )Net loss per common
share  As reported:Basic and diluted
    
    $
    (0.28
    )
    
    $
    (0.11
    )
    
    $
    (0.46
    )
    
    $
    (0.33
    )Net loss per common
share  Pro forma:Basic and diluted
    
    $
    (0.28
    )
    
    $
    (0.17
    )
    
    $
    (0.46
    )
    
    $
    (0.46
    )
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Three Months Ended
    
    
    Six Months EndedSeptember 30, 2006
    
    
    September 30, 2006Expected life in years
    
    
    5.00
    
    
    
    7.88Risk-free interest rate
    
    
    4.77
    %
    
    
    4.98
    %Expected volatility
    
    
    100.26
    %
    
    
    100.26
    %Expected dividend yield
    
    
    0
    
    
    
    0Weighted-average fair value
    
    
    1.396
    
    
    
    1.964
    Weighted AvgWeighted Avg
    
    
    RemainingNumber of Shares
    
    
    Exercise Price
    
    
    Contract LifeOptions outstanding at beginning of
period
    
    
    1,888,327
    
    
    $
    3.80
    
    
    
    4.48Options granted
    
    
    493,000
    
    
    
    2.32
    
    
    
    7.60Options exercised
    
    
    (65,649
    )
    
    
    2.24
    
    
    
    Options surrendered
    
    
    (99,944
    )
    
    
    2.89
    
    
    
    Options outstanding at end of period
    
    
    2,215,734
    
    
    $
    3.56
    
    
    
    4.97Options exercisable at end of period
    
    
    1,811,416
    
    
    $
    3.82
    
    
    
    4.57
 10. Savings and Retirement Plans
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Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Gross service cost
    
    $
    51,303
    
    
    $
    43,436
    
    
    $
    101,845
    
    
    $
    88,297Interest cost
    
    
    30,941
    
    
    
    24,975
    
    
    
    61,354
    
    
    
    50,810Expected return on assets
    
    
    (17,764
    )
    
    
    (14,403
    )
    
    
    (35,208
    )
    
    
    (29,314
    )Amortization
    
    
    10,604
    
    
    
    7,037
    
    
    
    21,035
    
    
    
    14,303Net periodic retirement cost
    
    $
    75,084
    
    
    $
    61,045
    
    
    $
    149,026
    
    
    $
    124,096
  Three and Six MonthsEndedSeptember 30,2006
    
    
    2005Discount rate
    
    
    4.255.50
    %
    
    
    4.505.25
    %Expected return on assets
    
    
    4.005.00
    %
    
    
    4.005.00
    %Expected rate of increase in future compensation:General
    
    
    3
    %
    
    
    3
    %Individual
    
    
    0%3
    %
    
    
    0%3
    %
 11. Foreign Currency Translation
   12. Income Tax Expense
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13. Business Segment and Geographic Information
 ®
 ®
   AdjustmentsUnited
    
    
    The
    
    
    United
    
    
    andStates
    
    
    Netherlands
    
    
    Kingdom
    
    
    Eliminations
    
    
    ConsolidatedFiscal 2007Sales, three months
ended September 30,
2006
    
    $
    707,733
    
    
    $
    1,252,452
    
    
    $
    423,270
    
    
    $
    (622,684
    )
    
    $
    1,760,771Sales, six months
ended September 30,
2006
    
    
    1,006,033
    
    
    
    2,415,581
    
    
    
    952,707
    
    
    
    (849,341
    )
    
    
    3,524,980Income tax benefit,
three months ended
September 30, 2006
    
    
    
    
    
    
    (12,841
    )
    
    
    
    
    
    
    
    
    
    
    (12,841
    )Income tax expense,
six months ended
September 30, 2006
    
    
    
    
    
    
    17,911
    
    
    
    
    
    
    
    
    
    
    
    17,911Net income (loss),
three months ended
September 30, 2006
    
    
    (2,007,429
    )
    
    
    1,283
    
    
    
    (41,669
    )
    
    
    (111,075
    )
    
    
    (2,158,890
    )Net income (loss),
six months ended
September 30, 2006
    
    
    (3,355,374
    )
    
    
    109,210
    
    
    
    (99,344
    )
    
    
    (54,621
    )
    
    
    (3,400,129
    )Long-lived assets
At September 30, 2006
    
    
    1,047,566
    
    
    
    730,261
    
    
    
    5,766
    
    
    
    
    
    
    
    1,783,593Fiscal 2006Sales, three months
ended September 30,
2005
    
    $
    194,076
    
    
    $
    1,238,605
    
    
    $
    460,758
    
    
    $
    (338,484
    )
    
    $
    1,554,955Sales, six months
ended September 30,
2005
    
    
    334,897
    
    
    
    2,576,206
    
    
    
    918,528
    
    
    
    (629,023
    )
    
    
    3,200,608Income tax benefit,
three months ended
September 30, 2005
    
    
    
    
    
    
    (34,314
    )
    
    
    
    
    
    
    
    
    
    
    (34,314
    )Income tax expense,
six months ended
September 30, 2005
    
    
    
    
    
    
    2,706
    
    
    
    
    
    
    
    
    
    
    
    2,706Net income (loss),
three months ended
September 30, 2005
    
    
    (641,312
    )
    
    
    (122,681
    )
    
    
    (12,678
    )
    
    
    40,955
    
    
    
    (735,716
    )Net income (loss),
six months ended
September 30, 2005
    
    
    (2,297,787
    )
    
    
    (134,784
    )
    
    
    31,736
    
    
    
    202,806
    
    
    
    (2,198,029
    )Long-lived assets
At September 30, 2005
    
    
    668,167
    
    
    
    733,711
    
    
    
    4,884
    
    
    
    
    
    
    
    1,406,762
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14. Recently Issued Accounting Standards
 Accounting for Uncertainty in Income Taxesan
Interpretation of FASB Statement 109
 Fair Value Measurements
 Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans
  15. Subsequent Event
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Forward-looking Statements
     Overview
  Strategy
  
    
    Focus on office-based solutions for physicians.We believe that our company is uniquely
positioned to provide a broad product offering of office-based solutions for physicians.
By expanding our U.S. presence, we intend to develop long-standing relationships with
leading physicians treating incontinence and overactive bladder symptoms. These
relationships will provide us with a source of new product ideas and a conduit through
which to introduce new products. We have also intend to develop marketing programs to
assist physicians in marketing their practices and to provide innovative programs focused
on helping physicians attract patients and develop referral networks. Building these
relationships is an important part of our growth strategy, particularly for the development
and introduction of new products.
    
    Grow our U.S. sales and international distribution.We believe that in addition to
international market, the U.S. is a significant opportunity for future sales of our
products. In order to grow our U.S. business, we recently created our sales organization,
consisting of a direct field sales management team and independent sales representatives,
and a
marketing organization to market our products directly to our customers. We anticipate
further increasing, as
needed, our sales and marketing organization in the United States to
support our sales growth. In addition, we intend to expand our European presence by
creating new distribution partnerships.
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
    
    Educate physicians and patients about the benefits of Urgent PC.We believe education
of physicians and patients regarding the benefits of Urgent PC is critical to the
successful adoption of this product. To this end, we have initiated a clinical trial,
which is a U.S. multi-center randomized prospective study comparing the Urgent PC device to
the most commonly prescribed pharmaceutical treatment for OAB symptoms. We believe the
results of this and other studies, if successful, will allow us to expand our marketing and
sales efforts. These sales and marketing efforts may include physician training and
education programs which will emphasize the clinical efficacy and ease of use of our Urgent
PC product as well as patient-oriented marketing materials for physicians to use to inform
patients of the availability and potential benefits of our Urgent PC product.
    
    Provide patient-driven alternatives.Patients often weigh the quality of life benefits
of electing to undergo a surgical procedure against the invasiveness of the procedure. We
intend to continue to expand our marketing efforts to build patient awareness of these
treatment alternatives and encourage patients to see physicians. We believe this will help
physicians build their practices and simultaneously increase sales of our products.
    
    Develop, license or acquire products.We believe that our broad and diverse product
offering is an important competitive advantage because it allows us to address the various
preferences of doctors and patients, as well as the quality of life issues presented by
voiding dysfunctions. Consolidation among hospital buying groups has reduced the number of
suppliers from which hospitals purchase products, providing an advantage to suppliers
offering a broad range of products. An important part of our growth strategy is to broaden
our product line further to meet customer needs by developing new products internally,
licensing or acquiring new products through acquisitions.
 Our Products
    Sales and Marketing
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Critical Accounting Policies
  Revenue Recognition
 Accounts Receivable
 Inventories
 Foreign Currency Translation/Transactions
 Impairment of Long-Lived Assets
 Share-Based Compensation. Share-Based Payment Accounting for
Stock-Based Compensation
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Income Taxes.
   Results of Operations
 Three months ended September 30, 2006 compared to three months ended September 30, 2005
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 
 Six months ended September 30, 2006 compared to six months ended September 30, 2005
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 
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Liquidity and Capital Resources
 Cash Flows
  Sources of Liquidity.
 
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Payments Due by PeriodRemainder
    
    
    Fiscal
    
    
    Fiscal
    
    
    Fiscalof Fiscal
    
    
    2008 and
    
    
    2010 and
    
    
    2012 andTotal
    
    
    2007
    
    
    2009
    
    
    2011
    
    
    thereafterMinimum royalty payments
    
    $
    220,500
    
    
    $
    27,000
    
    
    $
    108,000
    
    
    $
    85,500
    
    
    $
    Minimum purchase agreement
    
    
    6,601,542
    
    
    
    377,587
    
    
    
    2,112,719
    
    
    
    4,111,236
    
    
    
    Notes payable, including
interest
    
    
    672,860
    
    
    
    86,363
    
    
    
    192,522
    
    
    
    107,045
    
    
    
    286,930Operating lease commitments
    
    
    1,453,844
    
    
    
    128,535
    
    
    
    471,504
    
    
    
    366,330
    
    
    
    487,475Total contractual obligations
    
    $
    8,948,746
    
    
    $
    619,485
    
    
    $
    2,884,745
    
    
    $
    4,670,111
    
    
    $
    774,405
 ITEM 3. CONTROLS AND PROCEDURES.
  Internal Control Matters
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PART II. OTHER INFORMATION
  
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  AbstentionsAndVotes
    
    
    Votes
    
    
    Votes
    
    
    Broker Non-For
    
    
    Against
    
    
    Withheld
    
    
    VotesProposal 1  Election of
Directors:David B. Kaysen
    
    
    6,463,626
    
    
    
    
    
    
    
    27,800
    
    
    
    322,285Lee A. Jones
    
    
    6,471,671
    
    
    
    
    
    
    
    19,755
    
    
    
    322,285Sven A. Wehrwein
    
    
    6,263,822
    
    
    
    
    
    
    
    227,604
    
    
    
    322,285James P. Stauner
    
    
    6,263,822
    
    
    
    
    
    
    
    227,604
    
    
    
    322,285Proposal 2  Amendment to
Restated Articles of
Incorporation:
    
    
    6,158,706
    
    
    
    31,750
    
    
    
    300,968
    
    
    
    322,287
 
 ITEM 6. EXHIBITS.
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SIGNATURES
  UROPLASTY, INC.Date: November 9, 2006
    
    By:
    
    /s/ DAVID B. KAYSENDavid B. KaysenPresident and Chief Executive OfficerDate: November 9, 2006
    
    By:
    
    /s/ MAHEDI A. JIWANIMahedi A. JiwaniChief Financial Officer
 Page 26