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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 December 31, 2003

Commission File No. 000-20989

UROPLASTY, INC.

(Name of Small Business Issuer in its Charter)


|                                                                                 |  |                                                
|-------------------------------------------------------------------------------- |  | -----------------------------------------------
|Minnesota, U.S.A.
(State or other jurisdiction of
incorporation or organization) |  | 41-1719250
(I.R.S. Employer
Identification No.)

2718 Summer Street NE
Minneapolis, Minnesota 55413-2820
(Address of principal executive offices)

(612) 378-1180
(Issuers telephone number, including area code)

Securities registered under Section 12(g) of the Exchange Act: Common Stock, $.01 par value (Title of class)

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

|        |  |        
|------- |  | -------
|YES [X] |  | NO [  ]

The aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the
stock was sold or the average bid and asked prices of such stock as
of February 1, 2004 was $16,696,512.
The number of shares outstanding of the issuers only class of common stock on February 1, 2004 was 4,565,004.

Transitional Small Business Disclosure Format:

|         |  |       
|-------- |  | ------
|YES [  ] |  | NO [X]



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TABLE OF CONTENTS



|                                          |                                                                   |                                                        |  |  |  |  |  | 
|----------------------------------------- | ----------------------------------------------------------------- | ------------------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION            
|                                          | ITEM 1. FINANCIAL STATEMENTS                                     
|                                          |                                                                   | CONSOLIDATED BALANCE SHEETS                           
|                                          |                                                                   | CONSOLIDATED BALANCE SHEETS                           
|                                          |                                                                   | CONSOLIDATED STATEMENTS OF OPERATIONS                 
|                                          |                                                                   | CONSOLIDATED STATEMENTS OF CASH FLOWS                 
|                                          |                                                                   | Notes to the Interim Consolidated Financial Statements
|                                          | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|                                          | ITEM 3. CONTROLS AND PROCEDURES                                  
|PART II. OTHER INFORMATION               
|                                          | ITEM 2. CHANGES IN SECURITIES                                    
|                                          | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                         
|SIGNATURES                               
|Certifications of CEO & CFO - Section 302
|Certifications of CEO & CFO - Section 906
|Press Release                            



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PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




UROPLASTY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(unaudited)

|       |                                     |                           |   |                   |           |                |  |           |           | 
|------ | ----------------------------------- | ------------------------- | - | ----------------- | --------- | -------------- |  | --------- | --------- | 
|       |                                     |                           |   | December 31, 2003 |           | March 31, 2003
|       |                                     |                           |   |                   |           |               
|Assets |                                     |                           |   |                   |           |                |  |          
|       | Current assets:                     |                           |   |                   |           |                |  |           |          
|       |                                     | Cash and cash equivalents |   | $                 | 2,613,903 |                |  |           | 3,375,981 | 
|       |                                     | Accounts receivable, net  |   |                   | 1,021,959 |                |  |           | 969,556   | 
|       |                                     | Inventories               |   |                   | 499,288   |                |  |           | 455,114   | 
|       |                                     | Other                     |   |                   | 296,677   |                |  |           | 188,192   | 
|       |                                     |                           |   |                   |           |                |  |           |           | 
|       | Total current assets                |                           |   | 4,431,827         |           |                |  | 4,988,843 |          
|       | Property, plant, and equipment, net |                           |   | 1,075,488         |           |                |  | 833,234   |          
|       | Intangible assets, net              |                           |   | 49,607            |           |                |  | 48,214    |          
|       |                                     |                           |   |                   |           |                |  |           |           | 
|       | Total assets                        |                           | $ | 5,556,922         |           |                |  | 5,870,291 |          
|       |                                     |                           |   |                   |           |                |  |           |           | 

See accompanying notes to consolidated financial statements.

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UROPLASTY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(unaudited)

|                                     |                                            |                                                                                                                                                                        |   |                   |            |                |  |           |            |  
|------------------------------------ | ------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------------- | ---------- | -------------- |  | --------- | ---------- | -
|                                     |                                            |                                                                                                                                                                        |   | December 31, 2003 |            | March 31, 2003
|                                     |                                            |                                                                                                                                                                        |   |                   |            |               
|Liabilities and Shareholders Equity |                                            |                                                                                                                                                                        |   |                   |            |                |  |          
|                                     | Current liabilities:                       |                                                                                                                                                                        |   |                   |            |                |  |           |           
|                                     |                                            | Accounts payable                                                                                                                                                       |   | $                 | 131,813    |                |  |           | 199,673    |  
|                                     |                                            | Income tax payable                                                                                                                                                     |   |                   | 226,365    |                |  |           |           |  
|                                     |                                            | Accrued liabilities                                                                                                                                                    |   |                   | 317,986    |                |  |           | 349,937    |  
|                                     |                                            | Current maturities  long-term debt                                                                                                                                    |   |                   | 43,350     |                |  |           | 37,502     |  
|                                     |                                            |                                                                                                                                                                        |   |                   |            |                |  |           |            |  
|                                     | Total current liabilities                  |                                                                                                                                                                        |   | 719,514           |            |                |  | 587,112   |           
|                                     | Long-term debt  less current maturities   |                                                                                                                                                                        |   | 502,454           |            |                |  | 462,787   |           
|                                     |                                            |                                                                                                                                                                        |   |                   |            |                |  |           |            |  
|                                     | Total liabilities                          |                                                                                                                                                                        |   | 1,221,968         |            |                |  | 1,049,899 |           
|                                     |                                            |                                                                                                                                                                        |   |                   |            |                |  |           |            |  
|                                     | Shareholders equity:                      |                                                                                                                                                                        |   |                   |            |                |  |           |           
|                                     |                                            | Common stock $.01 par value;
20,000,000
shares authorized, 4,560,337 and
4,488,971 shares issued and
outstanding at December 31, 2003 and
March 31, 2003, respectively |   |                   | 45,603     |                |  |           | 44,890     |  
|                                     |                                            | Additional paid-in capital                                                                                                                                             |   |                   | 9,066,198  |                |  |           | 8,457,901  |  
|                                     |                                            | Accumulated deficit                                                                                                                                                    |   |                   | (4,550,320 | )              |  |           | (3,163,156 | )
|                                     |                                            | Vendor deposit                                                                                                                                                         |   |                   |           |                |  |           | (112,000   | )
|                                     |                                            | Deferred compensation                                                                                                                                                  |   |                   | (168,723   | )              |  |           |           |  
|                                     |                                            | Accumulated other comprehensive loss                                                                                                                                   |   |                   | (57,804    | )              |  |           | (407,243   | )
|                                     |                                            |                                                                                                                                                                        |   |                   |            |                |  |           |            |  
|                                     | Total shareholders equity                 |                                                                                                                                                                        |   | 4,334,954         |            |                |  | 4,820,392 |           
|                                     |                                            |                                                                                                                                                                        |   |                   |            |                |  |           |            |  
|                                     | Total liabilities and shareholders equity |                                                                                                                                                                        | $ | 5,556,922         |            |                |  | 5,870,291 |           
|                                     |                                            |                                                                                                                                                                        |   |                   |            |                |  |           |            |  

See accompanying notes to consolidated financial statements.

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UROPLASTY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                            |                                |   |                    |           |                   |  |           |           |      |  |            |           |   |  |           |           |  
|------------------------------------------- | ------------------------------ | - | ------------------ | --------- | ----------------- |  | --------- | --------- | ---- |  | ---------- | --------- | - |  | --------- | --------- | -
|                                            |                                |   | Three Months Ended |           | Nine Months Ended
|                                            |                                |   | December 31,       |           | December 31,     
|                                            |                                |   |                    |           |                  
|                                            |                                |   | 2003               |           | 2002              |  | 2003      |           | 2002
|                                            |                                |   |                    |           |                   |  |           |           |     
|Net sales                                   |                                | $ | 1,447,671          |           |                   |  | 1,264,742 |           |      |  | 3,982,333  |           |   |  | 3,862,716 |          
|Cost of goods sold                          |                                |   | 421,187            |           |                   |  | 330,015   |           |      |  | 1,100,960  |           |   |  | 1,105,018 |          
|                                            |                                |   |                    |           |                   |  |           |           |      |  |            |           |   |  |           |          
|Gross profit                                |                                |   | 1,026,484          |           |                   |  | 934,727   |           |      |  | 2,881,373  |           |   |  | 2,757,698 |          
|                                            |                                |   |                    |           |                   |  |           |           |      |  |            |           |   |  |           |          
|Operating expenses                          |                                |   |                    |           |                   |  |           |           |      |  |            |           |   |  |           |          
|                                            | General and administrative     |   |                    | 510,218   |                   |  |           | 312,003   |      |  |            | 1,432,263 |   |  |           | 884,131   |  
|                                            | Research and development       |   |                    | 471,406   |                   |  |           | 538,295   |      |  |            | 1,330,169 |   |  |           | 1,539,503 |  
|                                            | Selling and marketing          |   |                    | 503,931   |                   |  |           | 251,051   |      |  |            | 1,268,735 |   |  |           | 764,878   |  
|                                            |                                |   |                    |           |                   |  |           |           |      |  |            |           |   |  |           |          
|                                            |                                |   | 1,485,555          |           |                   |  | 1,101,349 |           |      |  | 4,031,167  |           |   |  | 3,188,512 |          
|                                            |                                |   |                    |           |                   |  |           |           |      |  |            |           |   |  |           |          
|Operating loss                              |                                |   | (459,071           | )         |                   |  | (166,622  | )         |      |  | (1,149,794 | )         |   |  | (430,814  | )        
|                                            |                                |   |                    |           |                   |  |           |           |      |  |            |           |   |  |           |          
|Other income (expense)                      |                                |   |                    |           |                   |  |           |           |      |  |            |           |   |  |           |          
|                                            | Interest income                |   |                    | 6,715     |                   |  |           | 12,482    |      |  |            | 23,832    |   |  |           | 35,075    |  
|                                            | Interest expense               |   |                    | (5,291    | )                 |  |           | (5,805    | )    |  |            | (16,539   | ) |  |           | (18,144   | )
|                                            | Foreign currency exchange gain |   |                    | 11,697    |                   |  |           | 146,024   |      |  |            | 5,126     |   |  |           | 553,357   |  
|                                            | Settlement                     |   |                    |          |                   |  |           |          |      |  |            |          |   |  |           | 180,000   |  
|                                            | Other                          |   |                    |          |                   |  |           |          |      |  |            |          |   |  |           | (157      | )
|                                            |                                |   |                    |           |                   |  |           |           |      |  |            |           |   |  |           |          
|                                            |                                |   | 13,121             |           |                   |  | 152,701   |           |      |  | 12,419     |           |   |  | 750,131   |          
|                                            |                                |   |                    |           |                   |  |           |           |      |  |            |           |   |  |           |          
|Income (loss) before income taxes           |                                |   | (445,950           | )         |                   |  | (13,921   | )         |      |  | (1,137,375 | )         |   |  | 319,317   |          
|Income tax expense                          |                                |   | 97,375             |           |                   |  |          |           |      |  | 249,789    |           |   |  |          |          
|                                            |                                |   |                    |           |                   |  |           |           |      |  |            |           |   |  |           |          
|Net income (loss)                           |                                | $ | (543,325           | )         |                   |  | (13,921   | )         |      |  | (1,387,164 | )         |   |  | 319,317   | )        
|                                            |                                |   |                    |           |                   |  |           |           |      |  |            |           |   |  |           |          
|Basic income (loss) per common share        |                                | $ | (0.12              | )         |                   |  | (0.00     | )         |      |  | (0.31      | )         |   |  | 0.09      |          
|Diluted income (loss) per common share      |                                | $ | (0.12              | )         |                   |  | (0.00     | )         |      |  | (0.31      | )         |   |  | 0.09      |          
|Weighted average common shares
outstanding: |                                |   |                    |           |                   |  |           |           |      |  |            |           |   |  |           |          
|                                            | Basic                          |   |                    | 4,530,657 |                   |  |           | 4,467,547 |      |  |            | 4,500,677 |   |  |           | 3,564,155 |  
|                                            | Diluted                        |   |                    | 4,530,657 |                   |  |           | 4,467,547 |      |  |            | 4,500,677 |   |  |           | 3,587,996 |  

See accompanying notes to consolidated financial statements.

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UROPLASTY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended December 31, 2003 and 2002
(Unaudited)

|                                                      |                                                                                          |                                |            |                   |          |      |           |           |         |  
|----------------------------------------------------- | ---------------------------------------------------------------------------------------- | ------------------------------ | ---------- | ----------------- | -------- | ---- | --------- | --------- | ------- | -
|                                                      |                                                                                          |                                |            | Nine Months Ended
|                                                      |                                                                                          |                                |            | December 31,     
|                                                      |                                                                                          |                                |            |                  
|                                                      |                                                                                          |                                |            | 2003              |          | 2002
|                                                      |                                                                                          |                                |            |                   |          |     
|Cash flows from operating activities:                 |                                                                                          |                                |            |                   |          |      |           |          
|                                                      | Net income (loss)                                                                        |                                | $          | (1,387,164        | )        |      |           | 319,317   |        
|                                                      | Adjustments to reconcile net income (loss) to net cash
provided by (used in) operations: |                                |            |                   |          |      |           |           |        
|                                                      |                                                                                          | Depreciation and amortization  |            |                   | 119,221  |      |           |           | 149,483 |  
|                                                      |                                                                                          | Stock-based consulting expense |            |                   | 304,290  |      |           |           | 1,508   |  
|                                                      | Changes in operating assets and liabilities:                                             |                                |            |                   |          |      |           |           |        
|                                                      |                                                                                          | Accounts receivable            |            |                   | (52,403  | )    |           |           | 44,905  |  
|                                                      |                                                                                          | Inventories                    |            |                   | (44,174  | )    |           |           | 53,383  |  
|                                                      |                                                                                          | Other current assets           |            |                   | (108,485 | )    |           |           | (84,968 | )
|                                                      |                                                                                          | Accounts payable               |            |                   | (39,780  | )    |           |           | 62,320  |  
|                                                      |                                                                                          | Accrued liabilities            |            |                   | 194,414  |      |           |           | (63,457 | )
|                                                      |                                                                                          |                                |            |                   |          |      |           |           |        
|Net cash provided by (used in) operating activities   |                                                                                          |                                | (1,014,081 | )                 |          |      | 482,491   |          
|                                                      |                                                                                          |                                |            |                   |          |      |           |           |        
|Cash flows from investing activities:                 |                                                                                          |                                |            |                   |          |      |           |          
|                                                      | Payments for property, plant and equipment                                               |                                |            | (63,944           | )        |      |           | (44,757   | )      
|                                                      | Payments for intangible assets                                                           |                                |            | (18,773           | )        |      |           | (675      | )      
|                                                      |                                                                                          |                                |            |                   |          |      |           |           |        
|Net cash used in investing activities                 |                                                                                          |                                | (82,717    | )                 |          |      | (45,432   | )        
|                                                      |                                                                                          |                                |            |                   |          |      |           |           |        
|Cash flows from financing activities:                 |                                                                                          |                                |            |                   |          |      |           |          
|                                                      | Repayment of long-term debt                                                              |                                |            | (29,710           | )        |      |           | (37,674   | )      
|                                                      | Net proceeds from issuance of stock                                                      |                                |            | 49,917            |          |      |           | 2,265,316 |        
|                                                      |                                                                                          |                                |            |                   |          |      |           |           |        
|Net cash provided by financing activities             |                                                                                          |                                | 20,207     |                   |          |      | 2,227,642 |          
|                                                      |                                                                                          |                                |            |                   |          |      |           |           |        
|Effect of exchange rates on cash and cash equivalents |                                                                                          |                                | 314,513    |                   |          |      | (146,646  | )        
|                                                      |                                                                                          |                                |            |                   |          |      |           |           |        
|Net increase (decrease) in cash and cash equivalents  |                                                                                          |                                | (762,078   | )                 |          |      | 2,518,055 |          
|Cash and cash equivalents at beginning of period      |                                                                                          |                                | 3,375,981  |                   |          |      | 1,046,121 |          
|                                                      |                                                                                          |                                |            |                   |          |      |           |           |        
|Cash and cash equivalents at end of period            |                                                                                          | $                              | 2,613,903  |                   |          |      | 3,564,176 |          
|                                                      |                                                                                          |                                |            |                   |          |      |           |           |        
|Supplemental disclosure of cash flow information:     |                                                                                          |                                |            |                   |          |      |           |          
|                                                      | Cash paid during the period for interest                                                 |                                | $          | 17,723            |          |      |           | 19,503    |        
|                                                      | Cash paid during the period for income taxes                                             |                                |            | 38,808            |          |      |           |          |        
|                                                      | Shares issued for 401(k) plan profit sharing contribution                                |                                |            | 28,080            |          |      |           | 27,270    |        
|                                                      | Restricted shares issued for mold purchase                                               |                                |            |                  |          |      |           | 24,000    |        
|                                                      | Vesting of restricted shares for mold purchase                                           |                                |            | 170,000           |          |      |           |          |        

See accompanying notes to consolidated financial statements.

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UROPLASTY, INC. AND SUBSIDIARIES

Notes to the Interim Consolidated Financial Statements
(Unaudited)

1. Basis of Presentation

The consolidated financial statements included in this Form 10-QSB have been
prepared by Uroplasty, Inc. (Uroplasty or the Company), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or
omitted, pursuant to such rules and regulations. The consolidated results of
operations for any interim period are not necessarily indicative of results for
a full year. These consolidated statements should be read in conjunction with
the consolidated financial statements and related notes included in the
Companys Annual Report on Form 10-KSB for the year ended March 31, 2003.

The consolidated financial statements presented herein as of December 31, 2003
and for the three and nine-months periods ended December 31, 2003 and 2002
reflect, in the opinion of management, all material adjustments consisting only
of normal recurring adjustments necessary for a fair presentation of the
consolidated financial position, consolidated results of operations and
consolidated cash flows for the interim periods.

The Company has identified certain of its accounting policies that it considers
particularly important for the portrayal of the Companys results of operations
and financial position and which may require the application of a higher level
of judgment by the Companys management, and as a result are subject to an
inherent level of uncertainty. These are characterized as critical accounting
policies and address revenue recognition, inventories, foreign currency
translation and transactions, and impairment of long-lived assets, each more
fully described in the Companys Annual Report on Form 10-KSB for the year
ended March 31, 2003. Based upon the Companys review, management has
determined that these policies remain its most critical accounting policies for
the three and nine-months periods ended December 31, 2003, and has made no
changes to these policies during fiscal 2004.

2. Nature of Business

The Company is currently selling its products outside of the United States and
is undertaking FDA investigational clinical trials in the United States and
Canada. Based on the Companys current plans, it is anticipated the Company
will launch its products in the U.S. after obtaining FDA approval. Completing
clinical trials and obtaining FDA approval is a costly and time-consuming
process. As a result of the $2.4 million gross proceeds of a Rights Offering
completed July 2002, management believes current resources and the funds
generated from sale of the Companys products outside the U.S. will be adequate
to meet the Companys cash flow needs, including R&D activities, associated
with existing products and markets through fiscal 2005. Ultimately, the Company
will need to achieve profitability and positive cash flows from operations or
obtain additional debt or equity financing to fund its operations.

3. Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or
market (net realizable value) and consist of the following:

|                |  |                   |         |                |  |  |         | 
|--------------- |  | ----------------- | ------- | -------------- |  |  | ------- | 
|                |  | December 31, 2003 |         | March 31, 2003
|                |  |                   |         |               
|Raw materials   |  | $                 | 107,485 |                |  |  | 78,910  | 
|Work-in-process |  |                   | 57,499  |                |  |  | 163,989 | 
|Finished goods  |  |                   | 334,304 |                |  |  | 212,215 | 
|                |  |                   |         |                |  |  |         | 
|                |  | $                 | 499,288 |                |  |  | 455,114 | 
|                |  |                   |         |                |  |  |         | 

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4. Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss), and the translation
adjustment as follows:

|                                            |                        |   |                    |         |                   |  |         |     |      |  |            |         |  |  |         |         |  
|------------------------------------------- | ---------------------- | - | ------------------ | ------- | ----------------- |  | ------- | --- | ---- |  | ---------- | ------- |  |  | ------- | ------- | -
|                                            |                        |   | Three Months Ended |         | Nine Months Ended
|                                            |                        |   | December 31,       |         | December 31,     
|                                            |                        |   |                    |         |                  
|                                            |                        |   | 2003               |         | 2002              |  | 2003    |     | 2002
|                                            |                        |   |                    |         |                   |  |         |     |     
|Net income (loss)                           |                        | $ | (543,325           | )       |                   |  | (13,921 | )   |      |  | (1,387,164 | )       |  |  | 319,317 |        
|Items of other
comprehensive income
(loss): |                        |   |                    |         |                   |  |         |     |      |  |            |         |  |  |         |        
|                                            | Translation adjustment |   |                    | 200,210 |                   |  |         | 620 |      |  |            | 349,439 |  |  |         | (82,748 | )
|                                            |                        |   |                    |         |                   |  |         |     |      |  |            |         |  |  |         |        
|Comprehensive income (loss)                 |                        | $ | (343,115           | )       |                   |  | (13,301 | )   |      |  | (1,037,725 | )       |  |  | 236,569 |        
|                                            |                        |   |                    |         |                   |  |         |     |      |  |            |         |  |  |         |        

5. Reconciliation of Net income (loss) and Share Amounts Used in EPS Calculation

Basic income (loss) per common share is calculated by dividing net income
(loss) by the weighted-average common shares outstanding during the period.
Diluted income (loss) per common share for the three and nine-months ended
December 31, 2003 and 2002 was calculated using the treasury-stock method to
compute the weighted average common stock outstanding assuming the conversion
of dilutive potential common shares.

|                            |                  |  |              |            |            |  |                |   |  |  |  |            |  
|--------------------------- | ---------------- |  | ------------ | ---------- | ---------- |  | -------------- | - |  |  |  | ---------- | -
|                            |                  |  | Basic Income |            | Effect of  |  | Diluted Income
|                            |                  |  | (Loss)       |            | Dilutive   |  | (Loss)        
|                            |                  |  | Per Share    |            | Securities |  | Per Share     
|                            |                  |  |              |            |            |  |               
|For the three months ended: |                  |  |              |            |            |  |                |   |  |  |  |           
|December 31, 2003           |                  |  |              |            |            |  |                |   |  |  |  |           
|                            | Net loss         |  | $            | (543,325   | )          |  |                |  |  |  |  | (543,325   | )
|                            | Shares           |  |              | 4,530,657  |            |  |                |  |  |  |  | 4,530,657  |  
|                            |                  |  |              |            |            |  |                |   |  |  |  |           
|                            | Per share amount |  | $            | (0.12      | )          |  |                |  |  |  |  | (0.12      | )
|                            |                  |  |              |            |            |  |                |   |  |  |  |           
|For the three months ended: |                  |  |              |            |            |  |                |   |  |  |  |           
|December 31, 2002           |                  |  |              |            |            |  |                |   |  |  |  |           
|                            | Net loss         |  | $            | (13,921    | )          |  |                |  |  |  |  | (13,921    | )
|                            | Shares           |  |              | 4,467,547  |            |  |                |  |  |  |  | 4,467,547  |  
|                            |                  |  |              |            |            |  |                |   |  |  |  |           
|                            | Per share amount |  | $            | (0.00      | )          |  |                |  |  |  |  | (0.00      | )
|                            |                  |  |              |            |            |  |                |   |  |  |  |           
|For the nine months ended:  |                  |  |              |            |            |  |                |   |  |  |  |           
|December 31, 2003           |                  |  |              |            |            |  |                |   |  |  |  |           
|                            | Net loss         |  | $            | (1,387,164 | )          |  |                |  |  |  |  | (1,387,164 | )
|                            | Shares           |  |              | 4,500,677  |            |  |                |  |  |  |  | 4,500,677  |  
|                            |                  |  |              |            |            |  |                |   |  |  |  |           
|                            | Per share amount |  | $            | (0.31      | )          |  |                |  |  |  |  | (0.31      | )
|                            |                  |  |              |            |            |  |                |   |  |  |  |           
|For the nine months ended:  |                  |  |              |            |            |  |                |   |  |  |  |           
|December 31, 2002           |                  |  |              |            |            |  |                |   |  |  |  |           
|                            | Net income       |  | $            | 319,317    |            |  |                |  |  |  |  | 319,317    |  

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| |                  |  |              |           |            |  |                |        |  |  |  |           | 
| | ---------------- |  | ------------ | --------- | ---------- |  | -------------- | ------ |  |  |  | --------- | 
| |                  |  | Basic Income |           | Effect of  |  | Diluted Income
| |                  |  | (Loss)       |           | Dilutive   |  | (Loss)        
| |                  |  | Per Share    |           | Securities |  | Per Share     
| |                  |  |              |           |            |  |               
| | Shares           |  |              | 3,564,155 |            |  |                | 23,841 |  |  |  | 3,587,996 | 
| |                  |  |              |           |            |  |                |        |  |  |  |          
| | Per share amount |  | $            | 0.09      |            |  |                |       |  |  |  | 0.09      | 
| |                  |  |              |           |            |  |                |        |  |  |  |          

The following options and warrants outstanding at December 31, 2003 and 2002 to
purchase shares of common stock were excluded from diluted loss per share,
because of the anti-dilutive effect:

|                            |                   |  |                  |           |                   |  |                 |  | 
|--------------------------- | ----------------- |  | ---------------- | --------- | ----------------- |  | --------------- |  | 
|                            |                   |  | Number of        |           | Range of exercise
|                            |                   |  | Options/Warrants |           | prices           
|                            |                   |  |                  |           |                  
|For the three months ended: |                   |  |                  |           |                   |  |                 | 
|                            | December 31, 2003 |  |                  | 1,752,264 |                   |  | $0.90 to $10.50
|                            | December 31, 2002 |  |                  | 1,705,123 |                   |  | $0.90 to $10.50
|For the nine months ended:  |                   |  |                  |           |                   |  |                 | 
|                            | December 31, 2003 |  |                  | 1,752,264 |                   |  | $0.90 to $10.50
|                            | December 31, 2002 |  |                  | 1,261,623 |                   |  | $1.50 to $10.50

6. Shareholders Equity

The Company applies the intrinsic-value method to account for employee
stock-based compensation. As such, compensation expense, if any, is recorded on
the date of grant if the current market price of the underlying stock exceeds
the exercise price.

The Company accounts for stock-based instruments granted to non-employees under
the fair value method of SFAS No. 123 and Emerging Issues Task Force (EITF)
96-18, Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services.
Under SFAS No. 123, options are recorded at their fair value on the measurement
date, which is typically the vesting date.

Consulting Agreements

On April 1, 2003, the Company executed a consulting agreement with C.C.R.I.
Corporation (CCRI) to provide investor relations and development services. The
Company pays the Consultant a monthly fee of $4,000 plus expenses. CCRI
received 35,000 shares of fully vested restricted common stock, and vested
warrants to purchase 50,000 shares of common stock at an exercise price of
$3.00 per share, and received vested warrants to purchase 50,000 shares of
common stock at an exercise price of $5.00 per share on November 2, 2003. The
Company recorded the fair value of the common stock and the warrants
aggregating $212,974, as of April 1, 2003, as deferred compensation in
shareholders equity. The balance is amortized over the 1-year service period.
Also, the Company recorded the fair value of the additional warrants to acquire
50,000 of common stock aggregating $144,200, as of November 2, 2003, as
deferred compensation in shareholders equity. This balance is amortized over
the remaining 5 months of the 1-year service period. Stock-based compensation
expense for CCRI agreement for the three and nine-months ended December 31,
2003 aggregated $110,924 and $217,410, respectively.

On April 1, 2003, the Company executed a consulting agreement with Executive
Advisory Group (EAG) to perform services for and on behalf of the Company. Mr.
Sam B. Humphries, a Director of the Company, is President of EAG. The Company
pays EAG a monthly fee of $6,000 plus expenses. EAG also received stock options
to purchase 50,000 shares of common stock, exercisable at $2.80 per share. The
Company recorded the fair value of the stock options aggregating $115,839, as
of April 1, 2003, as a deferred compensation in shareholders equity. The
balance is amortized over the 1-year service period. Stock-based compensation
expense for the EAG agreement for the three and nine-months ended December 31,
2003 aggregated $28,959 and $86,880, respectively.

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The options and warrants issued to EAG and CCRI to acquire an aggregate of
150,000 shares of common stock were fully vested upon issuance. The fair value
of these instruments was determined using the Black-Scholes options pricing
model with the following variables:

|                        |  |               |      |                  |  |  |      |  
|----------------------- |  | ------------- | ---- | ---------------- |  |  | ---- | -
|                        |  | April 1, 2003 |      | November 2, 2003
|Expected dividend yield |  |               | 0.00 | %                |  |  | 0.00 | %
|Risk-free interest rate |  |               | 2.93 | %                |  |  | 3.29 | %
|Expected volatility     |  |               | 118  | %                |  |  | 113  | %
|Expected life, in years |  |               | 5.00 |                  |  |  | 5.00 |  

Stock Option Grant

On April 15, 2003, the Company granted 30,000 options to its Director Sam B.
Humphries, for his services as a member of the board of directors. These
options vest over a period of five years. All vesting of these options would
accelerate when the Company receives written FDA market approval or in case a
change in control should occur.

Vendor Deposit

In September 2001, the Company executed an agreement with a vendor to
manufacture a mold for one of the Companys products. As consideration, the
Company issued to the vendor 20,000 shares of its common stock in September
2001. The Company amended the agreement in September 2002 and issued an
additional 20,000 shares of common stock to be held in escrow until completion
of the mold. On November 3, 2003, the Company has accepted the mold and
recorded the fair value of the vested common stock aggregating $170,000 as an
addition to property, plant and equipment.

7. Stock Option Plans

Had the Company determined compensation cost based on the fair value at the
grant date for its stock options under SFAS 123, Accounting for Stock-Based
Compensation, the Companys net income (loss) would have decreased (increased)
to the pro forma amounts shown below:

|                                                                                                                  |  |   |                    |   |                   |  |          |   |      |  |            |   |  |  |          |   | 
|----------------------------------------------------------------------------------------------------------------- |  | - | ------------------ | - | ----------------- |  | -------- | - | ---- |  | ---------- | - |  |  | -------- | - | 
|                                                                                                                  |  |   | Three Months Ended |   | Nine Months Ended
|                                                                                                                  |  |   | December 31,       |   | December 31,     
|                                                                                                                  |  |   |                    |   |                  
|                                                                                                                  |  |   | 2003               |   | 2002              |  | 2003     |   | 2002
|                                                                                                                  |  |   |                    |   |                   |  |          |   |     
|Net
income (loss) - As reported                                                                                   |  | $ | (543,325           | ) |                   |  | (13,921  | ) |      |  | (1,387,164 | ) |  |  | 319,317  |  
|Add: Total stock-based
employee compensation expense
determined under intrinsic
value based method for all
awards |  |   |                   |   |                   |  |         |   |      |  |           |   |  |  |         |  
|Deduct: Total stock-based
employee compensation expense
determined under fair value
based method for all awards   |  |   | (37,254            | ) |                   |  | (100,283 | ) |      |  | (111,761   | ) |  |  | (270,169 | )
|                                                                                                                  |  |   |                    |   |                   |  |          |   |      |  |            |   |  |  |          |  
|Net income (loss) - Pro forma                                                                                     |  | $ | (580,579           | ) |                   |  | (114,204 | ) |      |  | (1,498,925 | ) |  |  | 49,148   |  
|                                                                                                                  |  |   |                    |   |                   |  |          |   |      |  |            |   |  |  |          |  

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|                                                  |         |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |      | 
|------------------------------------------------- | ------- |  | ------------------ | ----- | ----------------- |  | ---- | ----- | ---- |  |  | ----- | - |  |  | ---- | 
|                                                  |         |  | Three Months Ended |       | Nine Months Ended
|                                                  |         |  | December 31,       |       | December 31,     
|                                                  |         |  |                    |       |                  
|                                                  |         |  | 2003               |       | 2002              |  | 2003 |       | 2002
|                                                  |         |  |                    |       |                   |  |      |       |     
|Net income (loss) per common
share  As reported: |         |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |     
|                                                  | Basic   |  | $                  | (0.12 | )                 |  |      | (0.00 | )    |  |  | (0.31 | ) |  |  | 0.09 | 
|                                                  | Diluted |  | $                  | (0.12 | )                 |  |      | (0.00 | )    |  |  | (0.31 | ) |  |  | 0.09 | 
|Net income (loss) per common
share  Pro forma:   |         |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |     
|                                                  | Basic   |  | $                  | (0.13 | )                 |  |      | (0.03 | )    |  |  | (0.33 | ) |  |  | 0.01 | 
|                                                  | Diluted |  | $                  | (0.13 | )                 |  |      | (0.03 | )    |  |  | (0.33 | ) |  |  | 0.01 | 

8. Foreign Currency Gains (Losses)

For the three-month periods ended December 31, 2003 and 2002, the Company
recognized foreign currency gains of $11,697 and $146,024, respectively. For
the nine-month periods ended December 31, 2003 and 2002, the Company recognized
foreign currency gains of $5,126 and $553,357, respectively. At December 31,
2003 and 2002, the Company had $0.3 million and $2.5 million of dollar
denominated intercompany debt at its Dutch subsidiaries. In January 2003, the
Company recapitalized one of the Dutch subsidiaries with an investment of 1.5
million euros ($1.6 million). The proceeds from the investment were used to
reduce the dollar denominated intercompany debt at the Dutch subsidiary.
Furthermore, the Dutch subsidiaries were profitable and the generated cash
flows were used to pay off the intercompany debt. These intercompany balances
are revolving in nature and are not deemed to be long-term balances.

9. Income Tax Expense

During the quarter ended December 31, 2003, the Companys Dutch subsidiaries
recorded income tax expense of $97,375 as they have fully utilized their net
operating loss carryforwards. During the nine months ended December 31, 2003,
the Companys Dutch subsidiaries recorded income tax expense of $249,789. As of
December 31, 2003 $38,808 income tax has been paid and the remaining balance is
included under current liabilities. The U.S. net operating loss carryforwards
cannot be used to offset taxable income in foreign jurisdictions.

10. Business Segment Information

The Company sells Macroplastique and the related ancillary products for use in
augmenting soft tissues for the purpose of treating urinary incontinence and
vesicoureteral reflux. At this time, sales are only made outside the United
States because the Company has not yet made submissions to the FDA for
regulatory approval to market its products in the United States. The Companys
current objectives are to focus on sales and marketing activities designed to
increase market penetration and sales of Macroplastique for SUI, VUR, and of
PTQ Implants in countries outside the U.S., and to efficiently and effectively
execute the Macroplastique human clinical study for treatment of female SUI
within the U.S. The Company also sells injectable implant products outside the
United States for soft-tissue augmentation for specific indications in
otolaryngology and plastic surgery applications under the name Bioplastique in
limited markets. In addition, the Company sells specialized wound care products
in The Netherlands and United Kingdom as a distributor. The Macroplastique
product line accounts for 84% to 87% of total net sales during the periods
presented.

Based upon the above, the Company has identified one reportable operating
segment consisting of medical products primarily for the urology market.

Information regarding operations in different geographies for the three and
nine-months ended December 31, 2003 and 2002 is as follows:

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|                                                         |  |        |            |             |  |         |           |              |  |              |           |   |  |             |          |   |  |  |            |  
|-------------------------------------------------------- |  | ------ | ---------- | ----------- |  | ------- | --------- | ------------ |  | ------------ | --------- | - |  | ----------- | -------- | - |  |  | ---------- | -
|                                                         |  |        |            |             |  |         |           |              |  |              |           |   |  | Adjustments |          |   |  | 
|                                                         |  | United |            | The         |  | United  |           | and          |  |              |           |  
|                                                         |  | States |            | Netherlands |  | Kingdom |           | eliminations |  | Consolidated
|                                                         |  |        |            |             |  |         |           |              |  |             
|Fiscal 2004                                              |  |        |            |             |  |         |           |              |  |              |           |   |  |             |          |   |  |  |            |  
|Sales to customers,
three-months ended December 31, 2003 |  | $      |           |             |  |         | 1,317,858 |              |  |              | 391,180   |   |  |             | (261,367 | ) |  |  | 1,447,671  |  
|Sales to customers,
nine-months ended
December 31, 2003  |  | $      |           |             |  |         | 3,586,988 |              |  |              | 1,085,354 |   |  |             | (690,009 | ) |  |  | 3,982,333  |  
|Income tax expense,
three-months ended
December 31, 2003 |  | $      |           |             |  |         | 97,375    |              |  |              |          |   |  |             |         |   |  |  | 97,375     |  
|Income tax expense,
nine-months ended
December 31, 2003  |  | $      |           |             |  |         | 249,789   |              |  |              |          |   |  |             |         |   |  |  | 249,789    |  
|Net income (loss),
three-months ended
December 31, 2003  |  | $      | (500,277   | )           |  |         | 180,012   |              |  |              | (117,627  | ) |  |             | (105,433 | ) |  |  | (543,325   | )
|Net income (loss),
nine-months ended
December 31, 2003   |  | $      | (1,308,535 | )           |  |         | 482,179   |              |  |              | (334,365  | ) |  |             | (226,443 | ) |  |  | (1,387,164 | )
|Long-lived assets
At December 31, 2003                   |  | $      | 267,589    |             |  |         | 786,180   |              |  |              | 21,719    |   |  |             |         |   |  |  | 1,075,488  |  
|Fiscal 2003                                              |  |        |            |             |  |         |           |              |  |              |           |   |  |             |          |   |  |  |            |  
|Sales to customers,
three-months ended
December 31, 2002 |  | $      |           |             |  |         | 1,092,721 |              |  |              | 366,274   |   |  |             | (194,253 | ) |  |  | 1,264,742  |  
|Sales to customers,
nine-months ended
December 31, 2002  |  | $      |           |             |  |         | 3,366,401 |              |  |              | 1,297,844 |   |  |             | (801,529 | ) |  |  | 3,862,716  |  
|Income tax expense,
three-months ended
December 31, 2002 |  | $      |           |             |  |         |          |              |  |              |          |   |  |             |         |   |  |  |           |  
|Income tax expense,
nine-months ended
December 31, 2002  |  | $      |           |             |  |         |          |              |  |              |          |   |  |             |         |   |  |  |           |  
|Net income (loss),
three-months ended
December 31, 2002  |  | $      | (563,990   | )           |  |         | 457,623   |              |  |              | (53,047   | ) |  |             | 145,493  |   |  |  | (13,921    | )
|Net income (loss),
nine-months ended
December 31, 2002   |  | $      | (1,071,362 | )           |  |         | 1,246,002 |              |  |              | (18,059   | ) |  |             | 162,736  |   |  |  | 319,317    |  
|Long-lived assets
At December 31, 2002                   |  | $      | 103,945    |             |  |         | 698,508   |              |  |              | 26,977    |   |  |             |         |   |  |  | 829,430    |  




ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

This Report on Form 10-QSB should be read in conjunction with the Annual Report
on Form 10-KSB for the year ended March 31, 2003.

Forward-looking Statements

The Registrant may from time to time make written or oral forward-looking
statements, including statements contained in this filing by the Company with
the Securities and Exchange Commission and in its reports to stockholders, as
well as elsewhere. Forward-looking statements are statements such as those
contained in projections, plans, objectives, estimates, statements of future
economic performance, and assumptions related to any of the foregoing, and may
be identified by the use of forward-looking terminology, such as may,
expect, anticipate, estimate, goal, continue, or other comparable
terminology. By their very nature, forward-looking statements are subject to
known and

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unknown risks and uncertainties relating to the Companys future performance that may cause the
actual results, performance, or achievements of the Company, or industry
results, to differ materially from those expressed or implied in any such
forward-looking statements. Any such statement is qualified by reference to
the following cautionary statements.

The Registrants business operates in highly competitive markets and is subject
to changes in general economic conditions, competition, customer and market
preferences, government regulation, the impact of tax regulation, foreign
exchange rate fluctuations, the degree of market acceptance of products, the
uncertainties of potential litigation, as well as other risks and uncertainties
detailed elsewhere herein and from time to time in the Registrants Securities
and Exchange Commission filings.

In this filing, the section entitled Managements Discussion and Analysis of
Financial Condition and Results of Operations contains forward-looking
statements. Various factors and risks (not all of which are identifiable at
this time) could cause the Companys results, performance, or achievements to
differ materially from that contained in the Companys forward-looking
statements, and investors are cautioned that any forward-looking statement
contained herein or elsewhere is qualified by and subject to the warnings and
cautionary statements contained above and in the Companys other filings with
the Securities and Exchange Commission.

The Company does not undertake and assumes no obligation to update any
forward-looking statement that may be made from time to time by or on behalf of
the Company.

Overview

Uroplasty, Inc. develops, manufactures, and/or markets medical products in
certain segments of the urology, gynecology, urogynecology, colon and rectal,
wound care, otolaryngology and plastic surgery markets. Products sold by the
Company are subject to regulation by the U.S. FDA and/or various regulating
agencies in countries outside the U.S. Existing sales have been, and future
sales growth is expected to be, derived from Macroplastique and related
ancillary products designed for use by urologists, gynecologists, and
uro-gynecologists for the treatment of stress urinary incontinence (SUI) and
for the treatment of vesicoureteral reflux (VUR), a condition in which urine
flows backward from the bladder to the kidney. Macroplastique is comprised of
soft, irregularly textured, vulcanized, medical grade silicone elastomer
implants suspended in a biocompatible carrier solution. When injected via a
minimally invasive procedure in the soft tissue of the mid-urethra and bladder
neck (in the case of SUI), and at the ureteral orifice (in the case of
vesicoureteral reflux), the implants act as a bulking material to restore
urinary continence or to eliminate reflux of urine from the bladder to the
kidneys.

In addition to the urological applications, the Companys implantable tissue
bulking material is also marketed by the Company outside the U.S. for
reconstructive and cosmetic plastic surgery applications under the trade name
Bioplastique Implants; fecal incontinence applications under the trade name
PTP Implants; and vocal cord rehabilitation under the trade name VOX
Implants. In The Netherlands and the United Kingdom, the Companys direct
sales force distributes certain wound care products on behalf of another
company in accordance with an executed Distributor Agreement. Under the terms
of the Distributor Agreement, the Company is not obligated to purchase any
minimum level of wound care products.

The Companys products are currently sold by direct sales forces in the United
Kingdom and The Netherlands, and by a network of distributors in numerous
countries outside the U.S., including Western Europe, Australia, Canada and
Central and South America. The Company is currently conducting a multi-center
human clinical trial with its urethral bulking agent, Macroplastique, pursuant
to an FDA IDE as a minimally invasive, office-based procedure for treating
female SUI. This study is required as part of a Premarket Approval Submission
to the FDA for marketing within the United States.

The Companys objectives are to focus on sales and marketing activities
designed to increase market penetration and sales of Macroplastique for SUI,
VUR, and of PTP Implants for fecal incontinence applications in countries
outside the U.S., and to efficiently and effectively execute the Macroplastique
clinical study for treatment of female SUI within the U.S.

Critical Accounting Policies

The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America, which
require the Company to make estimates and assumptions in certain circumstances
that affect amounts reported. In preparing these financial statements,
management has made its best estimates and judgments of certain amounts, giving
due consideration to materiality. The Company believes that of its significant
accounting policies, the following are particularly important to the portrayal
of the Companys

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results of operations and financial position and
may require the application of a higher level of judgment by the Companys
management, and as a result are subject to an inherent degree of uncertainty.

Revenue Recognition and Accounts Receivable. The level of the Companys revenue
during any period is not necessarily indicative of its distributors sales to
end-user customers during that period, which are estimated not to be
substantially different than the Companys sales to those distributors in each
of the last two years. The Companys future revenue growth may be impacted by
its distributors level of inventories of the Companys products, their sales
to end-user customers and their internal product requirements.

Inventories. Slow moving and obsolete inventories are valued at the lower of
cost or market based upon current and expected future product sales and the
expected impact of product transitions or modifications. In addition, the lack
of sales demand may cause our finished goods inventory to pass its use-by date
which is generally two years. The Company manufacturing production from quarter
to quarter fluctuates materially due to changes in product demand. Changes in
production significantly impact manufacturing variances.

Foreign Currency Translation/Transactions. Foreign currency transaction gains
and losses are recognized currently in the statement of operations, including
unrealized gains and losses on short-term inter-company obligations using
period-end exchange rates, resulting in an increase in the volatility of the
Companys Statements of Operations. Unrealized gains and losses on long-term
inter-company obligations are recognized within accumulated other comprehensive
loss, a separate component of shareholders equity.

Impairment of Long-Lived Assets. The recoverability of assets to be held and
used is measured by a comparison of the carrying amount of an asset to future
undiscounted net cash flows expected to be generated by the asset, which is
subject to considerable judgment.

Set forth below is managements discussion and analysis of the financial
condition and results of operations for the three and nine-months periods ended
December 31, 2003 and 2002.

Results of Operations

Net Sales: In the third quarter ended December 31, 2003, net sales of all
products were $1,447,671, representing a $182,929 or 14% increase when compared
to net sales of $1,264,742 for the third quarter ended December 31, 2002.
During the nine months ended December 31, 2003, net sales of all products were
$3,982,333, representing a $119,617 or 3% increase when compared to net sales
of $3,862,716 during the nine months ended December 31, 2002. The sales
increase is the result of favorable fluctuations in foreign currency exchange
rates between the U.S. Dollar (the functional reporting currency) and the Euro
and the British Pound (currencies of the Companys subsidiaries). Excluding the
fluctuations in foreign currency exchange rates, there was a sales decrease of
approximately 1% for the three months ended December 31, 2003 and approximately
11% for the nine months ended. Management believes the decrease in sales is
related to increased competition and healthcare reform in many European
countries with procedures being limited or rationed through reimbursement
systems designed to decrease overall costs to the various national healthcare
systems. Management believes sales will increase going forward with targeted
marketing programs. The Macroplastique product line accounts for 84% to 87% of
total net sales during the periods presented.

Gross Profit: Gross profit was $1,026,484 and $934,727 for the quarter ended
December 31, 2003 and 2002, respectively, or 71% and 74% of net sales. Gross
profit was $2,881,373 and $2,757,698 for the nine months ended December 31,
2003 and 2002, respectively, or 72% and 71% of net sales. Gross profit in any
one period is highly variable depending on unit sales and utilization of
manufacturing capacity. Historically, the gross margin percentage has moved
between approximately 70-80% of net sales.

General and Administrative Expense: General and administrative (G&A) expenses
increased from $312,003 during the third quarter of fiscal 2003 to $510,218
during the third quarter of fiscal 2004 and increased from $884,131 during the
nine months ended December 31, 2002 to $1,432,263 during the nine months ended
December 31, 2003. Increased foreign retirement costs, consulting, legal, and
shareholder expenses, combined with general price increases and fluctuations in
foreign currency exchange rates caused the increase in G&A expenses. The
consulting fees and shareholder expenses relate to the consulting agreements
with the Executive Advisory Group (EAG) to perform services for and on behalf
of the Company and the consulting agreement with C.C.R.I. Corporation to
provide investor relations and development services. The two agreements
accounted for $169,883 and $402,290, respectively, of the increased expense for
the three and nine months ended December 31, 2003.

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Research and Development Expense: Research and development (R&D) expenses
decreased $66,889, or 12%, from $538,295 during the third quarter of fiscal
2003 to $471,406 during the third quarter of fiscal 2004 and decreased 14% from
$1,539,503 during the nine months ended December 31, 2002 to $1,330,169 during
the nine months ended December 31, 2003. The decrease in R&D expense resulted
from a decrease in clinical costs due to the February 2003 completion of the
patient enrollment phase in the Companys multi-center IDE clinical trial.

Selling and Marketing Expenses: Selling and marketing (S&M) costs increased
101% from $251,051 during the third quarter of fiscal 2003 to $503,931 during
the third quarter of fiscal 2004 and increased 66% from $764,878 during the
nine months ended December 31, 2002 to $1,268,735 during the nine months ended
December 31, 2003. The increase resulted from recruitment fees, staffing, and
dismissal payments, travel costs and costs relating to trade-shows, conventions
and congresses, marketing materials, general price increases, and fluctuations
in foreign currency exchange rates. In October and December, changes were made
in sales management resulting in termination expenses and payments in the third
quarter of fiscal 2004 of $105,000.

Other Income (Expense): Other income (expense) includes interest income,
interest expense, foreign currency exchange gains and losses, settlement income
and other non-operating costs when incurred. The Companys financial results
are subject to material fluctuations based on changes in currency exchange
rates. Other income was $13,121 and $152,701 for the third quarter ended
December 31, 2003 and 2002, respectively, and $12,419 and $750,131 for the nine
months ended December 31, 2003 and 2002, respectively. The majority of the
differences between periods were due to foreign currency exchange gains and
losses and the settlement proceeds from the litigation. Exchange gains and
losses are recognized primarily as a result of fluctuations in currency rates
between the U.S. Dollar (the functional reporting currency) and the Euro and
British Pound (currencies of the Companys subsidiaries), as well as their
effect on the dollar denominated intercompany obligations between the Company
and its foreign subsidiaries. At December 31, 2003 and 2002, the Company had
$0.3 million and $2.5 million dollar denominated intercompany debt at its
foreign Dutch subsidiary. These intercompany balances are revolving in nature
and are not deemed to be long-term balances. The Company recognized foreign
currency gains of $11,697 and $146,024 for the third quarter ended December 31,
2003 and 2002, respectively, and $5,126 and $553,357 for the nine months ended
December 31, 2003 and 2002, respectively. The currency gains are primarily the
result of a weakened U.S. Dollar compared to the Euro. In January 2003, the
Company recapitalized one of the Dutch subsidiaries with an investment of 1.5
million Euros ($1.6 million). The Company used proceeds from the investment to
reduce the dollar denominated intercompany debt at the Dutch subsidiary,
resulting in an adjusted balance at December 31, 2002 of $0.9 million of
intercompany debt at the Dutch subsidiary subject for foreign currency
transaction accounting. This resulted in less volatility for changes in
currency exchange rates in the Companys statement of operations.

Income Tax Expense: During the quarter ended December 31, 2003, the Companys
Dutch subsidiaries recorded income tax expense of $97,375 as they have fully
utilized their net operating loss carryforwards. During the nine-months ended
December 31, 2003, the Companys Dutch subsidiaries recorded income tax expense
of $249,789. As of December 31, 2003 $38,808 income tax has been paid, the
remaining part has been accrued and therefore included under current
liabilities. The U.S. net operating loss carryforwards cannot be used to offset
taxable income in foreign jurisdictions. Management expects continued profits
for its Dutch subsidiaries and therefore continued income tax expenses. The
Dutch income tax rate is 29% for euro 22,689 of profit and 34.5% for the amount
above euro 22,689

Liquidity and Capital Resources

As of December 31, 2003, the Companys cash and cash equivalent balances totaled $2,613,903.

At December 31, 2003, the Company had working capital of approximately $3.7
million. During the nine months ended December 31, 2003, $1,014,081 of cash was
used in operating activities, compared to $482,491 of cash provided by
operating activities in the prior-year period. The usage of cash was primarily
attributable to the net loss incurred of $1,387,164, compared to a profit of
$319,317 in the prior year period. Accounts receivable increased by $52,403,
compared to a decrease of $44,905 for the prior-year period, due to the timing
of payment by our customers. Other current assets increased by $108,485,
compared to an increase of $84,968 for the prior-year period, due to prepaid
retirement premiums, royalties and insurance. Accounts payable and accrued
expenses fluctuated due to the timing of payments and fluctuations in foreign
currency exchange rates. The Company recorded $304,290 of non-cash stock-based
compensation expense during the nine-months ended December 31, 2003, compared
to $1,508 for the prior-year period. This increase was due to the stock-based
investor relations and other consulting agreements the Company consummated on
April 1, 2003 with C.C.C.R. Corporation and Executive Advisory Group. Net cash
used in investing activities for the nine months ended December 31, 2003 is
$82,717, compared to net cash used of $45,432 for the prior-year

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period. The increase was due to computer hardware and software expenditures and expenditures for obtaining patent rights. Net
cash provided by financing activities for the nine months ended December 31,
2003 is $20,207, compared to net cash provided by financing activities of
$2,227,642. This results from repayment of long-term debt and net proceeds from
issuance of stock. In July 2002, the Company completed its rights offering to
its shareholders.

The Company currently has no financing arrangements in place with any bank for
general working capital needs, and no material unused sources of liquidity
other than the cash, equipment leasing arrangements, and its accounts
receivable and inventory balances at December 31, 2003 of $1,021,959 and
$499,288, respectively. For fiscal 2004, management does not anticipate any
material capital expenditures.

The Companys financial condition and results of operations could be materially
affected by fluctuations in foreign currency exchange rates and weak economic
conditions in foreign markets where the Companys products are distributed.
The effects of these conditions could include reduced unit sales and reduced
sales in dollars when converted from foreign currency amounts and material
gains and losses on transactions denominated in foreign currencies.
Furthermore, because the Companys U.S. operations are funded by sales
denominated in foreign currency, strengthening of the U.S. dollar against the
Euro, and/or the British Pound could have an adverse effect on the Companys
cash flow and results of operations.

Management expects continued high costs associated with the conduct of the U.S.
human clinical study for Macroplastique pursuant to the FDA approved IDE, the
subsequent U.S. Premarket Approval process, and pre-commercialization and
market launch costs in the U.S. relating to Macroplastique for female SUI.

Management believes that current resources and the funds generated from sale of
the Companys products outside the U.S. will be adequate to meet the Companys
cash flow needs, including R&D activities associated with existing products and
markets through fiscal 2005. Ultimately, the Company will need to achieve
profitability and positive cash flows from operations or obtain additional debt
or equity financing to fund its operations.




ITEM 3. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures. Within the 90 days prior to the date of
this report, Daniel G. Holman, our President, Chief Executive Officer, Chief
Financial Officer and Arie J. Koole, our Controller, Principal Accounting
Officer, carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Rule 13a-15b
under the Securities Exchange Act of 1934. Based on their review of our
disclosure controls and procedures, such officers have concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information relating to us that is required to be included in our
periodic SEC filings.

Internal Controls and Procedures. There were no significant changes in
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

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PART II. OTHER INFORMATION

Except as indicated below, none of the items contained in PART II of Form
10-QSB are applicable to the Company for the three months ended December 31,
2003.




ITEM 2. CHANGES IN SECURITIES

(c) Recent Sales of Unregistered Securities

None.




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits

31 Certifications by the Chief Executive Officer/Chief Financial Officer and
the Controller pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32 Certifications by the Chief Executive Officer/Chief Financial Officer and
the Controller pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (this
Exhibit is furnished pursuant to SEC rules, but is deemed not filed)

99.1 Press release dated February 12, 2004

(b) Reports on Form 8-K

None

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

|                        |  |                                                
|----------------------- |  | -----------------------------------------------
|UROPLASTY, INC.         |  |                                                
|                        |  |                                                
|Date: February 12, 2004 |  | by: /s/ DANIEL G. HOLMAN                       
|                        |  |                                                
|                        |  | Daniel G. Holman                               
|                        |  | President, Chief Executive Officer,            
|                        |  | Chief Financial Officer and Director (Principal
|                        |  | Executive and Financial Officer)               
|                        |  |                                                
|Date: February 12, 2004 |  | by: /s/ ARIE J. KOOLE                          
|                        |  |                                                
|                        |  | Arie J. Koole                                  
|                        |  | Controller (Principal Accounting Officer)      

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