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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

Annual Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended March 31, 2002

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 [   ]

Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of Companys knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]

Issuers revenues for its most recent fiscal year: $4,973,976

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 May 13, 2002 was $4,094,664.

The number of shares outstanding of the issuers only class of common stock on May 13, 2002 was 2,047,332.

Documents Incorporated By Reference: Portions of the Companys Proxy Statement for its 2002 Annual Meeting of Shareholders
(the Proxy Statement), are incorporated by reference in Part III.

Transitional Small Business Disclosure Format:

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



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|                                    |                                                                                                                         |  |  |  |  |  |  | 
|----------------------------------- | ----------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                             
|                                    | ITEM 1. DESCRIPTION OF BUSINESS                                                                                        
|                                    | ITEM 2. DESCRIPTION OF PROPERTY                                                                                        
|                                    | ITEM 3. LEGAL PROCEEDINGS                                                                                              
|                                    | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                            
|PART II                            
|                                    | ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                                       
|                                    | ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION                                                      
|                                    | ITEM 7. FINANCIAL STATEMENTS                                                                                           
|                                    | ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                           
|                                    | ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
|                                    | ITEM 10. EXECUTIVE COMPENSATION                                                                                        
|                                    | ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                                                
|                                    | ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                
|                                    | ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K                                                                              
|SIGNATURES                         
|EX-13.0 Financial Statements       
|EX-21.0 Subsidiaries of the Company
|EX-23 Independent Auditors' Consent



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PART I

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Uroplasty, Inc. (Uroplasty, or the Company) 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 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 Company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 Companys Securities and
Exchange Commission filings.

Forward-looking statements may be contained in the Managements Discussion and
Analysis or Plan of Operation and other section of this filing. 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 Factors Affecting the Business section of this filing.

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.




ITEM 1. DESCRIPTION OF BUSINESS

Overview

The Company designs, develops, manufactures, and markets medical products
primarily for the treatment of urinary incontinence and vesicoureteral reflux.
The Companys key product is Macroplastique® Implants, an injectable, soft
tissue-bulking agent used to treat stress urinary incontinence (SUI), the
most common form of urinary incontinence. SUI refers to the involuntary loss
of urine as a result of activities that increase intra-abdominal pressure, such
as coughing, laughing, or exercising. Macroplastique is also used to treat
vesicoureteral reflux (VUR), a condition occurring mostly in children in
which urine flows backward from the bladder into the kidney. Additionally, men
recovered from prostate surgery who experience incontinence are also candidates
for Macroplastique treatment. Macroplastique is CE marked in Europe (similar
to FDA approval in the United States), allowing the product to be sold
throughout the European Union, and is marketed in other major markets
throughout the world, including Canada, Australia, and many Latin American and
Pacific Rim countries. Macroplastique is not sold in the United States because
it is not approved by the Food and Drug Administration (FDA) for marketing in
the United States. However, the Company is currently conducting human clinical
trials in the United States on Macroplastique for the treatment of female SUI
pursuant to an Investigational Device Exemption (IDE).

Macroplastique® Implants

Macroplastique is an injectable soft tissue-bulking agent used to treat SUI and
VUR. Macroplastique is a proprietary composition of heat vulcanized, highly
textured, solid, soft, irregularly shaped polydimethylsiloxane (solid silicone)
implants suspended in a biocompatible carrier solution. Based on the Companys
clinical experience outside the United States, Macroplastique does not cause an
adverse tissue response, and is not resorbed by the body. Macroplastique is
used to provide bulking of the urethral sphincter to treat SUI in female
patients. The implantation of Macroplastique is minimally invasive and can be
performed in less than 30 minutes in an inpatient or outpatient setting. It is
designed to restore the patient to normal urinary continence almost immediately
following treatment. Macroplastique is also used to treat vesicoureteral
reflux, a condition occurring primarily in children, as well as incontinence in
men after prostate surgery.

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The Company markets Macroplastique through Uroplasty BV, The Netherlands, on
the basis its use can lead to lower surgical risk, provide a long-lasting
treatment with shorter recovery time, and is less expensive when compared to
invasive alternatives. The Company believes the advantages of Macroplastique
are its biocompatibility, nonabsorbancy, cost effectiveness, and its successful
use in patients outside the United States since 1991.

Urinary Incontinence and Vesicoureteral Reflux Markets

Urinary incontinence is an involuntary loss of urine, which has emotional,
social, and hygienic consequences. In varying degrees, urinary incontinence is
a problem suffered by millions of people worldwide. The Agency for Health
Policy and Research (AHCPR), a division of the Public Health Service, U.S.
Department of Health and Human Services, estimates that urinary incontinence
affects about 13 million people in the United States of which, 85% or 11
million are women. The same agency estimates the total cost (utilizing all
management and curative approaches) of treating incontinence of all types in
the United States as $15 billion. Bulking agents such as Macroplastique are
used to treat women with SUI caused by intrinsic sphincter deficiency (ISD),
and the National Association For Incontinence (NAFC) estimates that up to 15%
of woman suffering with stress urinary incontinence is a result of intrinsic
sphincter deficiency. Urethral Bulking Agents (UBA) are currently
recommended by AHCPR as first-line treatment for woman with ISD who do not have
coexisting urethral hypermobility. Male patients can benefit from a urethral
bulking agent procedure such as Macroplastique, and according to the Agency for
Health Policy and Research UBA is recommended as first-line surgical treatment
for men with ISD. According to the American College of Surgeons, there are
approximately 400,000 prostate surgeries performed each year in the United
States, and up to 20% of these men develop incontinence following the
procedure. Urinary incontinence can result in a substantial decrease in a
persons quality of life, and is often the main reason a family moves an
elderly person to nursing home care. The Company expects the incidence of
urinary incontinence will rise as the percentage of elderly people continues to
increase.

The Agency for Healthcare Research and Quality (AHRQ) reported that VUR is
primarily a pediatric concern, with a prevalence estimated to be as high as 3%
of the U.S. pediatric population. Approximately 15,000 surgical procedures are
performed per year to address this VUR issue. Patients with VUR grades 1
through 4 in this population are candidates for Macroplastique treatments.
Globally, the use of Macroplastique to correct the VUR condition can save
patient costs related to continued use of antibiotics for treating these
patients for chronic urinary tracts infections, which can lead to more serious
related health complications.

Types of Urinary Incontinence

The mechanisms of urinary incontinence are complicated and involve the
interaction between several anatomical structures. In females, urinary
continence is controlled primarily by the sphincter muscle. This muscle
surrounds the urethra and provides constrictive pressure to prevent urine from
flowing out of the bladder. Urination occurs when the sphincter relaxes as the
bladder contracts, allowing urine to flow through the urethra. The urinary
sphincter is also responsible for maintaining continence during periods of
physical stress. Incontinence may result when any part of the urinary tract
fails to function as intended. A broad range of conditions and disorders can
cause incontinence, including birth defects (e.g., Spina Bifida), pelvic
surgery, injuries to the pelvic region or the spinal cord, neurological
diseases (e.g. Multiple Sclerosis, Poliomyelitis), and degenerative changes
associated with aging.

Stress Urinary Incontinence: SUI refers to the involuntary loss of urine due
to an increase in intra-abdominal pressure from coughing, sneezing, laughing,
straining or lifting. In women, the most common cause of SUI is hypermobility,
a lack of anatomic stability primarily caused by weak surrounding tissue,
resulting in the abnormal movement of the bladder neck and urethra. This
anatomical problem is often the result of childbirth. SUI can also be caused
by ISD, or the inability of the sphincter valve or muscle to function properly.
ISD can be due to congenital sphincter weakness or deterioration of the
muscular wall of the urethra after trauma, spinal cord lesion or radiation
therapy. To date, Macroplastique has been used to treat incontinence in women
suffering from SUI caused by intrinsic sphincter deficiency.

Urge Incontinence: Urge incontinence refers to the involuntary loss of urine
associated with an abrupt, strong desire to urinate. Urge incontinence often
occurs with neurologic problems, causing the bladder to contract and empty with
little or no warning.

Overflow Incontinence: Overflow incontinence is associated with an
over-distention of the bladder. This can be the result of an underactive
bladder or an obstruction in the bladder or urethra.

Mixed Incontinence: Mixed incontinence is the combination of urge and stress
incontinence (and, in some cases, overflow). Since prostate enlargement often
obstructs the urethra, older men often have urge incontinence coupled with
overflow incontinence.

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Management and Treatment of Urinary Incontinence

There are two general approaches to dealing with urinary incontinence. One
approach is to manage symptoms with items such as pads or diapers. The other
approach is to undergo curative treatments in an attempt to restore continence,
such as injection of urethral bulking agents or by invasive surgeries. The
Company believes and endorses the treatment of urinary incontinence from the
least invasive to the most invasive therapy as needed.

Management of Urinary Incontinence

Absorbent Products: Absorbent products are the most common form of management
for urinary incontinence because men and women can use them without consulting
a physician. The cost of adult diapers and pads can be substantial, thus
creating a continuous financial burden for patients. Additionally, this
management technique may require frequent changing of diapers and pads to
control patient embarrassment due to odor and/or soiling.

Behavior Modification: The techniques used in behavior modification include
bladder training, scheduled voiding, and pelvic floor muscle exercises known as
Kegels. Some of the tools used in conjunction with these training regimes are
vaginal cones or weights, biofeedback devices, and electrical stimulation.
Although these techniques are not effective in all patients, the company
believes that biofeedback or one of the other behavior modifications should be
used as a first line of treatment.

Penile Compression Devices: Penile clamps are reserved for temporary use with
male incontinence. Complications such as penile and urethral erosion, penile
edema, pain, and obstruction can be associated with extended and/or improper
use.

Pelvic Organ Support Devices: A pessary is a doughnut-shaped device made of
flexible materials. They are designed to temporarily reduce pelvic prolapse
and alleviate symptoms of pelvic relaxation in females with and without
incontinence. When these devices are misused or neglected, complications such
as ulceration of the vagina and rectovaginal and vesicovaginal fistula can
occur. Persons using pessaries require frequent, regular monitoring.

Occlusion Devices: Urethral occlusion devices, or plugs, of various designs
are temporarily applied to occlude the urethra and/or bladder. They are
disposable products and either fit over the urethral opening or in the urethra
and/or bladder to obstruct the involuntary leakage of urine. The primary
problems with these devices are urinary tract infections, treatment compliance,
and progressive urethral dilation that may require larger plugs over time.

Urinary Catheters and Collection Devices: There are four types of urinary
catheters: 1) intermittent (inserted through the urethra into the bladder
every 3 to 6 hours for bladder drainage; may be appropriate for the management
of acute or chronic urinary retention); 2) indwelling (a closed sterile system
inserted through the urethra to allow bladder drainage; may be needed for
short-term treatment and for terminally ill patients); 3) suprapubic (requires
percutaneous or surgical introduction of a catheter into the bladder through
the abdominal wall, for short-term use following gynecologic, urologic and
other types of surgery or as an alternative to long-term urethral catheter use
in men); and 4) external collection (devices made from latex rubber, polyvinyl
or silicone resembling a condom, are secured on the shaft of the penis by a
double-sided adhesive, latex or foam strap and are connected to urine
collecting bags by a tube; may be useful for short-term maintenance). The type
and severity of incontinence and the patients physical and mental condition
determine which is the best catheter option for the patient.

Drug Therapy: Drug treatment is used to manage multiple types of urinary
incontinence. These drugs tend to fall into one of two categories: those that
manage urge urinary incontinence by affecting the contraction of the muscle
tissue of the bladder, and those that manage stress urinary incontinence by
either affecting contraction of the muscle tissue of the bladder neck or
improving the quality of the mucosal lining of the bladder neck and urethra.
Drugs seldom cure stress urinary incontinence and the potential side effects
include urinary retention, nausea, dizziness, blurred vision, and the
possibility of unwanted interactions with other drugs.

Curative Treatments for Urinary Incontinence

Surgery: In women, SUI can be surgically corrected through various suspension
and sling procedures. In these procedures, the physician elevates and
stabilizes the urethra and bladder neck. Current surgical procedures require
vaginal or abdominal incisions and are typically performed under general
anesthesia. Surgery is expensive, traumatic, and can involve a hospital stay
with several weeks required for full recovery. In men, the main surgical
option is an implanted artificial urinary sphincter. It carries with it the
inherent risks of device malfunction, tissue erosion and atrophy, and
infection. In practice, the artificial urinary sphincter is rarely applicable
to the management of uncomplicated stress incontinence.

Injectable Bulking Agents: Urethral Bulking Agents (UAB)s are inserted with a
needle into the area around the urethra, thereby augmenting or bulking the
sphincter. Hence, these materials are often called bulk-enhancing agents,
bulking

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agents, or injectables. Urethral bulking agents may be either synthetic or
biologically derived and are an attractive alternative to surgery because they
are considerably less invasive than many of the surgical procedures described
above. For this reason, bulking agents represent a particularly desirable
treatment option for the elderly or infirm who may not otherwise be able to
withstand the trauma and morbidity resulting from a fully invasive surgical
procedure. Active women benefit from the use of urethral bulking agents since
their use will often allow the patient to return to normal activities in a
matter of days instead of weeks for fully invasive surgical procedures.
Additionally, the use of a UBA does not preclude the use of more invasive
treatments later on if the need arises. The Clinical Practice Guidelines
published by the U.S. Department of Health and Human Services recommend
periurethral bulking agents as a first line treatment for men with ISD and for
women with ISD who do not have co-existing hypermobility. Bulking agents
should be positioned as a primary minimally invasive procedure to treat only
Type I, Type IIb, and Type III patients without major prolapse or hypermobility
component. Slings or suspensions should be positioned to treat patients with
major prolapse or hypermobility.

The two major types of urethral bulking agents are biologically derived and
synthetic agents. Biologically derived bulking agents include injections of a
patients own fat cells, polysaccharides (not commercially available in the
U.S.) or bovine collagen. Fat injections involve complex, invasive harvesting
of the patients own fat cells and reinjecting them into the bladder neck.
Some of these biological agents require pre-treatment allergy tests, and since
the body resorbs these agents over time, subsequent reinjections may be
necessary. Macroplastique (polydimethylsiloxane) is a synthetic silicone
elastomer bulking agent. Although physicians and patients may question the
silicone issue, we are confident that we provide support and documentation to
show the difference between our silicone elastomer product and the silicone gel
products that were associated with the breast implants. Other synthetic bulking
agents are composed of polytetrafluoroethylene (PTFE) (not commercially
available in the U.S.) and pyrolytic carbon-coated beads.

Marketing, Distribution, and Sales

The Company markets and sells Macroplastique and the related ancillary products
used in the implantation procedure only in countries outside the United States.
The Company has a direct sales forces consisting of four persons in the United
Kingdom. Additionally, the Company employs two sales managers in The
Netherlands and one in the United States to manage a network of distributors
selling the Companys products outside the United States in approximately 40
countries including Canada, Australia, and countries within Europe, Latin
America and the Pacific Rim. The Companys technical staff in The Netherlands
and the United States trains both new as well as existing distributors. The
Company has written territory-specific distribution agreements with each of the
individual distributors. None of the distributors may sell injectable products
that compete directly with Macroplastique. During fiscal 2002, approximately
12% of the Companys net sales were to one customer. During fiscal 2001 no
customer exceeded 10% of the Companys net sales. Collectively, the Companys
distributors accounted for approximately 63% and 58% of total net sales in
fiscal years 2002 and 2001, respectively.

The Company markets a patented, non-endoscopic delivery kit called the
Macroplastique Implantation System (MIS) for treatment of female stress urinary
incontinence outside the United States. The MIS is for use by urologists,
gynecologists, and urogynecologists for the implantation of Macroplastique
without the aid of an endoscope. Historically, urologists have principally
performed the Macroplastique procedure, however the Company believes with the
MIS, Macroplastique will be available to a larger number of physicians
(specifically gynecologists) and therefore will be available to more female SUI
sufferers. There can be no assurance the MIS will have any significant effect
on increasing sales of Macroplastique.

Other Products

In addition to the urological applications, the Companys implantable bulking
material is also marketed outside the United States for reconstructive and
cosmetic plastic surgery, and otolaryngology vocal cord rehabilitation
applications under the trade name Bioplastique Implants. In The Netherlands
and United Kingdom only, the Companys direct sales force distributes certain
wound care products in accordance with a distributor agreement. Under the
terms of the Distributor Agreement, the Company is not obligated to purchase
any minimum level of wound care products. Collectively, these other products
accounted for 11% and 8% respectively, of the Companys net sales in fiscal
2002 and fiscal 2001.

Government Regulations

The Companys medical device products are subject to regulation by various
governmental agencies depending upon where the products are manufactured and/or
sold. In markets such as the United States and Europe, these regulations are
substantial and can significantly affect a companys ability to obtain and/or
maintain approval for manufacturing and distribution of medical device
products.

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In order to market its products within the countries consisting of the European
Union, the Company is required to obtain CE marking for its products. To
obtain CE marking, a product must comply with the requirements set forth in
Council Directive 93/42/EEC published in Volume 36 (12 July 1993) of the
Official Journal of the European Communities, referred to as the Medical Device
Directives (MDD). CE mark authorization is granted by organizations called
Notified Bodies who are approved by their respective national Competent
Authorities (sometimes referred to as National Health Ministries) to conduct
medical device evaluations. Notified Bodies are technical experts serving as
the auditing and certifying arm of the Competent Authorities.

Under the European MDD, Macroplastique is considered a Class IIb long-term
implantable device. To obtain the CE mark for Macroplastique, the Company was
required to submit extensive information regarding product design, labeling,
and preclinical and clinical safety testing to its Notified Body for evaluation
by expert reviewers. In addition, the Company maintains registration to
rigorous quality standards ISO 9001, ISO 13485 and EN 46001. After
successfully demonstrating full compliance to the MDD, the Notified Body issued
a Certificate of Authorization to the Company in June 1996, allowing the
Company to place the CE mark on Macroplastique and Bioplastique and their
related accessories. From 1991 to 1996, the Company marketed products in
Europe through individual country registrations. By complying with the MDD and
any specific National requirements, Macroplastique is marketed throughout the
European Union. The Company is subject to periodic surveillance audits by its
Notified Body to ensure it adheres to the requirements of the MDD, as well as
quality standards ISO 9001, ISO 13485 and EN 46001. Changes in existing
requirements or adoption of new requirements or policies could adversely affect
the ability of the Company to comply with regulatory requirements. Failure to
comply with regulatory requirements could have a material adverse effect on the
Companys business, financial condition, and results of operations. There can
be no assurance the Company will not be required to incur significant costs to
comply with laws and regulations in the future, or that laws or regulations
will not have a material adverse effect upon the Companys business, financial
condition, or results of operations.

The Company maintains facilities in the United States, United Kingdom, and The
Netherlands, each of which has numerous federal, state, and local laws relating
to such matters as safe working conditions, manufacturing practices,
environmental protection, fire hazard control and disposal of hazardous or
potentially hazardous substances. To the best of our knowledge, the Company
complies with all applicable local, state and national laws. There can be no
assurance the Company will not be required to incur significant costs to comply
with such laws and regulations now or in the future or that such laws or
regulations will not have a material adverse effect upon the Companys ability
to do business, financial condition, or results of operations.

The Company is structured so that The Netherlands subsidiary conducts business
as a manufacturer and international sales office, and is responsible for the
worldwide distribution of Macroplastique products outside of the United States
through our network of independent distributors. The United Kingdom subsidiary
is responsible for direct sales and distribution of Macroplastique products to
hospitals and physicians within the United Kingdom and Ireland. As a result of
our corporate structure, the U.S. regulation regarding medical exports that are
not FDA approved does not materially affect our business. In the United States,
the Company must comply with the Federal Food, Drug, and Cosmetic Act, as
amended, which is enforced by the FDA. The FDA has determined urethral bulking
agents such as Macroplastique are Class III devices subject to a Pre-Market
Approval (PMA) application prior to marketing in the United States.

A PMA is a rigorous submission requiring the manufacturer to substantiate
claims of safety and effectiveness with valid scientific evidence. The PMA
process is lengthy and expensive with no guarantee of final approval at its
completion. In some instances, the FDA may decide additional testing or
clinical studies are necessary to support the PMA submission. Such a decision
considerably lengthens the time and expense required for obtaining U.S.
marketing approval. If the FDA approves the PMA submission, it may still place
certain conditions on the manufacturer such as the initiation of a
post-marketing study or restrictions to the products intended use.

After PMA approval, the Company must comply with FDA regulations to maintain
its U.S. marketing approval. The Companys manufacturing facilities will be
subject to routine inspections by the FDA to ensure compliance with U.S.
Quality System Requirements. Even though the Company has achieved ISO 9001,
ISO 13485 and EN 46001 registrations, there can be no assurance the FDA would
find the Companys quality system to be in compliance with all relevant aspects
of the U.S. requirements. The Company is also subject to a variety of state
and local laws and regulations in those states or localities where its product
will be manufactured and/or marketed. Any applicable state or local
regulations may hinder the Companys ability to market its products in those
states or localities.

Third-Party Reimbursement

Reimbursement systems vary significantly by country. Third-party payors consist
of government health programs, private health insurance plans, managed care
organizations and other similar programs. Outside of the United States,
government managed health care systems control reimbursement for devices and
procedures such as Macroplastique. Reimbursement for Macroplastique has been
successful in multiple international markets where hospitals and physicians
have been able to get budgets approved by fund-holder trusts or global hospital
budgets. Physicians or hospitals that apply, but do not

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receive satisfactory reimbursement from either third-party payors or the
government, may choose not to use Macroplastique, and the sales of our products
could be affected. Upon FDA approval to market Macroplastique in the United
States, Uroplasty will need to apply for and gain acceptance from Medicare and
other third-party reimbursement. There is no uniform policy for reimbursement
throughout the United States, and no guarantee Macroplastique will be
reimbursed at the levels expected by the Company, if at all.

Product Liability

The medical device industry is subject to substantial litigation. The Company
is a manufacturer of a long-term implantable device and consequently faces an
inherent business risk of exposure to product liability claims resulting from
alleged adverse effects to the patient. The Company currently carries $2
million of worldwide product liability insurance on a claims made form, plus
another policy specific to the United Kingdom only. There can be no assurance,
however, the Companys existing insurance coverage limits are adequate to
protect the Company from any liabilities it might incur in connection with the
clinical trials of Macroplastique or the initial commercialization of
Macroplastique in the United States. There can be no assurance that liability
claims will not exceed coverage limits. Such insurance is expensive and in the
future may not be available on acceptable terms, if at all. Furthermore, the
Company does not expect to be able to obtain insurance covering its costs and
losses as a result of any recall of its products due to alleged defects,
whether such a recall is instituted by the Company or required by a regulatory
agency. A product liability claim, recall, or other claim with respect to
uninsured liabilities or in excess of insured liabilities could have a material
adverse effect on the business, financial condition, and results of operations
of the Company.

Manufacturing

The Company manufactures Macroplastique at its own facilities. Components are
manufactured in the United States, and finished products are manufactured in
The Netherlands from medical grade materials obtained from suppliers qualified
by the Companys Quality Department. The Companys facilities utilize
dedicated heating, ventilation, and high efficiency particulate air (HEPA)
filtration systems for the manufacturing areas to provide a controlled working
environment. All manufacturing processes are performed by trained production
technicians according to written procedures approved by the Companys Quality
Department. All critical manufacturing processes are performed in a cleanroom
environment. An outside vendor sterilizes Macroplastique, Bioplastique and
their accessories using validated methods and returns the products to the
Company for final inspection and testing.

The Companys manufacturing facilities are periodically audited by an
independent registrar to ensure compliance with ISO 9001 ISO 13485 and EN 46001
quality system requirements. Prior to marketing the product in the United
States, the Company will also be inspected by the U.S. FDA and will be subject
to additional state, local, and federal government regulations applicable to
the manufacture of the Companys products. See Description
of Business  Government Regulations.

Competition

Competition in the urinary incontinence products market is intense. The Company
faces competition from existing manufacturers of management and curative
treatments, competing manufacturers of commercially available bulking agents,
and from companies developing new or improved treatment methods. The Company
believes the principal competitive factors among treatment methods include
physician and patient acceptance of the method in managing or curing
incontinence, cost and availability of third-party reimbursement, marketing and
sales capability, and the existence of meaningful patent protection. The
Companys ability to compete in this market also will depend on the consistency
of its product quality as well as delivery and product pricing. Other factors
within and outside the Companys control include its product development and
innovation capabilities, ability to obtain required regulatory approvals,
ability to protect its proprietary technology, manufacturing and marketing
capabilities, and ability to attract and retain skilled employees.

Other soft-tissue injectable urethral bulking agents competing directly with
Macroplastique for the treatment of stress urinary incontinence and/or
vesicoureteral reflux are Contigen® manufactured by C.R. Bard, Inc., Zuidex®
and Deflux® manufactured by Q-Med AB, and Durasphere® manufactured by Carbon
Medical Technologies, which is marketed in the U.S. by Boston Scientific. In
addition, the Company believes Curis, Inc., Protein Polymer Technologies, Genyx
Medical, and Bioform, Inc. are performing research and development and/or are
seeking regulatory approval for various types of soft-tissue injectable bulking
agents for treatment of urinary incontinence. In contrast to the products
currently approved for sale, Macroplastique, marketed outside the United States
since 1991, is a synthetic material that will not degrade, become resorbed or
migrate, and does not require the patient to have a skin test prior to the
procedure. The silicone-elastomer material has been studied for over 50 years
in medical use for such urological applications as penile implants, stents and
catheters. The patented Macroplastique Implantation System (MIS) offers a
unique, non-endoscopic, minimally invasive delivery system that can be
performed in the physician office as an out-patient procedure. The

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Company expects continued stiff competition with Johnson & Johnson, American
Medical Systems, C.R. Bard Inc., Cook Urological, Boston Scientific Corporation
and others who manufacture urinary incontinence surgical products such as sling
devices. These companies have the advantage to bundle their incontinence
products or devices onto contracts that require a hospital to purchase the
incontinence device in order to maintain discounts on other product lines.

Many of the Companys competitors and potential competitors have significantly
greater financial, manufacturing, marketing, distribution and technical
resources, and experience than the Company. In addition, many of the Companys
competitors offer broader product lines within the urology market, which may
give such competitors the ability to negotiate exclusive, long-term supply
contracts and to offer comprehensive pricing for their products. It is
possible other large health care and consumer products companies may enter this
industry in the future. Furthermore, smaller companies, academic institutions,
governmental agencies, and other public and private research organizations will
continue to conduct research, seek patent protection, and establish
arrangements for commercializing products. Such products may compete directly
with any products, which may be offered by the Company in the future.

Dependence on One or a Few Major Customers

During fiscal 2002, approximately 12% of the Companys net sales were to one
customer. During fiscal 2001, no customer exceeded 10% of the Companys net
sales.

Patents, Trademarks, and Licenses

The Companys success depends in part on its ability to obtain and maintain
patent protection for its products, preserve its trade secrets, and operate
without infringing the proprietary rights of third parties. The Company seeks
to protect its technology by filing patent applications for patentable
technologies it considers important to the development of its business based on
an analysis of the cost of obtaining a patent, the likely scope of protection,
and the relative benefits of patent protection compared to trade secret
protection, among other considerations. The Company also relies upon trade
secrets, know-how, and continuing technological innovation to develop and
maintain its competitive position.

Multiple patents covering the Macroplastique materials, processes, and
applications have been issued to the Company by the Patent Offices in the
United States, United Kingdom, Japan, Germany, The Netherlands, and Canada.
Such patents will expire in the U.S. at various times between 2010 and 2013.
Applications are also currently pending in various other European countries.
There can be no assurance any of the Companys pending and/or future U.S.
and/or foreign patent applications will result in issued patents, or that any
issued patents will be of sufficient scope or strength to provide meaningful
protection of the Companys products. The coverage sought in a patent
application can be denied or significantly reduced before the patent is issued.
In addition, there can be no assurance any current and/or future U.S. and/or
foreign patents of the Company will not be challenged or circumvented by
competitors or others, or that such patents will be found to be valid or
sufficiently broad to protect the Companys technology or provide the Company
with any competitive advantage. Should attempts be made to challenge,
circumvent, or invalidate the Companys patents in the U.S. Patent and
Trademark Office or courts of competent jurisdiction, including administrative
boards or tribunals, the Company may have to participate in legal or
quasi-legal proceedings therein to maintain, defend, and/or enforce its rights
in these patents. Any legal proceedings to maintain, defend, and/or enforce the
Companys patent rights could be lengthy and costly, with no guarantee of
success.

The Company also relies heavily upon trade secrets and other proprietary
information. The Company seeks to maintain the confidentiality of such
information by requiring employees, consultants, and other parties to sign
confidentiality agreements, and by limiting access by parties outside the
Company to such information. There can be no assurance, however, these measures
will prevent the unauthorized disclosure or use of this information or that
others will not be able to independently develop such information.
Additionally, there can be no assurance any agreements regarding
confidentiality and non-disclosure will not be breached, or, in the event of
any breach, that adequate remedies would be available to the Company.

In July 21, 1998, the Company announced the United States Patent and Trademark
Office (USPTO) had informed the Company the USPTO would, as requested by the
Company, initiate an interference proceeding (the Interference Proceeding)
between the Company and Carbon Medical Technologies, Inc. (CMT), formerly
Advanced UroScience, Inc., White Bear Lake, Minnesota, to determine which
company was the first to invent pyrolytic carbon-coated micro beads for use in
treating urinary incontinence.

Later in 1998, the Company commenced a related lawsuit against CMT for
misappropriation of trade secrets (Misappropriation Lawsuit) pertaining to
the pyrolytic carbon-coated micro beads, among other things and CMT
subsequently brought a counterclaim against the Company with respect to such
matter.

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Effective October 26, 2001, the Company and CMT entered into a Settlement
Agreement terminating the above-referenced legal proceedings; as a part of such
Agreement, the Company agreed to dismiss the Misappropriation Lawsuit and to
abandon the Interference Proceeding.

Proceeds from the Settlement, totaling $407,000, will be recognized upon the
receipt of cash. During the fiscal year ended March 31, 2002, the Company
received and recorded a $200,000 gain related to this settlement. In the first
quarter of fiscal 2003 the Company received and recorded a $207,000 gain.

In 1992, the Company and its then parent, Bioplasty, Inc., were sued by
Collagen Corporation, which alleged that Macroplastique infringed on one of its
U.S. patents for a bulking agent. The parties entered into a license and
settlement agreement in 1993 pursuant to which the Company pays Collagen a
royalty of 5% of net sales in the U.S. of Macroplastique products with a
minimum of $50,000 per year. The duration of the Collagen Corporation agreement
is through May 1, 2006. Collagen has not brought any new or renewed legal
action in connection with its allegations. There can be no assurance, however,
Collagen and/or any other third party will not pursue legal action with respect
to these matters.

Claims by competitors, such as Collagen and other third parties that the
Companys products allegedly infringe the patent or other intellectual property
rights of others, could have a material adverse effect on the Company. There
has been substantial litigation regarding patent and other intellectual
property rights in the medical device industry, and intellectual property
litigation may be used against the Company as a means of gaining a competitive
advantage. Intellectual property litigation is complex, time-consuming, and
expensive, and the outcome of such litigation is difficult to predict. Any
future litigation, regardless of outcome, could result in substantial expense
to the Company and significant diversion of the efforts of the Companys
technical and management personnel. An adverse outcome in any litigation could
subject the Company to significant liabilities to third parties, require
disputed rights to be licensed from others, if licenses to such rights could be
obtained, or require the Company to cease making, using, or selling certain
products. There can be no assurance that any licenses required under any
patents or proprietary rights would be made available on terms acceptable to
the Company, if at all. In addition to being costly, protracted litigation to
defend or prosecute intellectual property could result in the Company being
unable to commercialize Macroplastique on a timely basis or at all, and could
have a material adverse effect on the Companys business, financial condition,
and results of operations.

Although the Company intends to apply for additional patents and vigorously
defend issued patents, management believes its success as a business will
depend primarily upon its development and marketing skills, and the quality and
economic value of its products rather than on its ability to obtain and defend
patents.

The Company has a Royalty Agreement with three individuals, two of whom are
former officers and directors. Under such Agreement, the Company pays
royalties, in the aggregate, of three to five percent of net sales of
Macroplastique and Bioplastique, subject to a monthly minimum of $4,500. The
royalties payable under this Agreement will continue until the patent
referenced in the Agreement expires in 2010.

In December 1995, the Company obtained a license from a British surgeon, which
became superseded by a subsequent Agreement entered into by the parties in
October 1998. Pursuant to this subsequent Agreement, the Company received an
absolute assignment of a patent relating to the Macroplastique Implantation
System in return for a royalty of 10 British pounds for each unit sold during
the life of the patent. The Company began commercialization of the product
outside the U.S. in March 2000.

Research and Development

The Company has an active Research and Development program working to develop
new products in the field of incontinence. The Company is also continually
evaluating potential improvements as well as new methods and devices for the
implantation of Macroplastique and on new applications for this material. R&D
expenses also include the costs of clinical studies including the U.S. clinical
trial currently underway pursuant to the IDE approved by the FDA. Expenditures
for research and development totaled $1,685,000 and $2,150,177 for the fiscal
years ended March 31, 2002 and 2001, respectively. None of these costs were
borne directly by customers.

Compliance with Environmental Laws

Compliance by the Company with applicable environmental requirements during its
fiscal years ended March 31, 2002 and 2001 has not had a material effect upon
its capital expenditures, earnings, or competitive position.

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Employees

As of March 31, 2002, the Company had 37 employees, of which 34 were full-time
and 3 part-time. No employee has a collective bargaining agreement with the
Company. The Company believes it maintains good relations with its employees.

Incorporation and Current Subsidiaries

The Company was incorporated in January 1992 as a Minnesota Corporation and a
wholly owned subsidiary of its parent. In February 1995, the Company became a
stand-alone, privately held company pursuant to a Plan of Reorganization
confirmed by the U.S. Bankruptcy Court. The Companys shares became registered
and the Company became a reporting company pursuant to a registration statement
filed with the Securities and Exchange Commission in July 1996.

The Companys wholly owned foreign subsidiaries and their respective principal
functions are as follows:

|              |  |                                                                                                                                                                
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|Uroplasty BV  |  | Incorporated in The Netherlands, is the manufacturer of
Macroplastique and Bioplastique and all their accessories,
and sells its products through distributors.
|              |  |                                                                                                                                                                
|Uroplasty LTD |  | Incorporated in and acts as the sole distributor of
Macroplastique and wound care products in the United
Kingdom.                                              
|              |  |                                                                                                                                                                
|Bioplasty BV  |  | Incorporated in The Netherlands and is the distributor of
Bioplastique to subdistributors, and distributes wound care
products in The Netherlands.             

Factors Affecting the Business

The following factors are important and should be considered carefully in
connection with any evaluation of the Companys business, financial condition,
results of operations and prospects. Additionally, any one or combination of
the following factors could cause the Companys actual results to materially
differ from those reflected in any forward-looking statements of the Company.

Government Regulation: The Companys product, manufacturing processes, and
product development activities are subject to extensive and rigorous regulation
by governmental and regulatory authorities in foreign countries similar to the
U.S. Food and Drug Administration (FDA). In Europe, where Macroplastique®
has been used since 1991, the Companys introduction of medical devices as well
as the design, manufacturing, labeling, distribution, sale, marketing,
advertising, promotion, and record keeping procedures for the Companys
products are subject to laws and regulations governing medical devices
contained in the European Medical Device Directives (MDD).

In the United States, the Company cannot market or sell Macroplastique until
pre-market approval (PMA) authorization is received from the FDA. In July
1999, Uroplasty received approval from the FDA of an Investigational Device
Exemption (IDE) relating to a U.S. clinical trial for the treatment of female
stress urinary incontinence (SUI) using Macroplastique. Upon successful
completion of the clinical trial, the Company plans to submit a PMA application
to the FDA requesting approval to commercialize Macroplastique in the U.S.
There can be no assurance the U.S. clinical trials will be successfully
completed or that the requisite approvals or certifications will be granted for
Macroplastique or any other product on a timely basis, or at all, or that such
regulatory reviews will not involve delays that would conflict with the
Companys ability to commercialize its products in the U.S.

If and when regulatory approval to market a product is obtained from the FDA,
this approval may necessitate limitations on the indicated uses of the product.
Marketing approval can also be withdrawn by the FDA in the United States (and
by regulatory authorities in foreign countries) due to failure to comply with
regulatory requirements or the occurrence of unforeseen problems following
initial approval. The Company may be required to make further filings with the
FDA and other regulatory authorities in foreign countries under certain
circumstances, such as the addition of product claims or product reformulation.
The FDA and other regulatory authorities in foreign countries could also limit
or prevent the manufacture and/or distribution of the Companys products and
have the power to demand the recall of such products. Medical device
regulations depend strongly on administrative interpretation, and there can be
no assurance future interpretation made by the FDA or other regulatory bodies,
with possible retroactive effect, will not adversely affect the Company. The
FDA and various other authorities either currently inspect or will inspect the
Companys facilities from time to time to determine whether Uroplasty is in
compliance with regulations relating to medical device manufacturing including
regulations concerning design, manufacturing, testing, quality control, product
labeling, distribution, promotion, and record keeping practices. A
determination that the Company is in material violation of such regulations
could lead to the imposition of civil penalties, including fines, product
recalls, product seizures or, in extreme cases, criminal sanctions.

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Effects of Technological Developments: The Company competes in a market
characterized by technological innovation, extensive research efforts, and
significant competition. Improvements in existing treatment options or
developments of new treatment methods may have a material adverse effect on the
Companys ability to increase sales of Macroplastique, successfully
commercialize any future products, and may render such products noncompetitive
or obsolete. Other companies are currently engaged in the development of
products and innovative methods for treating SUI that are similar to or
competing with Macroplastique and these companies may have greater financial
resources and know how than the Company. Significant developments by any of
these companies or advances by medical researchers could eliminate the market
for Macroplastique or otherwise render Macroplastique obsolete. Although
technological change has not had a direct material impact on the Company in
recent years, the potential such a change might occur is a continuing risk for
the Company.

Macroplastique Market Acceptance: The Company currently sells Macroplastique
in Europe, Canada and other countries outside the United States. Acceptance of
Macroplastique by physicians in preference to other treatment options,
including other bulking agents, will depend upon the demonstration of its
safety and effectiveness, relative performance of Macroplastique compared to
other market approved products, availability of other treatment options, and
ease of use and relative cost compared to treatment options including other
bulking agents. Physicians may elect not to use Macroplastique unless adequate
reimbursement from health care payers is available. Health care payer
acceptance of a treatment utilizing Macroplastique will require, among other
things, evidence of the cost effectiveness of this treatment as compared to
other treatment options. There can be no assurance the acceptance of
Macroplastique by urological and gynecological health care providers will
develop or continue to grow in countries where Macroplastique is already used.

Single Product: The Company currently derives over 89% of its net sales of
Macroplastique and related products. Discontinuance or reduction of revenues
from Macroplastique sold outside of the U.S. could therefore have a material
adverse effect on the Companys business, financial condition, and results of
operations. The Company does not expect commercialization of other new
products will be feasible without a substantial, continuing commitment to
research and development for an extended period of time or acquisitions of new
products, or both. Also, new medical products must typically undergo clinical
trials and regulatory clearance or approval before commercialization. There
can be no assurance as to whether or when commercialization of other products
might begin or as to the likelihood that any such initiative would be
successful. The market for medically-related products changes constantly. If
the market changes, new or strengthened competition emerges, customer
preferences change, and/or new technology causes Macroplastique to be viewed as
a less effective treatment, the Companys business, financial condition, and
results of operation would be adversely affected.

Patents and Proprietary Rights: The Companys success depends in part on the
ability to preserve trade secrets, obtain and maintain patent protection for
Uroplastys products under United States and international patent laws and
other intellectual property laws, and operate without infringing upon the
proprietary rights of third parties. Patents covering the materials, process,
and applications have been issued to the Company by the Patent Offices in the
United States, United Kingdom, Japan, Germany, The Netherlands, and Canada.
Applications are also currently pending in various other European countries.
No assurances can be given that the scope of any patent protection will prevent
competitors (most of which have financial and other resources substantially
greater than the Company) from introducing products competitive with the
Companys products, the Companys patents will be held valid if subsequently
challenged, others will not claim rights in or ownership of the patents and
other proprietary rights held by the Company, or the Companys product and
processes will not infringe, or be alleged to infringe, the proprietary rights
of others.

A number of patents have been issued to others in the area of injectable
bulking agents. The validity and breadth of claims covered in medical device
technology patents involve complex legal and factual questions and may
therefore be highly uncertain. The Company also relies upon unpatented trade
secrets to protect the Companys proprietary technology. No assurance can be
given that others will not independently develop or otherwise acquire
substantially equivalent techniques and/or gain access to and disclose the
Companys proprietary technology. Further, no assurance can be given that the
Company can ultimately protect meaningful rights to such unpatented proprietary
technology. There has been substantial litigation regarding patent and other
intellectual property rights in the medical device industry. Companies in the
medical device industry have employed intellectual property litigation to gain
a competitive advantage. Litigation may be necessary to enforce any patents
issued to the Company, protect trade secrets or proprietary information owned
by the Company against claimed infringement of the rights of others, or
determine the scope and validity of the proprietary rights of others. The
defense and prosecution of patent litigation or other legal and/or
administrative proceedings related to patents is costly and time-consuming
regardless of the outcome. An adverse outcome in any litigation could subject
the Company to significant liabilities to third parties, require disputed
rights to be licensed from others, and/or require the Company to cease making,
using, or selling any products. There can be no assurance that any licenses
required under any patents or proprietary rights would be made available on
terms acceptable to the Company, if at all.

Public Reaction to Silicone Products: Macroplastique is comprised of
heat-vulcanized polydimethylsiloxane, which results in a solid, flexible
silicone elastomer. In the early 1990s the United States breast implant
industry became the

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subject of significant controversies surrounding the possible effects upon the
human body of the use of silicone gel in breast implants resulting in a massive
flood of product liability litigation, leading to the bankruptcy of several
companies, including Uroplastys former parent, Bioplasty, Inc. The Company
uses only solid silicone material and not semi-liquid silicone gel (as was used
in breast implants) in the Macroplastique product. However, there can be no
assurance that the use by the Company and others of solid silicone in medical
devices implanted in the human body will not result in controversies,
litigation, or negative publicity from news media, competitors or legislative
and regulatory investigations. Furthermore, there can be no assurance that in
the event such negative publicity occurred, that it would not have a
significant adverse effect on the Companys future financial position or
results of operations.

Third-Party Reimbursement: Any success of the Company will depend, in part,
upon satisfactory reimbursement for Macroplastique procedures from third-party
health care payers. In the U.S. and many foreign countries, third-party
reimbursement is currently generally available for surgical procedures for
urinary incontinence, but there is no uniform policy for such reimbursements.
The Company sells Macroplastique to physicians, hospitals and other users which
bill various third-party payers, such as government health programs, private
health insurance plans, managed care organizations, and other similar programs
for the health care products and services provided to their patients. Payers
may deny reimbursement if they determine a product used in a procedure was not
used in accordance with established payer protocols regarding cost-efficient
treatment methods, was used for an unapproved indication or was not otherwise
covered. Third-party payers are increasingly challenging the prices charged
for medical products and services and, in some instances, have pressured
medical suppliers to lower their prices. The availability of third-party
reimbursement for Macroplastique or competitors products and continuing
efforts to reduce the costs of health care by decreasing reimbursement rates
may reduce the price received by the Company for Macroplastique or increase the
relative expense to the consumer. The Company believes a material amount of
Macroplastique revenues are received from third-party payers; therefore failure
to receive sufficient reimbursement from health care payers for procedures
using Macroplastique or adverse changes in governmental and third-party payers
policies toward reimbursement for such procedures would materially adversely
affect the Companys business, financial condition, and results of operations.

Clinical Studies: There are numerous abstracts and articles that support
Macroplastique for the treatment of SUI and VUR published in the scientific
literature. The majority of these publications are uncontrolled, which
preclude their use in obtaining marketing clearance in the United States.
Consequently, the Company is currently conducting a human clinical trial
pursuant to an IDE approval by the FDA that will provide a controlled,
prospective clinical study concerning Macroplastique treatment for female SUI.
Until this study is completed, no assurance can be given that Macroplastique
will receive marketing clearance in the United States.

Raw Material / Component Suppliers: The Company currently purchases certain
materials from single, qualified and approved sources. Alternative suppliers
for all these materials exist should the current suppliers discontinue
production or distribution. However, the Company would need to complete
additional testing to qualify the materials obtained from any new suppliers.
Limited notice of the need to switch suppliers for any of these materials could
result in production delays and inventory depletion, and alternative suppliers
could change prices significantly higher than current costs. The Company has
not experienced any shortage of these materials to date; however, no assurance
can be given that shortages of these materials will not be experienced in the
future.

Research and Development Expenses and Expected Losses: The Companys future
success will depend upon, among other factors, its ability to introduce and
market Macroplastique on a timely basis in the U.S. and, to that end, the
Company has committed the largest portion of the proceeds resulting from its
private placement of Common Stock in fiscal 1998. Although the Company
realized net income during fiscal years 1997 through 1999, the Company incurred
substantial losses in fiscal 2000, fiscal 2001 and fiscal 2002. The
development and commercialization by the Company of Macroplastique and other
products in the U.S. will require substantial additional product development,
clinical, regulatory, and other expenditures for the foreseeable future.

Additional Capital Requirements: In the event product sales and/or expenses
differ from expected levels, the Company may require additional financing to
complete the IDE clinical study and pre-market approval application for
Macroplastique in the U.S. Further, the Company will need additional funds for
market introduction of Macroplastique to the U.S. for female SUI, as well as
for the development of VUR and male incontinence markets, because separate
regulatory approval is needed for each of these indications. As of record date
May 13, 2002, the Company is offering a total of 3,071,535 shares and 1,023,845
warrants to each of its shareholders, each of whom holds one subscription right
for each two shares of common stock held on such date. If all of the rights are
sold, the Company will receive gross proceeds of $3.1 million. There is no
assurance that this offering will be partially or fully completed.

International Operations and Currency Fluctuations: The Company currently
sells its products only outside the U.S. through its wholly owned foreign
subsidiaries. Sales and operations outside of the U.S. are subject to certain
inherent risks, including, without limitation, fluctuations in the value of the
U.S. dollar relative to foreign currencies, tariffs, quotas, taxes and other
market barriers, political and economic instability, restrictions on the import
and export of technology, difficulties in staffing and managing international
operations, difficulties in obtaining work permits for

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employees, difficulties in collecting receivables, potentially adverse tax
consequences, potential language barriers, and difficulties in operating in a
different culture and legal system. There can be no assurance that any of
these factors will not have a materially adverse effect on the Companys
financial condition or results of operations. In particular, because the
Companys international sales are denominated primarily in Euros, currency
fluctuations in countries where the Company does business may render the
Companys products less price competitive than those of competing companies
whose sales are denominated in weaker currencies. The Company reports its
financial results in U.S. dollars, and fluctuations in the value of either the
dollar or the currencies in which the Company transacts business can have a
negative impact on its financial condition or results of operations.
Consequently, the Company has exposure to foreign currency exchange risks. The
Company attempts to lessen that exposure by keeping to a minimum the amount of
time trade payables and receivables are outstanding, and by denominating
product sales in a currency which historically has been more stable than other
foreign currencies. However, there can be no assurance that historical
stability of any currency is any indication of its future stability.

Limited Public Market for Common Stock; Possible Stock Price Volatility:
Announcements of new products and services by the Company or its competitors,
technological innovations by competitors, disputes regarding patents or other
proprietary rights, regulatory developments and economic and other external
factors, as well as period-to-period fluctuations in the Companys financial
results, could cause the market price of the Companys Common Stock to
fluctuate significantly. In addition, the stock market in general and, in
particular the market prices for medical technology companies, have
historically experienced significant volatility which has affected the market
price of securities of many companies and which has sometimes been unrelated to
the operating performance of such companies. Such volatility may adversely
affect the market price of the Companys Common Stock.




ITEM 2. DESCRIPTION OF PROPERTY

The Company owns office and warehouse space at Hofkamp 2, 6161 DC Geleen, The
Netherlands. In addition, the Company leases office, warehouse, laboratory and
production space through February 2003 at 2718 Summer Street NE, Minneapolis
Minnesota 55413-2820, USA; office and warehouse space through September 2011
(subject to a right of the Company to terminate early starting in 2006) at Unit
3, Woodside business Park, Whitley Wood Lane, Reading, Berkshire RG2 8LW,
United Kingdom; and office, warehouse, laboratory and manufacturing space
through June 2007 at Industrieweg 12, 5627 BS Eindhoven, The Netherlands. The
Company considers its facilities adequate; however, additional office,
production, and warehouse space will likely be necessary upon FDA approval and
subsequent increases in production, marketing, and sales activities in the U.S.




ITEM 3. LEGAL PROCEEDINGS

In July 21, 1998, the Company announced the United States Patent and Trademark
Office (USPTO) had informed the Company the USPTO would, as requested by the
Company, initiate an interference proceeding (the Interference Proceeding)
between the Company and Carbon Medical Technologies, Inc. (CMT), formerly
Advanced UroScience, Inc., White Bear Lake, Minnesota, to determine which
company was the first to invent pyrolytic carbon-coated micro beads for use in
treating urinary incontinence.

Later in 1998, the Company commenced a related lawsuit against CMT for
misappropriation of trade secrets (Misappropriation Lawsuit) pertaining to
the pyrolytic carbon-coated micro beads, among other things and CMT
subsequently brought a counterclaim against the Company with respect to such
matter.

Effective October 26, 2001, the Company and CMT entered into a Settlement
Agreement terminating the above-referenced legal proceedings; as a part of such
Agreement, the Company agreed to dismiss the Misappropriation Lawsuit and to
abandon the Interference Proceeding.

Proceeds from the Settlement, totaling $407,000, will be recognized upon the
receipt of cash. During the fiscal year ended March 31, 2002, the Company
received and recorded a $200,000 gain related to this settlement. In the first
quarter of fiscal 2003 the Company received and recorded a $207,000 gain.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company did not submit any matter to a vote of its security holders during
the fourth quarter of its recently completed fiscal year.

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PART II

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ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of the date hereof, there is only a limited public trading market for the
Companys Common Stock.

The following table sets forth the high and low bid prices for the Companys
Common Stock, as reported in the NASDS Bulletin Board system (market symbol
UPST.OB ; formerly UROP.OB) on a quarterly basis, from April 2001 through March
2002. Such quotations represent interdealer prices, without retail markup, mark
down or commission, and do not necessarily represent actual transactions. All
figures have been adjusted for a one-for-three reverse split effective April 2,
2002.

|                |  |         |      |          |  |   |      | 
|--------------- |  | ------- | ---- | -------- |  | - | ---- | 
|Fiscal Quarters |  | Low Bid |      | High Bid
|First Quarter   |  | $       | 4.56 |          |  | $ | 5.55 | 
|Second Quarter  |  |         | 2.55 |          |  |   | 4.80 | 
|Third Quarter   |  |         | 2.40 |          |  |   | 3.12 | 
|Fourth Quarter  |  |         | 2.10 |          |  |   | 3.15 | 

As of March 31, 2002, approximately 548 holders held the Companys Common Stock
of record. Registered ownership includes nominees who may hold securities on
behalf of multiple beneficial owners.




ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

THIS DISCUSSION OF THE FINANCIAL CONDITION AND THE RESULTS OF OPERATIONS OF THE
COMPANY SHOULD BE READ IN CONJUNCTION WITH, AND IS QUALIFIED IN ITS ENTIRETY
BY, THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE
WITHIN THIS ANNUAL REPORT, THE MATERIAL CONTAINED IN THE RISK FACTORS AND
BUSINESS SECTIONS OF THIS ANNUAL REPORT, AND THE CAUTIONARY DISCLOSURE ABOUT
FORWARD-LOOKING STATEMENTS AT THE FRONT OF PART I OF THIS ANNUAL REPORT.

Overview

Uroplasty, Inc. develops, manufactures, and/or markets medical products in
certain segments of the urology, otolaryngology, wound care, 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
primarily from Macroplastique and related ancillary products designed for use
by urologists, gynecologists, and uro-gynecologists for the primary treatment
of SUI and for the treatment of VUR (backflow of urine from the bladder to the
kidneys). 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 bulking
material is also marketed by the Company outside the U.S. for reconstructive
and cosmetic plastic surgery applications and vocal cord rehabilitation under
the trade name Bioplastique Implants. In The Netherlands and United Kingdom,
the Companys direct sales force distributes on behalf of another company
certain wound care products 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, and Central
and South America. In September 1999, the Company received unconditional
approval from the FDA pursuant to a

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previously filed IDE Application to initiate human clinical studies in the U.S.
for the Companys primary product Macroplastique in the treatment of female
SUI. Through various urological investigators in various clinical sites across
the U.S., the Company is currently performing the human procedures specified by
the study protocol.

The Companys current objectives are to focus on sales and marketing activities
designed to increase market penetration and sales of Macroplastique for SUI and
VUR applications 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.

In order to reduce costs, an aggregate of 21 positions worldwide were canceled
in fiscal 2001 and August 2001, either by terminating employment agreements or
through attrition. This reduced salary costs and associated expenses by
approximately $75,000 a month. Broken down by department, the reductions are as
follows: a $9,000 per month reduction in manufacturing, a $18,000 per month
reduction in general and administrative, a $24,000 per month reduction in
research and development and a $24,000 per month reduction in selling and
marketing. The total severance payments recorded in fiscal 2001 and 2002 were
approximately $200,000. There are no restructuring related cash obligations
remaining as of March 31, 2002. Companys realized cost reductions were in line
with managements expectation. The Company believes increased focus on
strategic goals and increased efficiencies will allow the Company to compensate
for the eliminated positions.

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the U.S., 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
(more fully described in note 1 to the consolidated financial statements), the
following are particularly important to the portrayal of the Companys 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 Securities and Exchange
Commissions Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition
provides guidance on the application of generally accepted accounting
principles to selected revenue recognition issues, and the Companys revenue
recognition policies are in compliance with SAB 101. The Company markets and
distributes its products through a network of distributors and through direct
sales to end-users in the United Kingdom and the Netherlands. The Company
recognizes revenue upon shipment of product to its distributors and direct
customers. There are no customer acceptance provisions or Company installation
obligations. The Companys sales terms to its distributors and customers
provide no right of return outside of the Companys standard warranty policy
(see Note 1 to the consolidated financial statements), and payment terms
consistent with industry standards apply. Sales terms and pricing to the
Companys distributors are governed by the respective distribution agreements.
The Companys distribution partners purchase the Companys products to meet
sales demand of their end-user customers as well as to fulfill their internal
requirements associated with the sales process and, if applicable, contractual
purchase requirements under the respective distribution agreements. Internal
and other requirements include purchases of products for training,
demonstration and evaluation purposes, clinical evaluations, product support,
establishing inventories, meeting minimum purchase commitments. As a result,
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. Inventories are stated at the lower of cost or market using the
first-in, first-out method. Reserves for slow moving and obsolete inventories
are provided based upon current and expected future product sales and the
expected impact of product transitions or modifications. While the Company
expects its sales to grow, a reduction in its sales could reduce the demand for
the Companys products, and additional inventory reserves may be required.

Foreign Currency Translation/Transactions. The financial statements of the
Companys foreign subsidiaries were translated in accordance with the
provisions of SFAS No. 52 Foreign Currency Translation. Under this
Statement, all assets and liabilities are translated using period-end exchange
rates and statements of operations items are translated using average exchange
rates for the period. The resulting translation adjustment is recorded within
accumulated other comprehensive loss, a separate component of shareholders
equity. 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.

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Impairment of Long-Lived Assets. Long-lived assets at March 31, 2002 consist of
property, plant and equipment and intangible assets. The Company reviews its
long-lived assets for impairment whenever events or business circumstances
indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows expected to be generated
by the asset. If such assets are considered to be impaired, the impairment to
be recognized is measured by the amount by which the carrying amount of the
assets exceeds the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to sell.

Set forth below is managements discussion and analysis of the financial
condition and results of operations for the year ended March 31, 2002 and 2001.
See note 8 to the Consolidated Financial Statements for business segment
information.

Results of Operations

Net Sales: The Macroplastique product line accounts for 89% and 92% of total
net sales for the years ended March 31, 2002 and 2001, respectively. In fiscal
year ended March 31, 2002, net sales of all products were $4,973,976,
representing a $694,507 or 12% decrease when compared to net sales of
$5,668,483 for fiscal 2001. Management believes the sales decrease was
primarily due to aggressive marketing programs targeted toward the urological
and gynecological surgeons by large, competitive companies.

Management expects unit sales of Macroplastique will increase in fiscal 2003.
This will be a result of a November 2001 product launch with Macroplastique
product enhancements and distributor training. The goal is to improve the
surgical technique, which will lead to an increased number of doctors
performing procedures that will broaden the Macroplastique penetration of the
SUI market. There can be no assurance, however, the Companys efforts to
increase sales and market penetration will be successful.

Gross Profit: Gross profit was $3,517,167 and $4,355,300 for the years ended
March 31, 2002 and 2001, respectively, or 71% and 77% of net sales. Excess
capacity, manufacturing inefficiencies due to the manufacturing of the modified
products, the additional allowance of approximately $35,000 for inventory
obsolescence and the relative higher sales to distributors at lower prices
compared to sales to end-users caused the decrease in the gross profit margin.
The Companys distributors accounted for approximately 63% and 58% of total net
sales in fiscal years 2002 and 2001, respectively.

General and Administrative Expense: General and administrative (G&A) expenses
decreased 17% from $1,389,943 during fiscal 2001 to $1,154,419 during fiscal
2002. The decrease in G&A expenses is primarily attributed to the decrease in
personnel as a result of the Companys restructuring activities in late fiscal
2001 and in August 2001. Legal expenses were $26,000 higher in fiscal 2002, as
a result of the settlement noted below.

Research and Development Expense: Research and development (R&D) expenses
decreased $465,177, or 22%, from $2,150,177 during fiscal 2001 to $1,685,000
during fiscal 2002. The decrease in R&D expense resulted principally from a
decrease in personnel related to the Companys restructuring activities in
fiscal 2001 and fiscal 2002. The human clinical study costs are primarily
comprised of physician and medical fees relating to the patient procedures and
follow-up examinations, in addition to the costs of monitoring the study,
maintaining and evaluating the patient treatment, and follow-up examination
data.

Selling and Marketing Expenses: Selling and marketing (S&M) costs decreased
$1,079,169, or 49% from $2,185,809 during fiscal 2001 to $1,106,640 during
fiscal 2002, as a result of the fiscal 2001 and fiscal 2002 restructuring of
the international sales and marketing departments as well as decreased
salesperson travel costs and decreased costs relating to trade-shows,
conventions and congresses. Furthermore, in the fourth quarter of fiscal 2001,
$294,000 was expensed as a termination fee of a distribution agreement.

Other Income (Expense): Other income (expense) includes interest income,
interest expense, foreign currency exchange gains and losses, settlement
proceeds and other non-operating costs when incurred. Other income (expense)
was $178,978 and $(310,270) for the years ended March 31, 2002 and 2001,
respectively. Interest income was $19,452 and $54,617 for the years ended
March 31, 2002 and 2001, respectively. This decrease is due to the redemption
of marketable securities and decreased cash and cash equivalents balances.
Interest expense decreased from $27,335 for fiscal 2001 to $25,769 for fiscal
2002 as the result of decreased long-term debt and capital lease balances.
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. The Companys foreign currency
exchange loss was $14,373 and $336,958 for the years ended March 31, 2002 and
2001, respectively. At March 31, 2002 and 2001 the Company has $4.0 million and
$4.3 million of dollar denominated debt at its Dutch subsidiaries, of which
$4.0 million and $3.1 million are short-term dollar denominated obligations
that the Company records as currency fluctuations in earnings. The high
currency exchange loss in fiscal 2001 was due to a strengthened U.S. Dollar

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compared to the Euro. At March 31, 2002, compared to same date last year, the
Euro did not further weaken compared to the dollar. The $200,000 settlement
income is the proceeds from the litigation settlement as described in note 5 to
the consolidated financial statements. In the first quarter of fiscal 2003 a
$207,000 payment was received as final settlement payment, which will be
recorded as settlement income in that quarter.

Liquidity and Capital Resources

As of March 31, 2002, the Companys cash and cash equivalent balances totaled
$1,046,121. The capital resources existing at March 31, 2002 were derived from
operations during the fiscal years ended March 31, 1997 and 1998, plus the net
proceeds from the Companys sale of approximately 1.7 million shares of Common
Stock in June 1998.

At March 31, 2002, the Company had working capital of approximately $2.1
million. During fiscal year 2002, the Company provided approximately $113,000
of cash by operating activities. This improvement in cash flow was primarily
attributable to $200,000 of proceeds from the lawsuit settlement, which reduced
the Companys net loss, a $120,334 reduction in inventory balances and a
decrease of the accounts receivable by $138,019. An accrued expense totaling
$227,000 as per March 31, 2001 for the termination of a French distributor was
paid in fiscal 2002. Other current assets, accounts payable, accrued expenses
fluctuated due to the timing of payments.

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 March 31, 2002 of $845,431 and $632,102,
respectively. As of March 31, 2002, the allowance for inventory obsolescence is
$57,000.

The Company has U.S. and international operations. U.S. net operating loss
carryforwards cannot be used to offset taxable income in foreign jurisdictions.
Furthermore, repatriation of dividends to the U.S. parent may result in
additional foreign or U.S. taxes.

The Companys financial condition and results of operations could be
significantly 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.
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.

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 PMA submission and review process, and pre-commercialization and
market launch costs in the U.S. relating to Macroplastique for the treatment of
female SUI.

As a result of the Companys cost reduction activities and the Companys
ability to manage the timing of the FDA clinical expenditures, management
believes current resources, the funds generated from sale of the Companys
products outside the U.S., and the expected proceeds from the rights offering
(more fully described in note 1 to the consolidated financial statements), will
be adequate to meet the Companys cash flow needs through fiscal 2003 and
fiscal 2004, including research and development activities associated with
existing products and markets. Without the successful completion of the rights
offering, the Company believes the completion of the FDA clinical study could
be delayed.

Repayments on the Companys contractual obligations, consisting of notes
payable, capital leases and operating leases, are summarized below:

|                              |  |                        |           |      |  |             |         |           |  |       |         |  |  |  |         |         |  |  |         | 
|----------------------------- |  | ---------------------- | --------- | ---- |  | ----------- | ------- | --------- |  | ----- | ------- |  |  |  | ------- | ------- |  |  | ------- | 
|                              |  | Payments due by period
|                              |  |                        |           |      |  | Less than 1 |         |           |  |       |         |  |  |  |         | After 5
|                              |  | Total                  |           | year |  | 1-3 years   |         | 4-5 years |  | years
|                              |  |                        |           |      |  |             |         |           |  |      
|Notes payable                 |  | $                      | 429,140   |      |  |             | 29,918  |           |  |       | 89,754  |  |  |  | 59,836  |         |  |  | 249,632 | 
|Capital lease obligations     |  |                        | 12,393    |      |  |             | 12,393  |           |  |       |        |  |  |  |        |         |  |  |        | 
|Operating lease commitments   |  |                        | 629,539   |      |  |             | 261,150 |           |  |       | 315,081 |  |  |  | 53,308  |         |  |  |        | 
|                              |  |                        |           |      |  |             |         |           |  |       |         |  |  |  |         |         |  |  |         | 
|Total contractual obligations |  | $                      | 1,071,072 |      |  |             | 303,461 |           |  |       | 404,835 |  |  |  | 113,144 |         |  |  | 249,632 | 
|                              |  |                        |           |      |  |             |         |           |  |       |         |  |  |  |         |         |  |  |         | 

The Company is obligated to pay royalties of 5% of net sales in the U.S. of
Macroplastique products with a minimum of $50,000 per year. The duration of
this royalty agreement is through May 1, 2006. Under another royalty agreement
the

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Company pays royalties, in the aggregate, of three to five percent of net sales
of Macroplastique and Bioplastique, subject to a monthly minimum of $4,500. The
royalties payable under this Agreement will continue until the patent
referenced in the Agreement expires in 2010. Under a licence agreement for the
Macroplastique Implantation System the Company pays a royalty of 10 British
pounds for each unit sold during the life of the patent. Royalties are more
fully described under Patents, Trademarks, and Licenses.

New Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board issued Statement No.
144, Accounting for the Impairment or disposal of Long-Lived Assets. Statement
No. 144 addresses the financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes Statement No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of. However, this statement retains the fundamental provisions of Statement No.
121 for (a) recognition and measurement of the impairment of long-lived assets
to be held and used and (b) measurement of long-lived assets to be disposed of
by sale. Statement No. 144 also supersedes the accounting and reporting
provisions of APB Opinion No. 30, Reporting the Results of Operations-Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions, for the disposal of a
segment of a business. However, this Statement retains the requirement of APB
No. 30 to report discontinued operations separately from continuing operations
and extends that reporting to a component of an entity that either has been
disposed of or is classified as held for sale. This statement also amends ARB
No. 51, Consolidated Financial Statements, to eliminate the exception to
consolidation for a temporarily controlled subsidiary. The Company will adopt
the provision of Statement No. 144 effective April 1, 2002. The Company has
evaluated Statement No. 144 and determined that the pronouncement will have no
material impact on the Companys consolidated financial statements.




ITEM 7. FINANCIAL STATEMENTS

The information contained under the headings Consolidated Statements of
Operations, Consolidated Balance Sheets, Consolidated Statements of
Shareholders Equity and Comprehensive Loss, Consolidated Statements of Cash
Flows, Notes to Consolidated Financial Statements and Independent Auditors
Report is incorporated herein by reference.




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

None.



---

PART III

---




ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

The Companys Directors and Executive Officers as of March 31, 2002 were as
follows:

|                   |  |     |    |          |  |                                                                    |  |          |      |      |  |  |      | 
|------------------ |  | --- | -- | -------- |  | ------------------------------------------------------------------ |  | -------- | ---- | ---- |  |  | ---- | 
|                   |  |     |    |          |  |                                                                    |  | Director |      | Term
|Name               |  | Age |    | Position |  | Since                                                              |  | expires 
|Daniel G. Holman   |  |     | 56 |          |  | Chairman, President, CEO, CFO                                      |  |          | 1994 |      |  |  | 2003 | 
|Joel R. Pitlor     |  |     | 63 |          |  | Director                                                           |  |          | 1994 |      |  |  | 2004 | 
|R. Patrick Maxwell |  |     | 57 |          |  | Director                                                           |  |          | 1994 |      |  |  | 2002 | 
|Thomas E. Jamison  |  |     | 42 |          |  | Director                                                           |  |          | 2000 |      |  |  | 2004 | 
|Christopher Harris |  |     | 43 |          |  | Vice President International Sales
Managing Director UK subsidiary |  |          |      |      |  |  |      | 

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|                     |  |     |    |          |  |                                                           |  |          |  |      |  |  |  | 
|-------------------- |  | --- | -- | -------- |  | --------------------------------------------------------- |  | -------- |  | ---- |  |  |  | 
|                     |  |     |    |          |  |                                                           |  | Director |  | Term
|Name                 |  | Age |    | Position |  | Since                                                     |  | expires 
|Larry Heinemann      |  |     | 49 |          |  | Vice President Marketing &
Corporate Development          |  |          |  |      |  |  |  | 
|Susan Hartjes Holman |  |     | 48 |          |  | Vice President Operations &
Regulatory Affairs, Secretary |  |          |  |      |  |  |  | 
|Arie J. Koole        |  |     | 38 |          |  | Controller
Managing Director Dutch subsidiaries           |  |          |  |      |  |  |  | 

All directors are members of the Nominating Committee; all directors except Mr.
Holman are members of the Compensation Committee and the Audit Committee.

The Company has entered into Employment Agreements, which are terminable at
will by either party upon thirty day written notice, with Mr. Holman, Ms.
Holman, Mr. Heinemann, and Mr. Harris, the terms of which, among other things,
specify a base salary subject to annual adjustment by mutual agreement of the
Company and the Employee, and a severance payment to the employee upon
employment termination without cause. The initial salaries, which can be
increased annually in the discretion of the Board, were $180,200, $121,000,
$78,000 and $74,000, respectively. Any severance amounts payable under the
Agreement shall be limited to the Employees base salary for not less than four
months and not longer than twelve months after employment termination,
depending on the Employees years of service. Contemporaneously with the
execution of the Employment Agreement, each of the officers executed an
Employee Confidentiality, Inventions, Non-Solicitation, and Non-Compete
Agreement, certain terms of which specify the Employee shall not disclose
confidential information, shall assign to the Company without charge all
intellectual property relating to the Companys business which is created or
conceived during the term of employment, shall not encourage Employees to leave
the employment of the Company for any reason and shall not compete with the
Company during the term of employment and for a period of eighteen months
thereafter. Also in connection with the execution of these Agreements, the
officers were granted varying amounts of stock options to purchase the
Companys Common Stock at the fair market value at date of grant of $7.50 per
share. In all cases, the options are exercisable for five years or until one
year after employment termination (subject to certain termination provisions),
whichever date is earlier, and vest in three equal amounts on each one year
anniversary date subsequent to the option grant date.

The following paragraphs describe the business experience of each of the
Companys directors and officers.

Daniel G. Holman: Mr. Holman has served as Chairman of the Board, President
and Chief Executive Officer of Uroplasty, Inc. since February 1994, as Chief
Financial Officer from June 1996 to November 1999 and as Chief Financial
Officer as of February 2001. He was Executive Vice President of Bioplasty,
Inc. from 1973 to 1985, its President from 1985 to 1987, and Secretary from
1986 to March 1992. Mr. Holman has been Chairman of the Board of Bioplasty,
Inc. from March 1992, and President and CEO from February 22, 1993 to December
31, 2001. He served as Chairman of the Board and Chief Executive Officer of
Bio-Vascular, Inc. from June 1988 to September 1991, served as a director of
Genetic Laboratories Wound Care, Inc. from February 1988 until July 1993, and
as Vice President from February 1988 through November 1992. Mr. Holman holds a
Bachelor of Arts degree in Biology from St. Cloud State University.

Joel R. Pitlor: Mr. Pitlor has been a director since February 1994. He served
as a director of Bioplasty from January 1989 until May 1996. For over sixteen
years, he has been the owner and manager of a management consulting firm. Mr.
Pitlor is presently a Director of Precision Optics Corporation, which is
publicly held. Mr. Pitlor holds a Bachelor of Science degree from MIT and
serves as Personal Advisor to several CEOs.

R. Patrick Maxwell: Mr. Maxwell was appointed a Director of Uroplasty in April
1994 and elected by the shareholders in August 1997. Mr. Maxwell has over 30
years of experience as a turn around management specialist, an entrepreneur and
executive in both the business and non-profit sectors. Mr. Maxwell is
Cofounder and a Director of Telnet Services Limited of Auckland, New Zealand
since September 1995, Cofounder and Chief Financial Officer of Tele Resources,
Inc. since October 1996 and Chief Financial Officer of American Specialty
Confections since April 2000. Mr. Maxwell has served on numerous Boards of
Directors of both business and charitable organizations. He has a B.A. in
philosophy from St. Johns University and a Juris Doctor from Northwestern
University School of Law.

Thomas E. Jamison: Mr. Jamison was elected a Director of Uroplasty in August
2000. Mr. Jamison is an attorney with the business litigation law firm of
Fruth, Jamison & Elsass, P.A. in Minneapolis. From 1996 to 1999, Mr. Jamison
served as an investment banker in the Corporate Finance Department of R.J.
Steichen & Co. From 1991 to 1996, Mr. Jamison practiced law at Fruth & Anthony,
P.A. in Minneapolis. Mr. Jamison graduated magna cum laude from William
Mitchell College of Law in 1991.

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Christopher Harris: Mr. Harris joined Bioplasty in October 1989 as Area Sales
Manager in the United Kingdom. Since September 1994, he has been the Managing
Director of the Companys subsidiary, Uroplasty LTD., in the United Kingdom.
In February 1996, Mr. Harris was appointed as Director of Corporate Development
and in January 1997 he was appointed Vice President of Corporate Development.
In August 2001 he was appointed Vice President International Sales. Mr. Harris,
a certified nurse in the United Kingdom, practiced general surgery nursing for
two years and operating room nursing for nine years prior to 1989.

Larry Heinemann: Mr. Heinemann joined Uroplasty in September 1998 as Director
of Sales for North and South America. In July 1999 he was promoted to Vice
President of Sales and Marketing for Uroplasty, Inc. In August 2001 he was
appointed as Vice President Marketing & Corporate Development. Prior to joining
Uroplasty, Inc., Mr. Heinemann worked for two divisions of C. R. Bard, Inc.
From January 1996 to September 1998, he was employed by the Bard Medical
Division in the positions of Territory Manager and Sales Training. From May
1987 to January 1996, Mr. Heinemann was employed by the Bard Urological
Division in various positions of Sales Consulting and Training Management.
Prior to that time, Mr. Heinemann was employed by surgical device divisions of
Squibb and Sterling Drug in various sales management positions. Mr. Heinemann
holds a Bachelor of Science Degree from the School of Business of Eastern
Illinois University and majored in Marketing and Personnel Management. He is a
member of SUNA (Society of Urological Nursing Association), and has been
serving on the Board as an Industry Liaison for the Upper Midwest Chapter since
1991.

Susan Hartjes Holman: Ms. Holman joined Bioplasty, Inc. in September 1991 as
Director of Operations and served as Vice President of Operations and
Regulatory Affairs from April 1993 until May 1996. In November 1994, she was
appointed Vice-President of Operations and Regulatory Affairs for Uroplasty,
Inc. and was elected Secretary in September 1996. Prior to 1991, Ms. Holman
was Director of Operations at Bio-Vascular, Inc. in St. Paul, Minnesota from
November 1989 to September 1991. Prior to that time, she served at various
other pharmaceutical and medical device companies in management-oriented
positions in manufacturing, quality assurance, and research. Ms. Holman has
Bachelor of Arts degrees in Biology-Microbiology and Biomedical Science from
St. Cloud State University, and has done graduate work in the biological
sciences. Ms. Holman is a senior member and a Certified Quality Auditor of the
American Society for Quality, served several years on its Executive Committee
and subcommittees, and is a member of the American Society of Microbiology, and
the Henrici Society for Microbiologists. She has served on several national
and international standards committees.

Arie J. Koole: Mr. Koole joined Bioplasty in May 1993 as Financial Manager in
The Netherlands. Since January 2000 he has been the Managing Director of the
Companys subsidiaries in The Netherlands. In June 1996, Mr. Koole was
appointed as Director of Finance and in January 2000, Mr. Koole was appointed
as Controller. From 1987 to 1993, Mr. Koole was a financial auditor with the
international accounting firm Deloitte & Touche in The Netherlands. Mr. Koole
has a bachelor degree in Business Economics.

Mr. Holman and Ms. Holman became husband and wife in June 1999.




ITEM 10. EXECUTIVE COMPENSATION

The information contained under the heading Executive Compensation in the
Proxy Statement is incorporated herein by reference.




ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information contained under the heading Principal Shareholders in the
Proxy Statement is incorporated herein by reference.




ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information contained under the heading Certain Transactions in the Proxy
Statement is incorporated herein by reference.

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ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K



| | (a) |  | Exhibits incorporated by reference (Rule 12b-23). The following
Exhibits are incorporated by reference to the Companys Registration
Statement on Form 10SB filed July 10, 1996 or the Companys Annual
Report on Form 10-KSB for the fiscal year ended March 31, 2000.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|       |  |                                                                                                                                                                                                                                            
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |  | Description                                                                                                                                                                                                                                
|2.1    |  | First Amended Joint Plan of Reorganization (Modified) of the
Company dated January 31, 1994 (Filed as Exhibit 8.1 to Form 10SB)                                                                                                            
|3.1    |  | Articles of Incorporation of Uroplasty, Inc. (Filed as Exhibit 2.1
to Form 10SB)                                                                                                                                                           
|3.2    |  | Bylaws of Uroplasty, Inc. (Filed as Exhibit 2.2 to Form 10SB)                                                                                                                                                                              
|4.1    |  | Form of Stock Certificate of the Company representing shares of the
Companys Common Stock (Filed as Exhibit 3.1 to Form 10SB)                                                                                                             
|10.1   |  | Settlement Agreement and Release dated November 30, 1993 by and
between Bioplasty, Inc., Bio-Manufacturing, Inc., Uroplasty, Inc.,
Arthur A. Beisang, Arthur A. Beisang III, MD and Robert A. Ersek,
MD (Filed as Exhibit 6.1 to Form 10SB)
|10.2   |  | Purchase and Sale Agreement dated December 1, 1995 by and among
Bio-Vascular, Inc., Bioplasty, Inc., and Uroplasty, Inc. (Filed as
Exhibit 6.2 to Form 10SB)                                                                               
|10.3   |  | License Agreement dated December 1, 1995 by and between
Bio-Vascular, Inc. and Uroplasty, Inc. (Filed as Exhibit 6.3 to
Form 10SB)                                                                                                         
|10.4   |  | Lease Agreement dated January 10, 1995 between Summer Business
Center Partnership and Uroplasty, Inc. (Filed as Exhibit 6.4 to
Form 10SB)                                                                                                  
|10.5   |  | Unsecured $640,000 Promissory Note dated March 30, 1994 by and
between Bioplasty, Inc., Uroplasty, Inc. and Bioplasty Product
Claimants Trust (Filed as Exhibit 6.5 to Form 10SB)                                                         
|10.6   |  | Agreement and Satisfaction dated January 30, 1995 by and between
Bioplasty Product Claimants Trust and Bioplasty, Inc. (Filed as
Exhibit 6.6 to Form 10SB)                                                                                
|10.7   |  | Asset Sale and Satisfaction of Debt Agreement dated June 23, 1995
by and between Bioplasty, Inc. and Uroplasty, Inc. (Filed as
Exhibit 6.7 to Form 10SB)                                                                                   
|10.8   |  | Executory Contract Assumption Stipulation dated December 28, 1993
by and between Bioplasty, Inc., Uroplasty, Inc., and Collagen
Corporation (Filed as Exhibit 6.8 to Form 10SB)                                                            
|10.9   |  | Settlement and License Agreement dated July 23, 1992 by and between
Collagen Corporation, Bioplasty, Inc., and Uroplasty, Inc. (Filed
as Exhibit 6.9 to Form 10SB)                                                                         
|10.10  |  | Employment Agreement between Uroplasty, Inc. and Daniel G. Holman
dated December 7, 1999. (Filed as Exhibit 10.10 to Form
10-KSB/03-31-2000.)                                                                                              
|10.11  |  | Employment Agreement between Uroplasty, Inc. and Christopher Harris
dated December 7, 1999. (Filed as Exhibit 10.11 to Form
10-KSB/03-31-2000.)                                                                                            
|10.12  |  | Employment Agreement between Uroplasty, Inc. and Susan Holman dated
December 7, 1999. (Filed as Exhibit 10.13 to Form
10-KSB/03-31-2000.)                                                                                                  
|10.13  |  | Employment Agreement between Uroplasty, Inc. and Larry Heinemann
dated December 7, 1999. (Filed as Exhibit 10.14 to Form
10-KSB/03-31-2000.)                                                                                               
|10.14  |  | Agreement, dated October 14, 1998, by and between Uroplasty, Inc.
and Samir M. Henalla (pertaining to Macroplastique Implantation
System). (Filed as Exhibit 10.15 to Form 10-KSB/A /03-31-2001)                                           



| | (b) |  | The following exhibits are filed as part of this report:
| | --- |  | --------------------------------------------------------

|       |  |                              
|------ |  | -----------------------------
|Number |  | Description                  
|13.0   |  | Financial Statements         
|21.0   |  | Subsidiaries of the Company  
|23     |  | Independent Auditors Consent

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##### Table of Contents






SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Company caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|                     |  |                                                                                                                                                                                            
|-------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Dated: June 11, 2002 |  | UROPLASTY, INC.
By: /s/ DANIEL G. HOLMAN
Daniel G. Holman
President, Chief Executive Officer,
Chief Financial Officer (Principal Financial Officer),
Director (Principal Executive Officer)

In accordance with the Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the Company and in the capacities and on
the dates indicated.

|                                          |  |                                                                                                                  |  |              
|----------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------- |  | -------------
|Name                                      |  | Title / Capacity                                                                                                 |  | Date         
|                                         
|/s/ DANIEL G. HOLMAN
Daniel G. Holman     |  | President, Chief Executive Officer
Chief Financial Officer,
Director (Principal Executive and
Financial Officer) |  | June 11, 2002
|                                         
|/s/ ARIE J. KOOLE
Arie J. Koole           |  | Controller
(Principal Accounting Officer)                                                                        |  | June 11, 2002
|                                         
|/s/ JOEL R. PITLOR
Joel R. Pitlor         |  | Director                                                                                                         |  | June 11, 2002
|                                         
|/s/ R. PATRICK MAXWELL
R. Patrick Maxwell |  | Director                                                                                                         |  | June 11, 2002
|                                         
|/s/ THOMAS E. JAMISON
Thomas E. Jamison   |  | Director                                                                                                         |  | June 11, 2002

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