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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)

|      |  |                                                                                          
|----- |  | -----------------------------------------------------------------------------------------
|[X]   |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934: 
|      |  |                                                                                          
|      |  | For the quarterly period ended March 31, 2002                                            
|      |  |                                                                                          
|      |  | OR                                                                                       
|      |  |                                                                                          
|[   ] |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934:
|      |  |                                                                                          
|      |  | For the transition period from           to                                              
|      |  |                                                                                          
|      |  | Commission file number: 0-12128                                                          

Matritech, Inc.
(Exact Name of Registrant as Specified in Its Charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 04-2985132                          
|                                                               |  |                                     
|(State or
Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer
Identification No.)

330 Nevada Street, Newton, Massachusetts 02460
(Address of Principal Executive Offices) (Zip Code)

(617) 928-0820
(Registrants Telephone Number, Including Area Code)

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

Yes [X]   No   [   ]

As of May 1, 2002, there were 30,670,043 shares of the Registrants Common
Stock outstanding.

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|                                                      |                                                                                               |  |  |  |  |  |  | 
|----------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                        
|                                                      | Item 1. Financial Statements                                                                 
|CONSOLIDATED BALANCE SHEETS                          
|CONSOLIDATED STATEMENTS OF OPERATIONS                
|CONSOLIDATED STATEMENTS OF CASH FLOWS                
|NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS
|                                                      | Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
|                                                      | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                                                      | PART II. OTHER INFORMATION                                                                   
|                                                      | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                           



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MATRITECH, INC.

INDEX

|                                      |                                                                                                               |  |                                                                                                     |    |  |   |      | 
|------------------------------------- | ------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------- | -- |  | - | ---- | 
|                                      |                                                                                                               |  |                                                                                                     |    |  |   | Page
|                                      |                                                                                                               |  |                                                                                                     |    |  |  
|PART I          FINANCIAL INFORMATION |                                                                                                               |  |                                                                                                     |   
|                                     
|                                      | Item 1.    Financial Statements                                                                               |  |                                                                                                     |    | 
|                                     
|                                      |                                                                                                               |  | Consolidated Balance Sheets as of December 31, 2001
and March 31, 2002 (unaudited)                  |    |  | 3 |     
|                                     
|                                      |                                                                                                               |  | Unaudited, Consolidated Statements of Operations for
the three months ended March 31, 2001 and 2002 |    |  | 4 |     
|                                     
|                                      |                                                                                                               |  | Unaudited, Consolidated Statements of Cash Flows for
the three months ended March 31, 2001 and 2002 |    |  | 5 |     
|                                     
|                                      |                                                                                                               |  | Notes to Unaudited, Consolidated Financial Statements                                               |    |  | 6 |     
|                                     
|                                      | Item 2.    Managements Discussion and Analysis of
Financial Condition and
             Results of Operations |  |                                                                                                     | 7  | 
|                                     
|                                      | Item 3.    Quantitative and Qualitative Disclosures About
Market Risk                                         |  |                                                                                                     | 11 | 
|                                     
|PART II        OTHER INFORMATION      |                                                                                                               |  |                                                                                                     |   
|                                     
|                                      | Item 6.    Exhibits and Reports on Form 8-K                                                                   |  |                                                                                                     | 12 | 
|                                     
|                                      | SIGNATURES                                                                                                    |  |                                                                                                     | 13 | 

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PART I. FINANCIAL INFORMATION




Item 1. Financial Statements




MATRITECH, INC.
CONSOLIDATED BALANCE SHEETS

|                                       |                                                                                |                            |           |             |           |              |           |             |           |             |  | 
|-------------------------------------- | ------------------------------------------------------------------------------ | -------------------------- | --------- | ----------- | --------- | ------------ | --------- | ----------- | --------- | ----------- |  | 
|                                       |                                                                                |                            |           |             |           | December 31, |           | March 31,  
|                                       |                                                                                |                            |           |             |           | 2001         |           | 2002       
|                                       |                                                                                |                            |           |             |           |              |           |            
|                                       |                                                                                |                            |           |             |           |              |           |             |           | (unaudited)
|                                       | ASSETS                                                                         |                            |           |             |           |              |           |            
|CURRENT ASSETS:                        |                                                                                |                            |           |             |           |              |           |            
|                                       | Cash and cash equivalents                                                      |                            | $         | 4,819,733   |           |              | $         | 6,777,238   |          
|                                       | Accounts receivable, net                                                       |                            |           | 291,902     |           |              |           | 597,621     |          
|                                       | Inventories                                                                    |                            |           | 337,087     |           |              |           | 369,669     |          
|                                       | Interest receivable and prepaid expenses                                       |                            |           | 176,748     |           |              |           | 147,075     |          
|                                       |                                                                                |                            |           |             |           |              |           |            
|                                       |                                                                                | Total current assets       |           |             | 5,625,470 |              |           |             | 7,891,603 |            
|                                       |                                                                                |                            |           |             |           |              |           |            
|Property and equipment, at cost:       |                                                                                |                            |           |             |           |              |           |            
|                                       | Laboratory equipment                                                           |                            |           | 1,898,125   |           |              |           | 1,909,430   |          
|                                       | Office equipment                                                               |                            |           | 273,148     |           |              |           | 283,637     |          
|                                       | Laboratory furniture                                                           |                            |           | 62,739      |           |              |           | 62,739      |          
|                                       | Leasehold improvements                                                         |                            |           | 88,865      |           |              |           | 88,865      |          
|                                       | Automobiles                                                                    |                            |           | 33,205      |           |              |           | 32,461      |          
|                                       |                                                                                |                            |           |             |           |              |           |            
|                                       |                                                                                |                            | 2,356,082 |             |           |              | 2,377,132 |            
|                                       | LessAccumulated depreciation and amortization                                 |                            |           | 1,636,365   |           |              |           | 1,675,128   |          
|                                       |                                                                                |                            |           |             |           |              |           |            
|                                       |                                                                                |                            | 719,717   |             |           |              | 702,004   |            
|                                       |                                                                                |                            |           |             |           |              |           |            
|Goodwill, net                          |                                                                                |                            | 132,615   |             |           |              | 132,615   |            
|Other assets, net                      |                                                                                |                            | 134,458   |             |           |              | 131,324   |            
|                                       |                                                                                |                            |           |             |           |              |           |            
|                                       |                                                                                | $                          | 6,612,260 |             |           | $            | 8,857,546 |            
|                                       |                                                                                |                            |           |             |           |              |           |            
|                                       | LIABILITIES AND STOCKHOLDERS EQUITY                                           |                            |           |             |           |              |           |            
|CURRENT LIABILITIES:                   |                                                                                |                            |           |             |           |              |           |            
|                                       | Current maturities of notes payable                                            |                            | $         | 46,366      |           |              | $         | 45,303      |          
|                                       | Accounts payable                                                               |                            |           | 491,993     |           |              |           | 565,664     |          
|                                       | Accrued expenses                                                               |                            |           | 720,201     |           |              |           | 596,901     |          
|                                       | Deferred revenue                                                               |                            |           | 29,538      |           |              |           | 254,154     |          
|                                       |                                                                                |                            |           |             |           |              |           |            
|                                       |                                                                                | Total current liabilities  |           |             | 1,288,098 |              |           |             | 1,462,022 |            
|                                       |                                                                                |                            |           |             |           |              |           |            
|Notes payable, less current maturities |                                                                                |                            | 102,300   |             |           |              | 88,808    |            
|                                       |                                                                                |                            |           |             |           |              |           |            
|Commitments (See Notes)                |                                                                                |                            |           |             |           |              |           |            
|STOCKHOLDERS EQUITY:                  |                                                                                |                            |           |             |           |              |           |            
|                                       | Preferred stock, $1.00 par value                                               |                            |           |             |           |              |           |             |          
|                                       | Authorized4,000,000 shares                                                    |                            |           |             |           |              |           |             |          
|                                       | Issued and outstandingno shares                                               |                            |           |            |           |              |           |            |          
|                                       | Common stock, $0.01 par value                                                  |                            |           |             |           |              |           |             |          
|                                       | Authorized40,000,000 shares                                                   |                            |           |             |           |              |           |             |          
|                                       | Issued and outstanding28,332,073 shares in 2001 and 30,670,043
shares in 2002 |                            |           | 283,321     |           |              |           | 306,700     |          
|                                       | Additional paid-in capital                                                     |                            |           | 67,882,572  |           |              |           | 72,021,661  |          
|                                       | Deferred compensation                                                          |                            |           | (107,146    | )         |              |           | (89,287     | )        
|                                       | Cumulative translation adjustment                                              |                            |           | 5,428       |           |              |           | (4,050      | )        
|                                       | Accumulated deficit                                                            |                            |           | (62,842,313 | )         |              |           | (64,928,308 | )        
|                                       |                                                                                |                            |           |             |           |              |           |            
|                                       |                                                                                | Total stockholders equity |           |             | 5,221,862 |              |           |             | 7,306,716 |            
|                                       |                                                                                |                            |           |             |           |              |           |            
|                                       |                                                                                | $                          | 6,612,260 |             |           | $            | 8,857,546 |            
|                                       |                                                                                |                            |           |             |           |              |           |            

See accompanying notes to unaudited, consolidated financial statements.

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MATRITECH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                                                       |                                     |                          |            |                    |            |      |            |           |            |  
|---------------------------------------------------------------------- | ----------------------------------- | ------------------------ | ---------- | ------------------ | ---------- | ---- | ---------- | --------- | ---------- | -
|                                                                       |                                     |                          |            | Three Months Ended
|                                                                       |                                     |                          |            | March 31,         
|                                                                       |                                     |                          |            |                   
|                                                                       |                                     |                          |            | 2001               |            | 2002
|                                                                       |                                     |                          |            |                    |            |     
|Revenue:                                                               |                                     |                          |            |                    |            |      |            |          
|                                                                       | Product sales and other             |                          | $          | 596,947            |            |      | $          | 799,396   |           
|                                                                       |                                     |                          |            |                    |            |      |            |          
|Expenses:                                                              |                                     |                          |            |                    |            |      |            |          
|                                                                       | Cost of product sales               |                          |            | 441,806            |            |      |            | 483,900   |           
|                                                                       | Research, development and clinical  |                          |            | 642,656            |            |      |            | 1,003,076 |           
|                                                                       | Selling, general and administrative |                          |            | 1,767,853          |            |      |            | 1,415,989 |           
|                                                                       |                                     |                          |            |                    |            |      |            |          
|                                                                       |                                     | Total operating expenses |            |                    | 2,852,315  |      |            |           | 2,902,965  |  
|                                                                       |                                     |                          |            |                    |            |      |            |          
|                                                                       |                                     | Loss from operations     |            |                    | (2,255,368 | )    |            |           | (2,103,569 | )
|                                                                       |                                     |                          |            |                    |            |      |            |          
|                                                                       | Interest income                     |                          |            | 65,672             |            |      |            | 20,205    |           
|                                                                       | Interest expense                    |                          |            | 4,327              |            |      |            | 2,631     |           
|                                                                       |                                     |                          |            |                    |            |      |            |          
|                                                                       |                                     | Net loss                 |            | $                  | (2,194,023 | )    |            | $         | (2,085,995 | )
|                                                                       |                                     |                          |            |                    |            |      |            |          
|Basic and diluted net loss per
common share                            |                                     | $                        | (0.09      | )                  |            | $    | (0.07      | )        
|                                                                       |                                     |                          |            |                    |            |      |            |          
|Basic and diluted weighted average
number of common shares outstanding |                                     |                          | 25,697,565 |                    |            |      | 29,437,149 |          
|                                                                       |                                     |                          |            |                    |            |      |            |          

See accompanying notes to unaudited, consolidated financial statements.

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MATRITECH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                 |                                                                             |                                                                    |                                          |                                           |         |                    |            |            |        |          |            |  
|------------------------------------------------ | --------------------------------------------------------------------------- | ------------------------------------------------------------------ | ---------------------------------------- | ----------------------------------------- | ------- | ------------------ | ---------- | ---------- | ------ | -------- | ---------- | -
|                                                 |                                                                             |                                                                    |                                          |                                           |         | Three Months Ended
|                                                 |                                                                             |                                                                    |                                          |                                           |         | March 31,         
|                                                 |                                                                             |                                                                    |                                          |                                           |         |                   
|                                                 |                                                                             |                                                                    |                                          |                                           |         | 2001               |            | 2002      
|                                                 |                                                                             |                                                                    |                                          |                                           |         |                    |            |           
|Cash Flows from Operating Activities:            |                                                                             |                                                                    |                                          |                                           |         |                    |            |           
|                                                 | Net loss                                                                    |                                                                    | $                                        | (2,194,023                                | )       |                    | $          | (2,085,995 | )     
|                                                 | Adjustments to reconcile net loss to net cash used in operating
activities: |                                                                    |                                          |                                           |         |                    |            |            |       
|                                                 |                                                                             | Depreciation and amortization                                      |                                          |                                           | 44,524  |                    |            |            | 38,763 |         
|                                                 |                                                                             | Amortization of deferred compensation                              |                                          |                                           | 17,859  |                    |            |            | 17,859 |         
|                                                 |                                                                             | Expense related to issuance of common stock warrants to consultant |                                          |                                           | 510,342 |                    |            |            |       |         
|                                                 |                                                                             | Changes in assets and liabilities:                                 |                                          |                                           |         |                    |            |            |        |         
|                                                 |                                                                             |                                                                    | Accounts receivable                      |                                           |         | (142,182           | )          |            |        | (305,719 | )         
|                                                 |                                                                             |                                                                    | Inventories                              |                                           |         | 1,112              |            |            |        | (32,582  | )         
|                                                 |                                                                             |                                                                    | Interest receivable and prepaid expenses |                                           |         | 26,631             |            |            |        | 29,673   |           
|                                                 |                                                                             |                                                                    | Accounts payable                         |                                           |         | 76,447             |            |            |        | 73,671   |           
|                                                 |                                                                             |                                                                    | Accrued expenses                         |                                           |         | 39,455             |            |            |        | (123,300 | )         
|                                                 |                                                                             |                                                                    | Deferred revenue                         |                                           |         | (698               | )          |            |        | 224,616  |           
|                                                 |                                                                             |                                                                    |                                          |                                           |         |                    |            |           
|                                                 |                                                                             |                                                                    |                                          | Net cash used in operating activities     |         |                    | (1,620,533 | )          |        |          | (2,163,014 | )
|                                                 |                                                                             |                                                                    |                                          |                                           |         |                    |            |           
|Cash Flows from Investing Activities:            |                                                                             |                                                                    |                                          |                                           |         |                    |            |           
|                                                 | Purchases of property and equipment                                         |                                                                    |                                          | (41,719                                   | )       |                    |            | (21,051    | )     
|                                                 | Decrease in other assets                                                    |                                                                    |                                          | 18,153                                    |         |                    |            | 3,134      |       
|                                                 |                                                                             |                                                                    |                                          |                                           |         |                    |            |           
|                                                 |                                                                             |                                                                    |                                          | Net cash used in investing activities     |         |                    | (23,566    | )          |        |          | (17,917    | )
|                                                 |                                                                             |                                                                    |                                          |                                           |         |                    |            |           
|Cash Flows from Financing Activities:            |                                                                             |                                                                    |                                          |                                           |         |                    |            |           
|                                                 | Payments on notes payable                                                   |                                                                    |                                          | (47,152                                   | )       |                    |            | (14,555    | )     
|                                                 | Proceeds from sale of common stock and warrants                             |                                                                    |                                          | 1,050,000                                 |         |                    |            | 4,139,910  |       
|                                                 | Proceeds from exercise of common stock warrants                             |                                                                    |                                          | 125,000                                   |         |                    |            |           |       
|                                                 | Proceeds from exercise of common stock options                              |                                                                    |                                          | 9,605                                     |         |                    |            | 9,254      |       
|                                                 | Proceeds from issuance of common stock under
employee stock purchase plan   |                                                                    |                                          | 21,402                                    |         |                    |            | 13,305     |       
|                                                 |                                                                             |                                                                    |                                          |                                           |         |                    |            |           
|                                                 |                                                                             |                                                                    |                                          | Net cash provided by financing activities |         |                    | 1,158,855  |            |        |          | 4,147,914  |  
|                                                 |                                                                             |                                                                    |                                          |                                           |         |                    |            |           
|                                                 | Effect of foreign exchange on cash and cash equivalents                     |                                                                    |                                          | 1,323                                     |         |                    |            | (9,478     | )     
|                                                 |                                                                             |                                                                    |                                          |                                           |         |                    |            |           
|(Decrease) increase in cash and cash equivalents |                                                                             |                                                                    | (483,921                                 | )                                         |         |                    | 1,957,505  |           
|Cash and cash equivalents, beginning of period   |                                                                             |                                                                    | 4,661,005                                |                                           |         |                    | 4,819,733  |           
|                                                 |                                                                             |                                                                    |                                          |                                           |         |                    |            |           
|Cash and cash equivalents, end of period         |                                                                             | $                                                                  | 4,177,084                                |                                           |         | $                  | 6,777,238  |           
|                                                 |                                                                             |                                                                    |                                          |                                           |         |                    |            |           
|Supplemental Cash Flow Information:              |                                                                             |                                                                    |                                          |                                           |         |                    |            |           
|Cash paid during the period for interest         |                                                                             | $                                                                  | 4,327                                    |                                           |         | $                  | 2,631      |           
|                                                 |                                                                             |                                                                    |                                          |                                           |         |                    |            |           

See accompanying notes to unaudited, consolidated financial statements.

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MATRITECH, INC.
NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS

1. Operations and Basis of Presentation

Matritech, Inc. (the Company) was incorporated on October 29, 1987 to
develop, produce and distribute products for the diagnosis and potential
treatment of cancer based on its proprietary nuclear matrix protein technology.
This technology was licensed to the Company by the Massachusetts Institute of
Technology.

The Company is devoting substantially all of its efforts toward product
research and development, raising capital, securing partners and marketing
products. The Company is subject to risks common to companies in similar
stages of development, including a history of operating losses and anticipated
future losses, fluctuation in operating results, uncertainties associated with
future performance, near-term dependence on a limited number of products,
reliance on sole suppliers, dependence on key individuals, competition from
substitute products and larger companies, the development of commercially
usable products and the need to obtain adequate additional financing necessary
to fund its operations and the development of its future products.

The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission (SEC) and include, in the opinion of management, all
adjustments, consisting of normal, recurring adjustments, necessary for a fair
presentation of interim period results. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States have been
condensed or omitted pursuant to such rules and regulations. The results for
the interim periods presented are not necessarily indicative of results to be
expected for any future period. It is suggested that these consolidated
financial statements be read in conjunction with the audited financial
statements and notes thereto included in the Companys Annual Report on Form
10-K for the year ended December 31, 2001 filed with the SEC (File No.
001-12128).

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary, Matritech GmbH. All significant intercompany
balances and transactions have been eliminated in consolidation.

Certain reclassifications have been made to the prior years financial
statements to conform to current presentation. These classifications have no
effect on the Companys results of operations or financial position.

2. Recent Accounting Pronouncements

Effective January 1, 2002, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets
(SFAS 142). This statement requires that goodwill and certain other intangibles
no longer be amortized, but instead tested for impairment at least annually.
There was no impairment of goodwill upon adoption of SFAS 142. The Company
did not record amortization expense relating to its goodwill during the quarter
ended March 31, 2002, which approximated $22,000 during the three months ended
March 31, 2001.

3. Cash Equivalents

The Company considers all highly liquid investments with original
maturities of 90 days or less to be cash equivalents. The Company follows the
provisions of SFAS No. 115, Accounting for Certain Investments in Debt and
Equity Securities, in accounting for its marketable securities. Securities
held at December 31, 2001 and March 31, 2002 include only cash and cash
equivalents, which consist of auction market preferred stocks, certificates of
deposit and money market accounts.

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4. Inventories

Inventories are stated at the lower of cost or market and consist of the
following:

|                |  |              |         |           |  |   |         | 
|--------------- |  | ------------ | ------- | --------- |  | - | ------- | 
|                |  | December 31, |         | March 31,
|                |  | 2001         |         | 2002     
|                |  |              |         |          
|Raw materials   |  | $            | 147,234 |           |  | $ | 157,513 | 
|Work-in-process |  |              | 3,804   |           |  |   | 3,622   | 
|Finished goods  |  |              | 186,049 |           |  |   | 208,534 | 
|                |  |              |         |           |  |   |         | 
|                |  | $            | 337,087 |           |  | $ | 369,669 | 
|                |  |              |         |           |  |   |         | 

5. Net Loss Per Common Share

The Company computes earnings per share in accordance with SFAS No. 128,
Earnings per Share. Basic net loss per common share is computed by dividing net
loss by the weighted average number of common shares outstanding during the
year. Diluted loss per share is the same as basic loss per share as the effects
of the Companys potential common stock are antidilutive. Potential common
stock consists of stock options and warrants as well as 37,153 and 22,914
contingently issuable shares of common stock held in escrow in connection with
the ADL acquisition at March 31, 2001 and 2002, respectively. The number of
antidilutive common stock equivalents excluded from the computation of diluted
loss per share were 1,258,991 and 3,650,391 for the periods ended March 31,
2001 and 2002, respectively.

6. Common Stock Purchase Agreement

In March 2002, the Company completed a private placement of 538,437 units,
at a purchase price of $8.00 per unit. Each unit consists of four shares of
common stock and a warrant to purchase one share of common stock at a price of
$3.00 per share. These warrants are exercisable until November 30, 2002 and are
callable by the Company if certain conditions are satisfied. The Company
received net proceeds of approximately $4,140,000 after deducting transaction
expenses.




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

This Quarterly Report on Form 10-Q, other reports and communications to
securityholders, as well as oral statements made by the Companys officers or
agents may contain forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
statements may relate to, among other things, the Companys future revenue,
operating income, EBITDA and the plans and objectives of management. In
particular, certain statements contained in the Managements Discussion and
Analysis of Financial Condition and Results of Operations and in Factors That
May Affect Future Results constitute forward-looking statements. Actual
events or results may differ materially from those stated in any
forward-looking statement. Factors that may cause such differences are
discussed below and in the Companys other reports filed with the Securities
and Exchange Commission.

The Company was incorporated in 1987 to develop, manufacture and market
innovative cancer diagnostic products based on its proprietary NMP technology.
The Company has been unprofitable since inception and expects to incur
significant operating losses for at least the next several years. For the
period from inception through March 31, 2002, the Company incurred a cumulative net
loss of approximately $65 million.

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In the United States, the Company sells its NMP22® Test Kit through a
distribution agreement with Fisher Healthcare (Fisher) granting Fisher the
right, co-exclusive with Matritech, to distribute the microtiter plate-based
NMP22 Test Kit to hospitals and commercial laboratories within the United
States. Outside the United States, the Company sells the NMP22 Test Kit and
newly released NMP22 BladderChekTM point-of-care test, through its European
subsidiary and other distributors.

Results of Operations

Three Months Ended March 31, 2002 Compared with the Three Months Ended March
31, 2001

Product sales and other revenue increased to $799,000 from $597,000 for
the quarters ended March 31, 2002 and 2001, respectively. The revenue earned
in the 2002 period consisted of $730,000 of product sales and $69,000 of
collaboration revenue from various alliance partners; the Company is
recognizing the collaboration revenue over the lives of the respective
contracts. The revenue earned in the 2001 period consisted entirely of product
sales. The increase in product sales was primarily due to an increase in
Matritech GmbHs European sales of distributed products, along with an increase
in Matritech product sales to customers in Europe and the United States.

Cost of product sales increased to $484,000 from $442,000 for the quarters
ended March 31, 2002 and 2001, respectively. As a percentage of product sales,
cost of sales decreased to 66% from 74% for the quarters ended March 31, 2002
and 2001, respectively. The decrease in cost of sales as a percentage of sales
is due to higher margins from the newly released BladderChek point-of-care test
and an increase of Matritech GmbHs sales of third-party products which carry
higher margins than the products developed and manufactured by Matritech.
Matritech product margins are negatively affected by costs related to excess
capacity maintained by the Company to support expected future sales increases.

Research, development and clinical expenses increased to $1,003,000 from
$643,000 for the quarters ended March 31, 2002 and 2001, respectively.
Clinical consulting costs, site payments, and supplies expense increased a
total of $302,000 due to the increased number of active projects, and
salary-related costs increased due to increased headcount.

Selling, general and administrative expenses decreased to $1,416,000 from
$1,768,000 for the quarters ended March 31, 2002 and 2001, respectively. This
decrease is primarily due to the absence of $510,000 of compensation expense in
the 2002 period related to the investor relations consultant warrant issued in
July 2000, and decreased goodwill amortization of $22,000. These decreases
were offset by increased consulting costs of $59,000, increased legal costs of
$26,000, increased annual report costs of $29,000 and increased travel expenses
of $57,000.

Interest income decreased to $20,000 from $66,000 for the quarters ended
March 31, 2002 and 2001, respectively. The decrease was due to lower
investment yields.

Liquidity and Capital Resources

Since its inception, the Company has financed its operations primarily
through private and
public offerings of its securities and through funded development and marketing
agreements. At March 31, 2002 and December 31, 2001, the Company had cash and
cash equivalents of $6,777,000 and $4,820,000, respectively, and working
capital of $6,430,000 and $4,337,000, respectively. The Company believes that
its existing cash resources, plans for equity financings, product sales and
corporate partnerships will be sufficient to satisfy its capital needs through
2002.

The Companys operating activities used cash of $2,163,000 and $1,621,000
for the three months ended March 31, 2002 and 2001, respectively, primarily to
fund the Companys operating loss.

The Companys investing activities used cash of $18,000 and $24,000 for
the three months ended March 31, 2002 and 2001, respectively, primarily for the
purchase of laboratory equipment.

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The Companys financing activities provided cash of $4,148,000 and
$1,159,000 for the three months ended March 31, 2002 and 2001, respectively.
The activity in the 2002 period resulted primarily from proceeds from the sale
of common stock and warrants offset by payments on notes payable. The activity
in the 2001 period resulted primarily from proceeds received from the sale of
common stock under the equity financing agreement and to a business partner as
well as proceeds received from the exercise of common stock warrants, net of
payments on notes payable.

In March 2002, the Company completed a private placement of 538,437 units,
at a purchase price of $8.00 per unit. Each unit consists of four shares of
common stock and a warrant to purchase one share of common stock at a price of
$3.00 per share. These warrants are exercisable until November 30, 2002 and are
callable by the Company if certain conditions are satisfied. The Company
received net proceeds of approximately $4,140,000 after deducting transaction
expenses.

The Company expects to incur continued research and development expenses
and other costs, including costs related to clinical studies to commercialize
additional products based upon its NMP technology. The Company will require
substantial additional funds to fund operations, complete new product
development, conduct clinical trials and manufacture and market its products.

The Companys future capital requirements will depend on many factors,
including, but not limited to: continued scientific progress in its research
and development programs; the magnitude of its research and development
programs; progress with clinical trials for its diagnostic products; the
magnitude of product sales; the time involved in obtaining regulatory
approvals; the costs involved in filing, prosecuting and enforcing patent
claims; the competing technological and market developments; and the ability of
the Company to establish additional development and marketing arrangements to
provide funding for research and development and to conduct clinical trials,
obtain regulatory approvals, and manufacture and market certain of the
Companys products.

The Company is also actively seeking additional long-term funding for its
operations from public and private sources including strategic collaborations
and partnerships. There can be no assurance, however, that capital will be
available on terms acceptable to the Company, if at all. If the Company uses
equity to finance its capital needs, such a financing could result in
significant dilution to existing stockholders.

Factors That May Affect Future Results

The Companys future financial and operational results are subject to a
number of material risks and uncertainties that may affect such results or
conditions, including:

Access to Capital.The Company will need additional funding to continue
to market its NMP22 tests for bladder cancer, to conduct research and
development, to conduct clinical trials and to manufacture and market its
products as it currently contemplates. The Company is currently seeking to
raise additional capital and will consider various financing alternatives,
including equity or debt financings and corporate partnering arrangements.
However, the Company may not be able to raise needed capital on terms that are
acceptable to it, or at all. If the Company does not receive additional
financing, it may be required to curtail its expenses or take other steps that
could hurt its future performance. Any future equity financings will dilute
the ownership interest of existing investors in the Company and may have an
adverse impact on the price of the Common Stock.

History of Operating Losses and Anticipated Future Losses.The Company
has incurred operating losses since it began operations in 1987 and anticipates
future losses. While the company expects to improve operating results in
future periods, there can be no assurance that the Company will achieve or
maintain profitability or that its revenue will grow in the future.

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Fluctuation in Operating Results.The Companys future operating results
may vary significantly from quarter to quarter or from year to year depending
on a number of factors including: the timing and size of orders from the
Companys customers and distributors; regulatory approvals and the introduction
of new products by the Company; and the market acceptance of the Companys
products. The Companys current planned expense levels are based in part upon
expectations as to future revenue. Consequently, profits may vary significantly
from quarter to quarter or year to year based on the timing of revenue. Revenue
or profits in any period will not necessarily be indicative of results in
subsequent periods.

Uncertainties Associated with Future Performance.The Companys success
in the market for diagnostic products will depend, in part, on the Companys
ability to: successfully develop, test, produce and market its products; obtain
necessary governmental approvals in a timely manner; maintain sources of supply
for certain key product components; maintain and defend its intellectual
property; successfully scale up its manufacturing; comply with ongoing
governmental regulations; attract and maintain key employees; and successfully
respond to technological changes in its marketplace. The Company has limited
internal marketing and sales resources and personnel. In order to successfully
market the Companys current and future products in the United States, Germany
and other territories in which it does not, or does not intend to, use
third-party distributors, the Company will need to develop a larger marketing
and sales force with appropriate technical expertise and distribution
capability. The Company may be unable to establish the marketing and sales
capabilities that it needs, and the Company may be unsuccessful in gaining wide
market acceptance for its products.

Reliance on Distributors.The Company has limited internal marketing and
sales resources and personnel. The Company derives a significant portion of its
sales revenue from distribution agreements with distributors. Because the
Company does not deal directly with customers when selling through
distributors, it depends on the ability of these distributors to market
actively, to forecast demand accurately and to maintain appropriate levels of
inventory. The failure or delay by a distributor in selling the Companys
products, or any material breach of their agreements with the Company could
significantly reduce the Companys revenues. The Company may be unable to enter
into additional distribution relationships on favorable terms, if at all. These
events could reduce anticipated future sales growth.

Near-Term Dependence Upon A Limited Number of Products.The Company
anticipates that in the near-term the Companys success will be substantially
dependent on the success of a limited number of products. The Company would
experience a material adverse effect on its business, financial condition and
results of operations if those products do not achieve wide market acceptance.
The Companys other products have not been approved by the FDA or are in
development, and there can be no assurance that the Company will be successful
with such regulatory approvals and product development.

Market Acceptance of NMP22 Test. The Company expects to generate a
significant share of all of the Companys near-term product sales from the sale
of the Companys NMP22 tests. The Companys results of operations may suffer if
the NMP22 tests do not achieve wide market acceptance because NMP22 is a major
source of sales revenue.

Reliance on Sole Supplier.The Company currently relies on sole suppliers
for certain key components and the assembly thereof for its NMP22 tests. If the
components from these suppliers or the services of these assemblers should
become unavailable for any reason, the Company would seek alternative sources
of supply or assembly. In order to maintain the FDA validation of the Companys
manufacturing process, the Company would have to show that these alternative
sources of supply are equivalent to its current sources. Although the Company
attempts to maintain an adequate level of inventory to provide for these and
other contingencies, if its manufacturing processes are disrupted as a result
of a shortage of key components, a revalidation of new components or the
failure of an assembler to meet the Companys requirements, the Company may be
unable to meet its commitments to customers. The Companys failure or delay in
meeting its commitments could cause sales to decrease, market share to be lost
permanently, and could result in significant expenses to obtain alternative
sources of supply or assembly with the necessary facilities and know-how.

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Competition.Although the Company is not aware of any other company using
nuclear matrix protein technology to develop diagnostic or therapeutic
products, competition in the development and marketing of cancer diagnostics
and therapeutics, using a variety of technologies, is intense. The Company
expects that certain of its clinical tests will compete with existing
FDA-approved clinical tests. The Company is also aware of a number of companies
exploring the application of oncogene technology to cancer diagnostics. The
Companys diagnostic products will also compete with more invasive or expensive
procedures such as surgery, bone scans, magnetic resonance imaging and other in
vivoimaging techniques. In addition, other companies may introduce competing
diagnostic products based on other technologies that may adversely affect the
Companys competitive position. As a result, the Companys products may become
obsolete or non-competitive.

Product-Related Liabilities. The testing, marketing and sale of human
healthcare products entail an inherent exposure to product liability, and third
parties may successfully assert product liability claims against the Company.
Although the Company currently has insurance covering its products, it may not
be able to maintain this insurance at acceptable costs in the future, if at
all. In addition, the Companys insurance may not be sufficient to cover large
claims. Significant product liability claims could result in large and
unexpected expenses as well as a costly distraction of management resources and
potential negative publicity and reduced demand for the Companys product.

Foreign Exchange. To the extent that foreign currency exchange rates
fluctuate in the future, the Company may be exposed to continued financial
risk. These can be no assurance that the Company will be successful in
limiting its exposure.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

Investment Portfolio. The Company owns financial instruments that are
sensitive to market and interest rate risks as part of its investment
portfolio. The investment portfolio is used to preserve the Companys capital
until it is required to fund operations including the Companys research and
development activities. None of these market-risk sensitive instruments are
held for trading purposes. The Company does not use derivative financial
instruments that meet high credit quality standards, as specified in the
Companys investment policy guidelines; the policy also limits the amount of
credit exposure to any one issue, issuer, and type of instrument. It is
suggested that this paragraph be read in conjunction with Note 1 of Notes to
Consolidated Financial Statements  Operations and Significant Accounting
Policies of the Companys Annual Report on Form 10-K for the year ended
December 31, 2001 filed with the SEC (File No. 001-12128).

Foreign Exchange.The accounts of Matritech GmbH are translated in
accordance with SFAS No. 52, Foreign Currency Translation. In translating the
accounts of Matritech GmbH into U.S. dollars, assets and liabilities are
translated at the rate of exchange in effect at year-end, while stockholders
equity is translated at historical rates. Revenue and expense accounts are
translated using the weighted-average exchange rate in effect during the
period. Foreign currency translation and transaction gains or losses for
Matritech GmbH are included in the accompanying consolidated statements of
operations since the functional currency for Matritech GmbH is the Euro. The
Company had sales of approximately $537,000 denominated in foreign currency in
the quarter ended March 31, 2002.

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PART II. OTHER INFORMATION




Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits:

None.

(b)  Reports on Form 8-K:

On March 4, 2002, the Company filed a Current Report on Form 8-K
dated as of March 4, 2002 including Items 5 and 7.

Item 5 reported the following other event: On March 4, 2002, the
Registrant completed a private placement of a total of 538,437 units, at a
purchase price equal to $8.00 per unit (the Units). Each Unit consists of (i)
four (4) shares of the Companys Common Stock, par value $.01 per share (the
Common Stock) and (ii) a warrant to purchase one (1) share of Common Stock
exercisable at $3.00 per share on or before November 30, 2002, the warrants
termination date. The Company received net proceeds of approximately $4.2
million after deducting the estimated expenses of the private placement. The
placement agent for the transaction elected to receive all of its commission
and expenses in the form of 172,300 shares of Common Stock and three-year
warrants for the purchase of an additional 215,375 shares of Common Stock
exercisable at $2.81 per share. These securities were offered and sold only to
accredited investors, as defined in Regulation D promulgated under the
Securities Act of 1933, as amended (the Securities Act) and were sold in
reliance on an exemption from registration under the Securities Act set forth
in Rule 506 of Regulation D.

Item 7 included the following: form of subscription agreement between the
Registrant and several purchasers, form of warrant to purchase shares of Common
Stock, placement agent warrant agreement dated February 13, 2002 between the
Company and Sunrise Securities Corp., placement agent warrant agreement dated
March 4, 2002 between the Company and Sunrise Securities Corp. and engagement
letter dated December 20, 2001 between the Company and Sunrise Securities Corp.

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SIGNATURES

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

|                   |  |                                                                                                                        
|------------------ |  | -----------------------------------------------------------------------------------------------------------------------
|                   |  | MATRITECH,
INC.                                                                                                        
|                   |  |                                                                                                                        
|Date: May 10, 2002 |  | By: /s/Stephen D. Chubb                                                                                                
|                   |  |                                                                                                                        
|                   |  | Stephen D. Chubbbr
Director, Chairman and Chief Executive Officer
(principal executive officer)                        
|                   |  |                                                                                                                        
|                   |  |                                                                                                                        
|Date: May 10, 2002 |  | By: /s/John S. Doherty, Jr.                                                                                            
|                   |  |                                                                                                                        
|                   |  | John S. Doherty, Jr.
Vice President, Chief Financial Officer and
Treasurer (principal accounting and financial officer)

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