<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                                 Washington, DC

                                    Form 10-Q

(Mark One)

  X   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
----  Exchange Act of 1934

                  For the quarterly period ended March 31, 2003
                                                 --------------

                                       or

____  Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

        For the transition period from _____________ to ________________

                         Commission File Number: 0-28748

                           CLOSURE MEDICAL CORPORATION
                           ---------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                    56-1959623
         ---------                                    ----------
(State or other jurisdiction of                    (I.R.S. Employer
 incorporation or organization)                    Identification No.)


              5250 Greens Dairy Road, Raleigh, North Carolina 27616
              -----------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (919) 876-7800
                                 --------------
              (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  _______
             ---

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

         Yes  X                                          No  _______
             ---


     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

           Class                                  Outstanding at May 13, 2003
           -----                                  ---------------------------

Common Stock, par value $0.01 per share                   13,670,555

<PAGE>

                           CLOSURE MEDICAL CORPORATION

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                     Page Number
                                                                                                     -----------
<S>                                                                                                       <C>
PART I:   FINANCIAL INFORMATION

      Item 1.  Condensed Financial Statements

          Balance Sheets as of March 31, 2003 (unaudited) and December 31, 2002 ...................         3

          Statements of Operations (unaudited) for the three months ended March 31,
             2003 and 2002 ........................................................................         4

          Statements of Cash Flows (unaudited) for the three months ended March 31,
             2003 and 2002 ........................................................................         5

          Notes to Condensed Financial Statements (unaudited) .....................................         6

      Item 2.  Management's Discussion and Analysis of Financial Condition and
               Results of Operations ..............................................................         9

      Item 3.  Quantitative and Qualitative Disclosure about Market Risk ..........................        13

      Item 4.  Controls and Procedures ............................................................        13



PART II:  OTHER INFORMATION

      Item 6.  Exhibits and Reports on Form 8-K ...................................................        14
</TABLE>

<PAGE>

                          PART I- FINANCIAL INFORMATION

ITEM 1.   CONDENSED FINANCIAL STATEMENTS

                           CLOSURE MEDICAL CORPORATION
                                 BALANCE SHEETS
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                           MARCH 31,             DECEMBER 31,
                                                                             2003                    2002
                                                                          (unaudited)
                                                                     --------------------   ---------------------
<S>                                                                  <C>                    <C>
Assets
Cash and cash equivalents                                            $               549    $                666
Short-term investments                                                            15,898                  14,060
Accounts receivable                                                                3,131                   2,473
Inventories                                                                        1,281                   1,184
Prepaid expenses                                                                     370                     407
Deferred income taxes                                                              3,340                   3,387
                                                                     --------------------   ---------------------
   Total current assets                                                           24,569                  22,177
Furniture, fixtures and equipment, net                                             5,361                   5,388
Intangible assets, net                                                             3,029                   2,999
Long-term investments                                                              1,601                   2,316
Deferred income taxes                                                              3,137                   3,867
                                                                     --------------------   ---------------------
   Total assets                                                      $            37,697    $             36,747
                                                                     ====================   =====================

Liabilities and Stockholders' Equity
Accounts payable                                                     $             1,333    $              1,236
Accrued expenses                                                                   1,433                   2,648
Deferred revenue                                                                   1,226                   1,478
                                                                     --------------------   ---------------------
   Total current liabilities                                                       3,992                   5,362
Other accrued liabilities                                                            317                     399
Deferred revenue                                                                   1,363                   1,460
Long-term debt                                                                       186                     336
                                                                     --------------------   ---------------------
   Total liabilities                                                               5,858                   7,557
                                                                     --------------------   ---------------------

Commitments and Contingencies                                                          -                       -

Preferred Stock, $.01 par value.  Authorized 2,000 shares; none
   issued or outstanding                                                               -                       -
Common Stock, $.01 par value.  Authorized 35,000 shares;
   13,636 and 13,549 shares issued and outstanding, respectively                     136                     135
Additional paid-in capital                                                        51,070                  50,341
Accumulated deficit                                                              (19,367)                (21,286)
                                                                     --------------------   ---------------------
   Total stockholders' equity                                                     31,839                  29,190
                                                                     --------------------   ---------------------
   Total liabilities and stockholders' equity                        $            37,697    $             36,747
                                                                     ====================   =====================
</TABLE>

         The accompanying notes are an integral part of these condensed
                              financial statements

                                       3

<PAGE>

                           CLOSURE MEDICAL CORPORATION
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)
                     (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                       THREE MONTHS ENDED
                                                                            MARCH 31,
                                                                    2003                2002
                                                               ---------------     --------------
<S>                                                            <C>                 <C>
Product sales                                                  $        7,899      $       5,155
License and product development revenues                                  262                245
                                                               ---------------     --------------
     Total revenues                                                     8,161              5,400
Cost of products sold                                                   1,893              1,663
                                                               ---------------     --------------
      Gross profit                                                      6,268              3,737
                                                               ---------------     --------------
Research, development and regulatory affairs expenses                   1,830              1,600
General and administrative expenses                                     1,527              1,338
                                                               ---------------     --------------
      Total operating expenses                                          3,357              2,938
                                                               ---------------     --------------
Income from operations                                                  2,911                799
Interest income, net                                                       78                 63
                                                               ---------------     --------------
Income before income taxes                                              2,989                862
Provision for income taxes                                              1,070                 15
                                                               ---------------     --------------
Net income                                                     $        1,919      $         847
                                                               ===============     ==============

Shares used in computation of net income per common share:

     Basic                                                             13,604             13,520
                                                               ===============     ==============
     Diluted                                                           13,751             13,992
                                                               ===============     ==============

Net income per common share:
     Basic                                                     $         0.14      $        0.06
                                                               ===============     ==============
     Diluted                                                   $         0.14      $        0.06
                                                               ===============     ==============
</TABLE>

         The accompanying notes are an integral part of these condensed
                             financial statements.

                                       4

<PAGE>

                           CLOSURE MEDICAL CORPORATION
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                       THREE MONTHS ENDED
                                                                                            MARCH 31,
                                                                                   2003                  2002
                                                                             -----------------     ------------------
<S>                                                                          <C>                   <C>
Cash flows from operating activities:
Net income                                                                   $          1,919      $             847
Adjustments to reconcile net income to net cash
   provided by operating activities:
Depreciation and amortization expense                                                     292                    277
Loss on abandonment of patents                                                            100                     30
Change in accounts receivable                                                            (658)                  (556)
Change in inventories                                                                     (97)                   182
Change in prepaid expenses                                                                 37                     44
Change in accounts payable and accrued expenses                                        (1,200)                (1,232)
Change in deferred revenue                                                               (349)                   706
Change in deferred taxes                                                                  777                      -
Tax benefits associated with stock options                                                217                      -
                                                                             -----------------     ------------------
Net cash provided by operating activities                                               1,038                    298
                                                                             -----------------     ------------------

Cash flows from investing activities:
Purchases of furniture, fixtures and equipment                                           (236)                  (461)
Investment in intangible assets                                                          (159)                  (132)
Purchases of investments                                                               (4,294)                (1,593)
Proceeds from the sale of investments                                                   3,171                  1,522
                                                                             -----------------     ------------------
Net cash used by investing activities                                                  (1,518)                  (664)
                                                                             -----------------     ------------------

Cash flows from financing activities:
Repayment of debt                                                                        (150)                  (149)
Net proceeds from sale of common stock                                                    513                    334
Payments under capital lease obligations                                                    -                    (89)
                                                                             -----------------     ------------------
Net cash provided by financing activities                                                 363                     96
                                                                             -----------------     ------------------
Decrease in cash and cash equivalents                                                    (117)                  (270)
Cash and cash equivalents at beginning of period                                          666                  2,914
                                                                             -----------------     ------------------
Cash and cash equivalents at end of period                                   $            549      $           2,644
                                                                             =================     ==================
</TABLE>

         The accompanying notes are an integral part of these condensed
                             financial Statements.

                                       5

<PAGE>

Closure Medical Corporation
Notes to Condensed Financial Statements
(Unaudited)

1.  Organization

Closure Medical Corporation (the "Company" or "Closure") develops, manufactures
and commercializes medical adhesive products based on its proprietary medical
grade cyanoacrylate technology. From May 10, 1990 to February 29, 1996, the
business of the Company was conducted by its predecessor, Tri-Point Medical L.P.
The Company was incorporated in Delaware on February 20, 1996.

2.  Significant Accounting Policies

The significant accounting policies followed by the Company for interim
financial reporting are consistent with the accounting policies followed for
annual financial reporting. These unaudited financial statements have been
prepared in accordance with Rule 10-01 of Regulation S-X, and in management's
opinion, all adjustments of a normal recurring nature necessary for a fair
presentation have been included. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements and should be read in conjunction with the
financial statements and notes thereto for the year ended December 31, 2002
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2002.

The results of operations for the three-month period ended March 31, 2003 are
not necessarily indicative of the results to be expected for the entire fiscal
year ending December 31, 2003.

Reclassifications
Certain prior year balances have been reclassified to conform to the current
year presentation.

Recent Accounting Pronouncements
In November 2002, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others", an interpretation of FASB Statements No. 5, 57 and 107 and Rescission
of FASB Interpretation No. 34. FIN 45 clarifies the requirements of FASB
Statement No. 5, "Accounting for Contingencies", relating to the guarantor's
accounting for, and disclosure of, the issuance of certain types of guarantees.
FIN 45 requires that upon issuance of a guarantee, the guarantor must recognize
a liability for the fair value of the obligation it assumes under that
guarantee. The Interpretation's provisions for initial recognition and
measurement should be applied on a prospective basis to guarantees issued or
modified after December 31, 2002, and the disclosure requirements are effective
for financial statements of both interim and annual periods that end after
December 15, 2002. The Company adopted FIN 45 as of January 1, 2003 which did
not and is not expected to have a material impact on the Company's financial
position or results of operations.

In April 2003, FASB issued Statement of Financial Accounting Standards No. 149
"Amendment of Statement 133 on Derivative Instruments and Hedging Activities"
("SFAS 149"). FASB Statements No. 133 "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS 133") and No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities", establish accounting and reporting
standards for derivative instruments including derivatives embedded in other
contracts (collectively referred to as derivatives) and for hedging activities.
SFAS 149 amends SFAS 133 for certain decisions made by the Board as part of the
Derivatives Implementation Group (DIG) process. SFAS 149 contains amendments
relating to FASB Concepts Statement No. 7, "Using Cash Flow Information and
Present Value in Accounting Measurements", and FASB Statements No. 65,
"Accounting for Certain Mortgage Banking Activities", No. 91 "Accounting for
Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and
Initial Direct Costs of Leases", No. 95, "Statement of Cash Flows", and No. 126,
"Exemption from Certain Required Disclosures about Financial Instruments for
Certain Nonpublic Entities". The Company is presently evaluating the effect of
this pronouncement but does not expect that it will have a material impact on
the Company's financial position or results of operations.


                                       6

<PAGE>

Closure Medical Corporation
Notes to Condensed Financial Statements
(Unaudited)

Accounting for Stock-Based Compensation
The Company accounts for stock-based compensation based on the provisions of
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB No. 25"). In December 2002, the FASB issued Statement No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure - an
amendment of FASB Statement No. 123" ("SFAS 148"). This statement amends
Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123") to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, this statement amends the disclosure requirements of SFAS 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The Company has adopted the
disclosure requirements of SFAS 123 and SFAS 148.

Had compensation expense, assuming it was recognized on a straight-line basis
over the vesting period for awards under the Company's Equity Compensation Plan
and in the period of purchase for benefits received under the Employee Stock
Purchase Plan, been determined based on the fair value at the grant date,
consistent with the provisions of SFAS 123, the Company's results of operations
would have been reduced to the pro forma amounts indicated below (in thousands,
except per share data):

                                                    Three Months ended
                                                         March 31,
                                               ---------------------------
                                                   2003            2002
                                               ------------    -----------
Net income -as reported                        $    1,919      $     847
Less: Pro forma adjustment for stock-
  based compensation                               (1,228)        (4,467)
                                               ------------    -----------
Net income (loss) -pro forma                   $      691      $  (3,620)
                                               ============    ===========

Basic net income (loss) per common share:
  As reported                                  $     0.14      $    0.06
  Effect of pro forma adjustment                    (0.09)         (0.27)
                                               ------------    -----------
  Pro forma                                    $     0.05      $   (0.21)
                                               ============    ===========

Diluted net income (loss) per common share:
  As reported                                  $     0.14      $    0.06
  Effect of pro forma adjustment                    (0.09)         (0.26)
                                               ------------    -----------
  Pro forma                                    $     0.05      $   (0.20)
                                               ============    ===========

The assumptions used to calculate the fair value of options granted are
evaluated and revised, as necessary, to reflect market conditions and
experience.


                                       7

<PAGE>

Closure Medical Corporation
Notes to Condensed Financial Statements
(Unaudited)

3.  Income Taxes

Prior to 2003, the Company's tax provision was limited to alternative minimum
taxes and certain state taxes because a full valuation allowance had been
provided on all deferred tax assets. During the fourth quarter of 2002, the
Company re-evaluated the amount of valuation allowance on its deferred tax
assets required in light of profitability achieved in recent years and expected
in future years. As a result, the Company reduced the valuation allowance to an
amount that it believes is more likely than not of being realized based on the
Company's assessment of the likelihood of near term operating income coupled
with uncertainties with respect to the impact of future market conditions.
Accordingly, the tax provision for the three months ended March 31, 2003 was
$1.1 million and reflects the Company's effective rate.

4.  Inventories

Inventories included the following (in thousands):

                                      March 31,          December 31,
                                        2003                 2002
                                   ----------------     ----------------
Packaging                          $        481         $        433
Raw materials                               114                  171
Work-in-process                             462                  372
Finished goods                              224                  208
                                   ----------------     ----------------
                                   $      1,281         $      1,184
                                   ================     ================

5.  Net Income Per Common Share

Basic net income per common share is computed using the weighted average number
of shares of common stock outstanding during the period.

Diluted net income per common share is computed using the weighted average
number of shares of common and common equivalent shares outstanding during the
period. Common equivalent shares consist of stock options using the treasury
stock method and are excluded from the computation if their effect is
antidilutive.

                                       8

<PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION ACT OF 1995

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

This report and the documents incorporated by reference herein contain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. When used in this report and the documents incorporated herein by
reference, the words "anticipate," "believe," "estimate," and similar
expressions are generally intended to identify forward-looking statements. These
forward-looking statements are based on a number of factors concerning future
events, and are subject to a number of uncertainties and other factors, many of
which are outside of our control. These statements include, among others, the
statements in Management's Discussion and Analysis about the following:

..    our expectations with respect to increases in operating expenses;

..    expectations with respect to increases in research and development and
     general and administrative expenses in order to develop new products,
     manufacture commercial quantities of products and fund additional clinical
     studies;

..    expectations with respect to the development, manufacturing and approval of
     new products;

..    expectations with respect to incurring additional capital expenditures to
     expand our manufacturing capabilities;

..    expectations with respect to generating revenue or maintaining
     profitability;

..    our ability to enter into additional marketing agreements and the ability
     of our existing marketing partners to successfully commercialize products
     incorporating our technologies;

..    the sufficiency of our existing cash, cash equivalents and investments to
     finance our capital requirements for at least 12 months; and

..    expectations with respect to future capital requirements.

There are important factors that could cause actual results to differ materially
from those expressed or implied by such forward-looking statements including,
but not limited to, the following:

..    a decline in the level of demand for our products;

..    developments by competitors;

..    our inability to obtain regulatory clearances;

..    general economic conditions and specifically, conditions in the health care
     industry;

..    our ability to protect our proprietary products, know-how and manufacturing
     processes;

..    our inability to obtain adequate supply of raw materials;


                                       9

<PAGE>

..    the failure to enter into definitive marketing agreements;

..    unanticipated cash requirements to support current operations or research
     and development; and

..    our ability to attract and retain key personnel.

These and other risks and uncertainties affecting Closure are discussed in
greater detail in this report and in other filings by Closure with the
Securities and Exchange Commission. We undertake no obligation to update or
revise forward-looking statements, whether as a result of new information,
future events or otherwise.

OVERVIEW

We develop, manufacture and commercialize medical tissue adhesive products for
wound care and wound closure for the professional healthcare, over-the-counter,
or OTC, and veterinary markets based on our proprietary medical grade
cyanoacrylate technology. To date, we have commercialized nonabsorbable products
for topical use and our research efforts include the development of absorbable
and nonabsorbable formulations for internal use.

Our leading product, DERMABOND adhesive, is sold to healthcare professionals and
can be used professionally to rapidly close, seal and protect wounds and
incisions from infection, and to stop leakage of blood and other body fluids
from injured tissue. This product allows natural healing to proceed by closing
and sealing injured tissue without the trauma caused by suturing or stapling. We
believe that using DERMABOND adhesive results in enhanced patient and physician
benefits such as lower overall procedure costs and is easier and quicker to use
than sutures or staples.

We have other products that are marketed in the OTC adhesive bandage and the OTC
oral pain relief markets. BAND-AID(R) Brand Liquid Bandage quickly seals,
protects and stops bleeding from minor cuts and scrapes. SOOTHE-N-SEAL(R)
adhesive provides a protective barrier that shields oral ulcers and sores from
irritation caused by eating and drinking while providing immediate and long-term
pain relief.

In addition, we have two veterinary products in our NEXABAND(R) product line
that are used in cat declaw procedures as well as spay and neuter procedures.

We have entered into marketing partnerships with third parties that distribute
and market our current products to professionals and consumers. Our partners
include Ethicon, Inc., a Johnson & Johnson company; Johnson & Johnson Consumer
Products Company; Colgate Oral Pharmaceuticals, Inc.; and Abbott Laboratories,
Inc.

We continue to pursue modifications and improvements to our existing products to
enhance their effectiveness and expand their marketability. We are also
developing additional new nonabsorbable and internal adhesive products,
including our vascular sealant product. These future products require further
development and are subject to clinical trials and regulatory clearance or
approval before commercialization. At this time, we have decided not to focus
our efforts on the liquid occlusive dressing for the professional market and
Endobronchial Lung Volume Reduction project. We believe, based upon recent
evaluation, that there are other product development opportunities that are more
feasible, can be more quickly commercialized and may allow for a greater return
on investment.

RESULTS OF OPERATIONS

Revenues. Total revenues for the three months ended March 31, 2003 were $8.2
million compared to $5.4 million for the corresponding period of 2002. The
increase primarily relates to increased shipments of DERMABOND adhesive,
including the new High Viscosity DERMABOND, which received FDA approval in
January 2003. Also contributing to revenue growth was increased order
fulfillment for BAND-AID(R) Brand Liquid Bandage in anticipation of the
upcoming, higher-usage bandage season.


                                       10

<PAGE>

Cost of products sold. Cost of products sold was $1.9 million for the three
months ended March 31, 2003 compared to $1.7 for the 2002 period. Cost of
products sold as a percentage of revenues decreased to 23% for the three months
ended March 31, 2003 from 31% for the corresponding 2002 period. The decrease in
the cost of products sold as a percentage of revenues was primarily the result
of higher production volumes and greater efficiency and capacity utilization in
the 2003 period. In addition, we experienced cost savings due to an automated
filling process, used for all products except DERMABOND, which was not available
during the first quarter of 2002. We expect that future gross margins on product
sales will continue to fluctuate based on production volumes and the relative
proportion of our various products.

Operating Expenses. Operating expenses were $3.4 million for the three months
ended March 31, 2003 and $2.9 million for the same period of 2002. Research and
development expenses increased by $230,000, or 14%, to support our ongoing
projects, including product improvements, line extensions and our vascular
sealant clinical study. General and administrative expenses also increased by
14%, primarily due to increases in outside professional services, personnel
costs and insurance costs during the 2003 period. As a percentage of total
revenues, research and development expenses were 22%, down from 30% while
general and administrative expenses were 19%, also down from 25%, for the
comparative 2002 period.

Net interest income. Net interest income was $78,000 for the three months ended
March 31, 2003, compared to $63,000 for the three months ended March 31, 2002.
Interest income for the 2003 period remained relatively flat when compared to
the 2002 period. Interest expense declined due to the absence of capital lease
obligations during the 2003 period as compared to 2002, as well as the continued
reduction of long-term debt, which totaled $186,000 at March 31, 2003.

Provision for income taxes. The provision for income taxes was $1.1 million and
$15,000 for the periods ending March 31, 2003 and 2002, respectively. During the
2002 period, the net provision reflected only alternative minimum taxes.
Beginning in the 2003 quarter, we began recording fully-taxed earnings at 36%.
We are not required to pay federal income taxes until such time as our net
operating losses, approximately $10.0 million, and tax credit carryforwards,
approximately $2.0 million, are exhausted.

LIQUIDITY AND CAPITAL RESOURCES

We have financed our operations to date primarily through the sale of equity
securities, borrowings from lenders, license and product development revenues
and product sales. At March 31, 2003, we had net working capital of $20.6
million, an increase of $3.8 million from December 31, 2002. Our principal
sources of liquidity include cash, cash equivalents and marketable investments,
which totaled $18.0 million at March 31, 2003.

Closure maintains a $3.0 million line of credit for working capital purposes
which contains certain restrictive covenants including, but not limited to,
maintenance of certain levels of unencumbered liquid assets and a minimum
tangible net worth requirement. The line of credit is secured by certain trade
accounts receivable, inventory and equipment. At March 31, 2003, the outstanding
balance of $186,000 was classified as long-term debt as the agreement does not
require principal payments until maturity at May 31, 2004.

Capital Expenditures

There are no individually material capital expenditure commitments outstanding
as of March 31, 2003. We estimate that capital investments for 2003 will be less
than $2.5 million. We believe that our balances of cash, cash equivalents, and
investments together with funds generated from operations and existing borrowing
facilities will be sufficient to meet our operating cash requirements and fund
required capital expenditures for the foreseeable future.

Research and Development

During 2002, we spent approximately $6.4 million in research, development and
regulatory affairs expenses. We anticipate that research and development
expenses will continue to increase for the next several years as we develop new
products and line extensions for existing products. We also expect that clinical
trials related to new products and line extensions will be costly and represent
a significant part of future expenses. Research, development and


                                       11

<PAGE>

regulatory affairs expenses consist of items related to personnel, costs of
supplies, clinical trials, professional fees, facility costs and fees paid to
consultants and outside contractors and are expensed as incurred. We are
reimbursed for a fixed percentage of research and development expenses related
to certain projects approved under cost sharing arrangements with marketing
partners. These reimbursements are recorded as a reduction in research,
development and regulatory affairs expenses on a quarterly basis. During the
first quarter of 2003, we were reimbursed $66,000 in accordance with these
cost-sharing arrangements. We cannot estimate the costs of our internal research
and development projects due to uncertainties regarding successful completion of
projects, clinical trial outcomes, regulatory approvals and cost sharing
arrangements with partners. We believe that funds for future research and
development needs can be obtained from existing cash and investment balances and
from cash generated from operations. However, no assurance can be given that we
may not require additional funds to support the completion of new product
development, conduct clinical trials and obtain regulatory approvals.

Cash Flows

Net cash provided by operating activities was $1.0 million for the three months
ended March 31, 2003 compared to $298,000 for the same period in 2002. The
increase in cash provided by operations was primarily due to the increase in
operating income as well as a decrease in deferred revenue.

Net cash used by investing activities was $1.5 million for the three months
ended March 31, 2003 compared to $664,000 during the 2002 period. The increase
in net cash used during 2003 primarily related to net purchases of investments
using available cash.

Net cash provided by financing activities was $363,000 for the three months
ended March 31, 2003 compared to $96,000 for same period in 2002. The increase
in net cash provided by financing activities was due to an increase in net
proceeds from the exercise of stock options and the issuance of shares under our
employee benefit plans during the 2003 period combined with the absence of
capital lease payments.

Based on our current plans, we believe that existing cash, cash equivalents and
investments, which totaled $18.0 million as of March 31, 2003, will be
sufficient to finance our operating and capital requirements for at least 12
months. We anticipate that our recurring operating expenses will increase for
the next several years, as we expect research, development and regulatory
affairs and general and administrative expenses to increase in order to develop
new products, manufacture in commercial quantities and fund additional clinical
trials. We will also invest in long-term assets such as intangible assets and
capital expenditures to expand our manufacturing capabilities.

Our future capital requirements, however, will depend on numerous factors,
including but not limited to the following:

..    our ability to manufacture and commercialize successfully our lead product,
     DERMABOND adhesive;
..    the progress of our research and product development programs for future
     nonabsorbable and absorbable products, including clinical studies;
..    the effectiveness of product commercialization activities and marketing
     agreements for our future products, including the scale-up of manufacturing
     capabilities for increased capacity in anticipation of product
     commercialization and development and progress of sales and marketing
     efforts;
..    our ability to maintain existing marketing agreements, including our
     agreement with Ethicon for DERMABOND adhesive, and establish and maintain
     new marketing agreements;
..    the costs involved in preparing, filing, prosecuting, defending and
     enforcing intellectual property rights and complying with regulatory
     requirements;
..    the effect of competing technological and market developments;
..    timely receipt of regulatory clearances and approvals;
..    general acceptance of our products by the medical community and consumers;
     and
..    general economic conditions.

We may be required to seek additional capital to finance our operations in the
future. If our currently available funds and internally generated cash flow are
not sufficient to satisfy our financing and operating needs, we will be required


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<PAGE>

to seek additional funding through bank borrowings, additional public or private
sales of our securities, including equity securities, or through other
arrangements with marketing partners. Other than our working capital line of
credit, we have no credit facility or other committed sources of capital. There
can be no assurance that additional funds, if required, will be available to us
on favorable terms, if at all.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no material changes to our critical accounting policies and
estimates since December 31, 2002. For detailed information on our critical
accounting policies and estimates, see our Annul Report on Form 10-K for the
year ended December 31, 2002.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

INTEREST RATE SENSITIVITY

We are subject to interest rate risk on our investment portfolio which consists
primarily of high quality short-term money market funds, commercial paper,
corporate bonds and other investments with an average maturity of less than one
year. We mitigate default risk by investing in what we believe are safe and high
credit quality securities and by monitoring the credit rating of investment
issuers. The portfolio includes only marketable securities with active secondary
or resale markets to ensure portfolio liquidity and there are limitations
regarding average and individual duration of investments as established by the
Board of Directors. These available-for-sale securities are subject to interest
rate risk and will decrease in value if market interest rates increase. At March
31, 2003, our total portfolio consisted of approximately $18.0 million of cash,
cash equivalents and investments, the majority of which had average maturities
within one year. Additionally, we generally have the ability to hold fixed
income investments to maturity. Therefore, we do not expect our results of
operations or cash flows to be materially affected due to a sudden change in
interest rates.

FOREIGN CURRENCY EXCHANGE RISK

Our international sales and related royalties of DERMABOND adhesive and
international sales of NEXABAND(R) adhesives are based on sales in foreign
currencies. However, all of our sales to customers are payable in U.S. dollars
and we may be adversely affected by fluctuations in currency exchange rates.
Additionally, fluctuations in currency exchange rates may adversely affect
demand for our products by increasing the price of our products in the currency
of the countries in which the products are sold.

Item 4.  CONTROLS AND PROCEDURES

The Company's President and Chief Executive Officer along with the Company's
Vice President of Finance and Chief Financial Officer evaluated the Company's
disclosure controls and procedures within 90 days of the filing date of this
quarterly report. Based upon this evaluation, the Company's President and Chief
Executive Officer along with the Company's Vice President of Finance and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective in ensuring that material information required to be
disclosed is included in the reports that it files with the Securities and
Exchange Commission.

There were no significant changes in the Company's internal controls or, to the
knowledge of the management of the Company, in other factors that could
significantly affect these controls subsequent to the evaluation date.


                                       13

<PAGE>

                            PART II-OTHER INFORMATION

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

        (a)  Exhibits.

             Exhibit 10.1 - Employment Agreement, dated as of March 3, 2003,
                            between James F. Buck and the Company
             Exhibit 99.1 - Certification of Chief Executive Officer
             Exhibit 99.2 - Certification of Chief Financial Officer

        (b)  Reports on Form 8-K.

             A Current Report on Form 8-K was filed on April 22, 2003 for the
             purpose of furnishing the Company's first quarter 2003 financial
             results press release.

                                   SIGNATURES

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

                                   CLOSURE MEDICAL CORPORATION

Date: May 15, 2003                 By:  /s/ Daniel A. Pelak
                                      ------------------------
                                      Daniel A. Pelak
                                      President and Chief Executive Officer

Date: May 15, 2003                 By:  /s/ Benny Ward
                                      ------------------------
                                      Benny Ward
                                      Vice President of Finance and Chief
                                      Financial Officer


                                       14

<PAGE>

                                 CERTIFICATIONS

I, Daniel A. Pelak, certify that:

     1.   I have reviewed this quarterly report on Form 10-Q of Closure Medical
          Corporation;

     2.   Based on my knowledge, this quarterly report does not contain any
          untrue statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this quarterly report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this quarterly report.

     4.   The registrant's other certifying officer and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and have:

               a)   designed such disclosure controls and procedures to ensure
                    that material information relating to the registrant,
                    including its consolidated subsidiaries*, is made known to
                    us by others within those entities, particularly during the
                    period in which this quarterly report is being prepared;

               b)   evaluated the effectiveness of the registrant's disclosure
                    controls and procedures as of a date within 90 days prior to
                    the filing date of this quarterly report (the "Evaluation
                    Date"); and

               c)   presented in this quarterly report our conclusions about the
                    effectiveness of the disclosure controls and procedures
                    based on our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officer and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent function):

               a)   all significant deficiencies in the design or operation of
                    internal controls which could adversely affect the
                    registrant's ability to record, process, summarize and
                    report financial data and have identified for the
                    registrant's auditors any material weakness in internal
                    controls; and

               b)   any fraud, whether or not material, that involves management
                    or other employees who have a significant role in the
                    registrant's internal controls; and

     6.   The registrant's other certifying officer and I have indicated in this
          quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.

     * The reference is only to Closure Medical Corporation, which has no
       subsidiaries.

     Date: May 15, 2003            By: /s/ Daniel A. Pelak
                                      ------------------------
                                      Daniel A. Pelak
                                      President and Chief Executive Officer


                                       15

<PAGE>

I, Benny Ward, certify that:

     1.   I have reviewed this quarterly report on Form 10-Q of Closure Medical
          Corporation;

     2.   Based on my knowledge, this quarterly report does not contain any
          untrue statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this quarterly report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this quarterly report.

     4.   The registrant's other certifying officer and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and have:

               a)   designed such disclosure controls and procedures to ensure
                    that material information relating to the registrant,
                    including its consolidated subsidiaries*, is made known to
                    us by others within those entities, particularly during the
                    period in which this quarterly report is being prepared;

               b)   evaluated the effectiveness of the registrant's disclosure
                    controls and procedures as of a date within 90 days prior to
                    the filing date of this quarterly report (the "Evaluation
                    Date"); and

               c)   presented in this quarterly report our conclusions about the
                    effectiveness of the disclosure controls and procedures
                    based on our evaluation as of the Evaluation Date;

     7.   The registrant's other certifying officer and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent function):

               a)   all significant deficiencies in the design or operation of
                    internal controls which could adversely affect the
                    registrant's ability to record, process, summarize and
                    report financial data and have identified for the
                    registrant's auditors any material weakness in internal
                    controls; and

               b)   any fraud, whether or not material, that involves management
                    or other employees who have a significant role in the
                    registrant's internal controls; and

     8.   The registrant's other certifying officer and I have indicated in this
          quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.

     * The reference is only to Closure Medical Corporation, which has no
       subsidiaries.

     Date: May 15, 2003            By: /s/ Benny Ward
                                      ------------------------
                                      Benny Ward
                                      Vice President of Finance and Chief
                                      Financial Officer

                                       16