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

FORM 10-QSB/A

Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2001

Commission File No. 000-20989

UROPLASTY, INC.
(Name of Small Business Issuer in its Charter)

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

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

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

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

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

YES    NO 

The aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the stock was sold or the average bid and asked prices of such stock as of July 23, 2001 was $8,813,203.

The number of shares outstanding of the issuer’s only class of common stock on July 23, 2001 was 6,078,071.

Transitional Small Business Disclosure Format:

YES    NO 

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UROPLASTY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited)

			June 30, 2001		March 31, 2001
Assets
	Current assets:
		Cash and cash equivalents	$	762,886	$	1,012,397
		Accounts receivable, net		937,260		983,450
		Inventories		913,955		752,436
		Other		227,016		258,997
	Total current assets			2,841,117		3,007,280
	Property, plant, and equipment, net			840,049		902,189
	Intangible assets, net			94,143		101,232
	Total assets		$	3,775,309	$	4,010,701

UROPLASTY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited)

				June 30, 2001			March 31, 2001
Liabilities and Shareholders’ Equity
	Current liabilities:
		Accounts payable		$	244,965		$	213,288
		Accrued liabilities			478,917			593,997
		Current maturities — long-term debt			44,861			46,557
	Total current liabilities				768,743			853,842
	Long-term debt — less current maturities				415,385			438,335
	Total liabilities				1,184,128			1,292,177
	Shareholders’ equity:
		Common stock $.01 par value; 20,000,000
			shares authorized, 6,049,071 and 6,041,071 shares issued and outstanding at June 30, 2001 and March 31, 2001, respectively		60,491			60,411
		Additional paid-in capital			6,011,146			5,999,398
		Accumulated deficit			(3,089,182	)		(2,954,456	)
		Accumulated other comprehensive loss			(391,274	)		(386,829	)
	Total shareholders’ equity				2,591,181			2,718,524
	Total liabilities and shareholders’ equity			$	3,775,309		$	4,010,701

See accompanying notes to consolidated financial statements.

UROPLASTY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended June 30, 2001 and 2000
(Unaudited)

		2001			2000
Net sales		$	1,149,389		$	1,479,043
Cost of goods sold			179,872			298,341
Gross profit			969,517			1,180,702
Operating expenses
	General and administrative		272,610			329,089
	Research and development		390,038			482,086
	Selling and marketing		355,067			542,189
			1,017,715			1,353,364
Operating loss			(48,198	)		(172,662	)
Other income (expense)
	Interest income		5,918			20,694
	Interest expense		(6,438	)		(6,705	)
	Foreign currency exchange loss		(86,008	)		(17,265	)
			(86,528	)		(3,276	)
Net loss before income taxes			(134,726	)		(175,938	)
Income tax expense			—			—
Net loss		$	(134,726	)	$	(175,938	)
Basic loss per common share		$	(0.02	)	$	(0.03	)
Diluted loss per common share		$	(0.02	)	$	(0.03	)
Weighted average common shares outstanding:
	Basic		6,046,434			5,981,040
	Diluted		6,046,434			5,981,040

See accompanying notes to consolidated financial statements.

UROPLASTY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended June 30, 2001 and 2000
(Unaudited)

			2001			2000
Cash flows from operating activities:
	Net loss		$	(134,726	)	$	(175,938	)
	Adjustments to reconcile net loss to net cash used in operations:
	Depreciation and amortization			37,146			50,429
	Loss on disposal of assets			1,789			—
	Stock-based consulting expense			3,828			—
	Changes in operating assets and liabilities:
		Accounts receivable		46,190			(57,508	)
		Inventories		(161,519	)		(106,028	)
		Other current assets		31,981			158,073	)
		Accounts payable		31,677			(82,105	)
		Accrued liabilities		(115,080	)		(23,628	)
Net cash used in operating activities				(258,714	)		(236,705	)
Cash flows from investing activities:
	Payments for property, plant and equipment			(2,402	)		(9,369	)
	Payments relating to intangible assets			—			(17,750	)
	Redemption of marketable securities			—			750,000
Net cash (used in) provided by investing activities				(2,402	)		722,881
Cash flows from financing activities:
	Repayment of long-term debt			(11,491	)		(12,063	)
	Net proceeds from issuance of stock			8,000			5,000
Net cash used in financing activities				(3,491	)		(7,063	)
Effect of exchange rates on cash and cash equivalents				15,096			(11,409	)
Net (decrease) increase in cash and cash equivalents				(249,511	)		467,704
Cash and cash equivalents at beginning of period				1,012,397			1,553,093
Cash and cash equivalents at end of period			$	762,886		$	2,020,797
Supplemental disclosure of Cash Flow information:
	Cash paid during the year for interest		$	6,457		$	7,551
	Cash paid during the year for income taxes			—			—

See accompanying notes to consolidated financial statements.

UROPLASTY, INC. AND SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements

1. Basis of Presentation

The consolidated financial statements included in this Form 10-QSB have been prepared by Uroplasty, Inc. (“Uroplasty” or “the Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, pursuant to such rules and regulations, although management believes the disclosures are adequate to make the information presented not misleading. The consolidated results of operations for any interim period are not necessarily indicative of results for a full year. These consolidated statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-KSB for the year ended March 31, 2001.

The consolidated financial statements presented herein as of June 30, 2001 and for the three month period ended June 30, 2001 and 2000 reflect, in the opinion of management, all material adjustments consisting only of normal recurring adjustments necessary for a fair presentation of the consolidated financial position, consolidated results of operations and consolidated cash flows for the interim periods.

2.     Nature of Business

The Company is currently selling its products outside of the United States and is undertaking clinical trials in the United States. Based on the Company’s current plans, it is anticipated that the Company will launch its products in the US after obtaining FDA approval. Completing clinical trials and obtaining FDA approval is a costly and time-consuming process. Management believes that the Company’s ability to manage cash, if required, through a less aggressive clinical trial schedule should provide adequate cash flows to fund the Company’s obligations through mid 2002. In the event the Company were not to generate adequate cash flows from operations or financing activities, the Company’s US market launch could be delayed. Ultimately, the Company will need to achieve profitability and positive cash flows from operations or obtain additional debt or equity financing to fund its operations.

3.     Inventories

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

	June 30, 2001		March 31, 2001
Raw materials	$	157,761	$	82,827
Work-in-process		390,766		337,077
Finished goods		365,428		332,532
	$	913,955	$	752,436

4.     Comprehensive loss consists of net loss, net unrealized gains (losses) on marketable securities, and the translation adjustment as follows:

		Three Months Ended
		June 30
		2001			2000
Net loss		$	(134,726	)	$	(175,938	)
Items of other comprehensive loss:
	Translation adjustment		(4,445	)		(15,708	)
Total comprehensive loss		$	(139,171	)	$	(191,646	)

5.     Reconciliation of Net Loss and Share Amounts Used in EPS Calculation

Basic loss per common share is calculated by dividing net loss by the weighted-average common shares outstanding during the period. Diluted loss per common share for the three months ended June 30, 2001 and 2000 was calculated using the treasury-stock method to compute the weighted average common stock outstanding assuming the conversion of dilutive potential common shares.

			Basic loss				Diluted loss
			per share		Effect of		per share
			to common		dilutive		to common
			shareholders		securities		shareholders
For the three months ended:
	June 30, 2001
		Net loss	$	(134,726	)	—	$	(134,726	)
		Shares		6,046,434		—		6,046,434
		Per share amount	$	(0.02	)	—	$	(0.02	)
	June 30, 2000
		Net loss	$	(175,938	)	—	$	(175,938	)
		Shares		5,981,040		—		5,981,040
		Per share amount	$	(0.03	)	—	$	(0.03	)

Options and warrants to purchase 1,171,200 shares of common stock at per share amounts ranging from $.50 to $3.50 per share were outstanding at June 30, 2001 but were not included in the computation of diluted earnings per share because net loss realized during the quarter would cause the potential common shares to have an anti-dilutive effect. The options expire from August 2001 to June 2006. At June 30, 2000 options and warrants to purchase 1,195,400 shares of common stock at per share amounts ranging from $.50 to $3.50 per share were outstanding but were not included in the computation of diluted earnings per share because net loss realized during the quarter would cause the potential common shares to have an anti-dilutive effect.

6.     Legal Proceeding

In Item 1 of Part II of this filing the legal proceedings of the Company are listed. The Company has not accrued for potential losses on these cases as the likelihood of a loss is not probable and the amount in the event of a loss cannot be reasonably estimated.

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

Forward-looking Statements

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

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

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

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

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

Overview

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

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

The Company’s products are currently sold by a direct sales force in the United Kingdom, and by a network of distributors in numerous countries outside the U.S., including Western Europe, Australia, and Central and South America. In September 1999, the Company received unconditional approval from the FDA pursuant to a previously filed IDE Application to initiate human clinical studies in the U.S. for the Company’s primary product Macroplastique in the treatment of female SUI. Through various urological investigators in various clinical sites across the U.S., the Company is currently performing the human procedures specified by the study protocol.

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

In order to reduce costs, thirteen positions worldwide were canceled in the fourth quarter of fiscal 2001, either by terminating employment agreements or attrition. Two manufacturing positions were eliminated, three administrative positions, four positions in research and development and four sales and marketing positions. It was anticipated that these changes would reduce salary and associated employment costs by approximately $50,000 per month. For the quarter ended June 30, 2001, the Company’s realized cost reductions were in line with management’s expectation.

In order to further reduce costs eight positions worldwide were canceled in August 2001, either by terminating employment agreements or attrition. Two manufacturing positions were eliminated, two administrative positions, two positions in research and development and two sales and marketing positions. This will reduce salary costs and associated expenses by $25,000

per month. Broken down by department the reductions are as follows: a $4,000 per month reduction in manufacturing, a $4,000 per month reduction in general and administrative, a $6,000 per month reduction in research and development and a $11,000 per month reduction in selling and marketing. An increased focusing on the Company’s goals and increased efficiencies should streamline the operations. No activities will be discontinued. Along with the cost reductions from the fiscal 2001 restructuring activities, management believes the Company should be able to run its operations at a break-even level and that current resources and funds generated from sales should meet the Company’s cash flow needs.

Set forth below is management’s discussion and analysis of the financial condition and results of operations for the three month periods ended June 30, 2001 and 2000.

Results of Operations

Net Sales: The Macroplastique product line accounts for approximately 90% of total net sales during the periods presented. In the first quarter ended June 2001, net sales of all products were $1,149,389, representing a $329,654 or 22% decrease when compared to net sales of $1,479,043 for the first quarter ended June 30, 2000.

During late fiscal 2001, the Company terminated an aggregate of four positions in sales and marketing. Management expected that these terminations would have an insignificant impact on sales as a result of a focused marketing and product sales. The decline in current years sales was attributable to decreased shipments which management believes is the result of increased competition and distributor inventory tightening pending the anticipated launch of product enhancements and new delivery system. The Company believes that the impact on sales, if any, related to the terminated positions was not material. There was no significant impact on sales prices in the current year period as compared to last year.

Management expects that unit sales of Macroplastique will increase in the remaining nine months of fiscal 2002 as a result of improving and enhancing our distributors in existing and new geographical markets, and as a result of enhancements to the surgical technique leading to an increased number of implanting doctors and greater penetration of the SUI market. There can be no assurance however, that the Company’s efforts to increase sales and market penetration will be successful.

Gross Profit: Gross profit was $969,517 and $1,180,702 for the quarters ended June 30, 2001 and 2000, respectively, or 84% and 80% of net sales. Manufacturing efficiencies and increased utilization of manufacturing facilities and manufacturing related personnel had a positive effect on gross profit margins.

General and Administrative Expense: General and administrative (“G&A”) expenses decreased 17% from $329,089 during the first quarter of fiscal 2001 to $272,610 during the first quarter of fiscal 2002. The decrease in General and Administrative expenses is primarily attributed to the decrease in personnel as a result of the Company’s restructuring activities in late fiscal 2001.

Research and Development Expense: Research and development (“R&D”) expenses decreased $92,048, or 19%, from $482,086 during the first quarter of fiscal 2001 to $390,038 during the first quarter of fiscal 2002. The decrease in R&D expense during the quarter ended June 30, 2001 resulted principally from a decrease in personnel related to the Company’s restructuring activities in late fiscal 2001 and consulting costs. The human clinical study costs are primarily comprised of physician and medical fees relating to the patient procedures and follow-up examinations, in addition to the costs of managing the study.

Selling and Marketing Expenses: Selling and marketing (“S&M”) costs decreased 35% from $542,189 during the first quarter of fiscal 2001 to $355,067 during the first quarter of fiscal 2002, as a result of the fiscal 2001 restructuring of the international sales and marketing department.

Other Income (Expense): Other income (expense) includes interest income, interest expense, foreign currency exchange gains and losses, and other non-operating costs when incurred. Other expense was $(86,528) and $(3,276) for the period ended June 30, 2001 and June 30, 2000, respectively. Interest income was $5,918 and $20,694 for the period ended June 30, 2001 and June 30, 2000, respectively. This decrease is due to the redemption of marketable securities and decreased cash and cash equivalents balances. Interest expense decreased from $6,705 for the quarter ended June 30, 2000 to $6,438 for the quarter ended June 30, 2000 as the result of decreased long-term debt and capital lease balances. Exchange gains and losses are recognized primarily as a result of fluctuations in currency rates between the U.S. Dollar (the functional reporting currency) and the Dutch Guilder and British Pound (currencies of the Company’s subsidiaries), as well as their effect on the dollar denominated intercompany obligations between the Company and its foreign subsidiaries. The Company’s foreign currency exchange loss was $86,008 and $17,265 for the quarter ended June 30, 2001 and 2000, respectively. At June 30, 2001 and

2000 the Company has $4.7 million and $4.6 million of dollar denominated debt at its Dutch subsidiaries, of which $3.5 million and $3.4 million are short-term dollar denominated obligations that the Company records currency fluctuations in earnings. The increased loss is due to a strengthened U.S. Dollar compared to the Dutch Guilder.

Liquidity and Capital Resources

As of June 30, 2001, the Company’s cash and cash equivalent balances totaled $762,886. The capital resources existing at June 30, 2001 were derived from operations during the fiscal years ended March 31, 1997 and 1998, plus the net proceeds from the Company’s sale of approximately 1.7 million shares of Common Stock in June 1998.

At June 30, 2001, the Company had working capital of approximately $2.1 million. During the first quarter of fiscal year 2002, the Company used approximately $259,000 of cash from operating activities.

The Company currently has no financing arrangements in place with any bank for general working capital needs, and no material unused sources of liquidity other than the cash, equipment leasing arrangements, and its accounts receivable and inventory balances at June 30, 2001 of approximately $937,000 and $914,000, respectively.

The inventory balance has increased by $162,000 from March 31, 2001 to June, 2001. This increase includes approximately $150,000 for the build-up of modified product prior to the launch of the enhanced Macroplastique administration device, due for market release in third quarter of fiscal 2002. As of June 30, 2001 the allowance for inventory obsolescence is $21,000. A substantial increase in the allowance for inventory obsolescence or inventory write-offs as a result of the introduction of the modified product is not expected due the Company’s management of the non-modified product quantities.

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

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

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

As a result of the Company’s cost reduction activities and the Company’s ability to manage the timing of the FDA clinical expenditures, management believes that current resources and the funds generated from sale of the Company’s products outside the U.S. will be adequate to meet the Company’s cash flow needs, including R&D activities associated with existing product and markets, through the remaining three quarters of fiscal 2002.

Additional funds from the sale of the Company’s securities or other alternative sources will be necessary to actively support the U.S. regulatory activities. It is the intention of the Company to raise additional capital this fiscal year. There can be no assurance that such alternative sources of funds will be available to the Company.

PART II. OTHER INFORMATION

Except for the following, none of the items contained in PART II of Form 10-QSB are applicable to the Company for the three months ended June 30, 2001.

ITEM 1. LEGAL PROCEEDINGS

On July 21, 1998, the Company announced that the United States Patent and Trademark Office (“USPTO”) had informed the Company that the USPTO will, as requested by the Company, initiate an interference proceeding (“the Interference Proceeding”) between the Company and Carbon Medical Technologies, Inc. (“CMT”), formerly Advanced UroScience, Inc., White Bear Lake, Minnesota, to determine which company was the first to invent pyrolytic carbon-coated micro beads for use in treating urinary incontinence. The USPTO has not, as of July 23, 2001, formally declared the Interference Proceeding.

At such time as the Interference Proceeding is formally declared, it could take the USPTO twenty-four months or more to reach a final decision concerning this matter. Although the USPTO originally granted the applicable patent to CMT, the Interference Proceeding may result in a determination that either Uroplasty, Inc. or CMT is the proper holder, or that a patent should not have been granted. An interference proceeding, like other patent litigation, can be complex, time consuming and expensive.

Later in 1998, the Company commenced a related lawsuit against CMT for misappropriation of trade secrets (“Misappropriation Lawsuit”) pertaining to the pyrolytic carbon-coated micro beads, among other things. CMT, subsequent to December 31, 1998, brought a counterclaim against the Company with respect to such matter. In October 1999, the Company announced that the U.S. District Court for Minnesota had granted a motion by CMT to dismiss the Misappropriation Lawsuit, which the Company appealed.

Subsequently, the U.S. Court of Appeals, Eighth Circuit, notified the Company that pursuant to the Company’s request, the Company’s appeal was transferred to the Federal Circuit, and in May 2000 the Company filed its appeal of the District Court’s order granting summary judgment with the U.S. Court of Appeals for the Federal Circuit.

In February 2001, the United States Court of Appeals for the Federal Circuit (the “Circuit Court”) granted the Company’s appeal of the dismissal of the Misappropriation Lawsuit. The Circuit Court vacated the dismissal by the U.S. District Court for Minnesota due to lack of jurisdiction and remanded the case; a motion to dismiss the Misappropriation Lawsuit brought by CMT is now pending in Ramsey County District Court in Minnesota.

SIGNATURES

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

UROPLASTY, INC.

Date:	February 15, 2002	by: /s/ DANIEL G. HOLMAN Daniel G. Holman President, Chief Executive Officer, Chief Financial Officer (Principal Financial Officer), Director (Principal Executive Officer)
Date:	February 15, 2002	by: /s/ ARIE J. KOOLE Arie J. Koole Controller (Principal Accounting Officer)