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UNITED STATES
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 June 30, 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 0-18053

LASERSCOPE

3070 ORCHARD DRIVE, SAN JOSE, CALIFORNIA 95134-2011
(Address of Principal Executive Offices)

Registrant’s Telephone Number, Including Area Code: (408) 943-0636

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    [   ]

The number of shares of Registrant’s common stock issued and outstanding as of July 31, 2002 was 16,470,449.

Table of Contents

TABLE OF CONTENTS

						Page
PART I.   FINANCIAL INFORMATION							3
Item 1.				Financial Statements (unaudited)			3
				Condensed Consolidated Balance Sheets			3
				Condensed Consolidated Statements of Operations			4
				Condensed Consolidated Statements of Cash Flows			5
				Notes to Condensed Consolidated Financial Statements			6
Item 2.				Management’s Discussion and Analysis of Financial Condition and Results of Operations			8
				Results of Operations			9
				Liquidity and Capital Resources			10
				Risk Factors			12
Item 3.				Quantitative and Qualitative Disclosures About Market Risk			16
PART II.   OTHER INFORMATION							16
Item 1.				Legal Proceedings			16
Item 2.				Changes in Securities			16
Item 3.				Defaults upon Senior Securities			17
Item 4.				Submission of Matters to a Vote of Security Holders			17
Item 5.				Other Items			18
Item 6.				Exhibits and Reports on Form 8-K			18
SIGNATURES							19

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements:

Laserscope
Condensed Consolidated Balance Sheets
(Unaudited)

					June 30,				December 31,
(thousands)					2002				2001
Assets
Current assets:
	Cash and cash equivalents				$	3,772			$	3,408
	Accounts receivable, net					10,537				8,427
	Inventories					9,234				9,228
	Other current assets					1,194				1,283
		Total current assets				24,737				22,346
Property and equipment, net						2,082				2,067
Goodwill						655				655
Other assets						346				414
			Total assets		$	27,820			$	25,482
Liabilities and Shareholders’ Equity
Current liabilities:
	Short-term bank loans				$	1,350			$	1,135
	Accounts payable					3,051				2,821
	Accrued compensation					1,973				1,588
	Deferred revenue					1,287				1,031
	Convertible subordinated debentures, current portion					147				—
	Other current liabilities					2,897				2,435
		Total current liabilities				10,705				9,010
Convertible subordinated debentures, net of current portion						2,853				3,000
Obligations under capital leases						91				60
		Total long-term liabilities				2,944				3,060
Contingencies (Note 5)
Shareholders’ equity:
	Common stock					55,104				54,712
	Accumulated deficit					(39,762	)			(39,843	)
	Accumulated other comprehensive loss					(1,046	)			(1,332	)
	Notes receivable from shareholders					(125	)			(125	)
			Total shareholders’ equity			14,171				13,412
			Total liabilities and shareholders’ equity		$	27,820			$	25,482

See Accompanying Notes to Condensed Consolidated Financial Statements

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Laserscope
Condensed Consolidated Statements Of Operations
(Unaudited)

			Three months ended								Six months ended
			June 30,								June 30,
(thousands, except per share amounts)			2002				2001				2002				2001
Net revenue			$	10,529			$	9,302			$	19,949			$	17,530
Cost of sales				4,957				4,281				9,756				8,800
Gross margin				5,572				5,021				10,193				8,730
Operating expenses:
	Research and development			1,033				978				2,049				1,791
	Selling, general and administrative			4,289				3,774				7,836				7,084
				5,322				4,752				9,885				8,875
Operating income (loss)				250				269				308				(145	)
Interest income (expense) and other, net				(104	)			(73	)			(194	)			(131	)
Income (loss) before income taxes				146				196				114				(276	)
Provision for income taxes				18				14				33				32
Net income (loss)			$	128			$	182			$	81			$	(308	)
Basic net income (loss) per share			$	0.01			$	0.01			$	0.00			$	(0.02	)
Diluted net income (loss) per share			$	0.01			$	0.01			$	0.00			$	(0.02	)
Shares used in basic per share calculations				16,335				15,902				16,262				15,893
Shares used in diluted per share calculations				18,688				19,029				18,511				15,893

See Accompanying Notes to Condensed Consolidated Financial Statements

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Laserscope
Condensed Consolidated Statements of Cash Flows
(Unaudited)

					Six Months Ended
					June 30,
(thousands)					2002				2001
Cash flows from operating activities:
	Net income (loss)				$	81			$	(308	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Depreciation and amortization				605				559
		Changes in assets and liabilities:
			Accounts receivable, net			(1,956	)			(101	)
			Inventories			97				(285	)
			Other current assets			122				(29	)
			Accounts payable			214				255
			Accrued compensation			385				317
			Deferred revenue			257				571
			Other current liabilities			382				249
Net cash provided by operating activities						187				1,228
Cash flows from investing activities:
	Acquisition of property and equipment					(372	)			(547	)
Net cash used in investing activities						(372	)			(547	)
Cash flows from financing activities:
	Payments on obligations under capital leases					(133	)			(184	)
	Proceeds from the sale of common stock under stock plans					393				18
	Proceeds from bank loans					5,020				6,244
	Repayment of bank loans					(4,805	)			(6,052	)
Net cash provided by financing activities						475				26
Effect of exchange rate changes on cash						74				(403	)
Net increase in cash and cash equivalents						364				304
Cash and cash equivalents, beginning of period						3,408				2,698
Cash and cash equivalents, end of period					$	3,772			$	3,002
Supplemental disclosure of cash flow information:
		Cash paid during the period for:
			Interest		$	78			$	201
			Income taxes		$	—			$	8
		Non-cash increase in obligations under capital leases			$	172			$	—

See Accompanying Notes to Condensed Consolidated Financial Statements

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Laserscope Notes to Condensed Consolidated Financial Statements:

1. Basis of presentation

The accompanying unaudited condensed consolidated financial statements include Laserscope (the “Company,” “management,” “we,” “us,” “our”) and its wholly and majority-owned subsidiaries. All intercompany transactions and balances have been eliminated. While the financial information in this report is unaudited, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position and results of operations as of and for the periods indicated have been recorded. We suggest that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2001 included in the Company’s annual report on Form 10-K for the year ended December 31, 2001. The results of operations for the three and six month periods ended June 30, 2002 are not necessarily indicative of the results expected for the full year.

2. Inventories

Inventories were comprised of the following (in thousands):

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3. Net income (loss) per share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by giving effect to all dilutive potential common shares, including options, warrants, and convertible debentures. A reconciliation of the numerator and denominator used in the calculation of historical basic and diluted net income (loss) per share follows:

The following outstanding options and warrants (prior to the application of the treasury stock method) and convertible debentures (on an as-converted basis) were excluded from the computation of diluted net income (loss) per common share for the periods ended June 30, 2002 and 2001 because including them would have had an antidilutive effect: