Quarterly Report (10-q)

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 September 30, 2014

o Transition Report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from ______ to _______.

Commission File No. 001-32632

UROPLASTY, INC.

(Exact name of registrant as specified in its Charter)

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

5420 Feltl Road

Minnetonka, Minnesota, 55343

(Address of principal executive offices)

(952) 426-6140

(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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o

Accelerated Filer x

Non-Accelerated Filer o

Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

YES o NO x

As of September 30, 2014 the registrant had 22,131,518 shares of common stock outstanding.

Table of Contents

INDEX

UROPLASTY INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations	5

	Condensed Consolidated Statements of Comprehensive Loss	6

	Condensed Consolidated Statement of Shareholders’ Equity	7

	Condensed Consolidated Statements of Cash Flows	8

	Notes to the Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19

Item 4.	Controls and Procedures	19

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	20

Item 1A.	Risk Factors	20

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20

Item 3.	Defaults upon Senior Securities	20

Item 4.	Mine Safety Disclosures	20

Item 5.	Other Information	20

Item 6.	Exhibits	20

	SIGNATURES	21

	Certification by the Chief Executive Officer and the Chief Financial Officer pursuant to Section 302	22

	Certification by the Chief Executive Officer and the Chief Financial Officer pursuant to Section 906	24

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UROPLASTY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2014		March 31, 2014

Assets

Current assets:
Cash and cash equivalents	$	9,540,168	$	8,681,609
Short-term investments		-		3,451,086
Accounts receivable, net		2,663,403		2,875,275
Inventories		526,367		517,217
Other		518,135		507,299
Total current assets		13,248,073		16,032,486

Property, plant, and equipment, net		952,910		997,609

Intangible assets, net		103,428		119,980

Prepaid pension assets		-		855

Deferred tax assets		136,406		150,116

Total assets	$	14,440,817	$	17,301,046

See accompanying notes to the Condensed Consolidated Financial Statements.

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UROPLASTY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2014			March 31, 2014

Liabilities and Shareholders’ Equity

Current liabilities:
Accounts payable	$	670,832		$	904,879
Current portion – deferred rent		-			2,917
Income taxes payable		28,017			21,922
Accrued liabilities:
Compensation		2,105,483			1,999,966
Other		472,771			479,373
Total current liabilities		3,277,103			3,409,057

Deferred rent – less current portion		26,238			171

Accrued pension liability		588,733			678,118

Total liabilities		3,892,074			4,087,346

Commitments and contingencies		-			-

Shareholders’ equity:
Common stock $.01 par value; 40,000,000 shares authorized, 22,131,518 and 21,653,835 shares issued and outstanding at September 30, 2014 and March 31, 2014, respectively		221,315			216,538
Additional paid-in capital		58,368,739			57,655,628
Accumulated deficit		(47,444,650	)		(44,174,071	)
Accumulated other comprehensive loss		(596,661	)		(484,395	)

Total shareholders’ equity		10,548,743			13,213,700

Total liabilities and shareholders’ equity	$	14,440,817		$	17,301,046

See accompanying notes to the Condensed Consolidated Financial Statements.

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UROPLASTY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	September 30						September 30
	2014			2013			2014			2013

Net sales	$	6,454,630		$	5,976,875		$	12,839,259		$	11,817,716
Cost of goods sold		753,225			741,842			1,544,536			1,489,889

Gross profit		5,701,405			5,235,033			11,294,723			10,327,827

Operating expenses
General and administrative		1,288,297			2,390,610			2,865,665			3,971,373
Research and development		651,035			428,763			1,560,479			908,423
Selling and marketing		4,818,704			4,323,084			10,091,325			8,950,493
Amortization		8,226			7,826			16,552			14,474
		6,766,262			7,150,283			14,534,021			13,844,763

Operating loss		(1,064,857	)		(1,915,250	)		(3,239,298	)		(3,516,936	)

Other income (expense)
Interest income		1,833			5,476			4,845			14,740
Foreign currency exchange gain (loss)		(2,190	)		(1,339	)		(1,279	)		(4,034	)
		(357	)		4,137			3,566			10,706

Loss before income taxes		(1,065,214	)		(1,911,113	)		(3,235,732	)		(3,506,230	)

Income tax expense		15,032			16,367			34,847			30,542

Net loss	$	(1,080,246	)	$	(1,927,480	)	$	(3,270,579	)	$	(3,536,772	)

Basic and diluted net loss per common share	$	(0.05	)	$	(0.09	)	$	(0.15	)	$	(0.17	)

Weighted average common shares outstanding:
Basic and diluted		21,617,675			21,076,570			21,693,989			20,921,693

See accompanying notes to the Condensed Consolidated Financial Statements.

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UROPLASTY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

	Three Months Ended September 30						Six Months Ended September 30
	2014			2013			2014			2013

Net loss	$	(1,080,246	)	$	(1,927,480	)	$	(3,270,579	)	$	(3,536,772	)

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments		(135,688	)		72,811			(136,477	)		93,419

Unrealized gain (loss) on available-for-sale investments		(32	)		2,657			(775	)		2,817

Pension adjustments		25,382			(15,923	)		24,986			(19,555	)

Total other comprehensive income (loss), net of tax		(110,338	)		59,545			(112,266	)		76,681

Comprehensive loss	$	(1,190,584	)	$	(1,867,935	)	$	(3,382,845	)	$	(3,460,091	)

See accompanying notes to the Condensed Consolidated Financial Statements.

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UROPLASTY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

Six Months Ended September 30, 2014

(Unaudited)

										Accumulated
					Additional					Other			Total
	Common Stock				Paid-in		Accumulated			Comprehensive			Shareholders'
	Shares		Amount		Capital		Deficit			Loss			Equity

Balance at March 31, 2014		21,653,835	$	216,538	$	57,655,628	$	(44,174,071	)	$	(484,395	)	$	13,213,700

Share-based compensation		396,413		3,964		656,927		-			-			660,891

Proceeds from exercise of stock options, net of shares exchanged		81,270		813		56,184		-			-			56,997

Comprehensive loss		-		-		-		(3,270,579	)		(112,266	)		(3,382,845	)

Balance at September 30, 2014		22,131,518	$	221,315	$	58,368,739	$	(47,444,650	)	$	(596,661	)	$	10,548,743

See accompanying notes to the Condensed Consolidated Financial Statements.

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UROPLASTY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
	September 30
	2014			2013
Cash flows from operating activities:
Net loss	$	(3,270,579	)	$	(3,536,772	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		139,252			179,123
Loss (gain) loss on disposal of equipment		834			(5,000	)
Amortization of premium on marketable securities		311			6,070
Share-based compensation expense		660,891			920,729
Deferred income tax expense		1,973			4,979
Deferred rent		23,150			(18,526	)
Changes in operating assets and liabilities:
Accounts receivable, net		155,498			197,216
Inventories		(10,822	)		97,787
Other current assets		(18,093	)		127,104
Accounts payable		(230,103	)		51,232
Accrued compensation		113,132			(51,129	)
Accrued liabilities		(5,669	)		(78,619	)
Accrued pension liability		(35,524	)		(137,089	)
Net cash used in operating activities		(2,475,749	)		(2,242,895	)

Cash flows from investing activities:
Proceeds from maturity of available-for-sale investments		3,450,000			2,000,000
Proceeds from maturity of held-to-maturity investments		-			3,940,000
Purchases of property, plant and equipment		(128,041	)		(208,768	)
Proceeds from sale of property, plant and equipment		1,552			6,773
Payments for intangible assets		-			(41,300	)
Net cash provided by investing activities		3,323,511			5,696,705

Cash flows from financing activities:
Proceeds from exercise of stock options		67,850			69,360
Net cash provided by financing activities		67,850			69,360

Effect of exchange rate changes on cash and cash equivalents		(57,053	)		34,724

Net increase in cash and cash equivalents		858,559			3,557,894

Cash and cash equivalents at beginning of period		8,681,609			3,533,864

Cash and cash equivalents at end of period	$	9,540,168		$	7,091,758

Cash paid during the period for income taxes	$	42,715		$	25,334

See accompanying notes to the Condensed Consolidated Financial Statements.

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UROPLASTY, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

We have prepared our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, have been condensed or omitted, pursuant to such rules and regulations, although we believe that our disclosures are adequate to make the information not misleading. The consolidated results of operations for any interim period are not necessarily indicative of results for a full year. These Condensed Consolidated Financial Statements, presented herein, should be read in conjunction with the audited consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended March 31, 2014.

The Condensed Consolidated Financial Statements presented herein as of September 30, 2014 and March 31, 2014 and for the three- and six- month periods ended September 30, 2014 and 2013 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, results of operations and cash flows for the interim periods.

We have identified certain accounting policies that we consider particularly important for the portrayal of our results of operations and financial position and which may require the application of a higher level of judgment by our management, and as a result are subject to an inherent level of uncertainty. These are characterized as “critical accounting policies” and address revenue recognition, accounts receivable, inventories, foreign currency translation and transactions, impairment of long-lived assets, share-based compensation, defined benefit pension plans and income taxes, each of which is described in our annual report on Form 10-K for the year ended March 31, 2014. Based upon our review, we have determined that these policies remain our most critical accounting policies for the six months ended September 30, 2014 and we have made no changes to these policies during fiscal 2015.

2. Newly Adopted Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU No. 2013-11 provides financial statement presentation guidance on whether an unrecognized tax benefit must be presented as either a reduction to a deferred tax asset or separately as a liability. We adopted ASU No. 2013-11 on April 1, 2014 and the adoption of this update did not have a material impact on our financial statements.

In April 2014, the FASB issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” The amendments in this ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in GAAP. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations.

The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. This disclosure will provide users with information about the ongoing trends in a reporting organization’s results from continuing operations. The amendments in ASU No. 2014-08 are effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2014. We do not believe the adoption of this update will have a material impact on our financial statements.

In May 2014, the FASB has issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The guidance in this update supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition.” In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (for example, assets within the scope of Topic 360, Property, Plant, and Equipment, and intangible assets within the scope of Topic 350, Intangibles—Goodwill and Other) are amended to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in this update. Under the new guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU No. 2014-09 are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. We do not believe the adoption of this update will have a material impact on our financial statements.

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3. Fair Value Measurements

Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework prioritizes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following three broad levels of inputs may be used to measure fair value under the fair value hierarchy:

●

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

●

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

●

Level 3: Significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management's estimates of market participant assumptions.

If the inputs used to measure the financial assets and liabilities fall within more than one of the different levels described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The following table provides the assets carried at fair value measured on a recurring basis.

Asset Class	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

September 30, 2014
Short-term investments:
U.S. Government and Agency debt securities	$	-	$	-	$	-	$	-

March 31, 2014
Short-term investments:
U.S. Government and Agency debt securities		3,451,000		-		3,451,000		-

U.S. Government and U.S. Government Agency debt securities. Our debt securities consist of bonds, notes and treasury bills with risk ratings of AAA/Aaa and maturity dates within two years from date of purchase. The estimated fair value of these securities is based on valuations provided by external investment managers.

The carrying amounts reported in the Condensed Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, inventories, other current assets, accounts payable and accrued liabilities approximate fair market value.

4. Accounts Receivable

The allowance for doubtful accounts and sales returns was $35,000 at September 30, 2014 and $44,000 at March 31, 2014.

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5. Inventories

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

	September 30, 2014		March 31, 2014

Raw materials	$	128,000	$	136,000
Work-in-process		17,000		25,000
Finished goods		381,000		356,000

	$	526,000	$	517,000

6. Net Loss per Common Share

The following potentially dilutive options to purchase shares of common stock and unvested restricted common stock at September 30 were excluded from diluted net loss per common share because of their anti-dilutive effect, and therefore, basic net loss per common share equals diluted net loss per common share for all periods presented in our Condensed Consolidated Statements of Operations:

	Number of options and unvested restricted stock		Range of stock option exercise prices

September 30, 2014		1,506,739		$2.06 to $2.50
September 30, 2013		1,802,564		$0.77 to $3.25

7. Share-based Compensation

As of September 30, 2014, we had one active plan for share-based compensation grants. Under the 2006 Amended Stock and Incentive Plan, if we have a change in control, all outstanding grants, including those subject to vesting or other performance targets, fully vest immediately. Under the plan, we reserved 3,450,000 shares of our common stock for share-based grants. As of September 30, 2014, we had 360,531 shares remaining that were available for grant.

We recognize share-based compensation expense in our Condensed Consolidated Statement of Operations based on the fair value at the time of grant of the share-based payment over the requisite service period. We incurred approximately $661,000 and $921,000 in share-based compensation expense for the six months ended September 30, 2014 and 2013, respectively.

As of September 30, 2014, we had approximately $1,161,000 of unrecognized share-based compensation expense, net of estimated forfeitures, related to stock options that we expect to recognize over a weighted-average period of 1.9 years. We also had $1,353,000 of unrecognized share-based compensation expense, net of estimated forfeitures, related to restricted shares that we expect to recognize over a weighted-average period of 2.2 years.

Options. We grant option awards with an exercise price equal to the closing market price of our stock at the date of the grant. Options granted under this plan generally expire over a period ranging from five to seven years from date of grant and vest at varying rates ranging up to three years.

We determined the fair value of our option awards using the Black-Scholes option pricing model. We used the following weighted-average assumptions to value the options granted during the six months ended September 30:

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	2014			2013

Expected life in years		2.81			4.51
Risk-free interest rate		1.0	%		1.35	%
Expected volatility		66.41	%		89.43	%
Expected dividend yield		0	%		0	%
Weighted-average grant date fair value	$	1.21		$	1.65

The expected life selected for options granted during the six-months represents the period of time that we expect our options to be outstanding based on management’s expectation of option holder exercise and termination behavior for similar grants. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate over the expected life at the time of grant. Expected volatilities are based upon historical volatility of our stock. We estimate the forfeiture rate for stock awards to be approximately zero percent for executive employees and directors and approximately 18% for non-executive employees based on our historical experience.

The following table summarizes the activity related to our stock options during the six months ended September 30, 2014:

	Number of shares			Weighted average exercise price		Weighted average remaining life in years		Aggregate intrinsic value

Outstanding at March 31, 2014		2,328,043		$	3.39		3.85	$	1,781,415
Options granted		131,300			2.98
Options exercised		(85,000	)		0.80
Options surrendered		(163,018	)		5.02

Outstanding at September 30, 2014		2,211,325		$	3.34		3.75	$	117,780

Exercisable at September 30, 2014		1,402,997		$	3.74		2.50	$	39,994

The total fair value of stock options that vested during the six months ended September 30, 2014 and 2013 was $620,000 and $315,000, respectively.

Restricted Stock. Our 2006 Stock and Incentive Plan also permits our Compensation Committee to grant other stock-based benefits, including restricted shares. Restricted shares are subject to risk of forfeiture for termination of employment. The forfeiture risk generally lapses over a period of three to four years.

The following table summarizes the activity related to our restricted shares during the six months ended September 30, 2014:

	Number of Shares			Weighted average grant date fair value		Weighted average remaining life in years		Aggregate intrinsic value
Balance at March 31, 2014		146,262		$	3.38		2.23	$	540,000
Shares granted		405,625			3.25

Shares vested		(50,436	)		3.57
Shares forfeited		(9,212	)		3.94

Balance at September 30, 2014		492,239		$	3.24		2.20	$	1,230,598

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The aggregate intrinsic value shown above for the restricted shares represents the total pre-tax value based on the closing price of our common stock on the grant date.

8. Savings and Retirement Plans

We sponsor various retirement plans for eligible employees in the United States, the United Kingdom, and The Netherlands. Our retirement savings plan in the United States conforms to Section 401(k) of the Internal Revenue Code and participation is available to substantially all employees. We may also make discretionary contributions ratably to all eligible employees. We made discretionary contributions to the U.S. plan of $137,000 and $113,000 for the six months ended September 30, 2014, and 2013, respectively.

Our international subsidiaries have defined benefit retirement plans for eligible employees. These plans provide benefits based on the employee’s years of service and compensation during the years immediately preceding retirement, termination, disability, or death, as defined in the plans.

The cost for our defined benefit retirement plans in The Netherlands and the United Kingdom includes the following components for the three- and six-month periods ended September:

	Three Months Ended September 30						Six Months Ended September 30
	2014			2013			2014			2013

Gross service cost	$	36,000		$	31,000		$	71,000		$	62,000
Interest cost		35,000			34,000			73,000			69,000
Expected return on assets		(27,000	)		(20,000	)		(54,000	)		(40,000	)
Amortization		1,000			2,000			2,000			3,000
Net periodic retirement cost	$	45,000		$	47,000		$	92,000		$	94,000

9. Business Segment Information

We aggregate our operating segments into one reportable segment in accordance with the objectives and principles of the applicable guidance.

Net sales to customers outside the United States for the three months ended September 30, 2014 and 2013 represented 24% and 25%, respectively, of our consolidated net sales. Net sales to customers outside the United States for the six months ended September 30, 2014 and 2013 represented 27% and 26%, respectively, of our consolidated net sales.

Information regarding net sales to customers by geographic area for the three and six months ended September 30 is as follows:

	United States		United Kingdom		All Other Foreign Countries (1)		Consolidated

Three months ended September 30, 2014	$	4,896,000	$	627,000	$	932,000	$	6,455,000

Three months ended September 30, 2013	$	4,478,000	$	575,000	$	924,000	$	5,977,000

Six months ended September 30, 2014	$	9,429,000	$	1,287,000	$	2,123,000	$	12,839,000

Six months ended September 30, 2013	$	8,763,000	$	1,122,000	$	1,933,000	$	11,818,000

(1)

No other country accounts for 10% or more of the consolidated net sales.

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Information regarding geographic area in which we maintain long-lived assets is as follows:

	United States		All Other Foreign Countries (1)		Consolidated

September 30, 2014	$	385,000	$	568,000	$	953,000

March 31, 2014	$	379,000	$	619,000	$	998,000

(1)

Substantially all maintained in The Netherlands

Accounting policies of the operations in the various geographic areas are the same as those described in Note 1. Net sales attributed to each geographic area are net of intercompany sales. No single customer represents 10% or more of our consolidated net sales. Long-lived assets consist of property, plant and equipment.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We recommend that you read this quarterly report on Form 10-Q in conjunction with our annual report on Form 10-K for the year ended March 31, 2014.

Forward-looking Statements

This Form 10-Q contains “forward-looking statements” relating to projections, plans, objectives, estimates, and other statements of future economic performance. These forward-looking statements are subject to known and unknown risks and uncertainties relating to our future performance that may cause our actual results, performance, or achievements, or industry results, to differ materially from those expressed or implied in any such forward-looking statements. Our business operates in highly competitive markets and our ability to achieve the results implied by our forward looking statements is subject to changes in general economic conditions, competition, reimbursement levels, 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 in our annual report filed on Form 10-K for the year ended March 31, 2014.

We do not undertake, nor assume any obligation, to update any forward-looking statement that we may make from time to time.

Critical Accounting Policies

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, or GAAP, which require us to make estimates and assumptions in certain circumstances that affect amounts reported. In preparing these consolidated financial statements, we have made our best estimates and judgments of certain amounts, giving due consideration to materiality.

We have identified in our annual report on Form 10-K for the year ended March 31, 2014, our “critical accounting policies,” which are certain accounting policies that we consider important to the portrayal of our results of operations and financial position and which may require the application of a higher level of judgment by our management, and as a result are subject to an inherent level of uncertainty. Management made no significant changes to our critical accounting policies during the six months ended September 30, 2014.

Overview

We are a medical device company that develops, manufactures and markets innovative, proprietary products for the treatment of voiding dysfunctions. Our primary focus is on two products: the Urgent PC^® Neuromodulation System (“Urgent PC System”), which we believe is the only commercially available Food and Drug Administration (“FDA”) cleared, minimally-invasive, neuromodulation system that delivers percutaneous tibial nerve stimulation (“PTNS”) for office-based treatment of overactive bladder (“OAB”) and the associated symptoms of urinary urgency, urinary frequency, and urge incontinence; and Macroplastique^®Implants (“Macroplastique”), an injectable, urethral bulking agent for the treatment of adult female stress urinary incontinence primarily due to intrinsic sphincter deficiency (“ISD”). Our Urgent PC System has CE Mark for the treatment of OAB as well as the treatment of fecal incontinence. Macroplastique also has CE Mark for the treatment of adult female stress urinary incontinence as well as male stress incontinence, fecal incontinence, vocal cord rehabilitation and vesicoureteral reflux.

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We believe physicians prefer our products because they offer effective therapies for patients that can be administered in office or outpatient surgical-based settings and, to the extent reimbursement is available, provide the physicians a profitable revenue stream. We believe patients prefer our products because they are minimally invasive treatment alternatives that do not have the side effects associated with pharmaceutical treatment options nor the higher adverse events associated with other alternate treatment options.

Our sales are and have been significantly influenced by the availability of third-party reimbursement for PTNS treatments. Effective January 2011, the American Medical Association (“AMA”) granted a Category 1 Current Procedural Terminology (“CPT”) code for PTNS treatments. As a result, we have continued to expand our U.S. field sales and support organization and as of September 30, 2014, we employed 43 sales representatives, 9 field based clinical support specialists and 6 Regional Sales Directors.

We have focused our efforts on expanding reimbursement coverage with Medicare carriers and private payers by instituting a comprehensive program to educate their medical directors regarding the clinical effectiveness, cost effectiveness and patient benefits of PTNS treatments using our Urgent PC System. Effective August 10, 2014, National Government Services (NGS), which represents 10 states with approximately 10 million covered lives, issued a positive coverage decision for PTNS for the treatment of urinary urgency, urinary frequency and urge incontinence. With this positive coverage decision, access to PTNS treatments is now available to all 50 million Medicare beneficiaries across the country. In addition, we estimate that private payers insuring approximately 133 million lives provide coverage for PTNS treatments.

We expect to continue to emphasize sales of our Urgent PC System in the United States and internationally. In fiscal 2014 and continuing in fiscal 2015, we implemented new sales strategies and refocused the sales organization. We will continue to emphasize generating greater patient and physician awareness of our Urgent PC System, and on training physicians in the proper use and clinical benefits of our Urgent PC System for OAB. As part of this process, we hired three additional clinical support specialists during fiscal 2015 and expect to hire three more in the second half of fiscal 2015. We have started to expand our call point beyond our historical focus on urologists. Specifically, we are expanding our call point to include gynecologists and urogynecologists as well as exploring opportunities in the senior living market as we look to accelerate the growth of our Urgent PC System. We do not expect to see significant growth in our Macroplastique business, because we believe it is a small, mature market that is more competitively penetrated than the market for OAB treatment using PTNS.

Another key focus in fiscal 2015 will be investments in research and development to build our product pipeline. Enrollment for our pilot clinical trial for fecal incontinence in the United States using our Urgent PC System is completed. We have been advised by the FDA that a pivotal trial using Urgent PC for fecal incontinence will need an endpoint of at least six months. Accordingly, we plan to evaluate six month outcomes data for all thirty patients enrolled in our U.S. fecal incontinence pilot study and also evaluate the six month outcomes from a large randomized trial – the CONFIDeNT study of percutaneous tibial nerve stimulation for fecal incontinence in the United Kingdom that is currently in progress. Based on this development, we will defer making a decision on whether or not we will invest in a U.S. pivotal study for fecal incontinence until we have had an opportunity to thoroughly review the six month data, which will be sometime in early calendar year 2015. We are also researching other potential indication expansions in the pelvic health area, as well as exploring opportunities to expand our product portfolio through business development activities. Our focus will be on capitalizing upon our leverage at the call point created by our strong distribution channel.

Results of Operations

Three and six months ended September 30, 2014 compared to three and six months ended September 30, 2013.

Net Sales: During the three months ended September 30, 2014, consolidated net sales of $6,455,000 represented a $478,000, or an 8% increase, over net sales of $5,977,000 for the three months ended September 30, 2013. The increase in consolidated net sales for the three months ended September 30, 2014 was due to global sales growth of 17% of our Urgent PC System. During the six months ended September 30, 2014, consolidated net sales of $12,839,000 represented a $1,021,000, or a 9% increase, over net sales of $11,818,000 for the six months ended September 30, 2013. The increase in consolidated net sales for the six months ended September 30, 2014 was due to global sales growth of 18% of our Urgent PC System.

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Net sales in the U.S. of our Urgent PC System increased 16% to $3,527,000 for the three months ended September 30, 2014, up from $3,051,000 for the same period last year. Net sales to customers in the U.S. of our Urgent PC System were $6,657,000 during the six months ended September 30, 2014, represented an increase of $832,000, or 14%, over net sales of $5,825,000 for the six months ended September 30, 2013. Net sales increased as a result of improved sales execution within the U.S. resulting in new account conversions, a higher number of active customers and higher utilization by our active customers.

Urgent PC System sales to customers outside of the U.S. were $725,000 for the three months ended September 30, 2014, an increase of 28% from $567,000 in the same period last year. Urgent PC System sales to customers outside of the U.S. were $1,655,000 for the six months ended September 30, 2014, an increase of 39% from $1,194,000 in the same period last year. The increase in sales is attributed to the increase in adoption of the product by our customers, primarily in markets where we sell to hospitals directly.

Global sales of our Macroplastique product declined 4%, or $79,000, to $1,924,000 for the three months ended September 30, 2014, and declined 4%, or $174,000, to $4,004,000 for the six months ended September 30, 2014. Net sales decreased as a result of continued focus on our Urgent PC System.

Net sales in the U.S. of our Macroplastique product decreased 1%, or $15,000, to $1,340,000 for the three months ended September 30, 2014, compared to $1,355,000 for the three months ended September 30, 2013. Net sales in the U.S. of our Macroplastique product decreased 5%, or $129,000, to $2,714,000 for the six months ended September 30, 2014, compared to $2,843,000 for the six months ended September 20, 2013. The sales decrease is attributed to the shift in sales focus from Macroplastique to Urgent PC.

Macroplastique sales to customers outside of the U.S. declined 10% to $584,000 in the second fiscal quarter over the corresponding year ago period, and declined 3% to $1,290,000 for the six months ended September 30, 2014, over the corresponding year ago period. The sales decrease is attributed primarily to the shift in sales focus from Macroplastique to Urgent PC.

Sales for our PTQ Implants, VOX Implants and our distributed products, which are sold internationally, decreased 19% to $234,000 for the three months ended September 30, 2014, compared to $288,000 for the three months ended September 30, 2013. The sales of these products declined 17% to $426,000 for the six months ended September 30, 2014, compared to $515,000 for the three months ended September 30, 2013.

Net sales to customers in the U.S. of $4,897,000 during the three months ended September 30, 2014, represented an increase of $419,000, or 9%, over net sales of $4,478,000 for the three months ended September 30, 2013. Net sales to customers in the U.S. of $9,429,000 during the six months ended September 30, 2014, represented an increase of $666,000, or 8%, over net sales of $8,763,000 for the six months ended September 30, 2013.

Net sales to customers outside the U.S. for the three months ended September 30, 2014 increased 4% to $1,558,000, compared to $1,499,000 for the three months ended September 30, 2013. Net sales to customers outside the U.S. for the six months ended September 30, 2014 increased 12% to $3,410,000, compared to $3,055,000 for the six months ended September 30, 2013.

Gross Profit: Gross profit was $5,701,000, or 88.3% of net sales during the three months ended September 30, 2014, and $5,235,000, or 87.6% of net sales for the three months ended September 30, 2013. Gross profit was $11,295,000, or 88.0% of net sales during the six months ended September 30, 2014, and $10,328,000, or 87.4% of net sales for the six months ended September 30, 2013. The increase in gross profit percentage for the three month period and the six month period ended September 30, 2014 is attributed primarily to the favorable product mix.

General and Administrative Expenses (G&A): G&A expenses of $1,288,000 during the three months ended September 30, 2014, decreased $1,103,000 from $2,391,000 during the same period in 2013. In the three month period ended September 30, 2013 there were one-time charges for legal and accounting fees pertaining to the review of certain internal control issues and executive management changes. The decrease in G&A expenses were driven by a decrease in legal and accounting fees of $375,000 and a decrease in personnel costs of $728,000.

G&A expenses of $2,866,000 during the six months ended September 30, 2014, decreased $1,105,000 from $3,971,000 during the same period in 2013. In the six month period ended September 30, 2013 there were one-time charges for legal and accounting fees pertaining to the review of certain internal control issues and executive management changes. The decrease in G&A expenses were driven by a decrease in legal and accounting fees of $709,000 and personnel costs of $396,000.

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Research and Development Expenses (R&D): R&D expenses of $651,000 during the three months ended September 30, 2014, increased $222,000 from $429,000 during the same period in 2013. The increase is attributed primarily to higher enrollments in human clinical studies and higher personnel costs.

R&D expenses of $1,560,000 during the six months ended September 30, 2014, increased $652,000 from $908,000 during the same period in 2013. The increase is attributed primarily to higher enrollments in human clinical studies, higher personnel costs and severance expense.

Selling and Marketing Expenses (S&M): S&M expenses of $4,819,000 during the three months ended September 30, 2014, increased $496,000, from $4,323,000, during the same period in 2013. The increase is attributed primarily to a $554,000 increase in sales personnel costs, as forty-three sales territories were fully staffed as of September 30, 2014, versus thirty-nine territories staffed a year ago, as well as the addition of three clinical specialists in the second quarter of fiscal 2015.

S&M expenses of $10,091,000 during the six months ended September 30, 2014, increased $1,141,000, from $8,950,000, during the same period in 2013. The increase is attributed primarily to a $1,088,000 increase in sales personnel costs, as forty-three sales territories were fully staffed as of September 30, 2014, versus thirty-nine territories staffed a year ago, as well as the addition of three clinical specialists in the first half of fiscal 2015. Increased activity for conferences and training in the first half of fiscal 2015 as compared to the first half of fiscal 2014 also contributed to the increase.

Amortization of Intangibles: Amortization of intangibles was $8,000 and $8,000 for the three months ended September 30, 2014 and 2013, respectively. Amortization of intangibles was $17,000 and $15,000 for the six months ended September 30, 2014 and 2013, respectively.

Other Income (Expense): Other income (expense) includes interest income and foreign currency exchange gains and losses. Net other income was $0 and $4,000 for the three months ended September 30, 2014 and 2013, respectively. Net other income was $4,000 and $11,000 for the six months ended September 30, 2014 and 2013, respectively.

Income Tax Expense: During the three months ended September 30, 2014 and 2013, we recorded income tax expense of $15,000 and $16,000, respectively. During the six months ended September 30, 2014 and 2013, we recorded income tax expense of $35,000 and $31,000, respectively. Income tax expense is attributed to our European subsidiaries and to the payment of minimum taxes in the U.S.

Non-GAAP Financial Measures: The following table reconciles our operating loss calculated in accordance with GAAP in the U.S. to non-GAAP financial measures that exclude non-cash charges for share-based compensation, depreciation and amortization from gross profit, operating expenses and operating loss. The non-GAAP financial measures used by management and disclosed by us are not a substitute for, or superior to, financial measures and consolidated financial results calculated in accordance with GAAP, and you should carefully evaluate our reconciliations to non-GAAP. We may calculate our non-GAAP financial measures differently from similarly titled measures used by other companies. Therefore, our non-GAAP financial measures may not be comparable to those used by other companies. We have described the reconciliations of each of our non-GAAP financial measures described above to the most directly comparable GAAP financial measures.

We use these non-GAAP financial measures, and in particular non-GAAP operating loss, for internal managerial purposes because we believe such measures are one important indicator of the strength and the operating performance of our business. Analysts and investors frequently ask us for this information. We believe that they use these measures to evaluate the overall operating performance of companies in our industry, including as a means of comparing period-to-period results and as a means of evaluating our results with those of other companies.

Our non-GAAP operating loss during the three months ended September 30, 2014 and 2013 was approximately $661,000 and $917,000, respectively. The decrease in non-GAAP operating loss for the three months ended September 30, 2014 over the corresponding period a year ago is attributed to the increase in sales and gross profit percent, offset slightly by the increase in operating spending. Our non-GAAP operating loss during the six months ended September 30, 2014 and 2013 was essentially the same at $2.4 million for both periods. The non-GAAP operating loss for the six months ended September 30, 2014 includes an increase in operating spending, offset by the increase in net sales and gross profit percent.

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				Expense Adjustments
Three-Months Ended	GAAP			Share-based Expense			Depreciation			Amortization of Intangibles			Non-GAAP
September 30, 2014
Gross profit	$	5,701,000		$	11,000		$	4,000		$	-		$	5,716,000
% of net sales		88.3	%											88.6	%
Operating expenses
General and administrative		1,288,000			(231,000	)		(36,000	)		-			1,021,000
Research and development		651,000			(11,000	)		(1,000	)		-			639,000
Selling and marketing		4,819,000			(84,000	)		(18,000	)		-			4,717,000
Amortization		8,000			-			-			(8,000	)		-
		6,766,000			(326,000	)		(55,000	)		(8,000	)		6,377,000

Operating loss	$	(1,065,000	)	$	337,000		$	59,000		$	8,000		$	(661,000	)

September 30, 2013
Gross profit	$	5,235,000		$	6,000		$	9,000		$	-		$	5,250,000
% of net sales		87.6	%											87.8	%
Operating expenses
General and administrative		2,390,000			(834,000	)		(53,000	)		-			1,503,000
Research and development		429,000			(11,000	)		(1,000	)		-			417,000
Selling and marketing		4,323,000			(54,000	)		(22,000	)		-			4,247,000
Amortization		8,000			-			-			(8,000	)		-
		7,150,000			(899,000	)		(76,000	)		(8,000	)		6,167,000

Operating loss	$	(1,915,000	)	$	905,000		$	85,000		$	8,000		$	(917,000	)

				Expense Adjustments
Six-Months Ended	GAAP			Share-based Expense			Depreciation			Amortization of Intangibles			Non-GAAP
September 30, 2014
Gross profit	$	11,295,000		$	25,000		$	10,000		$	-		$	11,330,000
% of net sales		88.0	%											88.2	%
Operating expenses
General and administrative		2,866,000			(442,000	)		(74,000	)		-			2,350,000
Research and development		1,560,000			(30,000	)		(1,000	)		-			1,529,000
Selling and marketing		10,091,000			(164,000	)		(37,000	)		-			9,890,000
Amortization		17,000			-			-			(17,000	)		-
		14,534,000			(636,000	)		(112,000	)		(17,000	)		13,769,000

Operating loss	$	(3,239,000	)	$	661,000		$	122,000		$	17,000		$	(2,439,000	)

September 30, 2013
Gross profit	$	10,328,000		$	14,000		$	18,000		$	-		$	10,360,000
% of net sales		87.4	%											87.7	%
Operating expenses
General and administrative		3,971,000			(755,000	)		(103,000	)		-			3,113,000
Research and development		908,000			(25,000	)		(2,000	)		-			881,000
Selling and marketing		8,951,000			(127,000	)		(41,000	)		-			8,783,000
Amortization		15,000			-			-			(15,000	)		-
		13,845,000			(907,000	)		(146,000	)		(15,000	)		12,777,000

Operating loss	$	(3,517,000	)	$	921,000		$	164,000		$	15,000		$	(2,417,000	)

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Liquidity and Capital Resources

Cash Flows.

At September 30, 2014, our cash and cash equivalents and short-term investments balances totaled $9,540,000.

At September 30, 2014, we had working capital of approximately $9,971,000.

For the six months ended September 30, 2014, we used $2,476,000 of cash in operating activities, compared to $2,243,000 of cash used during the six months ended September 30, 2013. We used this cash primarily to fund the operating loss, net of non-cash charges for depreciation, amortization of intangibles and share-based compensation, of $2,439,000 during the six months ended September 30, 2014, and $2,417,000 during the six months ended September 30, 2013.

During the six months ended September 30, 2014, and 2013, we generated $3,450,000 and $5,940,000, respectively, of net cash from the maturity of marketable securities.

For the six months ended September 30, 2014, we used $128,000 to purchase property, plant and equipment compared with approximately $209,000 for the same period a year ago. The decrease is related to the purchase of new computer equipment for our sales force which occurred in the first quarter of fiscal 2014.

Sources of Liquidity.

We believe the $9,540,000 of cash and short-term investments we maintained at September 30, 2014, is adequate to meet our needs for the next twelve months, and depending upon our cash from operations and profitability, substantially longer.

Commitments and Contingencies.

We discuss our commitments and contingencies in our annual report on Form 10-K for the year ended March 31, 2014. Our operating lease commitments include a long-term lease with Liberty Property Limited Partnership for an 18,258 square foot facility for our U.S. headquarters located at 5420 Feltl Road, Minnetonka, Minnesota. The lease, which had an original expiration date of in April 2014, was amended in January 2014. The amended lease began on May 1, 2014, has a term of 62 months and requires average annual minimum lease payments of approximately $154,000.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Refer to our annual report on Form 10-K for the fiscal year ended March 31, 2014 for a complete discussion on our market risk. There has been no material changes in market risk during the fiscal quarter ended September 30, 2014.

ITEM 4.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.

Under the supervision and with the participation of our management, including, our President and Chief Executive Officer and Chief Financial Officer (“CEO and CFO”), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”). Based on this evaluation, our CEO and CFO concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and that such information is accumulated and communicated to our management, including our CEO and CFO, in a manner that allows timely decisions regarding required disclosure.

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Changes In Internal Control Over Financial Reporting.

There were no changes in our internal control over financial reporting during the three months ended September 30, 2014 that have materially affected, or are reasonably likely to material affect our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

We are not involved in any material active legal actions, however, from time to time may be subject to various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of our business. Such matters are subject to many uncertainties and to outcomes that are not predictable with assurance and that may not be known for extended periods of time.

ITEM 1A.

RISK FACTORS

We are affected by risks specific to us as well as factors that affect all businesses operating in a global market. The significant factors known to us that could materially adversely affect our business, financial condition, or operating results or could cause our actual results to differ materially from our anticipated results or other expectations, including those expressed in any forward-looking statement made in this report, are described in our annual report on Form 10-K (Item 1A. Risk Factors), for the fiscal year ended March 31, 2014. There has been no material change in those risk factors during the three months ended September 30, 2014.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5.

OTHER INFORMATION

As previously reported on a current report on Form 8-K dated October 15, 2014, the Board of Directors appointed Kenneth H. Paulus as a director. On October 30, 2014 and as a result of his appointment to the Board, the Board made a 14,475 share restricted stock grant to Mr. Paulus under the 2006 Amended Stock and Incentive Plan that will vest six months from the date of grant.

ITEM 6.

EXHIBITS

Exhibits

3.1. Amended & Restated By Laws of Uroplasty, Inc. (Incorporated by reference to Exhibit 3.1 to Registrant’s Form 8-K filed November 20, 2009).

3.2. Restated Articles of Incorporation of Uroplasty, Inc. (Incorporated by reference to Exhibit 3.1 to Registrant’s Registration Statement on Form SB-2 filed October 18, 2007 (File No. 333-146787)).

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10.1. Form of Nonqualified Stock Option Agreement under the Uroplasty, Inc. 2006 Amended Stock and Incentive Plan.

10.2. Form of Non-employee Director Nonqualified Stock Option Agreement under the Uroplasty, Inc. 2006 Amended Stock and Incentive Plan.

10.3. Form of Restricted Stock Award Agreement under the Uroplasty, Inc. 2006 Amended Stock and Incentive Plan.

10.4. Form of Non-employee Director Restricted Stock Award Agreement under the Uroplasty, Inc. 2006 Amended Stock and Incentive Plan.

31.1. Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002).

32.1. Certification by the Chief Executive Officer and Chief Financial Officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (this Exhibit is “furnished herewith pursuant to SEC rules, but is deemed not “filed”).

101. Financial statements from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, formatted in Extensible Business Reporting Language: (i) the Condensed Consolidated Balance Sheet, (ii) the Condensed Consolidated Statement of Operations, (iii) the Condensed Consolidated Statement of Comprehensive Loss, (iv) the Condensed Consolidated Statement of Shareholders’ Equity, (v) the Condensed Consolidated Statement of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements.

SIGNATURES

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

	UROPLASTY, INC.

Date: October 31, 2014	By: /s/ ROBERT KILL
	Robert Kill
	President, Chief Executive Officer and Chairman of the Board

Date: October 31, 2014	By: /s/ BRETT REYNOLDS
	Brett Reynolds
	Senior Vice President, Chief Financial Officer and Corporate Secretary

Page 21

Exhibit 10.1

UROPLASTY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT

AWARDED TO	Grant No.	Grant Date	Number of Shares	Exercise Price
NAME	NQXXX	MM/DD/YY	XX,XXX	$X.XX

This NON-QUALIFIED STOCK OPTION AGREEMENT (the “Agreement”) is made as of the date set forth in the box above labeled “Grant Date” (the “Grant Date”) by and between Uroplasty, Inc., a Minnesota corporation (the “Company”), and the individual named in the box above labeled “Awarded To” (the “Employee”).

1. Grant of Option. The Company hereby grants Employee the option (the “Option”) to purchase all or any part of an aggregate of the number of shares of the Company’s Common Stock set forth in the box above labeled “Number of Shares” (the “Shares”) at the exercise price set forth in the box above labeled “Exercise Price” according to the terms and conditions set forth in this Agreement and in the Uroplasty, Inc. 2006 Stock and Incentive Plan (the “Plan”). The Option will not be treated as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). The Option is issued under the Plan and is subject to its terms and conditions. A copy of the Plan will be furnished upon request of Employee.

The Option shall terminate at the close of business seven years from the Grant Date.

2. Vesting of Option Rights.

(a) Except as otherwise provided in this Agreement or the Plan, the option may not be exercised until vested and vests as follows: XX,XXX shares on the Option may not be exercised by Employee for the first year from the Grant Date, and then may be exercised with respect to one-third of the Shares after the first anniversary of Grant Date, with respect to an additional, cumulative one-third of the Shares after the second anniversary of the Grant Date, and with respect to all of the Shares after the third anniversary of Grant Date.

(b) During the lifetime of Employee, the Option shall be exercisable only by Employee and shall not be assignable or transferable by Employee, other than by will or the laws of descent and distribution.

3. Expiration Date. You may exercise the Option only to the extent you are vested in it. You may exercise that portion of your exercisable Option at any time and from time to time until 5:00 pm central time on MONTH DD, YYYY after which time your Option expires.

4. Exercise of Option after Death or Termination of Employment. The Option shall terminate and may no longer be exercised if Employee ceases to be employed by the Company or its affiliates, except that:

(a) If Employee’s employment shall be terminated for any reason, voluntary or involuntary, other than for “Cause” (as defined in the Plan) or Employee’s death or disability (as defined in the Plan), Employee may at any time within a period of 3 months after such termination exercise the Option to the extent the Option was exercisable by Employee on the date of the termination of Employee’s employment.

(b) If Employee’s employment is terminated for Cause, the Option shall be terminated as of the date of the act giving rise to such termination.

(c) If Employee shall die while the Option is still exercisable according to its terms or if employment is terminated because Employee has become disabled (as defined in the Plan) while in the employ of the Company and Employee shall not have fully exercised the Option, such Option may be exercised at any time within 12 months after Employee’s death or date of termination of employment for disability by Employee, personal representatives or administrators or guardians of Employee, as applicable or by any person or persons to whom the Option is transferred by will or the applicable laws of descent and distribution, to the extent of the full number of Shares Employee was entitled to purchase under the Option on (i) the earlier of the date of death or termination of employment or (ii) the date of termination for such disability, as applicable.

(d) Notwithstanding the above, in no case may the Option be exercised to any extent by anyone after the termination date of the Option.

5. Method of Exercise of Option . Subject to the foregoing, the Option may be exercised in whole or in part from time to time by serving written notice of exercise on the Company at its principal office within the Option period. The notice shall state the number of Shares as to which the Option is being exercised and shall be accompanied by payment of the exercise price. Payment of the exercise price shall be made (i) in cash (including bank check, personal check or money order payable to the Company), (ii) with the approval of the Company (which may be given in its sole discretion), by delivering to the Company for cancellation shares of the Company’s Common Stock already owned by Employee having a Fair Market Value (as defined in the Plan) equal to the full exercise price of the Shares being acquired

6. Miscellaneous.

(a) Plan Provisions Control. In the event that any provision of the Agreement conflicts with or is inconsistent in any respect with the terms of the Plan, the terms of the Plan shall control.

(b) No Rights of Stockholders. Neither Employee, Employee’s legal representative nor a permissible assignee of this Option shall have any of the rights and privileges of a stockholder of the Company with respect to the Shares, unless and until such Shares have been issued in the name of Employee, Employee’s legal representative or permissible assignee, as applicable.

(c) No Right to Employment. The grant of the Option shall not be construed as giving Employee the right to be retained in the employ of, or as giving a director of the Company or an Affiliate (as defined in the Plan) the right to continue as a director of the Company or an Affiliate with, the Company or an Affiliate, nor will it affect in any way the right of the Company or an Affiliate to terminate such employment or position at any time, with or without cause. In addition, the Company or an Affiliate may at any time dismiss Employee from employment, or terminate the term of a director of the Company or an Affiliate, free from any liability or any claim under the Plan or the Agreement. Nothing in the Agreement shall confer on any person any legal or equitable right against the Company or any Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an Affiliate. The Option granted hereunder shall not form any part of the wages or salary of Employee for purposes of severance pay or termination indemnities, irrespective of the reason for termination of employment. Under no circumstances shall any person ceasing to be an employee of the Company or any Affiliate be entitled to any compensation for any loss of any right or benefit under the Agreement or Plan which such employee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan, Employee shall be deemed to have accepted all the conditions of the Plan and the Agreement and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby.

(d) Governing Law. The validity, construction and effect of the Plan and the Agreement, and any rules and regulations relating to the Plan and the Agreement, shall be determined in accordance with the internal laws, and not the law of conflicts, of the State of Minnesota.

(e) Severability. If any provision of the Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Agreement under any law deemed applicable by the Committee (as defined in the Plan), such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Agreement, such provision shall be stricken as to such jurisdiction or the Agreement, and the remainder of the Agreement shall remain in full force and effect.

(f) No Trust or Fund Created. Neither the Plan nor the Agreement shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and Employee or any other person.

(g) Headings. Headings are given to the Sections and subsections of the Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Agreement or any provision thereof.

(h) Conditions Precedent to Issuance of Shares. Shares shall not be issued pursuant to the exercise of the Option unless such exercise and the issuance and delivery of the applicable Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, the requirements of any applicable Stock Exchange and the Minnesota Business Corporation Act. As a condition to the exercise of the purchase price relating to the Option, the Company may require that the person exercising or paying the purchase price represent and warrant that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation and warranty is required by law.

(i) Withholding. In order to provide the Company with the opportunity to claim the benefit of any income tax deduction which may be available to it upon the exercise of the Option and in order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to insure that, if necessary, all applicable federal or state payroll, withholding, income or other taxes are withheld or collected from Employee.

IN WITNESS WHEREOF, the Company and Employee have executed this Agreement on the date set forth in the first paragraph.

	UROPLASTY, INC.

	By:
	Name: Rob Kill
	Its: Title; President and CEO

Return to UROPLASTY, Inc., Chief Financial Officer,
5420 Feltl Road, Minnetonka, MN 55343

ACKNOWLEDGMENT OF RECEIPT

AWARDED TO	Grant No.	Grant Date	Number of Shares	Exercise Price
NAME	NQXXX	MM/DD/YY	XX,XXX	$X.XX

I hereby acknowledge receipt of the Non-Qualified Stock Option granted on the Grant Date under the terms and conditions of the Plan and this Agreement and agree to the provisions set forth therein and herein.


Signature of Participant	Date

Exhibit 10.2

UROPLASTY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT

AWARDED TO	Grant No.	Grant Date	Number of Shares	Exercise Price
NAME	NQXXX	MM/DD/YY	XX,XXX	$X.XX

1. Grant of Option. The Company hereby grants Participant the option (the “Option”) to purchase all or any part of an aggregate of the number of shares of the Company’s Common Stock set forth in the box above labeled “Number of Shares” (the “Shares”) at the exercise price, which is the closing price of the Company’s common stock on the Grant Date, set forth in the box above labeled “Exercise Price” according to the terms and conditions set forth in this Agreement and in the Uroplasty, Inc. 2006 Stock and Incentive Plan (the “Plan”). The Option will not be treated as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). The Option is issued under the Plan and is subject to its terms and conditions. A copy of the Plan will be furnished upon request of Participant.

The Option shall terminate at the close of business seven years from the Grant Date.

2. Vesting of Option Rights.

(a) Except as otherwise provided in this Agreement or the Plan, the Option may not be exercised by Participant until the Vesting Date on XXXX, XX, XXXX, the first anniversary of your Grant Date.

(b) During the lifetime of Participant, the Option shall be exercisable only by Participant and shall not be assignable or transferable by Participant, other than by will or the laws of descent and distribution.

3. Expiration Date. You may exercise the Option only to the extent you are vested in it. You may exercise that portion of your exercisable Option at any time and from time to time until 5:00 pm central time on XXXX, XX, XXXX after which time your Option expires.

4. Exercise of Option after Death or Termination. The Option shall terminate and may no longer be exercised if Participant ceases to be a member of the Board of Directors of the Company, except that:

(a) If Participant ceases to be a member of the Board of Directors of the Company for any reason, voluntary or involuntary, other than for “Cause” (as defined in the Plan) or Participant’s death or disability (as defined in the Plan), Participant may at any time within a period of 3 months after such termination exercise the Option to the extent the Option was exercisable by Participant on the date of the termination of Participant as a Director.

(b) If Participant ceases to be a member of the Board of Directors of the Company for Cause, the Option shall be terminated as of the date of the act giving rise to such termination.

(c) If Participant shall die while the Option is still exercisable according to its terms or if terminated because Participant has become disabled (as defined in the Plan) while a member of the Board of Directors of the Company and Participant shall not have fully exercised the Option, such Option may be exercised at any time within 12 months after Participant’s death or date of termination as a Director for disability by Participant, personal representatives or administrators or guardians of Participant, as applicable or by any person or persons to whom the Option is transferred by will or the applicable laws of descent and distribution, to the extent of the full number of Shares Participant was entitled to purchase under the Option on (i) the earlier of the date of death or termination as a Director or (ii) the date of termination for such disability, as applicable.

(d) Notwithstanding the above, in no case may the Option be exercised to any extent by anyone after the termination date of the Option.

5. Method of Exercise of Option. Subject to the foregoing, the Option may be exercised in whole or in part from time to time by serving written notice of exercise to the Company at its principal office within the Option period. The notice shall state the number of Shares as to which the Option is being exercised and shall be accompanied by payment of the exercise price. Payment of the exercise price shall be made (i) in cash (including bank check, personal check or money order payable to the Company), (ii) with the approval of the Company (which may be given in its sole discretion), by tendering to the Company a number of shares of the Company’s Common Stock already owned by Participant having a Fair Market Value (as defined in the Plan) equal to the full exercise price of the Shares being acquired.

6. Miscellaneous.

(a) Plan Provisions Control. In the event that any provision of the Agreement conflicts with or is inconsistent in any respect with the terms of the Plan, the terms of the Plan shall control.

(b) No Rights of Stockholders. Neither Participant, Participant’s legal representative nor a permissible assignee of this Option shall have any of the rights and privileges of a stockholder of the Company with respect to the Shares, unless and until such Shares have been issued in the name of Participant, Participant’s legal representative or permissible assignee, as applicable.

(c) No Right to Employment or Membership. The grant of the Option shall not be construed as giving Participant the right to be retained in the employ of, or as giving a Director of the Company the right to continue as a Member of the Board of Directors of the Company or an Affiliate (as defined in the Plan), nor will it affect in any way the right of the Company or an Affiliate to terminate such position at any time, with or without cause. In addition, the Company may at any time terminate Participant’s term as a member of the Board of a Directors of the Company, free from any liability or any claim under the Plan or the Agreement. Nothing in the Agreement shall confer on any person any legal or equitable right against the Company or any Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an Affiliate. The Option granted hereunder shall not form any part of the wages, salary or retainer of Participant for purposes of severance pay or termination indemnities, irrespective of the reason for termination. Under no circumstances shall any person ceasing to be a Participant of the Company or any Affiliate be entitled to any compensation for any loss of any right or benefit under the Agreement or Plan which such Participant might otherwise have enjoyed but for termination, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan, Participant shall be deemed to have accepted all the conditions of the Plan and the Agreement and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby.

(i) Income Tax. Participant is responsible for payment of all applicable taxes with respect to the exercise of this grant.

IN WITNESS WHEREOF, the Company and Participant have executed this Agreement on the date set forth in the first paragraph.

	UROPLASTY, INC.

	By:
	Name: Rob Kill
	Its: Title; President and CEO

Return to UROPLASTY, Inc., Chief Financial Officer,
5420 Feltl Road, Minnetonka, MN 55343

ACKNOWLEDGMENT OF RECEIPT

AWARDED TO	Grant Date	Number of Shares	Exercise Price
NAME	NQXXX	MM/DD/YY	XX,XXX


Signature of Participant	Date

Exhibit 10.3

UROPLASTY, INC.

RESTRICTED STOCK AWARD AGREEMENT

AWARDED TO	Award Date	Award No.	Number of UROPLASTY, Inc. Common Shares	Social Security Number
NAME	MM/DD/YY	RSAXXX	XX,XXX	XXX-XX-XXXX

THIS AGREEMENT is made as of the date set forth in the box above labeled “Award Date” (the “Award Date”) by and between Uroplasty, Inc., a Minnesota corporation (the “Company”), and the individual named in the box above labeled “Awarded To” (the “Participant”).

WHEREAS, the Company pursuant to its 2006 Amended Stock and Incentive Plan (the “Plan”) wishes to award to Participant shares of Common Stock of the Company, $.01 par value (the “Common Stock”), subject to certain restrictions and on the terms and conditions contained in this Agreement and the Plan;

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the parties hereto hereby agree as follows:

1. Award

The Company, effective as of the date of this Agreement, hereby grants to Participant a restricted stock award of the number of shares of the Company’s Common Stock set forth in the box above labeled “Number of Uroplasty, Inc. Common Shares” (the “Shares”) subject to the terms and conditions set forth herein.

2. Vesting

Subject to the terms and conditions of this Agreement, one third (1/3) of the Shares shall vest on the first anniversary of the Award Date, an additional one third (1/3) the Shares shall vest on the second anniversary of the Award Date and a final one third (1/3) the Shares shall vest on the third anniversary of the Award Date (the “Final Vesting Date”).

3. Restriction on Transfer

Until the Shares vest pursuant to Section 2 or 4 hereof, none of the Shares may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company, and no attempt to transfer the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the purported transferee with any interest or right in or with respect to the Shares.

4. Forfeiture; Early Vesting

If Participant ceases to be an employee of the Company or its subsidiaries prior to vesting of the Shares pursuant to Section 2 hereof or Section 12 of the Plan, all of Participant’s rights to all of the unvested Shares shall be immediately and irrevocably forfeited, except that (i) if Participant ceases to be an employee by reason of Disability (as defined below) prior to the vesting of Shares under Section 2 hereof or Section 12 of the Plan, Participant, in addition to Shares previously vested under this Agreement, shall become immediately vested, as of the date of such Disability, in all previously unvested Shares granted hereunder; and (ii) if Participant ceases to be an employee by reason of death prior to the vesting of Shares under Section 2 hereof or Section 12 of the Plan, Participant or his or her estate, in addition to Shares previously vested under this Agreement, shall become immediately vested, as of the date of death, in all previously unvested Shares granted hereunder. Upon forfeiture, Participant will no longer have any rights relating to the unvested Shares, including the right to vote the Shares and the right to receive cash dividends. For purposes of this Agreement, “Disability” has the meaning given to such term in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

5. Issuance and Custody of Certificate

(a) The Company shall cause to be issued one or more stock certificates, registered in the name of Participant, evidencing the Shares. Each such certificate shall bear the following legend:

“The shares of common stock represented by this certificate are subject to forfeiture, and the transferability of this certificate and the shares of stock represented hereby are subject to the restrictions, terms and conditions (including restrictions against transfer) contained in the Uroplasty, Inc. 2006 Stock and Incentive Plan and a Restricted Stock Award Agreement entered into between Uroplasty, Inc. and the registered owner of such shares. Copies of the Plan and the Agreement are on file in the office of the Chief Financial Officer of Uroplasty, Inc., 5420 Feltl Road, Minnetonka, MN 55343.”

(b) Each certificate issued pursuant to Section 5(a) hereof shall be deposited by the Company with the Chief Financial Officer of the Company or a custodian designated by the Chief Financial Officer.

(c) After any Shares vest pursuant to Section 2 or 4 hereof, or Section 12 of the Plan, the Company shall promptly cause to be issued a certificate or certificates evidencing such vested Shares, free of the legend set forth in Section 5(a) hereof, and shall cause such certificate or certificates to be delivered to Participant or Participant’s legal representatives, beneficiaries or heirs, as the case may be.

6. Securities Law Compliance

(a) The delivery of all or any of the Shares shall only be effective at such time that the issuance of such Shares will not violate any state or federal securities or other laws. The Company may, in its sole discretion, delay the delivery of the Shares or place restrictive legends on such Shares in order to ensure that the issuance of any Shares will be in compliance with federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Company to be applicable.

7. Distributions and Adjustments

(a) If there shall be a change in the shares of Common Stock of the Company through merger, consolidation, reorganization, recapitalization, dividend in the form of stock (of whatever amount), stock split or other change in the corporate structure of the Company, and any Shares shall remain unvested at such time, then appropriate adjustments in the unvested Shares shall be made by the Company, in order to prevent dilution or enlargement of rights hereunder. Such adjustments shall include, where appropriate, changes in the number of shares of Common Stock that are unvested and subject to this Agreement.

(b) Any additional shares of Common Stock, any other securities of the Company and any other property (except for cash dividends) distributed with respect to the Shares prior to the date the Shares vest shall be subject to the same restrictions, terms and conditions as the Shares. Any cash dividends payable with respect to the Shares shall be distributed to Participant at the same time cash dividends are distributed to stockholders of the Company generally.

(c) Any additional shares of Common Stock, any securities and any other property (except for cash dividends) distributed with respect to the Shares prior to the date such Shares vest shall be promptly deposited with the Chief Financial Officer or the custodian designated by the Chief Financial Officer to be held in custody in accordance with Section 5(b) hereof.

8. Income Tax Withholding

In order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of Participant, are withheld or collected from Participant. Participant may, at Participant’s election, satisfy applicable tax withholding obligations arising from the receipt of, or lapse of restrictions relating to, the Shares by electing to have the Company withhold a portion of the Shares otherwise to be delivered with a Fair Market Value (as such term is defined in the Plan) equal to the amount of such taxes. The election must be made on or before the date that the amount of tax to be withheld is determined.

9. Miscellaneous

(a) This Agreement is issued pursuant to the Plan and is subject to its terms. Participant hereby acknowledges receipt of a copy of the Plan. The Plan is also available for inspection during business hours at the principal office of the Company.

(b) This Agreement shall not confer on Participant any right with respect to continuance of employment with the Company or any of its subsidiaries, or to continue as a director, consultant or other person providing Services to the Company, nor will it interfere in any way with the right of the Company or any of its subsidiaries to terminate such employment, position or Services at any time.

(c) Until the Shares shall have been issued to Participant as provided herein, Participant shall have only the right to receive cash dividends and vote the Shares, but shall have no other rights of a stockholder with respect to the Shares. Subject to the restrictions and terms of this Agreement, after such issuance, Participant shall have all of the rights of a stockholder with respect to the Shares.

(d) Participant may designate, upon forms to be furnished by and filed with the Company, one or more primary beneficiaries or alternative beneficiaries to receive all or a specified part of Participant’s Shares in the event of Participant’s death. Participant may change or revoke any such designation from time to time without notice to or consent from any beneficiary or spouse. No such designation, change or revocation shall be effective unless executed by Participant and received by the Company during Participant’s lifetime. If Participant fails to designate a beneficiary, designates a beneficiary and thereafter such designation is revoked without another beneficiary being named, or designates one or more beneficiaries and all such beneficiaries so designated fail to survive Participant, then Participant’s Shares, or the part thereof as to which Participant’s designation fails, as the case may be, shall be payable to the representative of Participant’s estate.

(e) This Agreement and the Plan evidence the entire understanding and agreement of the parties hereto relative to the matters discussed herein. This Agreement supersedes any and all other agreements and understandings, whether written or oral, relative to the matters discussed herein. This Agreement may only be amended by a written document signed by both of the parties hereto.

(f) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.

	UROPLASTY, INC.

	By:
	Its:
	Its: Title; President and CEO

Return by mail (or fax: 952-426-6171) to UROPLASTY, Inc., Chief Financial Officer,
5420 Feltl Road, Minnetonka, MN 55343

ACKNOWLEDGMENT OF RECEIPT

AWARDED TO	Award Date	Award No.	Number of UROPLASTY, Inc. Common Shares	Social Security Number
NAME	MM/DD/YY	RSAXXX	XX,XXX	XXX-XX-XXXX

I hereby acknowledge receipt of the Restricted Stock Award granted on the Award Date under the terms and conditions of the Plan and this Agreement and agree to the provisions set forth therein and herein.


Signature of Participant	Date

Exhibit 10.4

UROPLASTY, INC.

RESTRICTED STOCK AWARD AGREEMENT

AWARDED TO	Award Date	Award No.	Number of UROPLASTY, Inc. Common Shares	Social Security Number
NAME	MM/DD/YY	RSXXX	XX,XXX	XXX-XX-XXXX

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the parties hereto hereby agree as follows:

1. Award

2. Vesting

Subject to the terms and conditions of this Agreement, your shares shall vest on MM, DD, YYYY

3. Restriction on Transfer

4. Forfeiture; Early Vesting

If Participant ceases to be a member of the Board of Directors of the Company prior to vesting of the Shares pursuant to Section 2 hereof or Section 12 of the Plan, all of Participant’s rights to all of the unvested Shares shall be immediately and irrevocably forfeited, except that (i) if Participant ceases to be a member of the Board of Directors by reason of Disability (as defined below) prior to the vesting of Shares under Section 2 hereof or Section 12 of the Plan, Participant, in addition to Shares previously vested under this Agreement, shall become immediately vested, as of the date of such Disability, in all previously unvested Shares granted hereunder; and (ii) if Participant ceases to be a member of the Board of Directors by reason of death prior to the vesting of Shares under Section 2 hereof or Section 12 of the Plan, Participant or his or her estate, in addition to Shares previously vested under this Agreement, shall become immediately vested, as of the date of death, in all previously unvested Shares granted hereunder. Upon forfeiture, Participant will no longer have any rights relating to the unvested Shares, including the right to vote the Shares and the right to receive cash dividends. For purposes of this Agreement, “Disability” has the meaning given to such term in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

5. Issuance and Custody of Certificate

(a) The Company shall cause to be issued one or more stock certificates, registered in the name of Participant, evidencing the Shares. Each such certificate shall bear the following legend:

(b) Each certificate issued pursuant to Section 5(a) hereof shall be deposited by the Company with the Chief Financial Officer of the Company or a custodian designated by the Chief Financial Officer. Upon forfeiture pursuant to Section 4, the Participant hereby authorizes the Chief Financial Officer to surrender the certificate for cancellation and has executed an assignment separate from certificate in the form of Exhibit I attached hereto to facilitate such cancellation.

6. Securities Law Compliance

7. Distributions and Adjustments

8. Income Tax

Participant is responsible for payment of all applicable taxes with respect to this grant.

9. Miscellaneous

(b) This Agreement shall not confer on Participant any right with respect to continuance as a member of the Board of Directors of the Company, or to continue as a consultant or other person providing Services to the Company.

(f) This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.

	UROPLASTY, INC.

	By:
	Name: Rob Kill
	Its: Title; President and CEO

Return by mail (or fax: 952-426-6171) to UROPLASTY, Inc., Chief Financial Officer,

5420 Feltl Road, Minnetonka, MN 55343

ACKNOWLEDGMENT OF RECEIPT

AWARDED TO	Award Date	Award No.	Number of UROPLASTY, Inc. Common Shares	Social Security Number
NAME	MM/DD/YY	RSXXX	XX,XXX	XXX-XX-XXXX


Signature of Participant	Date

EXHIBIT I

Assignment Separate from Certificate

For Value Received ________________________ hereby sell(s), assign(s) and transfer(s) unto Uroplasty, Inc. or its successors or assigns (the “Corporation”), _______________________ (________) shares of the Common Stock of the Corporation standing in his or her name on the books of the Corporation represented by Certificate No. _______________ herewith and do(es) hereby irrevocably constitute and appoint _________________ as attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises.

Dated:

	Signature:
	Name:
	Title:
	Address:

Instruction: Please do not fill in any blanks other than the signature line. Please sign exactly as you would like your name to appear on the issued stock certificate. The purpose of this assignment is to enable the Corporation to exercise the Repurchase Right without requiring additional signatures on the part of Participant.

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert Kill, certify that:

1. I have reviewed this report on Form 10-Q for the quarterly period ended September 30, 2014 of Uroplasty, Inc. (the “Registrant”);

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: October 31, 2014

/s/ ROBERT KILL

Robert Kill
President, Chief Executive Officer and Chairman of the Board

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Brett Reynolds, certify that:

1. I have reviewed this report on Form 10-Q for the quarterly period ended September 30, 2014 of Uroplasty, Inc. (the “Registrant”);

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: October 31, 2014

/s/ BRETT REYNOLDS

Brett Reynolds
Senior Vice President, Chief Financial Officer and Corporate Secretary

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Uroplasty, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert Kill, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ ROBERT KILL

Robert Kill
President, Chief Executive Officer and Chairman of the Board

Dated: October 31, 2014

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Uroplasty, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brett Reynolds, SVP and Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.