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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-K
(Mark One)

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended March 31, 2003

OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the Transition period from to

Commission file number 000-22673

SCHICK TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Delaware 11-3374812
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

30-00 47th Avenue, Long Island City, NY 11101
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (718) 937-5765

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Common stock, par value $.01 per share

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

Yes |X| No |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|

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

Yes |_| No |X|

The aggregate market value of Common Stock held by non-affiliates of the
registrant as of September 30, 2002, the last business day of the registrant's
most recently completed second fiscal quarter, was approximately $14,501,462.
Such aggregate market value is computed by reference to the closing sale price
of the Common Stock on such date.

As of June 3, 2003, the number of shares outstanding of the Registrant's
Common Stock, par value $.01 per share, was 10,228,198

DOCUMENTS INCORPORATED BY REFERENCE:
NONE



Table of Contents

Item of Form 10-K Page

Part I
Item 1. Business .............................................. 1
Item 2. Properties ............................................ 9
Item 3. Legal Proceedings ..................................... 9
Item 4. Submission of Matters to a Vote of Security Holders ... 10

Part II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters ................................... 10
Item 6. Selected Financial Data ............................... 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................... 13
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk .................................................. 18
Item 8. Financial Statements and Supplementary Data ........... 18
Item 9. Changes in and Disagreements with Accountants
On Accounting and Financial Disclosure ................ 18

Part III
Item 10. Directors and Executive Officers of the Registrant .... 18
Item 11. Executive Compensation ................................ 22
Item 12. Security Ownership of Certain Beneficial Owners And
Management ............................................ 26
Item 13. Certain Relationships and Related Transactions ........ 28
Item 14. Controls and Procedures................................. 29

Part IV
Item 15. Exhibits, Financial Statement Schedules and Reports on
Form 8-K .............................................. F-1




FORWARD-LOOKING STATEMENTS

This Form 10-K Annual Report contains forward-looking statements that
involve risk and uncertainties. All statements, other than statements of
historical facts, included in this Annual Report regarding the Company, its
financial position, business strategy and plans and objectives of management of
the Company for future operations, are forward-looking statements. When used in
this Annual Report, words such as "anticipate," "believe," "estimate," "expect,"
"intend," "objectives," "plans" and similar expressions, or the negatives
thereof or variations thereon or comparable terminology as they relate to the
Company, its products or its management, identify forward-looking statements.
Such forward-looking statements are based on the beliefs of the Company's
management, as well as assumptions made by and information currently available
to the Company's management. Actual results could differ materially from those
contemplated by the forward-looking statements as a result of various factors,
including, but not limited to, those contained in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in this Annual Report
and the "Risk Factors" set forth in Exhibit 99.2 to this Annual Report. All
subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by this paragraph.

PART I

ITEM 1. BUSINESS

Schick Technologies, Inc. (the "Company") designs, develops and
manufactures innovative digital radiographic imaging systems and devices, which
are based on proprietary digital imaging technologies, for the dental and
medical markets.

In the field of dentistry, the Company's products include the CDR(R)
computed dental radiography imaging system, introduced in March 1994. The CDR(R)
system, a leading product in its field, uses an intra-oral sensor to produce
instant, full size, high-resolution dental x-ray images on a color computer
monitor without film or the need for chemical development, while reducing the
radiation dose by up to 80% or more as compared with conventional x-ray film. In
February 2003, the Company introduced CDR Wireless(TM), an innovative wireless
instant digital dental x-ray system. The Company also manufactures and sells the
USBCam (TM), an intra-oral camera which fully integrates with the CDR(R) system,
and the CDRPan(R), a digital panoramic imaging device. In addition, the Company
is developing other products and devices for the dental field, as well as
updated versions of its current products.

In the field of medical radiography, the Company manufactures and sells
the accuDEXA(R) bone densitometer, a low-cost and easy-to-operate device for the
assessment of bone mineral density and fracture risk. Additionally, the Company
has commenced development of a general purpose digital radiography device for
various intended uses, including cephalometric imaging. The Company's core
products are based primarily on its proprietary active-pixel sensor ("APS")
imaging technology. In addition, certain of the Company's products are based
upon its proprietary enhanced charged-coupled-device ("CCD") imaging technology.
APS allows the fabrication of large-area imaging devices with high resolution at
a fraction of the cost of traditional technologies. APS technology, developed by
the California Institute of Technology and initially licensed to Photobit
Corporation, is licensed to Micron Technology, Inc.; it is sublicensed to the
Company for a broad range of health care applications.

The Company's objective is to be the leading provider of high resolution,
low-cost digital radiography products. The Company plans to leverage its
technological advantage in the digital imaging field to penetrate a broad range
of diagnostic imaging markets. The Company believes that its proprietary
technologies and expertise in electronics, imaging software and advanced
packaging may enable it to compete successfully in these markets. Key elements
of the Company's strategy include (i) expanding market leadership in dental
digital radiography; (ii) enhancing the Company's international distribution
channels; and (iii) broadening the Company's product offerings.

The Company's business was founded in 1992 and it was incorporated in
Delaware in 1997. On July 7, 1997, the Company completed an initial public
offering of its Common Stock. Proceeds to the Company after expenses of the
offering were approximately $33,508,000.

Under generally accepted accounting principles, the Company operates in
one reportable segment: digital radiographic imaging systems. Note 1 to the
Company's Consolidated Financial Statements summarizes the percent of the
Company's revenues from its principal products.


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The Company's offices are located at 30-00 47th Avenue, Long Island City,
New York 11101. The Company's telephone number is (718) 937-5765, and its
website address is http://www.schicktech.com.

PRODUCTS / INDUSTRY

Digital Imaging

X-ray imaging, or radiography, is widely used as a basic diagnostic
technique in a broad range of medical applications. To produce a conventional
radiograph, a film cassette is placed behind the anatomy to be imaged. A
generator, which produces high-energy photons known as x-rays, is positioned
opposite the film cassette. The transmitted x-rays pass through soft tissue,
such as skin and muscle, and are absorbed by harder substances, such as bone.
These x-rays then form a latent image upon the film. After exposure, the film is
passed through a series of chemicals and then dried.

Film, however, has certain inherent limitations, including the time,
operating expense, inconvenience and uncertainty associated with film
processing, as well as the cost of disposal of waste chemicals and the need for
compliance with environmental regulations. Furthermore, the radiation dosage
levels required to assure adequate image quality in conventional film raise
concerns regarding the health risks associated with exposure to radiation. Also,
conventional film images cannot be electronically retrieved from patient records
or electronically transmitted to health care providers or insurance carriers at
remote locations, a capability which has become increasingly important in
today's managed care environment. While x-ray scanning systems convert x-rays
into digital form, they add to the time and expense associated with the use of
conventional film and do not eliminate the drawbacks of film processing.

Digital radiography products have been developed to overcome the
limitations of conventional film. These systems replace the conventional film
cassette with an electronic receptor which directly converts the incident x-rays
to digital images.

Dental Imaging

Dentists, who typically perform their own radiology work, represent the
single largest group of radiologists in the world and the dental industry is, in
terms of unit volume, the largest consumer of radiographic products and
equipment.

The Company believes that there is a potential market for approximately
1.1 million digital dental radiography devices worldwide. According to the
American Dental Association, there are approximately 150,000 practicing dentists
in the United States. The Company believes that each of them, on average,
operates 2.5 radiological units, creating a potential market of 375,000 digital
dental radiography devices in the United States. In addition, the Company
believes that there are approximately 600,000 practicing dentists in the world's
major healthcare markets outside of the United States and, the Company believes
that each of them, on average, operates 1.25 radiological units, creating a
potential market of 750,000 additional devices. According to a survey of United
States dentists, reported in Dental Products Report in June 2002, the market
penetration for digital dental radiography devices among the survey respondents
was 14%.

The Company believes that dentists have a particularly strong motivation
to adopt digital radiography. Radiographic examinations are an integral part of
routine dental checkups and the dentist is directly involved in the film
development process. The use of digital radiography eliminates delays in film
processing, thus increasing the dentist's potential revenue stream and
efficiency, and reduces overhead expenses. The use of digital radiography also
allows dentists to more effectively communicate diagnosis and treatment plans to
patients, which the Company believes has the potential to increase the rate of
patients' treatment acceptance and resulting revenues. Finally, the radiation
dosage required to produce an intra-oral dental x-ray, which is high when
compared with other medical radiographs, can be reduced by up to 80% through the
use of digital radiography

The Company's principal revenue-generating product is its CDR(R) computed
dental radiography imaging system. The Company's CDR(R)system is easy to operate
and can be used with any dental x-ray generator. To produce a digital x-ray
image using CDR(R), the dentist selects an intra-oral sensor of suitable size
and places it in the patient's mouth. The


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sensor converts the x-rays into a digital image that is displayed on the
computer monitor within five seconds and automatically stored as part of the
patient's clinical records. CDR(R) system software allows the dentist to perform
a variety of advanced diagnostic operations on the image. The sensor can then be
repositioned for the next x-ray. As the x-ray dose is significantly lower than
that required for conventional x-ray film, concern over the potential health
risk posed by multiple x-rays is greatly diminished. The process is easy and
intuitive, enabling nearly any member of the dental staff to operate the CDR(R)
system with minimal training.

The Company manufactures digital sensors in three sizes which correspond
to the three standard sizes of conventional dental x-ray film. Size 0 measures
31 x 22 x 5mm and is designed for pediatric use; size 1 measures 37 x 24 x 5mm
and is designed for taking anterior dental images; and size 2 measures 43 x 30 x
5mm and is designed for taking bitewing images. All of the Company's CDR(R)
sensors can be sterilized using cold solutions or gas. The typical CDR(R)
configuration includes a computer, display monitor and size 2 digital sensor.

In February 2003, the Company announced the introduction of CDR
Wireless(TM), which the Company believes to be the world's first wireless
instant dental x-ray system. It allows dentists to produce high-quality instant
radiographs with low radiation dosage and without the need for a cable between
the intra-oral sensor and computer.

The Company began selling its intra-oral camera, the CDRCam(R), in early
1997 and a redesigned version, the CDRCam 2000(R), in November 1999. In April
2002, the Company introduced the USBCam(TM), an innovative intra-oral camera
which fully integrates with the CDR(R) system to provide color video images of
the structures of the mouth. The Company believes that the USBCam(TM) was the
world's first intra-oral camera with a direct USB interface. Since their
introduction in 1991, intra-oral cameras have become widely accepted as a dental
diagnostic, communication and presentation tool. USBCam(TM) is "ETL Listed".
"ETL" is a North American Safety Mark indicating compliance with safety standard
UL-2601-1.

In March 1999, the Company commenced the sale of its digital panoramic
imaging device, the CDRPan(R). This device, which is designed to be retrofitted
into conventional panoramic dental x-ray machines, replaces film with electronic
sensors and a computer. This obviates the need for film and provides
instantaneous images, thus offering substantial savings in terms of time and
costs. Additionally, the CDRPan(R) easily integrates with practice management
and other computer software applications.

Bone Mineral Density / Fracture Risk Assessment

Assessment of bone mineral density ("BMD") is an essential component in
the diagnosis and monitoring of osteoporosis. Osteoporosis is a disease that
causes progressive loss of bone mass which, in serious cases, may result in bone
fractures and even death. Until recently, osteoporosis was considered neither
treatable nor preventable. Because recognized treatments are now available and
because osteoporosis may be preventable if detected in its early stages, the
demand for BMD diagnostic equipment has significantly increased. The Company's
accuDEXA(R)device is an innovative BMD assessment device used to assist doctors
in the diagnosis of low bone density and prediction of fracture risk. The
Company believes that this low-cost and precise diagnostic tool assesses BMD
more quickly and easily than any comparable product currently on the market,
while using a minimal radiation dosage. It is a point-of-treatment tool,
designed for use by primary care physicians as an integral part of a patient's
regular physical examination. In December 1997, the Company received clearance
from the United States Food and Drug Administration ("FDA") for the general use
and marketing of the accuDEXA(R) as a BMD assessment device; in June, 1998 and
May 2000, the FDA granted the Company additional clearances for its marketing of
the accuDEXA(R), respectively, as a predictor of fracture risk and to further
clarify issues regarding the collection of the normative database.

Based on APS technology, accuDEXA(R) is a small self-contained unit
capable of instantly assessing the BMD of a specific portion of the patient's
hand, a relative indicator of BMD elsewhere in the body. This device is the
first BMD assessment instrument that is virtually automatic, requiring little
operator intervention or interfacing other than the entry of relevant patient
data into a built-in touch sensitive LCD screen. The device requires no external
x-ray generator or computer and it exposes the patient to less than 1% of the
radiation of a single conventional chest x-ray. To perform a test using the
accuDEXA(R), the patient places his or her hand into a position and, upon
activation by the operator, the device automatically emits two low-dosage x-ray
pulses. The patient's bone density and fracture risk information is displayed on
the screen in less than 30 seconds. The accuDEXA(R)


3


is "ETL Listed". "ETL" is a North American Safety Mark indicating compliance
with safety standard UL-2601-1.

MANUFACTURING

The Company's manufacturing facility is located at its headquarters in
Long Island City, New York. This facility is subject to periodic inspection by
the FDA. The Company assembles its CDR(R) sensors, CDRPan(R) sensors, USBCam(TM)
intra-oral cameras and accuDEXA(R) bone densitometers at this manufacturing
facility. The Company outsources the assembly of certain subassemblies, such as
printed circuit boards, plastics and cables, but performs the final assembly and
testing process at its manufacturing facility.

The Company purchases components for its products from a number of outside
vendors. While the Company strives to maintain multiple sources of supply for
each component, certain highly-specialized components, including semiconductor
wafers used in the assembly of sensors, are primarily provided by a single
supplier. In these cases, the Company strives to maintain sufficient inventory
so as to provide extra time in which to locate an acceptable alternate supplier
in the event of a supply interruption. However, in such event, there can be no
assurance that an acceptable alternate supplier would be found. The need to
replace a supplier may have a material adverse impact on the Company if it
causes a disruption in the Company's ability to deliver its products or
increases the Company's costs.

The Company's quality assurance program includes various quality control
measures, from inspection of raw materials, purchased parts and assemblies
through in-process and final inspection, and conforms to the guidelines of the
International Quality Standard, ISO 9001. In August 1998, the Company was
granted ISO 9001 certification and, since that time, has been subject to
semi-annual audits to evaluate the Company's eligibility to maintain such
certification.

DEPENDENCE ON CUSTOMERS

During fiscal 2003, Patterson Dental Company ("Patterson"), the Company's
exclusive distributor in the United States and Canada, accounted for annual
sales by the Company of $15.4 million or 52% of annual sales. During fiscal
2002, Patterson accounted for annual sales by the Company of $9.9 million or 41%
of annual sales. During fiscal 2001, Patterson and Roesch AG Medizintechnik
accounted for annual sales by the Company of $4.5 million and $3.0 million, or
21% and 14%, respectively, of annual sales. During fiscal 2003, 2002 and 2001,
respectively, sales of approximately $6.2 million, $6.2 million and $8.1 million
were made to foreign customers.

PATENTS, TRADE SECRETS AND PROPRIETARY RIGHTS

The Company seeks to protect its intellectual property through a
combination of patent, trademark and trade secret protection. The Company's
future success will depend in part on its ability to obtain and enforce patents
for its products and processes, preserve its trade secrets and operate without
infringing the proprietary rights of others.

Patents

The Company has an active corporate patent program, the goal of which is
to secure patent protection for its technology. The Company currently has issued
United States patents for an `Intra-Oral Sensor For Computer Aided Radiography',
U.S. Patent No. 5,434,418, which expires on October 16, 2012; a `Large Area
Image Detector', U.S. Patent No. 5,834,782, which expires on November 20, 2016;
a `Method and Apparatus for Measuring Bone Density', U.S. Patent No. 5,852,647,
which expires on September 24, 2017; an 'Apparatus for Measuring Bone Density
Using Active Pixel Sensors', U.S. Patent No. 5,898,753, which expires on June 6,
2017; a 'Dental Imaging System with Lamps and Method', U.S. Patent No.
5,908,294, which expires on June 12, 2017; an 'X-ray Detection System Using
Active Pixel Sensors', U.S. Patent No. 5,912,942, which expires on June 6, 2017;
a `Dental Imaging System with White Balance Compensation', U.S. Patent No.
6,002,424, which expires on June 12, 2017; `Dental Radiography Using an
Intraoral Linear Array Sensor,' U.S. Patent No. 5,995,583, which expires on
November 13, 2016; a `Method for Reading Out Data from an X-Ray Detector,' U.S.
Patent No. 6,069,935, which expires on June 6, 2017; and a `Filmless Dental
radiography System Using Universal Serial Bus Port', U.S. Patent No. 6,134,298,
which expires on August 7, 2018. In addition, the Company is the licensee of
U.S. Patent No. 5,179,579, for a 'Radiograph Display System with Anatomical Icon
for Selecting Digitized Stored Images', under a worldwide, non-exclusive,


4


fully paid license. The Company also has U.S. and foreign patent applications
currently pending.

The Company is the exclusive sub-licensee for use in medical radiography
applications of certain patents, patent applications and other know-how
(collectively, the "Intellectual Property") related to complementary metal oxide
semiconductor ("CMOS") active pixel sensor technology (the "APS Technology"),
which was developed by the California Institute of Technology and licensed to
Photobit Corp. from which the Company obtained its sub-license. Photobit was
subsequently acquired by Micron Technology, Inc., which continues to sublicense
the CMOS Intellectual Property to the Company. The Company's exclusive rights to
such technology are subject to government rights to use, noncommercial
educational and research rights to use by California Institute of Technology and
the Jet Propulsion Laboratory, and the right of a third party to obtain a
nonexclusive license from the California Institute of Technology with respect to
such technology. The Company believes that, as of the date of this filing,
except for such third party's exercise of its right to obtain a nonexclusive
license to use APS Technology in a field other than medical radiography, none of
the foregoing parties have given notice of their exercise of any of their
respective rights to the APS Technology. There can be no assurance that this
will continue to be the case, and any such exercise could have a material
adverse effect on the Company. Additionally, the agreement between the Company
and Photobit Corp. required, among other things, that the Company use all
commercially reasonable efforts to timely introduce, improve and market and
distribute licensed products in various fields. The Company has not introduced
licensed products in certain of these fields, and there can be no assurance that
the Company will do so in the future. Such failure to introduce licensed
products could result in a termination or modification of the Company's rights
with respect to the fields in which the Company has not introduced licensed
products. This could have a material adverse effect on the Company.

Trademarks

The Company has obtained trademark registrations from the United States
Patent and Trademark Office for the marks (i) "CDR" for its digital dental
radiography product; (ii) "CDRCam" (both textual and stylized) for its
intra-oral camera (iii) "QuickZoom" (both textual and stylized) for a viewing
feature in its digital dental radiography product; (iv) "accuDEXA" for its BMD
assessment product; v) "CDR Discovery" for its x-ray generating product and (vi)
"CDRPan" for its panoramic digital dental radiography product. In addition, the
Company has pending trademark applications, and has common law trademark rights
in several other names it uses commercially in connection with its products.

Trade Secrets

In addition to patent protection, the Company owns trade secrets and
proprietary know-how which it seeks to protect, in part, through appropriate
Non-Disclosure, Non-Solicitation, Non-Competition and Inventions Agreements,
and, to a limited degree, employment agreements with appropriate individuals.
These agreements generally provide that all confidential information developed
by or made known to the individual by the Company during the course of the
individual's relationship with the Company is the property of the Company, and
is to be kept confidential and not disclosed to third parties, except in
specific limited circumstances. The agreements also generally provide that all
inventions conceived by the individual in the course of rendering services to
the Company shall be the exclusive property of the Company. However, there can
be no assurances that these agreements will not be breached, that the Company
would have adequate remedies available for any breach or that the Company's
trade secrets will not otherwise become known to, or independently developed by,
its competitors.

GOVERNMENT REGULATION

Products that the Company is currently developing or may develop in the
future are likely to require certain forms of governmental clearance, including
marketing clearance by the United States Food and Drug Administration (the
"FDA"). The FDA review process typically requires extended proceedings
pertaining to product safety and efficacy. The Company believes that its future
success will depend to a large degree upon commercial sales of improved versions
of its current products and sales of new products; the Company will not be able
to market such products in the United States without FDA marketing clearance.
There can be no assurance that any products developed by the Company in the
future will be given clearance by applicable governmental authorities or that
additional regulations will not be adopted or current regulations amended in
such a manner as to adversely affect the Company.



5


Pursuant to the Federal Food, Drug and Cosmetic Act, as amended (the "FD&C
Act"), the FDA classifies medical devices intended for human use into three
classes: Class I, Class II, and Class III. In general, Class I devices are
products for which the FDA determines that safety and effectiveness can be
reasonably assured by general controls under the FD&C Act relating to such
matters as adulteration, misbranding, registration, notification, records and
reports. The CDRCam(R) is a Class I device.

Class II devices are products for which the FDA determines that general
controls are insufficient to provide a reasonable assurance of safety and
effectiveness, and that require special controls such as promulgation of
performance standards, post-market surveillance, patient registries or such
other actions as the FDA deems necessary. The CDR(R) system, CDRPan(R) and
accuDEXA(R) have been classified as Class II devices.

Class III devices are devices for which the FDA has insufficient
information to conclude that either general controls or special controls would
be sufficient to assure safety and effectiveness, and which are life-supporting,
life-sustaining, of substantial importance in preventing impairment of human
health, or present a potential unreasonable risk of illness or injury. Devices
in this case require pre-market approval, as described below. None of the
Company's existing products are in the Class III category.

The FD&C Act further provides that, unless exempted by regulation, medical
devices may not be commercially distributed in the United States unless they
have been cleared by the FDA. There are two review procedures by which medical
devices can receive such clearance. Some products may qualify for clearance
under a Section 510(k) procedure, in which the manufacturer submits to the FDA a
pre-market notification that it intends to begin marketing the product, and
shows that the product is substantially equivalent to another legally marketed
product (i.e., that it has the same intended use and that it is as safe and
effective as a legally marketed device, and does not raise different questions
of safety and effectiveness than does a legally marketed device). In some cases,
the 510(k) notification must include data from human clinical studies.

Marketing may commence once the FDA issues a clearance letter finding such
substantial equivalence. According to FDA regulations, the agency has 90 days in
which to respond to a 510(k) notification. There can be no assurance, however,
that the FDA will provide a timely response, or that it will reach a finding of
substantial equivalence.

If a product does not qualify for the 510(k) procedure (either because it
is not substantially equivalent to a legally marketed device or because it is a
Class III device), the FDA must approve a Pre-Market Approval ("PMA")
application before marketing can begin. PMA applications must demonstrate, among
other things, that the medical device is safe and effective. A PMA application
is typically a complex submission that includes the results of clinical studies.
Preparation of such an application is a detailed and time-consuming process.
Once a PMA application has been submitted, the FDA's review process may be
lengthy and include requests for additional data. By statute and regulation, the
FDA may take 180 days to review a PMA application, although such time may be
extended. Furthermore, there can be no assurance that the FDA will approve a PMA
application.

In February 1994, the FDA cleared the Company's 510(k) application for
general use and marketing of the CDR(R) system, and in October 2002, cleared the
Company's expanded 510(k) application for the CDR wireless product. In November
1996, the FDA cleared the Company's 510(k) application for general use and
marketing of the CDRCam(R). In December 1997, the FDA cleared the Company's
510(k) application for general use and marketing of accuDEXA(R). The FDA granted
the Company additional clearances in connection with the accuDEXA(R), on June 4,
1998, to market accuDEXA(R) as a predictor of fracture risk, and on May 26,
2000, to further clarify issues regarding the collection of the normative
database. In December 1998 and May 2003, the FDA cleared the Company's 510(k)
applications for CDRPan(R) and CDRPanX(TM), respectively. The Company has not
yet submitted a 510(k) application for its general-purpose digital radiography
sensor. There can be no assurance that the Company will submit such application
or that it will obtain FDA clearance for such product.

In addition to the requirements described above, the FD&C Act requires
that all medical device manufacturers and distributors register with the FDA
annually and provide the FDA with a list of those medical devices which they
distribute commercially. The FD&C Act also requires that all manufacturers of
medical devices comply with labeling requirements and manufacture their products
and maintain their documents in a prescribed manner with respect to
manufacturing, testing, and quality control activities. The FDA's Medical Device
Reporting regulation subjects medical devices to post-market reporting
requirements for death or serious


6


injury, and for certain malfunctions that would be likely to cause or contribute
to a death or serious injury if malfunction were to recur. In addition, the FDA
prohibits a device which has received marketing clearance from being marketed
for applications for which marketing clearance has not been obtained.
Furthermore, the FDA generally requires that medical devices not cleared for
marketing in the United States receive FDA marketing clearance before they are
exported, unless an export certification has been granted.

The Company must obtain certain approvals by and marketing clearances from
governmental authorities, including the FDA and similar health authorities in
foreign countries, to market and sell its products in those countries. The FDA
regulates the marketing, manufacturing, labeling, packaging, advertising, sale
and distribution of "medical devices", as do various foreign authorities in
their respective jurisdictions. The FDA enforces additional regulations
regarding the safety of equipment utilizing x-rays. Various states also impose
similar regulations.

The FDA review process typically requires extended proceedings pertaining
to the safety and efficacy of new products. A 510(k) application is required in
order to market a new or modified medical device. If specifically required by
the FDA, a pre-market approval ("PMA") may be necessary. Such proceedings, which
must be completed prior to marketing a new medical device, are potentially
expensive and time consuming. They may delay or hinder a product's timely entry
into the marketplace. Moreover, there can be no assurance that the review or
approval process for these products by the FDA or any other applicable
governmental authorities will occur in a timely fashion, if at all, or that
additional regulations will not be adopted or current regulations amended in
such a manner as will adversely affect the Company. The FDA also regulates the
content of advertising and marketing materials relating to medical devices.
Failure to comply with such regulations may result in a delay in obtaining
approval for the marketing of such products or the withdrawal of such approval
if previously obtained.

The Company is currently developing new products for the dental and
medical markets. The Company expects to file 510(k) applications with the FDA in
connection with its future products. There can be no assurance that the Company
will file such 510(k) applications and/or will obtain pre-market clearance for
any future products, or that in order to obtain 510(k) clearance, the Company
will not be required to submit additional data or meet additional FDA
requirements that may substantially delay the 510(k) process and result in
substantial additional expense. Moreover, such pre-market clearance, if
obtained, may be subject to conditions on the marketing or manufacturing of the
digital radiography sensors which could impede the Company's ability to
manufacture and/or market the product. There can be no assurance that the
general-purpose digital radiography sensor or any other products which may be
developed by the Company will be approved by or receive marketing clearance from
applicable governmental authorities. If the Company is unable to obtain
regulatory approval for and market new products and enhancements to existing
products, it will have a material adverse effect on the Company.

Failure to comply with applicable regulatory requirements can, among other
consequences, result in fines, injunctions, civil penalties, suspensions or loss
of regulatory approvals, product recalls, seizure of products, operating
restrictions and criminal prosecution. In addition, governmental regulations may
be established that could prevent or delay regulatory clearance of the Company's
products. Delays in receipt of clearance, failure to receive clearance or the
loss of previously received clearance would have a material adverse effect on
the Company's business, financial condition and results of operations.

In addition to laws and regulations enforced by the FDA, the Company is
subject to government regulations applicable to all businesses, including, among
others, regulations related to occupational health and safety, workers' benefits
and environmental protection. The extent of government regulation that might
result from any future legislation or administrative action cannot be accurately
predicted. Failure to comply with regulatory requirements could have a material
adverse effect on the Company's business, financial condition and results of
operations.

Distribution of the Company's products in countries other than the United
States may be subject to regulations in those countries. These regulations vary
significantly from country to country; the Company typically relies on its
independent distributors in such foreign countries to obtain the requisite
regulatory approvals. The Company's products bear the "CE mark", necessary for
the marketing of its products in the member countries of the European Union. The
"CE mark" is a European Union symbol of adherence to quality assurance standards
and compliance with the European Union's Medical Device Directives. The Company
has developed


7


and implemented a quality assurance program in accordance with the guidelines of
the International Quality Standard, ISO 9001. In August 1998, the Company was
granted ISO 9001 certification. The Company's current products also comply with
the requirements for the "U.L." 2601-1 (U.S.A.) and "CSA" (Canada) standards and
bear the "ETL" mark indicating such compliance.

PRODUCT LIABILITY INSURANCE

The Company is subject to the risk of product liability and other
liability claims in the event that the use of its products results in personal
injury or other claims. Although the Company has not experienced any product
liability claims to date, any such claims could have an adverse impact on the
Company. The Company maintains insurance coverage related to product liability
claims, but there can be no assurance that product liability or other claims
will not exceed its insurance coverage limits, or that such insurance will
continue to be maintained or that it will be available on commercially
acceptable terms, or at all.

RESEARCH AND DEVELOPMENT

During fiscal 2003, 2002 and 2001, research and development expenses were
$2.6, $2.2 million and $2.2 million, respectively.

BACKLOG

The backlog of orders was approximately $0.5 million at each of June 3,
2003, June 1, 2002 and June 1, 2001, respectively. Such figures include
approximately $0.2 million, $0.4 million and $0.1 million of orders on hold
pending credit approval at June 3, 2003, June 1, 2002 and June 1, 2001,
respectively. Orders included in backlog may generally be cancelled or
rescheduled by customers without significant penalty.

EMPLOYEES

As of June 3, 2003, the Company had 128 full-time employees, engaged in
the following capacities: sales and marketing (30); general and administrative
(20); operations (58); and research and development (20). The Company believes
that its relations with its employees are good. No Company employees are
represented by a labor union or are subject to a collective bargaining
agreement, nor has the Company experienced any work stoppages due to labor
disputes.

SALES AND MARKETING

Dental Products

In April 2000, the Company and Patterson entered into an exclusive
distribution agreement covering the United States and Canada; as of May 1, 2000,
the Company began marketing and selling its CDR(R) dental products in the United
States and Canada through Patterson. The Company believes that Patterson is one
of the largest distributors of dental products in North America, with more than
1,100 field sales personnel in the U.S. and Canada. In addition, the Company has
an in-house sales program which focuses on universities and continuing education
programs. As of March 31, 2003, CDR(R) had been sold to 47 of the 55 dental
schools in the United States. The Company also employs a government sales
program to sell directly to the Armed Services, Veterans Administration
hospitals, United States Public Health Service and other government-sponsored
health institutions.

The Company employs 18 area sales managers ("ASMs") located throughout the
United States and one in Canada to interface with and assist Patterson in its
sales effort. Two individuals, based at the Company's corporate offices in New
York, manage the ASM staff. In addition, a sales and marketing support staff of
4 individuals, three of whom are based at the Company's offices in New York, and
one in California, supports the sales managers and the ASMs by planning events
and product seminars and developing promotional and marketing materials.

In the international market, the Company sells the CDR(R) system via
independent regional distributors. There are currently approximately 65
independent CDR(R) dealers, covering about 57 countries. A dedicated in-house
staff, as well as 2 individuals based in Europe and Latin America, provide the
foreign distributors with materials, sales support, technical assistance and
training, both in New York and abroad.


8


The Company's goal is to utilize its leading position in the industry,
secure as many productive sales channels as possible and penetrate additional
segments of the international market.

BMD / Fracture Risk Assessment

The Company currently sells the accuDEXA(R) primarily through a network of
manufacturer representatives. To date, accuDEXA(R) sales have taken place
primarily within the United States, with a relatively small number of sales
abroad. The primary end-users for accuDEXA(R) are primary care physicians,
including OB/GYN practices, and osteopathic and geriatric specialists.

COMPETITION

Competition relating to the Company's current products is intense and
includes various companies, both within and outside of the United States. Many
of the Company's competitors are large companies with financial, sales and
marketing, and other resources that are substantially greater than those of the
Company. In addition, they may have substantially greater experience in
obtaining regulatory approvals than that of the Company. In addition, there can
be no assurance that the Company's competitors are not currently developing, or
will not attempt to develop, technologies and products that are more effective
than those of the Company or that would otherwise render the Company's products
obsolete or uncompetitive. No assurance can be given that the Company will be
able to compete successfully.

Dental Products

A number of companies currently sell intra-oral digital dental sensors
under various brand names. These include PracticeWorks, Inc. ("Trophy"), Dentrix
Dental Systems, Inc. ("ImageRay"), Provisions Dental Systems, Inc. ("Dexis"),
Sirona Dental Systems ("Sidexis") and Suni Imaging, Inc. ("Dr. Suni"). In
addition, Dentsply International, Air Techniques and Soredex Corporation sell a
storage-phosphor based intra-oral dental system. The Company believes that its
CDR system has thus far competed successfully against other products. If other
companies enter the digital radiography field, it may result in a significantly
more competitive market in the future. Several companies are involved in the
manufacture and sale of intra-oral cameras, including Dentsply International,
Henry Schein Co., Digital Doc and Air Techniques. Several companies, including
Sirona, Signet, Instrumentarium Imaging and Planmeca, manufacture digital
panoramic dental devices. Of those, only the device manufactured by Signet is
designed to be incorporated into existing conventional panoramic devices.

BMD / Fracture Risk Assessment

Two other companies, GE Lunar Corporation and Cooper-Surgical, Inc., are
currently marketing peripheral dual-X-Ray-absorptiometry (DXA) BMD
densitometers. Several companies including GE Lunar, Hologic, Inc., Sunlight,
Inc. and Norland are marketing peripheral ultrasound devices. A number of other
companies market other devices including ones that assess hand densitometry. Two
companies, Ostex International Inc. and Quidel Corp., Inc., have developed
biochemical markers which indicate the rate at which the body is resorbing
(i.e., breaking down) bone.

ITEM 2. PROPERTIES

The Company presently leases approximately 50,000 square feet of space in
Long Island City, New York. This space houses the Company's executive offices,
sales and marketing headquarters, research and development laboratories and
production and shipping facilities. The Company believes that such space will be
adequate for its needs for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

The Company and/or certain of its officers and former officers, are
involved in the matters described below:

In August 1999, the Company, through its outside counsel, contacted the
Division of Enforcement of the Securities and Exchange Commission ("SEC") to
advise it of certain matters related to the Company's restatement of earnings
for interim periods of fiscal 1999. Subsequent thereto, the SEC requested the
voluntary production of certain documents and the


9


Company provided the SEC with the requested materials. On August 17, 2000 and
April 30, 2003, the SEC served subpoenas upon the Company, pursuant to a formal
order of investigation, requiring the production of certain documents. The
Company timely provided the SEC with the subpoenaed materials. The Company has
been informed that since January 2002 the SEC and/or the United States
Attorney's Office for the Southern District of New York have served subpoenas
upon and/or contacted certain individuals, including current and former officers
and employees of the Company, and a current Director, in connection with this
matter. On June 13, 2002, the Company was advised by counsel to David Schick,
the Company's Chief Executive Officer, that the United States Attorney's Office
for the Southern District of New York had notified such counsel that Mr. Schick
was a target of the United States Attorney's investigation of this matter. The
Company has cooperated fully with the SEC staff and U.S. Attorney's Office.

On June 11, 2003, the Company and its chief executive officer, David
Schick, received notifications from the staff of the SEC of their intention to
recommend that the SEC authorize civil enforcement actions against them. The
contemplated actions would allege violations of federal securities law relating
to the Company's publicly filed financial statements, including those for the
first three quarters of the Company's fiscal year ended March 31, 1999,
restatements of which were filed in March 2000. In connection with the
contemplated actions, the staff would ask for authority to seek injunctive
relief, civil penalties and a bar against Mr. Schick from serving as an officer
or director of a public company. The Company cannot predict the potential
outcome of these matters.

The Company could become a party to a variety of legal actions (in
addition to that referred to above), such as employment and employment
discrimination-related suits, employee benefit claims, breach of contract
actions, tort claims, shareholder suits, including securities fraud, and
intellectual property related litigation. In addition, because of the nature of
its business, the Company is subject to a variety of legal actions relating to
its business operations. Recent court decisions and legislative activity may
increase the Company's exposure for any of these types of claims. In some cases,
substantial punitive damages could be sought. The Company currently has
insurance coverage for some of these potential liabilities. Other potential
liabilities may not be covered by insurance, insurers may dispute coverage, or
the amount of insurance may not be sufficient to cover the damages awarded. In
addition, certain types of damages, such as punitive damages, may not be covered
by insurance and insurance coverage for all or certain forms of liability may
become unavailable or prohibitively expensive in the future.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the quarter
ended March 31, 2003.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock began trading on The Nasdaq National Market
under the symbol "SCHK" on July 1, 1997. Prior to such date, there was no
established public trading market for the Company's Common Stock. From September
15, 1999, following the Company's delisting from the Nasdaq National Market, as
described below, to January 29, 2002, there was no established trading market
for the Company's stock, which traded in the over-the-counter market. Since
January 30, 2002, the Company's Common Stock has been traded on the
over-the-counter Bulletin Board.

By letter dated September 15, 1999, the Nasdaq Stock Market's Listing
Qualifications Panel (the "Panel") advised the Company that the Company's Common
Stock would no longer be listed on the Nasdaq National Market effective with the
close of business on September 15, 1999. The Panel's action was based on the
Company's inability to timely file its Annual Report on Form 10-K for the fiscal
year ended March 31, 1999 and Form 10-Q for the quarter ended June 30, 1999, as
well as the revenue recognition and sales practices which had been the subject
of an investigation by the Audit Committee of the Company's Board of Directors
and had led to the filing delays and the need for the restatement of the
Company's financial reports. The Company timely requested a review of this
decision and, on May 25, 2000, the Nasdaq Listing and Hearing Review Council
informed the Company of its determination to affirm the Panel's decision.



10


The following table sets forth, for the periods indicated, the high and
low closing bid prices of the Company's Common Stock in the over-the-counter
market through January 29, 2002, as reported on the "pink sheets" published by
Pink Sheets LLC (formerly known as National Quotation Bureau LLC), and the high
and low bid prices of the Company's Common Stock as quoted on the
over-the-counter Bulletin Board commencing January 30, 2002.

Fiscal Year Ended March 31, 2002 High Low
-------------------------------- ------ -----
First Quarter 1.05 0.70
Second Quarter 1.05 0.55
Third Quarter 1.06 0.51
Fourth Quarter(through January 29, 2002) 2.15 1.07
Fourth Quarter(commencing January 30,2002) 2.40 1.50

Fiscal Year Ended March 31, 2003 High Low
-------------------------------- ------ -----
First Quarter $3.60 $2.10
Second Quarter $3.01 $1.10
Third Quarter $3.00 $1.78
Fourth Quarter $4.75 $2.72

On June 3, 2003, the closing bid and asked prices per share of the
Company's Common Stock, as quoted on the over-the-counter Bulletin Board, were
$6.95 and $7.01 per share, respectively. Such prices represent quotations
between dealers, without dealer mark-up, markdown or commission, and may not
represent actual transactions. On June 3, 2003, there were 180 holders of record
of the Company's Common Stock. However, the Company believes that the number of
beneficial owners of such stock is substantially higher.

To date, the Company has not paid any dividends on its Common Stock. The
Company currently intends to retain future earnings to finance the growth and
development of the Company's business and does not anticipate paying any
dividends in the foreseeable future. The payment of dividends is within the
discretion of the Board of Directors and will depend upon the Company's
earnings, its capital requirements, financial condition and other relevant
factors.

Equity Compensation Plan Information

The following table sets forth the following information, as of March 31,
2003, with respect to compensation plans (including individual compensation
arrangements) under which equity securities of the Company are authorized for
issuance: the number of securities to be issued upon the exercise of outstanding
options, warrants and rights; the weighted-average exercise price of such
options, warrants and rights; and, other than the securities to be issued upon
the exercise of such options, warrants and rights, the number of securities
remaining available for future issuance under the plan:



-------------------------------------------------------------------------------------
(a) (b) (c)
-------------------------------------------------------------------------------------
Plan category Number of Weighted-average Number of securities
securities to be exercise price remaining available
issued upon of outstanding for future issuance
exercise of options, under equity
outstanding warrants and compensation
options, rights (excluding
warrants and securities reflected
rights in column (a)
-------------------------------------------------------------------------------------

Equity compensation 2,077,538 $2.54 1,522,462
plans approved by
security holders
-------------------------------------------------------------------------------------
Equity compensation
plans not approved by
security holders -- -- --
-------------------------------------------------------------------------------------
Total 2,077,538 $2.54 1,522,462
-------------------------------------------------------------------------------------


In addition to the options described in the table above, the Company has
outstanding an aggregate of 5,650,000 warrants exercisable at an initial
exercise price of $0.75 per share, which warrants are held by Greystone Funding
Corporation ("Greystone") or its assignee. Such


11


warrants, which are described in Note 10 to the Company's Consolidated Financial
Statements, were issued in connection with loan transactions.

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data are derived from, and are qualified
by reference to, the audited financial statements of the Company for the period
indicated. The information presented below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in ITEM 7 and the Financial Statements included in ITEM 8 of this
Report.

Schick Technologies, Inc.
Selected Financial Data



Year ended March 31,
2003 2002 2001 2000 1999
---- ---- ---- ---- ----
(in thousands, except per share data)

Statement of Operations Data:

Revenue, net $ 29,817 $ 24,399 $ 21,252 $ 21,989 $ 45,605
-------- -------- -------- -------- --------

Cost of sales 9,369 8,540 9,736 15,393 34,611
Excess and obsolete inventory 259 292 570 898 5,466
-------- -------- -------- -------- --------
Total cost of sales 9,628 8,832 10,306 16,291 40,077
-------- -------- -------- -------- --------

Gross profit 20,189 15,567 10,946 5,698 5,528
-------- -------- -------- -------- --------

Operating expenses:
Selling and marketing 5,911 5,291 5,314 7,636 18,440
General and administrative 5,041 4,148 4,161 7,339 7,338
Research and development 2,598 2,176 2,220 2,830 4,354
Bad debt expense (recovery) -- (93) (454) -- 5,598
Abandonment of leasehold -- 118 275 -- --
-------- -------- -------- -------- --------
Total operating costs 13,550 11,640 11,516 17,805 35,730
-------- -------- -------- -------- --------

Income (loss) from operations 6,639 3,927 (570) (12,107) (30,202)

Total other income (expense) (174) (839) (1,068) (224) 244
-------- -------- -------- -------- --------

Income (loss) before income taxes 6,465 3,088 (1,638) (12,331) (29,958)

Income tax benefit 5,360 -- -- -- 352
-------- -------- -------- -------- --------

Net income (loss) $ 11,825 $ 3,088 $ (1,638) $(12,331) $(29,606)
======== ======== ======== ======== ========

Basic earnings (loss) per share $ 1.17 $ 0.30 $ (0.16) $ (1.23) $ (2.96)
======== ======== ======== ======== ========
Diluted earnings (loss) per share $ 0.78 $ 0.26 $ (0.16) $ (1.23) $ (2.96)
======== ======== ======== ======== ========


2003 2002 2001 2000 1999
---- ---- ---- ---- ----

Balance Sheet Data:
Cash and cash equivalents $ 7,100 $ 1,622 $ 2,167 $ 1,429 $ 1,415
Working capital / (deficiency) 9,157 1,133 (1,586) 841 2,902
Total assets 22,610 11,957 12,646 16,290 29,386
Long-term obligations -- 2,039 4,080 6,938 45
Total liabilities 7,747 9,057 12,835 14,974 16,850
Retained earnings (accumulated deficit) (27,857) (39,682) (42,770) (41,132) (28,801)
Stockholders' equity 14,863 2,900 (189) 1,316 12,536



12


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the
Consolidated Financial Statements included elsewhere in this Report. This
discussion contains forward-looking statements based on current expectations
that involve risks and uncertainties. Actual results and the timing of certain
events may differ significantly from those projected in such forward-looking
statements due to a number of factors, including those set forth in "Results of
Operations" in this Item and elsewhere in this Report. See "ITEM 1 - Business --
Forward-Looking Statements" and Exhibit 99.2 to this Report.

Overview

The Company designs, develops and manufactures digital imaging systems for
the worldwide dental and medical markets. In the field of dentistry, the Company
currently manufactures and markets a variety of digital imaging products
including an intra-oral digital radiography system (CDR(R)), a digital panoramic
radiography sensor (CDRPAN(R)) and an intra-oral camera system (CDRCam(R)). The
Company has also developed a bone mineral density assessment device (accuDEXA)
to assist in the diagnosis and treatment of osteoporosis, which was introduced
in December 1997. In addition, the Company has commenced development of a
general-purpose digital radiography device for various intended uses, including
cephalometric imaging. The Company's revenues during fiscal 2003 were derived
primarily from sales of its CDR(R) and accuDEXA(R) products. The Company records
sales revenue upon shipment to international dealers and to end-users in the
U.S. In the case of sales made by Patterson, revenue arising from inventory in
Patterson's possession is recorded in deferred revenue, and revenue is
recognized upon shipment from Patterson's distribution centers. Revenues from
the sales of extended warranties are recognized on a straight-line basis over
the life of the extended warranty, which is generally a one-year period. The
Company utilizes Patterson as the exclusive distributor for sales of its dental
products within the United States and Canada. The Company's accuDEXA(R) product
is sold through a network of independent sales representatives in the United
States. International sales are made primarily through a network of independent
foreign distributors. In fiscal 2003, 2002 and 2001, sales to customers within
the United States were approximately 78%, 75% and 62% of total revenues,
respectively. The Company's international sales are made primarily to
distributors in Europe. All of the Company's sales are denominated in United
States dollars.

Costs of sales consists of raw materials, manufacturing labor, facilities
overhead, product support, warranty costs and installation costs. Excess and
obsolete inventory expense relates to the overstocking or obsolescence of
various dies and/or obsolete X-Ray inventory that the Company may not use or
otherwise salvage.

Operating expenses include selling and marketing expenses, general and
administrative expenses and research and development expenses, and bad debt
expense. Selling and marketing expenses consist of salaries and commissions,
advertising, promotional and sales events and travel. General and administrative
expenses include executive salaries, professional fees, facilities, overhead,
accounting, human resources, and general office administration expenses.
Research and development expenses are comprised of salaries, consulting fees,
facilities overhead and testing materials used for basic scientific research and
the development of new and improved products and their uses. Research and
development costs are expensed as incurred. Development costs are expensed as
incurred. Bad debt expense is a result of product shipments that were determined
to be uncollectible or not collected. Bad debt recovery is a result of the
receipt, in cash, for shipments previously deemed uncollectible.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires the Company to make
estimates and assumptions that affect amounts reported in the accompanying
consolidated financial statements and related footnotes. These estimates and
assumptions are evaluated on an ongoing basis based on historical developments,
market conditions, industry trends and other information the Company believes to
be reasonable under the circumstances. There can be no assurance that actual
results will conform to the Company's estimates and assumptions, and that
reported results of operations will not be materially adversely affected by the
need to make accounting adjustments to reflect changes in these estimates and
assumptions from time to time. The following policies are those that the Company
believes to be the most sensitive to estimates and judgments. The Company's
significant accounting policies are more fully described in Note 1 to the
consolidated statements.


13


Revenue recognition

The Company recognizes revenue when each of the following four criteria
are met: 1) a contract or sales arrangement exists; 2) products have been
shipped and title has been transferred or services have been rendered; 3) the
price of the products or services is fixed or determinable; and 4)
collectibility is reasonably assured. The Company records sales revenue upon
shipment to international dealers and to end-users in the U.S. In the case of
sales made by Patterson, revenue is recognized upon shipment from Patterson's
warehouses. Revenue arising from inventory in Patterson's possession is recorded
in deferred revenue. The Company records warranty renewal revenue over the
warranty renewal period (generally one year). The unamortized portion of
warranty revenue is recorded in deferred revenue.

Accounts receivable

The Company primarily sells on open credit terms to Patterson and to the
US Government, and to hospitals and universities based upon signed purchase
orders. The Company's international sales are generally prepaid, guaranteed by
irrevocable letter of credit or underwritten by credit insurance. In a limited
number of cases, international dealers are granted limited open credit terms.
Warranty shipments are prepaid. Revenue from customers is subject to agreements
allowing limited rights of return. Accordingly, the Company reduces revenue
recognized for estimated future returns. The estimate of future returns is
adjusted periodically based upon historical rates of return.

Inventories

Inventories are stated at the lower of cost or market. The cost of
inventories is determined principally on the standard cost method for
manufactured goods and on the average cost method for other inventories, each of
which approximates actual cost on the first-in, first-out ("FIFO") method. The
Company establishes reserves for inventory estimated to be obsolete,
unmarketable or slow moving inventory equal to the difference between the cost
of inventory and estimated market value based upon assumptions about future
demand and market conditions. If actual market conditions are less favorable
than those anticipated or if changes in technology affect the Company's
products, additional inventory reserves may be required.

Goodwill and other long-lived assets

Effective April 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 142 ("SFAS 142"), "Goodwill and other Intangible
Assets". This statement requires that the amortization of goodwill be
discontinued and instead an annual impairment approach be applied. The
impairment tests were performed upon adoption and are performed annually
thereafter (or more often if adverse events occur) and will be based upon a fair
value approach rather than an evaluation of the undiscounted cash flows. If
impaired, the resulting charge reflects the excess of the asset's carrying value
over the recalculated goodwill. Impairment tests performed in August 2002 and
March 2003 indicate that goodwill is not impaired.

Other long-lived assets such as patent and property and equipment are
amortized or depreciated over their estimated useful lives. These assets are
reviewed for impairment whenever events or circumstances provide evidence that
suggest that the carrying amount of the asset may not be recoverable with
impairment being based upon an evaluation of the identifiable undiscounted cash
flows. If impaired, the resulting charge reflects the excess of the asset's
carrying cost over its fair value.

If market conditions become less favorable, future cash flows, the key
variable in assessing the impairment of these assets, may decrease and as a
result the Company may be required to recognize impairment charges.

Income taxes

Income taxes are determined in accordance with Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), which requires recognition of
deferred income tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred income liabilities and assets are
determined based on the difference between financial statements and tax bases of
liabilities and assets using enacted tax rates in effect for the year in which
the differences are expected to reverse. SFAS 109 also provides for the
recognition of deferred tax assets if


14


it is more likely than not that the assets will be realized in future years. A
valuation allowance has been established for deferred tax assets for which it is
not more likely than not that the deferred tax asset will be realized. At March
31, 2003 the deferred tax asset ($16.9 million) has a partial reserve of $11.1
million, reflecting a reduction in the valuation allowance of $5.8 million
during the year ended March 31, 2003. In assessing the valuation allowance, the
Company has considered future taxable income and ongoing tax planning strategies
and has determined that it is more likely than not that $5.8 million of the
deferred tax asset will be realized. Changes in these circumstances, such as a
decline in future taxable income, may result in the continuation of a full
valuation allowance being required. Continued future income results may provide
for additional reversals of the valuation allowance. During fiscal 2003, the
Company's utilization of its net operating losses resulted in a reduction of
current taxes in the amount of $2.9 million.

Warranty obligations

Products sold are generally covered by a warranty against defects in
material and workmanship for a period of one year. The Company accrues a
warranty reserve for estimated costs to provide warranty services. The Company
estimates costs to service warranty obligations based on historical experience
and expectation of future conditions. To the extent the Company experiences
increased warranty claim activity or increased costs associated with servicing
those claims, warranty accrual will increase, resulting in decreased gross
profit.

Stock-based compensation

Stock based compensation is accounted for under the recognition and
measurement principles of APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. No stock-based employee compensation
cost is reflected in net income, as all options granted under the Company's
option plans had an exercise price equal to the market value of the underlying
common stock on the date of grant. The Company determines the fair value of
options issued based on the Black-Scholes model. The Black-Scholes model is
based on certain assumptions including the expected life of the option, risk
free interest rates, expected volatility and expected dividend yield.

Litigation and contingencies

The Company and its subsidiary are from time to time parties to lawsuits
and regulatory administrative proceedings arising out of their respective
operations. The Company records liabilities when a loss is probable and can be
reasonably estimated. The Company believes it has estimated appropriately in the
past; however court decisions could cause liabilities to be incurred in excess
of estimates.

Contractual Obligations and Commercial Commitments

The following table summarizes contractual obligations and commercial
commitments at March 31, 2003:

=============================================================================
PAYMENTS DUE BY PERIOD
--------------------------------------------------------
Less
CONTRACTUAL than 1 1-3 4-5 After 5
OBLIGATIONS Total year years years years
-----------------------------------------------------------------------------

Long-Term Debt $ 1,503 $ 1,503 $ -- $ -- $ --
-----------------------------------------------------------------------------
Operating leases 2,122 467 992 663 --
-----------------------------------------------------------------------------
Employment
agreements 970 648 322 -- --
-----------------------------------------------------------------------------
Total Contractual
Cash Obligations $ 4,595 $ 2,618 $ 1,314 $ 663 $ --
=============================================================================

Results Of Operations

The following table sets forth, for the fiscal years indicated, certain
items from the Statement of Operations expressed as a percentage of net
revenues:


15


Year ended March 31,
--------------------------
2003 2002 2001
---- ---- ----
Revenue, net 100.0% 100.0% 100.0%
------ ------ ------

Cost of sales 31.4% 35.0% 45.8%
Excess and obsolete inventory 0.9% 1.2% 2.7%
------ ------ ------
Total cost of sales 32.3% 36.2% 48.5%
------ ------ ------

Gross profit 67.7% 63.8% 51.5%

Operating expenses:
Selling and marketing 19.8% 21.7% 25.0%
General and administrative 16.9% 17.0% 19.6%
Research and development 8.7% 8.9% 10.4%
Bad debt recovery -- -0.4% -2.1%
Abandonment of leasehold -- 0.5% 1.3%
------ ------ ------
Total operating costs 45.4% 47.7% 54.2%
------ ------ ------

Operating income 22.3% 16.1% -2.7%
====== ====== ======

Fiscal Year Ended March 31, 2003 as Compared to Fiscal Year Ended March 31, 2002

Net revenues increased $5.4 million (22.2%) to $29.8 million in fiscal
2003 from $24.4 million in fiscal 2002. The revenue increase was due to higher
sales of CDR(R) dental radiography products principally through expansion of
sales through its exclusive domestic distributor, Patterson Dental Company
("Patterson"). Domestic revenues increased $5.3 million (29.0%) to $23.6 million
(79.3% of net revenue) from $18.3 million (75.0% of net revenue) in fiscal 2002.
International sales increased $0.1 million (0.2%) to $6.2 million (20.7% of net
revenue) from $6.1 million (25.0% of net revenue) in fiscal 2002.

CDR(R) product sales increased $5.9 million (31.6%) to $24.4 million
(81.9% of total revenue) during fiscal 2003 from $18.5 million (75.8% of total
revenue) during fiscal 2002. AccuDEXA(R) product sales decreased $0.2 million
(25.0%) to $0.6 million (2.0% of total revenue) during fiscal 2003 from $0.8
million (3.3% of total revenue) during fiscal 2002. Warranty revenues decreased
$0.2 million (4.0%) to $4.8 million (16.1% of total revenue) during fiscal 2003
from $5.0 million (20.5% of total revenue) during fiscal 2002.

Patterson revenue amounted to 51.7% and 40.3% of total revenue in fiscal
2003 and 2002, respectively. No other individual customer exceeded 10% of total
revenue. Overall sales returns remained at 0.2% of revenue in fiscal 2003 and
2002.

Total cost of sales for fiscal 2003 increased $0.8 million (9.0%) to $9.6
million (32.3% of net revenue) from $8.8 million (36.2% of net revenue) in
fiscal 2002. The decline in relative cost of sales is due to improved operating
efficiency as the Company reduced overhead as a result of the consolidation of
its facilities into a single location during the first quarter of fiscal 2002
and a shift in product sales mix. Additionally, product improvements resulted in
reduced expense in support of its warranty program. The Company's provision for
excess and obsolete inventory decreased to 0.9% of net revenue in fiscal 2003
from 1.2% in fiscal 2002.

Selling and marketing expense for fiscal 2003 increased $0.6 million
(11.7%) to $5.9 million (19.8% of net revenue) from $5.3 million (21.7% of net
revenue) in fiscal 2002. Increased sales and sales activities resulted in higher
payroll, commissions and related travel expenses.

General and administrative expense for fiscal 2003 increased $0.9 million
(21.5%) to $5.0 million (16.9% of revenue) from $4.1 million (17.0% of revenue)
in fiscal 2002. Increases are principally the result of higher payroll, travel
and insurance expenses.

Research and development expense in fiscal 2003 increased $0.4 million
(19.4%) to $2.6 million (8.7% of revenue) from $2.2 million (8.9% of revenue) in
fiscal 2002. The increase is the result of higher payroll and research materials
expenses.


16


Interest expense in fiscal 2003 decreased $0.7 million (68.2%) to $0.3
million from $1.0 million in fiscal 2002 due to the Company's July 2001
prepayment of $1 million it had borrowed from Greystone. The prepayment resulted
in the write off of $0.4 million of deferred interest expense in fiscal 2002.

During fiscal 2003, the Company reduced its deferred tax valuation
allowance by $5.8 million resulting in an income tax benefit of $5.5 million,
net of alternative minimum income taxes ("AMT") of $0.3 million. The Company
reduced the valuation allowance because it believes it is more likely than not
that a portion of the net operating loss carryforward will be realized. The
Company continues to reserve approximately $11.1 million of deferred income
taxes. During fiscal 2003, the Company's utilization of its net operating losses
resulted in a reduction of current taxes in the amount of $2.9 million.

As a result of all of the foregoing items, the Company's net income in
fiscal 2003 increased $8.7 million (283%) to $11.8 million from $3.1 million in
fiscal 2002.

Fiscal Year Ended March 31, 2002 as Compared to Fiscal Year Ended March 31, 2001

Net revenues increased $3.1 million (14.8%) to $24.4 million in fiscal
2002 from $21.3 million in fiscal 2001. The revenue increase was due to higher
sales of both the CDR(R) dental radiography product and the accuDEXA(R) bone
mineral density assessment device. Domestic revenues increased $5.1 million
(38.8%) to $18.3 million (74.9% of net revenue) from $13.2 million (61.2% of net
revenue) in fiscal 2001. International sales declined $2.0 million (24.2%) to
$6.1 million (25.1% of net revenue) from $8.1 million (38.8% of net revenue in
fiscal 2001.

CDR(R) product sales increased $2.7 million (17.2%) to $18.4 million
during fiscal 2002 from $15.7 million during fiscal 2001. AccuDEXA(R) product
sales increased $0.1 million (14.3%) to $0.8 million during fiscal 2002 from
$0.7 million during fiscal 2001. Warranty revenues increased $0.8 million
(18.2%) to $5.2 million during fiscal 2002 from $4.4 million during fiscal 2001.
This increase is the result of the expansion of the Company's warranty program.

Domestic sales increased due to higher sales to Patterson and higher
warranty revenue. International sales declined due to lower sales to certain
distributors in Europe. Overall sales returns have fallen to 0.2% of revenue in
fiscal 2002 from 2.0% in fiscal 2001. The Company believes this improvement is
the result of its continuing product improvement.

Total cost of sales for fiscal 2002 decreased $1.5 million (14.3%) to $8.8
million (36.2% of net revenue) from $10.3 million (48.5% of net revenue) in
fiscal 2001. Total cost of sales declined due to improved operating efficiency
as the Company reduced overhead 10% as a result of the consolidation of its
facilities into a single location after fiscal 2001. Additionally product
improvements resulted in reduced expense in support of its warranty program. The
Company's reserve for excess and obsolete inventory decreased to 1.2% of net
revenue in fiscal 2002 from 2.7% in fiscal 2001 as a result of improved
inventory management.

Selling and marketing expense remained unchanged at $5.3 million (21.7%
and 25.0% of net revenue in fiscal 2002 and 2001, respectively). Increases in
payroll and creative development expenses were offset by reduced advertising and
occupancy costs. General and administrative expense remained unchanged at $4.2
million (17.0% and 19.6% of net revenue in fiscal 2002 and 2001, respectively).
Research and development expense remained unchanged at $2.2 million (8.9% and
10.4% of net revenue in fiscal 2002 and 2001, respectively).

Bad debt recoveries declined $0.4 million to $0.1 million from $0.5
million in fiscal 2001. Recoveries related to receipt of prior fiscal year
reserved receivables declining during fiscal 2002.

Interest expense increased $0.1 million in fiscal 2002 due to the
Company's July 2001 prepayment in full of $1 million it had borrowed from
Greystone Funding Corporation. The prepayment resulted in the write off of $0.4
million of deferred interest expense. This increase was offset by a decline in
the level of borrowing and the prime interest rate during fiscal 2002.

Liquidity and Capital Resources

At March 31, 2003, the Company had $7.8 million in cash, cash equivalents
and short-term investments and working capital of $9.2 million compared to $2.1
million in cash, cash


17


equivalents and short-term investments and $1.1 million in working capital at
March 31, 2002. The increase in working capital is primarily attributable to
operating profit during fiscal 2003.

During fiscal 2003, cash provided by operations was $8.3 million compared
to $3.5 million provided by operations during fiscal 2002. Accounts receivable
increased to $3.0 million at March 31, 2003 compared to $2.8 million at March
31, 2002 due to increased sales activity. The allowance for doubtful accounts
decreased $675 to $42 at March 31, 2003 from $717 at March 31, 2002 due to the
write off of previously reserved accounts receivable, which are deemed
uncollectible. The amount due from Patterson included in accounts receivable
($1.8 million at March 31, 2003) were collected subsequent to year end.
Inventories increased to $3.0 million at March 31, 2003 compared to $2.8 million
at March 31, 2002 due to the Company's introduction of the CDR(R) wireless
product during the month of March 2003. The Company's capital expenditures
decreased to $0.5 million in fiscal 2003 from $0.8 million in fiscal 2002.
Fiscal 2003 capital expenditures primarily consisted of tooling costs and
computer upgrades. Fiscal 2002 capital expenditures were primarily related to
the Company's consolidation into a portion of its premises during the first
quarter.

During the fiscal years ended March 31, 2003 and 2002 the Company made
principal payments on long-term debt of $2.4 million and $3.4 million,
respectively. At March 31, 2003, $1.5 million in notes payable to Greystone were
outstanding, which are secured by first priority liens on substantially all of
the Company's assets. The Notes are expected to be paid in full during fiscal
2004.

The Company prepaid to Greystone $396 of outstanding principal during the
first quarter of fiscal 2004. Such payment constituted full satisfaction of the
Company's obligations to Greystone for the period through March 31, 2003,
pursuant to an Amendment and Waiver Agreement between the Company and Greystone
entered into in March 2003. As of June 3, 2003, the outstanding principal
balance of the Greystone notes is $889.

Based upon the Company's present operating conditions, management
anticipates that it will be able to meet its financing requirements on a
continuing basis. The ability of the Company to meet its cash requirements is
dependent, in part, on the Company's ability to maintain adequate sales and
profit levels, to satisfy warranty obligations without incurring expenses
substantially in excess of related warranty revenue and to collect its accounts
receivable on a timely basis. Expenses relating to the legal proceedings
described in Item 3, to the extent not covered by insurance, could affect the
Company's cash position. Management believes that its existing capital resources
and other potential sources of credit are adequate to meet its current cash
requirements. However, if the Company's cash needs are greater than anticipated
the Company may be required to seek additional or alternative financing sources
and could consider the reduction of certain discretionary expenses and the sale
of certain assets. There can be no assurance that such financing will be
available or available on terms acceptable to the Company

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The notes payable to Greystone bear an annual interest rate based on the
prime rate plus 2.5%, provided, however, that if any payments thereunder are
past due for more than 60 days, interest will thereafter accrue at the prime
rate plus 5.5%. Because the interest rate is variable, the Company's cash flow
may be adversely affected by increases in interest rates. Management does not,
however, believe that any risk inherent in the variable-rate nature of the loan
is likely to have a material effect on the Company's interest expense or
available cash.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to this item is included as a separate section of this Annual
Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DATA

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


18


(a) The Directors of the Company are as follows:

Euval Barrekette, Ph.D. Age 72, has served as a Director of the Company
since April 1992. Dr. Barrekette's current term on
the Board expires at the Company's Annual Meeting
of Stockholders in 2005. Dr. Barrekette is a
licensed Professional Engineer in New York State.
Since 1986 Dr. Barrekette has been a consulting
engineer and physicist. From 1984 to 1986 Dr.
Barrekette was Group Director of Optical
Technologies of the IBM Large Systems Group. From
1960 to 1984 Dr. Barrekette was employed at IBM's
T.J. Watson Research Center in various capacities,
including Assistant Director of Applied Research,
Assistant Director of Computer Science, Manager of
Input/Output Technologies and Manager of Optics and
Electrooptics. Dr. Barrekette holds an A.B. degree
from Columbia College, a B.S. degree from Columbia
University School of Engineering, an M.S. degree
from its Institute of Flight Structures and a Ph.D.
from the Columbia University Graduate Faculties.
Dr. Barrekette is a fellow of the American Society
of Civil Engineers, a Senior Member of the
Institute of Electronic & Electrical Engineers, and
a member of The National Society of Professional
Engineers, The New York State Society of
Professional Engineers, The Optical Society of
America and The New York Academy of Science. Dr.
Barrekette is the uncle of David B. Schick and the
brother-in-law of Dr. Allen Schick.

Jonathan Blank, Esq. Age 58, has served as a Director of the Company and
as a member of the Audit Committee of the Board of
Directors since April 2000. Mr. Blank's current
term on the Board expires at the Company's Annual
Meeting of Stockholders in 2005. Since 1979, Mr.
Blank has been a member of the law firm of Preston
Gates Ellis & Rouvelas Meeds LLP and a managing
partner of the firm since 1995

William Hood Age 79, has served as a Director of the Company and
as Chairman of the Audit Committee of the Board of
Directors since February 2002. Mr. Hood's current
term on the Board expires at the Company's Annual
Meeting of Stockholders in 2004. From 1972 to 1980,
Mr. Hood was President and Chief Executive Officer
of Hunt-Wesson Foods, Inc. From 1981 to 1983, he
served as Dean of the Chapman University School of
Business and Management. From 1983 to 1988, Mr.
Hood was Senior Vice-President of American Bakeries
Company. From 1989 to 1996, he served as a
consultant to Harlyn Products, Inc. and as a member
of its Board of Directors. Mr. Hood is a Trustee of
Chapman University.

Uri Landesman Age 41, has served as a Director of the Company
since January 2003 and from April 1992 to June
1997. Mr. Landesman's current term on the Board
expires at the Company's Annual Shareholders
Meeting in 2003. Since February 2003, Mr. Landesman
has been a Senior Portfolio Manager at Federated
Global Investment Management Corp. From July 2001
to January 2003, Mr. Landesman was a Principal and
Portfolio Manager at Arlington Capital Management.
From April 1999 to June 2001, he was a Principal
and Chief Investment Officer at Aaron Fleck &
Associates, LLC/A.F.A. Management Partners, L.P.
From June 1993 to March 1999, Mr. Landesman was
employed at J.P. Morgan Investment Management, as
Vice-President and Lead Portfolio Manager from
February 1997 to March 1999, and as Vice-President
and Senior Analyst from June 1993 to January 1997.
He holds a B.A. degree from Yeshiva University.

Curtis M. Rocca III Age 40, has served as a Director of the Company and
as a member of the Audit Committee of the Board of
Directors since May 2002. Mr. Rocca's current term
on the Board expires at the Company's Annual
Meeting of Stockholders in 2004. Since 2000, Mr.
Rocca has been the Chief Executive Officer of
Douglas, Curtis & Allyn, LLC. From 1998 to 2000, he
served as Chief Executive Officer of Dental


19


Partners, Inc. From 1990 to 1998, Mr. Rocca was
Chairman and Chief Executive Officer of Bio-Dental
Technologies Corp.

Allen Schick, Ph.D. Age 68, has served as a Director of the Company
since April 1992. Dr. Schick's current term on the
Board expires at the Company's Annual Meeting of
Stockholders in 2003. Since 1981, Dr. Schick has
been a professor at the University of Maryland and,
in 2000, was elected "Distinguished University
Professor", a title reserved for fewer than 2% of
the faculty. Since 1988, Dr. Schick has been a
Visiting Fellow at the Brookings Institution. Dr.
Schick holds a Ph.D. degree from Yale University.
Dr. Schick is David B. Schick's father and the
brother-in-law of Dr. Barrekette.

David B. Schick Age 42, is a founder of the Company and, since its
inception in April 1992, has served as the
Company's Chief Executive Officer and Chairman of
the Board of Directors. From the Company's
inception to December 1999, Mr. Schick also served
as the Company's President. Mr. Schick's current
term on the Board expires at the Company's Annual
Meeting of Stockholders in 2003. From September
1991 to April 1992, Mr. Schick was employed by
Philips N.V. Laboratories, where he served as a
consulting engineer designing high-definition
television equipment. From February 1987 to August
1991, Mr. Schick was employed as a senior engineer
at Cox and Company, an engineering firm in New York
City. From January 1985 to January 1987, Mr. Schick
was employed as an electrical engineer at Grumman
Aerospace Co. Mr. Schick holds a B.S. degree in
electrical engineering from the University of
Pennsylvania's Moore School of Engineering. Mr.
Schick is the son of Dr. Allen Schick and the
nephew of Dr. Barrekette.

Jeffrey T. Slovin Age 38, has served as the Company's President and
Chief Operating Officer since November 2001. He has
served as a Director of the Company since December
1999. From December 1999 to November 2001, Mr.
Slovin served as the Company's President. Mr.
Slovin's current term on the Board expires at the
Company's Annual Meeting of Stockholders in 2004.
Since November 2002, Mr. Slovin has been a member
of the Board of Directors of Electronic Global
Holdings Ltd. From 1999 to November 2001, Mr.
Slovin was a Managing Director of Greystone & Co.,
Inc. From 1996 to 1999, Mr. Slovin served in
various executive capacities at Sommerset
Investment Capital LLC, including Managing
Director, and as President of Sommerset Realty
Investment Corp. During 1995, Mr. Slovin was a
Manager at Fidelity Investments Co. From 1991 to
1994, Mr. Slovin was Chief Financial Officer of
Sports Lab USA Corp. and, from 1993 to 1994, was
also President of Sports and Entertainment Inc.
From 1987 to 1991, Mr. Slovin was an associate at
Bear Stearns & Co., Inc., specializing in mergers
and acquisitions and corporate finance. Mr. Slovin
holds an MBA degree from Harvard Business School.

(b) The following table shows the names and ages of all executive officers of
the Company, the positions and offices held by such persons and the period
during which each such person served as an officer. The term of office of each
person is generally not fixed since each person serves at the discretion of the
Board of Directors of the Company.



Officer
Name Age Position Since
---- --- -------- -------

David B. Schick................... 42 Chairman of the Board and Chief
Executive Officer 1992

Jeffrey T. Slovin................. 38 President, Chief Operating Officer
and Director 1999



20




Michael Stone..................... 50 Executive Vice-President of
Sales & Marketing 2000

Stan Mandelkern................... 43 Vice President of Engineering 1999

Ari Neugroschl.................... 32 Vice President of Management
Information Systems 2000

Zvi N. Raskin..................... 40 Secretary and General Counsel 1992

Will Autz......................... 49 Vice President of Manufacturing 2003

Ronald Rosner..................... 56 Director of Finance and
Administration 2000


The business experience of each of the executive officers who is not a
Director is set forth below.

MICHAEL STONE has served as the Company's Executive Vice President of
Sales and Marketing since September 2000 and as the Company's Vice
President of Sales and Marketing from January 2000 to September 2000. From
September 1993 to January 2000, Mr. Stone was General Manager of the
Dental Division of Welch-Allyn Company, and from October 1989 to September
1993 was Director of Marketing for Welch-Allyn. Mr. Stone holds an MBA
degree from the University of Rochester.

STAN MANDELKERN has served as the Company's Vice President of Engineering
since November 1999. From 1998 to 1999, Mr. Mandelkern was the Company's
Director of Electrical Engineering, and was a Senior Electrical Engineer
at the Company from 1997 to 1998. From 1996 to 1997, Mr. Mandelkern was at
Satellite Transmission Systems as Project Leader for the Digital Video
Products Group. From 1989 to 1996, Mr. Mandelkern held various design and
management positions at Loral Corp. Mr. Mandelkern holds a M.S. Degree in
electrical engineering from Syracuse University.

ARI NEUGROSCHL has served as the Company's Vice President of Management
Information Systems since July 2000. From November 1997 to July 2000, Mr.
Neugroschl was the Company's Director of Management Information Systems,
and from February 1996 to November 1997 he served as the Company's
Director of Customer Service and Support. Mr. Neugroschl holds a B.S. in
Economics from Yeshiva University.

ZVI N. RASKIN has served as Secretary of the Company since April 1992 and
as General Counsel of the Company since September 1995. From April 1992 to
May 1996, Mr. Raskin was a Director of the Company. Mr. Raskin is admitted
to practice law before the Bars of the State of New York, the United
States District Courts for the Southern and Eastern Districts of New York
and the United States Court of Appeals for the Second Circuit. From 1992
to 1995, Mr. Raskin was a senior associate at the New York law firm of
Townley & Updike. Mr. Raskin holds a J.D. degree from Yale Law School.

WILL AUTZ has served as the Company's Vice President of Manufacturing
since January 2003. From January 2000 to December 2002, Mr. Autz was the
Company's Director of Manufacturing. From 1996 to 1999, Mr. Autz was the
Manager of Manufacturing Engineering at Trident International Inc., a
division of Illinois Tools Work Inc. From 1991 to 1996, Mr. Autz was the
Director of Manufacturing & Manufacturing Engineering at General Signal
Networks, a division of General Signal Inc. Mr. Autz holds a BS in
Electromechanical Technology from the New York Institute of Technology and
is a member of the American Society of Manufacturing Engineers.

RONALD ROSNER has served as the Company's Director of Finance and
Administration since August 2000. From March 1999 to August 2000, Mr.
Rosner served the Company in several senior accounting and financial
capacities. From October 1998 to February 1999, Mr. Rosner was a
Consultant at Mercantile Ship Corporation, and from April 1997 to October
1998 was the CFO at Coast MFG. Mr. Rosner holds a B.S. degree in
Accounting from Brooklyn College and has been a Certified Public
Accountant in the State of New York since May 1972. Prior to 1999, for a
period of approximately four years, Mr. Rosner was an audit manager with
the predecessor to Ernst & Young LLP.

(c) Not applicable.


21


(d) Family Relationships

See Item 10(a).

(e) Business Experience

See Items 10(a) and 10(b).

(f) Involvement in Certain Legal Proceedings

There are no legal proceedings involving any of Company's Directors or
Officers which are reportable hereunder.

Audit Committee Financial Experts

The Company's Board of Directors has determined that two members of the
Audit Committee, Mr. Hood and Mr. Rocca, are "independent directors" and "audit
committee financial experts," as those terms are defined by the Securities and
Exchange Commission.

Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors and persons who beneficially own more
than 10% of the Company's Common Stock to file initial reports of ownership and
reports of changes in ownership with the Commission. Such executive officers and
directors and greater than 10% beneficial owners are required by the regulations
of the Commission to furnish the Company with copies of all Section 16(a)
reports they file.

Based solely on a review of the copies of such reports furnished to the
Company and written representations from executive officers and directors, the
Company believes that all Section 16(a) filing requirements applicable to its
executive officers and directors and greater than 10% beneficial owners were
complied with, except for the following: a Form 3 was filed on May 13, 2003 for
Mr. Autz who became Vice President of Manufacturing on April 9, 2003. A Form 4
was filed on February 5, 2003 for Mr. Landesman who was issued stock options on
January 29, 2003 by the Board of Directors, pursuant to the 1997 Directors Stock
Option Plan. Eight Forms 4 were filed on November 29, 2002 for the issuance of
employee stock options on November 18, 2002 by the Board of Directors to the
following executive officers, pursuant to the 1996 Employee Stock Option Plan:
Messrs. Mandelkern, Neugroschl, Raskin, Rogers, Rosner, Schick, Slovin and
Stone.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth certain information concerning compensation
received for the fiscal years ended March 31, 2003, 2002 and 2001 by the
Company's chief executive officer and each of the four most highly compensated
executive officers of the Company whose total salary and other compensation
exceeded $100,000 (the "Named Executives") for services rendered in all
capacities (including service as a director of the Company) during the year
ended March 31, 2003.

Summary Compensation Table



Long-Term
Annual Compensation
------
Compensation
------------
Awards
------
Other
Annual Securities All Other
Name and Principal Fiscal Compensa- Underlying Compensa-
Position Year Salary($) Bonus($) tion(1) Options(2) tion($)(3)
-------- ---- --------- -------- ------- ---------- ----------
- -----------------------------------------------------------------------------------------------------------------

David B. Schick 2003 $246,540 $ 90,463 -- 8,572 $ 6,708
Chairman of the Board and
Chief Executive Officer 2002 225,246 50,000 -- 160,709 4,362

2001 200,000 16,308 -- -- 4,468
- -----------------------------------------------------------------------------------------------------------------



22




- -----------------------------------------------------------------------------------------------------------------

Jeffrey T. Slovin 2003 246,646 90,463 -- 8,502 6,710
President and Chief
Operating Officer 2002 89,430 57,263 -- 150,000 1,846
(4)
- -----------------------------------------------------------------------------------------------------------------
Michael Stone 2003 212,487 45,232 -- 7,439 5,894
Executive Vice President of
Sales and Marketing
2002 193,577 48,154 -- 135,207 4,491

2001 175,000 -- -- -- 2,861
- -----------------------------------------------------------------------------------------------------------------
Zvi N. Raskin, Esq 2003 222,690 28,025 -- 7,793 5,078
General Counsel and
Secretary 2002 204,154 20,000 -- 36,018 4,527

2001 200,001 20,000 -- -- 4,038

- -----------------------------------------------------------------------------------------------------------------
Stan Mandelkern 2003 163,241 5,952 -- 7,240 4,081
Vice President of
Engineering 2002 154,615 -- -- 30,108 3,865

2001 121,878 -- -- -- 3,048


(1) Does not include other compensation if the aggregate amount thereof does
not exceed the lesser of $50,000 or 10% of the total annual salary and
bonus for the named officer.

(2) Represents options to purchase shares of Common Stock granted during
fiscal 2003, 2002, and 2001 pursuant to the Company's 1996 Employee Stock
Option Plan.

(3) Reflects amounts contributed by the Company in the form of matching
contributions to the Named Executive's Savings Plan account during fiscal
2003, 2002 and 2001.

(4) Prior to November 1, 2001, Greystone paid Mr. Slovin for his service as
the Company's President. The Company reimbursed Greystone in the amount of
$17,000 per month pursuant to a Termination Agreement between the Company
and Greystone entered into on July 12, 2001 and made effective as of March
31, 2001. Such amounts are not included in the table above.

Employment Agreements and Termination of Employment Arrangement

In January 2002, the Company entered into two-year employment agreement
with Michael Stone, pursuant to which Mr. Stone is employed as the Company's
Executive Vice President of Sales and Marketing. Mr. Stone's annual base salary
is $210,000. In addition to base salary, Mr. Stone is eligible to receive annual
merit and/or cost-of-living increases as may be determined by the Executive
Compensation Committee of the Board of Directors. Pursuant to the terms of the
employment agreement, Mr. Stone also received a performance bonus equal to 0.5%
of the Company's earnings before income taxes, depreciation and amortization for
the 2003 fiscal year. In addition, Mr. Stone received 75,000 employee stock
options which vest as follows: 12,500 options upon grant, an additional 25,000
options on January 14, 2003, an additional 25,000 options on January 14, 2004,
and the final 12,500 options on January 14, 2005. In the event that Mr. Stone is
terminated from employment with the Company without cause, he would receive 6
months of severance pay, a pro-rated performance bonus and immediate vesting of
all unvested Company stock options. Additionally, all unvested Company stock
options held by Mr. Stone will immediately vest in the event that the Company
has a change in control or is acquired by another entity.

In December 2001, the Company entered into a three-year employment
agreement with David Schick, replacing the previous employment agreement between
the Company and Mr. Schick, entered into in February 2000. Pursuant thereto, Mr.
Schick is employed as Chief Executive Officer of the Company. The term of the
agreement is renewable thereafter on a year-to-year


23


basis unless either party gives 60-days written notice of termination before the
end of the then-current term. Mr. Schick's initial base annual salary under the
Agreement is $242,000. In addition to base salary, Mr. Schick is eligible to
receive annual merit or cost-of-living increases as may be determined by the
Executive Compensation Committee of the Board of Directors. Mr. Schick will also
receive an increase in base salary as well as incentive compensation in the form
of a bonus based on the Company's EBITDA. Such incentive compensation is capped
at $100,000 per fiscal year. Pursuant to the Agreement, as amended by a letter
agreement dated March 4, 2002, Mr. Schick also received 150,000 employee stock
options which vest as follows: 50,000 options on December 20,2002, an additional
50,000 options on December 20, 2003, and the final 50,000 options on December
20, 2004. Additionally, all Company stock options held by, or to be issued to,
Mr. Schick will immediately be granted and vest in the event that the Company
has a change in control or is acquired by another company or entity. In the
event that Mr. Schick is terminated from employment with the Company without
cause, he would receive severance pay for two years or the remainder of the term
of the Agreement, whichever time period is shorter. Under certain circumstances,
where the Company effects a change in Mr. Schick's title or diminishes, in any
significant manner, his duties or responsibilities of employment, Mr. Schick may
unilaterally resign from employment. In this instance, he would act as a
consultant to the Company for a period of one year following his resignation and
receive severance pay for one year.

In November 2001, the Company entered into a three-year employment
agreement with Jeffrey T. Slovin. Pursuant to the Agreement, Mr. Slovin is
employed as President and Chief Operating Officer of the Company. Mr. Slovin's
initial base annual salary under the Agreement is $240,000. In addition to base
salary, Mr. Slovin is eligible to receive annual merit or cost-of-living
increases as may be determined by the Executive Compensation Committee of the
Board of Directors. Mr. Slovin will also receive an increase in base salary as
well as incentive compensation in the form of a bonus based on the Company's
EBITDA. Such incentive compensation is capped at $100,000 per fiscal year.
Pursuant to the Agreement, Mr. Slovin also received 150,000 employee stock
options which vest as follows: 50,000 options on October 31, 2002, an additional
50,000 options on October 31, 2003, and the final 50,000 options on October 31,
2004. Additionally, all Company stock options held by, or issued to, Mr. Slovin
will immediately vest in the event that the Company has a change in control or
is acquired by another company or entity. In the event that Mr. Slovin is
terminated from employment with the Company without cause, he would receive
severance pay for two years or the remainder of the term of the Agreement,
whichever time period is shorter. Under certain circumstances, where the Company
effects a change in Mr. Slovin's title or diminishes, in any significant manner,
his duties or responsibilities of employment, Mr. Slovin may unilaterally resign
from employment. In this instance, he would act as a consultant to the Company
for a period of one year following his resignation and receive severance pay for
one year.

In February 2000, the Company entered into a three-year employment
agreement with Zvi Raskin, effective January 1, 2000, pursuant to which Mr.
Raskin was employed as General Counsel of the Company until January 2003. Under
the expired employment agreement, Mr. Raskin's base annual salary was $220,000.
In addition to base salary, Mr. Raskin received a bonus of $20,000 per calendar
year and was eligible to receive additional performance bonuses at the sole
discretion of the Executive Compensation Committee of the Board of Directors.
Mr. Raskin was also awarded 75,000 shares of the Company's Common Stock, subject
to a risk of forfeiture which expired as to 25,000 shares on each of December
31, 2000, 2001 and 2002. Upon the sale of any such vested shares, Mr. Raskin is
required to pay the Company the sum of $1.32 per share sold within 30 days
following such sale. In the event that Mr. Raskin was terminated from employment
with the Company without cause, he would have received 12 months of severance
pay. Since January 2003, Mr. Raskin has been serving as an at-will employee of
the Company.

Compensation of Directors

Directors who are also paid-employees of the Company are not separately
compensated for any services they provide as directors. In fiscal 2003, each
director of the Company who is not a paid-employee received $1,000 for each
meeting of the Board of Directors attended in person and $1,000 for each
committee meeting attended in person. The Company was permitted to, but did not,
pay such fees in Common Stock. In addition, directors who are not paid-employees
of the Company are eligible to receive annual grants of stock options under the
Company's Directors Stock Option Plan. No fees are paid for meetings attended
telephonically.

Compensation Committee Interlocks and Insider Participation


24


The Executive Compensation Committee reviews and makes recommendations
regarding the compensation for top management and key employees of the Company,
including salaries and bonuses. The members of the Executive Compensation
Committee during the fiscal year ended March 31, 2003 were Euval Barrekette,
Jonathan Blank, William K. Hood, Curtis M. Rocca and Allen Schick. None of such
persons is an officer or employee, or former officer or employee, of the Company
or any of its subsidiaries. Allen Schick is David Schick's father. No
interlocking relationship existed during the fiscal year ended March 31, 2003,
between the members of the Company's Board of Directors or Compensation
Committee and the board of directors or compensation committee of any other
company, nor had any such interlocking relationship existed in the past.

Stock Option Grants

The following table sets forth information regarding grants of options to
purchase Common Stock made by the Company during the year ended March 31, 2003
to each of the Named Executives.

Option Grants in Fiscal 2003



Individual Grants
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees in Price Expiration Grant Date
Name Granted(1) Fiscal 2003(2) ($/Share) Date Value (3)
---- ---------- ----------------- --------- ---- -----------

David B. Schick 8,572 3.2% $3.03 11/18/07 $13,972
Jeffrey T. Slovin 8,502 3.2% $2.75 11/18/12 $14,283
Michael Stone 7,439 2.8% $2.75 11/18/12 $12,498
Stan Mandelkern 7,240 2.7% $2.75 11/12/12 $12.163
Zvi N. Raskin 7,793 2.9% $2.75 11/18/12 $13,092


(1) All the options listed in the above table have the following vesting
schedule: 25% shall vest on November 18, 2003, 25% shall vest on November
18, 2004, 25% shall vest on November 18, 2005 and the final 25% shall vest
on November 18, 2006.

(2) The Company granted employees options to purchase a total of 265,000
shares of Common Stock in fiscal 2003.

(3) The Company uses the Black-Scholes valuation model to determine the grant
date value. Assumptions used to calculate the grant date value include:

Volatility 82%
Risk-free interest rate 3.03%
Dividend yield None
Time of exercise 4 years

Option Exercises and Year-End Value Table

The following table sets forth information regarding the exercise of stock
options during fiscal 2003 and the number and value of unexercised options held
at March 31, 2003 by each Named Executive.

Aggregated Option Exercises in Fiscal 2003 and Fiscal 2003 Year-End Option
Values




Number of
Securities Value of
Underlying Unexercised
Unexercised "In-the-Money"
Options at Options at
Shares March 31, 2003 March 31, 2003
Acquired on Value Exercisable/ Exercisable/
Name Exercise(#) Realized ($) Unexercisable Unexercisable(1)
---- ----------- ------------ ------------- ----------------

David B. Schick -- -- 114,283/64,998 $271,091/127,357
Jeffrey T. Slovin -- -- 80,000/108,502 $282,400/316,008(2)
Michael Stone -- -- 85,332/82,314 $276,672/258,209
Stan Mandelkern -- -- 48,151/27,877 $132,168/84,540
Zvi N. Raskin -- -- 30,006/26,904 $35,646/75,765



25


(1) Options are "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the options. The amounts set
forth represent the difference between $4.28 per share, the closing price
per share on March 31, 2003, and the exercise price of the option,
multiplied by the applicable number of options.

(2) This chart does not include warrants issued to Mr. Slovin as designee of
Greystone. Such warrants are discussed in Item 13.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of June 3, 2003 by (i) each person
who is known by the Company to own beneficially more than 5% of the Common
Stock, (ii) each director, (iii) each Named Executive of the Company and (iv)
all directors and executive officers of the Company as a group. Unless otherwise
noted, the stockholders listed in the table have sole voting and investment
powers with respect to the shares of Common Stock owned by them.



Number of Shares Percentage of
Name Beneficially Owned(1) Outstanding Shares
---- --------------------- ------------------

David B. Schick(2) 2,247,583(3) 21.9%
Jeffrey T. Slovin(2) 927,500(11) 8.3%
Michael Stone(2) 162,632(4) 1.6%
Stan Mandelkern(2) 64,251(5) *
Zvi N. Raskin(2) 94,406(6) *
Euval S. Barrekette(7) 178,240(8) 1.7%
Allen Schick(9) 653,824(10) 6.4%
William K. Hood (12) 60,250(13) *
Jonathan Blank(14) 190,575(15) 1.8%
Curtis M. Rocca(19) 32,000(20) *
Uri Landesman(21) 104,600(22) 1.0%
Greystone Funding Corp.(16) 4,802,500(17) 32.0%
All current executive Officers
and Directors as a group(18) 4,779,482 43.8%


* Less than 1%

(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission and includes voting power and/or
investment power with respect to securities. Shares of Common Stock
subject to options or warrants currently exercisable or exercisable within
60 days of June 3, 2003 are deemed outstanding for computing the number
and the percentage of outstanding shares beneficially owned by the person
holding such options or warrants but are not deemed outstanding for
computing the percentage beneficially owned by any other person.

(2) Such person's business address is c/o Schick Technologies, Inc., 30-00
47th Avenue, Long Island City, New York 11101.

(3) Consists of 2,183,300 shares held jointly by Mr. Schick and his wife; 4283
shares issuable upon the exercise of stock options granted to Mr. Schick
in October 2001; 50,000 shares issuable upon the exercise of stock options
granted to Mr. Schick in December 2001 and 10,000 shares issuable upon the
exercise of stock options granted to Mr. Schick in October 1998, pursuant
to the 1996 Employee Stock Option Plan.

(4) Consists of 71,050 shares held by Mr. Stone; 18,750 shares issuable upon
the exercise of stock options granted to Mr. Stone in January 2000; 18,750
shares issuable upon the exercise of stock options granted to Mr. Stone in
January 2001; 12,500 shares issuable upon the exercise of stock options
granted to Mr. Stone in December 2001; 4,082 shares issuable upon the
exercise of stock options granted to Mr. Stone in October 2001 and 37,500
shares issuable upon the exercise of stock options granted to Mr. Stone in
January 2002.


26


(5) Consists of 1,000 shares held by Mr. Mandelkern; 2,000 shares issuable
upon the exercise of stock options granted to Mr. Mandelkern in April
1998; 5,000 shares issuable upon the exercise of stock options granted to
Mr. Mandelkern in July 1998; 2,560 shares issuable upon the exercise of
stock options granted to Mr. Mandelkern in March 1999; 29,120 shares
issuable upon the exercise of stock options granted to Mr. Mandelkern in
January 2000; 20,880 shares issuable upon the exercise of stock options
granted to Mr. Mandelkern in January 2001 and 3,691 shares issuable upon
the exercise of stock options granted to Mr. Mandelkern in October 2001.

(6) Consists of 75,000 shares (the "Shares") issued by the Company to Mr.
Raskin on February 6, 2000, which were subject to restrictions on their
sale or transfer which have expired; (2,343 shares issuable upon the
exercise of stock options granted to Mr. Raskin in July 1997; 2006 shares
issuable upon the exercise of options granted to Mr. Raskin in April 1998;
5,000 shares issuable upon the exercise of options granted to Mr. Raskin
in July 1998; 10,000 shares issuable upon the exercise of options granted
to Mr. Raskin in October 1998, 7 shares issuable upon the exercise of
options granted to Mr. Raskin in October 2001 and 50 shares issuable upon
the exercise of stock options granted to Mr. Raskin in December 2001. With
respect to the Shares, Mr. Raskin is required to pay the Company the sum
of $1.32 per share sold within 30 days following their sale. The Company
recorded a note receivable, which is presented as a reduction of Paid in
Capital amounting to $99, relating to the issuance of the Shares. The
charge to operations relating to this stock award is not material to the
financial statements.

(7) Such person's address is 90 Riverside Drive, New York, New York 10024.

(8) Consists of 115,740 shares held by Dr. Barrekette; 2,500 shares issuable
upon the exercise of stock options granted to Dr. Barrekette in July,
1998; 30,000 shares issuable upon the exercise of stock options granted to
Dr. Barrekette in June, 2000, pursuant to the 1997 Directors Stock Option
Plan and 30,000 shares issuable upon the exercise of stock options granted
to Dr. Barrekette in December 2001, pursuant to the 1997 Directors Stock
Option Plan.

(9) Such person's business address is University of Maryland at College Park,
School of Public Affairs, Van Munching Hall, College Park, Maryland
20742-182190.

(10) Consists of 546,524 shares held jointly by Dr. Schick and his wife; 44,800
shares held by Dr. Schick as custodian for the minor children of David
Schick; 2,500 shares issuable upon the exercise of stock options granted
to Dr. Schick in July 1998; 30,000 shares issuable upon the exercise of
stock options granted to Dr. Schick in June, 2000, pursuant to the 1997
Directors Stock Option Plan and 30,000 shares issuable upon the exercise
of stock options granted to Dr. Schick in December 2001, pursuant to the
1997 Directors Stock Option Plan. Dr. Schick disclaims beneficial
ownership of the 44,800 shares held as custodian.

(11) Consists of 847,500 shares issuable upon the exercise of warrants held by
Mr. Slovin (which Mr. Slovin received as designee of Greystone); 50,000
shares issuable upon the exercise of stock options granted to Mr. Slovin
in November 2001 and 30,000 shares issuable upon the exercise of stock
options granted to Mr. Slovin in June 2000, pursuant to the 1997 Directors
Stock Option Plan.

(12) Such person's address is 444 Via Lido Nord, Newport Beach, CA 92663.

(13) Consists of 30,250 shares held by Mr. Hood and 30,000 shares issuable upon
the exercise of stock options granted to Mr. Hood in February 2002,
pursuant to the 1997 Directors Stock Option Plan.

(14) Such person's business address is c/o Preston Gates Ellis & Rouvelas Meeds
LLP, 1735 New York Avenue, N.W., Washington, D.C. 20006.

(15) Consists of 130,575 shares held by Mr. Blank; 30,000 shares issuable upon
the exercise of stock options granted to Mr. Blank in June 2000, pursuant
to the 1997 Directors Stock Option Plan and 30,000 shares issuable upon
the exercise of stock options granted to Mr. Blank in December 2001,
pursuant to the 1997 Directors Stock Option Plan.

(16) Greystone's address is 152 West 57th Street, New York, New York 10019.


27


(17) Consists of 4,802,500 shares issuable upon the exercise of warrants held
by Greystone.

(18) Includes the shares underlying warrants described in Note 11 as well as
shares subject to options held by current officers and directors.

(19) Such person's business address is c/o Douglas, Curtis & Allyn, LLC, 2998
Douglas Boulevard, Suite 300, Roseville, CA 95661

(20) Consists of 2,000 shares held by Mr. Rocca and 30,000 shares issuable upon
the exercise of stock options granted to Mr. Rocca in July 2002, pursuant
to the 1997 Directors Stock Option Plan.

(21) Such person's address is 25 Lovell Road, New Rochelle, New York, NY 10804.

(22) Consists of 89,600 shares held by Mr. Landesman and 15,000 shares issuable
upon the exercise of stock options granted to Mr. Landesman in January
2003, pursuant to the 1997 Directors Stock Option Plan.

A table containing information, as of March 31, 2003, with respect to
compensation plans (including individual compensation arrangements) under which
equity securities of the Company are authorized for issuance is set forth above.
See "Item 5 - Market for Registrant's Common Equity and Related Stockholder
Matters - Equity Compensation Plan Information."

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In connection with the Loan Agreement with Greystone, the Company issued
to Greystone 4,250,000 warrants to purchase the Company's Common Stock, and to
Jeffrey T. Slovin, as Greystone's designee, 750,000 warrants to purchase the
Company's Common Stock. Mr. Slovin is the Company's President and Chief
Operating Officer and serves as a Director of the Company.

On July 5, 2001, the Company repaid all outstanding advances under the
Greystone amended Loan Agreement, together with all unpaid accrued interest
thereunder, and concurrently terminated said amended Loan Agreement. On July 12,
2001, the Company and Greystone entered into a Termination Agreement, effective
as of March 31, 2001, acknowledging the repayment and termination of the Amended
Loan Agreement and agreeing that all the Company's obligations thereunder have
been fully satisfied. The Company and Greystone further agreed, among other
matters, that: (i) five million warrants held by Greystone and its assigns to
purchase Common Stock of the Company remain in full force and effect; (ii) the
Registration Rights Agreement between Greystone and the Company dated as of
December 27, 1999 remains in full force and effect; and (iii) for so long as
Jeffrey T. Slovin holds the office of President of the Company, the Company
shall reimburse Greystone in the amount of $17 monthly. Effective November 1,
2001, Mr. Slovin joined the Company on a full-time basis and left the employ of
Greystone thereby canceling this reimbursement provision of the agreement.

In addition, DVI Financial Services, Inc. ("DVI") provided the Company
with notes payable for $6.6 million, secured by first priority liens on
substantially all of the Company's assets. See "Item 7 -- Management's
Discussion and Analysis - Liquidity and Capital Resources."

Effective August 28, 2000, DVI transferred its rights, title and interest
in, to, and under the DVI Notes payable and related loan documents to Greystone.
In connection with such transfer, DVI directed the Company to make all remaining
payments due under the loan documents to Greystone. Concurrently, DVI
transferred 650,000 warrants to purchase the Company's Common Stock to
Greystone, of which 97,500 warrants were transferred to Mr. Slovin, as
Greystone's designee.

During the first quarter of fiscal 2004, the Company prepaid to Greystone
$396 of outstanding principal of the DVI loan. The April 2003 prepayment
constituted full satisfaction of the Company's obligations to Greystone for the
period through March 31, 2003, pursuant to an Amendment and Waiver Agreement
between the Company and Greystone entered into in March 2003. As of June 3,
2003, the outstanding principal balance of that loan is $889, subject to
periodic prepayment in accordance with the terms of the loan documents.

In November 2001, the Company entered into a three-year employment
agreement with Jeffrey T. Slovin. Pursuant to the Agreement, Mr. Slovin is
employed as President and Chief Operating Officer of the Company. Mr. Slovin's
initial base annual salary under the Agreement is $240. In addition to base
salary, Mr. Slovin is eligible to receive annual merit or cost-of-living
increases as may be determined by the Executive Compensation Committee of the


28


Board of Directors. Mr. Slovin will also receive an increase in base salary as
well as incentive compensation in the form of a bonus based on the Company's
EBITDA. Such incentive compensation is capped at $100,000 per fiscal year.
Pursuant to the Agreement, Mr. Slovin also received 150,000 employee stock
options which vest as follows: 50,000 options on October 31, 2002, an additional
50,000 options on October 31, 2003, and the final 50,000 options on October 31,
2004. Additionally, all Company stock options held by, or issued to, Mr. Slovin
will immediately vest in the event that the Company has a change in control or
is acquired by another company or entity. In the event that Mr. Slovin is
terminated from employment with the Company without cause, he would receive
severance pay for two years or the remainder of the term of the Agreement,
whichever time period is shorter. Under certain circumstances, where the Company
effects a change in Mr. Slovin's title or diminishes, in any significant manner,
his duties or responsibilities of employment, Mr. Slovin may unilaterally resign
from employment. In this instance, he would act as a consultant to the Company
for a period of one year following his resignation and receive severance pay for
one year.

Item 14. CONTROLS AND PROCEDURES

a) Under the supervision and with the participation of the Company's
management, including its chief executive officer and the principal accounting
officer, the Company has evaluated the effectiveness of the Company's disclosure
controls and procedures as of a date within 90 days prior to the filing of this
report (the "Evaluation Date").

They have concluded that these disclosure controls provide
reasonable assurance that the Company can collect, process and disclose, within
the time periods specified in the Commission's rules and forms, the information
required to be disclosed in its periodic Exchange Act reports.

b) There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect its internal
controls subsequent to the date of their most recent evaluation.


29


ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, AND SCHEDULES

SCHICK TECHNOLOGIES, INC.

Index to Consolidated Financial Statements F-1
Report of Independent Certified Public Accountants F-1
Consolidated Balance Sheets as of March 31, 2003 and 2002 F-2
Consolidated Statements of Operations for the years ended
March 31, 2003, 2002 and 2001 F-3
Consolidated Statements of Changes in Stockholders' Equity
(Deficiency) for the years ended March 31, 2003, 2002 and 2001 F-4
Consolidated Statements of Cash Flows for the years ended
March 31, 2003, 2002 and 2001 F-5
Notes to Consolidated Financial Statements F-6
Schedule II/Valuation and Qualifying Accounts F-17

Report of Independent Certified Public Accountants

To the Board of Directors
and Stockholders of Schick Technologies, Inc.

We have audited the accompanying consolidated balance sheets of Schick
Technologies, Inc. and subsidiary (the "Company") as of March 31, 2003 and 2002,
and the related consolidated statements of operations, changes in stockholders'
equity (deficiency) and cash flows for each of the three years in the period
ended March 31, 2003. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Schick
Technologies, Inc. and subsidiary as of March 31, 2003 and 2002, and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended March 31, 2003, in conformity with
accounting principles generally accepted in the United States of America.

As discussed in Note 4 of the consolidated financial statements, effective April
1, 2002, the Company changed its method for accounting for goodwill and
intangible assets upon the adoption of Statement of Accounting Standards 142,
"Goodwill and Other Intangible Assets".

We have also audited Schedule II - Valuation and Qualifying Accounts of Schick
Technologies, Inc. and subsidiary for each of the three years in the period
ended March 31, 2003. In our opinion, this schedule presents fairly, in all
material respects, the information required to be set forth therein.


/s/ GRANT THORNTON LLP
New York, New York

May 9, 2003 except for the third paragraph of Note 13, under the subheading "SEC
Investigation and Other", as to which the date is June 11, 2003


F-1


Schick Technologies, Inc. and Subsidiary
Consolidated Balance Sheet
(In thousands, except share amounts)



March 31,
---------
2003 2002
---- ----

Assets
Current assets
Cash and cash equivalents $ 7,100 $ 1,622
Short - term investments 712 472
Accounts receivable, net of allowance for
doubtful accounts of $42 and $717, respectively 3,032 2,812
Inventories 3,039 2,805
Income taxes receivable 10 13
Prepayments and other current assets 421 427
Deferred income taxes 2,590 --
-------- --------
Total current assets 16,904 8,151
-------- --------
Equipment, net 2,151 2,939
Goodwill, net 266 266
Other assets 349 601
Deferred income taxes 2,940 --
-------- --------
Total assets $ 22,610 $ 11,957
======== ========

Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long term debt $ 1,503 $ 1,815
Accounts payable and accrued expenses 1,468 957
Accrued salaries and commissions 1,080 565
Income taxes payable 4 --
Deposits from customers 31 30
Warranty obligations 56 72
Deferred revenue 3,605 3,579
-------- --------
Total current liabilities 7,747 7,018
-------- --------
Long-term debt -- 2,039
-------- --------

Total liabilities 7,747 9,057
-------- --------

Commitments and contingencies -- --
Stockholders' equity
Preferred stock ($0.01 par value; 2,500,000
shares authorized; none issued and outstanding) -- --
Common stock ($0.01 par value; 50,000,000 shares authorized:
10,206,425 and 10,138,325 shares issued and outstanding) 102 101
Additional paid-in capital 42,618 42,481
Accumulated deficit (27,857) (39,682)
-------- --------
Total stockholders' equity 14,863 2,900
-------- --------
Total liabilities and stockholders' equity $ 22,610 $ 11,957
======== ========


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


F-2


Schick Technologies, Inc. and Subsidiary
Consolidated Statements of Operations
(In thousands, except share amounts)



Year ended March 31,
--------------------
2003 2002 2001
---- ---- ----

Revenue, net $ 29,817 $ 24,399 $ 21,252
------------ ------------ ------------

Cost of sales 9,369 8,540 9,736
Excess and obsolete inventory 259 292 570
------------ ------------ ------------
Total cost of sales 9,628 8,832 10,306
------------ ------------ ------------

Gross profit 20,189 15,567 10,946
------------ ------------ ------------

Operating expenses:
Selling and marketing 5,911 5,291 5,314
General and administrative 5,041 4,148 4,161
Research and development 2,598 2,176 2,220
Bad debt (recovery) expense -- (93) (454)
Lease termination -- 118 275
------------ ------------ ------------
Total operating costs 13,550 11,640 11,516
------------ ------------ ------------

Income (loss) from operations 6,639 3,927 (570)
------------ ------------ ------------

Other income (expense)
Other income 51 140 --
Gain on sale of investment 45 -- --
Interest income 52 33 60
Interest expense (322) (1,012) (1,128)
------------ ------------ ------------
Total interest and other income (expense) (174) (839) (1,068)
------------ ------------ ------------

Income (loss) before income taxes 6,465 3,088 (1,638)

Income tax benefit 5,360 -- --
------------ ------------ ------------

Net income (loss) $ 11,825 $ 3,088 ($ 1,638)
============ ============ ============

Basic earnings per share $ 1.17 $ 0.30 $ (0.16)
============ ============ ============
Diluted earnings per share $ 0.78 $ 0.26 $ (0.16)
============ ============ ============
Weighted average common shares (basic) 10,148,991 10,137,209 10,135,867
============ ============ ============
Weighted average common shares (diluted) 15,143,999 11,915,351 10,135,867
============ ============ ============


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


F-3


Schick Technologies, Inc. and Subsidiary
Consolidated Statements of Changes in Stockholders' Equity
(In thousands, except share amounts)



(Accumulated
Common Stock Additional Deficit) Total
------------ Paid -in Retained Stockholders'
Shares Amount Capital Earnings Equity
------ ------ ------- -------- ------

Balance at March 31, 2000 10,134,340 $ 101 $ 42,347 $ (41,132) $ 1,316
Issuance of warrants 130 130
Issuance of common stock 2,809 -- 3 3
Net loss -- -- -- (1,638) (1,638)
---------- ---------- ---------- ---------- ----------
Balance at March 31, 2001 10,137,149 101 42,480 (42,770) (189)
Issuance of common stock 1,176 -- 1 1
Net income -- -- -- 3,088 3,088
---------- ---------- ---------- ---------- ----------
Balance at March 31, 2002 10,138,325 101 42,481 (39,682) 2,900
Issuance of common stock 68,100 1 137 138
Net income -- -- -- 11,825 11,825
---------- ---------- ---------- ---------- ----------
Balance at March 31, 2003 10,206,425 $ 102 $ 42,618 $ (27,857) $ 14,863
========== ========== ========== ========== ==========


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


F-4


Schick Technologies, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(In thousands)



Year ended
March 31
--------
2003 2002 2001
---- ---- ----

Cash flows from operating activities
Net income (loss) $ 11,825 $ 3,088 $ (1,638)
Adjustments to reconcile net loss to
Net cash provide by operating activities
Deferred tax asset (5,530) -- --
Depreciation and amortization 1,289 1,527 1,935
Bad debt recovery -- (93) (454)
Provision for excess and obsolete inventory 259 292 570
Amortization of deferred financing charges 135 169 189
Abandonment of leasehold -- -- 275
Gain from sale of investment in Photobit Corporation (45) -- --
Interest accretion -- 365 48
Other 150 (51) --
Changes in assets and liabilities:
Accounts receivable (220) (1,742) 1,012
Inventories (493) 723 1,222
Income taxes receivable 3 8 106
Prepayments and other current assets (118) (99) (10)
Other assets (58) (15) (19)
Account payable and accrued expenses 1,026 (626) (3,124)
Income taxes payable 79 -- --
Deposits from customers 1 (453) (183)
Warranty obligations (16) (69) (137)
Deferred revenue 26 447 1,451
-------- -------- --------
Net cash provided by operating activities 8,313 3,471 1,243
-------- -------- --------
Cash flows from investing activities
Investment in held to maturity investment (671) (417) --
Proceeds of held to maturity investment 431 5 --
Proceeds of sale of investment 169 662 --
Capital expenditures (476) (825) (347)
-------- -------- --------
Net cash used in investing activities (547) (575) (347)
-------- -------- --------
Cash flows from financing activities
Net proceeds from issuance of common stock 63 1 3
Payment of long term debt (2,351) (3,442) (161)
-------- -------- --------
Net cash used in financing activities (2,288) (3,441) (158)
-------- -------- --------

Net increase (decrease) in cash and cash equivalents 5,478 (545) 738
Cash and cash equivalents at beginning of period 1,622 2,167 1,429
-------- -------- --------

Cash and cash equivalents at end of period $ 7,100 $ 1,622 $ 2,167
======== ======== ========
Interest paid $ 196 $ 955 $ 854
======== ======== ========
Income taxes paid $ 91 $ -- $ --
======== ======== ========


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


F-5


Schick Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Amounts In thousands, except share and per share amounts)

1. Organization and Business

Schick Technologies, Inc. (the "Company") designs, develops, manufactures
and markets innovative digital radiographic imaging systems and devices for the
dental and medical markets that utilize low dosage radiation to produce instant
computer generated, high-resolution, electronic x-ray images. The Company's
products are sold worldwide.

The Company operates in one reportable segment - digital radiographic
imaging systems. The Company's principal products include the CDR (R) computed
digital radiography imaging system and the accuDEXA(R) bone densitometer.

The following is a summary of the Company's revenues from its principal
products:

% Of Total Revenue
2003 2002 2001
---- ---- ----
CDR(R) 98% 97% 97%
AccuDEXA(R) 2% 3% 3%
---- ---- ----
100% 100% 100%
==== ==== ====

The consolidated financial statements of the Company at March 31, 2003
include the accounts of the Company and its wholly owned subsidiary, Schick New
York.

2. Summary of Significant Accounting Policies

Basis of Consolidation

The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary. All material intercompany accounts
and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. These estimates and assumptions relate to the allowance for doubtful
accounts, allowances for estimated sales returns, estimated costs of initial
warranties, and valuation allowance on deferred tax assets. Management has
exercised reasonable judgment in deriving these estimates. However, actual
results could differ from these estimates. Consequently, an adverse change in
conditions could affect the Company's estimates.

Cash equivalents

Cash equivalents consist of short-term, highly liquid investments, with
original maturities of less than three months when purchased and are stated at
cost. At March 31, 2003, cash balances in excess of FDIC insurance approximates
$6.7 million

Short-Term Investments

Investments with original maturities greater than three months and less
than one year when purchased are classified as short-term investments.
Investments are categorized as held-to-maturity and are carried at amortized
cost, without recognition of gains or losses that are deemed to be temporary, as
the Company has both the intent and the ability to hold these investments until
they mature.

Accounts Receivable

The Company reports accounts receivable net of reserves for uncollectible
accounts. The majority of the Company's accounts receivable (62% and 50%, at
March 31, 2003 and 2002, respectively) are due from its exclusive domestic
distributor (Patterson). Other accounts


F-6


receivable are due from international distributors and agencies of the US
military. Credit is extended to distributors on varying terms between 30 and 90
days. Most international credit is underwritten by credit insurance. The Company
provides an allowance for doubtful accounts based upon analysis of the accounts
receivable aging. The Company writes off accounts receivable when they become
uncollectible. Subsequently received payments are credited to operations.

Inventories

Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market value. Cost is determined principally on the standard
cost method for manufactured goods and on the average cost method for other
inventories, each of which approximates actual cost on the first-in, first-out
method. The Company establishes reserves for inventory estimated to be obsolete,
unmarketable or slow moving inventory equal to the difference between the cost
of inventory and estimated market value based upon assumptions about future
demand and market conditions. If actual market conditions are less favorable
than those anticipated or if changes in technology affect the Company's
products, additional inventory reserves may be required.

Equipment

Equipment is stated at cost. The cost of additions and substantial
improvements to equipment is capitalized. The cost of maintenance and repairs of
equipment is charged to operating expenses. Depreciation and amortization are
provided on the straight-line method over the lesser of the estimated useful
lives of the related assets ranging from five to ten years or, where
appropriate, the lease term.

Revenue Recognition

Revenues from sales of the Company's hardware and software products are
recognized at the time of shipment to customers, and when no significant
obligations exist and collectibility is probable. The Company provides its
customers with a 30-day return policy but allows for an additional 15 days, and,
accordingly, recognizes allowances for estimated returns by customers pursuant
to such policy at the time of shipment. The Company defers revenue from products
shipped to its exclusive domestic distributor, Patterson Dental Company
("Patterson"), until Patterson ships such inventory from its distribution
centers. Amounts received from customers in advance of product shipment are
classified as deposits from customers. Revenues from the sale of extended
warranties on the Company's products are recognized on a straight-line basis
over the life of the extended warranty, which is generally for a one-year
period. Deferred revenues relate to extended warranty fees paid by customers
prior to the performance of extended warranty services, and to certain shipments
to Patterson described above.

Advertising Costs

Advertising costs included in selling and marketing expenses are expensed
as incurred and were $568, $492 and $851, for the years ended March 31, 2003,
2002, and 2001, respectively.

Warranties

The Company records a liability for an estimate of costs that it expects
to incur under its basic limited warranty when product revenue is recognized.
Factors affecting the Company's warranty liability include the number of units
sold and historical and anticipated rates of claims and costs per claim. The
company periodically assesses the adequacy of its warranty liability based on
changes in these factors.

The Company records revenues on extended warranties on a straight-line
basis over the term of the related warranty contracts (generally one year).
Deferred revenues related to extended warranty were $2.3 million and $2.4
million at March 31, 2003 and 2002, respectively. Services costs are expensed as
incurred.

Research and Development

Research and development costs consist of expenditures covering basic
scientific research and the application of scientific advances to the
development of new and improved products and their uses. Research and
development costs are expensed as incurred. Software


F-7


development costs for external use software incurred after the establishment of
technological feasibility are capitalized and amortized to cost of revenues on a
straight-line basis over the expected useful life of the software. Software
development costs incurred prior to the attainment of technological feasibility
are considered research and development and are expensed as incurred. Costs of
software developed for internal use incurred during the development of the
application are capitalized and amortized to operating expense on a
straight-line basis over the expected useful life of the software. The Company
did not capitalize any software development costs during 2003, 2002 and 2001.

Income Taxes

Income taxes are accounted for under the asset and liability method.
Deferred income taxes are recorded for temporary differences between financial
statement carrying amounts and the tax basis of assets and liabilities. Deferred
tax assets and liabilities reflect the tax rates expected to be in effect for
the years in which the differences are expected to reverse. A valuation
allowance is provided if it is more likely than not that some or the entire
deferred tax asset will not be realized.

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, accounts receivable,
accounts payable and debt approximates fairvalue due to the relatively short
maturity associated with the Company's cash, accounts receivable and accounts
payable and the interest rates associated with its debt.

Goodwill and Other Intangible Assets

Goodwill represents the cost of acquired companies in excess of the fair
value of the net assets acquired. At the date of acquisition, goodwill is
allocated to reporting units based on net assets assigned to that unit.
Effective April 1, 2002, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets", which
established financial accounting and reporting for acquired goodwill and other
intangible assets and superseded Accounting Principles Board Opinion ("APB") No.
17, "Intangible Assets". Under SFAS No. 142 goodwill and indefinite-lived
purchased intangible assets are no longer amortized but are reviewed at least
annually for impairment. The Company has elected to perform this review annually
as of February 28.

Identifiable intangible assets that have finite lives continue to be
amortized over their estimated useful lives. Other intangible assets include
costs incurred to secure patents and deferred financing costs, and are included
in other assets. Finite-lived purchased intangible assets are amortized
principally by the straight-line method over their expected period of benefit.
Costs incurred to secure patents and deferred financing costs are amortized by
the straight-line method over periods of five years and over the term of the
loan, respectively.

Long-lived assets and intangibles are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of the assets to the future net cash
flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets.

Stock-based compensation

At March 31, 2003, the Company has stock based compensation plans which
are described more fully in Note 14. As permitted by SFAS No. 123, "Accounting
for Stock Based Compensation", the Company accounts for stock based compensation
arrangements with employees under the recognition and measurement principles of
APB Opinion No. 25, "Accounting for Stock Issued to Employees, and related
Interpretations". No stock-based employee compensation cost is reflected in net
income, as all options granted under those plans had an exercise price equal to
the market value of the underlying common stock on the date of grant. The
following table illustrates the effect on net income and earnings per share if
the Company had applied the fair value recognition provisions of FASB Statement
No. 123, Accounting for Stock-Based Compensation , to stock-based employee
compensation.


F-8




Year ended March 31,
2003 2002 2001
---- ---- ----

Net income (loss), as reported $ 11,825 $ 3,038 ($ 1,638)
Deduct: Total stock-based employee compensation
expense determined under fair value based method for
all awards,* net of related tax effects 476 474 590
-------- -------- --------
Pro forma net income $ 11,349 $ 2,564 ($2,228)
======== ======== ========
Earnings per share:
Basic-as reported $ 1.17 $ 0.30 ($0.16)
======== ======== ========
Basic-pro forma $ 1.12 $ 0.25 ($0.22)
======== ======== ========
Diluted-as reported $ 0.78 $ 0.26 ($0.16)
======== ======== ========
Diluted-pro forma $ 0.75 $ 0.22 ($0.22)
======== ======== ========


* All awards refers to awards granted, modified, or settled in fiscal periods
beginning after December 15, 1994, awards for which the fair value was
required to be measured under FASB Statement 123.

3. Recently Issued Accounting Standards

Accounting for Asset Retirement Obligations

In June 2001, the FASB issued Statement 143, "Accounting for Asset
Retirement Obligations" (SFAS 143). This statement requires entities to record a
liability for estimated retirement and removal costs of assets used in their
business. The liability should be recorded at its fair value, with a
corresponding asset that should be depreciated over the remaining useful life of
the long-lived asset to which the liability relates. Period expense will also be
recognized for changes in the original value of the liability as a result of the
passage of time and revisions in the undiscounted cash flows required to satisfy
the obligation. The provisions of SFAS 143 are effective for fiscal years
beginning after June 15, 2002. The Company estimates that adoption of SFAS 143
will not have a material effect on future net income, if any.

Accounting for Costs Associated with Exit or Disposal Activities

In June 2002, the FASB issued Statement 146, "Accounting for Costs
Associated with Exit or Disposal Activities". This statement requires entities
to recognize costs associated with exit or disposal plans, as currently
required. Examples of costs covered by this guidance include one-time employee
termination benefits, costs to terminate contracts other than capital leases,
costs to consolidate facilities or relocate employees, and certain other exit or
disposal activities. This statement is effective for any exit or disposal
activities the Company initiates after December 31, 2002. The Company
anticipates that SFAS No. 146 will not have a material effect on its financial
statements.

Accounting for Debt Extinguishments

In April 2002, the FASB issued Statement 145, "Rescission of FASB
Statements 4, 44 and 64, Amendment of FASB Statement 13, and Technical
Corrections" (SFAS 145). Among other provisions, SFAS 145 rescinds FASB
Statement 4, "Reporting Gains and Losses from Extinguishment of Debt".
Accordingly, gains or losses from extinguishment of debt should not be reported
as extraordinary items unless the extinguishment qualifies as an extraordinary
item under the criteria of Accounting Principles Board Opinion 30, "Reporting
the Results of operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions" (APB 30). Gains or losses from extinguishment of debt, which do
not meet the criteria of APB 30, should be reclassified to income from
continuing operations in all prior periods presented. The provisions of SFAS 145
are effective for fiscal years beginning after May 15, 2002. The Company
anticipates that SFAS No. 145 will not have a material effect on its financial
statements.

Stock-Based Employee Compensation

In December 2002, the FASB issued Statement 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure; an amendment of FASB
Statement 123" (SFAS 123), to provide alternative transition methods for a
voluntary change to the fair value based method of accounting for stock-based
compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS
123 to require prominent disclosures in annual financial statements about the
method of accounting for stock-based employee compensation and the pro forma
effect on


F-9


reported results of applying the fair value based method for entities that use
the intrinsic value method of accounting. The pro forma effect disclosures are
also required to be prominently disclosed in interim period financial
statements. This statement is effective for financial statements for fiscal
years ending after December 15, 2002, with earlier application permitted. The
Company does not plan a change to the fair value based method of accounting for
stock-based employee compensation and has included the disclosures required by
SFAS 148 in the accompanying financial statements.

Accounting for Guarantees

In November 2002, FASB Interpretation 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others" (FIN 45), was issued. FIN 45 requires a guarantor
entity, at the inception of a guarantee covered by the measurement provisions of
the interpretation, to record a liability for the fair value of the obligation
undertaken in issuing the guarantee. FIN 45 applies prospectively to guarantees
the Company issues or modifies subsequent to December 31, 2002, but has certain
disclosure requirements effective for interim and annual periods ending after
December 15, 2002.

The Company records a liability for an estimate of costs that it expects
to incur under its basic limited warranty when product revenue is recognized.
Factors affecting the Company's warranty liability include the number of units
sold and historical and anticipated rates of claims and costs per claim. The
Company periodically assesses the adequacy of its warranty liability based on
changes in these factors. The Company records revenues on extended warranties on
a straight-line basis over the term of the related warranty contracts (generally
one year). Deferred revenues related to extended warranties were $2.3 million
and $2.4 million at March 31, 2003 and 2002, respectively. Services costs are
expensed as incurred. The Company anticipates that FIN 45 will not have a
material effect on its financial statements.

Variable Interest Entities

In January 2003, the FASB issued FASB Interpretation 46 (FIN 46),
"Consolidation of Variable Interest Entities". FIN 46 clarifies the application
of Accounting Research Bulletin 51, "Consolidated Financial Statements", for
certain entities that do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial support for
other parties or in which equity investors do not have the characteristics of
controlling financial interests ("variable interest entities"). Variable
interest entities within the scope of FIN 46 will be required to be consolidated
by their primary beneficiary. The primary beneficiary of a variable interest
entity is determined to be the party that absorbs a majority of the entity's
expected losses, receives a majority of its expected returns, or both. FIN 46
applies immediately to variable interest entities created after January 31,
2003, and to variable interest entities in which an enterprise obtains an
interest after that date. It applies in the first fiscal year or interim period
beginning after June 15, 2003, to variable interest entities in which an
enterprise holds a variable interest that it acquired before February 1, 2003.
The Company does not have any investment or other interest in "variable interest
entities".

Revenue Recognition

In November 2002, the Emerging Issues Task Force reached a consensus
opinion of EITF 00-21, "Revenue Arrangements with Multiple Deliverables". That
consensus provides that revenue arrangements with multiple deliverables should
be divided into separate units of accounting if certain criteria are met. The
consideration of the arrangement should be allocated to the separate units of
accounting based on their relative fair values, with different provisions if the
fair value of all deliverables are not known or if the fair value is contingent
on delivery of specified items or performance conditions. Applicable revenue
criteria should be considered separately for each separate unit of accounting.
EITF 00-21 is effective for revenue arrangements entered into in fiscal periods
beginning after June 15, 2003. Entities may elect to report the change as a
cumulative effect adjustment in accordance with APB Opinion 20, "Accounting
Changes." The Company is still evaluating the impact of the adoption of EITF
00-21 on its financial statements.

4. Accounting for Business Combinations, Intangible Assets and Goodwill

In July 2001, the Financial Accounting Standards Board issued SFAS No.
141, "Business Combinations" and SFAS 142, "Goodwill and Other Intangible
Assets". The new standards require that all business combinations initiated
after June 30, 2001 must be accounted for


F-10


under the purchase method. In addition, all intangible assets acquired that are
obtained through contractual or legal right, or are capable of being separately
sold, transferred, licensed, rented or exchanged shall be recognized as an asset
apart from goodwill. Goodwill and intangibles with indefinite lives will no
longer be subject to amortization, but will be subject to at least an annual
assessment for impairment by applying a fair value based test.

The Company continued to amortize under its current method until March 31,
2002. Thereafter, annual goodwill amortization of $107 is no longer recognized.
In August 2002, the Company performed a transitional fair value based impairment
test and in March 2003 the performed its annual fair value impairment test. Both
tests indicate that the fair value is greater than the recorded value of
goodwill. Therefore the Company's goodwill was not impaired during the year
ended March 31, 2003. The adjustment of previously reported net income and
earnings per share represents the recorded amortization of goodwill. The impact
on net income and basic and diluted earnings per share for the years ended March
31, 2002 and 2001 are set forth below:



Year ended March 31
2003 2002 2001
---- ---- ----

Reported net income (loss) $11,825 $ 3,088 ($1,638)
Add back of goodwill amortization -- 107 107
------- ------- -------
Adjusted net income (loss) $11,825 $ 3,195 ($1,531)
======= ======= =======
Basic and diluted earnings per share:
Basic net income (loss) $ 1.17 $ 0.30 ($0.16)
======= ======= =======
Diluted net income (loss) $ 0.78 $ 0.26 ($0.16)
======= ======= =======
After effect of change in accounting principle
Basic net income (loss) $ 1.17 $ 0.32 ($0.15)
======= ======= =======
Diluted net income (loss) $ 0.78 $ 0.27 ($0.15)
======= ======= =======


5. Earnings Per Share

Basic earnings per share ("Basic EPS") is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share ("Diluted EPS") gives
effect to all dilutive potential common shares outstanding during the period.
The computation of Diluted EPS does not assume conversion, exercise or
contingent exercise of securities that would have an antidilutive effect on
earnings. The following table is the reconciliation from basic to diluted shares
for the years ended March 31, 2003, 2002 and 2001

March 31,
---------
2003 2002 2001
---- ---- ----
Basic shares 10,148,991 10,137,209 10,135,867
Dilutive:
Options 940,381 449,384 --
Warrants 4,054,627 1,328,758 --
---------- ---------- ----------
Diluted shares 15,143,999 11,915,351 10,135,867
========== ========== ==========

At March 31, 2003, 2002 and 2001, outstanding options and warrants to
purchase 434,066, 2,393,833 and 6,696,807 shares of common stock, respectively,
at exercise prices ranging from $0.50 to $27.72 per share have been excluded
from the computation of diluted earnings per share as they are antidilutive.

6. Inventories

Inventories at March 31, 2003 and 2002, net of provisions for excess and
obsolete inventories, are comprised of the following:

2003 2002
---- ----
Raw materials $2,103 $2,141
Work-in-process 241 16
Finished goods 695 648
------ ------
Total inventories $3,039 $2,805
====== ======


F-11


7. Equipment

Equipment at March 31, 2003 and 2002 is comprised of the following:

2003 2002
---- ----
Production equipment $ 5,572 $ 5,257
Computer and communications equipment 2,389 2,283
Demonstration equipment 944 944
Leasehold improvements 1,907 1,857
Other equipment 128 123
Total equipment ------- -------
Less - accumulated depreciation and 10,940 10,464
8,789 7,525
------- -------
amortization
Equipment, net $ 2,151 $ 2,939
======= =======

8. Short-term investments

Held-to-maturity securities at March 31, 2003 and 2002 include short-term
U.S. Treasury and government agency debt securities of $660 and $417,
respectively on an amortized cost basis, with maturity dates of less than one
year. The gross unrealized gains and losses at March 31, 2003 and 2002 on
held-to-maturity securities were insignificant.

9. Accounts payable and accrued expenses

Accounts payable and accrued expenses are summarized as follows at March
31, 2003 and 2002:

2003 2002
---- ----
Advertising and marketing expenses $ 106 $ 55
Inventory 635 341
Printing 100 100
Professional fees 40 84
Refunds payable 95 120
Royalties 82 84
Travel and entertainment 190 53
Other 220 120
------ ----
Accounts payable and accrued expenses $1,468 $957
====== ====

10. Debt

Long-term debt is summarized as follows at March 31, 2003 and 2002:

2003 2002
---- ----
Term notes $1,503 $3,854
Less current maturities 1,503 1,815
------ ------
$ -- $2,039
====== ======

Secured Term Notes

The principal balance of the term notes was payable in 49 monthly payments
which commenced April 15, 2001, with interest payable monthly at the prime rate
plus 2.5% (4.25% and 4.75% at March 31, 2003 and 2002, respectively). The
Company is also required to make additional principal payments equal to fifty
percent of the "positive actual cash flow", as defined. In April 2003 and May
2002 the Company made prepayments of $396 and $236, respectively, in
satisfaction of this provision. The April 2003 prepayment constituted full
satisfaction of the Company's obligations to Greystone for the period through
March 31, 2003, pursuant to an Amendment and Waiver Agreement between the
Company and Greystone entered into in March 2003. Such payment is classified in
current loan maturities. The tangible and intangible assets of the Company, as
defined, collateralize the term loans.

In connection with the notes, the Company granted the lender 650,000
warrants at an exercise price of $0.75 expiring in December 2006. The fair value
of the warrants amounted to $726, and is being accounted for as deferred
financing costs. The costs ($150 at March 31, 2003) are included in "Other
Assets" in the accompanying balance sheet and are being amortized


F-12


over the life of the notes. Interest expense of approximately $135 and $95
relating to this warrants issuance was recognized for the year ended March 31,
2003 and 2002, respectively.

Effective August 28, 2000, the lender sold all its rights, title and
interest in, to and under the warrants, notes payable and security agreement as
described above, to the Company's other secured creditor (Greystone). By letter
dated October 11, 2000, the lender directed the Company to make all remaining
payments due for the notes payable directly to Greystone.

Former Secured Credit Facility

In December 1999 (as amended in March 2000), the Company entered into a
Loan Agreement (the "Loan Agreement") with Greystone Funding Corporation
("Greystone") to provide up to $7.5 million of subordinated debt in the form of
a secured credit facility. Under the Loan Agreement, the Company appointed two
of Greystone's executive officers, one as President of the Company and both as
Directors. Pursuant to the Loan Agreement, and to induce Greystone to enter into
said Agreement, the Company issued to Greystone, or its designees, warrants to
purchase 3,000,000 shares of the Company's Common Stock at an exercise price of
$0.75 per share. The President of the Company has been issued 750,000 of these
warrants as a Greystone designee. The Company agreed to issue to Greystone or
its designee's warrants to purchase an additional 2,000,000 shares at an
exercise price of $0.75 per share in connection with a $1 million drawn down
under the loan agreement.

Under the Amended Loan Agreement, the Company also issued to Greystone (or
its designees) warrants (the "Additional Warrants") to purchase an additional
13,000,000 shares of common stock, which were to vest and become exercisable at
a rate of two shares of Common Stock for each dollar advanced under the Amended
Loan Agreement in excess of the initial draw of $1,000,000. Any Additional
Warrants which did not vest prior to expiration or surrender of the line of
credit, were to be forfeited and canceled.

The $1 million proceeds of the initial draw was allocated to the loan and
5 million warrants issued, based upon their relative fair values at issuance.
The carrying value of the note of $575 was being accreted to the face value of
the $1 million using the interest method over the seven-year term of the loan.
The fair value of 3 million warrants issued in connection with the agreement,
amounting to $90, was accounted for as deferred financing cost.

The secured term notes and secured credit facility were subject to various
financial and restrictive covenants including, among others, interest coverage,
current ratio, and EBITDA. On July 5, 2001, the Company repaid all outstanding
advances under the Greystone Amended Loan Agreement, together with all unpaid
accrued interest thereunder (aggregating $1.05 million), and concurrently
terminated said Amended Loan Agreement. Approximately $423 representing the
unamortized discount and deferred financing costs relating to the Amended Loan
Agreement was charged to expense in July 2001.

On July 12, 2001, the Company and Greystone entered into a Termination
agreement effective as of March 31, 2001, acknowledging the repayment and
surrender of the line of credit and cancellation of the Additional Warrants,
which had not vested, and agreeing that all the Company's obligations thereunder
have been fully satisfied. The Company and Greystone further agreed, among other
matters, that: (i) five million warrants held by Greystone and its assigns to
purchase Common Stock of the Company remain in full force and effect; (ii) the
Registration Rights Agreement between Greystone and the Company dated as of
December 27, 1999 remains in full force and effect; and (iii) for so long as
Jeffrey T. Slovin holds the office of President of the Company, the Company
shall reimburse Greystone in the amount of $17 monthly. Effective November 1,
2001 Mr. Slovin joined the Company on a full-time basis and left the employ of
Greystone thereby canceling this reimbursement provision of the agreement.

11. Income Taxes

The following table provides detail of the income tax benefit at March 31,
2003:

March 31,
2003
----
Current provision
Federal $ 95
State --
-------
Total current provision 95
-------
Deferred tax benefit
Federal (4,423)
State (1,032)
-------
Total deferred tax benefit (5,455)
-------
Total income tax benefit ($5,360)
=======


F-13


The reconciliation between the U.S. federal statutory rate and the
Company's effective tax rate is as follows:



March 31,
---------
2003 2002 2001
---- ---- ----

Tax benefit at Federal statutory rate 34.0% 34.0% -34.0%
State income tax expense , net of
Federal tax benefit 5.3% -8.1% -8.1%
Permanent differences -1.5% 0.9% 0.7%
Alternative minimum tax 1.4% -- --
Research and development tax credit -- 2.2% 5.0%
Federal and state net operating loss and credits
(used) in the current year or
generated in the year in which
there is no benefit -37.8% -29.0% 36.4%
Federal and state valuation allowance reversal -83.2% -- --
Other 1.2% -- --
------ ------ ------
Effective tax rate -80.6% 0.0% 0.0%
====== ====== ======


Significant components of the Company's deferred tax assets
(liabilities) at March 31, 2003, 2002 and 2001 are as follows:



March 31,
---------
2003 2002 2001
---- ---- ----

Net operating loss carryforwards $ 12,484 $ 14,636 $ 15,638
Reserves and allowances for inventory 1,238 1,257 1,400
Accounts receivable and warranties 1,566 1,862 2,182
Tax credit and carryforwards 1,581 1,421 1,305
Depreciation and other 80 575 663
Other (64) 65 114
-------- -------- --------
16,885 19,816 21,302
Valuation allowance (11,355) (19,816) (21,302)
-------- -------- --------
Net deferred tax asset $ 5,530 $ -- $ --
======== ======== ========


During the fourth quarter of the fiscal year ended March 31, 2003, the
Company reduced its deferred tax valuation allowance by $5.8 million since the
Company has projected taxable income of approximately $13.8 million and believes
that it is more likely than not that such tax benefit will be realized.
Management has established a valuation allowance for the amount of the deferred
tax asset where it believes it is not more likely than not a benefit will be
realized based on uncertainties with respect to the Company's ability to
generate sufficient future taxable income. Management will continue to assess
the realizability of the deferred tax asset at the interim and annual balance
date based upon actual and forecasted operating results. During fiscal 2003, the
Company's utilization of its net operating losses resulted in a reduction of
current taxes in the amount of $2.9 million.

At March 31, 2003, the Company has a net operating loss carryforward for
Federal income tax purposes of $29.7 million expiring in fiscal 2019 to 2021.
While the net operating loss is currently not subject to limitation under IRC
Section 382, any future changes of ownership, as defined within IRC Section 382
may affect future utilization of such net operating loss.

Under current tax law, the utilization of the Company's tax attributes
will be restricted if an ownership change, as defined, were to occur. Section
382 of the Internal Revenue Code provides, in general, that if an "ownership
change" occurs with respect to a corporation with net operating and other loss
carryforwards, such carryforwards will be available to offset taxable income in
each taxable year after the ownership change only up to the "Section 382
Limitation" for each year (generally, the product of the fair market value of
the corporation's stock at the time of the ownership change, with certain
adjustments, and a specified long-term tax-exempt bond rate at such time). The
Company's ability to use its loss carryforwards would probably be limited in the
event of an ownership change.


F-14


12. Concentration of Risks and Customer Information

The Company's future results of operations involve a number of risks and
uncertainties. Factors that could affect the Company's future operating results
and cause actual results to vary materially from expectations include, but are
not limited to, dependence on key personnel, government regulation,
manufacturing disruptions, competition, reliance on certain customers and
vendors, absence of redundant facilities, credit risk, product liability and
other liability claims, adequacy of insurance coverage and litigation.

Substantially all of the Company's sales are to domestic and foreign
dentists, doctors, and distributors of dental and medical supplies and
equipment. Financial instruments that potentially subject the Company to
concentrations of credit risks are primarily accounts receivable and cash
equivalents. The Company generally does not require collateral and the majority
of its trade receivables are unsecured. The Company is directly affected by the
financial well being of the dental and medical industries. The Company places
its cash equivalents in short-term money market instruments.

The Company currently purchases each of its primary raw materials, the
active-pixel sensor ("APS") and the charged coupled device ("CCD") semiconductor
wafers from single suppliers. During the fourth quarter of fiscal 1998, the
Company experienced a delay in the supply flow from its CCD vendor, which
resulted in manufacturing, and product shipment delays. Although there are a
number of manufacturers capable of supplying these materials, which the Company
believes could provide for its semiconductor requirements on comparable terms,
such delays could occur again.

Approximately $6.2 million of the Company's sales both in fiscal 2003 and
2002, and $8.1 million of the Company's sales in fiscal 2001, respectively, were
to foreign customers. The majority of such foreign sales were to customers in
Europe. During 2003 and 2002, sales of $15.4 million and $9.9 million,
respectively, were made to a single customer. During 2001, sales of $7.5 million
were made to two customers.

On April 6, 2000, the Company entered into an agreement with Patterson
Dental Company which granted Patterson exclusive rights to distribute the
Company's dental products in the United States and Canada effective May 1, 2000.

13. Commitments and Contingencies

Employment Agreements

The Company has employment agreements with certain executive officers. As
of March 31, 2003 minimum compensation obligations under these employment
agreements are as follows:

March 31
2004 648
2005 322
----
$970
====

In addition, certain of the Company's agreements provide for the issuance
of common stock and/or common stock options to the executives, which generally
vest ratably over the term of the agreements (2-3 years). Additionally, certain
executives may earn bonus compensation based upon the specific terms of the
respective agreements, as defined.

Operating Leases

The Company leases its facilities under an operating lease agreement
expiring June 2007. Rent expense for the years ended March 31, 2003, 2002, and
2001 was $367, $470, and $701 respectively.

Future minimum payments on a fiscal year basis under non-cancelable
operating leases are as follows:

2004 $ 467
2005 486
2006 506
2007 526
Thereafter 137
------
$2,122
======


F-15


Product Liability

The Company is subject to the risk of product liability and other
liability claims in the event that the use of its products results in personal
injury or other claims. Although the Company has not experienced any product
liability claims to date, any such claims could have an adverse impact on the
Company. The Company maintains insurance coverage related to product liability
claims, but there can be no assurance that product or other claims will not
exceed its insurance coverage limits, or that such insurance will continue to be
maintained or to be available on commercially acceptable terms, or at all.

SEC Investigation and other

In August 1999, the Company, through its outside counsel, contacted the
Division of Enforcement of the Securities and Exchange Commission ("SEC") to
advise it of certain matters related to the Company's restatement of earnings
for interim periods of fiscal 1999. Subsequent thereto, the SEC requested the
voluntary production of certain documents and the Company provided the SEC with
the requested materials. On August 17, 2000 and April 30, 2003, the SEC served
subpoenas upon the Company, pursuant to a formal order of investigation,
requiring the production of certain documents. The Company timely provided the
SEC with the subpoenaed materials. The Company has been informed that since
January 2002 the SEC has served subpoenas upon and/or contacted certain former
and current officers and employees of the Company in connection with this
matter. The Company has cooperated fully with the inquiry.

In addition, the Company has been informed that since January 2002
investigators associated with the U.S. Attorney's Office have served subpoenas
on and/or contacted certain former and current employees, and a current
Director, apparently in connection with the same event. On June 13, 2002, the
Company was advised by counsel to David Schick, the Company's Chief Executive
Officer, that the United States Attorney's Office for the Southern District of
New York had notified such counsel that Mr. Schick was a target of the United
States Attorney's investigation of this matter.

On June 11, 2003, the Company and its Chief Executive Officer, David
Schick, received notifications from the staff of the SEC of their intention to
recommend that the SEC authorize civil enforcement actions against them. The
contemplated actions would allege violations of federal securities law relating
to the Company's publicly filed financial statements, including those for the
first three quarters of the Company's fiscal year ended March 31, 1999,
restatements of which were filed in March 2000. In connection with the
contemplated actions, the staff would ask for authority to seek injunctive
relief, civil penalties and a bar against Mr. Schick from serving as an officer
or director of a public company. The Company cannot predict the potential
outcome of these matters and their impact on the Company and, therefore, has
made no provision relating to these matters in the accompanying consolidated
financial statements. Regardless of the outcome of these matters, the Company
could be forced to expend significant amounts of money in legal fees.

Litigation

The Company may be a party to a variety of legal actions (in addition to
that referred to above), such as employment and employment
discrimination-related suits, employee benefit claims, breach of contract
actions, tort claims, shareholder suits, including securities fraud, and
intellectual property related litigation. In addition, because of the nature of
its business, the Company is subject to a variety of legal actions relating to
its business operations. Recent court decisions and legislative activity may
increase the Company's exposure for any of these types of claims. In some cases,
substantial punitive damages may be sought. The Company currently has insurance
coverage for some of these potential liabilities. Other potential liabilities
may not be covered by insurance, insurers may dispute coverage, or the amount of
insurance may not be sufficient to cover the damages awarded. In addition,
certain types of damages, such as punitive damages, may not be covered by
insurance and insurance coverage for all or certain forms of liability may
become unavailable or prohibitively expensive in the future.

14. Stock Option Plan, Stock Grants and Defined Contribution Plan

Stock Option Plan and Stock Grants

In April 1996, the Company implemented its 1996 Stock Option Plan (the
"Plan") whereby incentive and non-qualified options to purchase shares of the
Company's common stock may be


F-16


granted to employees, directors and consultants. In September 1998, the Plan was
amended to increase the number of shares of Common Stock issuable under the Plan
from 470,400 to 1,000,000 and further amended in November 2000 to increase the
number of shares of Common Stock issuable under the plan to 3,000,000. The Board
of Directors determines exercise and vesting periods and the exercise price of
options granted under the Plan. The Plan stipulates that the exercise price of
non-qualified options granted under the Plan must have an exercise price equal
to or exceeding 85% of the fair market value of the Company's common stock as of
the date of grant of the option and no option may be exercisable after ten years
from the date of grant. Options granted under the plan generally vest over a
period of four years.

In 1997, the Company adopted the Directors Plan. In November 2002 the Plan
was amended to increase the number of shares of Common Stock issuable to
600,000. At March 31, 2003, 2002 and 2001, a total of 330,000, 266,875 and
133,125 options to purchase Common Stock pursuant to the Directors Plan were
outstanding, respectively. The plan stipulates that the exercise price of
non-qualified options granted under the Plan must have an exercise price equal
to or exceeding 85% of the fair market value of the Company's common stock as of
the date of grant of the option and no option may be exercisable after ten years
from the date of grant. Options granted under the plan generally vest over a
period of four years.

The fair value of options granted to employees and directors during 2002,
2001, and 2000 has been determined on the date of the respective grant using the
Black-Scholes option-pricing model based on the following weighted-average
assumptions:



2003 2002 2001
---- ---- ----

Dividend yield None None None
Risk-free interest rate on date of grant 2.24%-3.03% 2.81%-3.56% 4.70%-4.87%
Forfeitures None None None
Expected life 5 years 5 years 5 years
Volatility 82% 84% 84%
Weighted average fair value per share $1.62 $0.55 $0.62


The following table summarizes information regarding stock options for
2003, 2002 and 2001:



2003 2002 2001
---- ---- ----
Shares Weighted Shares Weighted Shares Weighted
Under Average Under Average Under Average
Option Exercise Option Exercise Option Exercise
Price Price Price
----- ----- -----

Options outstanding,
Beginning of year 1,840,426 $ 2.47 1,046,807 $ 3.53 992,605 $ 4.57
Options granted 332,862 2.69 859,739 1.31 297,442 1.06
Options exercised (68,100) 0.98 (1,176) 1.00 (2,809) 1.00
Options forfeited (27,650) 3.72 (64,944) 4.14 (240,431) 4.84
---------- ---------- ----------
Options outstanding,
End of year 2,077,538 $ 2.54 1,840,426 $ 2.47 1,046,807 $ 3.53
========== ========== ==========



Options outstanding Weighted average remaining
Range of exercise prices At March 31, 2003 Contractual life (years)
------------------------ ----------------- ------------------------

$ 0.50 to $ 1.56 1,331,709 7
$ 2.15 to $ 3.20 560,000 8
$ 4.91 to $ 7.86 87,803 5
$14.81 to $22.97 72,486 4
$25.75 to $27.72 25,549 5


At March 31, 2003, there are 1,522,462 options available for grant
pursuant to the Company's option plans.

Defined Contribution Plan

The Company has a defined contribution savings plan, which qualifies under
Section 401(k) of the Internal Revenue Code, for employees meeting certain
service requirements.


F-17


Participants may contribute up to 15% of their gross wages not to exceed, in any
given year, a limitation set by the Internal Revenue Service regulations. The
plan provides for mandatory matching contributions to be made by the Company to
a maximum amount of 2.5% of a plan participant's compensation. Company
contributions to the plan approximated $171, $135 and $131, in 2003, 2002 and
2001, respectively.

15. Stockholders' Equity (Deficiency)

In February 2000, an executive was awarded 75,000 shares of the Company's
Common Stock, subject to a risk of forfeiture, which vested as to 25,000 shares
on each of December 31, 2000, 2001 and 2002. Upon the sale of any such vested
shares, the employee is required to pay the Company $1.32 per share sold within
30 days following such sale. The Company recorded a note receivable, which is
presented as a reduction of Paid in Capital amounting to $99, relating to the
stock issuance. The charge to operations relating to this stock award is not
material to the financial statements.

16. Investment

Investment in Photobit Corporation

In September 1997, the Company purchased a minority interest of 5%, for
$1,000 in Photobit Corporation ("Photobit"), a developer of complementary
metal-oxide semiconductor ("CMOS"), APS imaging technology. In July 1998, the
Company invested an additional $250 in Photobit Corporation, bringing its total
investment in Photobit to $1,250. The Company is the exclusive licensee of the
APS technology for medical applications and utilizes the technology in its
bone-mineral density assessment device and certain components of its computed
dental x-ray imaging system. In September 1999, the Company sold 250,000 shares
of Photobit stock for $1 million and recorded an investment gain of
approximately $565.

In November 2001 Micron Technologies, Inc. acquired Photobit Corporation
and subsequently Photobit adopted a plan of dissolution. The Company received
$662, the initial proceeds of the liquidation of its investment. Final
distributions of $169 were paid during fiscal 2003. The Company recognized a $45
gain upon receipt of the final payment.

17. Unaudited selected quarterly financial data

The following is a summary of the Company's unaudited quarterly operating
results for the years ended March 31, 2003 and 2002:



Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2003 2002 2002 2002 2002 2001
---- ---- ---- ---- ---- ----

Statement of Operations Data:
Revenue, net $ 7,347 $ 8,816 $ 6,750 $ 6,904 $ 6,736 $ 7,003
Total cost of sales 2,209 2,653 2,474 2,292 2,494 2,288
----------- ----------- ----------- ----------- ------------ -----------
Gross profit 5,138 6,163 4,276 4,612 4,242 4,715
----------- ----------- ----------- ----------- ------------ -----------
Gross profit margin 69.9% 69.9% 63.3% 66.8% 63.0% 67.3%
Operating expense:
Selling and marketing 1,654 1,482 1,334 1,441 1,287 1,390
General and administrative 1,492 1,179 1,268 1,102 1,231 1,012
Research and development 689 663 580 666 566 548
Bad debt recovery -- -- -- -- (50) --
Abandonment of leasehold -- -- -- -- -- 117
----------- ----------- ----------- ----------- ------------ -----------
Operating expense 3,835 3,324 3,182 3,209 3,034 3,067
----------- ----------- ----------- ----------- ------------ -----------
Income from operations 1,303 2,839 1,094 1,403 1,208 1,648
----------- ----------- ----------- ----------- ------------ -----------
Net income $ 6,676 $ 2,805 $ 1,008 $ 1,336 $ 1,167 $ 1,544
=========== =========== =========== =========== ============ ===========
Earnings per share:
Basic income $ 0.66 $ 0.28 $ 0.10 $ 0.13 $ 0.12 $ 0.15
=========== =========== =========== =========== ============ ===========
Diluted income $ 0.42 $ 0.19 $ 0.07 $ 0.09 $ 0.08 $ 0.14
=========== =========== =========== =========== ============ ===========
Weighted average common stock
outstanding (basic) 10,170,782 10,154,059 10,147,537 10,138,900 10,137,257 10,137,193
=========== =========== =========== =========== ============ ===========
Weighted average common stock
outstanding (diluted) 15,868,163 14,957,659 14,465,750 15,212,574 14,115,104 10,894,495
=========== =========== =========== =========== ============ ===========



F-18


Sep 30, Jun 30,
2001 2001
---- ----
Statement of Operations Data:
Revenue, net $ 4,819 $ 5,841
Total cost of sales 1,752 2,298
------------ ------------
Gross profit 3,067 3,543
------------ ------------
Gross profit margin 63.6% 60.7%
Operating expense:
Selling and marketing 1,312 1,302
General and administrative 925 980
Research and development 532 530
Bad debt recovery -- (43)
Abandonment of leasehold -- --
------------ ------------
Operating expense 2,769 2,769
------------ ------------
Income from operations 298 774
------------ ------------
Net income (loss) $ (250) $ 627
============ ============
Earnings (loss) per share:
Basic income (loss) $ (0.02) $ 0.06
============ ============
Diluted income (loss) $ (0.02) $ 0.05
============ ============
Weighted average common stock
outstanding (basic) 10,137,193 10,137,193
============ ============
Weighted average common stock
outstanding (diluted) 10,137,193 11,470,010
============ ============

Schedule II

Schick Technologies, Inc. and Subsidiary
Valuation and Qualifying Accounts



Additions
---------
Balance Charged Charged Balance
at to to at
Beginning Cost and Other End of
Of Period Expenses Accounts Deductions Period
--------- -------- -------- ---------- ------

ALLOWANCE FOR DOUBTFUL ACCOUNTS

For the year ended March 31, 2003 $ 717 -- $ 675(a) $ 42
For the year ended March 31, 2002 1,818 1,008(a) 717
93(b)
For the year ended March 31, 2001 2,449 -- -- 177(a) 1,818
454(b)

RESERVE FOR OBSOLETE/SLOW MOVING INVENTORY

For the year ended March 31, 2003 $ 2,899 $ 259 $ 321(c) $ 2,837
For the year ended March 31, 2002 3,195 292 588(c) 2,899
For the year ended March 31, 2001 6,332 754 3,891(c) 3,195

VALUATION ALLOWANCE - DEFERRED TAX ASSET

For the year ended March 31, 2003 $ 19,816 $ 5,805(d) $11,355
2,656(e)
For the year ended March 31, 2002 21,302 1,486(e) 19,816
For the year ended March 31, 2001 17,623 3,679 21,302

PROVISION FOR WARRANTY OBLIGATIONS

For the year ended March 31, 2003 $ 72 $ 16(f) $ 56
For the year ended March 31, 2002 141 69(f) 72
For the year ended March 31, 2001 278 137(f) 141



F-19


(a) Accounts receivable written off

(b) Accounts receivable recovered

(c) Inventory disposed of

(d) Reduction of valuation allowance and reserve adjustment

(e) NOL used in year

(f) Reduction of reserve


F-20


(a) Documents filed as a part of this Report

(1) Consolidated Financial Statements filed as part of this Report:

Index to the Financial Statements F-1

Report of Independent Certified Public Accountants F-1

Consolidated Balance Sheet at March 31, 2003 and 2002 F-2

Consolidated Statement of Operations for the years ended
March 31, 2003, 2002 and 2001 F-3

Consolidated Statement of Changes in Stockholders'
Equity for the years ended March 31, 2003, 2002 and 2001 F-4

Consolidated Statement of Cash Flows for the year ended
March 31, 2003, 2002 and 2001 F-5

Notes to Consolidated Financial Statements F-6

(2) Financial statement schedules filed as part of this Report

Schedule II Valuation and Qualifying Accounts F-18

Schedules other than that mentioned above are omitted because the
conditions requiring their filing do not exist, or because the information is
provided in the financial statements filed herewith, including the notes
thereto.

(b) Reports on Form 8-K

None.

(c) The following Exhibits are included in this report:

Number Description

* 3.1 Amended and Restated Certificate of Incorporation of the
Company.

****** 3.2 Bylaws of the Company, as amended.

* 4.1 Form of Common Stock certificate of the Company.

* 4.2 Form of private-placement Warrant of the Company.

* 4.3 Agreement and Plan of Merger dated as of May 15, 1997 among
Schick Technologies, Inc., a New York corporation, Schick
Technologies Inc., a Delaware corporation and STI Acquisition
Corp, a Delaware corporation.

****** 10.1 Schick Technologies, Inc. 1996 Employee Stock Option Plan, as
amended.

10.2 Schick Technologies, Inc. 1997 Stock Option Plan for Non
Employee Directors, as amended.

* 10.3 Form of Non-Disclosure, Solicitation, Solicitation,
Non-Competition and Inventions Agreements between Schick
Technologies, Inc. and Named Executives of Schick
Technologies, Inc.

* 10.5 Service and License Agreement between Photobit, LLC and
Schick Technologies, Inc. dated as of June 24, 1996.

*** 10.10 Secured Promissory Note between Schick Technologies, Inc. and
DVI Financial Services, Inc., dated as of January 25, 1999.

*** 10.11 Allonge to Secured Promissory Note by and between Schick
Technologies, Inc. and DVI Financial Services, Inc., dated as
of March 4, 1999.


30


*** 10.13 Security Agreement between Schick Technologies, Inc. and DVI
Affiliated Capital, dated January 25, 1999.

*** 10.15 Employment Agreement between Schick Technologies Inc. and
David Schick, dated February 29, 2000.

*** 10.16 Employment Letter Agreement between Schick Technologies Inc.
and Zvi Raskin, dated February 6, 2000.

*** 10.17 Employment Letter Agreement between Schick Technologies Inc.
and Michael Stone, dated January 12, 2000.

*** 10.18 Employment Letter Agreement between Schick Technologies Inc.
and William F. Rogers, dated December 31, 1999.

*** 10.19 Separation, Severance and General Release Agreement between
Schick Technologies Inc. and Fred Levine, dated August 27,
1999.

*** 10.20 Separation, Severance and General Release Agreement between
Schick Technologies Inc. and Avi Itzhakov, dated August 20,
1999.

******10.21 Loan Agreement, dated December 27, 1999, by and between Schick
Technologies, Inc., a Delaware corporation, Schick
Technologies, Inc., a New York corporation, and Greystone
Funding Corporation ("Greystone"), a Virginia corporation.
(Incorporated by reference to Exhibit 1 to the Company's
Report on Form 8-K dated December 27, 1999.)

******10.22 Stockholders' Agreement, dated December 27, 1999, by and
between Schick Technologies, Inc., a Delaware corporation,
David B. Schick, Allen Schick and Greystone. (Filed as Exhibit
2 to the Company's Report on Form 8-K dated December 27,
1999.)

******10.23 Stock Purchase Agreement, dated December 27, 1999, by and
between Schick Technologies, Inc., a Delaware Corporation, and
Greystone. (Filed as Exhibit 3 to the Company's Report on Form
8-K dated December 27, 1999.)

******10.24 Form of Warrant Certificate Issued to Greystone to Purchase
Shares of Common Stock of Schick Technologies, Inc., a
Delaware Corporation. (Filed as Exhibit 4 to the Company's
Report on Form 8-K dated December 27, 1999.)

**** 10.25 Amended and Restated Loan Agreement, dated March 17, 2000 and
made effective as of December 27, 1999, by and between Schick
Technologies, Inc., a Delaware corporation, Schick
Technologies, Inc., a New York corporation, and Greystone
Funding Corporation, a Virginia corporation.

***** 10.26 Agreement to Rescind Stock Purchase, dated March 17, 2000 and
made effective as of December 27, 1999, by and between
Greystone Funding Corp., a Virginia corporation, and Schick
Technologies, Inc., a Delaware corporation.

***** 10.27 Registration Rights Agreement between Schick Technologies,
Inc. and Greystone, dated as of December 27, 1999.

***** 10.28 Second Amended and Restated Secured Promissory Note between
Schick Technologies, Inc. and DVI Financial Services, Inc., in
the principal amount of $5,000,000,dated as of March 15, 2000.

***** 10.29 Second Amended and Restated Secured Promissory Note between
Schick Technologies, Inc. and DVI Financial Services, Inc., in
the principal amount of $1,596,189, dated as of March 15,
2000.

***** 10.30 Security Agreement between Schick Technologies, Inc. and DVI
Financial Services, Inc., dated as of March 15, 2000.

***** 10.31 Amended and Restated Security Agreement between Schick
Technologies,


31


Inc. and DVI Financial Services, Inc., dated as of March 15,
2000.

***** 10.32 Form of Warrant Certificate Issued to DVI Financial
Services, Inc. to Purchase Shares of Schick Technologies,
Inc.

***** 10.33 Registration Rights Agreement between Schick Technologies,
Inc. and DVI Financial Services, Inc., dated as of March 15,
2000.

***** 10.34 Distributorship Agreement, dated April 6, 2000, by and
between Schick Technologies, Inc. and Patterson Dental
Company.

****** 10.35 Termination Agreement between Greystone Funding Corporation
and Schick Technologies, Inc. entered into as of March 30,
2001.

******* 10.36 Employment Agreement between Schick Technologies, Inc. and
Jeffrey T. Slovin, dated November 9, 2001

******* 10.37 Employment Agreement between Schick Technologies, Inc. and
David Schick, dated December 20, 2001

******* 10.38 Employment Agreement between Schick Technologies, Inc. and
Michael Stone, dated as of January 14, 2002

******* 10.39 Letter Agreement between Schick Technologies, Inc. and David
Schick, dated March 4, 2002, amending, in part, the
Employment Agreement between Schick Technologies, Inc. and
David Schick, dated December 20, 2001

21 List of Subsidiaries of Schick Technologies, Inc.

23.1 Consent of Grant Thornton LLP.

24 Powers of Attorney (included on signature page of this
Report)

99.1 Certification of Chief Executive Officer and principal
accounting officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002

99.2 Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995

* Filed as the same exhibit number as part of the registrant's
Registration Statement on Form S-1 (File No. 333-33731) declared
effective by the Securities and Exchange Commission on June 30,
1997 and incorporated by reference herein.

** Filed as the same exhibit number as part of the registrant's
Annual Report on Form 10-K for the year ended March 31, 1998,
filed with the Securities and Exchange Commission on June 29,
1998.

*** Filed as the same exhibit number as part of the registrant's
Annual Report on Form 10-K for the year ended March 31, 1999,
filed with the Securities and Exchange Commission on March 21,
2000.

**** Filed as the same exhibit number as part of the registrant's
Quarterly Report on Form 10-Q for the quarter ended December 31,
1999, filed with the Securities and Exchange Commission on March
24, 2000.

***** Filed as the same exhibit number as part of the registrant's
Annual Report on Form 10-K for the year ended March 31, 2000,
filed with the Securities and Exchange Commission on June 29,2000.

****** Filed as the same exhibit number as part of the registrant's
Annual Report on Form 10-K for the year ended March 31, 2001,
filed with the Securities and Exchange Commission on July 13,
2001.

******* Filed as the same exhibit number as part of the registrant's
Annual Report on Form 10-K for the year ended March 31, 2002,
filed with the Securities and Exchange Commission on June 17,
2002.


32


SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Long
Island City, State of New York, on June 17, 2003.

SCHICK TECHNOLOGIES, INC.


By: /s/ David Schick
--------------------------------
David Schick
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on June 17, 2003.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David B. Schick, Jeffrey Slovin and Zvi N. Raskin
(with full power to act alone), as his true and lawful attorneys-in-fact and
agents, with full powers of substitution and resubstitution, for him in his
name, place and stead to sign an Annual Report on Form 10-K of Schick
Technologies, Inc, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, lawfully do or
cause to be done by virtue hereof.



Signature Title
---------- -----

/s/ David Schick Chairman of the Board
- ----------------------------- and Chief Executive Officer
David Schick


/s/ Jeffrey T. Slovin Director, President and Chief Operating Officer
- -----------------------------
Jeffrey T. Slovin


/s/ Ronald Rosner Director of Finance and Administration
- ----------------------------- (Principal financial and accounting officer)
Ronald Rosner


/s/ Allen Schick Director
- -----------------------------
Allen Schick


/s/ Euval Barrekette Director
- -----------------------------
Euval Barrekette


/s/ Jonathan Blank Director
- -----------------------------
Jonathan Blank



33


/s/ William Hood Director
- -----------------------------
William Hood


/s/ Curtis M. Rocca III Director
- ------------------------------
Curtis M. Rocca III


/s/ Uri Landesman Director
- ------------------------------
Uri Landesman

Certification of Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002

CERTIFICATION

I, David B. Schick, certify that:

1. I have reviewed this Annual Report on Form 10-K of Schick Technologies,
Inc.;

2. Based on my knowledge, this annual 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 annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual
report;

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

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

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

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

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

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

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

6. The registrant's other certifying officers and I have indicated in this
annual report whether


34


or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

Date: June 17, 2003

/s/ David B. Schick
------------------------------
[Signature]
Chief Executive Officer

Certification of principal financial officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002

CERTIFICATION

I, Ronald Rosner, certify that:

1. I have reviewed this Annual Report on Form 10-K of Schick Technologies,
Inc.;

2. Based on my knowledge, this annual 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 annual report;

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

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

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

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

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

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

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

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

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,


35


including any corrective actions with regard to significant deficiencies
and material weaknesses.

Date: June 17, 2003

/S/ Ronald Rosner
--------------------------------------
[Signature]
Director of Finance and Administration
(Principal financial officer)


36