First of all, to put all of our discussions into perspective, would like to present an overview of the marketplace. And after that, I would like to focus on certain key segments in growth areas. I feel that there are several new areas that provide both current and future market opportunities, and I will clearly define the difference between what can be sold now and what might be sold in the future.

Actually I have three parts to my presentation this morning. I'm going to focus on the ophthalmic marketplace, spend most of the time there. I am also going to walk you through last fall's Academy of Ophthalmology meeting, introduce you to some of what I thought were interesting lasers that were on the floor at that meeting, and then I'm going to bring you up to date on a company that Arthur D. Little has a little bit of an interest in. It is a company called Intrasonics, which is involved in ultrasonic catheters for the angioplasty market; even though that has nothing to do with ophthalmics, because I am part of Arthur D. Little I thought I would just like to tell you a little bit about what Intrasonics is up to and what they are doing.

I am not going to rehash the size of the market or the directions the markets are taking in any great detail. I am going to focus more on the industry itself and some of the problems associated with the industry, and the problems we all face in a growing industry, in a marketplace that offers great potential but so far has returned very little return on the investment of those of us who are in this industry.

I want to say right up front that the scope of this talk is going to be focused on laser-based devices with no discussion of t nechanical-based devices, since this is a laser show, we want to talk primarily about lasers today. But I would say in passing, th ;ome of the mechanical devices have excellent clinical results and gill certainly rival laser devices as this whole area evolves.

I am going to be talking about medical laser business strategies. There are two approaches I can take here. One is I can say, these are the ideal strategies that you should follow. And, of course, I would love to do that and I do that with individual clients. But it is very difficult in a roomful of you folks to give a general strategy that you are all going to follow, because obviously if I did that you would not all be successful. The other is to discuss the strategies of each of the competitors; this is difficule, since these strategies are usually confidential. But I will try to do a little of both of those and give you a flavor of what are some of the strategies that are being followed, and what I think some of the ideal strategies should be for these companies.

This is my second annual State-Of-The-Industry, if you will, from the financial standpoint. Swergold, Chefitz & Sinsabaugh, so you understand my position a little bit better, is both an investment banking and institutional research firm. We specialize both in healthcare research and in high technology research. I am one of three healthcare analysts. I am one of the fortunate ones who get to be in the San Francisco office. My speciality includes, in the medical device and technology areas, such subsectors as medical lasers, ophthalmology, critical care medicine, orthopedic devices, and cardiovascular devices. I have followed the medical laser industry for the last few years, and what I wanted to do today was give you kind of an update on the financial state of the industry.

Wandering through the exhibit hall yesterday, I noticed that if you look at the laser companies and if you look at the accessory companies, there are pretty much the same number of accessory booths as well as the laser companies. There was one difference. Laser company booths are all sexy looking, very flashy, big booths. Whereas if you look at the accessories booths, they were small, not so prominent.

I am going go over photodynamic therapy first, just an overview for those of you not familiar with it, as it is quite different from most of the normal surgical laser applications. Then I will be talking about the various aspects of the technology, and what we feel the market potentials are in the various aspects of the photodynamic therapy.

My basis for being here is that I worked for the Emergency Care Research Institute for about 10 years, and responded formally to about 200 responses from hospitals that were interested in acquiring lasers of various types. The full gambit. I also provided on-site consulting assistance, doing needs analysis, helping them develop the request proposal, helping them analyze the request proposal. We also help hospitals, or have helped hospitals, select lasers with another vehicle called Select that was offered to VHA and similar hospitals, assessing their needs from an off-site basis.

Of course, much can be attributed to our relative youth - the sheer number and scope of the opportunities have distorted focus and strained resources. However, I believe that we have reached a point - a crossroads - where the topography is more clearly defined and where some discernible trends point to the direction this industry will take over the next five years. These will be important years - investors, especially, expect signs of maturity to replace unbounded youthful optimism. How many of us can look back on the business plans we wrote five years ago and not feel chastened (or depressed). Our excuse is that we got everything right except the timing. Well, the "timing" is the next five years! So my talk today will center upon my personal view of these next five years. I wish to emphasize the personal aspect of my discussion: this is my prescription for future happiness.