Securities and Exchange Commission
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

COMMISSION FILE NUMBER 001-15431

THE PLASTIC SURGERY COMPANY
(Exact Name of Registrant as Specified in its Charter)

GEORGIA 58-2317410
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)

509 E. MONTECITO STREET, 2ND FLOOR
SANTA BARBARA, CALIFORNIA 93103
TELEPHONE: (805) 963-0400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

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[ ]

As of March 31, 2001, the registrant had 4,692,158 shares of common
stock outstanding.

THE PLASTIC SURGERY COMPANY

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2001

INDEX

PART I FINANCIAL INFORMATION

Item 1 Condensed Consolidated Financial Statements ............. 3-5

Condensed Consolidated Balance Sheets as of March 31,
2001 (unaudited) and December 31, 2000 .................. 3

Condensed Consolidated Statement of Operations for
the Three Months Ended March 31, 2001
(unaudited) and March 31, 2000 (unaudited) .............. 4

Condensed Consolidated Statement of Cash Flows for
the Three Months Ended March 31, 2001
(unaudited) and March 31, 2000 (unaudited) ............... 5

Notes to Condensed Consolidated Financial Statements .... 6-8

Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 9-12

Item 3 Quantitative and Qualitative Disclosure About
Market Risk ............................................. 12

PART II OTHER INFORMATION

Item 1 Legal Proceedings ...................................... 13

Item 6 Exhibits and Reports on Form 8-K ........................ 13

PART I
FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THE PLASTIC SURGERY COMPANY
CONDENSED CONSOLIDATED
BALANCE SHEETS

March 31,
2001 December 31,
(Unaudited) 2000
------------ ------------

ASSETS
CURRENT ASSETS:
Cash, cash equivalents and restricted cash .................. $ 221,957 $ 274,425
Accounts receivable, net ................................... 772,118 602,498
Current portion of notes receivable ........................ 309,771 31,872
Other current assets ....................................... 221,391 238,925
------------ ------------
Total current assets ...................................... 1,525,237 1,147,720
------------ ------------
Property and Equipment, net ................................... 1,088,365 1,291,903
Goodwill, net ................................................. 14,747,838 15,028,216
Other Intangibles, net ........................................ 324,294 329,849
Notes Receivable, net ........................................ 504,563 526,899
Debt Issuance Costs, net ..................................... 202,476 214,028
Other assets ................................................. 19,291 19,291
------------ ------------
$18,412,064 $18,557,906
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt ........................... $ 6,282,602 $ 1,857,477
Accounts payable ............................................ 779,995 647,668
Accrued payroll and payroll related ........................ 217,258 185,728
Accrued consulting expenses ................................ 93,997 406,395
Accrued expenses ........................................... 262,691 383,059
------------ ------------
Total current liabilities ................................ 7,636,543 3,480,327
LONG-TERM DEBT: .............................................. 5,875,100 10,263,357
------------ ------------
Total liabilities ........................................ 13,511,643 13,743,684
Commitments and Contingencies
SHAREHOLDERS' EQUITY:
Common stock; no par value; 100,000,000 shares
authorized, and 4,692,158 and 4,765,873 shares issued and
outstanding at March 31, 2001 and December 31, 2000 - -
Paid-in capital ............................................. 37,777,524 37,529,583
Warrants .................................................... 9,170,134 9,170,134
Accumulated deficit ......................................... (42,047,237) (41,885,495)
------------ ------------
Total shareholders' equity ............................... 4,900,421 4,814,222
------------ ------------
$18,412,064 $18,557,906
============ ============

The accompanying notes are an integral part of these condensed consolidated statements.

THE PLASTIC SURGERY COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)

For the Three For the Three
Months Ended Months Ended
March 31, 2001 March 31, 2000
------------ ------------
Revenues:
Practice reimbursements ........................ $ 4,850,984 $ 6,312,529
Management fees ................................ 1,203,775 1,325,989
Cosmetic procedures ............................ 2,795,674 -
------------ ------------
Total revenue ................................ 8,850,433 7,638,518
------------ ------------
Direct expenses:
Salaries, wages, and benefits .................. 1,698,463 1,831,327

Cost of procedures ............................. 912,083 -
Medical supplies ............................... 1,259,670 850,825
Advertising .................................... 635,700 640,801
Rent ........................................... 655,400 727,234
------------ ------------
Total direct expenses ....................... 5,161,316 4,050,187
Salaries, wages and benefits ..................... 1,158,503 360,145
General operating expenses ....................... 1,934,630 2,486,585
Depreciation and amortization .................... 415,214 227,907
------------ ------------
Total operating expenses ....................... 8,669,663 7,124,824
------------ ------------
Operating income ................................. 180,770 513,694
Other income ..................................... 1,404 7,145
Interest expense ................................. (343,916) (119,118)
------------ ------------
Income (loss) before provision for income taxes .. (161,742) 401,721
Provision for income taxes ....................... - 36,424
------------ ------------
Net income (loss) ................................ $ (161,742) $ 365,297
Basic earnings (loss) per share .................. $ (0.03) $ 0.08
============ ============
Weighted average basic shares outstanding ........ 4,778,787 4,553,708
============ ============
Diluted earnings (loss) per share ................ $ (0.03) $ 0.08
============ ============
Weighted average diluted shares outstanding ...... 4,778,787 4,865,061
============ ============

The accompanying notes are an integral part of these condensed consolidated
statements.

THE PLASTIC SURGERY COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)

For the Three For the Three
Months Ended Months Ended
March 31, 2001 March 31, 2000
---------- ----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ........................................ $(161,742) $ 365,297
Adjustments to reconcile net income (loss) to net
cash Provided by (used in) operating activities:
Loss on disposal of property and equipment ............. -- 7,603
Proceeds from sale of property and equipment ........... -- 600
Depreciation and amortization .......................... 415,214 227,907
Changes in assets and liabilities:
Accounts receivable .................................. (229,066) (637,604)
Prepaids and current assets .......................... -- (34,587)
Other assets ......................................... 19,633 (71,316)
Accounts payable ..................................... 98,901 (107,888)
Accrued payroll and payroll related .................. 23,132 --
Accrued consulting expense ........................... -- 114,861
Accrued expenses ..................................... (120,368) --
---------- ----------
Net cash provided by (used in) operating activities 45,704 (135,127)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment ....................... (10,361) (50,585)
Proceeds from practice unwinding ......................... 150,000 --
Notes receivable issued .................................. (280,000) --
Notes receivable payments received ....................... 22,336 --
---------- ----------
Net cash used in investing activities ............. (118,025) (50,585)
---------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit ............................. 190,000 --
Payment of debt .......................................... (170,147) (282,278)
---------- ----------
Net cash provided by (used in) financing activities 19,853 (282,278)
---------- ----------
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ... (52,468) (467,990)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH,
Beginning of period ...................................... 274,425 842,307
---------- ----------
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, End of period .. $ 221,957 $ 374,317
========== ==========

The accompanying notes are an integral part of these condensed consolidated statements.

THE PLASTIC SURGERY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS AND ORGANIZATION

GENERAL DESCRIPTION OF BUSINESS

The Plastic Surgery Company (the "Company") acquires, develops and manages
elective cosmetic and laser surgery centers. The Company operates outside of the
managed care market and provides private pay, fee-for-service cosmetic surgery
and laser procedures through a retail network of surgery centers (the
"Centers"). These services include cosmetic surgery, cosmetic laser skin
treatments and physician-directed skin care which the Company plans to brand
under the national umbrella of Personal Image Centers. The Company currently
owns and/or manages 25 Centers located throughout the United States.
Headquartered in Santa Barbara, California, the Company completed its initial
public offering on December 10, 1999 and its common stock trades on the American
Stock Exchange under the ticker symbol PSU.

Basis of Presentation

The consolidated financial statements included herein have been prepared in
accordance with rule 10-01 of Regulation S-X. Pursuant to applicable regulations
of the Securities and Exchange Commission (the "SEC"), the information at March
31, 2001 and for the three-month periods ended March 31, 2001 and 2000 is
unaudited. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States have been condensed or omitted. The financial
statements reflect all elimination entries and normal adjustments that are
necessary for a fair presentation of the results for the interim periods ended
March 31, 2001 and March 31, 2000. In the opinion of management, the
accompanying condensed financial statements include the accounts of the Company
and all adjustments necessary to present fairly the Company's financial position
at March 31, 2001 and December 31, 2000, and its results of operations and cash
flows for the three months ended March 31, 2001 and March 31, 2000.

Operating results for interim periods are not necessarily indicative of the
results for full years. These condensed financial statements should be read in
conjunction with the financial statements of The Plastic Surgery Company and
related notes thereto, and management's discussion and analysis related thereto,
all of which are included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.

The Company currently does not consolidate the operations of the practices
that it manages because the arrangements do not meet the requirements for
consolidation as set forth in Emerging Issues Task Force 97-2. The Company does
consolidate the operations of its wholly owned subsidiaries.

2. CASH, CASH EQUIVALENTS AND RESTRICTED CASH

The restricted cash balance was $195,238 at March 31, 2001 and $118,048 at
December 31, 2000.

3. PROPERTY AND EQUIPMENT

Property and Equipment is stated at cost. Depreciation and amortization is
provided using the straight-line method over the assets' estimated useful lives
of two to seven years. Property and equipment consisted of the following:

March 31, 2001 December 31, 2000
------------ ------------
Computer hardware and software $ 425,957 $ 429,901
Furniture and fixtures 311,873 355,551
Medical equipment 324,828 412,405
Leasehold improvements 408,392 433,767
------------ ------------
1,471,050 1,631,624
Less accumulated depreciation (382,685) (339,721)
------------ ------------
$ 1,088,365 $ 1,291,903
============ ============

4. NOTES RECEIVABLE

The Company has unsecured notes receivable from plastic surgeons that were
previously affiliated practices. The principal balances of these notes are
$1,044,334 at March 31, 2001 and $788,771 at December 31, 2000. These notes bear
interest at rates ranging from 6% to 8% and are being repaid based on
amortization schedules or as a percentage withheld from the doctor's negotiated
fee from ongoing services as an independent contractor surgeon. The Company has
provided a reserve, in purchase accounting, of $230,000 for potential default of
the notes receivable.

5. DEBT

The Company's debt consisted of the following:

March 31, 2001 December 31, 2000
------------- -------------
Notes payable to employees/shareholders $ 1,833,225 $ 1,669,082
Notes payable to affiliated practices 3,393,717 3,665,529
Secured notes payable to sellers of
the Florida Center 4,989,385 4,996,142
Note payable to Mezzanine lender 1,060,899 1,044,720
Line of credit 190,000 -
Miscellaneous notes payable and capital leases 690,476 745,361
------------- -------------
12,157,702 12,120,834
Less current portion (6,282,602) (1,857,477)
------------- -------------
$ 5,875,100 $ 10,263,357
============= =============

6. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share represents net earnings (loss) divided by
the weighted-average number of common shares outstanding for the period. Diluted
earnings (loss) per share represents net earnings (loss) divided by the
weighted-average number of shares outstanding including the dilutive impact of
common stock equivalents calculated using the treasury stock method. For the
three-month period ended March 31, 2000, the difference between the
weighted-average number of shares used in the basic computation compared to that
used in the diluted computation was due to the dilutive impact of options and
warrants to purchase common stock.

The reconciliation of basic to diluted weighted-average shares for the three
months ended March 31 are as follows:

2001 2000
---------- ----------
Weighted-average shares used in basic computation 4,778,787 4,553,708
Dilutive stock options and warrants - 311,353

---------- ----------
Weighted-average shares used for dilutive computation 4,778,787 4,865,061
========== ==========

7. UNWINDING OF AFFILIATED PRACTICES

In March 2001, the Company unwound the acquisitions and service agreements
of one additional physician whose practice was initially acquired in a business
combination accounted for using SAB 48. All the tangible and intangible assets
originally transferred at the initial combination were returned. The net effect
of the transaction was recorded in additional paid in capital.

8. CONVERSION OF ACCRUED EXPENSES

In January 2001, the Company converted $156,000 of current accrued expenses
into 60,000 shares of Company common stock and converted $150,000 of current
accrued expenses into a five-year long-term note payable.

9. SEGMENT INFORMATION

The Company has two reportable business segments, both in the medical
industry: operation of personal image centers and management services for
affiliated practices and operation of personal image centers. The reportable
segments are based on the types of services provided. The Company operates
personal image centers through its two wholly owned subsidiaries. These have
been aggregated as a single reportable segment due to the similarities in
economic characteristics, the services provided, the processes involved, the
types of customers and the regulatory environment.

Revenues from the operation of personal image centers are generated from the
performance of surgical procedures for the quarter ended March 31, 2001.
Revenues from management services to affiliated practices are generated from the
affiliated surgeons participating in management agreements for the quarters
ended March 31, 2001 and 2000, as well as the practice reimbursements from such
affiliated practices. The Company evaluates performance based on several
factors, of which the primary financial measures are revenues and operating
income (loss).

The Company had no customers representing more than 10% of revenues in
either quarter. Substantially all of the Company's revenues were earned in the
United States. All of the Company's long-lived assets reside in the United
States.

Summarized financial information concerning the Company's reportable
segments for the quarters ended March 31 is shown in the following tables:

2001 2000
------------- -------------
Revenues:
Personal image centers ........................ $ 2,795,674 -
Affiliated practices - management fees ........ 1,203,775 $ 1,325,989
Affiliated practices - practice reimbursements 4,850,984 6,312,529
------------- -------------
Total .................................... $ 8,850,433 $ 7,638,518
============= =============
Operating income:
Personal image centers ........................ $ 351,071 -
Management of affiliated practices ............ (170,301) $ 513,694
------------- -------------
Total .................................... $ 180,770 $ 513,694
============= =============
Interest expense:
Personal image center ......................... $ 140 -
Management of affiliated practices ............ 343,776 $ 119,118
------------- -------------
Total .................................... $ 343,916 $ 119,118
============= =============
Depreciation and amortization:
Personal image centers ........................ $ 46,243 -
Management of affiliated practices ............ 368,971 $ 227,907
------------- -------------
Total .................................... $ 415,214 $ 227,907
============= =============
Assets (March 31, 2001 and December 31, 2000):
Personal image centers ........................ $ 1,247,424 $ 1,241,153
Management of affiliated practices ............ 17,164,640 17,316,753
------------- -------------
Total ................................... $ 18,412,064 $ 18,557,906
============= =============
Capital expenditures:
Personal image centers ........................ $ 10,361 -
Management of affiliated practice ............. - $ 50,585
------------- -------------
Total .................................... $ 10,361 $ 50,585
============= =============

10. GOING CONCERN

The Company's Report of Independent Public Accountants issued in connection
with the December 31, 2000 consolidated financial statements was qualified as to
the Company's ability to continue as a going concern. The Company has been
advised by it's Independent Public Accountants that, if prior to the completion
of their audit of the Company's financial statements for the year ending
December 31, 2001, the Company is unable to demonstrate its ability to fund
operations for the following 12 months, their auditor's report on those
financial statements will be modified for the contingency related to the
Company's ability to continue as a going concern.

11. SUBSEQUENT EVENT

In May 2001, the Company acquired the assets of an affiliated practice in
exchange for 97,778 shares of the Company's common stock.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The following discussion and analysis contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended (the
"1934 Act"). Although the Company believes that its expectations are based on
reasonable assumptions, there can give no assurance that its goals will be
achieved. The important factors that could cause actual results to differ
materially from those in the forward-looking statements herein include, without
limitation, the ability to secure capital, and the related cost of such capital,
needed to continue as a going concern and to fund its future growth, the ability
to identify suitable acquisition candidates, regulatory development and changes
in the United States healthcare system and medical profession that may affect
the profitability or the enforceability of the agreements with the affiliated
practices and the other factors detailed in the Annual Report on Form 10-K for
the year ended December 31, 2000 filed with the Securities and Exchange
Commission.

OVERVIEW

The Company acquires, develops and manages elective cosmetic and laser
surgery centers. It operates outside of the managed care market and provides
private pay, fee-for-service cosmetic surgery and laser procedures through a
retail network of surgery centers (the "Centers"). These services include
cosmetic surgery, cosmetic laser skin treatments and physician-directed skin
care all "under one roof." The Company currently owns and/or manages 25 Centers
located throughout the United States and Canada and has recently launched a
national branding strategy in selected facilities under the name Personal Image
Centers. During the third and fourth quarter of 2000, the company converted an
affiliated practice into a Personal Image Center and acquired the Florida Center
for Cosmetic Surgery. These transactions marked the Company's entrance into the
ownership of Personal Image Centers whereby the company takes more control over
the business aspects of the practice. The Company believes that the strategic
conversions will allow it to focus additional efforts toward developing and
growing surgery centers.

Under its business services agreements the Company earns revenue from
providing services and facilities to affiliated practices at Centers on a
monthly basis as each affiliated practice collects its cash. The agreements
provide that each affiliated practice will pay the Company fees based on a
percentage of the net cash collected by that affiliated practice. The Company's
revenue consists of the sum of the service fee and amounts equal to the
operating expenses of the affiliated practice assumed by it under the business
services agreements. The operating expenses of the affiliated practice that are
the Company's responsibility and that it is legally obligated to pay include the
following:

o salaries, benefits, payroll taxes, workers compensation,
health insurance and other benefit plans, and other direct
expenses of non-medical employees that are the Company's
employees located at the Centers;

o direct costs of all employees or consultants that provide
services to each of the Centers;

o medical and office supplies;

o lease or rent payments, utilities, telephone and maintenance
expenses for the Center's facilities;

o property taxes on Company assets located at the Centers;

o property, casualty and liability insurance premiums, excluding
malpractice insurance, is the responsibility of the affiliated
practice;

o surgeon recruiting expenses; and

o advertising and expenses attributable to the promotion of the
Centers.

The Company assumes all of these expenses and pay the third-party provider
of the goods and services.

The affiliated practices pay for any and all direct employment expenses,
including benefits, for any surgeon or other employee that the Company is
prohibited from employing by applicable law. In addition, the affiliated
practices retain responsibility for the payment of expenses for continuing
education, seminars, professional licenses, professional membership dues and
malpractice insurance and all other expenses of any surgeon.

RESULTS OF OPERATIONS

Revenues. Revenues consist of affiliate costs that must be reimbursed to the
Company, from management fees, and revenue from procedures performed at the
Personal Image Centers in Fort Lauderdale, Florida and Raleigh, North Carolina.
Revenues for the three months ended March 31, 2001 were $8,850,433. This was
$1,211,915 greater than the $7,638,518 for the same period in 2000. This
increase primarily reflects the additional revenue associated with the
acquisition of the Florida Center in the last quarter of 2000. This increase was
offset in part by reduced practice reimbursements and management fees
attributable to certain underperforming affiliate practices that either unwound
and discontinued or converted to a Personal Image Center whereby the Company
took more control over all business aspects of the practice. Same store sales of
continuing operations generated revenues of $7,797,593 in the first quarter of
2001, a 20% increase over the first quarter of 2000. The following tabular
presentation reflects revenues by type of services:

3 months ended
---------------------------------
March 31, 2001 March 31, 2000
------------- -------------
Practice reimbursements $4,850,984 $6,312,529
Management fees 1,203,775 1,325,989
Cosmetic procedures 2,795,674
------------- -------------
Net revenues $8,850,433 $7,638,518
============= =============

Direct Expenses. Direct expenses consist of operating room costs at the
Centers and the reimbursable expenses paid by us for the affiliated practices
for salaries, wages and benefits, medical supplies, advertising and rent, paid
as part of providing plastic surgery procedures in their facilities. During the
first three months of 2001 direct expenses totaled $5,161,316 compared to
$4,050,187 for the first three months of 2000. This increase reflects the costs
of procedures and medical supplies performed at the Centers. These increases
were offset in part by lower other direct costs which fall in line with the
lower practice reimbursements.

Salaries, Wages and Benefits. Salaries, wages and benefits expenses
represent the labor-associated costs of employees at the corporate office and
those employees at the Centers that are paid by the corporate office. Salaries,
wages and benefits for the quarters ended March 31, 2001 and 2000 were
$1,158,503 and $360,145, respectively. This increase is primarily due to more
employees at the corporate offices and the acquisition of the Centers.

General Operating Expenses. General operating expenses consist primarily of
administrative operating costs, non-rent facility costs, professional fees and
overhead costs incurred by the corporate office, the Centers and reimbursed by
affiliated practices. General operating expenses for the first quarter of 2001
were $1,934,630 compared to $2,486,585 for the first quarter of 2000. This
reduction is primarily due to reduced expenses related to practice
reimbursements offset in part by increased expenses resulting from the
acquisition and operation of the Centers.

Depreciation and Amortization. Depreciation expenses consist of depreciation
of corporate assets and depreciation of the assets acquired from the affiliated
practices. Depreciation expense for the first three months of 2001 was $89,872.
The same expense for the first three months of 2000 was $59,561. This increase
reflects the additions to assets after the first quarter of the 2000 fiscal year
from acquisitions of the affiliate practices and internal asset additions.
Amortization expense consist of amortization of goodwill from the affiliated
practices, intangible assets recorded as a result of its acquisition of the
rights to negotiate business development agreements with the plastic surgery
Centers and goodwill related to the acquisition of the Florida Center and the
acquisition of additional assets from an affiliate practice in Raleigh, North
Carolina through a wholly owned subsidiary, TPSC of North Carolina. Amortization
expense for the first quarter of 2001 was $325,342, compared to $168,346 for
2000. This increase primarily reflects the amortization of the goodwill
associated with the acquisition of the Florida Center.

Interest expense. Interest expense consists of the interest portion of note
payments to the affiliated surgeons, interest on notes payable to consultants
and employees, and interest on credit lines. Interest expense for the first
quarters of 2001 and 2000 was $343,916 and $119,118, respectively. The greater
interest expense primarily reflects the debt incurred in connection with the
acquisition of the Florida Center.

Provision for income taxes. Due to the loss before provision before income
taxes, there is no provision for income taxes for the quarter ended March 31,
2001. The provision for the first three months of 2000 related to the taxable
income offset in part by utilization of net operating loss carryforwards from
1999.

Net income or loss. The Company recognized a net loss of $161,742 for the
quarter ended March 31, 2001 versus net income of $365,297 for the same period
in 2000. Earnings for 2001 were impacted by the increased salaries, wages and
benefits expenses, amortization expense and interest expense.

LIQUIDITY AND CAPITAL RESOURCES

Development and acquisition costs, capital expenditures and working capital
requirements will be financed by cash generated through operations, borrowings
and the issuance of notes and common stock. As of March 31, 2001, the Company
had cash, cash equivalents and restricted cash in the amount of $221,957
including restricted cash totaling $195,238. This cash is restricted in
accordance with the terms of the Stock Purchase Agreement with the former
shareholders of the Florida Center until the Company pays the $4,100,000
promissory note which becomes payable on January 1, 2002. During the quarter,
$280,000 of the restricted cash was loaned to the former shareholders of the
Florida Center. This loan is reflected in the current portion of notes
receivable.

Total Assets. Total assets were $18,412,064 at March 31, 2001, a slight
decrease from the year ended December 31, 2000. Decreases in cash and
intangibles, primarily due to depreciation and amortization, were offset, in
part, by increases in accounts and notes receivable.

Working Capital. The working capital deficit at March 31, 2001 was
$6,111,306, compared to $2,332,607 at December 31, 2000. This increase reflects
the reclassification from long-term to current the $4,100,000 note payable
associated with the acquisition of the Florida Center. This note is due January
1, 2002.

Cash Flows. Net cash flows from operating activities totaled $45,704 for the
quarter ended March 31, 2001. Cash provided from operating activities was
negatively impacted by the net loss offset by the effects of depreciation and
amortization expense. The primary negative impacts on cash were the increases in
accounts receivable. For the same period in 2000, $135,127 was used in
operations. This was due to the significant fluctuations in its operating
accounts due to the commencement of operations offset, in part, by net income.

Net cash used in investing activities for the quarter ended March 31, 2001
primarily reflects the issuance of notes receivable to the former shareholders
of the Florida Center offset, in part, by the proceeds from the unraveling of an
affiliated practice. For the same period in 2000, net cash was used in investing
activities to purchase property and equipment.

Net cash used in financing activities for the first quarter of 2001 is due
to the net debt reduction, primarily reflecting debt principal payments
partially offset by funds provided from its line of credit. In the same period
in 2000, funds were used to repay principal toward debt.

Debt. Total debt at March 31, 2001 was $12,157,702, slightly higher than
$12,120,834 at the year ended December 31, 2000. Contributing to the increase
was the draw down on our line of credit totaling $190,000. This increase was
mostly offset by principal payments on debt. The Company has a credit facility
with a total availability of $250,000. There is $60,000 remaining available on
this credit facility.

Going concern. The Company incurred losses from operations in two of the
last three years. As of March 31, 2001, the Company had a working capital
deficit of $6,111,306 that raises substantial doubt about its ability to
continue as a going concern. In addition, all cash acquired and generated
through the Florida Center for Cosmetic Surgery is restricted until the Company
pays a $4,100,000 debt obligation due to the former shareholders of the Florida
Center for Cosmetic Surgery. Further, the Company must make this debt payment of
$4,100,000 on January 1, 2002. Availability under the Company's line of credit
is limited. At March 31, 2001, the Company had $60,000 available out of a
maximum of $250,000 under the facility.

Management's plans in regard to these items include the following:

o The Company plans to sell additional equity securities and pursue
financing arrangements

o The Company has reduced portions of its fixed overhead expenses

o In January 2001, the Company converted $156,000 of current accrued
expenses into 60,000 shares of the Company's common stock

o Management is working to restructure its obligations with debt holders

o Management intends to focus additional efforts toward developing and
growing surgery centers, in which the Company controls all business
aspects of the centers

There are no assurances that Management will be able to successfully
complete a financing arrangement or that the ultimate amounts raised will meet
the Company's cash flow needs and be sufficient to fund the Company's operations
through 2001. In addition, there is no assurance that the Company will be able
to successfully convert additional debt into common stock and reduce its current
liabilities. Further, there is no assurance that the Company will be able to
successfully develop and grow its affiliated practices or acquire or open new
Centers. The failure of the Company to successfully achieve one or all of the
above items may have a material impact on the Company's financial position and
results of operations. The accompanying financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might result should
the Company be unable to continue as a going concern.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company's primary financial instrument subject to market risk is a
line-of-credit agreement with maximum availability at March 31, 2001 of
$250,000. The line-of-credit is secured by principal operating assets and
personally guaranteed by certain members of management. The line-of-credit bears
variable interest rate equal to the Prime rate published in the Wall Street
Journal plus 1 percentage point. (9.5 percent at December 31, 2000) The primary
exposures relating to this financial instrument result from changes in the
interest rates. At March 31, 2001, $190,000 was outstanding and no amounts were
outstanding on this line at December 31, 2000.

At March 31, 2000, a hypothetical ten-percentage point increase in
short-term interest rates would result in a reduction of $25,000 in annual
pre-tax earnings. The estimated reduction is based on the bank debt at its March
31, 2001 level if the credit line was completely used.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

As of March 31, 2001, the Company is not a party to any litigation that if
adversely determined would have a material adverse effect on its operations.
Many of the founding Centers and some owned Centers have pending litigation
arising in the ordinary course of business. If the Company acquired the stock of
a Center in a stock purchase or merger transaction, it assumes the liabilities
of the Center, including litigation, prior to the transaction. The Company
intends to vigorously defend any and all litigation. The Company maintains
general liability insurance for it and on behalf of its affiliated Centers and
where permitted by applicable law and insurers, will be named as an additional
insured under the policies of the affiliated Centers. The affiliated surgeons
maintain professional liability insurance covering the delivery of health
services. Also, the Company is indemnified under the business services
agreements for liabilities it incurs as a result of the performance of medical
services by affiliated surgeons. Successful malpractice claims against
affiliated Centers could have a material adverse effect on its profitability.
Although the Company believes it has adequate liability insurance coverage,
there can be no assurance that a pending or future claim or claims will not be
successful or, if successful, will not exceed the limits of available insurance
coverage. There can also be no assurance that coverage will continue to be
available at acceptable costs and on favorable terms.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Reports on Form 8-K

Date Filed Item Number Description
---------- ----------- -----------

1/02/2001 2 Acquisition or Disposition of Assets
7 Financial Statements and Exhibits

1/16/2001 5 Other Events
7 Exhibits

2/16/2001 9 Regulation FD Disclosure

3/05/2001 2 Acquisition or Disposition of Assets
7 Financial Statements and Exhibits

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the 1934 Act, we have
duly caused this Form 10-Q to be signed on behalf of the undersigned, thereunto
duly authorized, on May 14, 2001.

THE PLASTIC SURGERY COMPANY

By: /s/ Dennis E. Condon
-----------------------------------
Dennis E. Condon
President, Chief Executive
Officer and Director

Pursuant to the requirements of the 1934 Act, this report has been signed
below by the following persons in the capacities indicated and on the date
indicated.

SIGNATURE TITLE DATE
- --------- ----- ----

/s/ Dennis E. Condon President and Chief May 14, 2001
- -------------------------------- Executive Officer (Principal
Dennis E. Condon Executive Officer)

/s/ Adam E. Romo Jr. Chief Financial Officer May 14, 2001
- -------------------------------- (Principal Accounting
Adam E. Romo Jr. Officer)