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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K
                                    ---------

[X]      Annual  report  pursuant  to  Section  13 or  15(d)  of the  Securities
         Exchange Act of 1934 for the fiscal year ended December 31, 2002 or

[ ]      Transition  report  pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934.

                           MERIT MEDICAL SYSTEMS, INC.
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             (Exact name of registrant as specified in its charter)

      Utah                        0-18592                    87-0447695
------------------         ----------------------      ----------------------
 (State or other            (Commission File No.)           (IRS Employer
 jurisdiction of                                          Identification No.)
 incorporation)
                             1600 West Merit Parkway

                            South Jordan, Utah 84095

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          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (801) 253-1600
        Securities registered pursuant to Section 12(b) of the Act: None
                                                                    ----

           Securities registered pursuant to Section 12(g) of the Act:

                   Title of Class: Common Stock, No Par Value
                   --------------

         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. X

         Indicate by check mark whether the registrant is an  accelerated  filer
(as defined in rule 12b-2 of the Act)   Yes X      No
                                           ---       ---

         The aggregate  market value of the Common Stock held by  non-affiliates
of the Registrant,  on June 28, 2002,  which is the last day of the Registrant's
most recently completed second fiscal quarter (based upon the closing sale price
of the Common Stock on the NASDAQ National Market System on June 28, 2002),  was
approximately  $251million.  Shares of Common  Stock  held by each  officer  and
director  and by each  person  who may be  deemed to be an  affiliate  have been
excluded.

         As of March 25, 2003 the  Registrant  had  14,117,405  shares of Common
Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the  following  document are  incorporated  by reference in
Part III of this Report: the Registrant's definitive Proxy Statement relating to
the Annual Meeting of Shareholders scheduled for May 22, 2003.





                                TABLE OF CONTENTS

                                                                                               
PART I .......................................................................................    1
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS ..............................................    1
Item 1   Business.............................................................................    1
GENERAL ......................................................................................    1
PRODUCTS .....................................................................................    2
MARKETING AND SALES ..........................................................................    7
CUSTOMERS ....................................................................................    8
RESEARCH AND DEVELOPMENT .....................................................................    9
MANUFACTURING ................................................................................    9
COMPETITION ..................................................................................    9
PATENTS, PATENT APPLICATIONS, LICENSES, TRADEMARKS AND COPYRIGHTS ............................   10
REGULATION ...................................................................................   10
EMPLOYEES ....................................................................................   11
AVAILABLE INFORMATION ........................................................................   11
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
AND EXPORT SALES .............................................................................   11
FACTORS THAT MAY AFFECT FUTURE RESULTS .......................................................   12

Item 2.  Properties ..........................................................................   15

Item 3.  Legal Proceedings ...................................................................   16

Item 4.  Submission of Matters to a Vote of Security Holders .................................   16

PART II ......................................................................................   16

Item 5.  Market for Registrant's Common Stock and Related Shareholder Matters ................   16

Item 6.  Selected Financial Data .............................................................   17

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations   17

Item 7A. Quantitative and Qualitative Disclosure About Market Risk ...........................   21

Item 8.  Financial Statements and Supplementary Data .........................................   22

Item 9.  Changes and Disagreements with Accountants on Accounting and Financial Disclosure ...   44

PART III .....................................................................................   45

Items 10, 11, 12, 13 and 15 ..................................................................   45

Item 14   Controls and Procedures  ...........................................................   45

PART IV ......................................................................................   45

Item 16.  Exhibits, Financial Statement Schedule and Reports on Form 8-K .....................   46

Signatures ...................................................................................   48

Certification Pursuant To Rule 13a-14 under the Securities Exchange Act of 1934 ..............   49






                                     PART I.

DISCLOSURE REGARDING FORWARD -LOOKING STATEMENTS

         This Report includes "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.  All  statements  other  than
statements of historical fact are  "Forward-Looking  Statements" for purposes of
these  provisions,  including  any  projections  of earnings,  revenues or other
financial  items,  any  statements of the plans and objectives of management for
future operations,  any statements concerning proposed new products or services,
any statements  regarding  future economic  conditions or  performance,  and any
statements of assumptions  underlying any of the foregoing.  All Forward-Looking
Statements  included  in this  document  are made as of the date  hereof and are
based on  information  available  to the  Company as of such date.  The  Company
assumes no obligation to update any  Forward-Looking  Statement.  In some cases,
Forward-Looking  Statements can be identified by the use of terminology  such as
"may,"  "will,"  "expects,"  "plans,"  "anticipates,"  "intends" or  "believes,"
"estimates,"  "potential,"  or  "continue,"  or the  negative  thereof  or other
comparable  terminology.  Although the Company  believes  that the  expectations
reflected in the  Forward-Looking  Statements  contained  herein are reasonable,
there can be no assurance that such  expectations or any of the  Forward-Looking
Statements will prove to be correct,  and actual results could differ materially
from  those  projected  or  assumed in the  Forward-Looking  Statements.  Future
financial  condition and results of operations,  as well as any  Forward-Looking
Statements are subject to inherent  risks and  uncertainties,  including  market
acceptance of the Company's products,  product introductions,  potential product
recalls, delays in obtaining regulatory approvals, cost increases,  fluctuations
in and obsolescence of inventory, price and product competition, availability of
labor and materials,  development of new products and techniques that render the
Company's  products  obsolete,   product  liability  claims,   foreign  currency
fluctuations,  changes in health  care  markets  related to health  care  reform
initiatives  and other factors  referred to in the Company's  press releases and
reports  filed with the  Securities  and Exchange  Commission  (the "SEC").  All
subsequent  Forward-Looking  Statements  attributable  to the Company or persons
acting  on its  behalf  are  expressly  qualified  in  their  entirety  by these
cautionary statements.  Additional factors that may have a direct bearing on the
Company's  operating results are described under "Factors That May Affect Future
Results" beginning on page 12.

Item 1.  Business.
         ---------

GENERAL

         Merit Medical  Systems,  Inc. (the "Company" or "Merit," "we," or "us")
was formed in 1987 by  members  of its  current  management  for the  purpose of
producing  single-use  medical  products  of high  quality  and  superior  value
primarily  for use in diagnosis  and treatment of  cardiovascular  disease.  The
Company's  products  are  designed to provide  physicians  and other health care
professionals  with  devices  that  enable  them to perform  interventional  and
diagnostic procedures safely and effectively. Initially, the Company's expertise
in product  design and its  proprietary  technology  and skills in injection and
insert  molding  enabled it to  introduce  innovative  new  products and capture
significant market share. The Company subsequently combined its plastics molding
capability  with the  application of proprietary  electronics  and  sensor-based
technologies to develop a line of angioplasty inflation products with electronic
sensing  and display  features.  These  devices  are now  included in a group of
sensor-based  products that address a broad range of needs related to diagnostic
and  interventional  catheterization  procedures  performed in hospitals.  Since
1997, the Company has expanded its product offerings to include catheters, guide
wires, sheath introducers, needles, safety products and drug infusion devices.

         The  Company's  strategy  is to  offer  a  broad  line  of  innovative,
disposable  products for diagnosis and intervention in radiology and cardiology.
Merit  continues to increase  market  acceptance  and  penetration  for both its
existing and new  products in the United  States and in  international  markets.
Longer  term,  the  Company's  strategy  is to  extend  the  application  of its
sensor-based   technologies,   plastics  molding,   catheter,  guide  wire,  and
electronic   capabilities   and  to  develop   products   for   diagnostic   and
interventional   procedures  in  additional   markets  such  as  neuroradiology,
nephrology,   pain   management  and  critical  care.  The  Company's  sales  of
stand-alone products in combination with custom kits have increased as additions
have been made to the Company's product lines. In 2002, approximately 51% of the
Company's  sales  were  made  directly  to  the  United  States   hospitals  and
approximately  26% of sales  were made to  custom  packagers,  distributors  and
O.E.M.   companies  who  also   distribute  to  the  United  States   hospitals.
Approximately  23% of the  Company's  sales in 2002 were  made in  international
markets.

                                       1


         The Company was organized in July 1987 as a Utah  corporation.  In July
1994, the Company purchased a controlling interest in Merit Sensor Systems, Inc.
(formerly Sentir, Inc.), a California-based manufacturer of silicon sensors, and
during 1999, the Company  purchased the remaining  interest in Sentir,  Inc. The
Company also has  established  subsidiaries  in Ireland,  Germany,  France,  the
United  Kingdom,  Belgium,  and the  Netherlands  to conduct  its  international
business.  On January 31, 1997, the Company  purchased the operating  assets and
product lines of Universal  Medical  Instruments  Corp.  ("UMI").  On August 20,
1999,  the Company  purchased  the  operating  assets and  product  lines of the
Angleton, Texas division of Mallinckrodt Inc. ("Mallinckrodt"). Unless otherwise
specified  or evident from the context,  references  to the Company  include its
consolidated  subsidiaries.  The  Company's  principal  offices are located in a
manufacturing and office facility at 1600 West Merit Parkway, South Jordan, Utah
84095, and its telephone number is (801) 253-1600. See "Item 2. Properties."

PRODUCTS

         The Company's  products have been designed and developed in response to
the needs of customers and patients.  These needs have been identified primarily
through  observation  of  procedures  in cardiac  catheterization  and radiology
laboratories,  consultation  with the Company's medical advisors and consultants
and direct  communication with customers.  Since 1988, the Company has developed
and introduced several product lines, including the following:

o  control  syringes  (CCS(TM),  Smart     o  a torque device,
   Tip(TM)and Inject8(TM)),

o  inflation devices  (IntelliSystem(R),   o  contrast    management   systems
   Monarch(R), Basix(R),and BasixCOMPAK       (Miser(R)and In-Line(TM)Contrast
   (TM) including new 30-atmosphere           Management System(TM)),
   versions),

o  specialty syringes (Medallion(R)and     o  angiography needles (Majestik(R)
   VacLok(R))                                 Series,Majestik(R)Shielded
                                              Needle),

o  high-pressure tubing and connectors     o  blood containment devices
   (Excite(TM),   flexible,   braided,        (Captiva(R)),
   rigid, pvc, and Sherlock(TM)),

o  waste    handling    and   disposal     o  pericardiocentesis catheters and
   products (Merit Disposal  Depot(R),        procedure trays,
   Backstop(R)and ShortStop(R)),

o  a disposable    blood    pressure       o  thrombolytic  infusion catheters
   transducer (Meritrans(R)),                 (Fountain(R)and Mistique(TM))
                                              and accessories (Squirt(R)),


o  disposable     hemostasis    valves     o  diagnostic  angiographic pigtail
   (MBA(TM), Passage(R), Access-9,(TM)        catheters, diagnostic cardiology
   Access  Plus(TM),   Double-Play(TM)        and radiology catheters
   and Inspector(TM)),                        (SofTouch(R)and Performa(R)),

o  manifolds and stopcocks (Marquis(R)     o  sheath introducers (DialEase(TM)),
   Series),                                    and

                                           o  diagnostic guide wires
                                              (Inqwire(R), and RadStat(TM)).


These products are sold  separately and in custom kits  consisting  primarily of
selected combinations of products.

         The Company  has not  experienced  any  significant  product  liability
claims;  however, the sale and use of its products entails an inherent risk that
product  liability  claims may be  asserted  against  the  Company.  The Company
maintains product liability insurance in the amount of $5,000,000 per occurrence
and in the  aggregate,  which may not be adequate  for  expenses or  liabilities
actually incurred.

           The following  paragraphs contain a brief description of, and provide
other information regarding, Merit's key products:

                                       2


         Inflation  Devices and Angioplasty  Accessories.  Inflation devices are
large, specialized syringes used in interventional catheterization procedures to
inflate  balloon-tipped  catheters.  Each  of the  Company's  inflation  devices
incorporates  patented,  proprietary design features which contribute to ease of
use,  including allowing the clinicians to engage or release the syringe plunger
with one hand  while  increasing  or  decreasing  pressure.  Each  syringe  also
provides  a  clear  view  of the  fluid  path  that  simplifies  debubbling  and
contributes to accurate measurement of pressure.

         The Company's IntelliSystem(R) 25 inflation device, which was the first
such device to incorporate electronic sensing and display features,  consists of
a disposable 20cc inflation  syringe and an internal  pressure  transducer which
connects to a monitor outside of the sterile field. The IntelliSystem(R) monitor
measures,  times,  records,  and digitally displays  information  concerning the
pressure, duration and number of each inflation and deflation of the angioplasty
balloon.   The  Company  believes  that  electronic   sensing  display  of  such
information  is much more  accurate  and precise than that which can be obtained
from  conventional  analog  gauges.  The data is  stored  and may be  displayed,
retrieved, graphed and printed.

         The patented  IntelliSystem II(TM) color monitor is an advanced balloon
inflation  system.  It  gives  physicians   several  highly  desirable  options,
including:  a large touch  screen,  an instant  readout of positive and negative
pressures,  and an enlarged graphing display to show extremely subtle changes in
pressure measurements. In addition, the readouts are available in four languages
by touching the screen.  Management believes Merit the only company with digital
technology sensitive enough to show minute changes in pressure.

         The  Monarch(R)  is  a  disposable  inflation  device  which  digitally
displays data concerning pressure and duration of inflations and deflations on a
small digital readout mounted on the barrel of the inflation syringe.  The small
monitor does not offer the same display, storage or printing capabilities of the
IntelliSystem(R) & IntelliSystem  II(TM) but offers the convenience of portable,
digital  operation.  In 2002, Merit launched a 30 atmosphere  version to provide
clinicians with additional options.

         The  Basix(R)  25 and  the  BasixCOMPAK(TM)  are  disposable  inflation
syringes which  incorporate a conventional  analog pressure gauge mounted on the
barrel of the inflation  syringe.  The Basix(R) more closely  resembles  devices
marketed by the Company's  competitors  but includes the  Company's  proprietary
design  features  and  benefits.  The Company  believes  that the  Basix(R)  and
BasixCOMPAK(TM)  represent  a  significant  addition  to its  line of  inflation
devices and will contribute to increased sales where both clinical  outcomes and
price are a priority.

         Hemostasis  Valves.  The MBA(TM),  Passage(R),  AccessPlus(TM),  Double
Play(TM),  and the Inspector(R)  hemostasis  valves are used in conjunction with
the Company's inflation devices and as a component of the Company's  angioplasty
packs.  These valves are made of  polycarbonate  plastic for clarity and include
Sherlock(TM)  connectors.  The devices differ in size and function.  The MBA(TM)
features a valve  mechanism that minimizes  blood loss during exchange of wires,
catheters  and other tools  through the valve.  The Access  Plus(TM)  and Access
9(TM) are large-bore  configurations.  The Double Play(TM) incorporates a double
"Y"  configuration  for  kissing-balloon  techniques.  And the Inspector(R) is a
single-lumen, flow-through configuration.

         Torque  Device.  The Merit torque  device is a guide wire steering tool
with a tapered design and contrasting colors for improved visibility. The torque
device typically is included as a component of the Company's angioplasty packs.

         Control  Syringes.   The  Company's  disposable  control  syringes  are
utilized for  one-handed  control of the  injection of contrast  media and other
fluids during angiography,  angioplasty and stent placement.  (A stent is a tube
that is inserted  into a vessel or passage to keep it open and  prevent  closure
due to stricture  or external  pressure).  The control  syringes are molded from
polycarbonate material,  which is stronger than glass and other plastics used in
the  industry.  The  Company  offers  different  models and sizes of the control
syringes  with  varying  features,  according  to  physician  preference.  These
features  include  different  configurations  of syringe  handles,  plungers and
connectors which allow operation of the syringe in a fixed or rotating  position
and varying  volume sizes,  including a popular 8ml model,  Inject8(TM)  and the
new,  streamlined   Inject10(TM).   In  response  to  customer,  Merit  launched
latex-free control syringes in 1998.

                                       3


         Specialty  Syringes.   Merit's   Medallion(R)   syringes,   a  line  of
disposable,  latex-free,  color-coded specialty syringes, are used for injection
of medications,  flushing  manifolds and other general purposes.  These syringes
are molded of  polycarbonate  material for added  strength and are  available in
hundreds of sizes,  colors and custom printing  combinations.  The  color-coding
minimizes  medication  errors by allowing a clinician to assign a color for each
medication to be dispensed and to differentiate  syringes by their contents. The
syringes  also can be custom  printed  to the  specifications  of the user.  The
Company  believes  that the  design,  color  coding  and  materials  used in its
specialty syringes  contribute to patient safety and more efficient  procedures.
The specialty syringes are sold separately and are an important component of the
Company's custom kits.

         60ml VacLok(R).  The 60ml VacLok(R)  syringe is used to create negative
pressure.  There are many clinical applications for a negative pressure syringe,
including:  abscess  drainage  and  biopsy,  balloon  preparation,   nephrostomy
drainage, and more.

         Large-Bore  Stopcock(TM).  The Large-Bore(TM) Stopcock launched in 2001
is  designed  to  facilitate  movement  of fluid.  The large  internal  diameter
(0.120") is designed  for moving  drainage  fluid from the body.  Like all Merit
stopcocks,   the  large-bore   version   incorporates  a  clear  body  for  easy
visualization and a large, easy-to-manipulate handle.

         Marquis(TM) Series Stopcock.  The Company's Marquis(TM) Series Stopcock
offers  improvements  to  competitive  stopcock  devices,   including  a  large,
easy-grip  handle.  The  Marquis(TM)  Series Stopcock is used in connection with
Sherlock(TM) connectors to provide improved connections during procedures.

         Manifolds.  The  administration of saline,  imaging and contrast fluids
and the  management  of  blood-pressure  monitoring,  fluid  injection and waste
collection in angiography or angioplasty  procedures is  accomplished  through a
series of valves on a manifold  which  control the flow of various  fluids.  The
Company has designed its own manifold  consisting  of two,  three,  four or five
valves. When compared to manifolds sold by competitors, the Company believes its
manifold offers greater ease of use, simplified identification of flow direction
and leak-free operation under the pressures of manual or mechanical injection of
fluids. The Merit Manifold is sold separately but is also a key component of the
Company's custom kits.

         Percu-Stay(R) - Catheter Fixation Device.  Percu-Stay(R) is a one piece
catheter tube securing device and site dressing for percutaneous drainage sites.
The product  provides a comfortable,  low-profile  fixation device for catheters
and tubes. The device is used in interventional  radiology,  special procedures,
cardiology, urology, home health care, and skilled nursing facilities.

         MDD600(TM).  The Merit  Drainage  Depot(TM) was launched in 2001 and is
specifically  designed to temporarily collect fluids. It incorporates a drainage
spout for quick and easy fluid disposal,  and an internal  anti-reflux  valve to
help prevent fluid from backing up the line. The bag also comes packaged with an
adjustable  velcro strap that can be used to attach the device to the  patient's
waist or leg.

         High-Pressure  Contrast  Injection  Line and  Sherlock(TM)  Connectors.
During angiographic and diagnostic radiology procedures,  contrast media must be
injected  through a catheter into a patient's  artery or vein. This is sometimes
accomplished  by a mechanical  injector which can generate  pressures up to 1200
pounds per square inch ("psi"),  and requires  tubing that can  withstand  these
pressures.  The Company offers high-pressure,  specialty tubing with proprietary
Sherlock(TM) connectors. In 1998, the Company launched Excite(TM), a new line of
clear,  flexible,  high-pressure  tubing that  combines  the  features of tubing
clarity and strength.  Sherlock(TM)  connectors allow coupling and uncoupling of
tubing  with  injectors,  syringes  and  manifolds  without  over-tightening  or
breakage.  The Company is currently  offering  specialty  tubing that can handle
pressures  ranging from 500 to 1200 psi. The specialty tubing with  Sherlock(TM)
connectors is an important component of custom kits.

         RadStat(TM)  Radial Artery  Compression  Device. The RadStat(TM) Radial
Artery Compression Device is intended to be used to apply direct pressure to the
radial artery puncture site after diagnostic and interventional  procedures.  In
addition to rapid controlled hemostasis,  the RadStat(TM)  immobilizes the wrist
comfortably, permitting rapid patient ambulation.

                                       4


         Waste Containment Systems. Because of heightened awareness of the risks
associated with blood and related waste  materials,  hospitals have moved toward
closed systems  whenever  possible.  To address these concerns,  the Company has
designed a waste containment bag which connects to a manifold in a closed system
and collects waste  materials such as blood and other fluids during  angioplasty
or other procedures.  The Merit Disposal Depot(TM) is self-contained for ease of
disposal and reduces the risk of contamination.  The Backstop(R) is a unique and
proprietary  alternative  fluid disposal  basin  designed to reduce  exposure to
blood-borne  pathogens.  In 2002, Merit launched the DugOut(TM),  a large volume
(1000 ml) line extension to the  Backstop(R).  The  DugOut(TM)  also contains an
additional compartment for the storage of accessories.

         Contrast Management Systems. The Miser(TM) and the In-Line(TM) Contrast
Management   System  have  been   designed  to  increase   catheterization   lab
efficiencies  by reducing  contrast  media  waste.  This small system helps save
hospitals thousands of dollars a year in wasted contrast.

         Majestik(R)  Angiographic  Needles.  The angiography needle creates the
percutaneous   (through  the  skin)  access  site  for  virtually  all  invasive
diagnostic and interventional  procedures performed in cardiology and radiology.
The needle  provides the initial point of entry site for the introducer  sheath,
guide  wires,  catheters  and  any  other  interventional   devices.  The  Merit
Majestik(R)  Needle helps the physician achieve  precision  vascular access with
one of the sharpest angiography needles on the market.

         Majestik(R)  Shielded  Angiography  Needles. The Needlestick Safety and
Prevention  Act passed by the United  States  Congress in November 2000 requires
healthcare  employers  to document  their  exposure  control  plan and  evaluate
safety-engineered  products to protect clinicians. In 2002, Merit launched a new
line  of  shielded,  18-gauge  angiography  introducer  needles  that  meet  the
requirements  of the law. The  Majestik(R)  shielded  needle is one of the first
safety-engineered  devices  designed to promote safer needles in cardiology  and
radiology.  Access  Safety Kits (A.S.K.  Merit) were  launched in early 2003 and
include protected scalpels and needles used for vascular access.

         Fountain(R) and Mistique(TM) Infusion Catheters.  Vascular occlusion is
a  common  anomaly  that  affects  millions  of  patients  each  year.  Both the
Fountain(R)   catheter  and  the  Mistique(TM)   catheters  deliver  therapeutic
solutions  to  dissolve  thrombolytic  occlusions  (blood  clots) in  peripheral
arteries,  hemodialysis grafts and deep veins. The Fountain catheter utilizes an
occluding  wire to  effectively  block off the end hole and direct the  infusion
therapy  uniformly  through the  laser-drilled  side holes.  The Mistique(TM) is
designed  to be used over  standard  0.035 or 0.038 guide wires to block off the
end hole and direct the infusion therapy uniformly through the side holes.

         Squirt(R)  Fluid  Dispensing  System.  The Squirt(R)  fluid  dispensing
system is a unique and proprietary product designed specifically for therapeutic
infusion for controlled,  accurate and consistent fluid delivery.  Some Fountain
catheter configurations contain a Squirt(R) packaged with it.

         InQwire(R)   Diagnostic   Guide  Wires.   Guide  wires   consist  of  a
small-diameter wire tightly wrapped in a coated wire coil. The technology needed
to produce these wires is considerable, and Merit utilizes its guide wire center
of excellence in Ireland to manufacture the Inquire Diagnostic Guide Wire. Guide
wires vary in length,  outside diameter and tip  configuration,  and are used to
place either a diagnostic or therapeutic  catheter into a patient's heart artery
or other area of the body.

         RingMaster(TM).  The RingMaster(TM) guide wire basin, launched in 2001,
allows  clinicians to conveniently  store guide wires to maintain  sterility and
organization. It separates wires for quick selection, uses less table space than
conventional  basins  because it's  stackable  and it helps keep wires  hydrated
throughout the procedure.

         Vessel Dilators.  Dilators are used to dilate puncture sites.  They are
commonly used in radiology and cardiology  over a 0.035" or 0.038" guide wire to
dilate the site prior to placing sheaths and catheters in the femoral artery.

         DialEase(R)  Introducer  Sheath.  The  DialEase(TM)  Sheath  is a short
introducer ideally suited for dialysis graft  intervention.  It is commonly used
in  conjunction  with the  Fountain(R)  and  Mistique(TM)  therapeutic  infusion
catheters to declot dialysis grafts.

                                       5


         Angiography Pigtail Catheter. In 1997, Merit acquired new product lines
and  technologies  from UMI, a small  specialty  medical  manufacturing  firm in
upstate  New  York.  At that  time the  Company  began  marketing  a new line of
thin-wall,  (Teflon(R)),  high-flow, pigtail angiographic catheters designed for
smaller patients.

         Pericardiocentesis  Kit. On occasion,  the pericardial sack surrounding
the  heart  becomes  filled  with  blood or fluid.  To remove  the fluid and the
potential  for heart  strangulation  (tamponade),  a  catheter  is placed in the
pericardial   sack  to  drain  the  excess   fluid.   Merit  offers  a  complete
pericardiocentesis  kit  which  combines  a  high-flow  drainage  catheter  with
virtually all components needed to place the device in the pericardial sack. The
kit combination saves the physician both time and money by having all components
in one convenient tray.

         One-Step(TM)  Centesis Catheter.  The One Step(TM) Catheter launched in
the first  quarter of 2002 and is  intended to be used for  short-term  centesis
procedures.   It  incorporates  a  luer-locked  introducer  needle  for  secure,
one-handed placement. The tip of the introducer needle is echogenically enhanced
for visualization during ultrasound-guided placement. The transition between the
catheter and needle is smooth to facilitate insertion.

         Resolve(TM)  Universal  Drainage  Catheter  with Locking  Pigtail.  The
Resolve(TM)  Universal  Drainage  Catheter with locking  pigtail and hydrophilic
coating is expected to be another key  addition to Merit's  offering of drainage
catheters and accessories in 2003. It is intended for  percutaneous  drainage of
body fluids where a locking pigtail is required for extended catheter placement.
With the unique,  patented pigtail release mechanism there is no need to cut the
catheter for removal and  exchange.  With a new hub design,  the  clinician  can
close  the hub and  lock  the  pigtail  with  one  hand.  There  is no  longer a
requirement  to wind a locking  suture around the hub to keep the pigtail locked
in place.

         Resolve(TM)  Universal Drainage Catheter with Non-Locking  Pigtail. The
Resolve(TM)  Universal  Drainage  Catheter  with  non-locking  pigtail  was also
launched in 2002. It is a standard  drainage catheter designed to expand Merit's
offering of drainage products.

         Meritrans(R)  Pressure  Transducer and  Accessories.  Diagnostic  blood
pressure  monitoring  is a critical  priority in virtually  all  diagnostic  and
interventional  procedures.  The Meritrans(R)  provides clinicians with reliable
and precise blood pressure  measurement.  The clear,  flow-through  design makes
flushing and debubbling  simple and safe. The transducer is a vital component of
many custom kit  configurations.  Pressure  Monitoring  Tubing and Stopcocks are
common ancillary products to complement the Meritrans(R). Merit provides several
reusable  accessories  to support the  Meritrans(R).  The Merit  Mentor(TM) is a
transducer  calibration  and  troubleshooting  device  to  insure  accuracy  and
repeatability of physiologic pressure  measurements.  Reusable transducer cables
connect  the  Meritrans(R)  to the bedside  monitor.  Organizing  brackets  hold
multiple transducers to beds and IV poles.

         Pressure  Infusor Bag. In 2001,  Merit signed a distribution  agreement
for a line of Pressure  Infusor Bags.  These devices are used  hospital-wide  to
apply pressure to a sealed bag of fluid, such as IV solutions or blood products.
The pressure  exerted is shown by a color-coded  pressure gauge,  and the device
has a valve that releases pressure to prevent inadvertent over-pressurization.

         ShortStop(R).  In 2000,  Merit  introduced the  ShortStop(R),  a small,
temporary  sharps container with an adhesive base that fits on the back table in
a clinical lab. It is used for the temporary  containment  of needles,  scalpels
and other sharp tools to help prevent inadvertent clinician injury.

         Custom Kits. Custom kits allow physicians to obtain the medical devices
and  accessories  they most frequently use during  angiography,  angioplasty and
similar  procedures in a convenient,  pre-packaged and preassembled form. custom
kits also provide cost savings over  purchasing  single  products and reduce the
hospital's   administrative  costs  associated  with  maintaining  inventory  of
individual, sterile products.

         Universal  Fluid  Dispensing  Syringe.  In 1997,  the Company  received
510(k) approval from the U.S. Food and Drug  Administration  ("the FDA") for use
of its digital inflation devices  (IntelliSystem(R) and Monarch(R) products) for
a wide range of additional clinical applications such as discography, esophageal

                                       6



dilatation,  trigeminal nerve  compression,  and retinal  detachment.  Universal
fluid dispensing  syringes  incorporate  patented,  proprietary  design features
which contribute to ease of use,  including allowing the clinicians to engage or
release  the  syringe  plunger  with one hand  while  increasing  or  decreasing
pressure.  Each  syringe  also  provides  a clear  view of the  fluid  path that
simplifies debubbling and contributes to accurate measurement of pressure.  When
used in other clinical  applications such as discography,  the  IntelliSystem(R)
accurately dispenses fluid while documenting and graphing pressures in the disc.
The Company believes that electronic sensing display of such information is much
more  accurate and precise  than the tactile feel of standard  syringes and that
which can be obtained from  conventional  analog gauges.  The data is stored and
may be displayed, retrieved, graphed and printed.

         Diagnostic Cardiology Catheters.  Cardiac  catheterization is performed
to diagnose the nature,  severity,  and precise  location of blockages and other
abnormalities  of the  heart.  This  technique  represents  the  most  essential
diagnostic tool in the management of patients with cardiovascular  disease.  The
Company  manufactures and sells a complete line of diagnostic catheters used for
these procedures.

         Diagnostic Radiology Catheters.  Radiology catheters are engineered and
designed with distinct tip  configurations to access specific vessels and organs
outside the heart (head, kidneys,  legs, etc). Merit acquired a strong radiology
catheter product portfolio from Mallickrodt's Angleton Division in 1999.

         Vessel-Sizing  Catheters.  In 2000, Merit introduced a complete line of
adult  vessel-sizing  catheters,  which are used by  radiologists to measure the
internal diameter and length of a blood vessel under fluoroscopy.  Procedures in
which these  catheters  are used include  angioplasty,  embolization,  abdominal
aortic aneurysm (AAA)  stent-grafts  and vena cava filter  placements.  In 2001,
pediatric vessel-sizing catheters were introduced to complement the line.

         Guide Catheters.  The Company's acquisition of the operating assets and
product  lines of  Mallinckrodt's  Angleton,  division in 1999 brought a line of
high-quality guide catheters used in cardiology.  Coronary  angioplasty requires
the use of a guiding catheter to place the balloon within the  vasculature.  The
catheter is inserted through a sheath into the arterial  system.  Once in place,
the guiding  catheter acts as a conduit for the guide wire, the dilating balloon
catheter,   coronary   stents  and  radiopaque  dye  that  is  used  to  provide
fluoroscopic visualization during the procedure.

MARKETING AND SALES

         Target Market/Industry. Cardiovascular disease is the number-one health
problem in the United States. According to American Heart Association estimates,
nearly 60 million Americans, or approximately 25% of the population, have one or
more types of the disease.  Cardiovascular disease accounts for an estimated one
million  deaths  annually,  more than 40% of the U.S.  total.  A majority of the
Company's sales revenues are derived from products used in coronary  angiography
and angioplasty procedures designed to treat cardiovascular disease. The Company
believes that  transcatheter  modalities  (products and  technologies  utilizing
heart  catheterization  procedures)  such as balloons,  stents and defect repair
currently  represent  the greatest  potential to diagnose and treat the disease.
The Company  intends to build upon its existing market position in both catheter
technology and accessory products to continue its sales growth.

         The  global  market  for  transcatheter  products  stands  at  a  major
crossroad,  even when  considering the continued  dynamic  evolution in vascular
stent  placement.  The core  diagnostic and therapeutic  applications  for basic
transcatheter  technologies  (balloons,  stents  and  defect  repair)  are  well
established,  with the future growth of procedures  and products  dependent upon
demographic trends. This has not, however,  prevented significant  investment in
new  technologies  and  applications  designed to enhance  patient  outcomes and
enable the treatment of new populations that have been traditionally  limited to
surgical intervention. Much of this additional investment relates to procedures,
devices and drugs for the treatment and  prevention of coronary  artery  disease
that have been  developed  and are  currently  being used by  physicians.  These
procedures, devices and drugs include laser angioplasty,  atherectomy procedures
and  drug  therapies,  the  effect  of which  may be to  render  certain  of the
Company's products obsolete or to limit the markets for Merit products. However,
with the advent of vascular stents and other procedures, such as discography and
kyphoplasty,  the Company has  experienced  continued  growth in its proprietary
inflation  technology.  The Company is  monitoring  trends in the  industry  and
believes  it is in a position to launch  catheters  and  accessories  to support
growing clinical applications.

                                       7


         There are a large number of projects focused on improving the diagnosis
of  cardiovascular  disease,  solving  the issue of  restenosis  and other  less
invasive  alternatives to open-heart  surgery.  In recent years researchers have
focused their interests on technologies  and products that support the growth of
transcatheter   approaches   to  reducing  the   morbidity   and   mortality  of
cardiovascular  disease,  including:  drug-coated  stents,  radiated  stents and
balloons,   anti-platelet   therapy,   gene   therapy,   percutaneous   coronary
thrombectomy  and  transmyocardial  revascularization.   One  area  of  specific
interest to the Company is transradial catheterization which is the introduction
of vascular  catheters  through the radial artery allowing for rapid  ambulation
which  ultimately  reduces total patient cost.  The Company plans to continue to
develop and launch innovative products to support these clinical trends.

         Market  Strategy.  The  Company's  marketing  strategy  is  focused  on
identifying and introducing highly profitable, differentiated products that meet
customer needs.  The Company has targeted  selected  hospital market segments in
cardiology  and  radiology  where its  products  are used.  Suggestions  for new
products  and  product  improvements  may come from  engineers,  sales  persons,
physicians and technicians who perform the clinical procedures.

         When  a  product  suggestion   demonstrates   sustainable   competitive
advantage, meets customer needs, fits strategically and technologically with the
Company's business,  and has a good potential financial return, a "project team"
is  chartered  with  individuals  from  the  Company's  marketing,  engineering,
manufacturing  and  quality  assurance  departments.  This team  identifies  the
customer   requirements,   integrates   the  design,   compiles  all   necessary
documentation and testing and prepares the product for market introduction.  The
Company believes that one of its marketing  strengths is its capacity to rapidly
conceive, design, develop, and introduce new products.

         The United States Sales.  The  Company's  direct sales force  currently
consists of a vice president of sales, an executive sales manager, five regional
sales managers and 46 direct sales representatives located in major metropolitan
areas  throughout the United States.  The Company's  sales people are trained by
personnel  at the  Company's  facilities,  by a  senior  sales  person  in their
respective  territories,  at regular  national  and regional  sales  meetings by
consulting  cardiologists  and employees of the Company,  and by  observation of
procedures in catheterization laboratories.

         International  Sales.  Outside of the United States,  approximately 100
independent dealer organizations and 17 direct sales representatives in Germany,
France, the United Kingdom, Belgium, Netherlands, and Ireland presently sell the
Company's  products.  In 2002, the Company's  international sales grew by 8% and
accounted for approximately 23% of total sales. The Company has appointed a vice
president for  international  sales and established an  international  sales and
distribution office in Maastricht, The Netherlands.  With the recent and planned
additions to its product  lines,  the Company  believes  that its  international
sales will continue to increase.

         International  dealers are  required  to  inventory  products  and sell
directly to customers  within defined sales  territories.  Each of the Company's
products  must be approved for sale under the laws of the country in which it is
sold.  International  dealers are responsible for compliance with all applicable
laws and regulations in their respective countries.

CUSTOMERS

         The  Company   serves   hospital-based   cardiologists,   radiologists,
anesthesiologists, physiatrists (pain management), neurologists, technicians and
nurses,  all of whom  influence the  purchasing  decision for Merit's  products.
Hospitals  also  purchase the Company's  products in the United  States  through
custom  packagers  and packers who assemble and combine  products in custom kits
and packs. The Company's  customers  outside the United States are hospitals and
other  end  users  in  those  countries  where a  direct  sales  force  has been
established;  In other  countries where the Company does not have a direct sales
force,  independent  dealers in medical  products  resell to hospitals and other
customers.

           In 2002, approximately 51% of the Company sales were made directly to
domestic  hospitals,  approximately  26% to custom  packagers  and  packers  and
approximately  23% to  international  markets.  Sales  to the  Company's  single
largest customer, a packer, accounted for approximately 7% of total sales during
the year ended December 31, 2002. Merit manufactures  products for other medical
device  companies  through its OEM program.  During the year ended  December 31,
2002, OEM sales represented approximately 9.5% of Merit's total revenue.

                                       8


RESEARCH AND DEVELOPMENT

         The  Company  believes  that one of its  strengths  is its  ability  to
quickly adapt its expertise and experience in injection molding and to apply its
electronic  and  sensor  technologies  as well  as its  recently  developed  and
acquired technologies of guide wires and catheters to a perceived need for a new
product or product improvement.  The Company's development efforts are presently
focused on disposable,  innovative single-patient or single-use items, which can
be  included  in the  Company's  custom  kits  or sold  separately.  Longer-term
projects  include  the  use  of  sensor-based   technologies  in  a  variety  of
applications  and  additional   inflation  devices  with  added  capacities  and
features.  There is a new focus on interventional vascular access products, such
as needles,  guide wires,  and  catheters.  Several of the  Company's  executive
officers  also  devote a  substantial  portion  of their  time to  research  and
development.  Research and development expenses were $4,007,622,  $4,117,839 and
$3,864,171 in 2002, 2001 and 2000, respectively. The Company did not conduct any
customer-sponsored  research and development  during those periods.  The Company
anticipates  that its  research  and  development  expenses  will range  between
approximately 3% and 4% of net sales during the year ended December 31, 2003.

MANUFACTURING

         Many  of  the  Company's   products  are  manufactured   utilizing  its
proprietary  technology and expertise in plastic  injection and insert  molding.
Tooling of molds is contracted  with third parties,  but the Company designs and
owns all of its molds.  The Company  utilizes its  experience  in injection  and
insert molding  technologies in the manufacture of most of the custom components
used in its products.

         The   electronic   monitors   and   sensors   used  in  the   Company's
IntelliSystem(R)  and Monarch(R)  inflation  devices are assembled from standard
electronic  components or purchased  from  suppliers.  In July 1994, the Company
acquired a 73%  interest and in August 1999 the Company  acquired the  remaining
interest in Merit Sensor  Systems,  Inc.,  which  develops  and markets  silicon
sensors.  Merit Sensor Systems, Inc. is presently providing virtually all of the
sensors utilized by the Company in its digital inflation devices.

         The Company's products are manufactured at several facilities including
South Jordan, Utah; Santa Clara,  California;  Galway, Ireland;  Angleton, Texas
and a leased expansion facility in Murray, Utah. See "Item 2. Properties."

         Merit's variety of suppliers for raw materials and components necessary
for the manufacture of its products, as well as its long term relationships with
such  suppliers,  helps to ensure the  stability in its  manufacturing  process.
Historically,  Merit has not been materially affected by interruptions with such
suppliers.  Further,  contingency plans are in place to engage back-up suppliers
so that materials and components continue to be available.

COMPETITION

         The  radiology  and  cardiology  markets  encompass  a large  number of
suppliers of many different sizes.  The Company competes with small firms,  such
as Possis Medical and Microtherapeutics; medium-sized companies like Cook, Arrow
and Angio Dynamics;  and large,  international,  multi-supply medical companies,
such as Johnson & Johnson, Boston Scientific,  Guidant, Medtronic and C.R. Bard.
Many  of  the  Company's   competitors  have  substantially  greater  financial,
technical and marketing resources than the Company.

         The principal competitive factors in the markets in which the Company's
products  are sold are  quality,  performance,  service  and price.  The Company
believes that its products have achieved rapid market  acceptance  due, in part,
to the  quality of  materials  and  workmanship,  innovative  design and ease of
operation,  and the  Company's  prompt  attention  to  customer  inquiries.  The
Company's products are priced competitively,  but generally not below prices for
competing products.

           The Company believes,  based on available  industry data with respect
to the number of procedures  performed,  that it is one of two market leaders in

                                       9



the United States for control syringes,  tubing and manifold kits (together with
NAMIC USA Corporation, a subsidiary of Boston Scientific),  and is the leader in
the U.S. market for inflation  devices and hemostasis  accessories.  The Company
also  believes  that the recent and planned  additions to its product lines will
enable it to compete more  effectively in both U.S. and  international  markets.
The  Company's  new  IntelliSystem(R)  II color  monitor  provides  considerable
improvements,  including  sensitivity,  in Merit's  existing,  patented  digital
technology.  The Company is the only provider of digital inflation technology in
the world.  There is no  assurance,  however,  that the Company  will be able to
maintain its existing  competitive  advantages or to compete successfully in the
future.

         A substantial  majority of the Company's revenues are presently derived
from sales of products used in coronary angiography and angioplasty  procedures.
Other procedures, devices and drugs for the treatment and prevention of coronary
artery  disease have been  developed and are currently  being used such as laser
angioplasty,  atherectomy procedures and drug therapies, the effect of which may
be to render certain of the Company's  products obsolete or to limit the markets
for its  products.  However,  with the  advent  of  vascular  stents  and  other
procedures such as discography,  the Company has experienced continued growth in
its proprietary inflation technology.

PATENTS, LICENSES, TRADEMARKS AND COPYRIGHTS

         The Company considers its proprietary technology to be important in the
development  and manufacture of its products and seeks to protect its technology
through  a  combination  of  patents  and  confidentiality  agreements  with its
employees and others. Merit has received 92 issued U.S. and foreign patents, and
many  more are  pending.  Two U.S.  patents  were  issued in 1991  covering  the
mechanical aspects of the Company's  angioplasty  inflation devices which relate
to the  ability  of the user to engage or  release  the  syringe  plunger  while
increasing or decreasing  pressure,  and two U.S.  patents were obtained in 1992
and 1993 covering  digital  control  aspects of the  Company's  IntelliSystem(R)
inflation device and for displaying,  storing and retrieving inflation data. The
Company has obtained other patents  covering each of its Monarch(R) and Basix(R)
inflation  devices  and  additional  features of the  IntelliSystem(R).  Patents
granted to the Company  prior to 1995,  expire 17 years after the date of grant,
and patents  granted to the Company after 1995 expire 20 years after the date of
application.

          Corresponding patent applications  covering the claims included in the
Company's U.S.  patents and patent  applications  have been initiated in several
foreign  countries.  The Company  deems its  patents  and patents  pending to be
materially  important  to its  business  but does not  believe  its  business is
dependent on securing such patents. Moreover,  although certain of the Company's
key patents will expire in 2008 and other  patents will expire  thereafter,  the
Company  expects that related  products  will  continue to be valuable,  in part
because of proprietary  innovations  made since the issue of the initial patent.
The  Company  negotiated  a license in 1992 with  respect to patents  concerning
technology utilized in its  IntelliSystem(R) and Monarch(R) inflation devices in
consideration  of a 5.75%  ongoing  royalty,  not to exceed  $450,000  annually.
Royalties paid in each of 2001, 2000 and 1999 were $450,000.

         While the Company has obtained U.S.  patents and filed  additional U.S.
and foreign patent  applications as discussed  above,  there can be no assurance
that issued  patents will provide the Company with any  significant  competitive
advantages  or will not be  challenged  by third  parties or that the patents of
others will not have an adverse  effect on the ability of the Company to conduct
its business.  The Company could incur substantial costs in seeking  enforcement
of its patents against  infringement or the  unauthorized use of its proprietary
technology by others or in defending  itself  against  similar claims of others.
Insofar as the  Company  relies on trade  secrets  and  proprietary  know-how to
maintain its competitive position, there can be no assurance that others may not
independently develop similar or superior technologies.

         The Company has registered or applied for registration of several trade
names or trademarks.  See "Products"  above.  The Company also places  copyright
notices  on its  instructional  and  advertising  materials  and has  registered
copyrights  relating  to  certain  software  used  in its  electronic  inflation
devices.

REGULATION

         The development,  testing, packaging, labeling and marketing of medical
devices and the manufacturing procedures relating to these devices are regulated
under  the  Federal  Food,  Drug and  Cosmetic  Act and  additional  regulations
promulgated  thereunder by the FDA. In general,  these statutes and  regulations


                                       10


require that  manufacturers  adhere to certain standards  designed to ensure the
safety and  effectiveness of medical devices.  The Company employs a director of
regulatory  affairs and a director of quality  assurance who are responsible for
compliance with all applicable FDA regulations. Although the Company believes it
is currently  in material  compliance  with these  requirements,  the  Company's
business could be adversely  affected by a failure to comply with all applicable
FDA and other government  regulations  presently  existing or promulgated in the
future.

         The FDA's Good Manufacturing Practices standards regulate the Company's
manufacturing processes,  require the maintenance of certain records and provide
for unscheduled inspections of the Company's facilities. Certain requirements of
state,  local  and  foreign  governments  must  also  be  complied  with  in the
manufacture and marketing of the Company's products.

         New medical  devices  may also be subject to either the Section  510(k)
Pre-Market   Notification   regulations  or  the  Pre-Market   Approval  ("PMA")
regulations promulgated by the FDA and similar regulatory authorities in foreign
countries.  New products in either  category  require  extensive  documentation,
careful  engineering  and  manufacturing  controls to ensure  quality.  Products
needing PMA approval  require  extensive  pre-clinical  and clinical testing and
clearance by the FDA prior to marketing.  Products subject to the Section 510(k)
of the  Federal  Food Drug and  Cosmetic  Act  require  FDA  clearance  prior to
marketing  Federal Food Drug and Cosmetic Act. To date,  the Company's  products
have required only compliance with Section  510(k).  The Company's  products are
subject to foreign regulatory  approvals before they may be marketed abroad. The
Company places the "CE" mark on devices and products sold in Europe. The Company
has  received  ISO  9001,  EN46001,  and ISO 13485  certification  for its South
Jordan,  Murray,  Utah  facilities,  and  Angleton  facilities.  The Company has
received its ISO 9001 and EN46001 for its Galway,  Ireland facility. The Company
has also  received ISO 9002  certification  for its Merit Sensor  Systems,  Inc.
facility in Santa Clara, California.

EMPLOYEES

         As of March 18, 2003, the Company employed 1,098 persons, including 818
in manufacturing,  118 in sales and marketing,  79 in engineering,  research and
development and 83 in administration.

         Many  of the  Company's  present  employees  are  highly  skilled.  The
Company's  failure or success will depend,  in part,  upon its ability to retain
such employees.  Management is of the opinion that an adequate supply of skilled
employees  is  available.  The Company has from time to time  experienced  rapid
turnover among its entry-level  assembly workers as well as occasional shortages
of such workers,  resulting in increased labor costs and administrative expenses
related to hiring and training of replacement and new entry-level employees. All
employees  are  bound by  policies  of  confidentiality.  None of the  Company's
employees is represented  by a union or other  collective  bargaining  group and
management of the Company  believes  that its  relations  with its employees are
good.

AVAILABLE INFORMATION

      The  Company  files  annual,  quarterly  and  current  reports  and  other
information  with the SEC.  These  materials  can be inspected and copied at the
SEC's Public Reference Room at 450 Fifth Street, N.W.,  Washington,  D.C. 20549.
Copies of these materials may also be obtained by mail at prescribed  rates from
the SEC's Public  Reference  Room at the above  address.  Information  about the
Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.  The
SEC also maintains an Internet site that contains reports, proxy and information
statements,  and other information  regarding  issuers that file  electronically
with the SEC. The address of the SEC's Internet site is http://www.sec.gov.

         The Company makes available,  free of charge,  on its Internet website,
located at http://www.merit.com, its most recent Annual Report on Form 10-K, its
most recent Quarterly Report on Form 10-Q, any current reports on Form 8-K filed
since the Company's most recent Annual Report on Form 10-K and any amendments to
such reports as soon as reasonably  practicable  following the electronic filing
of such report with the SEC. In addition,  the Company  provides  electronic  or
paper copies of its filings free of charge upon request.

FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

         For  financial  information  relating  to  the  Company's  foreign  and
domestic sales,  transfers between geographic areas, net income and identifiable
assets, see Note 11 to the Consolidated  Financial  Statements  included in this
report.

                                       11


FACTORS THAT MAY AFFECT FUTURE RESULTS

         The business,  operations  and  financial  condition of the Company are
subject to certain risks and uncertainties. Should one or more of these risks or
uncertainties materialize, or should any underlying assumptions prove incorrect,
actual results may vary materially from those anticipated,  estimated, projected
or  expected.  Among  the key  factors  that may have a  direct  bearing  on the
Company's   business,   operations  and  financial  condition  are  the  factors
identified below:

The Company's products may be subject to recall or product liability claims.

         Merit's products are used in connection with surgical procedures and in
other medical  contexts in which it is important  that those  products  function
with  precision  and  accuracy.  If the  Company's  products do not  function as
designed,  or are designed  improperly,  the Company may be forced by regulatory
agencies to withdraw  such  products  from the market.  In addition,  if medical
personnel  or their  patients  suffer  injury as a result of any  failure of the
Company's  products to function as designed,  or an  inappropriate  design,  the
Company may be subject to lawsuits seeking significant compensatory and punitive
damages.  Any product recall or lawsuit seeking significant monetary damages may
have a material effect on the Company's business and financial condition.

         Substantially  all of Merit's products are backed by a limited warranty
for returns due to defects in quality and workmanship. Merit maintains a reserve
for these  future  returned  products,  but the actual costs of such returns may
significantly exceed the reserve,  which could have a material adverse effect on
the Company's operations.

Termination of relationships  with the Company's  suppliers,  or failure of such
suppliers to perform, could disrupt the Company's business.

         Merit relies on raw materials,  component parts, finished products, and
services supplied by outside third parties in connection with its business.  For
example,  substantially  all of the  Company's  products are  sterilized  by two
entities.  In  addition,  some of the  Company's  products are  manufactured  or
assembled  by  third  parties.  If a  supplier  of  significant  raw  materials,
component  parts,  finished goods or services were to terminate its relationship
with the Company,  or otherwise cease supplying raw materials,  component parts,
finished goods or services consistent with past practice,  the Company's ability
to meet its obligations to its end customers may be disrupted. A disruption with
respect to numerous  products,  or with respect to a few  significant  products,
could have a material  adverse  effect on the  Company's  business and financial
condition.

The Company may be unable to compete in its markets,  particularly if there is a
significant change in relevant practices and technology.

         The market for each of the Company's existing and potential products is
highly competitive.  The Company faces competition from several companies,  many
of which are larger,  better established and have greater  financial,  technical
and other resources and greater market presence than does Merit.  Such resources
and market  presence may enable the Company's  competition  to more  effectively
market competing  products or to market competing  products at reduced prices in
order to gain market share.

         In addition,  Merit's ability to compete successfully is dependent,  in
part, upon the Company's ability to respond effectively to changes in technology
and to  develop  and  market  new  products  which  achieve  significant  market
acceptance.  Competing  companies with substantially  greater resources than the
Company are  actively  engaged in research and  development  of  diagnostic  and
interventional  methods,  treatments and procedures  that could limit the market
for the Company's  products and eventually  make certain  products  obsolete.  A
reduction in the demand for a significant number of the Company's products, or a
few key products, could have a material adverse effect on the Company's business
and financial condition.

A  significant  adverse  change  in,  or  failure  to  comply  with,   governing
regulations could adversely affect the Company's business.

                                       12


         Substantially  all of the Company's  products are "devices," as defined
in the  Federal  Food,  Drug and  Cosmetic  Act  ("FDA"),  and the  manufacture,
distribution,  record keeping, labeling and advertisement of Merit's products is
subject  to  regulation  by the "FDA" in the United  States  and its  equivalent
regulatory  agencies in various foreign  countries in which Merit's products are
manufactured,  distributed,  labeled,  offered and sold. Further, the Company is
subject to continual review and periodic  inspections at its current  facilities
with respect to the FEA's Good Manufacturing  Practices and similar requirements
of  foreign  countries.  Merit's  business  and  financial  condition  could  be
adversely  affected  if it is  found  to be out  of  compliance  with  governing
regulations.  In  addition,  if such  regulations  are  amended  to become  more
restrictive  and costly to comply with, the costs of compliance  could adversely
affect the Company's business and financial condition.

Limits on reimbursement imposed by governmental and other programs may adversely
affect the Company's business.

         The  cost  of a  significant  portion  of  medical  care is  funded  by
governmental,   social   security  or  other  insurance   programs.   Limits  on
reimbursement  imposed by such  programs  may  adversely  affect the  ability of
hospitals and others to purchase  Merit  products.  In addition,  limitations on
reimbursement for procedures which utilize Merit products could adversely affect
sales.

The Company is subject to work stoppage, transportation and related risks.

         Merit  manufactures  its  products at various  locations  in the United
States and in  Ireland  and sells its  products  throughout  the United  States,
Europe  and  other  parts of the  world.  The  Company  depends  on  third-party
transportation  companies to deliver  supplies  necessary to  manufacture  Merit
products  from vendors to the  Company's  various  facilities  and to move Merit
products to customers, operating divisions and other subsidiaries located within
and  outside  the  United  States.  Merit's  manufacturing  operations,  and the
operations of the transportation  companies on which the Company depends, may be
adversely affected by natural disasters and significant human events,  such as a
war, terrorist attack,  riot, strike,  slowdown or similar event. Any disruption
in the Company's  manufacturing or  transportation  could  materially  adversely
affect  the  Company's  ability  to  meet  customer  demands  or its  operations
generally.

The Company may be unable to protect its proprietary  technology or may infringe
on the proprietary technology of others.

      The Company's  ability to remain  competitive is dependent,  in part, upon
its ability to prevent other  companies  from using its  proprietary  technology
incorporated  into its  products.  The Company  seeks to protect its  technology
through  a  combination  of  patents  and  trade  secrets,  as well as  license,
proprietary know-how and confidentiality  agreements. The Company may be unable,
however, to prevent others from using its proprietary  information,  or continue
to use such information itself, for numerous reasons, including the following:

o        Merit's issued patents may not be sufficiently  broad to prevent others
         from copying its proprietary technologies;

o        Merit's issued patents may be challenged by third parties and deemed to
         be overbroad or unenforceable;

o        Merit's products may infringe on the patents of others, requiring it to
         alter or discontinue its manufacture or sale of such products;

o        Costs  associated  with seeking  enforcement of Merit's patents against
         infringement,  or defending itself against allegations of infringement,
         may be significant;

o        Merit's  pending  patent  applications  may not be granted  for various
         reasons, including overbreadth or conflict with an existing patent; and

o        Other persons may independently develop, or have developed,  similar or
         superior technologies.

A significant  portion of the Company's revenues are derived from a few products
and procedures.

                                       13


         A significant  portion of the Company's  revenues are  attributable  to
sales of its inflation  devices.  During the year ended December 31, 2002, sales
of the Company's  inflation devices (including  inflation devices sold in custom
kits)  accounted for  approximately  33% of the Company's  total  revenues.  Any
material decline in market demand for the Company's inflation devices could have
an adverse effect on the Company's business and financial condition.

         In addition,  the products that account for a majority of the Company's
historical  revenues  are  designed  for use in  connection  with a few  related
medical procedures,  including  angioplasty and stent placement  procedures.  If
subsequent  developments  in  medical  technology  or  drug  therapy  make  such
procedures  obsolete,  or alter  the  methodology  of such  procedures  so as to
eliminate the usefulness of the Company's products, the Company may experience a
material  decrease  in demand  for its  products  and  experience  deteriorating
financial performance.

Fluctuations  in  Euro  exchange  rates  may  negatively  impact  the  Company's
financial results

         Fluctuations  in the  rate of  exchange  between  the Euro and the U.S.
Dollar  could have a negative  impact on the  Company's  margins  and  financial
results. For example, during 2000, the exchange rate between the Euro and the U.
S. Dollar  dropped by  approximately  13.2%,  resulting  in a  reduction  in the
Company's  gross  revenues of  $1,076,695  and 1.2% in gross profit for the year
ended December 31, 2000. During 2001, the exchange rate between the Euro and the
U. S. Dollar resulted in a reduction of the Company's gross revenues of $467,283
and 0.4% in gross  profit.  However,  in 2002,  the exchange rate resulted in an
increase of gross revenues of $497,644 and 0.4% in gross profit.

         For the year ended December 31, 2002,  approximately  $10.1 million, or
8.7%,  of  Merit's  sales were  denominated  in Euros.  If the rate of  exchange
between the Euro and the U.S.  Dollar  declines,  the Company may not be able to
increase the prices it charges its European  customers for products whose prices
are denominated in Euros. Furthermore, the Company may be unable or elect not to
enter into  hedging  transactions  which could  mitigate the effect of declining
exchange rates. As a result,  as the rate of exchange between Euros and the U.S.
Dollars declines, the Company's financial results may be negatively impacted.

The  Company  may be unable  to  successfully  manage  growth,  particularly  if
accomplished through acquisitions.

         Successful  implementation  of Merit's  business  strategy will require
that the Company  effectively  manage any  associated  growth.  To manage growth
effectively, the Company's management will need to continue to implement changes
in  certain  aspects  of  the  Company's  business,  to  enhance  the  Company's
information  systems and operations to respond to increased  demand,  to attract
and retain  qualified  personnel and to develop,  train and manage an increasing
number of management-level and other employees. Growth could place an increasing
strain  on the  Company's  management,  financial,  product  design,  marketing,
distribution  and other resources,  and the Company could  experience  operating
difficulties.  Any failure to manage  growth  effectively  could have a material
adverse effect on the Company's results of operations and financial condition.

         To the extent that the Company grows through acquisition,  it will face
the  additional  challenges  of  integrating  its current  operations,  culture,
informational  management  systems  and other  characteristics  with that of the
acquired entity.  The Company may incur significant  expenses in connection with
negotiating  and  consummating  one or  more  transactions,  and it may  inherit
certain  liabilities  in  connection  with the  acquisition  as a result  of its
failure to conduct adequate due diligence or otherwise. In addition, the Company
may not realize competitive advantages,  synergies or other benefits anticipated
in  connection  with such  acquisition(s).  If the Company  does not  adequately
identify targets for, or manage issues related to our future acquisitions,  such
acquisitions  may have a negative  adverse effect on the Company's  business and
financial results.

The market price of the Common Stock has been, and may continue to be, volatile.

                                       14


The market  price of the Common Stock has been,  and may continue to be,  highly
volatile for various reasons, including the following:

o        Merit's  announcement  of new  products or  technical  innovations,  or
         similar announcements by its competitors;

o        Development  of  new  procedures  that  use,  or do  not  use,  Merit's
         technology;

o        Quarter-to-quarter variances in the Company's financial results;

o        Claims   involving   potential   infringement   of  patents  and  other
         intellectual property rights;

o        Analyst and other projections or  recommendations  regarding the Common
         Stock or medical technology stocks generally;

o        Any  restatement  of  the  Company's   financials   statements  or  any
         investigation  into  the  Company  by  the  SEC or  another  regulatory
         authority; and

o        A general  decline,  or rise,  of stock  prices in the capital  markets
         generally.

The Company is dependent upon key personnel.

         The  Company's   continued  success  is  dependent  on  key  management
personnel,  including Fred P. Lampropoulos, the Company's Chairman of the Board,
President and Chief Executive  Officer.  Mr.  Lampropoulos is not subject to any
agreement  prohibiting his departure,  and the Company does not maintain key man
life insurance with his life. The loss of Mr. Lampropoulos,  or of certain other
key  management  personnel,  could  materially  adversely  affect the  Company's
business  and  operations.  The  Company's  success  also  depends,  among other
factors,  on  the  successful  recruitment  and  retention  of  key  operations,
manufacturing, sales and other personnel.

 Item 2. Properties.
         -----------

         The  Company is the owner of  approximately  26 acres of real  property
situated in the City of South Jordan,  Utah,  surrounding an additional 10 acres
of leased real  property on which is located the Company's  175,000  square foot
principal office and manufacturing  facility.  The Company sold the 10-acre site
to a developer in order to facilitate  construction of such facility and entered
into a 25-year lease agreement  (beginning in 1995) to finance the new facility.
Monthly lease  payments are  approximately  $122,000.  The Company also holds an
option to purchase the facility,  exercisable at market value after 10 years and
25 years. The facility was constructed to the Company's  specifications  and the
Company  estimates  that  it is  presently  utilizing  approximately  80% of the
capacity.

         The Company owns a building of  approximately  26,500  square feet with
approximately  three  acres of land,  in  Galway,  County  Galway,  Republic  of
Ireland,  as its  principal  office  and  manufacturing  facility  for  European
operations.  Of the three acres of land,  the Company added 1.6 acres in January
2003 in preparation for a possible facility  expansion which could be started as
early  as 2003.  The  existing  Galway  facility  is used as the  administrative
headquarters to support the Company's  European direct sales force. The facility
also houses a research and  development  team,  which has developed a PTCA guide
wire and a new  diagnostic  guide wire,  and is  developing  other new products.
Beginning in the fourth  quarter of 1997,  the Company  initiated  manufacturing
operations  for  several  new and  existing  products  at the  Galway  facility,
including  custom kits,  the BASIX(R)  inflation  device and the Company's  PTCA
guide  wire.  In 1998,  the  Company  began  the  manufacture  of the  Company's
hemostasis  valve  products  in  Ireland.  Toward  the end of 2001  the  Company
finished an R&D project and began manufacturing a new diagnostic guide wire. The
Company's  Galway  property has been improved and equipped on terms favorable to
the  Company in  connection  with  economic  development  incentives  and grants
provided by the Irish Government.

          The Company leases a manufacturing  facility of  approximately  50,000
square feet located in Murray,  Utah. The Murray facility is used for production
of several of the Company's well-established products. The leases related to the
Murray  facility expire in 2003 and 2004 and require the Company to make monthly
lease payments of  approximately  $30,000.  The Company also leases 8,500 square
feet of  manufacturing  and office space located in Santa Clara,  California for
the  production of sensors.  The lease runs through  September 2004 at a monthly
cost of approximately $17,000 per month.

          In August 1999, the Company purchased the operating assets and product
lines of Mallinckrodt's  Angleton,  Texas division,  including  approximately 19
acres of land and a 75,000 square foot building.

                                       15


          The Company  believes that its facilities  are generally  adequate for
its present and currently anticipated level of operations.

Item 3.   Legal Proceedings.
          ------------------

          In the course of conducting its business  operations,  the Company is,
from time to time,  involved in litigation and other  disputes.  Management does
not  currently  anticipate  that any pending  litigation  or dispute will have a
materially adverse effect on the Company's operations.

Item 4.   Submission of Matters to a Vote of Security Holders
          ---------------------------------------------------

          No matters  were  submitted to a vote of security  holders  during the
fourth quarter of the year ended December 31, 2002.

                                     PART II

Item 5.   Market for Registrant's Common Stock and Related Shareholder Matters.
          ---------------------------------------------------------------------

MARKET PRICE FOR THE COMMON STOCK

          The Common Stock is traded on the NASDAQ  National Market System under
the symbol  "MMSI." The  following  table sets forth high and low  closing  sale
price for the Common Stock for the periods indicated.

               Quarter Ended             High*             Low*

               March 31, 2001            $  4.16           $  3.28
               June 30, 2001             $  6.00           $  4.00
               September 30, 2001        $ 15.20           $  5.49
               December 31, 2001         $ 15.56           $ 10.16

               March 31, 2002            $ 16.86           $ 11.64
               June 39, 2002             $ 20.74           $ 15.05
               September 30, 2002        $ 20.49           $ 16.00
               December 31, 2002         $ 24.06           $ 18.62

         * Effective as of August 27, 2001,  and again as of April 11, 2002, the
Company effected a 5 for 4 forward stock split of the Common Stock by means of a
stock  split of one  additional  share of Common  Stock for each four  shares of
Common Stock  outstanding.  Data related to periods prior to the effective dates
of the two stock  splits  have been  adjusted to reflect the terms of such stock
splits.

OUTSTANDING SHARES AND NUMBER OF SHAREHOLDERS

         As of March 25, 2003, the number of shares of Common Stock  outstanding
was 14,117,405,  held by approximately 200 shareholders of record, not including
shareholders whose shares are held in securities position listings.

                                       16


DIVIDENDS

         The Company has never  declared  or paid cash  dividends  on the Common
Stock.  The Company  presently  intends to retain any future earnings for use in
its business and,  therefore,  does not  anticipate  paying any dividends on the
Common Stock in the foreseeable  future.  In addition,  the Company's  revolving
line of credit contains  covenants  prohibiting the declaration and distribution
of a cash dividend at any time prior to the termination of such line of credit.

Item 6.   Selected Financial Data
          -----------------------


                                                         Year Ended December 31,
                                       ------------------------------------------------------------
                                          2002        2001         2000        1999         1998
                                       ---------    ---------    ---------   ---------    ---------
Operating Data:

                                                                             
   Sales                                 $ 116,227    $ 104,036    $  91,448   $  77,960    $  68,377
   Cost of  Sales                           67,712       65,938       60,824      47,918       42,434
   Gross Profit                             48,515       38,098       30,624      30,042       25,943
   Selling, General and Administrative
     Expenses                               27,732       24,040       23,300      20,407       17,528
   Research and Development
     Expenses                                4,008        4,118        3,864       3,618        3,244
   Severance Costs                            --           --            331        --           --
   Income from Operations                   16,775        9,940        3,129       6,017        5,171
   Other Expense                                13          938        2,355       1,256          881
   Gain on Sale of Land                       --           (786)        --          --           --
   Income Before Income Tax Expense         16,762        9,788          774       4,761        4,290
   Income Tax Benefit (Expense)             (5,452)      (3,052)          53      (1,454)      (1,687)
   Minority Interest in Subsidiary            --           --           --           (81)        (152)
   Net Income                            $  11,310    $   6,736    $     827   $   3,226    $   2,451
   Net Income Per Share (Diluted)        $    0.77    $    0.50    $    0.07   $    0.27    $    0.21
   Weighted Average Shares
   Outstanding (Diluted)                    14,759       13,430       12,283      11,821       11,700
 Balance Sheet Data:
   Working Capital                       $  34,582    $  26,911    $  32,447   $  33,934    $  15,780
   Total Assets                             78,305       66,659       71,447      72,360       50,665
   Long-Term Debt                               17        5,727       24,102      27,817        3,389
   Stockholders' Equity                  $  63,399    $  47,658    $  34,773   $  32,690    $  29,086





Item 7.   Management's  Discussion  and  Analysis  of  Financial  Condition  and
          Results of Operations.
          ----------------------------------------------------------------------

OVERVIEW

          Year 2002 was Merit's most successful year in Merit's history in terms
of revenue and  profitability.  Not only did the Company's  revenues grow by 12%
during 2002,  but virtually  every area of the Company's  financial  performance
improved in 2002,  including net income, which increased 68% over the year ended
December  31, 2001  (previously  the year in which the Company had  achieved its
highest level of net income).

                                       17


          Merit  experienced  continued  record growth and improvements in 2002.
The Company's  productivity increased to over $109,000 of sales per employee for
the year ended December 31, 2002, up 65% from just three years ago. From January
2000 to December 2002, the Company's revenues increased over 67% and the Company
introduced 15 new  products,  while  decreasing  inventory by more than 35%. The
reduction in inventory and the higher employee productivity,  along with Merit's
upgraded MIS systems and new incentive pay system,  worked  together to make the
Company much more productive.  The productivity  gains are especially evident in
the gross margin  improvements.  Gross margins as a percentage of sales improved
510 basis points during the year ended December 31, 2002. The improvement in the
Company's  financial  condition  is reflected  by the recent  retirement  of the
Company's  long-term and short-term  debt. Since August 2000 (the month in which
the Company's  long-term debt reached its highest  point),  the Company paid off
$32  million in  long-term  debt in just 19  months.  Since  March 27,  2002 the
Company's line of credit has been paid in full, and in the 11 months since,  the
Company has paid cash for all its capital investments  including the purchase of
the facility and land in Galway,  Ireland and accumulated  almost $15 million in
cash. All of these accomplishments have contributed to a record year for Merit.

          Higher  employee  productivity  resulted  in part from a  Company-wide
incentive  pay  program  that  compensates  each  employee  for  achievement  of
individual, team and/or Company goals, the benefit from which the Company shares
with its employees.  The Company's new Oracle  system,  with which the Company's
employees  are now  experienced,  has  contributed  to the  Company's  increased
productivity.  Rising from the Company's  struggles  during 1999,  management is
continuing to leverage  long-term  investments in: (1) product breadth,  quality
and  innovation  (2) direct sales forces in the United States and Europe and (3)
quality systems and facilities.

          With the  Company's  cash flow  improving and its debt paid off (as of
February 28, 2003, the Company had retired all of its long-term debt),  Merit is
positioned to take advantage of many opportunities now becoming available to the
Company.  Merit  recently added to its product line several  products  developed
outside the Company because management believes that the Company's marketing and
sales  capabilities  are the best vehicle for those  products to get the focused
exposure they need.  Management  believes there are many more  opportunities for
growth within the Company in addition to the  continued  growth of the market in
which the Company`s products are sold.  Furthermore,  management believes market
acceptance  of the  Company's  new and existing  products,  (particularly  newly
acquired products,  technologies and/or businesses),  if achieved,  will further
enhance and leverage the position Merit has attained.

RESULTS OF OPERATIONS

The following table sets forth certain operational data as a percentage of sales
for the periods indicated:

                                         2002     2001     2000
                                        ------   ------   ------
Sales                                   100.0%   100.0%   100.0%
Gross margin                             41.7     36.6     33.5
Selling, general and administrative      23.9     23.1     25.5
Research and development                  3.4      4.0      4.2
Income from operations                   14.4      9.6      3.4
Income before income tax expense         14.4      9.4       .8
Net income                                9.7      6.5       .9

          Sales increased by $12.2 million,  or 11.7%,  in 2002,  compared to an
increase of $12.6 million,  or 13.8%, in 2001, and an increase of $13.5 million,
or 17.3%, in 2000. The increase in sales for 2002 resulted  primarily from a 13%
increase  in  custom  kit  revenues,  a 13%  increase  in  stand-alone  products
revenues, an 11% increase in inflation device revenues, and 6% increase catheter
product revenues. The Company's revenues increased notwithstanding the fact that
the markets for many of the Company's  products are experiencing  slight pricing
declines;   therefore   substantially  all  of  the  increase  in  revenues  was
attributable  to increased  unit sales.  Sales growth from 2000 through 2002 was
also favorably  affected by the introduction of new products and increased sales
of existing  products sold separately and packaged in custom kits, and increased
penetration of the market by Merit's inflation devices.  International  sales in


                                       18


2002 were approximately $27.1 million, or 23% of total sales,  compared to $23.8
million,  or 23% of total sales,  in 2001,  and $21.8  million,  or 24% of total
sales,  in 2000.  These increases were primarily a result of the addition of the
Angleton  product lines and ongoing growth in European  direct sales, as well as
greater  acceptance of the Company's  products in other  international  markets.
Direct sales in France,  Germany, the U.K., Belgium, the Netherlands and Ireland
were $12.3  million,  $10.6  million  and $8.6  million in 2002,  2001 and 2000,
respectively.

          Gross profit as a percentage of sales was 41.7%,  36.6%,  and 33.5% in
2002, 2001, and 2000, respectively.  The increase in the gross margin percentage
in 2002 over 2001 was due  primarily to increased  efficiency  and  productivity
gains achieved by the operations group in the Company's Utah facilities. A lower
head count in both direct labor and overhead areas of production  contributed to
higher  efficiency and  productivity.  The Company has also reduced the material
costs from many of its principal vendors.  Management presently anticipates that
the Company  will be able to improve  upon the level of gross  margins  achieved
during 2002, as  demonstrated  by the 43.4% gross margin reported by the Company
for the  fourth  quarter  of 2002.  The  Company  is  operating  in a  generally
declining price market.  There is also a general  cost-increasing  manufacturing
environment.  Merit  has been  able to  battle  this  difficult  situation  with
ever-increasing  production  volumes  until 2000.  Beginning in early 1999,  the
Company  suffered  through the  implementation  of a comprehensive  new software
system,  which led to  difficulties  in  efficiently  operating the  purchasing,
planning  and  manufacturing  processes  of  the  business.  Merit  also  made a
purposeful   effort  to  increase  its  safety  stock  levels  of  inventory  in
preparation for higher,  anticipated  sales orders ahead of Y2K. The combination
of these  increased  production  demands created a build-up of capacity in labor
and overhead.  As the end of 1999  approached,  however,  the Company  needed to
reduce production levels to match cash-flow expectations. The reduced production
volumes created higher overhead costs per unit,  lower gross margins,  and lower
bottom-line results. Another important factor negatively affecting gross margins
was the  large  (13.2%)  drop in the value of the Euro in  relation  to the U.S.
Dollar  during  2000,  which  reduced  revenues and gross profit of the European
operation by $1.1 million and reduced overall gross margins by 1.2%. In December
1999,  the  Company  began the  difficult  process of  downsizing  the labor and
overhead  capacities  in the  operation  of its  Utah  facilities.  The  Company
eliminated the large excess  negative  production  variances that were caused by
the  slowdown  in  production  volumes.  This  result  was  accomplished  by the
attrition of  approximately  240 people from its high point in December of 1999,
or an average reduction of 100 people in 2000 compared to 1999.

          Selling,  general and administrative  expenses increased $3.7 million,
or 15.4%, in 2002 over 2001 and $.7 million,  or 3.2%, in 2001 over 2000.  These
additional expenditures were related principally to increased costs of expanding
the direct sales force market,  marketing  support and their  management both in
the United States and Europe. Another important factor in the increase from 2001
to  2002  was  expenses   associated   with  the  development  of  new  business
opportunities such as acquisitions,  product distribution  agreements,  national
accounts and the O.E.M  portion of Merit's  business.  These  increases in costs
have caused  selling,  general and  administrative  expenses as a percentage  of
sales to increase to 23.9 % in 2002 from 23.1% in 2001.

          Research  and  development  expenses  for 2002  were $4.0  million,  a
decrease  of 2.7%,  compared  to $4.1  million  for 2001,  an  increase  of 6.6%
compared to $3.9 million in 2000. R&D expenses  declined during 2002 as a result
of the completion of R&D activities in Ireland  relating to the Company's  guide
wire  product  line  and  the  transition  of  much  of  the  R&D  resources  to
manufacturing  of the  new  diagnostic  guide  wire  product  line.  Most of the
increase  from 2000 to 2001 was due to an  increase of the R&D  capabilities  in
Galway,  Ireland, with the Company's developing guide wire technology.  Research
and  development  costs as a  percentage  of sales were 3.4%,  4.0% and 4.2% for
2002, 2001 and 2000,  respectively.  Management believes that the development of
10 to 12  projects  at any  given  time is an  appropriate  level of R&D for the
Company,  and is likely to  provide 8 to 10 new  products  a year  through  R&D,
regulatory, manufacturing, marketing and sales introduction.

          In 2002,  higher sales,  better gross margins and lower research costs
per dollar of sales combined to increase income from operations (up 69%), income
before tax (up 71%), and net income (up 68% to record levels), compared to 2001.

          The effective  tax rate for 2002 was 32.5%,  up slightly from 31.2% in
2001,  mostly  because the foreign sales  corporation  and R&D tax benefits were
diluted by a 71% increase in income before taxes. In 2000,  significantly  lower
margins more than offset the gains in sales as well as the reduction in SG&A and
R&D  expenses,  the net  effect  of which was  income  from  operations  of $3.1
million.  The income tax  benefit for 2000 was  $52,712,  an  effective  rate of
(-6.8%). This negative tax rate was due principally to R&D tax credits which the
Company was able to realize in the fourth  quarter of 2000,  including a portion
of which related to prior years.  Management  expects the effective tax rate for
2003 to rise  substantially  to as much as 36% due to a higher  incremental  tax
rate,  further  dilution  and some  reduction  in the foreign  sales and R&D tax
benefits.

                                       19


         Effective  January  1, 2002,  the  Company  has  adopted  Statement  of
Financial  Accounting  Standards  (SFAS) No. 142,  Goodwill and Other Intangible
Assets.  Under SFAS No.  142,  the  Company no longer  amortizes  goodwill  from
business  acquisitions and reviews annually the impairment of goodwill,  or more
frequently if impairment indicators arise. The Company has completed its initial
testing  of  goodwill  as of January  1, 2002 and  determined  that there was no
impairment.  The Company  has elected to perform its annual  testing of goodwill
impairment as of July 1. As of July 1, 2002, the Company  updated its testing of
goodwill  for  impairment  and  determined  that  there was no  impairment.  The
unamortized  amount of goodwill at December 31,  2001,  was  approximately  $4.8
million.

         With the  adoption of SFAS No. 142, the Company  reassessed  the useful
lives  and  residual  values  of all  acquired  intangible  assets  to make  any
necessary  amortization  period  adjustments.   Based  on  that  assessment,  no
adjustments  were made to the  amortization  period or residual  values of other
intangible assets.

         Other recently adopted or issued financial  accounting standards are as
follows,  SFAS No. 144,  Accounting for the impairment or Disposal of Long-Lived
Assets,  SFAS  No.  133,  Accounting  for  Derivative  Instruments  and  Hedging
Activities,  SFAS No.146,  Accounting for Costs Associated with Exit or Disposal
Activities, SFAS No. 148, Accounting for Stock-Based Compensation Transition and
Disclosure.  See  discussion  of the  effect of these  accounting  standards  in
footnote 1 of the consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

Capital Commitments

         The following table  summarizes the Company's  capital  commitments and
contractual  obligations  as of December 31,  2002,  including  long-term  debt,
operating  lease  payments,  and office  lease  payments,  as well as the future
periods in which such payments are currently anticipated to become due:



         Contractual Obligations            Payment due by period (in thousands)
                                                Less than 1                              After 5
                                      Total        Year       1-3 Years    4-5 Years      Years
                                     ------       ------       ------       ------        ------
                                                          
Long-term debt                          417          400           17         --           --
Operating leases                     28,383        2,532        4,359        3,785       17,707
Royalty obligations                   2,988          513        1,050          975          450
                                     ------       ------       ------       ------       ------
Total contractual cash obligations   31,788        3,445        5,426        4,760       18,157
                                     ======       ======       ======       ======       ======


          Additional  information  regarding the Company's capital  commitments,
and contractual obligations including royalty payments, is contained in Notes 7,
8 and 12 of  the  Notes  to the  Company's  Consolidated  Financial  Statements,
commencing on page 38 below.

          As of December  31,  2002,  the  Company's  working  capital was $34.6
million,  an increase of over 28.1%,  from the Company's net working  capital on
December 31, 2001 of $26.9  million.  As of December 31, 2002, the Company had a
current  ratio of 4.0 to 1,  compared to 3.5 to 1, as of December 31, 2001.  The
increase in working capital during 2002 was primarily due to the accumulation of
almost  $9.3  million in cash  generated  from  operations.  The  Company had $0
outstanding  under its line of credit at December 31,  2002.  Merit has financed
leasehold  improvements and equipment acquisitions through secured notes payable
and  capital  lease  arrangements  with an  outstanding  balance of  $416,875 at
December 31, 2002. For the year ended  December 31, 2002, the Company  generated
cash from operations in the amount of $21.4 million,  the most in the history of
the Company.

          Historically,   the  Company  has  incurred  significant  expenses  in
connection with product  development and introduction of new products.  This was
particularly  true in 1999 with regard to an increase  in  inventory,  plant and
equipment associated with the Company's  acquisition of the operating assets and


                                       20




product  lines of the  Angleton,  Texas  division  of  Mallinckrodt,  as well as
several new product  introductions.  The Company's  principal sources of funding
for  these  and  other  expenses  has been  cash  generated  from the  Company's
operations,  secured  loans on  equipment,  bank  lines of  credit  and sales of
equity.  Management  believes that its present  sources of liquidity and capital
are adequate for the pursuit of its currently anticipated operations.

Critical Accounting Policies and Estimates

         The SEC has requested that all registrants  discuss their most critical
accounting  policies  in their  MD&A.  The SEC has  indicated  that a  "critical
accounting  policy" is one which is both important to the  representation of the
Company's  financial  condition  and  results  and  requires  management's  most
difficult,  subjective  or complex  judgments,  often as a result of the need to
make estimates  about the effect of matters that are inherently  uncertain.  The
Company bases estimates on past experience and on various other assumptions that
are believed to be reasonable under the circumstances, the results of which form
the basis for making  judgments  about carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions. The following are the
Company's most critical accounting policies:

         Inventory  Obsolescence  Reserve: The Company writes down its inventory
for estimated obsolescence for unmarketable and/or slow moving products that may
expire prior to being sold.  If market  conditions  become less  favorable  than
those projected by management, additional inventory write-downs may be required.

         Allowance for Doubtful Accounts:  The Company maintains  allowances for
doubtful accounts for estimated losses resulting from the inability of customers
to make required payments. The allowance is based upon historical experience and
a review of individual  customer  balances.  If the  financial  condition of the
Company's  customers  were to  deteriorate,  resulting in an impairment of their
ability to make payments, additional allowances may be required.

        Stock-Based   Compensation:   The   Company   accounts   for  its  stock
compensation  arrangements  under the provisions of Accounting  Principles Board
Opinion No. 25,  Accounting for Stock Issued to Employees,  (APB 25) and intends
to continue to do so. Accordingly,  no compensation cost has been recognized for
its stock compensation arrangements.  If the compensation cost for the Company's
compensation  plans had been  determined  consistent with Statement of Financial
Accounting  Standards (SFAS) No. 123,  Accounting for Stock-Based  Compensation,
the Company's  net income and net income per common and common share  equivalent
would have changed to the pro forma amounts indicated below:

                                    2002               2001           2000
Net income:
  As reported                  $   11,310,030   $   6,735,978   $   826,557
  Pro forma                         9,873,717       5,379,236       140,145

Net income per common share:
  Basic:
    As reported                $         0.83   $        0.53   $      0.07
    Pro forma                            0.72            0.42          0.00

  Diluted:
    As reported                          0.77            0.50          0.07
    Pro forma                            0.67            0.40         (0.01)

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option-pricing   model  with  the   following   weighted-average
assumptions  used for  grants in 2002,  2001,  and 2000:  dividend  yield of 0%;
expected  volatility of 63.24%,  63.48%,  and 61.04% for 2002,  2001,  and 2000,
respectively; risk-free interest rates ranging from 4.48% to 6.71%; and expected
lives ranging from 2.33 to 4.58 years.

Item 7A.   Quantitative and Qualitative Disclosure About Market Risk
           ---------------------------------------------------------

         The Company's  principal market risk relates to changes in the value of
the Euro relative to the value of the U.S.  Dollar.  The Company's  Consolidated
Financial  Statements are denominated in, and the Company's  principal  currency
is, the U.S. Dollar. A portion of the Company's revenues in 2002 ($10.1 million,
representing approximately 8.7% of aggregate revenues) came from sales that were

                                       21



denominated in Euros.  Certain of the Company's expenses are also denominated in
Euros,  partially  offsetting  any  risk  associated  with  fluctuations  of the
Euro/Dollar  exchange rate. Because of the Company's  Euro-denominated  revenues
and expenses, in a year in which the Company's  Euro-denominated revenues exceed
its Euro-based expenses, the value of such Euro-denominated net income increases
if the value of the Euro increases relative to the value of the U.S. Dollar, and
decreases if the value of the Euro decreases relative to the value of the United
States. For example,  in 2000, a 13.2% drop in the value of the Euro in relation
to the U.S.  Dollar led to reduced  Company  revenues  and gross  profit of $1.1
million. By contrast,  in 2002, an increase in the value of the Euro relative to
the U.S.  Dollar led to  increased  revenue  and gross  profit of  approximately
$500,000.

         At December 31, 2002, the Company had a net exposure  (representing the
difference between Euro denominated  receivables and Euro denominated  payables)
of approximately  $600,000.  In order to partially offset such risk, at December
31, 2002,  the Company  entered into a 30 day EURO hedge  contract.  The Company
enters  into  similar  hedging  transactions  various  times  during the year to
partially  offset exchange rate risks it bears  throughout the year. The Company
does not purchase or hold  derivative  financial  instruments for speculative or
trading  purposes.  During  the  year  ended  December  31,  2002,  the  Company
experienced  a net loss of $37,097 on hedging  transactions  it executed  during
2002 in an effort to limit  its  exposure  to  fluctuations  in the  Euro/Dollar
exchange rate.

          As of December 31, 2002,  the Company had no variable rate debt,  (but
had  approximately  $5.1 million of variable rate debt as of December 31, 2001),
all denominated in U. S. Dollars.  As long as the Company does not have variable
rate debt,  the Company's  interest  expense would not be affected by changes in
interest rates.

Item 8.  Financial Statements and Supplemental Data

                                       22


INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
  of Merit Medical Systems, Inc.:

We have audited the  accompanying  consolidated  balance sheets of Merit Medical
Systems, Inc. and subsidiaries as of December 31, 2002 and 2001, and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
each of the three years in the period ended  December 31, 2002.  Our audits also
included the  financial  statement  schedule  listed in the table of contents at
Item 16. These  financial  statements and financial  statement  schedule 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,  such consolidated  financial  statements present fairly, in all
material  respects,  the financial  position of Merit Medical Systems,  Inc. and
subsidiaries  as of  December  31,  2002  and  2001,  and the  results  of their
operations  and their cash flows for each of the three years in the period ended
December 31, 2002, in conformity with accounting  principles  generally accepted
in the United States of America.  Also, in our opinion, such financial statement
schedule,  when  considered  in  relation  to the basic  consolidated  financial
statements  taken as a whole,  presents  fairly  in all  material  respects  the
information set forth therein.

As  discussed  in Notes 1 and 5, the  Company  adopted  Statement  of  Financial
Accounting  Standards No. 142, Goodwill and Other Intangible  Assets, on January
1, 2002.

/s/ DELOITTE & TOUCHE LLP
--------------------------
    DELOITTE & TOUCHE LLP
    Salt Lake City, Utah
    February 26, 2003


                                       23





MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
-------------------------------------------------------------------------------



ASSETS                                                          2002            2001
                                                            ------------    ------------
                                                                       
CURRENT ASSETS:
  Cash and cash equivalents                                  $  9,683,578    $    341,690
  Short-term investments                                          217,451          85,286
  Trade receivables--net of allowance for uncollectible
    accounts:  2002--$476,294; 2001--$408,851                  15,247,892      14,748,021
  Other receivables                                             1,209,804          98,081
  Employee and related party receivables                          299,751         266,905
  Inventories                                                  18,699,217      20,823,616
  Prepaid expenses and other assets                               667,151         514,786
  Deferred income tax assets                                      143,265         723,299
                                                             ------------    ------------

          Total current assets                                 46,168,109      37,601,684
                                                             ------------    ------------

PROPERTY AND EQUIPMENT:
  Land                                                          2,034,522       1,252,066
  Building                                                      5,118,683       1,500,000
  Manufacturing equipment                                      25,577,837      23,289,880
  Furniture and fixtures                                       10,823,852       9,963,045
  Leasehold improvements                                        4,345,620       5,659,457
  Automobiles                                                      87,536          91,573
  Construction-in-progress                                      3,008,734       1,738,540
                                                             ------------    ------------

          Total                                                50,996,784      43,494,561
  Less accumulated depreciation and amortization              (25,584,648)    (21,671,501)
                                                             ------------    ------------

          Property and equipment--net                          25,412,136      21,823,060
                                                             ------------    ------------

OTHER ASSETS:
  Patents and trademarks--net of accumulated amortization:
    2002--$1,153,965; 2001--$1,118,822                          1,927,160       2,434,632
  Goodwill                                                      4,764,596       4,764,596
  Deposits                                                         33,213          34,843
                                                             ------------    ------------

          Total other assets                                    6,724,969       7,234,071
                                                             ------------    ------------

TOTAL ASSETS                                                 $ 78,305,214    $ 66,658,815
                                                             ============    ============


                                                                 (Continued)

                                       24





MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
-------------------------------------------------------------------------------


LIABILITIES AND STOCKHOLDERS' EQUITY                          2002            2001
                                                          ------------    ------------
                                                                    
CURRENT LIABILITIES:
  Current portion of long-term debt                       $    400,182    $    598,086
  Trade payables                                             4,121,577       4,659,295
  Accrued expenses                                           6,618,407       4,817,595
  Advances from employees                                      161,529         128,624
  Income taxes payable                                         284,148         486,763
                                                          ------------    ------------

          Total current liabilities                         11,585,843      10,690,363

DEFERRED INCOME TAX LIABILITIES                              2,443,156       1,654,383

LONG-TERM DEBT                                                  16,693       5,727,381

DEFERRED CREDITS                                               860,931         928,280
                                                          ------------    ------------

          Total liabilities                                 14,906,623      19,000,407
                                                          ------------    ------------

COMMITMENTS AND CONTINGENCIES (Notes 8 and 12)

STOCKHOLDERS' EQUITY:
  Preferred stock--5,000,000 shares authorized as of
    December 31, 2002 and 2001, no shares issued
  Common stock--no par value; 20,000,000 shares
    authorized; 13,864,052 and 13,377,021 shares issued
    at December 31, 2002 and 2001, respectively             30,265,963      25,958,295
  Retained earnings                                         33,663,083      22,353,053
  Accumulated other comprehensive loss                        (530,455)       (652,940)
                                                          ------------    ------------

           Total stockholders' equity                       63,398,591      47,658,408
                                                          ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $ 78,305,214    $ 66,658,815
                                                          ============    ============



See notes to consolidated financial statements.                 (Concluded)


                                       25





MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
--------------------------------------------------------------------------------

                                              2002            2001              2000
                                         -------------    -------------    -------------
                                                                  
NET SALES                                $ 116,227,201    $ 104,035,806    $  91,447,512

COST OF SALES                               67,711,728       65,938,044       60,823,459
                                         -------------    -------------    -------------

GROSS PROFIT                                48,515,473       38,097,762       30,624,053
                                         -------------    -------------    -------------

OPERATING EXPENSES:
  Selling, general, and administrative      27,732,363       24,040,297       23,300,352
  Research and development                   4,007,622        4,117,839        3,864,171
  Severance costs                                                                330,975
                                         -------------    -------------    -------------
          Total operating expenses          31,739,985       28,158,136       27,495,498
                                         -------------    -------------    -------------

INCOME FROM OPERATIONS                      16,775,488        9,939,626        3,128,555
                                         -------------    -------------    -------------

OTHER INCOME (EXPENSE):
  Interest income                               96,942           40,530           39,091
  Interest expense                             (94,106)        (978,009)      (2,319,500)
  Miscellaneous income (expense)               (16,045)         786,248          (74,301)
                                         -------------    -------------    -------------

          Other expense--net                   (13,209)        (151,231)      (2,354,710)
                                         -------------    -------------    -------------

INCOME  BEFORE INCOME TAXES                 16,762,279        9,788,395          773,845

INCOME TAX BENEFIT (EXPENSE)                (5,452,249)      (3,052,417)          52,712
                                         -------------    -------------    -------------

NET INCOME                               $  11,310,030    $   6,735,978    $     826,557
                                         =============    =============    =============

EARNINGS  PER COMMON SHARE:
  Basic                                  $         .83    $         .53    $         .07
                                         =============    =============    =============
  Diluted                                $         .77    $         .50    $         .07
                                         =============    =============    =============

AVERAGE COMMON SHARES:
  Basic                                     13,627,181       12,677,611       12,077,023
                                         =============    =============    =============
  Diluted                                   14,759,128       13,429,585       12,282,664
                                         =============    =============    =============


See notes to consolidated financial statements.

                                       26





MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
--------------------------------------------------------------------------------

                                                                                                  Accumulated
                                                                         Common Stock            Other Compre-     Retained
                                                      Total           Shares       Amount         hensive Loss      Earnings
                                                  ------------    ------------    ------------    ------------    ------------
                                                                                                   
BALANCE--JANUARY 1, 2000                          $ 32,690,136      11,861,308    $ 18,428,572    $   (528,954)   $ 14,790,518
Comprehensive income:
  Net income                                           826,557            --              --              --           826,557
  Other comprehensive loss--
    Foreign currency translation
    adjustment (net of tax)                            (95,184)           --              --           (95,184)           --
                                                  ------------
Comprehensive income                                   731,373            --              --              --              --
Tax benefit attributable to
  appreciation of common
  stock options exercised                              172,818            --           172,818            --              --
Issuance of common stock
  under Employee Stock
  Purchase Plans                                       350,248         100,269         350,248            --              --
Options and warrants exercised                         933,605         229,156         933,605            --              --
Shares surrendered in
  exchange for the payment of
  payroll tax liabilities                               (9,109)         (1,674)         (9,109)           --              --
Shares surrendered in exchange
  for the extinguishment
  of related party receivable                          (45,004)        (10,229)        (45,004)           --              --
Shares surrendered in exchange
  for the exercise of
  stock options                                        (51,365)         (9,755)        (51,365)           --              --
                                                  ------------    ------------    ------------    ------------    ------------

BALANCE--DECEMBER 31, 2000                          34,772,702      12,169,075      19,779,765        (624,138)     15,617,075
Comprehensive income:
  Net income                                         6,735,978            --              --              --         6,735,978
  Other comprehensive loss--
    Foreign currency translation
    adjustment (net of tax)                            (28,802)           --              --           (28,802)           --
                                                  ------------
Comprehensive income                                 6,707,176            --              --              --              --
Tax benefit attributable to
  appreciation of common
  stock options exercised                            2,514,392            --         2,514,392            --              --
Deferred compensation                                  (37,084)         (7,450)        (37,084)           --              --
Issuance of common stock
  under Employee Stock
  Purchase Plans                                       257,702          55,599         257,702            --              --
Options and warrants exercised                       5,019,939       1,295,349       5,019,939            --              --
Shares surrendered in exchange
  for the payment of
  payroll tax liabilities                             (537,375)        (43,305)       (537,375)           --              --
Shares surrendered in exchange
  for the extinguishment
  of related party receivable                         (214,558)        (24,284)       (214,558)           --              --
Shares surrendered in exchange
  for the exercise of
  stock options                                       (824,486)        (67,963)       (824,486)           --              --
                                                  ------------    ------------    ------------    ------------    ------------
BALANCE--DECEMBER 31, 2001                          47,658,408      13,377,021      25,958,295        (652,940)     22,353,053
Comprehensive income:
  Net income                                        11,310,030            --              --              --        11,310,030
  Other comprehensive income--
    Foreign currency translation
    adjustment (net of tax)                            122,485            --              --           122,485            --
                                                  ------------
Comprehensive income                                11,432,515            --              --              --              --
Tax benefit attributable to
  appreciation of common
  stock options exercised                            2,684,444            --         2,684,444            --              --
Sale of treasury stock                                 142,096           7,450         142,096            --              --
Issuance of common stock
  under Employee Stock
  Purchase Plans                                       349,622          23,616         349,622            --              --
Options and warrants exercised                       1,927,525         492,990       1,927,525            --              --
Shares surrendered in
  exchange for the payment of
  payroll tax liabilities                             (468,668)        (20,524)       (468,668)           --              --
Shares surrendered in exchange
  for the exercise of
  stock options                                       (327,351)        (16,501)       (327,351)           --              --
                                                  ------------    ------------    ------------    ------------    ------------

BALANCE--DECEMBER 31, 2002                        $ 63,398,591      13,864,052    $ 30,265,963    $   (530,455)   $ 33,663,083
                                                  ============    ============    ============    ============    ============


See notes to consolidated financial statements.

                                       27




MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000

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


                                                             2002             2001            2000
                                                          ------------    ------------    ------------
                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                              $ 11,310,030    $  6,735,978    $    826,557
                                                          ------------    ------------    ------------
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation and amortization                            4,576,609       4,767,588       4,486,291
    (Gain) losses on sales and abandonment of
      property and equipment                                     4,022        (784,729)         49,833
    Write-off of certain patents and trademarks                391,217          93,291
    Amortization of deferred credits                          (195,472)       (203,131)       (166,609)
    Deferred income taxes                                    1,293,735         (45,152)        389,635
    Tax benefit attributable to appreciation of
      common stock options exercised                         2,684,444       2,514,392         172,818
    Changes in operating assets and liabilities, net of
      effects from acquisitions:
      Short-term investments                                  (132,165)        (85,286)
      Trade receivables                                       (499,871)     (1,512,163)       (685,726)
      Employee and related party receivables                   (32,846)        (40,809)         17,145
      Inventories                                            2,124,399       4,449,812       2,274,934
      Prepaid expenses and other assets                       (152,364)        148,315           6,112
      Other receivables                                     (1,111,723)        668,036        (462,946)
      Deposits                                                   1,630           6,430          10,046
      Trade payables                                          (537,718)       (176,222)         86,085
      Accrued expenses                                       1,800,812       1,346,556         378,759
      Advances from employees                                   32,905          31,846         (19,316)
      Income taxes payable                                    (202,615)        453,343        (236,021)
                                                          ------------    ------------    ------------

          Total adjustments                                 10,044,999      11,632,117       6,301,040
                                                          ------------    ------------    ------------

          Net cash provided by operating activities         21,355,029      18,368,095       7,127,597
                                                          ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures for:

      Property and equipment                                (7,954,191)     (4,091,399)     (4,690,107)
      Patents and trademarks                                   (97,467)       (263,427)       (406,229)
      Acquisitions                                                --              --          (607,129)
  Proceeds from the sale of property and equipment               2,575         952,308       1,347,613
                                                          ------------    ------------    ------------

           Net cash used in investing activities            (8,049,083)     (3,402,518)     (4,355,852)
                                                          ------------    ------------    ------------


                                                                    (Continued)

                                       28





MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
--------------------------------------------------------------------------------


                                                           2002            2001            2000
                                                        ------------    ------------    ------------
                                                                               
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net payments on revolving credit facility             $ (5,115,241)   $(17,884,761)   $ (2,907,596)
  Proceeds from:
    Issuance of common stock                               1,586,140       3,915,780       1,223,379
    Deferred credits                                         128,123         175,572         132,513
  Principal payments on notes payable to
    financial institutions and capital leases               (793,352)     (1,164,444)     (1,316,089)
  Sale (purchase) of treasury stock for deferred
    compensation                                              37,084         (37,084)           --
                                                        ------------    ------------    ------------

          Net cash used in financing activities           (4,157,246)    (14,994,937)     (2,867,793)
                                                        ------------    ------------    ------------

EFFECT OF EXCHANGE RATES ON CASH                             193,188         (41,334)       (160,279)
                                                        ------------    ------------    ------------

NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                                         9,341,888         (70,694)       (256,327)

CASH AND CASH EQUIVALENTS:
  Beginning of year                                          341,690         412,384         668,711
                                                        ------------    ------------    ------------

  End of year                                           $  9,683,578    $    341,690    $    412,384
                                                        ============    ============    ============

SUPPLEMENTAL DISCLOSURES OF CASH
  FLOW INFORMATION--Cash paid during
    the year for:
      Interest (including capitalized interest of
        approximately $17,000, $105,000, and $128,000
        during 2002, 2001, and 2000, respectively)      $    109,002    $  1,286,872    $  2,309,634
                                                        ============    ============    ============

      Income taxes                                      $  2,396,885    $    127,553    $    172,202
                                                        ============    ============    ============



                                                                    (Continued)

                                       29


MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
--------------------------------------------------------------------------------


SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
o    During 2001 and 2000, the Company entered into capital lease obligations
     and notes payable for approximately $271,000 and $508,000, respectively,
     for manufacturing equipment.

o    During 2002, 2001, and 2000, options to purchase 20,524,  43,305, and 1,674
     shares of the Company's  common stock were  surrendered in exchange for the
     Company's   recording  of  payroll  tax   liabilities   in  the  amount  of
     approximately $469,000, $537,000, and $9,000.

o    During 2002, 2001, and 2000,  16,501,  67,963,  and 9,755 shares of Company
     common stock with a value of approximately $327,000, $824,000, and $51,000,
     respectively,  were  surrendered  in  exchange  for the  exercise  of stock
     options.

See notes to consolidated financial statements.                     (Concluded)


                                       30



MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
--------------------------------------------------------------------------------


1.       ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Organization--Merit  Medical Systems, Inc. (Merit) and its wholly-owned
         subsidiaries,  Merit Holdings,  Inc.  (MHI),  and Merit Sensor Systems,
         Inc.  collectively  own  100% of  Merit  Medical  Systems  LP  (MMSLP).
         Combined  with  its  other  wholly-owned   subsidiary,   Merit  Medical
         International,  Inc. (MMI), Merit, MHI, and Merit Sensor Systems,  Inc.
         collectively own 100% of Merit Services, Inc. (MSI) (collectively,  the
         Company).  The Company develops,  manufactures,  and markets disposable
         medical  products  primarily  for use in the diagnosis and treatment of
         cardiovascular  disease  which is  considered to be one segment line of
         business.  The Company  manufactures  its products in plants located in
         the United  States and in  Ireland.  The  Company  has export  sales to
         dealers and has direct sales forces in the United  States,  and Western
         Europe (see Note 11).

         The consolidated financial statements of the Company have been prepared
         in accordance  with  accounting  principles  generally  accepted in the
         United  States of  America.  The  following  is a  summary  of the more
         significant of such policies.

         Use of Estimates in Preparing Financial Statements--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 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.

         Principles  of  Consolidation--The  consolidated  financial  statements
         include those of Merit,  MMI, MHI, MSI, MMSLP and Merit Sensor systems,
         Inc.  Intercompany  balances  and  transactions  have been  eliminated.

         Receivables--The  allowance for  uncollectible  accounts  receivable is
         based  on  the  Company's   historical  bad  debt   experience  and  on
         management's evaluation of collectibility of the individual outstanding
         balances.

         Revenue Recognition--The Company recognizes revenues from product sales
         when the goods are  shipped or  delivered  depending  on when title and
         risk passes to the customer. Provisions for certain product returns and

                                       31


         discounts to customers are provided for as  reductions  in  determining
         sales  in  the  same   period   the   related   sales   are   recorded.

         Inventories--Inventories are stated at the lower of cost (computed on a
         first-in,   first-out  basis)  or  market.

         Income Taxes--The  Company utilizes an asset and liability approach for
         financial  accounting and reporting for income taxes.  Deferred  income
         taxes are provided for temporary differences in the bases of assets and
         liabilities  as  reported  for  financial   statement  and  income  tax
         purposes.

         Intangible  Assets--Effective  January 1, 2002, the Company has adopted
         Statement of Financial  Accounting  Standards (SFAS) No. 142,  Goodwill
         and Other Intangible Assets.  Under SFAS No. 142, the Company no longer
         amortizes   goodwill  from   acquisitions   and  reviews  annually  the
         impairment of goodwill,  or more  frequently  if impairment  indicators
         arise.  The Company has completed its initial testing of goodwill as of
         January  1,  2002 and  determined  that  there was no  impairment.  The
         Company  has  elected  to  perform  its  annual   testing  of  goodwill
         impairment  as of July 1. As of July 1, 2002,  the Company  updated its
         testing of goodwill for  impairment  and  determined  that there was no
         impairment.  The  unamortized  amount of goodwill at December 31, 2001,
         was approximately $4.8 million.

         With the  adoption of SFAS No. 142, the Company  reassessed  the useful
         lives and residual values of all acquired intangible assets to make any
         necessary amortization period adjustments. Based on that assessment, no
         adjustments were made to the amortization  period or residual values of
         other intangible assets.

         Long-Lived  Assets--In  August  2001,  the FASB  issued  SFAS No.  144,
         Accounting  for the Impairment or Disposal of Long-Lived  Assets.  SFAS
         No. 144  supercedes  SFAS No. 121,  Accounting  for the  Impairment  of
         Long-Lived  Assets and for  Long-Lived  Assets to be  Disposed  Of, but
         retains the requirements relating to recognition and measurements of an
         impairment loss and resolves  certain  implementation  issues resulting
         from SFAS No.  121.  SFAS No. 144 was adopted by the Company on January
         1, 2002 and did not have a material impact on the results of operations
         or financial condition of the Company.

         The Company  periodically reviews the carrying amount of its long-lived
         assets for impairment.  An asset is considered  impaired when estimated
         future cash flows are less than the  carrying  amount of the asset.  In
         the  event  the  carrying  amount  of  such  asset  is  considered  not
         recoverable,  the asset is adjusted  to its fair  value.  Fair value is
         generally  determined based on discounted  future cash flow. There were
         no impairments of long-lived assets as of December 31, 2002 or 2001.

         Property  and  Equipment--Property  and  equipment  is  stated  at  the
         historical cost of construction or purchase. Construction costs include
         payroll-related  costs,  an  allocation  of general and  administrative
         costs, and interest  capitalized during  construction.  Maintenance and
         repairs  of  property  and  equipment  are  charged  to  operations  as
         incurred.   Depreciation   and  amortization  are  computed  using  the
         straight-line  method over estimated useful lives as follows:

         Building                                                     25 years
         Automobiles                                                   4 years
         Manufacturing  equipment                                5 to 12 years
         Furniture and fixtures                                  3 to 10 years
         Leasehold  improvements                                 4 to 25 years

         Accrued Expenses--Accrued expenses consist of the following at
         December 31, 2002 and 2001:

                                            December 31,
                                      ------------------------
                                         2002         2001
                                      ----------   ----------
             Payroll taxes            $  317,522   $  377,254
             Payroll                     940,088      706,538
             Bonuses                   1,445,888      883,056
             Commissions                 304,943      278,675
             Vacation                  1,025,407      836,380
             Other accrued expenses    2,584,559    1,735,692
                                      ----------   ----------

             Total                    $6,618,407   $4,817,595
                                      ==========   ==========

         Deferred Credits--Deferred credits consist of grant money received from
         the  Irish   government   and   deferred   gains  on  sales   leaseback
         transactions.  Grant money is received for a percentage of expenditures

                                       32


         on eligible  property and equipment,  specific research and development
         projects,  and costs of hiring and training employees.  Amounts related
         to the  acquisition  of  property  and  equipment  are  amortized  as a
         reduction of depreciation  expense over the lives of the  corresponding
         property.  Deferred gains on sales leaseback transactions are amortized
         as a reduction  of rent  expense  over  periods  ranging from six to 10
         years (see Note 8).

         Research and  Development--Research  and development costs are expensed
         as incurred.

         Stockholders'  Equity--On  March  27,  2002,  the  Company's  Board  of
         Directors approved a five-for-four  split of the Company's common stock
         effective  April  11,  2002 for  stockholders  of record as of April 8,
         2002.  Additionally,  on  August  14,  2001,  the  Company's  Board  of
         Directors approved a five-for-four  split of the Company's common stock
         effective  August 27, 2001 for  stockholders of record as of August 24,
         2001. All historical  share and per share amounts have been restated to
         reflect these stock splits.

         Earnings per Common  Share--Net  income per common share is computed by
         both the basic method,  which uses the weighted  average  number of the
         Company's  common shares  outstanding,  and the diluted  method,  which
         includes the dilutive common shares from stock options and warrants, as
         calculated using the treasury stock method.

         Financial Instruments--The Company's financial instruments, when valued
         using market interest rates, would not be materially different from the
         amounts presented in the consolidated financial statements.

         Stock-Based   Compensation--The   Company   accounts   for  its   stock
         compensation arrangements under the provisions of Accounting Principles
         Board Opinion No. 25,  Accounting  for Stock Issued to Employees,  (APB
         25) and intends to continue to do so. Accordingly, no compensation cost
         has been  recognized for its stock  compensation  arrangements.  If the
         compensation  cost  for  the  Company's  compensation  plans  had  been
         determined  consistent with Statement of Financial Accounting Standards
         (SFAS) No. 123, Accounting for Stock-Based Compensation,  the Company's
         net income and net income per common and common share  equivalent would
         have changed to the pro forma amounts indicated below:



                                              2002             2001             2000
         Net income:
                                                               
           As reported                  $   11,310,030   $   6,735,978   $   826,557
           Pro forma                         9,873,717       5,379,236       140,145

         Net income per common share:
           Basic:
             As reported                $        0.83    $       0.53    $     0.07
             Pro forma                           0.72            0.42          0.00

           Diluted:
             As reported                $        0.77    $       0.50    $     0.07
             Pro Forma                           0.67            0.40         (0.01)






         The fair value of each option  grant is  estimated on the date of grant
         using  the  Black-Scholes   option-pricing  model  with  the  following
         weighted-average  assumptions  used for grants in 2002, 2001, and 2000:
         dividend yield of 0%; expected volatility of 63.24%, 63.48%, and 61.04%
         for  2002,  2001,  and 2000,  respectively;  risk-free  interest  rates
         ranging from 4.48% to 6.71%;  and expected  lives  ranging from 2.33 to
         4.58 years.

         Statements of Cash Flows--For purposes of the statements of cash flows,
         the  Company  considers  interest  bearing  deposits  with an  original
         maturity  date  of  three  months  or  less  to  be  cash  equivalents.

         Concentration  of Credit  Risk--Financial  instruments that potentially
         subject the Company to  concentrations of credit risk consist primarily
         of temporary cash and cash  equivalents  and accounts  receivable.  The
         Company provides credit, in the normal course of business, primarily to
         hospitals and independent  third-party  packers and  distributors.  The
         Company  performs  ongoing  credit  evaluations  of its  customers  and
         maintains  allowances  for potential  credit losses.

         Foreign Currency  Translation  Adjustment--The  financial statements of
         the Company's foreign subsidiaries,  which are included within MHI, are
         measured using local  currencies as the functional  currency,  with the
         exception of Ireland,  which uses a U.S.  dollar  functional  currency.
         Assets and  liabilities  are translated  into U.S.  dollars at year-end
         rates of exchange and results of operations  are  translated at average
         rates for the year. Gains and losses resulting from these  translations
         are  included in  accumulated  other  comprehensive  loss as a separate
         component of  stockholders'  equity.

         Accumulated Other Comprehensive  Loss--Accumulated  other comprehensive
         loss consists entirely of foreign currency translation adjustments.

         Recently  Issued   Financial   Accounting   Standards--SFAS   No.  133,
         Accounting  for  Derivative  Instruments  and  Hedging  Activities,  as

                                       33


         amended,  requires  that all  derivative  instruments  be recognized as
         either assets or liabilities at fair market value.  The Company adopted
         this statement  beginning  January 1, 2001. The effect on the Company's
         financial statements of adopting this statement was not significant.

         In June 2002, SFAS No. 146,  Accounting for Costs  Associated with Exit
         or Disposal  Activities,  was issued.  SFAS No. 146 requires  recording
         costs associated with exit or disposal  activities at their fair values
         when a liability has been incurred.  Under previous  guidance,  certain
         exit costs were accrued upon  management's  commitment to an exit plan,
         which is generally  before a liability has been  incurred.  The Company
         will adopt SFAS No. 146 as of January 1, 2003. The adoption of SFAS No.
         146 is not expected to  materially  impact the  Company's  consolidated
         results of operations,  financial  position,  or cash flow.

         In  December  2002,  the FASB  issued  SFAS  No.  148,  Accounting  for
         Stock-Based  Compensation--Transition  and  Disclosure.  SFAS  No.  148
         amends SFAS No. 123 to provide  alternative methods of transition for a
         voluntary  change to the fair  value  based  method of  accounting  for
         stock-based employee compensation. In addition, SFAS No. 148 amends the
         disclosure   requirements   of  SFAS  No.  123  to  require   prominent
         disclosures in both annual and interim  financial  statements about the
         method of accounting  for  stock-based  employee  compensation  and the
         effect of the method used on reported  results.  The provisions of SFAS
         No. 148 are  effective for  financial  statements  for fiscal years and
         interim   periods  ending  after  December  15,  2002.  The  disclosure
         provisions  of SFAS No.  148 have  been  adopted  by the  Company  (see
         Stock-Based  Compensation  above).  SFAS No.  148 did not  require  the
         Company  to change to the fair value  based  method of  accounting  for
         stock-based  compensation.

         In November  2002,  the  Financial  Accounting  Standards  Board (FASB)
         issued Financial  Accounting Standards Board Interpretation No. ("FIN")
         45, Guarantor's Accounting and Disclosure  Requirements for Guarantees,
         Including Indirect Guarantees of Indebtedness of Others, which requires
         the  guarantor  to  recognize  as a  liability  the  fair  value of the
         obligation  at  the  inception  of  the   guarantee.   The   disclosure
         requirements  in FIN 45  are  effective  for  financial  statements  of
         interim or annual periods  ending after  December 15, 2002.  Management
         believes  the  Company  has  no  guarantees  that  are  required  to be
         disclosed in the financial statements.  The recognition  provisions are
         to be  applied  on a  prospective  basis  to  guarantees  issued  after
         December 31, 2002. The adoption of the recognition provisions of FIN 45
         is not expected to have a material  impact on the  Company's  financial
         statements.

         Short-term  Investments--Trading  securities  are recorded at estimated
         fair value with unrealized  gains and losses included in  miscellaneous
         income. The basis of cost used in determining realized gains and losses
         is specific identification.  The estimated fair value of all securities
         is determined by quoted market prices.

         Deferred  Compensation--During  2001, the Company  established  certain
         non-qualified  deferred  compensation  plans for eligible  participants
         (the "deferred  compensation  plans"). The deferred  compensation plans
         permit each  participant  to defer a portion of their  salary until the
         future.   The  deferred  salary  may  be  invested  on  behalf  of  the
         participant  in  marketable  securities,  money  market  funds  or  the
         company's  own  stock.  However,  as the  Company  is the  owner of the
         invested assets, such assets are reflected in the consolidated  balance
         sheet as cash  equivalents  and short-term  investments at December 31,
         2002.  Common stock of the Company  held for the deferred  compensation
         plans is reported as treasury stock at cost. The deferred  compensation
         obligation  is classified  as an accrued  expense and adjusted,  with a
         corresponding  charge (or  credit)  to  compensation  cost,  to reflect
         changes  in the  fair  value  of the  underlying  assets.  Because  the
         deferred  compensation  obligation  may be settled by delivery of cash,
         shares of Company stock, or diversified assets, Company shares acquired
         are not  included in basic  earnings  per share but are included in the
         calculation of diluted earnings per share. All shares of treasury stock
         were sold during the year ended December 31, 2002.

2.       SEVERANCE COSTS

         During  the year  ended  December  31,  2000,  the  Company  terminated
         approximately  30 employees and  correspondingly  accrued a termination
         cost of  approximately  $331,000.  This amount is included in operating
         expenses as severance costs.

3.       ACQUISITIONS

         On  May  18,   2000,   the   Company   acquired   certain   assets   of
         Electro-Catheter Corporation (Elecath) for a purchase price of $607,129
         in cash.  Elecath  develops,  manufactures  and sells a broad  range of
         cardiovascular  catheters for use primarily in the Electro  physiology,
         Cath Lab and Critical Care  departments of hospitals.  The cost of this
         acquisition exceeded the estimated fair value of the acquired assets by
         $533,793. Such excess was allocated to goodwill.

                                       34


4.       INVENTORIES

         Inventories consist of the following at December 31, 2002 and 2001:

                                                  2002               2001
                                                ------------    ------------
         Finished goods                        $ 10,223,180    $ 13,716,474
         Work-in-process                          2,343,500       3,001,250
         Raw materials                            8,900,959       7,501,253
         Less reserve for obsolete inventory     (2,768,422)     (3,395,361)
                                                ------------    ------------

         Total                                 $ 18,699,217    $ 20,823,616
                                               ============    ============

5.       GOODWILL AND OTHER INTANGIBLE ASSETS

         Goodwill and  intangibles  consisted  of the  following at December 31,
         2002 and 2001:




                                                                     2002         2001
                                                                 ----------   ----------
                                                                        

         Patents, net of accumulated amortization of $594,160
         and $656,710, respectively                              $1,557,006   $1,957,617

         Trademarks, net of accumulated amortization of $181,293
         and $155,058, respectively                                 157,662      193,065

         License agreements, net of accumulated amortization
         of $378,512 and $307,054, respectively                     212,492      283,950
                                                                 ----------   ----------

         Total                                                   $1,927,160   $2,434,632
                                                                 ==========   ==========

         Cost in excess of the fair value of assets acquired
         (goodwill)                                              $4,764,596   $4,764,596
                                                                 ==========   ==========


                                       35



         The  following  table  reconciles  net  income and  earnings  per share
         information for the years ended December 31, 2002,  2001, and 2000, for
         the non-amortization provision of goodwill for SFAS No. 142



                                                               Year Ended December 31
                                                              2001              2000
                                                         -------------   -------------
                                                                   
         Reported net income                             $   6,735,978   $     826,557
         Add back--goodwill amortization, net of tax           196,589         184,388
                                                         -------------   -------------

         Adjusted net income                             $   6,932,567   $   1,010,945
                                                         =============   =============
         Basic earnings per share:
           Reported earnings per common share            $        0.53   $        0.07
           Add back--goodwill amortization, net of tax            0.02            0.02
                                                         -------------   -------------

         Adjusted earnings per common share              $        0.55   $        0.09
                                                         =============   =============

         Diluted earnings per share:
           Reported earnings per common share            $        0.50   $        0.07
           Add back--goodwill amortization, net of tax            0.02            0.01
                                                         -------------   -------------

         Adjusted earnings per common share              $        0.52   $        0.08
                                                         =============   =============


         Aggregate  amortization  expense for the years ended December 31, 2002,
         2001,  and 2000 is  approximately  $227,000,  $298,000,  and  $279,000,
         respectively.

         Estimated  amortization  expense  for  the  intangible  assets  for the
         current year and five succeeding fiscal years is as follows:

         Estimated amortization expense:
              Year ended December 31:
                   2003                                    174,376
                   2004                                    154,068
                   2005                                    151,047
                   2006                                    150,522
                   2007                                    148,536

                                       36



6.       INCOME TAXES

         Deferred  income tax assets and  liabilities  at December  31, 2002 and
         2001 consist of the following  temporary  differences and carry forward
         items:



                                                          Current                     Long-Term
                                                  --------------------------    --------------------------
                                                     2002           2001          2002            2001
                                                  -----------    -----------    -----------    -----------
                                                                                  
         Deferred income tax assets:
           Allowance for uncollectible
             accounts receivable                  $   174,700    $   163,540    $      --      $      --
           Accrued compensation expense               509,339        263,126           --             --
           Inventory capitalization for
             tax purposes                             107,202        106,937
           Inventory obsolescence reserve             855,315      1,427,188
           Tax credits                                   --             --          249,328        813,599
           Net operating losses of subsidiaries        66,283        120,779        227,957        278,639
           Other                                      114,846         65,004        325,117        444,915
                                                  -----------    -----------    -----------    -----------

         Total deferred income tax assets           1,827,685      2,146,574        802,402      1,537,153

         Deferred income tax liabilities:
           Prepaid expenses                        (1,683,603)    (1,419,916)
           Property and equipment                        --             --       (3,005,013)    (2,880,088)
           Other                                         (817)        (3,359)      (240,545)      (311,448)
                                                  -----------    -----------    -----------    -----------

         Net                                      $   143,265    $   723,299    $(2,443,156)   $(1,654,383)
                                                  ===========    ===========    ===========    ===========
        

         Income tax expense  (benefit) differs from amounts computed by applying
         the statutory Federal rate to pretax income as follows:




                                                             2002            2001          2000
                                                          -----------    -----------    -----------
                                                                               
         Computed Federal income tax expense at
           statutory rate of 35%                          $ 5,866,798    $ 3,425,938    $   270,846
         State income taxes                                   384,358        159,770         25,153
         Creation of tax credits                             (355,684)      (399,001)      (444,551)
         Tax benefit of foreign sales corporation            (118,057)      (141,565)       (53,139)
         Income of subsidiaries recorded at
           foreign tax rates                                 (286,424)       (63,517)       (13,746)
         Other--including the effect of graduated rates       (38,742)        70,792        162,725
                                                          -----------    -----------    -----------

         Total income tax expense (benefit)               $ 5,452,249    $ 3,052,417    $   (52,712)
                                                          ===========    ===========    ===========


                                       37




         The components of the provision for income taxes are as follows:

                                          2002           2001            2000
                                       -----------    -----------    -----------
         Current expense (benefit):

                                                            
           Federal                     $ 3,614,502    $ 2,608,391    $  (423,470)
           State                           435,612        370,707        (29,922)
           Foreign                         108,400        118,471         11,045
                                       -----------    -----------    -----------
                                         4,158,514      3,097,569       (442,347)
                                       -----------    -----------    -----------

         Deferred expense (benefit):

           Federal                       1,029,364        (57,070)       196,470
           State                           139,787       (124,908)       132,281
           Foreign                         124,584        136,826         60,884
                                       -----------    -----------    -----------
                                         1,293,735        (45,152)       389,635
                                       -----------    -----------    -----------

         Total                         $ 5,452,249    $ 3,052,417    $   (52,712)
                                       ===========    ===========    ===========


         7.       REVOLVING CREDIT FACILITY AND LONG-TERM DEBT

         Revolving Credit Facility--The  Company maintains a long-term revolving
         credit  facility (the Facility) with a bank,  which enables the Company
         to borrow funds at variable  interest  rates.  The credit  facility was
         voluntarily  reduced to $500,000 in August 2002.  The Facility is fully
         due and payable on June 30, 2006.  The weighted  average  interest rate
         applied to the  outstanding  balance at  December  31,  2001 was 3.42%.
         Under the terms of the  Facility,  among other  things,  the Company is
         required to maintain a ratio of total liabilities to tangible net worth
         not to exceed 2.0 to 1.0, maintain a ratio of current assets to current
         liabilities of at least 1.5 to 1.0, maintain minimum working capital of
         $25,000,000,  and is restricted from paying  dividends to shareholders.
         For the years  ended  December  31,  2002 and 2001,  management  of the
         Company believes the Company was in compliance with all debt covenants.
         As of December 31, 2002 and 2001,  the Company owed $-0- and $5,115,239
         under the Facility,  respectively.  The Facility is  collateralized  by
         trade receivables,  inventories, property and equipment, and intangible
         assets.

         Long-term  Debt--Long-term  debt  consists of the following at December
         31, 2002 and 2001:



                                                                    2002        2001
                                                                ----------   ----------
                                                                      
         Notes payable to  financial  institutions;
         payable in monthly  installments
         through 2004, including
         interest at rates ranging
         from 6.26% to 8.89%; collateralized by equipment       $  416,875   $1,210,228

         Revolving credit facility (see above)                        --      5,115,239
                                                                ----------   ----------

         Total                                                     416,875    6,325,467
         Less current portion                                      400,182      598,086
                                                                ----------   ----------

         Long-term portion                                      $   16,693   $5,727,381
                                                                ==========   ==========


         Scheduled  maturities  of  long-term  debt at December  31, 2002 are as
         follows:

         Year ending December 31:

           2003                                        $400,182
           2004                                          16,693
                                                       --------

         Total                                         $416,875
                                                       ========

8.       COMMITMENTS AND CONTINGENCIES

         Leases--The  Company has  noncancelable  operating lease agreements for
         off-site office and production facilities and equipment. The leases for
         the off-site

                                       38



         office and  production  facilities  are for five years and have renewal
         options of one to five  years.  The terms of the  leases for  equipment
         range from five to seven years. Total rental expense on these operating
         leases and on the Company's new  manufacturing and office building (see
         below)  for  the  years  ended  December  31,  2002,   2001,  and  2000
         approximated $2,978,000, $2,539,000, and $2,539,000, respectively.

         In June 1993, the Company entered into a 25 year lease agreement with a
         developer  for a new  manufacturing  and  office  building.  Under  the
         agreement,  the Company was granted an option to purchase  the building
         at fair market  value after 10 years and,  if not  exercised,  after 25
         years.  In connection  with this lease  agreement,  in 1993 the Company
         sold to the  developer  10  acres  of land on which  the  building  was
         constructed.  The  $166,136  gain on the  sale  of the  land  has  been
         recorded as a deferred  credit and is being amortized as a reduction of
         rent expense over ten years.  In connection  with the lease  agreement,
         the Company issued to the developer warrants to purchase 242,908 shares
         of the  Company's  common stock at $3.17 per share  subject to carrying
         cost  increases of 3% per year ($3.90 as of December 31,  2002).  These
         warrants  were  exercised  in January  2003 with total  proceeds to the
         Company of  approximately  $950,000.

         On December  22, 2000,  the Company  sold certain of its  manufacturing
         equipment  with a net carrying value of  approximately  $1,210,000 to a
         financial  institution.  The  Company  then  entered  into  a  six-year
         operating  lease  agreement  for the same  equipment.  The  approximate
         $70,000  gain on sale has been  recorded  as a  deferred  credit and is
         being  amortized as a reduction of rental  expense over six years.  The
         future minimum lease  payments for operating  leases as of December 31,
         2002 are as follows:

                                                         Operating
                                                          Leases
               Year ending December 31:

                 2003                                   $ 2,532,429
                 2004                                     2,331,998
                 2005                                     2,027,040
                 2006                                     2,007,087
                 2007                                     1,777,555
              Thereafter                                 17,706,965
                                                        -----------
              Total minimum lease payments              $28,383,074
                                                        ===========

         Irish Government Development Agency Grants--Through  December 31, 2002,
         the Company had entered into several  grant  agreements  with the Irish
         Government  Development Agency of which  approximately $-0- and $98,000
         remained in  receivables  at December 31, 2002 and 2001,  respectively.
         The Company has recorded the grants related to research and development
         projects and costs of hiring and  training  employees as a reduction of
         operating   expenses  in  2002,  2001,  and  2000  in  the  amounts  of
         approximately  $163,000,  $36,000,  and $67,000,  respectively.  Grants
         related to the  acquisition  of property  and  equipment  purchased  in
         Ireland are amortized as a reduction to depreciation expense over lives
         corresponding to the depreciable lives of such property. The balance of
         deferred  credits for the periods ended  December 31, 2002 and 2001 are
         approximately $710,000 and $804,000,  respectively.  During 2002, 2001,
         and 2000, approximately $167,000, $175,000, and $149,000, respectively,
         of the  deferred  credit was  amortized  as a  reduction  of  operating
         expenses.

         Preferred Share Purchase Rights--In August 1997, the Company declared a
         dividend of one  preferred  share  purchase  right (a "Right") for each
         outstanding  share of Common Stock which entitles the holder of a Right
         to  purchase  one   one-hundredth   of  a  share  of  Series  A  Junior
         Participating  Preferred Stock at an exercise price of $40 in the event
         a person or group acquires,  or announces an intention to acquire,  15%
         or more of the Company's common stock.  Until such an event, the Rights
         are not exercisable and are transferable  with the common stock and may
         be redeemed at a price of $.0001 per Right.

         Litigation--In the ordinary course of business, the Company is involved
         in  litigation  and claims which  management  believes  will not have a
         materially  adverse  effect  on the  Company's  financial  position  or
         results of operations.

         Other--As of December  31,  2002,  the Company had entered a nonbinding
         agreement to purchase land adjacent to its Ireland production facility.
         During  January  2003,  this  agreement  was finalized and the land was
         purchased for $742,052

                                       39



9.       EARNINGS PER COMMON SHARE (EPS)

         The  following  table  sets  forth  the  computation  of basic  diluted
         earnings per common share:



                                                               Net                      Per Share
                                                             Income        Shares        Amount
                                                           -----------   -----------   -----------
                                                                              
         Year ended December 31, 2002:
           Basic EPS                                       $11,310,030    13,627,181   $   0.83
           Effect of dilutive stock options and warrants          --       1,131,947    --
                                                           -----------   -----------   -----------

         Diluted EPS                                       $11,310,030    14,759,128   $   0.77
                                                           ===========   ===========   ===========

         Year ended December 31, 2001:

           Basic EPS                                       $ 6,735,978    12,677,611   $   0.53
           Effect of dilutive stock options and warrants          --         751,974    --
                                                           -----------   -----------   -----------

         Diluted EPS                                       $ 6,735,978    13,429,585   $   0.50
                                                           ===========   ===========   ===========

         Year ended December 31, 2000:

           Basic EPS                                       $   826,557    12,077,023   $   0.07
           Effect of dilutive stock options and warrants          --         205,641    --
                                                           -----------   -----------   -----------

         Diluted EPS                                       $   826,557    12,282,664   $   0.07
                                                           ===========   ===========   ===========


10.      EMPLOYEE STOCK PURCHASE PLAN AND STOCK OPTIONS AND WARRANTS

         The Company  offers to its  employees an Employee  Stock  Purchase Plan
         (ESPP)  which  allows the  employee  on a  quarterly  basis to purchase
         shares of the Company's common stock at the lesser of 85% of the market
         value on the offering  commencement date or offering  termination date.
         The Company has a qualified and non-qualified ESPP. The total number of
         shares  available to employees to purchase  under the qualified plan is
         671,875 of which  432,176 have been  purchased as of December 31, 2002.
         The total number of shares available to employees to purchase under the
         non-qualified plan is 109,375 of which 17,227 have been purchased as of
         December 31, 2002.

         The Company  has a  long-term  incentive  plan which  provides  for the
         issuance of incentive stock options,  nonstatutory  stock options,  and
         certain  corresponding stock appreciation rights. The maximum number of
         shares of common stock for which  options may be granted is  3,750,000.
         Options may be granted to directors, officers, outside consultants, and
         key  employees  of the Company  and may be granted  upon such terms and
         such  conditions as the  Compensation  Committee in its sole discretion
         shall determine.  Options vest 20% per year over either a 4.5 or 5 year
         life  with  contractual  lives of 5 and 10 years,  respectively.  In no
         event,  however,  shall the exercise price be less than the fair market
         value on the date of grant.


                                       40


         Changes in stock  options and warrants (see Note 8) for the years ended
         December 31, 2002, 2001, and 2000 are as follows:



                                                    Options               Warrants
                                            ---------------------   ---------------------
                                                          Weighted               Weighted
                                                          Average                Average
                                                          Exercise               Exercise
                                             Shares       Price      Shares      Price
         2002:

                                                                  
           Granted                           83,750   $   16.84        --          --
           Exercised                        492,990        3.91
           Forfeited/expired                 28,615        6.96
           Outstanding at December 31     2,071,070        7.04     242,908   $   3.90
           Exercisable                      881,874        5.87     242,908       3.90

         Weighted average fair value of
           options granted during year         --     $    6.39        --          --

         Weighted average fair value of
           shares issued under Employee
           Stock Purchase Plan                 --     $    2.61        --          --





                                                    Options               Warrants
                                            ---------------------   ---------------------
                                                          Weighted               Weighted
                                                          Average                Average
                                                          Exercise               Exercise
                                             Shares       Price      Shares      Price

                  2001:

                                                                   
           Granted                        1,414,889    $   8.04        --           --
           Exercised                      1,295,349        3.87        --           --
           Forfeited/expired                310,531        5.26        --           --
           Outstanding at December 31     2,508,925        6.11     242,908    $   3.78
           Exercisable                      805,466        3.66     242,908        3.78

         Weighted average fair value of
           options granted during year         --      $   4.39        --           --

         Weighted average fair value of
           shares issued under Employee
           Stock Purchase Plan                 --      $   0.82        --           --



                                       41




                                                    Options               Warrants
                                            ---------------------   ---------------------
                                                          Weighted               Weighted
                                                          Average                Average
                                                          Exercise               Exercise
                                             Shares       Price      Shares      Price
         2000:

                                                                  
           Granted                          758,750    $   2.88        --           --
           Exercised                        229,156        4.08
           Forfeited/expired                194,438        4.44        --           --
           Outstanding at December 31     2,699,916        3.93     242,908   $   3.67
           Exercisable                    1,281,563        4.46     242,908       3.67

         Weighted average fair value of
           options granted during year         --      $   1.28        --           --

         Weighted average fair value of
           shares issued under Employee
           Stock Purchase Plan                 --      $   0.62        --           --


         The  following  table  summarizes  information  about stock options and
         warrants outstanding at December 31, 2002:
         
         

                                                                                                    Options and Warrants
                                      Options and Warrants Outstanding                                   Exercisable
                  ----------------------------------------------------------------------        ----------------------------
                                                         Weighted
                                                         Average
                                                        Remaining          Weighted                              Weighted
              Range of                                 Contractual          Average                               Average
              Exercise                    Number           Life            Exercise                 Number       Exercise
              Prices                   Outstanding      (in years)          Price                 Exercisable     Price

         Options:

                                                                                                  
             $2.88 - $7.22              1,378,955          4.91            $ 3.66                  700,112       $ 3.61
            $13.53 - $20.00               692,115          8.79             13.77                  181,762        14.56

         Warrants:

                 $3.90                    242,908          2.04              3.90                  242,908         3.90
         

11.      SEGMENT REPORTING AND FOREIGN OPERATIONS

         During the years ended  December 31, 2002,  2001, and 2000, the Company
         had  foreign  sales  of  approximately  $27,062,000,  $23,801,000,  and
         $21,773,000 or approximately 23%, 23%, and 24%, respectively,  of total
         sales, primarily in Japan, Germany, France, and the United Kingdom.

         The Company  operates  primarily  in one segment in which it  develops,
         manufactures,  and markets disposable medical products, principally for
         use in the  diagnosis and treatment of  cardiovascular  disease.  Major
         operations  outside the United States include a manufacturing  facility
         in  Ireland,  a  distribution  facility in the  Netherlands,  and sales
         subsidiaries  in Europe.  The  following is a summary of the  Company's
         foreign  operations by geographic area for fiscal years 2002, 2001, and
         2000:

                                       42






                                                                 Transfers
                                                 Sales to         Between                             Net
                                               Unaffiliated      Geographic                         Income       Identifiable
                                                 Customers          Areas           Revenue          (Loss)          Assets
                                               -------------    -------------    -------------    -------------    -------------
                                                                                                     
         Fiscal year ended December 31, 2002:
           United States, Canada, and
             international distributors         $  99,694,349    $   1,787,099    $ 101,481,448    $  11,415,816    $  66,733,647
           Europe direct and European
             distributors                          16,532,852        9,077,730       25,610,582          117,886       13,200,294
           Eliminations                                  --        (10,864,829)     (10,864,829)        (223,672)            --
                                                -------------    -------------    -------------    -------------    -------------
         Consolidated                           $ 116,227,201    $        --      $ 116,227,201    $  11,310,030    $  79,933,941
                                                =============    =============    =============    =============    =============

         Fiscal year ended December 31, 2001:
           United States, Canada, and
             international distributors         $  89,208,943    $   1,770,388    $  90,979,331    $   7,807,510    $  57,151,956
           Europe direct and European
             distributors                          14,826,863        6,101,400       20,928,263         (884,181)       9,506,859
           Eliminations                                  --         (7,871,788)      (7,871,788)        (187,351)            --
                                                -------------    -------------    -------------    -------------    -------------
         Consolidated                           $ 104,035,806    $        --      $ 104,035,806    $   6,735,978    $  66,658,815
                                                =============    =============    =============    =============    =============

         Fiscal year ended December 31, 2000:
           United States, Canada, and
             international distributors         $  80,380,485    $   1,060,749    $  81,441,234    $   2,301,524    $  61,897,460
           Europe direct and European
             distributors                          11,067,027        4,906,800       15,973,827       (1,608,513)       9,549,171
           Eliminations                                  --         (5,967,549)      (5,967,549)         133,546             --
                                                -------------    -------------    -------------    -------------    -------------
         Consolidated                           $  91,447,512    $        --      $  91,447,512    $     826,557    $  71,446,631
                                                =============    =============    =============    =============    =============
         

         Transfers  between  geographic areas are accounted for at amounts which
         are generally  above cost and consistent with the rules and regulations
         of governing tax  authorities.  Such  transfers  are  eliminated in the
         consolidated  financial  statements.  Net  income by  geographic  areas
         reflects   foreign   earnings   reported  by  the   foreign   entities.
         Identifiable  assets are those  assets that can be directly  associated
         with a particular  foreign  entity and thus do not include  assets used
         for general corporate purposes.

12.      ROYALTY AGREEMENTS

         Pursuant to a 1992  settlement  agreement,  the Company  entered into a
         license  agreement  with  another  medical  product  manufacturer  (the
         Licensor),  whereby the Licensor  granted to the Company a nonexclusive
         right and license to manufacture and sell products which are subject to
         the patents issued to the Licensor.  For the rights and license granted
         under the  agreement,  the Company  paid the  Licensor a  nonrefundable
         prepaid  royalty in the amount of $600,000.  In addition to the prepaid
         royalty, the Company agreed to pay the Licensor a continuing royalty of
         5.75% of sales (which will not exceed  $450,000 for any calendar  year)
         made  in  the  United  States,  of  products  covered  by  the  license
         agreement.  Royalties  of $450,000  were paid or accrued in each of the
         years ended December 31, 2002, 2001, and 2000.

         During 2002, the Company entered into a license  agreement with another
         medical  product  manufacturer  (the  Licensor),  whereby the  Licensor
         granted to the Company an exclusive  worldwide  license to  manufacture
         and sell  products  which  are  subject  to the  patents  issued to the
         Licensor.  For the rights and license granted under the agreement,  the
         Company agreed to pay the Licensor a royalty of 5% of net sales,  which
         will not exceed $62,500 for calendar year 2003 and $75,000 per year for
         calendar year 2004 through 2006.

13.      EMPLOYEE BENEFIT PLAN

         The Company has a  contributory  401(k) savings and profit sharing plan
         (the Plan)  covering all full-time  employees who are at least 18 years

                                       43


         of age. The Plan has no minimum  service  requirement.  The Company may
         contribute  at  its  discretion  matching  contributions  based  on the
         employees' compensation.  Contributions made by the Company to the Plan
         for  the  years  ended  December  31,  2002,  2001,  and  2000  totaled
         approximately $499,000, $361,000, and $258,000, respectively.

14.      QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

         Quarterly data for the years ended December 31, 2002, 2001, and 2000 is
         as follows:



                                                                                  Quarter Ended
                                                    -----------------------------------------------------------------------
         2002                                            March 31          June 30        September 30       December 31
                                                                                                
         Net sales                                     $ 28,672,168     $ 28,789,370      $ 29,341,129      $ 29,424,534
         Gross profit                                    11,151,780       12,033,078        12,556,666        12,773,949
         Income from operations                           3,483,243        4,104,019         4,624,051         4,564,175
         Income tax expense                               1,095,974        1,376,107         1,509,412         1,470,756
         Net income                                       2,326,907        2,701,814         3,125,403         3,155,906
         Basic earnings per common share                       0.17             0.20              0.23              0.23
         Diluted earnings per common share                     0.16             0.18              0.21              0.21


         2001

         Net sales                                     $ 26,788,373     $ 26,264,015      $ 25,694,128      $ 25,289,290
         Gross profit                                     9,219,374        9,426,157         9,725,611         9,726,620
         Income from operations                           2,083,229        2,177,236         2,730,338         2,948,823
         Income tax expense                                 460,737          785,935           854,528           951,217
         Net income                                       1,186,425        1,858,793         1,744,996         1,945,764
         Basic earnings per common share                       0.10             0.15              0.14              0.14
         Diluted earnings per common share                     0.10             0.14              0.13              0.13


         2000

         Net sales                                     $ 22,080,435     $ 23,552,859      $ 23,330,203      $ 22,484,015
         Gross profit                                     7,634,050        7,616,239         7,958,848         7,414,916
         Income from operations                             289,575          647,698         1,224,604           966,678
         Income tax expense (benefit)                       (68,347)          19,254           169,026          (172,645)
         Net income (loss)                                 (159,482)          44,927           394,397           546,715
         Basic and diluted earnings
           (loss) per common share                            (0.02)            0.01              0.03              0.05
         

SUPPLEMENTARY FINANCIAL DATA

         The  supplementary  financial  information  required  by  Item  302  of
         Regulation  S-K is contained in Note 14 to the  Consolidated  Financial
         Statements of the Company set forth above.

Item 9.  Changes and Disagreements  with Accountants on Accounting and Financial
         Disclosure

                  None

                                       44


                                    PART III

Item 10, 11, 12, 13 and 15

         These items are  incorporated by reference to the Company's  definitive
Proxy Statement relating to the Annual Meeting of Shareholders scheduled for May
22, 2003. The definitive  Proxy  Statement will be filed with the Commission not
later than 120 days after  December 31, 2002,  pursuant to Regulation 14A of the
Securities Exchange Act of 1934, as amended.

Item 14.  Controls and Procedures

     (a) Under the  supervision  and with the  participation  of our management,
including our principal  executive officer and principal  financial officer,  we
conducted an evaluation of our disclosure controls and procedures,  as such term
is defined under Rule 13a-14(c) promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), within 90 days of the filing date of this
report. Based on this evaluation,  our principal executive officer and principal
financial  officer  concluded  that our  disclosure  controls and procedures are
effective in alerting them on a timely basis to material information relating to
our Company (including its consolidated subsidiaries) required to be included in
our reports filed or submitted under the Exchange Act

There have been no significant changes (including corrective actions with regard
to significant  deficiencies or material weaknesses) in our internal controls or
in other factors that could  significantly  affect these controls  subsequent to
the date of the evaluation referenced in paragraph (a) above.

                                     PART IV

Item 16.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

          (a) Documents filed as part of this report:

                (1) Financial Statements.  The following  consolidated financial
                  statements  and  the  notes  thereto,   and  the   Independent
                  Auditors'  Report are incorporated by reference as provided in
                  Item 8 of this report:

                  -- Independent Auditors' Report

                  --  Consolidated  Balance  Sheets as of December  31, 2002 and
                      2001

                  --  Consolidated  Statements of Operations for the Years Ended
                      December 31, 2002, 2001 and 2000

                  --  Consolidated  Statements of  Stockholders'  Equity for the
                      Years Ended December 31, 2002, 2001 and 2000

                  --  Consolidated  Statements of Cash Flows for the Years Ended
                      December 31, 2002, 2001 and 2000

                  -- Notes to Consolidated Financial Statements

 (2)  Financial Statement Schedule

                  -- Schedule II - Valuation and qualifying account

                                       45




                        VALUATION AND QUALIFYING ACCOUNTS
                  YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000

                                                                    Additions
                                                 Balance at         Charged to                         Balance at
                                                  Beginning           Costs                              End of
Description                                        of Year           Expenses       Deductions            Year

ALLOWANCE FOR UNCOLLECTIBLE

  ACCOUNTS:

                                                                                          
  2000                                        $ (305,475)        $ (626,263)        $ 491,463         $ (440,275)

  2001                                          (440,275)           (50,892)           82,316           (408,851)

  2002                                          (408,851)           (81,026)           13,583           (476,294)



RESERVE FOR INVENTORY

  OBSOLESCENCE:

  2000                                             $ (1,120,289)      $ (1,555,963)        $ 689,937       $ (1,986,315)

  2001                                               (1,986,315)        (3,119,864)        1,710,818         (3,395,361)

  2002                                               (3,395,361)        (1,830,633)        2,457,572         (2,768,422)


All other  schedules  have  been  omitted  because  they are not  required,  not
applicable,  or  the  information  is  otherwise  set  forth  in  the  financial
statements or notes thereto.

          (b) Reports on Form 8-K:

                  None.

          (c)     Exhibits:

                  The following  exhibits required by Item 601 of Regulation S-K
                  are filed herewith or have been filed  previously with the SEC
                  as indicated below:

                                       46




           Description                                                                         Exhibit No.
           -----------------------------------------------------------------------    ------------------------------
                                                                                   
       3.1       Articles of Incorporation of the Company, as amended and             [Form 10-Q  filed  August 14,
                 restated*                                                            1996, Exhibit No. 1]
       3.2       Bylaws of the Company*                                               [Form S-18 filed  October 19,
                                                                                      1989, Exhibit No. 2]
         4       Specimen Certificate of the Company's Common Stock, no par value*    [Form S-18 filed  October 19,
                                                                                      1989, Exhibit No. 10]
      10.1       Merit Medical Systems, Inc. Long Term Incentive Plan (as amended     [Form 10-Q  filed  August 14,
                 and restated) dated March 25, 1996*                                  1996, Exhibit No. 2]
      10.2       Merit Medical Systems, Inc. 401(k) Profit Sharing Plan (as           [Form S-1 filed  February 14,
                 amended effective January 1, 1991*                                   1992, Exhibit No. 8]
      10.3       License Agreement, dated April 8, 1992 between the Company and       [Form S-1 filed  February 14,
                 Utah Medical Products, Inc.*                                         1992, Exhibit No. 5]
      10.4       Lease Agreement dated as of June 8, 1993 for office and              [Form  10-K  for  year  ended
                 manufacturing facility*                                              December  31,  1994,  Exhibit
                                                                                      No. 10.5]
      10.5       Amended and Restated Loan Agreement with Zions First National        [Form  10-K  for  year  ended
                 Bank dated August 11, 1999                                           December  31,  1995,  Exhibit
                                                                                      No. 10.5

      10.6       Amendment to Loan Agreement with Zion's First National Bank          [Form  10-K  for  year  ended
                 3/11/2002                                                            December  31,  2000,  Exhibit
                                                                                      No. 10.10]

      10.7       Fifth Amendment to Loan Agreement with Zions First National Bank
                 Date November 15, 2002                                               Filed herewith

      10.8       Employment agreement between the Company and Fred P. Lampropoulos    Filed herewith

      10.9       Employment agreement between the Company and Kent W. Stanger         Filed herewith

     10.10       Employment agreement between the Company and B. Leigh Weintraub      Filed herewith

     10.11       Employment agreement between the Company and Brian Ferrand           Filed herewith

      23.1       Consent of Independent Auditors                                      Filed herewith

      99.1       Certification of Chief Executive Office                              Filed herewith

      99.2       Certification of Chief Financial Officer                             Filed herewith

* These exhibits are incorporated herein by reference.

                                       47


                                   SIGNATURES

              Pursuant  to  the  requirements  of  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, on March
29, 2003.

              MERIT MEDICAL SYSTEMS, INC.



              By:  /s/:  FRED P. LAMPROPOULOS, PRESIDENT
                 -------------------------------------------
                         Fred P. Lampropoulos, President and
                         Chief Executive Officer



                   ADDITIONAL SIGNATURE AND POWER OF ATTORNEY

                  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 March 28, 2003. In addition,
each person whose signature to this report appears below hereby  constitutes and
appoints Fred P. Lampropoulos and Kent W. Stanger, and each of them, as his true
and lawful attorney-in-fact and agent, with full power of substitution,  to sign
on his behalf  individually  and in the capacity stated below and to perform any
acts  necessary to be done in order to file all  amendments  and  post-effective
amendments to this report,  and any and all  instruments  or documents  filed as
part of or in connection with this report or the amendments  thereto and each of
the  undersigned  does hereby ratify and confirm all that said  attorney-in-fact
and agent, or his substitutes, shall do or cause to be done by virtue hereof.

     Signature                                 Capacity in Which Signed
     ---------                                 ------------------------

/s/:  FRED P. LAMPROPOULOS       President, Chief Executive Officer and Director
----------------------------
      Fred P. Lampropoulos
      March 28,2003

/s/:  KENT W. STANGER            Chief Financial Officer, Secretary, Treasurer
----------------------------     and Director (Principal financial and
      Kent W. Stanger            accounting  officer)
      March 28,2003

/s/:  RICHARD W. EDELMAN         Director
----------------------------
     Richard W. Edelman
     March 28,2003

/s/:  REX C. BEAN                Director
----------------------------
      Rex C. Bean
      March 28,2003

/s/:  JAMES J. ELLIS             Director
----------------------------
      James J. Ellis
      March 28,2003

/s/:  MICHAEL E. STILLABOWER     Director
----------------------------
      Michael E. Stillabower
      March 28,2003
                                       48


                                 CERTIFICATIONS

I, Fred P. Lampropoulos, certify that:

         1. I have  reviewed  this  annual  report on Form 10-K of Merit  Medial
Systems, 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 this 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,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: March 28,2003           /s/ Fred P. Lampropoulos
                              -------------------------------------------------
                                  Fred P. Lampropoulos, Chief Executive Officer




                                       49

I, Kent W. Stanger, certify that:

         1. I have  reviewed  this annual  report on Form 10-K of Merit  Medical
Systems, 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 this 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,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: March 28,2003               /s/ Kent W. Stanger
                                  --------------------------------------------
                                      Kent W. Stanger, Chief Financial Officer


                                      50