<PAGE>   1
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________
         TO ________________.

                          Commission file number 0-6523


                            MICRO THERAPEUTICS, INC.
        (exact name of small business issuer as specified in its charter)

            Delaware                                   33-0569235
  (State or other jurisdiction           (I.R.S. Employer Identification Number)
of incorporation or organization)

              1062 Calle Negocio #F, San Clemente, California 92673
                    (Address of principal executive offices)

                                 (714) 361-0616
                           (Issuer's telephone number)

                                 NOT APPLICABLE
              (Former name, former address and former fiscal year,
                          if changed since last report)

Check whether the issuer (1) filed all reports to be filed by Section 13 or
15(d) of the Exchange Act during the past 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
                                                        ---------     ---------

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.

<TABLE>
<CAPTION>
          Class                                       Outstanding at May 8, 1997
          -----                                       --------------------------
<S>                                                        <C>
Common Stock, $.001 par value                               6,417,808
</TABLE>




                               Page 1 of 21 Pages
                            Exhibit Index on Page 20


<PAGE>   2
                            MICRO THERAPEUTICS, INC.

                              INDEX TO FORM 10-QSB

<TABLE>  
<CAPTION>
                                                                                                    Page Number
                                                                                                    -----------
PART I.  FINANCIAL INFORMATION                                                                                 
<S>                                                                                                   <C>      
         Item 1.  Financial Statements                                                                         
                                                                                                               
                  Balance Sheet (unaudited) as of March 31, 1997 ................................       3
                                                                                                               
                  Statements of Operations (unaudited) for the three                                           
                  months ended March 31, 1996 and 1997...........................................       4
                                                                                                               
                  Statements of Cash Flows (unaudited) for the three months ended                              
                  March 31, 1996 and 1997........................................................       5
                                                                                                               
                  Notes to Financial Statements..................................................       6
                                                                                                               
         Item 2.  Management's Discussion and Analysis of Financial Condition                                  
                  and Results of Operations......................................................       7
                                                                                                               
PART II. OTHER INFORMATION                                                                                     
                                                                                                               
         Item 1.  Legal Proceedings..............................................................      18
                                                                                                   
         Item 6.  Exhibits and Reports on Form 8-K...............................................      18
                                                                                                               
SIGNATURES.......................................................................................      19
</TABLE>  






                                     - 2 -
<PAGE>   3
                            MICRO THERAPEUTICS, INC.

                                  BALANCE SHEET
                                 March 31, 1997
                                   (Unaudited)
                                  
                                  -----------

                                    ASSETS

<TABLE>
<S>                                                               <C>                       
Current assets:                                                                             
    Cash and cash equivalents                                     $  6,128,025              
    Short term investments                                           5,860,618              
    Accounts receivable                                                248,433              
    Inventories                                                        520,299              
    Prepaid expenses and other current assets                          368,287              
                                                                  ------------              
                 Total current assets                               13,125,662              
                                                                                            
Property and equipment, net of accumulated                                             
  depreciation of $371,618                                             740,680              
Patents and licenses, net of accumulated                                               
  amortization of $24,460                                              350,536              
Other assets                                                            42,290              
                                                                  ------------              
                 Total assets                                     $ 14,259,168              
                                                                  ============              
                      LIABILITIES AND STOCKHOLDERS' EQUITY                                  
                                                                                            
Current liabilities:                                                                        
    Current portion of equipment line of credit                   $     54,522              
    Accounts payable                                                   307,241              
    Accrued liabilities, salaries and benefits                         479,530              
                                                                  ------------              
                 Total current liabilities                             841,293              
                                                                                            
Equipment line of credit                                               187,614              
                                                                  ------------              
                 Total liabilities                                   1,028,907              
                                                                                            
Commitments and contingencies                                                               
                                                                                            
Stockholders' equity:                                                                       
    Preferred stock $.001 par value, 5,000,000 shares 
       authorized, no shares issued and outstanding                                                     
    Common stock, $.001 par value, 20,000,000 shares 
       authorized; 6,398,633 shares issued and outstanding               6,399                                         
    Additional paid-in-capital                                      25,217,895              
    Unearned compensation                                             (346,344)             
    Accumulated deficit                                            (11,647,689)             
                                                                  ------------              
                 Total stockholders' equity                         13,230,261              
                                                                  ------------              
                 Total liabilities and stockholders' equity       $ 14,259,168              
                                                                  ============              
</TABLE>




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




                                     - 3 -
<PAGE>   4

                            MICRO THERAPEUTICS, INC.

                            STATEMENTS OF OPERATIONS
                 For The Quarters Ended March 31, 1996 and 1997
                                   (Unaudited)
                                   -----------

<TABLE>
<CAPTION>
                                                                1996            1997
                                                                ----            ----
<S>                                                         <C>             <C>        
Net Sales                                                   $   232,913     $   510,039
Cost of Sales                                                   336,950         490,317
                                                            -----------     -----------
             Gross margin (loss)                               (104,037)         19,722

Cost and expenses:
    Research and development                                    427,781       1,021,397
    Selling, general & administrative                           722,172       1,038,104
                                                            -----------     -----------
             Total costs and expenses                         1,149,953       2,059,501
                                                            -----------     -----------
             Loss from operations                            (1,253,990)     (2,039,779)

    Other income (expense), net                                  14,400         230,430
                                                            -----------     -----------
             Loss before provision for income taxes          (1,239,590)     (1,809,349)
                                                            -----------     -----------
Provision for income taxes                                                         (800)
                                                            -----------     -----------
             Net loss                                       $(1,239,590)    $(1,810,149)
                                                            ===========     ===========
Net loss per common share and common share
 equivalent                                                 $     (0.37)    $     (0.33)
                                                            ===========     ===========
Weighted average common shares and common share
 equivalents outstanding                                      3,375,000       5,524,000
                                                            ===========     ===========
</TABLE>

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






                                     - 4 -
<PAGE>   5

                            MICRO THERAPEUTICS, INC.

                            STATEMENTS OF CASH FLOWS
                 For The Quarters Ended March 31, 1996 and 1997
                                   (Unaudited)
                                   -----------

<TABLE>
<CAPTION>
                                                                   1996             1997
                                                                   ----             ----
<S>                                                            <C>              <C>
Cash flows from operating activities:
    Net loss                                                   $ (1,239,590)    $ (1,810,149)
    Adjustments to reconcile net loss to cash used in
     operating activities:

     Depreciation and amortization                                   42,001           86,579
     Compensation related to stock options vesting                                    29,874
     Gain on sale of investment                                                     (167,456)
     Change in operating assets and liabilities:
       Accounts receivable                                          (48,262)          (4,597)
       Inventories                                                  (99,329)         (88,677)
       Prepaid expenses and other assets                             (7,164)        (106,882)
       Accounts payable                                             (74,103)          91,719
       Accrued liabilities                                           94,778          136,022
                                                               ------------     ------------
                  Net cash used in operating activities          (1,331,669)      (1,833,567)

Cash flows from investing activities:
    Purchase of short-term investments                                            (5,860,618)
    Additions to property and equipment                             (40,871)        (108,400)
    Additions to patents and licenses                                (2,057)         (26,854)
                                                               ------------     ------------
                  Net cash used in investing activities             (42,928)      (5,995,872)

Cash flows from financing activities:
    Proceeds from sale of common stock                                            10,267,200
    Costs of equity issuances                                                       (494,190)
    Proceeds from exercise of stock options                                           23,900
    Borrowings on equipment line of credit                           54,766           15,465
    Repayments on equipment line of credit                           (2,027)         (12,058)
                                                               ------------     ------------
                  Net cash provided by financing activities          52,739        9,800,317
                  Net increase (decrease) in cash and cash
                    equivalents                                  (1,321,858)       1,970,878

Cash and cash equivalents at the beginning of the quarter         2,417,644        4,157,147
                                                               ------------     ------------
Cash and cash equivalents at the end of the quarter            $  1,095,786     $  6,128,025
                                                               ============     ============
Supplemental cash flow disclosures:
    Cash paid during the quarter for interest                  $      1,661     $      7,442
                                                               ============     ============
    Cash paid during the quarter for income taxes                               $        800
                                                                                ============
Supplemental schedule of noncash activities:
    Conversion of preferred stock to common stock                               $ 15,034,497
                                                                                ============
</TABLE>





The accompanying notes are an integral part of these financial statements




                                     - 5 -
<PAGE>   6
                            MICRO THERAPEUTICS, INC.

                         NOTES TO FINANCIAL STATEMENTS

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

1.  Description Of The Company and Basis of Presentation:

    Micro Therapeutics, Inc. ("MTI" or the "Company") was incorporated on June
    11, 1993 in California and was reincorporated in Delaware in November 1996
    to develop, manufacture and market minimally invasive medical devices for
    diagnosis and treatment of neuro and peripheral vascular diseases.

    The unaudited financial statements of the Company presented herein, have
    been prepared pursuant to the rules of the Securities and Exchange
    Commission for quarterly reports on Form 10-QSB and do not include all of
    the information and footnote disclosures required by generally accepted
    accounting principles. These statements should be read in conjunction with
    the audited financial statements and notes thereto included in the Company's
    Form 10-KSB for the year ended December 31, 1996.

    Certain expense reclassifications have been made to the prior period
    statements of operations to conform to the current period presentation.

2.  Summary Of Significant Accounting Policies:

    Unaudited Interim Financial Information:
    ----------------------------------------

    The financial information at March 31, 1997 and for the three month periods
    ended March 31, 1996 and 1997 is unaudited but includes all adjustments
    (consisting only of normal recurring adjustments) which the Company
    considers necessary for a fair presentation of the financial position at
    such date and the operating results and cash flows for such periods. Results
    of the March 31, 1997 period are not necessarily indicative of the results
    for the entire year.

    Statements of Financial Accounting Standards Not Yet Adopted:
    -------------------------------------------------------------

    In February 1997, the Financial Accounting Standards Board issued Statement
    of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share."
    SFAS No. 128 requires companies to adopt its provisions for fiscal years
    beginning after December 15, 1997 and requires restatement of all prior
    period earnings per share (EPS) data presented. Earlier application is not
    permitted. SFAS No. 128 specifies the computation, presentation and
    disclosure requirements for EPS. The implementation of SFAS No. 128 is not
    expected to have a material effect on the EPS data presented by the Company.

3.  Sale Of Common Stock:

    In February 1997, the Company completed its initial public offering of its
    common stock in which 1,840,000 shares of common stock were sold generating
    net proceeds of approximately $10 million. In connection with the offering,
    all 3,612,664 outstanding shares of preferred stock were converted into
    equal shares of common stock.


                                      - 6 -
<PAGE>   7

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

         The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Financial
Statements and the related Notes thereto included elsewhere in this Quarterly
Report on Form 10-QSB. This Quarterly Report on Form 10-QSB contains
forward-looking statements which involve risks and uncertainties. The Company's
actual results may differ significantly from the results discussed in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, those discussed under "Certain Factors That May Affect
the Company's Business and Future Results."

OVERVIEW

         Since its inception in June, 1993, MTI has been primarily engaged in
the design, development and marketing of minimally invasive devices for
treatment of vascular disease. The Company has a limited history of operations
and has experienced significant operating losses since inception. Operating
losses are expected to continue as the Company expends substantial resources to
fund research and development, clinical trials, and regulatory approvals and
increased marketing and sales activities.

         The Company commenced U.S. commercial shipments of its first
thrombolytic infusion catheters in November 1994, but did not generate
significant revenues until it established a direct domestic sales force in the
second half of 1995. The Company currently sells its products in selected
international markets through a limited number of distributors. During September
1996 four of the Company's seven sales representatives left the Company to join
three other companies. In the fourth quarter of 1996 the Company hired four new
sales representatives to replace those who left plus one representative to cover
an additional territory. The temporary reduction of the sales force had the
effect of reducing the rate of growth of sales during the fourth quarter. The
Company plans to increase its direct sales force in the United States and has
hired a Director of International Operations in France to establish a sales
presence outside North America. Any increase in the Company's direct sales force
will require significant expenditures and additional management resources.

         To date virtually all the Company's revenues have been derived from
sales of its initial infusion catheters and related accessories. The Company
expects sales of these and similar products to provide the majority of the
Company's revenues at least through 1997. Clinical trials of the Cragg
Thrombolytic Brush are currently underway and market introduction is expected in
1997. However, there can be no assurance that FDA approval will be obtained or,
if obtained, that the Company will be successful in generating sales of this or
other future products. In addition, the Company expects to generate only minimal
revenues in the European Community (EC) nations until it obtains CE Mark
notification for its products and expands its sales and marketing activities in
the EC. The Company received CE Mark notification for its existing products in
April 1997.

         The Company's thrombolytic infusion catheters and sidehole infusion
wire are currently manufactured by the Company at its facility in San Clemente,
California. An end hole infusion wire and certain accessories are manufactured
by contract manufacturers. During 1996 the 




                                     - 7 -
<PAGE>   8

Company expanded its manufacturing facilities in order to provide sufficient
capacity for future products, and to better control product costs and quality.
Future revenues and results of operations may fluctuate significantly from
quarter to quarter and will depend upon, among other factors, actions relating
to regulatory and reimbursement matters, the extent to which the Company's
products gain market acceptance, the rate at which the Company establishes its
international sales and distribution network, the progress of clinical trials,
and the introduction of competitive products for diagnosis and treatment of
neuro and peripheral vascular disease. The Company's limited operating history
makes accurate prediction of future operating results difficult or impossible.
Although the Company has experienced sales growth in recent periods, there can
be no assurance that, in the future, the Company will sustain sales growth or
gain profitability on a quarterly or annual basis or that its growth will be
consistent with predictions made by securities analysts in the future.

         The Company currently manufactures product for stock and ships product
shortly after the receipt of orders, and anticipates that it will do so in the
future. Accordingly, the Company has not developed a significant backlog and
does not anticipate that it will develop a material backlog in the future.

RESULTS OF OPERATIONS

Three months ended March 31, 1997 and 1996

         Net sales for the quarter ended March 31, 1997 increased to $510,000
from $233,000 for the quarter ended March 31, 1996. The increase is the result
of the growth in sales of its infusion products. International sales represented
3% of total sales for the quarter ended March 31, 1997 and 10% in the quarter
ended March 31, 1996.

         Cost of sales increased to $490,000 for the quarter ended March 31,
1997 from $337,000 for the quarter ended March 31, 1996. The increase was
attributable to the increase in sales as well as non-recurring production costs
and inefficiencies associated with the rapid increase and expansion of
production operations, and the expansion of the Company's manufacturing
facilities in July 1996. The Company continues to incur high manufacturing
overhead costs relative to sales.

         Research and development expenses, which include regulatory and
clinical expenses, increased to $1.0 million for the quarter ended March 31,
1997 from $428,000 for the quarter ended March 31, 1996. The increase is
primarily attributable to increases in the number of employees and increased
expenditures related to development of the Liquid Embolic System ("LES") and the
Cragg Thrombolytic Brush. The Company expects to significantly increase research
and development costs in 1997, particularly for human clinical trials of the LES
and development of its initial lines of neuro micro catheters.

         Selling, general and administrative expenses increased to $1.0 million
for the quarter ended March 31, 1997 from $722,000 for the quarter ended March
31, 1996. This increase was primarily attributable to the result of the
expansion of the direct sales force in the United States, establishment of a
European office, development of marketing programs and materials in support of
new product introductions and addition of administrative personnel.




                                     - 8 -
<PAGE>   9
         Net interest and other income and expense increased to $230,000 for the
quarter ended March 31, 1997 from $14,000 for the quarter ended March 31, 1996
Included in other income for the quarter ended March 31, 1997, was nonrecurring
income of $167,000 from the sale of common stock received in a 1996 sale of a
privately held company in which MTI had held a minority interest. Net interest
income also increased for the quarter ended March 31, 1997 from the quarter
ended March 31, 1996 due to higher average cash balances in first quarter 1997.

         As a result of the items discussed above, the Company had a net loss of
$1.8 million for the quarter ended March 31, 1997 compared to $1.2 million for
the quarter ended March 31, 1996.

LIQUIDITY AND CAPITAL RESOURCES

         Since inception, the Company's cash expenditures have significantly
exceeded its sales, resulting in an accumulated deficit of $11.6 million at
March 31, 1997. The Company has funded its operations from incorporation through
March 1997 primarily through the private placement of equity securities, the net
proceeds from its February 1997 initial public offering and through interest
income and equipment financing. Through March 31, 1997, the Company had raised
approximately $15.3 million from the private placement of equity securities. In
February 1997 the Company completed an initial public offering of 1,840,000
shares of Common Stock, raising net proceeds of approximately $10 million.

         As of March 31, 1997, the Company had cash, cash equivalents and short
term investments of $12 million. Cash used in the Company's operations was $1.8
million for the quarter ended March 31, 1997 and $1.3 million for the quarter
ended March 31, 1996 This increase relates to costs associated with increased
levels of research and development activities, clinical trials, initial
marketing of new products in the United States, establishment of initial direct
marketing activities in Europe and additional general and administrative
expenses required to support increased operations. The Company's capital
expenditures were $108,000 during the quarter ended March 31, 1997 and $41,000
for the quarter ended March 31, 1996 which included equipment purchased under a
lease-line of credit entered into in 1996. The agreement under the lease-line of
credit provides financing on qualified equipment purchases through June 15, 1997
up to a maximum of $900,000 at an implicit rate of 14.23% for a 48 month term.
Cash provided under the capital financing agreement was $15,000 for the quarter
ended March 31, 1997 and $55,000 in the first quarter 1996. The Company plans to
finance its capital and operational needs principally from its existing capital
resources at March 31, 1997, and, to the extent available, from bank and lease
financing.

         MTI believes current resources will be sufficient to fund its
operations through 1997. However, the Company's future liquidity and capital
requirements will depend upon numerous factors, including the progress of the
Company's clinical research and product development programs, the receipt of and
the time required to obtain regulatory clearances and approvals, and the
resources the Company devotes to developing, manufacturing and marketing its
products. The Company's capital requirements will also depend on the demands
created by the operational and development programs including requirements for
domestic and international sales and marketing growth. The Company does not have
any commitments for any future expansion of its manufacturing facilities nor is
additional capacity anticipated for 1997. However, there can be no assurance
that the Company will not require additional financing within this time frame
and, therefore, may in the future seek to raise additional funds through bank
facilities, debt or equity 





                                     - 9 -
<PAGE>   10
offerings or other sources of capital. Additional funding may not be available
when needed or on acceptable terms, which would have a material adverse effect
on the Company's business, financial condition and results of operations.

CERTAIN FACTORS THAT MAY AFFECT THE COMPANY'S BUSINESS AND FUTURE RESULTS

         THIS QUARTERLY REPORT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT INVOLVE
RISKS AND UNCERTAINTIES. IN ADDITION, THE COMPANY MAY FROM TIME TO TIME MAKE
ORAL FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS OF THE COMPANY'S BUSINESS,
OPERATING RESULTS AND FINANCIAL CONDITION ARE UNCERTAIN AND MAY BE IMPACTED BY
THE FOLLOWING FACTORS, AMONG OTHERS, WHICH MAY CAUSE THE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENT. BECAUSE
OF THESE AND OTHER FACTORS THAT MAY AFFECT THE COMPANY'S BUSINESS, OPERATING
RESULTS AND FINANCIAL CONDITION, THE COMPANY'S PAST PERFORMANCE SHOULD NOT BE
CONSIDERED AN INDICATOR OF FUTURE PERFORMANCE AND INVESTORS SHOULD NOT USE
HISTORICAL RESULTS TO ANTICIPATE RESULTS OR TRENDS IN FUTURE PERIODS.

         Early Stage of Development. The Company has only recently commercially
introduced a number of products. Several of its key products are in the early
stage of development. The Liquid Embolic System ("LES") has not yet entered
clinical trials in the United States and the Company recently filed its 510(k)
market clearance application covering the Cragg Thrombolytic Brush.
Commercialization of the Company's products will depend on a number of factors,
including the Company's ability to demonstrate the safety and efficacy of such
products in the clinical setting. There can be no assurance that the Company's
products will be safe and effective in clinical trials or will ultimately be
cleared for marketing by U.S. or foreign regulatory authorities. Failure to
develop safe and effective products, which are approved for sale on a timely
basis would have a material adverse effect on the Company's business, operating
results and financial condition.

         Uncertainty of Market Acceptance. Even if the Company is successful in
developing safe and effective products that have received marketing clearance,
there can be no assurance that the Company's products will gain market
acceptance. Acceptance of the Company's LES and Cragg Thrombolytic Brush will
require the Company to satisfactorily address the needs of potential customers.
The target customers for the Company's products are interventional radiologists
and interventional neuroradiologists. However, there can be no assurance that
acceptance of the Company's products by interventional radiologists and
interventional neuroradiologists will translate into sales. In addition, no
assurance can be given that the Company's market share for its existing products
will grow or that its products which have yet to be introduced will be accepted
in the market. If the Company is unable to gain market acceptance of its current
and future products, the Company's business, operating results and financial
condition would be materially adversely affected.





                                     - 10 -
<PAGE>   11
         Rapid Technological Change; New Product Development. The markets for
the Company's products are characterized by rapidly changing technologies and
new product introductions and enhancements. In addition to the risks associated
with market acceptance of the Company's products, the Company's success will
depend to a significant extent upon its ability to enhance and expand the
utility of its products and to develop and introduce innovative new products
that gain market acceptance. Moreover, the Company may encounter technical
problems in connection with its product development that could delay
introduction of new products or product enhancements. There can be no assurance
that new technologies, products or drug therapies developed by others will not
reduce the demand for the Company's products. The Company maintains research and
development programs to continually improve its product offerings, including
adding interventional devices. There can be no assurance however that such
efforts will be successful or that other companies will not develop and
commercialize products based on new technologies that are superior in either
performance or cost-effectiveness to the Company's products.

         Intense Competition. The medical technology industry is characterized
by intense competition. The Company's products will compete with other medical
devices, surgical procedures and pharmaceutical products. A number of the
companies in the medical technology industry, including manufacturers of neuro
vascular and peripheral vascular products, have substantially greater capital
resources, larger customer bases, broader product lines, greater marketing and
management resources, larger research and development staffs and larger
facilities than the Company. Such entities have developed, or may develop,
additional products competitive with the Company's products. There can be no
assurance that the Company's competitors will not succeed in developing or
marketing technologies and products that are more readily accepted than those
developed or marketed by the Company or that such competing products would not
render the Company's technology and products obsolete or noncompetitive.
Although the Company believes that its products may offer certain advantages
over its competitors' currently-marketed products, earlier entrants in the
market often obtain and maintain significant market share relative to later
entrants. While the Company has designed its products to be cost effective and
more efficient than competing technologies, there can be no assurance that
competitors will not provide better methods or products at comparable or lower
costs. The Company may experience competitive pricing pressures that may
adversely affect unit prices and sales levels and, consequently, materially
adversely affect the Company's business, operating results and financial
condition.

         The Company also competes with other manufacturers of medical devices
for clinical sites to conduct human trials. The Company's ability to locate such
clinical sites on a timely basis could have a material adverse effect on the
Company's ability to conduct trials of its products which may be necessary to
obtain required FDA clearance or approval of such products. Such delays could
have a material adverse effect on the Company's business, operating results and
financial condition.

         Limited Operating History; Absence of Profitability. The Company was
incorporated in 1993. To date, the Company's business has generated limited
product sales. From its inception through March 31, 1997, the Company incurred
cumulative losses of approximately $11.6 million. The Company expects to incur
additional losses as it expands its research and development, manufacturing and
marketing efforts. No assurance can be given that the Company will achieve





                                     - 11 -
<PAGE>   12
significant sales of its products or that such sales will lead to profitability.
There can be no assurance that the Company will not encounter substantial delays
and unexpected expenses related to the introduction of its current and future
products, or the Company's research and development, manufacturing and marketing
efforts. Such delays or expenses could have a material adverse effect on the
Company's business, operating results and financial condition.

         Possible Need for Additional Funds; Uncertainty of Additional
Financing. The Company's operations to date have consumed substantial amounts of
cash, and the Company expects its capital and operating expenditures to
increase. The Company believes that its existing capital resources and
anticipated cash flow from planned operations should be adequate to satisfy its
capital requirements through 1997. There can be no assurance, however, that the
Company will not need additional capital before such time. The Company's need
for additional financing will depend upon numerous factors, including the extent
and duration of the Company's future operating losses, the level and timing of
future revenues and expenditures, market acceptance of new products, the results
and scope of ongoing research and development projects, competing technologies,
and market and regulatory developments. The Company currently has no committed
external sources of funds. To the extent that existing resources are
insufficient to fund the Company's activities, the Company may seek to raise
additional funds through public or private financing. There can be no assurance
that additional financing will be available or, if available, that it will be
available on acceptable terms. If additional funds are raised by issuing equity
securities, further dilution to then-existing stockholders may result. If
adequate funds are not available, the Company's business, operating results and
financial condition may be materially adversely affected.

         Dependence on Patents and Proprietary Technology. The success of the
Company will depend, in part, on its ability to obtain and maintain patent
protection for its products, to preserve its trade secrets and to operate
without infringing the proprietary rights of others. The patent position of a
medical device company may involve complex legal and factual issues. As of March
31, 1997, the Company held ten issued U.S. patents, one issued foreign patent
and has eighteen U.S. and eight foreign patent applications pending. The
Company's issued U.S. patents cover technology underlying the Cragg MicroValve,
infusion wire, Cragg Thrombolytic Brush, Liquid Embolic System and carotid and
intra-cerebral stent products. The expiration dates of these patents range from
February 2009 to December 2015. The pending claims cover various aspects of its
infusion catheter, infusion wire, Thrombolytic Brush, micro catheter, Liquid
Embolic System, carotid and intra-cerebral stent technologies and non-vascular
liquid embolic products. Each product area the Company is pursuing is covered by
at least one issued and pending patent. There can be no assurance that issued
patents will provide significant proprietary protection, that pending patents
will be issued, or that products incorporating the technology in issued patents
or pending applications will be free of challenge from competitors. There also
can be no assurance that patents belonging to competitors will not require the
Company to alter its technology and products, pay licensing fees or cease to
market or develop its current or future technology and products. The Company
also relies on trade secrets to protect its proprietary technology, and no
assurance can be given that others will not independently develop or otherwise
acquire equivalent technology or that the Company can maintain such technology
as trade secrets. In addition, the laws of some foreign countries do not protect
the Company's proprietary rights to the same extent as the laws of the United
States. The failure of 





                                     - 12 -
<PAGE>   13
the Company to protect its intellectual property rights could have a material
adverse effect on its business, operating results and financial condition.

         The medical device industry has been characterized by extensive
litigation regarding patents and other intellectual property rights. There can
be no assurance that infringement, invalidity, right to use or ownership claims
by third parties will not be asserted against the Company in the future.
Although patent and intellectual property disputes in the medical device
industry have often been settled through licensing or similar arrangements,
costs associated with such arrangements may be substantial and there can be no
assurance that necessary licenses would be available to the Company on
satisfactory terms or at all. Accordingly, an adverse determination in a
judicial or administrative proceeding or failure to obtain necessary licenses
could prevent the Company from manufacturing and selling its products, which
would have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, should the Company decide to
litigate such claims, such litigation could be expensive and time consuming,
could divert management's attention from other matters and could have a material
adverse effect on the Company's business, operating results and financial
condition, regardless of the outcome of the litigation.

         Limited Marketing Experience; Lack of Distribution. The Company's sales
force consists of nine people in the United States and one person in Europe all
of whom have been with the Company for a limited time. The Company believes it
will have to increase the number of sales personnel to fully cover its target
markets. Recently, there has been an increase in competition for sales personnel
experienced in interventional medical device sales and, as a result, the Company
has experienced significant turnover in its sales force. There can be no
assurance that the Company will be able to successfully respond to this
competition and attract, motivate and retain qualified sales personnel. The
Company intends to market and sell its products outside the United States
principally through distributors and believes that it will need to significantly
expand its distributor network or develop its own sales force. The Company's
ability to market its products in certain areas may depend on strategic
alliances with marketing partners. There can be no assurance that the Company
will be able to enter into distribution agreements on acceptable terms or at
all, that such agreements will be successful in developing the Company's
marketing capabilities or that the Company will be able to successfully develop
a direct sales force. Such failure could have a material adverse effect on the
Company's business, operating results and financial condition.

         Limited Manufacturing Experience. The Company's experience in
manufacturing its products is limited. The Company anticipates that it will be
necessary to expand its manufacturing capacity in connection with the continued
commercialization of its products. Such commercialization may require the
additional commitment of capital resources for facilities, tooling and equipment
and for leasehold improvements. The Company expects that the expansion of its
manufacturing capacity within the next eighteen months will be achieved from
improved efficiencies, automation and the acquisition of additional tooling and
equipment. The Company does not expect to require any expansion of its
manufacturing facilities during the next eighteen months. Any delay or inability
in expanding its manufacturing capacity or in obtaining the commitment of such
resources could materially adversely affect the Company's manufacturing ability,
business, operating results and financial condition.






                                     - 13 -
<PAGE>   14
         Government Regulation. The development, testing, manufacturing and
marketing of MTI's products in the United States are regulated by the U.S. Food
and Drug Administration ("FDA") as well as various state agencies. The FDA
requires governmental clearance of such products before they are marketed. The
process of obtaining FDA and other required regulatory clearances is lengthy,
expensive and uncertain. Moreover, regulatory clearance, if granted, may include
significant limitations on the indicated uses for which a product may be
marketed. Failure to comply with applicable regulatory requirements can result
in, among other things, warning letters, fines, suspensions of approvals,
product seizures, injunctions, recalls of products, operating restrictions and
criminal prosecutions. The restriction, suspension or revocation of regulatory
approvals or any other failure to comply with regulatory approvals or
requirements would have a material adverse effect on the Company's business,
financial condition and results of operations. The offer and sale of the
Company's current products required the submission of information to the FDA in
the form of a 510(k) pre-market notification to substantiate label claims and to
demonstrate "substantial equivalence" to a legally marketed Class I or II
medical device or a Class III medical device for which the FDA has not called
for premarket approvals ("PMAs"). Although the Company has received FDA
clearance for many of these products, there can be no assurance that the Company
will be able to obtain the necessary regulatory clearance for the manufacture
and marketing of enhancements to its existing products or future products either
in the United States or in foreign markets on a timely basis or at all. The
Company has made modifications which affect 19 of its products covered under
two 510(k) clearances, which modifications, the Company believes, do not
affect the safety or efficacy of the products and thus, under FDA guidelines, do
not require the submission of new 510(k) notices. There can be no assurance,
however, that the FDA would agree with any of the Company's determinations not
to submit a new 510(k) notice for any of these changes or would not require the
Company to submit a new 510(k) notice for any of the changes made to a device.
If the FDA requires the Company to submit a new 510(k) notice for any device
modification, the Company may be prohibited from marketing the modified device
until the 510(k) notice is cleared by the FDA. Utilization of the Company's LES
may require submission of a PMA application to the FDA, which generally involves
a substantially longer and less certain review process than that of a 510(k)
pre-market notification. In either event, such approvals or clearances may
require human clinical testing prior to any action on such products by the FDA.
Based on the information presented by the Company regarding the material
composition of the LES, the Company believes the LES would be regulated as a
device. There can be no assurance, however, that upon more detailed review of
the LES, the FDA will not at a later date determine that the LES should be
regulated as a drug. Such a change could significantly delay the commercial
availability of the LES and have a material adverse effect on the Company's
business, operating results and financial condition. Delays in receipt of, or
failure to receive, regulatory approvals or clearances to market such products,
or loss of previously received approvals or clearances, would materially
adversely affect the marketing of such products and the Company's business,
operating results and financial condition.

         In the European Union, the Company will be required to obtain the
certifications necessary to affix the CE Mark to its products by mid-1998 in
order to commence or continue sales in member countries of the European Union.
Although the CE Mark requirement for medical devices does not become effective
until June 1998, the Company's experience to date in European Union countries is
that the CE Mark is already necessary to achieve meaningful sales. The Company
received the certifications necessary to affix the CE Mark to its existing
products in April 1997. There can be no assurance, however, that the Company
will be able to obtain such 





                                     - 14 -
<PAGE>   15
certifications for future products in a timely manner, if at all. In addition,
federal, state, local and international government regulations regarding the
manufacture and sale of health care products and diagnostic devices are subject
to future change and additional regulations may be adopted which may materially
adversely affect the Company's business, operating results and financial
condition.

         Commercial distribution and clinical trials in most foreign countries
also are subject to varying government regulations which may delay or restrict
marketing of the Company's products. Any inability or delay in obtaining
approvals would materially adversely affect the Company's business, operating
results and financial condition.

         Manufacturers of medical devices for marketing in the United States are
required to adhere to applicable regulations setting forth detailed Good
Manufacturing Practices requirements, which include testing, control and
documentation requirements. The Company's manufacturing processes also are
subject to stringent federal, state and local regulations governing the use,
generation, manufacture, storage, handling and disposal of certain materials and
wastes. Although the Company believes that it has complied in all material
respects with such laws and regulations, the Company is subject to periodic
inspection to ensure its compliance with such laws and regulations. There can be
no assurance that the Company will not be required to incur significant costs in
the future in complying with manufacturing and environmental regulations, or
that the Company will not be required to cease operations in the event of its
continued failure to effect compliance.

         Risk of Product Liability Claims. The nature of the Company's business
exposes it to risk from product liability claims. The risk of such claims has
increased in light of a U.S. Supreme Court decision in 1996 concluding that the
FDA regulatory framework does not necessarily preempt personal injury actions
against medical device manufacturers. The Company currently maintains product
liability insurance for its products, with limits of $2 million per occurrence
and an annual aggregate maximum of $2 million. However, such coverage is
becoming increasingly expensive and there can be no assurance that the Company's
insurance will be adequate to cover future product liability claims, or that the
Company will be successful in maintaining adequate product liability insurance
at acceptable rates. Any losses that the Company may suffer from any liability
claims, and the effect that any product liability litigation may have upon the
reputation and marketability of the Company's products, may divert management's
attention from other matters and may have a material adverse effect on the
Company's business, operating results and financial condition.

         Dependence on Single Source Suppliers; Independent Contract
Manufacturers. The Company purchases certain components used in its products and
receives certain services with respect to its products from third parties. The
Company's dependence on third-party suppliers involves several risks, including
limited control over pricing, availability, quality and delivery schedules. Any
delays in delivery of such components or provision of such services or shortages
of such components could cause delays in the shipment of the Company's products,
which could cause the Company's business, operating results and financial
condition to be adversely affected. The Company's single-source components are
generally acquired pursuant to purchase orders placed in the ordinary course of
business, and the Company has no guaranteed supply arrangements with any of its
single-source suppliers. Because of the Company's reliance on these 





                                     - 15 -
<PAGE>   16
vendors, the Company may also be subject to increases in component costs which
could have a material adverse effect on its business, operating results and
financial condition. There can be no assurance that the Company will not
experience quality control problems, supply shortages or price increases with
respect to one or more of these components in the future. The establishment of
additional or replacement suppliers for certain of these components may delay
accessibility of such components as the Company qualifies such suppliers. Any
quality control problems, interruptions in supply or component price increases
with respect to one or more components could have a material adverse effect on
the Company's business, operating results and financial condition.

         The Company relies on independent contract manufacturers for the
manufacture and assembly of certain of its products and components. Reliance on
independent contract manufacturers involves several risks, including the
potential inadequacy of capacity, the unavailability of or interruptions in
access to certain process technologies and reduced control over product quality,
delivery schedules, manufacturing yields and costs. Such manufacturers have
possession of and at times title to molds for certain manufactured components of
the Company's products. Shortages of raw materials, production capacity
constraints or delays by the Company's contract manufacturers could negatively
affect the Company's ability to meet its production obligations and result in
increased prices for affected parts. Any such reduction, constraint or delay may
result in delays in shipments of the Company's products or increases in the
prices of components, either of which could have a material adverse effect on
the Company's business, operating results and financial condition. The Company
has no supply agreements with its current contract manufacturers and utilizes
purchase orders which are subject to supplier acceptance. The unanticipated loss
of any of the Company's contract manufacturers could cause delays in the
Company's ability to deliver product while the Company identifies and qualifies
a replacement manufacturer. There can be no assurance that current or future
independent contract manufacturers will be able to meet the Company's
requirements for manufactured products. Such an event would have a material
adverse effect on the Company's business, operating results and financial
condition.

         Dependence Upon Key Personnel. The Company is dependent to a
significant extent upon the contributions, experience and expertise of its
founders, certain members of its management team and key consultants. The
Company maintains a key-man life insurance policy in the amount of $1 million on
the life of George Wallace, the Company's President and Chief Executive Officer;
however, there can be no assurance that the Company's insurance is adequate. In
addition, the Company's success will depend upon its ability to attract and
retain additional highly qualified management, sales, technical, clinical and
consulting personnel, particularly as the Company increases its manufacturing
capability. The loss of the services of any of such key personnel or the
inability to attract and retain such personnel could have a material adverse
effect on the Company's business, financial condition and results of operations.

         Third-Party Reimbursement. In the United States, health care providers
such as hospitals and physicians that purchase medical devices generally rely on
third-party payors, principally federal Medicare, state Medicaid and private
health insurance plans, to reimburse all or part of the cost of therapeutic and
diagnostic procedures. With the implementation of Medicare's Prospective Payment
System for hospital inpatient care (Diagnosis Related Groups or "DRGs") in the
1980s, public and private payors began to reimburse providers on a fixed payment
schedule 





                                     - 16 -
<PAGE>   17
for patients depending on the nature and severity of the illness. Many tests and
procedures that would have been performed under cost-plus reimbursement formulas
are subject to scrutiny and must be justified in terms of their impact on
patient outcomes. As a result, the incentives are now to conduct only those
tests that will optimize cost-effective care.

         The Company could be materially adversely affected by changes in
reimbursement policies of governmental (both domestic and international) or
private healthcare payors to the extent any such changes affect reimbursement
for therapeutic or diagnostic procedures in which the Company's products are
used. Adverse changes in governmental and private third party payors' policies
toward reimbursement for such procedures would have a material adverse effect on
the Company's business, operating results and financial condition.

         Risks Associated with International Sales. To date, the Company has
derived very little revenue from international sales. The Company believes that
its future performance will be dependent in part upon its ability to increase
international sales. Although the perceived demand for certain products may be
lower outside the United States, the Company intends to continue to expand its
international operations and to enter additional international markets, which
will require significant management attention and financial resources. There can
be no assurance, however, that the Company will be able to successfully expand
its international sales. The Company's success in international markets will
depend on its ability to establish and maintain agreements with suitable
distributors, or establish a direct sales presence.

         Furthermore, international sales in general are subject to inherent
risks, including unexpected changes in regulatory requirements, fluctuating
exchange rates, difficulties in staffing and managing foreign sales and support
operations, additional working capital requirements, customs, duties, tariff
regulations, export license requirements, political and economic instability,
potentially limited intellectual property protection and difficulties with
distributors. In addition, sales and distribution of the Company's products
outside the United States are subject to extensive foreign government
regulation. The Company has in the past avoided losses due to fluctuating
exchange rates associated with international sales by selling its products in
U.S. dollars; however, the Company expects to sell products in selected markets
in local currency and thus be subject to currency exchange risks in association
with such sales. There can be no assurance that any of these factors will not
have a material adverse effect on the Company's future international sales and,
consequently, on the Company's business, operating results and financial
condition.

         Large-scale market acceptance of the Company's products will depend on
the availability and level of reimbursement in international markets targeted by
the Company. Reimbursement systems in international markets vary significantly
by country, and by region within some countries, and reimbursement approvals
must be obtained on a country-by-country basis. Many international markets have
government managed health care systems that govern reimbursement for new devices
and procedures. In most markets, there are private insurance systems as well as
government-managed systems. Obtaining reimbursement approvals in each country
can require 12-18 months or longer.

         Anti-Takeover Provisions. The Company's Certificate of Incorporation
provides for 5,000,000 authorized shares of Preferred Stock, the rights,
preferences, qualifications, limitations 





                                     - 17 -
<PAGE>   18
and restrictions of which may be fixed by the Board of Directors without any
further vote or action by the stockholders. In addition, the Company's stock
option plans provide for the acceleration of vesting of options granted under
such plans in the event of certain transactions which result in a change of
control of the Company. Further, Section 203 of the General Corporation Law of
Delaware prohibits the Company from engaging in certain business combinations
with interested stockholders. These provisions may have the effect of delaying
or preventing a change in control of the Company without action by the
stockholders, and therefore could materially adversely affect the price of the
Company's Common Stock.

         Possible Volatility of Stock Price. The stock market has from time to
time experienced significant price and volume fluctuations that are unrelated to
the operating performance of particular companies. These broad market
fluctuations may materially adversely affect the market price of the Company's
Common Stock. In addition, the market price of the shares of Common Stock is
likely to be highly volatile. Factors such as fluctuations in the Company's
results of operations, failure of such results of operations to meet the
expectations of public market analysts and investors, timing and announcements
of technological innovations or new products by the Company or its competitors,
FDA and foreign regulatory actions, developments with respect to patents and
proprietary rights, timing and announcements of developments, including clinical
trials related to the Company's products, public concern as to the safety of
technology and products developed by the Company or others, changes in health
care policy in the United States and internationally, changes in stock market
analyst recommendations regarding the Company, the medical device industry
generally and general market conditions may have a material adverse effect on
the market price of the Common Stock. In addition, it is likely that during a
future quarterly period, the Company's results of operations will fail to meet
the expectations of stock market analysts and investors and, in such event, the
Company's stock price could be materially and adversely effected.

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         The Company is not a party to any material legal proceeding.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (A)    EXHIBITS

                See Index to Exhibits on Page 20 of this Quarterly Report on
                Form 10-QSB.

         (B)    REPORTS ON FORM 8-K

                No reports on Form 8-K were filed by the Company during the
                quarterly period ended March 31, 1997, and none were required.


                                     - 18 -
<PAGE>   19

SIGNATURES

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

                                                     MICRO THERAPEUTICS, INC.


Date:  May 14, 1997                                  By: /s/ THOMAS BERRYMAN
                                                         -----------------------
                                                         Thomas Berryman
                                                         Chief Financial Officer


                                     - 19 -
<PAGE>   20


                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
================================================================================
Exhibit                                                                    Page
Number                              Description                           Number
================================================================================
<S>              <C>                                                        <C>
27.1             Financial Data Schedule
================================================================================
</TABLE>