SECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly
period ended March 31, 2003

Commission file number
0-19841

i-STAT Corporation(Exact name of
Registrant as specified in its charter)

|                                                                                                  | 
|------------------------------------------------------------------------------------------------- | 
|Delaware                                                                                          | 
|(State or other jurisdiction of                                    incorporation or organization) | 

|                                           | 
|------------------------------------------ | 
|104 Windsor Center Drive, East Windsor, NJ | 
|(Address of Principle Executive Offices)   | 

(609) 443-9300 (Registrants
telephone number, including area code)

| | 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 whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of
the Act)
| | -----------------------------------------------------------------------------------------------------------

| | Yes
_____ No____X__
| | -------------------

| | The number of shares outstanding of each Issuer's classes of Common Stock as of the latest
practicable date.
| | ------------------------------------------------------------------------------------------------------------

|Class | May 1, 2003
|----- | -----------

|Common Stock, $0.15 par value | 20,137,342
|----------------------------- | ----------

---

i-STAT CORPORATION

TABLE OF CONTENTS

PART I        FINANCIAL INFORMATION

Item 1.     Financial Statements











PART II        OTHER INFORMATION









2

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# i-STAT CORPORATION
                                            CONSOLIDATED CONDENSED STATEMENTS OF
OPERATIONS

# (In thousands of
dollars, except share and per share data)
                                                              (unaudited)

|                                                |  | Three Months Ended |  
|----------------------------------------------- |  | ------------------ | -
|
|                                                |  |                    |  
|                                                |  |                    |  
|Net revenues:                                   |  |                   
|Related party net revenues                      |  |                    | $
|Third party net revenues                        |  |                    |  
|Other related party net revenues                |  |                    |  
|                                                |  |                    |  
|Total net revenues                              |  |                    |  
|                                               
|Cost of net revenues                            |  |                    |  
|                                                |  |                    |  
|Gross margin on total net revenues              |  |                    |  
|Operating expenses:                             |  |                   
|Research and development                        |  |                    |  
|Sales and marketing                             |  |                    |  
|General and administrative                      |  |                    |  
|                                                |  |                    |  
|Total operating expenses                        |  |                    |  
|                                                |  |                    |  
|Operating loss                                  |  |                    |  
|                                               
|Other income, net                               |  |                    |  
|                                                |  |                    |  
|Net loss                                        |  |                    |  
|                                               
|Accretion of Preferred Stock                    |  |                    |  
|Dividends on Preferred Stock                    |  |                    |  
|                                                |  |                    |  
|Net loss available to Common Stockholders       |  |                    |  
|                                                |  |                    |  
|Basic and diluted net loss per share            |  |                   
|available to Common Stockholders                |  |                    |  
|                                                |  |                    |  
|Shares used in computing basic and diluted net  |  |                   
|loss per share available to Common Stockholders |  |                    |  
|                                                |  |                    |  

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

3

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# i-STAT CORPORATION
                                                 CONSOLIDATED CONDENSED BALANCE SHEETS

# (In thousands of
dollars, except share and per share data)(unaudited)

|                                                                        |  | 
|----------------------------------------------------------------------- |  | 
|                                                                        |  | 
|Assets                                                                  |  | 
|Current assets:                                                         |  | 
|Cash and cash equivalents                                               |  | 
|Martketable securities, current                                         |  | 
|Accounts receivable from related party, net                             |  | 
|Accounts receivable, net                                                |  | 
|Inventories (Note 2)                                                    |  | 
|Prepaid expenses and other current assets                               |  | 
|                                                                        |  | 
|Total current assets                                                    |  | 
|Martketable securities, long-term                                       |  | 
|Plant and equipment, net of accumulated depreciation of $39,299 as      |  | 
|of March 31, 2003 and $36,130 as of December 31, 2002                   |  | 
|Other assets                                                            |  | 
|                                                                        |  | 
|Total assets                                                            |  | 
|                                                                        |  | 
|Liabilities, Redeemable Preferred Stock and Stockholders' Deficit       |  | 
|Current liabilities:                                                    |  | 
|Accounts payable                                                        |  | 
|Accrued expenses                                                        |  | 
|Related party liability, current                                        |  | 
|Deferred revenue, current                                               |  | 
|                                                                        |  | 
|Total current liabilities                                               |  | 
|Deferred revenue, non-current                                           |  | 
|Related party liability, non-current (Note 11)                          |  | 
|                                                                        |  | 
|Total liabilities                                                       |  | 
|                                                                        |  | 
|Series D Redeemable Convertible Preferred Stock, liquidation value      |  | 
|$33,270 in 2003 and $32,617 in 2002                                     |  | 
|Stockholders' deficit:                                                  |  | 
|Preferred Stock, $0.10 par value, shares authorized 7,000,000:          |  | 
|Series A Junior Participating Preferred Stock, $0.10 par                |  | 
|value, 1,500,000 shares authorized; none issued                         |  | 
|Series C Convertible Preferred Stock, 25,000 shares                     |  | 
|authorized; none issued                                                 |  | 
|Common Stock, $0.15 par value, 50,000,000 shares authorized;            |  | 
|20,157,927 shares issued and 20,117,110                                 |  | 
|shares outstanding as of March 31, 2003 and December 31, 2002           |  | 
|Treasury Stock, at cost, 40,817 shares                                  |  | 
|Additional paid-in capital                                              |  | 
|Loan to officer, net                                                    |  | 
|Accumulated deficit                                                     |  | 
|Accumulated other comprehensive loss                                    |  | 
|                                                                        |  | 
|Total stockholders' deficit                                             |  | 
|                                                                        |  | 
|Total liabilities, redeemable preferred stock and stockholders' deficit |  | 
|                                                                        |  | 

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

4

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# i-STAT CORPORATION
                                            CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

# (In thousands of dollars)
(unaudited)

|                                                    |  | Three Months Ended |  
|--------------------------------------------------- |  | ------------------ | -
|
|                                                    |  |                    |  
|Cash flows from operating activities:               |  |                   
|Net loss                                            |  |                    |  
|Adjustment to reconcile net loss to net cash        |  |                   
|provided by (used in) operating activities          |  |                    |  
|Change in assets and liabilities                    |  |                    |  
|                                                    |  |                    |  
|Net cash provided by (used in) operating activities |  |                    |  
|                                                    |  |                    |  
|                                                   
|Cash flows from investing activities:               |  |                   
|Purchases of marketable securities                  |  |                    |  
|Purchases of equipment                              |  |                    |  
|Other                                               |  |                    |  
|                                                    |  |                    |  
|Net cash used in investing activities               |  |                    |  
|                                                    |  |                    |  
|                                                   
|Cash flows from financing activities:               |  |                   
|Proceeds from stock options exercised               |  |                    |  
|Expenses related to private placement of Series D   |  |                   
|Redeemable Convertible Preferred Stock              |  |                   
|and Warrants                                        |  |                    |  
|                                                    |  |                    |  
|Net cash provided by financing activities           |  |                    |  
|                                                    |  |                    |  
|                                                   
|Effect of currency exchange rate changes on cash    |  |                    |  
|                                                    |  |                    |  
|Net decrease in cash and cash equivalents           |  |                    |  
|                                                    |  |                    |  
|Cash and cash equivalents at beginning of period    |  |                    |  
|                                                    |  |                    |  
|Cash and cash equivalents at end of period          |  |                    | $
|                                                    |  |                    |  

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

5

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# i-STAT CORPORATION

# NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS

(unaudited)

# 1.                  General

Basis
of Presentation

| | The information presented as of March 31, 2003, and for the three months ended March 31, 2003
and 2002, is unaudited, but includes all adjustments (consisting of normal recurring
accruals except for the inventory adjustment that was recorded in the first quarter of
2002, see Note 2) which the management of i-STAT Corporation (the Company)
believes to be necessary for the fair presentation of results for the periods presented.
The results for the interim periods are not necessarily indicative of results to be
expected for the year. The December 31, 2002 consolidated condensed balance sheet data was
derived from the audited financial statements, but does not include all disclosures
required by generally accepted accounting principles. These consolidated condensed
financial statements should be read in conjunction with the Companys audited
financial statements for the year ended December 31, 2002, including the Notes thereto,
which were included as part of the Companys Annual Report on Form 10-K, File No.
0-19841.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Reclassification

| | Certain reclassifications have been made to 2002 amounts in order to conform them to the 2003
presentation.
| | -----------------------------------------------------------------------------------------------------------

Marketable
Securities

| | Marketable securities, current and long-term, consist of fixed-income investments in United States
Treasury securities with a maturity of greater than three months from the date of
purchase. The Company applies Statement of Financial Accounting Standards
(SFAS) No. 115 Accounting for Certain Investments in Debt and Equity
Securities to its investments in marketable securities. The Companys
marketable securities are classified as held-to-maturity and are recorded at amortized
cost.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At March 31, 2003, marketable securities consisted of the following:
| | --------------------------------------------------------------------

|                                     | Amortized Cost | Market Value | Unrealized Gain
|------------------------------------ | -------------- | ------------ | ---------------
|
|U.S. Treasury securities - current   |                |              | $              
|U.S. Treasury securities - long-term |                |              |                
|                                     |                |              |                
|                                     |                |              | $              
|                                     |                |              |                

Basic
and Diluted Loss per Share

| | Basic loss per share is computed by dividing net loss available to common stockholders by the
weighted average number of Common Shares outstanding for the period. Diluted loss per
share reflects the potential dilution that could occur if securities or other contracts to
issue Common Stock were exercised or converted into Common Stock or resulted in the
issuance of Common Stock that then shared in the earnings of the Company. The Company has
not included potentially dilutive Common Shares in the diluted per-share computation for
the periods presented, as the result is antidilutive due to the Companys net loss.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Options to purchase 4,042,471 shares of common stock at $2.24  $32.58 per share, which
expire on various dates from May 2003 to February 2013, were outstanding at March 31,
2003. In addition, warrants to purchase 1,875,357.5 shares of Common Stock at $8.00 per
share were outstanding at March 31, 2003. The options and warrants were not included in
the computation of diluted loss per share because the effect would be antidilutive (i.e.,
decrease the net loss per share) due to the Companys net loss.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6

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Comprehensive
Income

| | SFAS No. 130, Reporting Comprehensive Income, requires certain items to be included
in other comprehensive income. The only component of accumulated other comprehensive
income (loss) for the Company is foreign currency translation adjustments resulting from
the translation of the financial statements of the Companys Canadian subsidiary.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                   | Three Months | Ended March 31, | 
|---------------------------------- | ------------ | --------------- | 
|
|
|Net loss                           |              |                 | 
|Other comprehensive income (loss): |              |                
|Foreign currency translation       |              |                 | 
|                                   |              |                 | 
|Comprehensive loss                 |              |                 | 
|                                   |              |                 | 

Foreign Currency Translation/Transactions

| | In general, balance sheet amounts from the Companys Canadian subsidiary have been
translated using exchange rates in effect at the balance sheet dates and the resulting
translation adjustments have been included in the accumulated other comprehensive loss as
a separate component of Consolidated Stockholders Deficit. The Statements of
Operations from the Companys Canadian subsidiary have been translated using the
average monthly exchange rates in effect during each period presented.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Effective May 31, 2002, as a result of repayment of a portion of intercompany debt owed by the
Companys Canadian subsidiary and that subsidiarys deemed ability and intent to
repay the remaining intercompany debt, the Company is required to treat such intercompany
debt as short-term in accordance with SFAS No. 52 Foreign Currency
Translation. SFAS No. 52 requires the Company to record the impact of foreign
currency gains and losses on short-term intercompany debt in the Companys results of
operations. Foreign currency gains of approximately $1.4 million were recorded in
other income, net for the three months ended March 31, 2003. These gains were
primarily the result of the impact of the exchange rate between U.S. dollars and Canadian
dollars on the debt owed by the Companys Canadian subsidiary to the Company.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Stock
Based Compensation

| | The Company applies the provisions of Accounting Principles Board Opinion No. 25 (APB
25) and related Interpretations in accounting for its stock based compensation
plans. Accordingly, compensation expense has been recognized in the financial statements
in respect to the above plans to the extent that the fair market value of the
Companys common stock exceeds the exercise price of the stock option on the date of
grant. During the three months ended March 31, 2003, there were no stock option grants
with exercise prices below the fair market value of the Companys common stock on the
date of grant. Had compensation costs for the above plans been determined based on the
fair value at the grant dates for awards under those plans consistent with the method of
SFAS No. 123, Accounting for Stock Based Compensation, the Companys net
loss and net loss per share would have been increased to the pro forma amounts below:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

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|In thousands of dollars, except per share data     | March 31, |  | 
|-------------------------------------------------- | --------- |  | 
|
|                                                   |           |  | 
|Reported net loss available to Common Stockholders |           |  | 
|Proforma compensation expense under SFAS 123       |           |  | 
|Proforma net loss available to Common Stockholders |           |  | 
|Reported basic and diluted net loss per share      |           |  | 
|Proforma basic and diluted net loss per share      |           |  | 

| | As options vest over a varying number of years, and awards are generally made each year,
the proforma  impacts shown here may not be  representative  of future pro forma
expense amounts due to the annual grant of options by the Company.  The proforma
additional compensation  expense of approximately  $0.8 million and
 appproximately $0.9 million for the quarter ended March 31, 2003 and 2002,
 respectively, was calculated based on the fair value of each option grant using the
 Black-Scholes model with the following weighted average assumptions used for
grants:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  | 
|----------------------- |  | 
|                        |  | 
|                        |  | 
|Dividend yield          |  | 
|Expected volatility     |  | 
|Risk free interest rate |  | 
|Expected option lives   |  | 

2.                   Inventories

| | Inventories
consist of the following:
| | -------------------------------------

|(In thousands of dollars) | March 31, 2003 | December 31, 2002
|------------------------- | -------------- | -----------------
|
|
|Raw materials             |                |                  
|Work-in-process           |                |                  
|Finished goods            |                |                  
|                          |                |                  
|                          |                |                  
|                          |                |                  

# 3.               Commitments and
Contingencies

| | The Company and Abbott Laboratories (Abbott) are in disagreement over the amount
of money Abbott is entitled to for the sharing of certain cartridge production cost
savings resulting from increases in the volume of cartridges sold during the term of the
Abbott Marketing and Distribution Agreement (the Abbott Distribution
Agreement). This disputed item relates to different interpretations of certain terms
of the Abbott Distribution Agreement. Additionally, the Company and Abbott are in
disagreement over the amount of money the Company is entitled to for the development,
production, maintenance and support of certain software products sold by Abbott during the
term of the Abbott Distribution Agreement. If these disagreements are not resolved
amicably, the Abbott Distribution Agreement states that they must be resolved through
binding arbitration. Management of the Company believes that Abbotts position on
both of these issues in dispute are without merit and that, in the event that these issues
are resolved through arbitration, the Company will not incur any additional liability to
Abbott. The disagreement regarding the sharing of certain cartridge production cost
savings resulting from an increase in sales volume over the past several years is
approximately $1.3 million at March 31, 2003, and if this matter is resolved in favor of
Abbott, which management of the Company believes is unlikely, the Companys cost of
goods sold would increase by up to the amount in dispute. The disagreement regarding
payment for the development, production, maintenance, and support of certain software sold
by Abbott over the past several years is approximately $0.8 million at March 31, 2003, and
if this matter is resolved in favor of the Company, the Companys cost of goods sold
would decrease by up to the amount in dispute. Such adjustment would be made when, and if,
it is determined that an unfavorable outcome to the Company is probable, or, in the case
of a payment of the disputed amounts by Abbott, when payment is received by the Company.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

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# 4.               Related Party
Transactions

| | On July 25, 2002, the Company announced its decision to allow the Abbott Distribution
Agreement to expire effective December 31, 2003. As a result, the Company is obligated to
make the following payments to Abbott on the dates noted: (a) on December 31, 2003, a $5.0
million one-time termination fee, (b) on December 31, 2003, approximately $5.0 million
representing the unrecognized portion of a $25.0 million prepayment received from Abbott,
(c) early in 2004, approximately $2.0 million to repurchase inventory and equipment from
Abbott, and (d) on December 31, 2004, and on each December 31 thereafter through 2008, for
a total of five unequal residual payments based upon Abbotts net sales of the
Companys products during 2003, approximately $47.0 million in the aggregate. The
Company recognized the $5.0 million one-time termination fee and the $47.0 million in
estimated residual payments as expense in the third quarter of 2002. Since the Abbott
residual payments are based on Abbotts actual net sales during 2003, the estimated
liability for these residual payments may change as the actual net sales become known.
There was no change to the estimate in the first quarter of 2003. These charges had a
material impact on the Companys results of operations and these payments will have a
material impact on the Companys future cash flows.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Company recorded approximately $12.9 million and approximately $11.6 million of net
product sales to Abbott during the three months ended March 31, 2003 and 2002,
respectively. Other related party revenues from Abbott were approximately $0.2 million in
both of the three-month periods ended March 31, 2003 and 2002. The other related party
revenues from Abbott consist of amounts reimbursed by Abbott for services performed by the
Companys implementation coordinators.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 5.               FUSO Pharmaceutical
Industries, Ltd. (FUSO) Distribution Agreement

| | In January 2003, the Company and FUSO entered into a new Distribution Agreement (the
FUSO Distribution Agreement). The FUSO Distribution Agreement extends
FUSOs current non-exclusive distribution rights in Japan through December 31, 2003
and grants exclusive distribution rights in Japan from January 1, 2004 through December
31, 2008, subject to FUSO meeting certain sales milestones. During the first quarter of
2003, FUSO paid $2.0 million for marketing support throughout the exclusive term of the
FUSO Distribution Agreement. The $2.0 million payment is included in cash and cash
equivalents. The $2.0 million payment is refundable under certain circumstances until the
exclusive term of the FUSO Distribution Agreement takes effect January 1, 2004. The $2.0
million payment will be recognized as revenue ratably over the five-year term of the FUSO
Distribution Agreement. In addition, FUSO is expected to pay an additional $11.0 million
in October 2003 as a prepayment that will be offset against future purchases of
cartridges.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 6.                Stock Options

Option
Program Description

| | As incentives to Company personnel and others, the Board of Directors from time to time
grants options to purchase shares of the Companys Common Stock. Most options are
granted under the 1985 Stock Option Plan or Equity Incentive Plan (the Plans).
Both Plans have been approved by the Companys stockholders. The maximum number of
issuable shares of Common Stock under the Plans is 7,300,000 of which 1,574,781 are
available for grant at March 31, 2003. Options under the 1985 Stock Option Plan can be
granted until November 26, 2005, and options under the Equity Incentive Plan can be
granted until March 31, 2008. The exercise price of an option is generally based upon the
fair market value of the Companys Common Stock at the time of the grant, as
determined by utilizing the closing price of the Companys Common Stock on the day
prior to the date of grant. In general, the Company issues stock options that vest
annually over a period of at least three years but not longer than five years. In
addition, the Company has in the past, and may in the future, issue stock options with
performance-based acceleration provisions. Acceleration of vesting can only occur if
certain clearly defined and objective goals are met. These stock options with accelerated
vesting are treated as fixed awards in accordance with APB 25 and Financial Accounting
Standards Board Interpretation No. 44. Unexercised options issued under the Plans
generally expire ten years from the date of grant or three months following termination of
the optionees employment, whichever occurs first.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

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General
Option Information

| | The table below is a summary of stock option activity for the quarter ended March 31, 2003.
| | -------------------------------------------------------------------------------------------

|                                 |  | Options   |  | Option
Activity |   | Weighted
Average
Exercise Price
per Share |       | Weighted
Average
Black-Scholes
Value per Option
|-------------------------------- |  | --------- |  | --------------- | - | ----------------------------------------- | ----- | -----------------------------------------------
|Outstanding at December 31, 2002 |  | 4,222,028 |  |                 |   | $                                         | 9.18  |                                                
|Exercisable at December 31, 2002 |  | 1,592,672 |  |                 |   | $                                         | 11.97 |                                                
|2003 Activity:                   |  |           |  |                 |   |                                           |       |                                                
|Options granted                  |  |           |  | 241,739         |   | $                                         | 3.88  |                                                
|Options exercised                |  |           |  |                |   |                                           |      |                                                
|Options forfeited                |  |           |  | (418,796        | ) | $                                         | 18.34 |                                                
|Options expired                  |  |           |  | (2,500          | ) | $                                         | 6.13  |                                                
|Outstanding at March 31, 2003    |  | 4,042,471 |  |                 |   | $                                         | 7.91  |                                                
|Exercisable at March 31, 2003    |  | 1,820,454 |  |                 |   | $                                         | 10.45 |                                                

| | 
| | 

| | The
weighted average remaining contractual lives of outstanding options at March 31, 2003 was
approximately 7.46 years.
| | -----------------------------------------------------------------------------------------------------------------------

| | The following table summarizes information about stock options outstanding at March 31,
2003.
| | ---------------------------------------------------------------------------------------------

|                          |               | Options Outstanding |           | Options Exercisable
|------------------------- | ------------- | ------------------- | --------- | -------------------
|
|In the Money Options (1): |               |                     |           |                    
|                          | $2.24$4.41   |                     | 1,192,739 |                    
|Out of the Money Options: |               |                     |           |                    
|                          | $5.08$6.44   |                     | 1,184,537 |                    
|                          | $7.89$10.81  |                     | 858,766   |                    
|                          | $11.81$17.96 |                     | 600,901   |                    
|                          | $21.00$32.58 |                     | 205,528   |                    
|                          |               |                     |           |                    
|                          | $2.24$32.58  |                     | 4,042,471 |                    
|                          |               |                     |           |                    

(1) In-the-money options are those
options with an exercise price less than the fair market value closing price of $5.07 at
the end of the quarter.

10

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Options
Granted to Executive Officers

| | The following table details option grants to executive officers during the quarter ended March 31, 2003:
| | --------------------------------------------------------------------------------------------------------

Individual Grants

|                   |  |  |        |  |      |   |   |            |  | Potential Realizable
Value at
Assumed Annual
Rates of Stock
Price Appreciation
for Option Term ($)
|------------------ |  |  | ------ |  | ---- | - | - | ---------- |  | --------------------------------------------------------------------------------------------------
|
|
|
|
|William P. Moffitt |  |  |       |  |     |   |   |           |  |                                                                                                   
|Bruce F. Basarab   |  |  | 6,219  |  | 2.57 | % | $ | 3.87/Share |  |                                                                                                   
|Noah Kroloff       |  |  | 6,468  |  | 2.68 | % | $ | 3.87/Share |  |                                                                                                   
|Lorin J. Randall   |  |  | 10,883 |  | 4.50 | % | $ | 3.87/Share |  |                                                                                                   
|Michael Zelin      |  |  |       |  |     |   |   |           |  |                                                                                                   

| | The following table details option exercises during the quarter ended March 31, 2003 and remaining holdings of executive
officers:
| | ----------------------------------------------------------------------------------------------------------------------------------

|                   |  |   |  |   |  | Number of Securities
Underlying Unexercised
Options at March 
31, 2003 |  | Values of Unexercised
In-the-Money Options
at March 31,
2003
|------------------ |  | - |  | - |  | ---------------------------------------------------------------------- |  | ------------------------------------------------------------
|
|
|
|William P. Moffitt |  |  |  |  |  | 91,956                                                                 |  | 379,735                                                     
|Bruce F. Basarab   |  |  |  |  |  |                                                                       |  | 126,219                                                     
|Noah Kroloff       |  |  |  |  |  | 142,605                                                                |  | 85,778                                                      
|Lorin J. Randall   |  |  |  |  |  |                                                                       |  | 95,883                                                      
|Michael Zelin      |  |  |  |  |  | 177,388                                                                |  | 164,482                                                     

11

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# i-STAT CORPORATIONMANAGEMENTS
DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

# General

i-STAT Corporation
(i-STAT or the Company), which was incorporated in Delaware in
1983, together with its wholly-owned subsidiaries, i-STAT Europe, i-STAT Canada Limited
and i-STAT Limited, develops, manufactures and markets medical diagnostic products for
blood analysis that provide health care professionals with immediate and accurate
critical, diagnostic information at the point of patient care.

The
Companys current products, known as the i-STAT® System,
consist of portable, hand-held analyzers and single-use, disposable cartridges, the
majority of which simultaneously perform different combinations of commonly ordered blood
tests in approximately two to three minutes. Coagulation and immunoassay tests take longer
than two to three minutes because of the nature of these tests. The i-STAT System
requires the user to perform several simple steps, the results of which can be easily
linked by infrared transmission to a health care providers information system. The
i-STAT System also includes peripheral components that enable the results of tests
to be transmitted by infrared means to both a proprietary information system for managing
the users point-of-care testing program and to the users information systems
for billing and archiving. The Company intends for the i-STAT System to become the
standard of care for blood analysis at the point of patient care, enabling rapid clinical
intervention, improved patient outcomes, and lower operational costs.

The
i-STAT System currently performs blood tests for sodium, potassium, chloride,
glucose, creatinine, urea nitrogen, hematocrit, ionized calcium, lactate,
Celite® ACT (activated clotting time), Prothrombin time, arterial blood
gases (pH, PCO2 and PO2), and bicarbonate, and derives certain other values,
such as total carbon dioxide, base excess, anion gap, hemoglobin and O2saturation, by calculation from the tests performed. The Company continues to engage
in research and development in order to improve its existing products and develop new
products based on the i-STAT System technology. During the fourth quarter of 2002,
the Company submitted a 510(k) filing with the Food and Drug Administration (the
FDA) for a cartridge that performs the kaolin-based activated clotting time
(kaolin ACT) test. Assuming timely regulatory approvals, the Company expects to begin
commercial introduction of the kaolin ACT in 2003. The Company is also conducting clinical
trials on its first immunoassay test, a test for troponin I, a cardiac marker capable of
indicating the degree of heart muscle damage. The Company expects to file a 510(k)
application with the FDA in the second quarter of 2003, and subject to regulatory
approval, to begin commercial introduction of its troponin I test in the second half of
2003.

Prior
to November 1, 1998, the Company marketed and distributed its products in the United
States and Canada principally through its own direct sales and marketing organization, in
Japan through FUSO Pharmaceutical Industries, Ltd. (FUSO), in Europe through
Hewlett-Packard Company and in Mexico, South America, China, Australia, and certain other
Asian and Pacific Rim countries, through selected distribution channels. Since November
1998, Abbott Laboratories (Abbott) has become, subject to certain pre-existing
rights of the Companys other international distributors, the exclusive worldwide
distributor of the Companys existing products and any new products the Company may
develop for use in the professionally attended human healthcare delivery market during the
term of the Abbott Marketing and Distribution Agreement (the Abbott Distribution
Agreement). The majority of the Companys net revenues are currently derived
from Abbott.

On
July 25, 2002, the Company announced its decision to allow the Abbott Distribution
Agreement to expire effective December 31, 2003. As a result, the Company is obligated to
make the following payments to Abbott on the dates noted: (a) on December 31, 2003, a $5.0
million one-time termination fee, (b) on December 31, 2003, approximately $5.0 million
representing the unrecognized portion of a $25.0 million prepayment received from Abbott,
(c) early in 2004, approximately $2.0 million to repurchase inventory and equipment from
Abbott, and (d) on December 31, 2004, and on each December 31 thereafter through 2008, for
a total of five unequal residual payments based upon Abbotts net sales of the
Companys products during 2003, approximately $47.0 million in the aggregate. The
Company recognized the $5.0 million one-time termination fee and the $47.0 million in
estimated residual payments as expense in the third quarter of 2002. Since the Abbott
residual payments are based on Abbotts actual net sales during 2003, the estimated
liability for these residual payments may change as the actual net sales become known.
There was no change to the estimate in the first quarter of 2003. These charges had a
material impact on the Companys results of operations and these payments will have a
material impact on the Companys future cash flows. The Company anticipates that the
profit margins presently being earned by Abbott as a result of the sale of the
Companys products will be earned by the Company commencing January 1, 2004, and will
provide the Company with the sufficient cash to fund these payments to Abbott. The Company
has begun to take actions to assume primary responsibility for the marketing and sale of
its products, effective January 1, 2004. These actions have included hiring additional
sales personnel, a vice president of medical affairs, a director of marketing, a general
manager in Europe and an executive vice president of commercial operations. The Company
anticipates further additions of sales and marketing personnel during 2003. In April 2003,
the Company created i-STAT Ltd., a wholly-owned subisidiary located in England, that will
facilitate direct sales to customers in certain countries in Europe starting in 2004. The
Company will incur additional costs and may recognize lower unit sales than anticipated as
a result of resuming direct distribution of its products, the combination of which may
adversely impact the Companys future results of operations and cash flows.

12

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In
January 2003, the Company and FUSO entered into a new Distribution Agreement (the
FUSO Distribution Agreement). The FUSO Distribution Agreement extends
FUSOs current non-exclusive distribution rights in Japan through December 31, 2003
and grants exclusive distribution rights in Japan from January 1, 2004 through December
31, 2008, subject to FUSO meeting certain sales milestones. During the first quarter of
2003, FUSO paid $2.0 million for marketing support throughout the exclusive term of the
FUSO Distribution Agreement. The $2.0 million payment is included in cash and cash
equivalents. The $2.0 million payment is refundable under certain circumstances until the
exclusive term of the FUSO Distribution Agreement takes effect January 1, 2004. The $2.0
million payment will be recognized as revenue ratably over the five-year term of the FUSO
Distribution Agreement. In addition, FUSO is expected to pay an additional $11.0 million
in October 2003 as a prepayment that will be offset against future purchases of
cartridges.

# Results of Operations

Three
Months Ended March 31, 2003

The
Company generated total net revenues of approximately $15.4 million and approximately
$14.4 million for the three months ended March 31, 2003 and 2002, respectively, including
international net revenues (as a percentage of total net revenues) of approximately $4.1
million (26.9%) and approximately $4.0 million (27.8%), respectively. Total net revenues
from Abbott represented approximately 85.0% and 81.5% of the Companys worldwide
total net revenues for the three months ended March 31, 2003 and 2002, respectively.

The
approximately $1.0 million, or 6.8%, increase in total net revenues was primarily due to
increased sales volume of the Companys cartridges, reflecting higher cartridge
consumption by existing hospital customers and the addition of new hospital customers.
Worldwide cartridge shipments increased by 28.6% to 3,459,075 units in the three months
ended March 31, 2003, from 2,688,825 units in the three months ended March 31, 2002. The
increase in worldwide cartridge volume was partially offset by a decrease in worldwide
average selling prices per cartridge, which decreased from approximately $3.47 in the
first quarter of 2002 to $3.24 in the first quarter of 2003. The decrease in worldwide
average selling prices per cartridge is primarily a result of the pricing arrangements
under the Abbott Distribution Agreement, which produce lower average selling prices as
volume increases. Analyzer revenue decreased $0.4 million, or 14.1%, as analyzer sales
volume declined from 1,175 units in the three months ended March 31, 2002 to 936 units in
the three months ended March 31, 2003. The decline was primarily evident in the domestic
market and is attributable to a greater volume of customers upgrading to newer versions of
the analyzer in the first quarter of 2002. Other related party revenues were approximately
$0.2 million in each of the three-month periods ended March 31, 2003 and March 31, 2002.
The other related party revenues from Abbott consist of amounts reimbursed by Abbott for
services performed by the Companys implementation coordinators.

13

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As
a result of the expiration of the Abbott Distribution Agreement, effective December 31,
2003, the Company expects a material increase in net revenues resulting from the increase
in the average sales price it will recognize as a result of selling the Companys
products directly to end-user customers and distributors. Currently, the Companys
average sales price is lower than the end-user average sales price or average sales price
to sub-distributors due to distribution discounts taken by Abbott.

The
gross margin on total net revenues was $3.9 million and $1.7 million in the three months
ended March 31, 2003 and 2002, respectively. Gross margin percentage on sales of products
and services, which excludes other net revenues such as royalties and
reimbursements of sales and marketing expenses, was 25.7% and 11.7% in the three months
ended March 31, 2003 and 2002, respectively. Gross margin percentage on the sale of
products generally improves with increased production and shipment volume of the
Companys cartridges and as a result of overhead absorption and improvements in
manufacturing productivity and yields. Gross margin percentage improved in the first
quarter of 2003 compared to the first quarter of 2002 primarily because of a charge of
approximately $1.6 million (11.2%) recorded in the first quarter of 2002 for the write-off
of certain cartridges in inventory and the replacement of certain cartridges in the field
that exhibited a higher than usual quality check rejection rate.

The
Company incurred research and development costs (as a percentage of total net revenues) of
approximately $1.7 million (11.2%) and approximately $1.9 million (13.1%) for the three
months ended March 31, 2003 and 2002, respectively. Research and development expenses
consist of costs associated with the personnel, material, equipment and facilities
necessary for conducting new product development.

The
Company incurred sales and marketing expenses (as a percentage of total net revenues) of
approximately $2.7 million (17.4%) and approximately $2.2 million (15.1%) for the three
months ended March 31, 2003 and 2002, respectively. Sales and marketing expenses consist
primarily of salaries, commissions, benefits, travel, business development and similar
expenditures for sales representatives, implementation coordinators and international
marketing support, as well as order entry, product distribution, technical services,
clinical affairs, product literature, market research, and other sales infrastructure
costs. The increase in sales and marketing expenses is attributable to the actions taken
to assume primary responsibility for the marketing and sale of its products, effective
January 1, 2004. These actions have included hiring additional sales personnel, a vice
president of medical affairs, an executive vice president of commercial operations, a
director of marketing and a general manager in Europe. The Company anticipates further
additions of sales and marketing personnel during 2003. The Company will incur additional
costs and may recognize lower unit sales than anticipated as a result of resuming direct
distribution of its products, the combination of which may adversely impact the
Companys future results of operations and cash flows. A portion of the costs of
implementation coordinators is reimbursed by Abbott, and as a result, approximately $0.2
million of reimbursement is included in total net revenues in each of the three month
periods ended March 31, 2003 and 2002.

The
Company incurred general and administrative expenses (as a percentage of total net
revenues) of approximately $1.6 million (10.5%) and approximately $1.5 million (10.6%) for
the three months ended March 31, 2003 and 2002, respectively. General and administrative
expenses consist primarily of salaries and benefits of personnel, office costs, legal and
other professional fees and other costs necessary to support the Companys
infrastructure. The Company expects that general and administrative costs will remain
relatively consistent with recent levels, subject to normal quarterly fluctuations, despite the actions taken to terminate the
Abbott Distribution Agreement and assume the primary responsibility for the marketing and
sale of its products.

Other
income, net, of $1.5 million and $0.2 million for the three months ended March 31, 2003
and 2002, respectively, primarily reflects interest income earned on cash and cash
equivalents, marketable securities, and for 2003, the net impact of certain foreign
currency gains and losses. Effective May 31, 2002, as a result of repayment of a portion
of intercompany debt owed by the Companys Canadian subsidiary and that
subsidiarys deemed ability and intent to repay the remaining intercompany debt, the
Company is required to treat such intercompany debt as short-term in accordance with
Statement of Financial Accounting Standards (SFAS) No. 52 Foreign
Currency Translation. SFAS No. 52 requires the Company to record the impact of
foreign currency gains and losses on short-term intercompany debt in the Companys
results of operations. Foreign currency gains of $1.4 million were recorded for the three
months ended March 31, 2003. These gains were the result of the impact of the exchange
rate between U.S. dollars and Canadian dollars on the debt owed by i-STAT
Corporations Canadian subsidiary to i-STAT Corporation. The amount of the gains and
losses could continue to be material in the event of significant changes in the exchange
rate between U.S. dollars and Canadian dollars.

14

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The
Company recorded accretion of Preferred Stock of approximately $0.1 million in each of the
three months ended March 31, 2003 and 2002. The accretion of Preferred Stock relates to
the issuance by the Company of Series D Redeemable Convertible Preferred Stock (the
Series D Stock) in December of 2001. The accretion recorded by the Company
reflects amortization of the difference between the carrying value and the redemption
value of such stock. The Series D Stock is being accreted over a period of ten years.

The
Series D Stock carries a dividend of 8%, which is either accrued or paid in cash
quarterly, at the option of the Company. The dividend on the Series D Stock was recorded
at its fair value of approximately $0.4 million and $0.5 million in the three months ended
March 31, 2003 and 2002, respectively. The dividend was not paid in cash and approximately
$0.7 million and $0.6 million were accrued and added to the liquidation preference of the
Series D Stock in the three months ended March 31, 2003 and 2002, respectively.

Net
loss available to Common Stockholders for the three months ended March 31, 2003 was
approximately $1.1 million, or 5 cents per basic and diluted share, compared with a net
loss of approximately $4.4 million, or 22 cents per basic and diluted share, for the first
quarter of 2002. The principal factors contributing to the decrease of approximately $3.3
million in the net loss available to Common Stockholders were the write-off of certain
cartridges in inventory and the replacement of certain cartridges in the field that
exhibited a higher than usual quality check rejection rate in the amount of approximately
$1.6 million in the first quarter of 2002, the exchange rate gains of $1.4 million related
to the inter-company debt owed by the Companys Canadian subsidiary and the increase
in total net revenues. The weighted average number of shares used in computing basic and
diluted net loss per share was approximately 20.117 million and 19.981 million in the 2003
and 2002 periods, respectively.

Liquidity
and Capital Resources

At
March 31, 2003, the Company had cash, cash equivalents and total marketable securities of
approximately $28.0 million, an increase of approximately $0.9 million from the December
31, 2002 balance of approximately $27.1 million. The increase primarily reflects the
receipt of $2.0 million from FUSO for marketing support throughout the five-year exclusive
term of the FUSO Distribution Agreement. The $2.0 million is included in cash and cash
equivalents and is refundable under certain circumstances until the exclusive term of the
FUSO Distribution Agreement takes effect January 1, 2004. This increase was partially
offset by purchases of equipment that totaled approximately $0.5 million in the first
quarter of 2003. Working capital decreased by approximately $3.6 million from
approximately $33.3 million to approximately $29.7 million during the same period because
of the purchase of $4.6 million of long-term marketable securities.

The
Company expects its existing cash, cash equivalents and total marketable securities to be
sufficient to meet its short-term obligations, liquidity and capital requirements. In
addition, the Company expects its existing cash, cash equivalents and total marketable
securities and cash expected to be generated from future operations, including an $11.0
payment due from FUSO under the new FUSO Distribution Agreement and the increased cash
flows from selling its products direct to end-users (the profit margins presently being
earned by Abbott as a result of the sale of the Companys products will be earned by
the Company commencing January 1, 2004), to be sufficient to meet all of its obligations
and capital requirements for the foreseeable future, including those payment obligations
resulting from the termination of the Abbott Distribution Agreement. However, numerous
factors may change this expectation, including the results of its sales and marketing
activities, the success of its new product development efforts, manufacturing
difficulties, manufacturing efficiencies, the results of dispute resolution proceedings,
competitive conditions, long-term strategic decisions, and other factors listed under
Factors That May Affect Future Results in the Companys 2002 Annual
Report on Form 10-K on file with the Securities and Exchange Commission. The Company
regularly monitors capital raising alternatives in order to take advantage of
opportunities to supplement its current working capital upon favorable terms, including
joint ventures, strategic corporate partnerships or other alliances and the sale of equity
and/or debt securities.

15

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International
sales are invoiced in U.S. dollars, however, the payment received from international
partners, primarily Abbott, are subject to changes in the value of the U.S. dollar
relative to local currencies. The price paid by customers to our international partners is
set in local foreign currencies. Therefore, when the value of foreign currencies changes
with respect to the U.S. dollar, the price paid by our partners to us changes. Price
reductions are limited, however, by guaranteed U.S. dollar minimum prices established for
each cartridge.

The
Companys cartridge manufacturing is conducted through a wholly-owned subsidiary in
Canada. Most manufacturing labor and overhead costs of this subsidiary are incurred in
Canadian dollars, while some raw material purchases are made in U.S. dollars. The
Companys Canadian operation is primarily funded by payments in U.S. dollars made by
the Company for cartridges purchased for resale to its customers. Since most of the
cartridge manufacturing expenses are incurred in Canadian dollars, the cost of products
sold and therefore, the Companys consolidated results of operations and cash flows
can be impacted by a change in exchange rates between the Canadian dollar and the U.S.
dollar.

The
impact of inflation on the Companys business has been minimal and is expected to be
minimal for the near-term.

Contingencies

The
Company and Abbott are in disagreement over the amount of money Abbott is entitled to for
the sharing of certain cartridge production cost savings resulting from increases in the
volume of cartridges sold during the term of the Abbott Distribution Agreement. This
disputed item relates to different interpretations of certain terms of the Abbott
Distribution Agreement. Additionally, the Company and Abbott are in disagreement over the
amount of money the Company is entitled to for the development, production, maintenance
and support of certain software products sold by Abbott during the term of the Abbott
Distribution Agreement. If these disagreements are not resolved amicably, the Abbott
Distribution Agreement states that they must be resolved through binding arbitration.
Management of the Company believes that Abbotts position on both of these issues in
dispute are without merit and that, in the event that these issues are resolved through
arbitration, the Company will not incur any additional liability to Abbott. The
disagreement regarding the sharing of certain cartridge production cost savings resulting
from an increase in sales volume over the past several years is approximately $1.3 million
at March 31, 2003, and if this matter is resolved in favor of Abbott, which management of
the Company believes is unlikely, the Companys cost of goods sold would increase by
up to the amount in dispute. The disagreement regarding payment for the development,
production, maintenance, and support of certain software sold by Abbott over the past
several years is approximately $0.8 million at March 31, 2003, and if this matter is
resolved in favor of the Company, the Companys cost of goods sold would decrease by
up to the amount in dispute. Such adjustment would be made when, and if, it is determined
that an unfavorable outcome to the Company is probable, or, in the case of a payment of
the disputed amounts by Abbott, when payment is received by the Company.

16

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Special Note on
Forward-Looking Statements

CERTAIN STATEMENTS IN THIS
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, MAY RELATE TO FUTURE EVENTS AND EXPECTATIONS AND AS SUCH CONSTITUTE
FORWARD-LOOKING STATEMENTS, WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. THE WORDS BELIEVES, ANTICIPATES,
PLANS, EXPECTS, AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES, AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS AND TO
VARY SIGNIFICANTLY FROM REPORTING PERIOD TO REPORTING PERIOD. SUCH FACTORS INCLUDE, AMONG
OTHERS, COMPETITION FROM EXISTING MANUFACTURERS AND MARKETERS OF BLOOD ANALYSIS PRODUCTS
WHO HAVE GREATER RESOURCES THAN THE COMPANY, ECONOMIC AND GEOPOLITICAL CONDITIONS
AFFECTING THE COMPANYS TARGET MARKETS, ACTS OF TERRORISM, THE UNCERTAINTY OF NEW
PRODUCT DEVELOPMENT INITIATIVES, THE ABILITY TO ATTRACT AND RETAIN KEY SCIENTIFIC,
TECHNOLOGICAL AND MANAGEMENT PERSONNEL, DEPENDENCE UPON LIMITED SOURCES FOR PRODUCT
MANUFACTURING COMPONENTS, UPON A SINGLE MANUFACTURING FACILITY AND UPON INNOVATIVE AND
HIGHLY TECHNICAL MANUFACTURING TECHNIQUES, MARKET RESISTANCE TO NEW PRODUCTS AND
POINT-OF-CARE-BLOOD DIAGNOSIS, INCONSISTENCY IN CUSTOMER ORDER PATTERNS, DOMESTIC AND
INTERNATIONAL REGULATORY CONSTRAINTS, UNCERTAINTIES OF INTERNATIONAL TRADE, PENDING AND
POTENTIAL DISPUTES CONCERNING OWNERSHIP OF INTELLECTUAL PROPERTY, AVAILABILITY OF CAPITAL
UPON FAVORABLE TERMS AND DEPENDENCE UPON AND CONTRACTUAL RELATIONSHIPS WITH STRATEGIC
PARTNERS, PARTICULARLY ABBOTT LABORATORIES. IN ADDITION, THE COMPANYS DECISION TO
END ITS ALLIANCE WITH ABBOTT LABORATORIES AND RESUME DIRECT DISTRIBUTION OF ITS PRODUCTS
INVOLVES ADDITIONAL RISKS AND UNCERTAINTIES THAT ARE DIFFICULT TO QUANTIFY AT THIS TIME.
FOR EXAMPLE, THE COMPANY MAY INCUR COSTS OR RECOGNIZE REVENUES IN CONNECTION WITH RESUMING
DIRECT DISTRIBUTION THAT ARE GREATER OR LESSER, RESPECTIVELY, THAN ANTICIPATED. SEE
ADDITIONAL DISCUSSION UNDER FACTORS THAT MAY AFFECT FUTURE RESULTS IN THE
COMPANYS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002, AND OTHER
FACTORS DETAILED FROM TIME TO TIME IN THE COMPANYS OTHER FILINGS WITH THE SECURITIES
AND EXCHANGE COMMISSION.

# Item 4. Controls and
Procedures

The
Chief Executive Officer and Chief Financial Officer of the Company (its principal officer
and principal financial officer, respectively) have concluded, based on their evaluation
as of a date within 90 days prior to filing this Report, that the Companys
disclosure controls and procedures are effective to ensure that information required to be
disclosed by the Company in the reports filed or submitted by it under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commissions rules and
forms, and include controls and procedures designed to ensure that information required to
be disclosed by the Company in such reports is accumulated and communicated to the
companys management, including the Chief Executive Officer and Chief Financial
Officer, as appropriate and allow timely decisions regarding required disclosure.

There
were no significant changes in the Companys internal controls or in other factors
that could significantly affect these controls subsequent to the date of this evaluation.

17

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# i-STAT CORPORATION

# PART II  OTHER
INFORMATION

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

The company held its Annual Meeting
of Stockholders on April 30, 2003, at which time two matters were submitted to a vote of
stockholders. A description of the matters voted upon and a voting tabulation for each
matter is as follows:

I.    
          Election of six members to the Board of Directors, each to serve until the next
          Annual Meeting.

|                        |  | Number of Votes |  |                 
|----------------------- |  | --------------- |  | ----------------
|
|Name of Nominee         |  | For             |  | Against/Withheld
|J. Robert Buchanan, M.D |  | 18,259,992      |  | 50,680          
|Sam H. Eletr, Ph.D      |  | 18,282,292      |  | 28,380          
|Daniel R. Frank         |  | 18,276,791      |  | 33,881          
|William P. Moffitt      |  | 18,237,130      |  | 73,542          
|Lionel N. Sterling      |  | 18,257,492      |  | 53,180          
|Anne M. VanLent         |  | 18,257,612      |  | 53,060          



II.     Ratification
 of the  appointment  of  PricewaterhouseCoopers  LLP, as  independent  accountants  to
audit the Company's  2003 financial          statements.

| |  |            |  |                 
| |  | ---------- |  | ----------------
|
| |  | For        |  | Against/Withheld
| |  | 18,271,030 |  | 27,050          

18

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# EXHIBIT INDEX

# ITEM 6. Exhibits and
Reports on Form 8-K

(a)
Exhibits

| |  |  | 3.1 |  | Restated
Certificate of Incorporation (Form S-8/S-3 Registration Statement, File No. 33-48889)*
| |  |  | --- |  | -----------------------------------------------------------------------------------------------

| |  |  | 3.2 |  | By-Laws
(Form 10-K for fiscal year ended December 31, 1996)*
| |  |  | --- |  | ------------------------------------------------------------

| |  |  | 3.3 |  | Certificate of Designation, Preferences and Rights of Series A Preferred Stock (Form 8-K,
dated July 10, 1995 and amended on September 11, 1995)*
| |  |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | 3.5 |  | Certificate of Designation, Preferences and Rights of Series C Preferred Stock (Form 10-Q
for the quarterly period ended September 30, 2002)*
| |  |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | 3.6 |  | Certificate of Amendment to the Restated Certificate of Incorporation (Form 10-Q for the
quarterly period ended September 30, 2002)*
| |  |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------

| |  |  | 3.7 |  | Certificate of Designation, Preferences and Rights of Series D Preferred Stock (Form 10-K
for fiscal year ended December 31, 2002.)*
| |  |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------

| |  |  | 4.1 |  | Stockholder Protection Agreement, dated as of June 26, 1995, between Registrant and First
Fidelity Bank, National Association (Form 8-K, dated July 10, 1995 and amended on
September 11, 1995)*
| |  |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | 10.1 |  | Employment
Agreement, dated April 1, 2003, between the Registrant and Michael P. Zelin
| |  |  | ---- |  | --------------------------------------------------------------------------------------

| |  |  | 99.1 |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
| |  |  | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | 99.2 |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
| |  |  | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

|* |  | These items are hereby incorporated by reference from the exhibits of the filing or report
indicated (except where noted, Commission File No. 0-19841) and are hereby made a part of
this Report.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** |  | Pursuant to Commission Release No. 33-8212, this certification will be treated as
accompanying this report on Form 10-Q and not filed as part of
such report for the purposes of Section 18 of the Exchange Act, or otherwise subject to
the liability of Section 18 of the Exchange Act and this certification will not be deemed
to be incorporated by reference into any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except to the extent that the registrant specifically
incorporates it by reference.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)
Reports on Form 8-K

| | On February 3, 2003, the Company filed a current Report on Form 8-K attaching a press release
pertaining to the signing of a new distribution agreement with Fuso Pharmaceutical
Industries, Ltd. which extended Fusos distribution rights for the
i-STAT®System in Japan.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On February 24, 2003, the Company filed a current Report on Form 8-K attaching a press
release that disclosed its financial results for the fourth quarter and full year 2002.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On March 24, 2003, the Company filed a current Report on Form 8-K furnishing sworn statements
of the Chief Executive Officer and Chief Financial Officer pursuant to Commission Order
No. 4-460, and the statements of the Chief Executive Officer and Chief Financial Officer
required under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On April 24, 2003, the Company filed a current Report on Form 8-K attaching a press release
that disclosed its financial results for the first quarter of 2003.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

19

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# SIGNATURES

Pursuant to the requirements 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.

DATE: May 8, 2003



i-STAT Corporation                               
                                                                          (Registrant)



BY: /s/William P.
Moffitt                                William P. Moffitt                                    President and Chief Executive Officer (Principal Executive
Officer)



BY: /s/Lorin J. Randall                                   Lorin J. Randall                                       
Senior Vice President of Finance,        Treasurer and Chief Financial Officer Principal Financial Officer and             
Accounting Officer

20

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CERTIFICATION

I, William P. Moffitt, certify that:

|1. |  | I have reviewed this quarterly report on Form 10-Q of i-STAT Corporation;
|-- |  | -------------------------------------------------------------------------

|2. |  | Based on my knowledge, this quarterly 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 quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Based on my knowledge, the financial statements, and other financial information
                    included in this quarterly report, fairly present in all material respects the
                    financial condition, results of operation and cash flows of i-STAT Corporation
                    as of, and for, the periods presented in this quarterly report;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | i-STAT Corporation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 i-STAT Corporation and we have:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|b) |  | evaluated the effectiveness of i-STAT Corporations disclosure controls and
               procedures as of a date within 90 days prior to the filing date of this quarterly
               report; and
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|c) |  | presented in this quarterly report our conclusions about the effectiveness of the
               disclosure controls and procedures based on our evaluation;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | i-STAT Corporations other certifying officers and I have disclosed, based
                    on our most recent evaluation, to i-STAT Corporations auditors and the
                    audit committee of i-STAT Corporation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 i-STAT Corporations ability to record,
               process, summarize and report financial data and have identified for i-STAT
               Corporation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 i-STAT Corporations internal controls; and
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. |  | i-STAT Corporations other certifying officers and I have indicated in this
                    quarterly 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:
May 8, 2003

/s/ William P. Moffitt

William
P. Moffitt President and Chief Executive Officer(Principal Executive Officer)

21

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CERTIFICATION

I, Lorin J. Randall, certify that:

|1. |  | I have reviewed this quarterly report on Form 10-Q of i-STAT Corporation;
|-- |  | -------------------------------------------------------------------------

|2. |  | Based on my knowledge, this quarterly 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 quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Based on my knowledge, the financial statements, and other financial information
                    included in this quarterly report, fairly present in all material respects the
                    financial condition, results of operation and cash flows of i-STAT Corporation
                    as of, and for, the periods presented in this quaterly report;
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | i-STAT Corporation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 i-STAT Corporation and we have:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|b) |  | evaluated the effectiveness of i-STAT Corporations disclosure controls and
               procedures as of a date within 90 days prior to the filing date of this quarterly
               report; and
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|c) |  | presented in this quarterly report our conclusions about the effectiveness of the
               disclosure controls and procedures based on our evaluation;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | i-STAT Corporations other certifying officers and I have disclosed, based
                    on our most recent evaluation, to i-STAT Corporations auditors and the
                    audit committee of i-STAT Corporation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 i-STAT Corporations ability to record,
               process, summarize and report financial data and have identified for i-STAT
               Corporation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 i-STAT Corporations internal controls; and
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. |  | i-STAT Corporations other certifying officers and I have indicated in this
                    quarterly 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:
May 8, 2003

/s/ Lorin J. Randall

Lorin J.
RandallSenior Vice President of Finance,Treasurer and Chief Financial Officer(Principal
Financial Officer and Accounting Officer)

22

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EXHIBIT 99.1

CERTIFICATION PURSUANT
TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

William P. Moffitt, as President and
Chief Executive Officer of i-STAT Corporation (the Company), certifies,
pursuant to 18 U.S.C. (S)1350, as adopted pursuant to (S)906 of the Sarbanes-Oxley Act of
2002, that:

(1)    
          the Companys Report on Form 10-Q for the quarter ended March 31, 2003 as
          filed with the Securities and Exchange Commission on the date hereof (the
          Report) fully complies with the requirements of Section 13(a) of the
          Securities Exchange Act of 1934; and

(2)    
          the information contained in the Report fairly presents, in all material
          respects, the financial condition and results of operations of the Company.

/s/ William P. Moffitt    _________________



William P. Moffitt              
                                                     President and Chief            Executive Officer               May 8, 2003

(A signed original of this written
statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to
i-STAT Corporation and will be retained by i-STAT Corporation and furnished to the
Securities and Exchange Commission or its staff upon request.)

23

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EXHIBIT 99.2

CERTIFICATION PURSUANT
TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Lorin J. Randall, as Senior Vice
President of Finance, Treasurer and Chief Financial Officer of i-STAT Corporation (the
Company), certifies, pursuant to 18 U.S.C. (S)1350, as adopted pursuant to
(S)906 of the Sarbanes-Oxley Act of 2002, that:

(1)    
          the Companys Report on Form 10-Q for the quarter ended March 31, 2003 as
          filed with the Securities and Exchange Commission on the date hereof (the
          Report) fully complies with the requirements of Section 13(a) of the
          Securities Exchange Act of 1934; and

(2)    
          the information contained in the Report fairly presents, in all material
          respects, the financial condition and results of operations of the Company.

/s/ Lorin J. Randall    _________________



Lorin J. Randall                  
                                                     Senior Vice President         of Finance,
                                                     Treasurer and Chief Financial Officer      May 8, 2003

(A signed original of this written
statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to
i-STAT Corporation and will be retained by i-STAT Corporation and furnished to the
Securities and Exchange Commission or its staff upon request.)

24

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