Table of Contents





UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON,
 D.C. 20549

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FORM 10-Q

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(Mark
One)

|                                                    |   |                                                                                          
|--------------------------------------------------- | - | -----------------------------------------------------------------------------------------
|                                                    | x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  
|For the
 quarterly period ended March 31, 2009     
|                                                   
|OR                                                 
|                                                   
|                                                    | o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE SECURITIES EXCHANGE ACT OF 1934
|For the
 transition period from _______ to ________

Commission File Number: 0-27605

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VASCULAR SOLUTIONS, INC.

(Exact name of registrant as specified in
 its charter)

|                                                                |  |                                  
|--------------------------------------------------------------- |  | ---------------------------------
|Minnesota                                                       |  | 41-1859679                       
|(State or other jurisdiction of
 incorporation or organization) |  | (IRS Employer Identification No.)



|                                                                                                                                                                                                                                                                                                                                                              
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6464
 Sycamore Court                                                                                                                                                                                                                                                                                                                                          
|Minneapolis,
 Minnesota 55369                                                                                                                                                                                                                                                                                                                                 
|(Address of principal executive offices,
 including zip code)                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                              
|(763)
 656-4300                                                                                                                                                                                                                                                                                                                                               
|(Registrants telephone number, including
 area code)                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                              
|Not Applicable                                                                                                                                                                                                                                                                                                                                                
|(Former name, former address and former
 fiscal year, if changed since last report)                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                              
|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
 o                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                              
|Indicate by check mark whether the registrant is a large accelerated
 filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
 company. See the definitions of large accelerated filer, accelerated
 filer and smaller reporting company in Rule 12b-2 of the Exchange Act.                                                        

|                          |                            
|------------------------- | ---------------------------
|Large accelerated filer o | Accelerated filer x        
|Non-accelerated filer o   | Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes o     No x

The registrant had 16,182,319 shares of common stock, $.01 par value
per share, outstanding as of April 15, 2009.







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VASCULAR
SOLUTIONS, INC.

TABLE OF CONTENTS

|                               |          |                                                                                        |  |     
|------------------------------ | -------- | -------------------------------------------------------------------------------------- |  | ----
|                               |          |                                                                                        |  | Page
|                               |          |                                                                                        |  |     
|PART I. FINANCIAL
 INFORMATION |          |                                                                                       
|                               |          |                                                                                       
|                               | Item 1.  | Financial Statements (Unaudited)                                                       |  | 2   
|                               |          |                                                                                        |  |     
|                               |          | Consolidated Balance Sheets                                                            |  | 2   
|                               |          |                                                                                        |  |     
|                               |          | Consolidated Statements of Operations                                                  |  | 3   
|                               |          |                                                                                        |  |     
|                               |          | Consolidated Statements of Cash Flows                                                  |  | 4   
|                               |          |                                                                                        |  |     
|                               |          | Notes to Unaudited Consolidated Financial Statements                                   |  | 5   
|                               |          |                                                                                        |  |     
|                               | Item 2.  | Managements Discussion and Analysis of Financial Condition and
 Results of Operations |  | 13  
|                               |          |                                                                                        |  |     
|                               | Item 3.  | Quantitative and Qualitative Disclosures about Market Risk                             |  | 18  
|                               |          |                                                                                        |  |     
|                               | Item 4.  | Controls and Procedures                                                                |  | 19  
|                               |          |                                                                                        |  |     
|PART II. OTHER
 INFORMATION    |          |                                                                                       
|                               |          |                                                                                       
|                               | Item 1.  | Legal Proceedings                                                                      |  | 19  
|                               |          |                                                                                        |  |     
|                               | Item 1A. | Risk Factors                                                                           |  | 19  
|                               |          |                                                                                        |  |     
|                               | Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds                            |  | 19  
|                               |          |                                                                                        |  |     
|                               | Item 3.  | Defaults Upon Senior Securities                                                        |  | 20  
|                               |          |                                                                                        |  |     
|                               | Item 4.  | Submission of Matters to a Vote of Security Holders                                    |  | 20  
|                               |          |                                                                                        |  |     
|                               | Item 5.  | Other Information                                                                      |  | 20  
|                               |          |                                                                                        |  |     
|                               | Item 6.  | Exhibits                                                                               |  | 20  

1

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Table of Contents

PART
1. FINANCIAL INFORMATION

|        |                     
|------- | --------------------
|Item 1. | Financial Statements

VASCULAR SOLUTIONS, INC.Consolidated Balance Sheets

|                                                                                                      |  |                |             |                   |   |             |  
|----------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | ----------------- | - | ----------- | -
|                                                                                                      |  | March 31, 2009 |             | December 31, 2008 |  
|                                                                                                      |  | (unaudited)    |             | (see note)        |  
|Assets                                                                                                |  |                |             |                   |   |             |  
|Current
 assets:                                                                                      |  |                |             |                   |   |             |  
|Cash and cash equivalents                                                                             |  | $              | 8,057,000   |                   | $ | 7,209,000   |  
|Accounts receivable, net of reserves of
 $105,000 and $120,000 in 2009 and 2008, respectively         |  |                | 8,550,000   |                   |   | 8,706,000   |  
|Inventories                                                                                           |  |                | 10,270,000  |                   |   | 9,974,000   |  
|Prepaid expenses                                                                                      |  |                | 1,293,000   |                   |   | 1,045,000   |  
|Current portion of deferred tax assets                                                                |  |                | 2,680,000   |                   |   | 2,680,000   |  
|Total
 current assets                                                                                 |  |                | 30,850,000  |                   |   | 29,614,000  |  
|                                                                                                      |  |                |             |                   |   |             |  
|Property and
 equipment, net                                                                          |  |                | 3,857,000   |                   |   | 3,887,000   |  
|Intangible
 assets, net                                                                               |  |                | 193,000     |                   |   | 193,000     |  
|Deferred tax
 assets, net of current portion and liabilities                                          |  |                | 9,955,000   |                   |   | 10,486,000  |  
|Total assets                                                                                          |  | $              | 44,855,000  |                   | $ | 44,180,000  |  
|                                                                                                      |  |                |             |                   |   |             |  
|Liabilities and shareholders equity                                                                  |  |                |             |                   |   |             |  
|Current
 liabilities:                                                                                 |  |                |             |                   |   |             |  
|Accounts payable                                                                                      |  | $              | 2,031,000   |                   | $ | 2,022,000   |  
|Accrued compensation                                                                                  |  |                | 2,526,000   |                   |   | 2,584,000   |  
|Accrued expenses                                                                                      |  |                | 763,000     |                   |   | 848,000     |  
|Accrued royalties                                                                                     |  |                | 479,000     |                   |   | 576,000     |  
|Current portion of deferred revenue                                                                   |  |                | 908,000     |                   |   | 907,000     |  
|Total
 current liabilities                                                                            |  |                | 6,707,000   |                   |   | 6,937,000   |  
|                                                                                                      |  |                |             |                   |   |             |  
|Long-term
 deferred revenue, net of current portion                                                   |  |                | 5,204,000   |                   |   | 5,417,000   |  
|                                                                                                      |  |                |             |                   |   |             |  
|Shareholders
 equity:                                                                                |  |                |             |                   |   |             |  
|Common stock, $0.01 par value:                                                                        |  |                |             |                   |   |             |  
|Authorized shares  40,000,000
 Issued and outstanding shares  16,182,319  2009;
 16,027,519  2008 |  |                | 162,000     |                   |   | 160,000     |  
|Additional paid-in capital                                                                            |  |                | 85,469,000  |                   |   | 85,292,000  |  
|Other                                                                                                 |  |                | 84,000      |                   |   | 84,000      |  
|Accumulated deficit                                                                                   |  |                | (52,771,000 | )                 |   | (53,710,000 | )
|Total
 shareholders equity                                                                           |  |                | 32,944,000  |                   |   | 31,826,000  |  
|Total
 liabilities and shareholders equity                                                           |  | $              | 44,855,000  |                   | $ | 44,180,000  |  

See accompanying notes.

Note: The balance sheet at
December 31, 2008 has been derived from the audited financial statements at
that date.

2

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Table of Contents

VASCULAR SOLUTIONS, INC.

Consolidated
Statements of Operations

|                                            |  |                               |            |      |   |            |  
|------------------------------------------- |  | ----------------------------- | ---------- | ---- | - | ---------- | -
|                                            |  | Three Months Ended
 March 31, |           
|                                            |  | 2009                          |            | 2008 |  
|                                            |  | (unaudited)                   |           
|                                            |  |                               |            |      |   |            |  
|Revenue:                                    |  |                               |            |      |   |            |  
|Product revenue                             |  | $                             | 15,416,000 |      | $ | 13,737,000 |  
|License and collaboration revenue           |  |                               | 395,000    |      |   | 377,000    |  
|Total
 revenue                              |  |                               | 15,811,000 |      |   | 14,114,000 |  
|                                            |  |                               |            |      |   |            |  
|Product
 costs and operating expenses:      |  |                               |            |      |   |            |  
|Cost of goods sold                          |  |                               | 5,215,000  |      |   | 4,581,000  |  
|Collaboration expenses                      |  |                               | 183,000    |      |   | 181,000    |  
|Research and development                    |  |                               | 1,916,000  |      |   | 1,467,000  |  
|Clinical and regulatory                     |  |                               | 612,000    |      |   | 851,000    |  
|Sales and marketing                         |  |                               | 5,253,000  |      |   | 5,212,000  |  
|General and administrative                  |  |                               | 1,119,000  |      |   | 1,542,000  |  
|Litigation                                  |  |                               |           |      |   | 26,000     |  
|Total
 product costs and operating expenses |  |                               | 14,298,000 |      |   | 13,860,000 |  
|                                            |  |                               |            |      |   |            |  
|Operating
 income                           |  |                               | 1,513,000  |      |   | 254,000    |  
|                                            |  |                               |            |      |   |            |  
|Other income
 (expenses):                   |  |                               |            |      |   |            |  
|Interest income                             |  |                               | 23,000     |      |   | 92,000     |  
|Interest expense                            |  |                               | (9,000     | )    |   | (24,000    | )
|Foreign exchange loss                       |  |                               | (12,000    | )    |   |           |  
|                                            |  |                               |            |      |   |            |  
|Income
 before income taxes                 |  |                               | 1,515,000  |      |   | 322,000    |  
|                                            |  |                               |            |      |   |            |  
|Income tax
 expense                         |  |                               | (577,000   | )    |   | (87,000    | )
|Net income                                  |  | $                             | 938,000    |      | $ | 235,000    |  
|                                            |  |                               |            |      |   |            |  
|Net income
 per share  basic               |  | $                             | 0.06       |      | $ | 0.02       |  
|Net income
 per share  diluted             |  | $                             | 0.06       |      | $ | 0.01       |  

See accompanying notes.

3

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Table of Contents

VASCULAR SOLUTIONS, INC.

Consolidated
Statements of Cash Flows

|                                                                                                |  |                               |           |      |   |           |  
|----------------------------------------------------------------------------------------------- |  | ----------------------------- | --------- | ---- | - | --------- | -
|                                                                                                |  | Three Months Ended
 March 31, |          
|                                                                                                |  | 2009                          |           | 2008 |  
|                                                                                                |  | (unaudited)                   |          
|Operating activities                                                                            |  |                               |           |      |   |           |  
|Net income                                                                                      |  | $                             | 938,000   |      | $ | 235,000   |  
|Adjustments to reconcile net income to net
 cash provided by operating activities:              |  |                               |           |      |   |           |  
|Depreciation                                                                                    |  |                               | 337,000   |      |   | 367,000   |  
|Stock-based compensation                                                                        |  |                               | 477,000   |      |   | 523,000   |  
|Deferred compensation expense                                                                   |  |                               |          |      |   | 7,000     |  
|Deferred taxes, net                                                                             |  |                               | 531,000   |      |   | 1,000     |  
|Change in allowance for doubtful accounts                                                       |  |                               | (15,000   | )    |   |          |  
|Changes in operating assets and
 liabilities:                                                   |  |                               |           |      |   |           |  
|Accounts receivable                                                                             |  |                               | 171,000   |      |   | 489,000   |  
|Inventories                                                                                     |  |                               | (297,000  | )    |   | (343,000  | )
|Prepaid expenses                                                                                |  |                               | (247,000  | )    |   | (73,000   | )
|Accounts payable                                                                                |  |                               | 10,000    |      |   | (235,000  | )
|Accrued compensation and expenses                                                               |  |                               | (239,000  | )    |   | (153,000  | )
|Deferred license fees received                                                                  |  |                               |          |      |   | 191,000   |  
|Amortization of deferred license fees and
 other deferred revenue                               |  |                               | (212,000  | )    |   | (182,000  | )
|Net cash provided by operating activities                                                       |  |                               | 1,454,000 |      |   | 827,000   |  
|                                                                                                |  |                               |           |      |   |           |  
|Investing activities                                                                            |  |                               |           |      |   |           |  
|Purchase of property and equipment, net                                                         |  |                               | (307,000  | )    |   | (148,000  | )
|Net cash used in investing activities                                                           |  |                               | (307,000  | )    |   | (148,000  | )
|                                                                                                |  |                               |           |      |   |           |  
|Financing activities                                                                            |  |                               |           |      |   |           |  
|Repurchase of common shares                                                                     |  |                               | (333,000  | )    |   | (141,000  | )
|Payment on long-term debt                                                                       |  |                               |          |      |   | (200,000  | )
|Proceeds from the exercise of stock
 options, stock warrants and sale of stock, net of expenses |  |                               | 34,000    |      |   | 4,000     |  
|Net cash used in financing activities                                                           |  |                               | (299,000  | )    |   | (337,000  | )
|                                                                                                |  |                               |           |      |   |           |  
|Effect of exchange rate changes on cash and
 cash equivalents                                   |  |                               |          |      |   | 12,000    |  
|Increase in cash and cash equivalents                                                           |  |                               | 848,000   |      |   | 354,000   |  
|Cash and cash equivalents at beginning of
 period                                               |  |                               | 7,209,000 |      |   | 5,286,000 |  
|Cash and cash equivalents at end of period                                                      |  | $                             | 8,057,000 |      | $ | 5,640,000 |  
|                                                                                                |  |                               |           |      |   |           |  
|Supplemental disclosure of cash flow                                                            |  |                               |           |      |   |           |  
|Cash paid for interest                                                                          |  | $                             | 3,000     |      | $ | 26,000    |  
|Cash paid for taxes                                                                             |  | $                             | 38,000    |      | $ | 170,000   |  

See accompanying notes.

4

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Table of Contents

VASCULAR SOLUTIONS, INC.Notes to Unaudited Consolidated Financial Statements

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The
 accompanying unaudited financial statements of Vascular Solutions, Inc. (the
 Company) have been prepared in accordance with generally accepted accounting
 principles for interim financial information and with the instructions to
 Form 10-Q and Regulation S-X. Accordingly, they do not include all of the
 information and footnotes required by generally accepted accounting
 principles for complete financial statements. In the opinion of management,
 all normal, recurring adjustments considered necessary for a fair
 presentation have been included. The financial statements should be read in
 conjunction with the audited financial statements for the fiscal year ended
 December 31, 2008 included in the Annual Report on Form 10-K of the Company
 filed with the Securities and Exchange Commission. Interim results of
 operations are not necessarily indicative of the results to be expected for
 the full year or any other interim periods.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(2) | Net Income (Loss) per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | In
 accordance with Statement of Financial Accounting Standards No. 128, Earnings
 Per Share,(SFAS 128), basic net income (loss) per share for the
 three months ended March
 31, 2009 and 2008 is computed by dividing net income by the weighted
 average common shares outstanding during the periods presented. Diluted net
 income per share is computed by dividing net income by the weighted average
 number of common shares outstanding during the period, increased to include
 dilutive potential common shares issuable relating to outstanding restricted
 stock, and upon the exercise of stock options and awards that were
 outstanding during the period.                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Weighted
 average common shares outstanding for the three months ended March 31, 2009 and 2008 was as
 follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|                                               |  |                               |            |      |  |            | 
|---------------------------------------------- |  | ----------------------------- | ---------- | ---- |  | ---------- | 
|                                               |  | Three Months Ended
 March 31, |           
|                                               |  | 2009                          |            | 2008 | 
|                                               |  | (unaudited)                   |           
|Weighted average shares outstanding 
basic    |  |                               | 15,804,000 |      |  | 15,413,126 | 
|Weighted average shares outstanding 
 diluted |  |                               | 16,154,000 |      |  | 15,838,773 | 

5

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Table of Contents

VASCULAR SOLUTIONS, INC.
Notes to Unaudited Consolidated Financial Statements-Continued

|    |                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Comprehensive Income (Loss)                                                                                                                                                          
|    |                                                                                                                                                                                      
|    | Comprehensive
 income for the Company includes net income and foreign currency translation.
 Comprehensive income for the three months ended March 31, 2009 and 2008 was as
 follows:

|                                         |  |                               |         |      |   |         | 
|---------------------------------------- |  | ----------------------------- | ------- | ---- | - | ------- | 
|                                         |  | Three Months Ended
 March 31, |        
|                                         |  | 2009                          |         | 2008 |  
|                                         |  | (unaudited)                   |        
|                                        
|Net income                               |  | $                             | 938,000 |      | $ | 235,000 | 
|Foreign currency translation adjustments |  |                               |        |      |   | 33,000  | 
|Comprehensive income                     |  | $                             | 938,000 |      | $ | 268,000 | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | In the
 United States the Company sells its products directly to hospitals and
 clinics. Revenue is recognized in accordance with generally accepted
 accounting principles as outlined in the Securities and Exchange Commissions
 Staff Accounting Bulletin No. 104, Revenue
 Recognition(SAB 104),
 which requires that four basic criteria be met before revenue can be
 recognized: (i) persuasive evidence of an arrangement exists; (ii) the price
 is fixed or determinable; (iii) collectibility is reasonably assured; and
 (iv) product delivery has occurred or services have been rendered. The
 Company recognizes revenue as products are shipped based on FOB shipping
 point terms when title passes to customers. The Company negotiates credit
 terms on a customer-by-customer basis and products are shipped at an
 agreed-upon price. All product returns must be pre-approved and, if approved,
 customers are subject to a 20% restocking charge.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Effective April 1, 2008
 the Company entered into a five-year distribution agreement with Nicolai,
 GmbH. As a result of entering into this distribution agreement, the Company
 no longer maintains a direct sales force in Germany. In connection with this
 distribution agreement, the Company received 500,000 Euros from Nicolai,
 GmbH. The 500,000 Euro payment was deferred and is being recognized ratably
 over the five-year term of the distribution agreement. The agreement also
 includes provisions requiring the Company to pay Nicolai, GmbH specific
 amounts if the Company terminates the distribution agreement prior to the end
 of the five-year term. The Company does not intend to terminate the
 distribution agreement and, as such, has not recorded a liability relating to
 these potential future payments to Nicolai, GmbH.                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | In all
 international markets, the Company sells its products to international
 distributors which subsequently resell the products to hospitals and clinics.
 The Company has agreements with each of its distributors which provide that
 title and risk of loss pass to the distributor upon shipment of the products
 to the distributor. The Company warrants that its products are free from
 manufacturing defects at the time of shipment to the distributor. Revenue is
 recognized upon shipment of products to distributors following the receipt
 and acceptance of a distributors purchase order. Allowances are provided for
 estimated returns and warranty costs at the time of shipment.                                                                                                                                                                                                                                                                

6

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Table of Contents

VASCULAR SOLUTIONS, INC.
Notes to Unaudited Consolidated Financial Statements-Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The Company
 also generates revenues from license agreements and research collaborations
 and recognizes these revenues when earned. In accordance with Emerging Issues
 Task Force (EITF) Issue No. 00-21, Revenue Arrangements with Multiple Deliverables,
 for deliverables which contain multiple deliverables, the Company separates
 the deliverables into separate accounting units if they meet the following
 criteria: (i) the delivered items have a stand-alone value to the customer;
 (ii) the fair value of any undelivered items can be reliably determined; and
 (iii) if the arrangement includes a general right of return, delivery of the
 undelivered items is probable and substantially controlled by the seller.
 Deliverables that do not meet these criteria are combined with one or more
 other deliverables into one accounting unit. Revenue from each accounting unit is recognized based on the applicable
 accounting literature, primarily Staff Accounting Bulletin (SAB) 104, Revenue
 Recognition.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In addition, the
 Company has reviewed the provisions of EITF Issue No. 07-01, Accounting
 for Collaborative Arrangements,and believes the adoption of this
 EITF will have no impact on the amounts recorded under these agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In
 accordance with EITF Issue No. 00-10, Accounting
 for Shipping and Handling Fees and Costs, the Company includes
 shipping and handling revenues in net revenue, and shipping and handling
 costs in cost of sales.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(5) | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Inventories
 are stated at the lower of cost (first-in, first-out method) or market.
 Appropriate consideration is given to deterioration, obsolescence and other
 factors in evaluating net realizable value. Inventories are comprised of the
 following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|                |  |                  |            |                     |   |           | 
|--------------- |  | ---------------- | ---------- | ------------------- | - | --------- | 
|                |  | March 31, 
 2009 |            | December 31, 
 2008 |  
|                |  | (unaudited)      |            |                     |  
|               
|Raw materials   |  | $                | 4,284,000  |                     | $ | 4,943,000 | 
|Work-in process |  |                  | 1,176,000  |                     |   | 871,000   | 
|Finished goods  |  |                  | 4,810,000  |                     |   | 4,160,000 | 
|                |  | $                | 10,270,000 |                     | $ | 9,974,000 | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(6) | Credit Risk and Allowance for Doubtful Accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company
 maintains allowances for doubtful accounts for estimated losses resulting
 from the inability of our customers to make required payments. This allowance
 is regularly evaluated by the Company for adequacy by taking into
 consideration factors such as past experience, credit quality of the customer
 base, age of the receivable balances, both individually and in the aggregate,
 and current economic conditions that may affect a customers ability to pay.
 Accounts receivable over 60 days past due are considered past due. The
 Company does not accrue interest on past due accounts receivable. Receivables
 are written off only after all collection attempts have failed and are based
 on individual credit evaluation and the specific circumstances of the
 customer. At March 31, 2009 and December 31, 2008, the allowance for doubtful
 accounts was $85,000 and $95,000, respectively.

7

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Table of Contents

VASCULAR SOLUTIONS, INC.Notes to Unaudited Consolidated Financial
Statements-Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | All product
 returns must be pre-approved and, if approved, customers are subject to a 20%
 restocking charge. The Company analyzes the rate of historical returns when
 evaluating the adequacy of the allowance for sales returns, which is included
 with the allowance for doubtful accounts on our balance sheet. At March 31,
 2009 and December 31, 2008, the sales and return allowance was $20,000 and
 $25,000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Accounts
 receivable are shown net of the combined total of the allowance for doubtful
 accounts and allowance for sales returns of $105,000 and $120,000 at March
 31, 2009 and December 31, 2008, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(7) | Concentrations of Credit and Other Risks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | In the
 United States the Company sells its products directly to hospitals and
 clinics. In all international markets, the Company sells its products to
 distributors who, in turn, sell to medical clinics. Loss, termination or
 ineffectiveness of distributors to effectively promote the Companys products
 could have a material adverse effect on the Companys financial condition and
 results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | With respect
 to accounts receivable, the Company performs credit evaluations of its
 customers and does not require collateral. No single customer represented
 greater than 10% of gross accounts receivable as of either March 31, 2009 or
 December 31, 2008. There have been no material losses on customer
 receivables.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Revenue by
 geographic destination as a percentage of total net revenue for the three
 month periods ended March 31, 2009 and 2008 was 86% and 85% in the United
 States and 14% and 15% in international markets, respectively. No single
 customer represented greater than 10% of the total net revenue for the three
 months ended March 31, 2009 or 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(8) | Dependence on Key Suppliers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | King Pharmaceuticals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company
 purchases certain key components from single-source suppliers. Any
 significant component delay or interruption could require the Company to
 qualify new sources of supply, if available, and could have a material
 adverse effect on the Companys financial condition and results of
 operations. The Company purchases its requirements for thrombin (a component
 in the D-Stat products) under a Thrombin-JMI Supply Agreement entered into
 with King Pharmaceuticals, Inc. (King) on January 9, 2007. Under the terms of
 the Thrombin-JMI Supply Agreement, King agrees to manufacture and supply
 thrombin to the Company on a non-exclusive basis. The Thrombin-JMI Supply
 Agreement does not contain any minimum purchase requirements. King agrees to
 supply the Company with such quantity of thrombin as the Company may order at
 a fixed price throughout the term of the Thrombin-JMI Supply Agreement as
 adjusted for inflation, variations in potency and other factors. The
 Thrombin-JMI Supply Agreement has an initial term of 10 years, followed by
 successive automatic one-year extensions, subject to termination by the
 parties under certain circumstances, including: (i) termination by King
 without cause anytime after the fifth anniversary of the date of the
 Thrombin-JMI Supply Agreement upon five years prior written notice to the
 Company, and (ii) termination by the Company
 without cause anytime after the fifth anniversary of the date of the
 Thrombin-JMI Supply Agreement upon five years prior written notice to King
 provided that the Device Supply Agreement, which the Company also entered
 into with King on January 9, 2007, has expired on its terms or the parties
 have agreed to terminate it.

8

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Table of Contents

VASCULAR SOLUTIONS, INC.Notes to Unaudited Consolidated Financial
Statements-Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(9) | Commitments and Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Diomed Inc. Litigation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | On March 4,
 2004, the Company was named as the defendant in an intellectual property
 lawsuit brought by Diomed Inc. (Diomed) in the United States District Court
 for the District of Massachusetts (the Court). The complaint requested a
 judgment that sales of the Companys Vari-Lase® procedure kit and
 Vari-Lase laser console infringe on a single method patent (No. 6,398,777)
 held by Diomed and asked for relief in the form of an injunction that would
 prevent the Company from selling the Companys Vari-Lase products,
 compensatory and treble damages caused by the manufacture and sale of the
 Companys products, and other costs, disbursements and attorneys fees. The
 trial commenced on March 12, 2007, and concluded on March 28, 2007, when the
 jury reached a verdict that the Company contributed to and induced infringement
 of Diomeds patent and awarded monetary damages in the amount of $4,100,000,
 plus pre-judgment interest. The jury concluded there was no willful
 infringement by the Company and therefore the award was not subject to treble
 damages or attorneys fees. To settle Diomeds claims for pre-judgment
 interest and for additional damages for sales not considered by the jury, the
 Company agreed to amend the judgment amount to $4,975,000 and accrued this
 amount together with additional costs and attorneys fees as of June 30, 2007
 in the aggregate amount of $5,690,000. On June 20, 2007 the Company posted a
 supersedeas bond and appealed the jury verdict to the U.S. Court of Appeals
 for the Federal Circuit in Washington, D.C. On April 8, 2008, the Company
 announced that it entered into a settlement agreement with Diomed. Pursuant
 to the settlement agreement, (i) on April 29, 2008, the Company made a
 one-time payment of $3,586,000 to Diomed, (ii) the Company and Diomed jointly
 dismissed the appeal with the United States Court of Appeals for the Federal
 Circuit, and (iii) Diomed provided to the Company a satisfaction of judgment,
 releasing the Company from the monetary obligations of the judgment imposed
 by the Court in its entirety.                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Marine Polymer Technologies, Inc. Litigation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | On May 11,
2005 the Company initiated a lawsuit for product disparagement and false
advertising against Marine Polymer Technologies, Inc., a Delaware corporation
(Marine Polymer). In the lawsuit, the Company alleged that Marine Polymer made
defamatory and disparaging statements concerning the Companys
D-Stat® Dry hemostatic bandage. The Company sought relief in the
form of an injunction to enjoin Marine Polymer from continuing to defame and
disparage the Companys products, damages as a result of such statements,
and other costs, disbursements and attorneys fees. Marine Polymer brought
a counter-claim against the Company including, among other claims, business
defamation and product disparagement for statements allegedly made by the
Company concerning Marine Polymers SyvekPatch®. Marine
Polymer sought relief in the form of monetary damages, costs, disbursements and
attorneys fees. The trial commenced on March 24, 2008 in the United States
District Court for the District of Massachusetts. At the conclusion of the trial
on April 7, 2008 the jury returned a verdict in favor of the Company and against
Marine Polymer for product disparagement concerning statements made regarding
the safety of the Companys D-Stat Dry hemostat product. In its verdict,
the jury found that Marine Polymers statements were false and disparaged
the D-Stat Dry product and awarded the Company $4,500,000 in monetary damages.
The jury rejected Marine Polymers counterclaims in their entirety.
Following post trial motions, on June 30, 2008, the Court upheld the jury
verdict, granted the Companys request for a permanent injunction against
Marine Polymer for the statements that the jury found were false, and added
pre-judgment interest on the jury verdict award in the amount of $592,124. On
July 14, 2008, Marine Polymer filed a Notice of Appeal with the U.S. First
Circuit Court of Appeals seeking to overturn the monetary damages and injunction
issued against them. Marine Polymer did not appeal the Courts rejection of
its counter claims against the Company. On February 4, 2009, oral arguments by
both parties on Marine Polymers appeal were heard by the U.S. First
Circuit Court of Appeals.

9

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Table of Contents

VASCULAR SOLUTIONS, INC.Notes to Unaudited Consolidated Financial Statements-Continued

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | VNUS®Medical Technologies Litigation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | On October
 13, 2005, the Company was named as one of three defendants in an intellectual
 property lawsuit brought by VNUS® Medical Technologies, Inc.
 (VNUS) in the United States District Court for the Northern District of
 California. The complaint requested a judgment that the Companys Vari-Lase®
 procedure kit and Vari-Lase® laser console infringe on four
 patents held by VNUS and asked for relief in the form of an injunction that
 would prevent the Company from selling the Companys Vari-Lase®
 products, compensatory and treble damages caused by the manufacture and sale
 of these products, and other costs, disbursements and attorneys fees. VNUS
 subsequently indicated that it was not pursuing its allegation of
 infringement concerning one of the four patents. On June 2, 2008, the Company
 entered into a settlement agreement with VNUS for the purpose of resolving
 the lawsuit. Under the terms of the settlement agreement, (i) on June 4,
 2008, the Company paid VNUS a royalty payment in the aggregate amount of
 $3,116,000 related to all Vari-Lase products shipped within the United States
 through the end of the first quarter of 2008, (ii) the Company agreed to pay
 a quarterly royalty on all on-going U.S. shipments of Vari-Lase laser and kit
 products payable quarterly during the remaining life of the applicable
 patents, (iii) VNUS granted the Company a non-exclusive and non-sublicensable
 license to the applicable patents for use in endovenous laser therapy, and
 (iv) all litigation between the parties was dismissed.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | From time to
 time, the Company is involved in legal proceedings arising in the normal
 course of business. As of the date of this report the Company is not a party
 to any legal proceeding not described in this section in which an adverse
 outcome would reasonably be expected to have a material adverse effect on the
 Companys results of operations or financial condition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(10) | Long-term Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | On December
 26, 2007, the Company modified and extended its secured asset-based loan and
 security agreement with Silicon Valley Bank dated December 31, 2003 (as
 previously amended December 28, 2006 and December 29, 2005), consisting of an
 operating line of credit and an equipment line of credit. The operating line
 of credit is a two-year, $10,000,000 facility with availability based
 primarily on eligible customer receivables and inventory. The interest rate
 is the greater of prime plus 0.5% or 7.25%. As of March 31, 2009, the Company
 had no outstanding balance against the operating line of credit. Based on the
 Companys eligible customer receivables, inventory and cash balances,
 $10,000,000 was available for borrowing as of March 31,
 2009. The operating line of credit requires an annual fee of 0.25% of the
 average unused portion of the committed revolving line as determined by the
 bank.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

10

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Table of Contents

VASCULAR SOLUTIONS, INC.Notes to Unaudited Consolidated Financial
Statements-Continued

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | The
 equipment line of credit was paid in full on July 9, 2008 and the Company no
 longer has the ability to borrow any additional funds under the equipment
 line of credit portion of the credit facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | The credit
 facility includes three covenants: a minimum of $10,000,000 in tangible net
 worth, a minimum of $3,000,000 of unrestricted cash in deposit accounts with
 Silicon Valley Bank and an adjusted net income for each financial reporting
 period. The adjusted net income covenant requires an adjusted net income
 greater than $500,000 for each rolling three month period for the remaining
 term of the agreement. The amount required as a minimum tangible net worth
 will increase by an amount equal to the sum of 50% of the Companys quarterly
 net profit and all consideration received by the Company upon the issuance of
 equity securities. The Company was in compliance with all of the covenants as
 of March 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(11) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | The Company
 is subject to income tax in numerous jurisdictions and at various rates and
 the use of estimates is required in determining the provision for income
 taxes. For the three month period ended March 31, 2009, the Company recorded
 a tax provision of $577,000 on income before tax of $1,515,000 resulting in
 an effective income tax rate of 38%. For the three months ended March 31, 2009,
 the difference between the effective tax rate of 38% and the U.S. federal
 statutory income tax rate of 34% was due mainly to the impact of state income
 taxes. For the three month period ended March 31, 2008, the Company recorded
 a tax provision of $87,000 related to alternative minimum taxes (AMT) as the
 Company continued to maintain a full valuation allowance on its tax benefits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | Through the
 third quarter of 2008, the Company maintained a full valuation allowance on
 its deferred tax assets. The Company regularly assesses the likelihood that
 the deferred tax assets will be recovered from future taxable income. The
 Company considers projected future taxable income and ongoing tax planning
 strategies, then records a valuation allowance to reduce the carrying value
 of the net deferred taxes to an amount that is more likely than not to be
 realized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | As of
 December 31, 2008, based upon the Companys assessment of all available
 evidence, including previous three year cumulative income before unusual and
 infrequent expenses (litigation and thrombin qualification expenses),
 estimates of future profitability, and the Companys overall prospects of
 future business, the Company determined that it is more likely than not that
 the Company will be able to realize a portion of the deferred tax assets in
 the future, and as a result recorded a $13,200,000 income tax benefit for the
 year ended December 31, 2008. To determine the amount of the reduction in the
 valuation allowance, the Company used a discounted projection of its revenue
 and income over the next five years, which would approximate the ten-year
 life of the Companys three most significant products at this time. The
 amount of the valuation allowance reduction was based on the Companys
 projected discounted taxable income. The Company will continue to assess the
 potential realization of deferred tax assets on an annual basis, or an
 interim basis if circumstances warrant. If the Companys actual results and
 updated projections vary significantly from the projections used as a basis
 for this determination, the Company may need to increase or decrease the
 valuation allowance against the gross
 deferred tax assets. The Company would adjust earnings for the deferred tax
 in the period the determination was made.

11

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Table of Contents

VASCULAR
SOLUTIONS, INC.
Notes to Unaudited Consolidated Financial Statements-Continued

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | Effective January 1,
 2007, the Company adopted FIN 48, Accounting for Uncertainty in Income Taxes  an
 Interpretation of FASB Statement No. 109. Upon adoption, the
 Company had $425,000 of unrecognized income tax benefits and the
 adoption of FIN 48 had no effect on shareholders equity. The Company has
 recorded a FIN 48 reserve of $597,000 as of December 31, 2008. The impact of
 tax related interest and penalties is recorded as a component of income tax
 expense. At March 31, 2009, the Company has recorded $-0- for the payment of
 tax related interest and there were no tax penalties or interest recognized
 in the statements of operations.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | The Company
 is subject to income tax examinations in the U.S. Federal jurisdiction,
 as well as in Germany and various state jurisdictions. At March 31, 2009, the
 Company was not under examination by any of these taxing authorities and the
 open tax years are 2006 to 2008.                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(12) | Products and Services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | The
 following tables set forth, for the periods indicated, net revenue by product
 line along with the percent change from the previous period:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

|                          |  |                              |            |                 |  |              |    |                 |            |  |  |     |  
|------------------------- |  | ---------------------------- | ---------- | --------------- |  | ------------ | -- | --------------- | ---------- |  |  | --- | -
|                          |  | Three Months Ended March 31, |           
|                          |  | 2009                         |            | 2008            | 
|                          |  | Net
 Revenue                 |            | Percent
 Change |  | Net
 Revenue |    | Percent
 Change |           
|Hemostat products         |  | $                            | 5,798,000  |                 |  | (1           | %) | $               | 5,860,000  |  |  | 2   | %
|Extraction catheters      |  |                              | 3,968,000  |                 |  | 18           | %  |                 | 3,358,000  |  |  | 20  | %
|Vein products             |  |                              | 2,410,000  |                 |  | 10           | %  |                 | 2,198,000  |  |  | 23  | %
|Specialty catheters       |  |                              | 1,310,000  |                 |  | 15           | %  |                 | 1,136,000  |  |  | 30  | %
|Access products           |  |                              | 1,678,000  |                 |  | 81           | %  |                 | 929,000    |  |  | 69  | %
|Other                     |  |                              | 252,000    |                 |  | (1           | %) |                 | 256,000    |  |  |    | %
|Total product revenue     |  | $                            | 15,416,000 |                 |  | 12           | %  | $               | 13,737,000 |  |  | 14  | %
|License and collaboration |  |                              | 395,000    |                 |  | 5            | %  |                 | 377,000    |  |  | 179 | %
|Total revenue             |  | $                            | 15,811,000 |                 |  | 12           | %  | $               | 14,114,000 |  |  | 16  | %

12

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Table of Contents

|         |                                                                                       
|-------- | --------------------------------------------------------------------------------------
|Item
 2. | Managements
 Discussion and Analysis of Financial Condition and Results of Operations

Overview

Vascular
Solutions, Inc. (we, us or Vascular) is a medical device company focused on
bringing clinically advanced solutions to interventional cardiologists and
interventional radiologists worldwide. We were incorporated in the state of
Minnesota in December 1996, and began operations in February 1997. Our main
product lines consist of the following:

| |   |                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Hemostat
 (blood clotting) products, principally consisting of the D-Stat® Dry hemostat, a topical
 thrombin-based pad with a bandage used to control surface bleeding, and the
 D-Stat® Flowable, a
 thick yet flowable thrombin-based mixture for preventing bleeding in
 subcutaneous pockets,
| |   |                                                                                                                                                                                                                                                                                                  
| |  | Extraction catheters,
 principally consisting of the Pronto® V3 extraction catheter, a
 mechanical system for the removal of soft thrombus from arteries,                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                                                  
| |  | Vein
 products, principally consisting of the Vari-Lase® endovenous laser, a laser
 and procedure kit used for the treatment of varicose veins,                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                  
| |  | Specialty
 catheters, consisting of a variety of catheters for clinical niches including
 the Langston®
 dual lumen catheters, Twin-Pass®
 dual access catheters, Gandras catheters, and Gopher support
 catheter, and                                                                         
| |   |                                                                                                                                                                                                                                                                                                  
| |  | Access
 products, principally consisting of micro-introducer kits, MICRO Elite and
 EXPRO Elite
 snares, the Guardian® hemostasis valve, and guidewires used in connection
 with percutaneous access to the vasculature.                                                                       

In
2000 we received FDA clearance for our first product, the Duett sealing
device, which is used to seal the puncture site following catheterization
procedures. In 2001, due to competitive developments in the sealing device
market, we made the strategic decision to develop additional products and
de-emphasize the promotion of our Duett sealing device. We have grown from net
revenue of $6.2 million in 2000 solely from the Duett device to net revenue of
$61.2 million in 2008, with 98% of our 2008 net revenue resulting from products
other than the Duett device. This increase in revenue represents a compound
annual growth rate of 33% and was driven by our commitment to the research and
development of multiple new devices to diagnose and treat existing and new
vascular conditions.

As
a vertically-integrated medical device company, we generate ideas and
create new interventional medical devices and then deliver these products
directly to the physician through our direct domestic sales force and our
international distribution network. We currently have in development several
additional products that leverage our existing infrastructure to bring
additional solutions to the interventional cardiologist and interventional
radiologist.

13

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Table of Contents

Results of Operations

The
following table sets forth, for the periods indicated, certain items from our
statements of operations expressed as a percentage of net revenue:

|                                           |  |                               |     |      |  |     |  
|------------------------------------------ |  | ----------------------------- | --- | ---- |  | --- | -
|                                           |  | Three Months Ended
 March 31, |    
|                                           |  | 2009                          |     | 2008 | 
|Revenue:                                   |  |                               |     |      |  |     |  
|Product revenue                            |  |                               | 98  | %    |  | 97  | %
|License and collaboration
 revenue         |  |                               | 2   | %    |  | 3   | %
|Total revenue                              |  |                               | 100 | %    |  | 100 | %
|                                           |  |                               |     |      |  |     |  
|Product costs and operating expenses:      |  |                               |     |      |  |     |  
|Cost of goods sold                         |  |                               | 33  | %    |  | 33  | %
|Collaboration expenses                     |  |                               | 1   | %    |  | 1   | %
|Research and development                   |  |                               | 12  | %    |  | 10  | %
|Clinical and regulatory                    |  |                               | 4   | %    |  | 6   | %
|Sales and marketing                        |  |                               | 33  | %    |  | 37  | %
|General and administrative                 |  |                               | 7   | %    |  | 11  | %
|Litigation                                 |  |                               |    |      |  |    |  
|Total product costs and operating expenses |  |                               | 90  | %    |  | 98  | %
|Operating income                           |  |                               | 10  | %    |  | 2   | %
|Other income and expenses, net             |  |                               |    |      |  |    |  
|Income before income taxes                 |  |                               | 10  | %    |  | 2   | %
|Income taxes                               |  |                               | 4   | %    |  |    |  
|Net income                                 |  |                               | 6   | %    |  | 2   | %

Three months ended
March 31, 2009, compared to three months ended March 31, 2008

Net
revenue increased 12% to $15,811,000 for the quarter ended March 31, 2009 from
$14,114,000 for the quarter ended March 31, 2008. The increase in net revenue
was a result of an increased market penetration as well as the introduction of
new products, principally in the access products category. Approximately 86%
and 85% of our net revenue was earned in the United States and 14% and 15% of
our net revenue was earned in international markets for the quarters ended
March 31, 2009 and March 31, 2008, respectively.

We
recognized $212,000 of licensing revenue during the quarter ended March 31,
2009 as the result of our License Agreement and Device Supply Agreement with
King and our distribution agreement with Nicolai in Germany. We also recognized
$183,000 of collaboration revenue in the first quarter as a result of
performing clinical and development work for King under the Device Supply
Agreement. We expect to recognize approximately $850,000 of license revenue in
2009, and expect collaboration revenue will continue in 2009 dependent upon our
progress with our pre-clinical and clinical projects for King.

Gross
margin across all product lines declined to 66% for the quarter ended March 31,
2009 from 67% for the quarter ended March 31, 2008, principally due to selling
mix. We expect product gross margins to be in the range of 64% to 66% for the
remainder of 2009, subject to changes in our selling mix between our lower
margin products such as the Vari-Lase products and our higher margin products
such as the D-Stat Dry.

14

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Table of Contents

Research
and development expense for the first quarter of 2009 totaled $1,916,000, or
12% of revenue, compared to $1,467,000, or 10% of revenue, for the first
quarter of 2008. The increase in research and development expenses resulted
from additional new products moving through our development system in 2009. We expect our continuing research and
development expenses to be approximately 9% to 11% of revenue during 2009 as we
continue to pursue additional new products and to move our longer term
development projects forward.

Clinical
and regulatory expense for the first quarter of 2009 totaled $612,000, or 4% of
revenue, compared to $851,000, or 6% of revenue, for the first quarter of 2008.
The reduction in clinical and regulatory expenses resulted from reduced
clinical study activity as well as a reduction in stock based compensation
expense. Clinical
and regulatory expenses fluctuate due to the timing of clinical studies and the
number of new products coming through the regulatory system. We expect clinical
and regulatory expenses to be approximately 4% to 5% of revenue during 2009.

Sales
and marketing expense for the first quarter of 2009 totaled $5,253,000, or 33%
of revenue, compared to $5,212,000, or 37% of revenue, for the first quarter of
2008. We expect to
maintain the same relative size of our direct sales force during 2009 at
between 85 and 90 full-time sales employees. As a result, we expect our sales
and marketing expenses will continue to decline as a percentage of revenue to a
between 29% and 31% of revenue by the end of 2009.

General
and administrative expense for the first quarter of 2009 totaled $1,119,000, or
7% of revenue, compared to $1,542,000, or 11% of revenue, for the first quarter
of 2008. The
decrease was primarily the result of lower legal fees of approximately $515,000
due to the litigation that was pending in the first quarter of 2008 (see Note 9
to the Consolidated Financial Statements included in Item 1 of Part I of this
Form 10-Q). We expect general and administrative expenses to be approximately
6% to 7% of revenue during 2009.

Litigation
expenses were $-0- for the first quarter of 2009 compared to $26,000 for the
first quarter of 2008. For a complete discussion of litigation matters, see Note 9 to
the Unaudited Consolidated Financial Statements in Item 1 of Part 1 of this
Form 10-Q.

Interest
income decreased to $23,000 for the first quarter of 2009 from $92,000 for the
first quarter of 2008. The decrease in interest income was primarily the result
of lower cash balance following payments made in settlement of the Diomed
litigation and VNUS litigation (see Note 9 to the Consolidated Financial Statements included in Item 1
of Part I of this Form 10-Q) as well as a decrease in interest rates.

Interest
expense decreased to $9,000 for the first quarter of 2009 from $24,000 for the
first quarter of 2008. The decrease in interest expense was as a result of
repaying our equipment line of credit during the year ended December 31, 2008.

Foreign
exchange loss increased to $12,000 for the quarter ended March 31, 2009 from
$-0- for the quarter ended March 31, 2008. Effective April 1, 2008 we began to
sell our products to Nicolai (our German distributor) at prices denominated in
Euros. We also purchase a small number of inventory items at prices denominated
in Euros. As a result, we are exposed to foreign exchange movements during the
time between the shipment of the product and payment. We currently have terms
of net 60 days with our distributor and net 30 with our vendors under the
agreements providing for payments in Euros.

Income
tax expense increased to $577,000 for the quarter ended March 31, 2009 on
income before tax of $1,515,000 resulting in an effective income tax rate of
38%. For the three months ended March 31, 2009, the
difference between the effective tax rate of 38% and the U.S. federal statutory
income tax rate of 34% was due mainly to the impact of state income taxes. For
the three month period ended March 31, 2008, income tax expense was $87,000
related to alternative minimum taxes (AMT) as we continued to maintain a full
valuation allowance on our tax benefits through the third quarter of 2008.

15

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Table of Contents

Liquidity and Capital
Resources

We
have financed substantially all of our operations since inception through the
issuance of equity securities and sales of our products. From the inception of
the Company through March 31, 2009, we have sold capital stock generating
aggregate net proceeds of approximately $81.3 million. At March 31, 2009, we
had $8,057,000 in cash and cash equivalents on-hand, compared to $7,209,000 in
cash and cash equivalents at December 31, 2008.

Cash
provided by operations. We generated $1,454,000 of
cash from operations in the three months ended March 31, 2009. The cash
generated in the first quarter primarily resulted from our income before taxes
of $1,515,000 since essentially all of our income taxes are offset by our
deferred tax assets.

Cash
used for investing activities.We used $307,000 of
cash in investing activities in the three months ended March 31, 2009. We
incurred capital expenditures of $307,000 relating primarily to leasehold
improvements as part of our facility expansion, additional manufacturing
equipment and additional research and development equipment.

Cash
used for financing activities.We used $299,000 of
cash in financing activities in the three month period ended March 31, 2009. We
used $333,000 of cash to repurchase shares that vested under outstanding
restricted stock awards for income tax withholding purposes. This was offset by
our receipt of $34,000 of cash we received upon the exercise of outstanding
stock options.

We
have a $10 million revolving line of credit with Silicon Valley Bank, which has
a 24-month term and bears interest at the rate equal to the greater of prime
plus 0.5% or 7.25% and is secured by a first security interest on all of our
assets. As of March 31, 2009, we were in compliance with all the bank covenants
and we had no outstanding balance on the revolving line of credit with an
availability of $10 million.

We
currently anticipate that we will experience positive cash flow from our normal
operating activities for the foreseeable future. We currently believe that our
working capital of $24.1 million at March 31, 2009 will be sufficient to meet
all of our operating and capital requirements for the foreseeable future.
However, our actual liquidity and capital requirements will depend upon
numerous unpredictable factors, including the amount of revenues from sales of
our existing and new products; the cost of maintaining, enforcing and defending
patents and other intellectual property rights; competing technological and
market developments; developments related to regulatory and third party
reimbursement matters; and other factors.

If
cash generated from operations is insufficient to satisfy our cash needs, we
may be required to raise additional funds. In the event that additional
financing is needed, and depending on market conditions, we may seek to raise
additional funds for working capital purposes through the sale of equity or
debt securities. There is no assurance such financing will be available on
terms acceptable to us or be available at all.

Off-Balance Sheet
Arrangements

We
did not have any off-balance sheet arrangements as of March 31, 2009.

16

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Table of Contents

Contractual
Obligations

The
following table summarizes our contractual cash commitments as of March 31,
2009:

|                           |  |                         |           |                    |   |              |  |              |           |                    |   |           |  |   |           | 
|-------------------------- |  | ----------------------- | --------- | ------------------ | - | ------------ |  | ------------ | --------- | ------------------ | - | --------- |  | - | --------- | 
|                           |  | Payments
 Due by Period |          
|Contractual Obligations    |  | Total                   |           | Less than 
 1 year |   | 1 - 3
 years |  | 3 - 5
 years |           | More than
 5 years |  
|Facility
 operating leases |  | $                       | 5,242,000 |                    | $ | 749,000      |  | $            | 1,570,000 |                    | $ | 1,661,000 |  | $ | 1,262,000 | 

We
do not have any other significant cash commitments related to supply
agreements, nor do we have any significant commitments for capital
expenditures.

Critical Accounting
Policies

Managements
Discussion and Analysis of Financial Condition and Results of Operations
addresses our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States for interim
financial information. The preparation of our financial statements requires
that we make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. On an on-going basis, we evaluate
these estimates and judgments. We base our estimates and judgments on
historical experience and on various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

The
material accounting policies that we believe are most critical to an investors
understanding of our financial results and condition and which require complex
management judgment are discussed in our 2008 Form 10-K under the caption
Critical Accounting Policies.

Cautionary Statement Pursuant to the Private
Securities Litigation Reform Act of 1995

The
Private Securities Litigation Reform Act of 1995 (the Act) provides a safe
harbor for forward-looking statements to encourage companies to provide
prospective information about their business, so long as those statements are
identified as forward-looking and are accompanied by meaningful cautionary statements
identifying important factors that could cause actual results to differ
materially from those discussed in the statement. We desire to take advantage
of the safe harbor provisions with respect to any forward-looking statements we
may make in this filing, other filings with the Securities and Exchange
Commission and any public oral statements or written releases. The words or
phrases will likely, is expected, will continue, is anticipated,
believe, estimate, projected, forecast, or similar expressions are
intended to identify forward-looking statements within the meaning of the Act.
Such statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected. We caution readers
not to place undue reliance on any such forward-looking statements, which speak
only as of the date made. In accordance with the Act, we identify the following
important general factors which, if altered from the current status, could
cause our actual results to differ from those described in any forward-looking
statements: risks associated with defense of patent infringement lawsuits,
adoption of our new products, limited profitability, exposure to possible
product liability claims, the development of new products by others, dependence
on third  party
distributors in international markets, doing business in international markets,
the availability of third party reimbursement, actions by the FDA related to
our products, the loss of key vendors, and those factors set forth under the
heading Risk Factors in Item 1A of Part I of our Annual Report on Form 10-K
for the year ended December 31, 2008. This list is not exhaustive, and we may
supplement this list in any future filing with the Securities and Exchange
Commission or in connection with the making of any specific forward-looking
statement. We undertake no obligation to revise or update publically any
forward-looking statement for any reason.

17

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Table of Contents

|        |                                                            
|------- | -----------------------------------------------------------
|Item 3. | Quantitative
 and Qualitative Disclosures About Market Risk

Financial
instruments that potentially subject us to concentrations of credit risk
consist primarily of cash and cash equivalents and accounts receivables. We
maintain our accounts for cash and cash equivalents principally at two major
banks and one investment firm in the United States. We have a formal written
investment policy that limits our investments to investments in issuers
evaluated as creditworthy. We have not experienced any losses on our deposits
of our cash and cash equivalents.

With
respect to accounts receivable, we perform credit evaluations of our customers
and do not require collateral. There have been no material losses on accounts
receivables.

In
the United States we sell our products directly to hospitals and clinics
denominated in United States dollars. In Germany, through April 1, 2008 we sold
our products to hospitals and clinics denominated in Euros. Effective April 1,
2008, we began selling our products in Germany through our new distributor
Nicolai, GmbH. The sale of our products to Nicolai is denominated in Euros.
Product revenue recognized on sales in Germany represented approximately 1.8%
of our total product revenue for the three months ended March 31, 2009. The
exposure to currency exchange rates on this volume of product sales in Germany
would be considered immaterial to our financial statements.

In
all other international markets, we sell our products to independent
distributors who, in turn, sell to medical clinics. We sell our product in
these countries through independent distributors denominated in United States
dollars. Loss, termination or ineffectiveness of distributors to effectively
promote our product would have a material adverse effect on our financial condition
and results of operations.

We
do not believe our operations are currently subject to significant market risks
for interest rates, foreign currency exchange rates, commodity prices or other
relevant market price risks of a material nature. As we have earned and
received all Euro installment payments pursuant to the terms of our
distribution agreement with Nicolai, GmbH before the end of 2008, there is no
further exposure to fluctuations in the Euro related to this agreement. A
change of 0.1 in the Euro exchange would result in an increase or decrease of
approximately $17,000 in the amount of United States dollars we receive in
payment on accounts receivable from Nicolai, GmbH. Under our current policies,
we do not use foreign currency derivative instruments to manage exposure to
fluctuations in the Euro exchange rate.

We
currently have no indebtedness, but if we were to borrow amounts from our
revolving credit line, we would be exposed to changes in interest rates.
Advances under our revolving credit line bear interest at an annual rate
indexed to prime. We will thus be exposed to interest rate risk with respect to
amounts outstanding under the line of credit to the extent that interest rates
rise. As we had no amounts outstanding on the line of credit at March 31, 2009,
we have no exposure to interest rate changes on this credit facility. Under our
current policies, we do not use interest rate derivative instruments to manage
exposure to interest rate changes. Additionally, we will be exposed to declines
in the interest rates paid on deposited funds. A 1% decline in the current
market interest rates paid on deposits would result in interest income being
reduced by approximately $81,000 on an annual basis.

18

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Table of Contents

|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

Evaluation of disclosure controls and
procedures.

Under
the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon
that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that, as of the end of the period covered by this report, our
disclosure controls and procedures were effective.

Changes in internal controls.

During
the fiscal quarter ended March 31, 2009, there has been no change in our
internal control over financial reporting (as defined in Rule 13a-15(f) under
the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

|        |                   
|------- | ------------------
|Item 1. | Legal
 Proceedings

The
legal proceedings for the Marine Polymer Technologies, Inc. litigation as
described in Note 9 to Unaudited Consolidated Financial Statements in Item 1 of
Part I of this Form 10-Q is incorporated into this Item 1 of Part II by
reference.

|         |              
|-------- | -------------
|Item 1A. | Risk
 Factors

Item 1A,
(Risk Factors) of our most recently filed Form 10-K sets forth information
relating to important risks and uncertainties that could materially adversely
affect our business, financial condition or operating results. There have been
no material changes from the Risk Factors described in our annual report on
Form 10-K; however, those Risk Factors continue to be relevant to an
understanding of our business, financial condition and operating results and,
accordingly, you should review and consider such Risk Factors in making any investment
decision with respect to our securities. An investment in our securities
continues to involve a high degree of risk.

|        |                                                             
|------- | ------------------------------------------------------------
|Item 2. | Unregistered Sales of Equity
 Securities and Use of Proceeds

Purchase
of Equity Securities by the Issuer and Affiliated Purchasers:

|                       |  |                                        |  |                                |  |                                                                                           |      |                                                                                               |  |   |  |  |   |  | 
|---------------------- |  | -------------------------------------- |  | ------------------------------ |  | ----------------------------------------------------------------------------------------- | ---- | --------------------------------------------------------------------------------------------- |  | - |  |  | - |  | 
|Period                 |  | Total
 Number
 of Shares
 Purchased(1) |  | Average
 Price Paid
 per Share |  | Total
 Number of 
 Shares Purchased 
 as Part of a Publicly
 Announced Plans or
 Programs |      | Approximate
 Dollar
 Value of Shares that
 May Yet be Purchased
 Under the Plans or
 Programs | 
|January 1 -
 31, 2009  |  | 36,700                                 |  |                                |  | $                                                                                         | 9.06 |                                                                                               |  |  |  |  |  |  | 
|February 1 -
 28, 2009 |  |                                       |  |                                |  |                                                                                           |     |                                                                                               |  |  |  |  |  |  | 
|March 1 -
 31, 2009    |  |                                       |  |                                |  |                                                                                           |     |                                                                                               |  |  |  |  |  |  | 

|                                                                                                                                                                                                                                                                                                  | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|(1)     At the
 request of our employees and pursuant to the terms of their Restricted Stock
 Awards, we purchased 36,700 shares of common stock at the fair market value
 of the common stock on the day their awards vested to satisfy income tax
 withholding obligations for those employees.

19

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Table of Contents

|        |                                                     
|------- | ----------------------------------------------------
|Item 3. | Defaults
 Upon Senior Securities                    
|        |                                                     
|        | None.                                               
|        |                                                     
|Item 4. | Submission
 of Matters to a Vote of Security Holders
|        |                                                     
|        | None.                                               
|        |                                                     
|Item 5. | Other
 Information                                  
|        |                                                     
|        | None                                                
|        |                                                     
|Item 6. | Exhibits                                            

|                |  |                                                                                                                                                                                                     | 
|--------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Exhibit
 Number |  | Description                                                                                                                                                                                         | 
|3.1             |  | Amended and
 Restated Articles of Incorporation of Vascular Solutions, Inc. (incorporated
 by reference to Exhibit 3.1 to Vascular Solutions Form 10-Q for the quarter
 ended September 30, 2000).
|3.2             |  | Amended and
 Restated Bylaws of Vascular Solutions, Inc. (incorporated by reference to
 Exhibit 3.1 of Vascular Solutions Form 8-K dated October 19, 2007).                                       
|4.1             |  | Specimen of
 Common Stock certificate (incorporated by reference to Exhibit 4.1 of
 Vascular Solutions Registration Statement on Form S-1 (File No. 333-84089)).                                  
|31.1            |  | Certification
 of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
 of 2002.                                                                                              
|31.2            |  | Certification
 of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
 of 2002.                                                                                              
|32.1            |  | Certification
 of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act
 of 2002.                                                                                              
|32.2            |  | Certification
 of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
 of 2002.                                                                                              

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Table of Contents

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.

|                      |  |                           |     |                                      | 
|--------------------- |  | ------------------------- | --- | ------------------------------------ | 
|                      |  | VASCULAR
 SOLUTIONS, INC.
|                      |  |                          
|Date: April
 16, 2009 |  |                           | By: | /s/ Howard
 Root                     | 
|                      |  |                           |     | Howard Root                         
|                      |  |                           |     | Chief Executive Officer and Director
|                      |  |                           |     | (principal executive officer)       
|                      |  |                           |     |                                     
|                      |  |                           |     |                                     
|                      |  |                           | By: | /s/ James
 Hennen                    | 
|                      |  |                           |     | James Hennen                        
|                      |  |                           |     | Chief Financial Officer             
|                      |  |                           |     | (principal
financial officer)       

21

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