Table of Contents





|                                  
|----------------------------------
|UNITED STATES                     
|SECURITIES AND EXCHANGE COMMISSION
|WASHINGTON, D.C. 20549            
|                                  
|                                  
|                                  
|FORM 10-Q                         
|                                  
|                                  

|                                                   |   |                                                                                          
|-------------------------------------------------- | - | -----------------------------------------------------------------------------------------
|(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, 2010     
|                                                   |   |                                                                                          
|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                       
|                                                       
|                                                       
|                                                       
|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 has submitted electronically and posted on its corporate
Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).
Yes o
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 16,739,180 shares of common stock, $.01 par value per share,
outstanding as of April 14, 2010.







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 |  | 12  
|                              |          |                                                                                        |  |     
|                              | Item 3.  | Quantitative
 and Qualitative Disclosures about Market Risk                            |  | 17  
|                              |          |                                                                                        |  |     
|                              | Item 4.  | Controls
 and Procedures                                                               |  | 17  
|                              |          |                                                                                        |  |     
|PART II. OTHER INFORMATION    |          |                                                                                       
|                              |          |                                                                                        |  |     
|                              | Item 1.  | Legal
 Proceedings                                                                     |  | 18  
|                              |          |                                                                                        |  |     
|                              | Item 1A. | Risk
 Factors                                                                          |  | 18  
|                              |          |                                                                                        |  |     
|                              | Item 2.  | Unregistered
 Sales of Equity Securities and Use of Proceeds                           |  | 18  
|                              |          |                                                                                        |  |     
|                              | Item 3.  | Defaults
 upon Senior Securities                                                       |  | 19  
|                              |          |                                                                                        |  |     
|                              | Item 4.  | (Removed and Reserved)                                                                 |  | 19  
|                              |          |                                                                                        |  |     
|                              | Item 5.  | Other
 Information                                                                     |  | 19  
|                              |          |                                                                                        |  |     
|                              | Item 6.  | Exhibits                                                                               |  | 19  

Page 1

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Table of Contents

PART 1. FINANCIAL INFORMATION

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

VASCULAR SOLUTIONS, INC.

Consolidated
Balance Sheets

|                                                                                                    |  |                |             |                   |   |             |  
|--------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | ----------------- | - | ----------- | -
|                                                                                                    |  | March 31, 2010 |             | December 31, 2009 |  
|                                                                                                    |  |                |             |                   |  
|                                                                                                    |  | (unaudited)    |             | (see note)        |  
|Assets                                                                                              |  |                |             |                   |   |             |  
|Current
 assets:                                                                                    |  |                |             |                   |   |             |  
|Cash and cash equivalents                                                                           |  | $              | 22,370,000  |                   | $ | 17,794,000  |  
|Accounts receivable, net of reserves of
 $130,000 and $150,000 in 2010 and 2009, respectively       |  |                | 9,323,000   |                   |   | 9,143,000   |  
|Inventories                                                                                         |  |                | 10,624,000  |                   |   | 8,977,000   |  
|Prepaid expenses                                                                                    |  |                | 1,359,000   |                   |   | 1,520,000   |  
|Current portion of deferred tax assets                                                              |  |                | 4,500,000   |                   |   | 4,500,000   |  
|Total
 current assets                                                                               |  |                | 48,176,000  |                   |   | 41,934,000  |  
|                                                                                                    |  |                |             |                   |   |             |  
|Property and
 equipment, net                                                                        |  |                | 3,842,000   |                   |   | 3,793,000   |  
|Intangible
 assets, net                                                                             |  |                | 193,000     |                   |   | 193,000     |  
|Deferred tax
 assets, net of current portion and liabilities                                        |  |                | 3,916,000   |                   |   | 5,835,000   |  
|Total assets                                                                                        |  | $              | 56,127,000  |                   | $ | 51,755,000  |  
|                                                                                                    |  |                |             |                   |   |             |  
|Liabilities and shareholders equity                                                                |  |                |             |                   |   |             |  
|Current
 liabilities:                                                                               |  |                |             |                   |   |             |  
|Accounts payable                                                                                    |  | $              | 2,545,000   |                   | $ | 1,396,000   |  
|Accrued compensation                                                                                |  |                | 3,008,000   |                   |   | 2,978,000   |  
|Accrued expenses                                                                                    |  |                | 1,294,000   |                   |   | 865,000     |  
|Accrued royalties                                                                                   |  |                | 518,000     |                   |   | 621,000     |  
|Current portion of deferred revenue                                                                 |  |                | 889,000     |                   |   | 929,000     |  
|Total
 current liabilities                                                                          |  |                | 8,254,000   |                   |   | 6,789,000   |  
|                                                                                                    |  |                |             |                   |   |             |  
|Long-term
 deferred revenue, net of current portion                                                 |  |                | 4,355,000   |                   |   | 4,567,000   |  
|                                                                                                    |  |                |             |                   |   |             |  
|Shareholders
 equity:                                                                              |  |                |             |                   |   |             |  
|Common stock, $0.01 par value:                                                                      |  |                |             |                   |   |             |  
|Authorized shares  40,000,000Issued and
 outstanding shares  16,744,725  2010; 16,557,669  2009 |  |                | 167,000     |                   |   | 166,000     |  
|Additional paid-in capital                                                                          |  |                | 88,133,000  |                   |   | 88,481,000  |  
|Other                                                                                               |  |                | 84,000      |                   |   | 84,000      |  
|Accumulated deficit                                                                                 |  |                | (44,866,000 | )                 |   | (48,332,000 | )
|Total
 shareholders equity                                                                         |  |                | 43,518,000  |                   |   | 40,399,000  |  
|Total
 liabilities and shareholders equity                                                         |  | $              | 56,127,000  |                   | $ | 51,755,000  |  

See accompanying notes.

Note: The
balance sheet at December 31, 2009 has been derived from the audited financial
statements at that date.

Page 2

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Table of Contents

VASCULAR SOLUTIONS, INC.

Consolidated
Statements of Operations

|                                            |  |                               |            |      |   |            |  
|------------------------------------------- |  | ----------------------------- | ---------- | ---- | - | ---------- | -
|                                            |  | Three Months Ended
 March 31, |           
|                                            |  | 2010                          |            | 2009 |  
|                                            |  |                               |           
|                                            |  | (unaudited)                   |           
|Revenue:                                    |  |                               |            |      |   |            |  
|Product revenue                             |  | $                             | 17,867,000 |      | $ | 15,416,000 |  
|License and collaboration revenue           |  |                               | 322,000    |      |   | 395,000    |  
|                                            |  |                               |            |      |   |            |  
|Total
 revenue                              |  |                               | 18,189,000 |      |   | 15,811,000 |  
|                                            |  |                               |            |      |   |            |  
|Product
 costs and operating expenses:      |  |                               |            |      |   |            |  
|Cost of goods sold                          |  |                               | 5,947,000  |      |   | 5,215,000  |  
|Collaboration expenses                      |  |                               | 110,000    |      |   | 183,000    |  
|Research and development                    |  |                               | 2,464,000  |      |   | 1,916,000  |  
|Clinical and regulatory                     |  |                               | 707,000    |      |   | 612,000    |  
|Sales and marketing                         |  |                               | 5,603,000  |      |   | 5,253,000  |  
|General and administrative                  |  |                               | 1,307,000  |      |   | 1,119,000  |  
|Litigation                                  |  |                               | (3,529,000 | )    |   |           |  
|Total
 product costs and operating expenses |  |                               | 12,609,000 |      |   | 14,298,000 |  
|                                            |  |                               |            |      |   |            |  
|Operating
 income                           |  |                               | 5,580,000  |      |   | 1,513,000  |  
|                                            |  |                               |            |      |   |            |  
|Other income
 (expenses):                   |  |                               |            |      |   |            |  
|Interest income                             |  |                               | 10,000     |      |   | 23,000     |  
|Interest expense                            |  |                               | (5,000     | )    |   | (9,000     | )
|Foreign exchange loss                       |  |                               | (23,000    | )    |   | (12,000    | )
|                                            |  |                               |            |      |   |            |  
|Income
 before income taxes                 |  |                               | 5,562,000  |      |   | 1,515,000  |  
|                                            |  |                               |            |      |   |            |  
|Income tax
 expense                         |  |                               | (2,096,000 | )    |   | (577,000   | )
|Net income                                  |  | $                             | 3,466,000  |      | $ | 938,000    |  
|                                            |  |                               |            |      |   |            |  
|Net income
 per share  basic               |  | $                             | 0.21       |      | $ | 0.06       |  
|Net income
 per share  diluted             |  | $                             | 0.21       |      | $ | 0.06       |  

See accompanying notes.

Page 3

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Table of Contents

VASCULAR SOLUTIONS, INC.

Consolidated
Statements of Cash Flows

|                                                                                                |  |                               |            |      |   |           |  
|----------------------------------------------------------------------------------------------- |  | ----------------------------- | ---------- | ---- | - | --------- | -
|                                                                                                |  | Three Months Ended
 March 31, |           
|                                                                                                |  | 2010                          |            | 2009 |  
|                                                                                                |  |                               |           
|                                                                                                |  | (unaudited)                   |           
|Operating activities                                                                            |  |                               |            |      |   |           |  
|Net income                                                                                      |  | $                             | 3,466,000  |      | $ | 938,000   |  
|Adjustments
 to reconcile net income to net cash provided by operating activities:              |  |                               |            |      |   |           |  
|Depreciation                                                                                    |  |                               | 388,000    |      |   | 337,000   |  
|Stock-based compensation                                                                        |  |                               | 450,000    |      |   | 477,000   |  
|Deferred taxes, net                                                                             |  |                               | 1,918,000  |      |   | 531,000   |  
|Change in allowance for doubtful accounts                                                       |  |                               | (20,000    | )    |   | (15,000   | )
|Changes in operating assets and
 liabilities:                                                   |  |                               |            |      |   |           |  
|Accounts receivable                                                                             |  |                               | (160,000   | )    |   | 171,000   |  
|Inventories                                                                                     |  |                               | (1,646,000 | )    |   | (297,000  | )
|Prepaid expenses                                                                                |  |                               | 160,000    |      |   | (247,000  | )
|Accounts payable                                                                                |  |                               | 1,149,000  |      |   | 10,000    |  
|Accrued compensation and expenses                                                               |  |                               | 356,000    |      |   | (239,000  | )
|Amortization of deferred license fees and
 other deferred revenue                               |  |                               | (251,000   | )    |   | (212,000  | )
|Net cash
 provided by operating activities                                                      |  |                               | 5,810,000  |      |   | 1,454,000 |  
|                                                                                                |  |                               |            |      |   |           |  
|Investing activities                                                                            |  |                               |            |      |   |           |  
|Purchase of
 property and equipment                                                             |  |                               | (437,000   | )    |   | (307,000  | )
|Net cash
 used in investing activities                                                          |  |                               | (437,000   | )    |   | (307,000  | )
|                                                                                                |  |                               |            |      |   |           |  
|Financing activities                                                                            |  |                               |            |      |   |           |  
|Repurchase
 of common shares                                                                    |  |                               | (980,000   | )    |   | (333,000  | )
|Proceeds
 from the exercise of stock options, stock warrants and sale of stock, net of expenses |  |                               | 183,000    |      |   | 34,000    |  
|Net cash
 used in financing activities                                                          |  |                               | (797,000   | )    |   | (299,000  | )
|                                                                                                |  |                               |            |      |   |           |  
|                                                                                                |  |                               |            |      |   |           |  
|Increase in cash and cash equivalents                                                           |  |                               | 4,576,000  |      |   | 848,000   |  
|Cash and
 cash equivalents at beginning of period                                               |  |                               | 17,794,000 |      |   | 7,209,000 |  
|Cash and
 cash equivalents at end of period                                                     |  | $                             | 22,370,000 |      | $ | 8,057,000 |  
|                                                                                                |  |                               |            |      |   |           |  
|Supplemental disclosure of cash flow                                                            |  |                               |            |      |   |           |  
|Cash paid
 for interest                                                                         |  | $                             | 2,000      |      | $ | 3,000     |  
|Cash paid
 (received) for taxes                                                                 |  | ($                            | 151,000    | )    | $ | 38,000    |  

See accompanying notes.

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Table of Contents

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

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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, 2009 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 per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | In
 accordance with Accounting Standards Codification (ASC) 260-10-55, basic
 net income per share for the three months ended March 31, 2010 and 2009 is
 computed by dividing net income by the weighted average common shares
 outstanding during the periods presented. Diluted net income per weighted
 average common share is computed by dividing net income by the weighted
 average 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, 2010
 and 2009 was as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|                                               |  |                               |            |      |  |            | 
|---------------------------------------------- |  | ----------------------------- | ---------- | ---- |  | ---------- | 
|                                               |  | Three Months Ended
 March 31, |           
|                                               |  | 2010                          |            | 2009 | 
|                                               |  |                               |           
|                                               |  | (unaudited)                   |           
|Weighted average shares outstanding  basic    |  |                               | 16,275,000 |      |  | 15,804,000 | 
|Weighted
 average shares outstanding  diluted |  |                               | 16,866,000 |      |  | 16,154,000 | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | 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 ASC 605-10-S99, 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.

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Table of Contents

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

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 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.                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The Company
 also generates revenues from license agreements and research collaborations
 and recognizes these revenues when earned. In accordance with ASC
 605-25-25-5, for revenues 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 ASC 605-10-S99-1.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In addition,
 the Company has reviewed the provisions of ASC 808-10 for Collaborative
 Arrangements, and has determined this ASC has no impact on the amounts
 recorded under these agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In
 accordance with ASC 605-45-45, the Company includes shipping and handling
 revenues in net revenue, and shipping and handling costs in cost of sales.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(4) | 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,
 2010 |            | December 31,
 2009 |  
|                 |  |                 |            |                    |   |          
|                 |  | (unaudited)     |            |                    |   |          
|                 |  |                 |            |                    |   |          
|Raw
 materials   |  | $               | 5,209,000  |                    | $ | 4,382,000 | 
|Work-in
 process |  |                 | 995,000    |                    |   | 858,000   | 
|Finished
 goods  |  |                 | 4,420,000  |                    |   | 3,737,000 | 
|                 |  | $               | 10,624,000 |                    | $ | 8,977,000 | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | 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. 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, 2010
 and December 31, 2009, the allowance for doubtful accounts was $100,000 and
 $105,000, respectively.

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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,
 2010 and December 31, 2009, the sales and return allowance was $30,000 and
 $45,000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Accounts
 receivable are shown net of the combined total of the allowance for doubtful
 accounts and allowance for sales returns of $130,000 and $150,000 at March
 31, 2010 and December 31, 2009, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(6) | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | 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, 2010 or
 December 31, 2009. 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, 2010 and 2009 was 86% in the United States and
 14% in international markets, respectively. No single customer represented
 greater than 10% of the total net revenue for the three months ended March
 31, 2010 or 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(7) | 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 Hemostat 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.

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Table of Contents

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

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(8) | Commitments and Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | 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 counter-claims 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 prejudgment 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. On December 23, 2009, the U.S. First Circuit Court
 of Appeals affirmed the judgment against Marine Polymer for product
 disparagement. As a result, the permanent injunction issued at the conclusion
 of the trial will remain in effect, prohibiting Marine Polymer and its
 representatives from making, publishing or disseminating certain disparaging
 statements concerning the safety of our D-Stat products. Addressing the
 jurys award of $4.5 million in damages, the Court determined that, due to
 differences in opinion among the judges, the Company could either accept a
 $2.7 million award of damages (plus interest) or insist upon a new trial
 limited to the issue of determining the reasonable amount of damages. The
 Company accepted the $2.7 million award of damages plus interest and on
 January 22, 2010 the Company received $3.56 million as payment in full for
 the judgment. This amount has been recorded as a litigation gain in the first
 quarter of 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                               

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Table of Contents

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

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | AngioDynamics, Inc. Litigation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | On July 29,
 2009 AngioDynamics, Inc. (AngioDynamics) filed a lawsuit against the Company
 in the U.S. District Court for the District of Delaware, alleging that the
 Company has infringed U.S. Patent No. 7,273,478 and U.S. Patent No.
 7,559,329. Specifically, AngioDynamics alleges that doctors using the
 Companys Bright Tip fibers and procedure kits are using the methods claimed
 in those patents, and accuses the Company of inducing and contributing to
 infringement. AngioDynamics has requested injunctive relief and compensatory damages. On December 1, 2009
 the Company filed its answer, a counterclaim, and a motion to transfer the
 case to the U.S. District Court for the District of Minnesota.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | The Company
 has also filed an inter partes
 request for reexamination of both the 478 and 329 patents with the United
 States Patent Office. The Patent Office granted the inter partes requests for reexamination
 for both the 478 and 329 patents. The Company expects the reexamination
 process for each patent will take at least three years to conclude. On
 January 27, 2010, the Company filed a motion with the U.S. District Court for
 the District of Delaware to stay all proceedings in the litigation pending
 the outcome of the inter partes
 reexaminations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | From time to
 time, the Company is involved in additional 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | King Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | On January
 9, 2007, the Company entered into three separate agreements with King: a
 License Agreement, a Device Supply Agreement and a Thrombin-JMI®
 Supply Agreement. Under the License Agreement, the Company licensed the
 exclusive rights to the Companys products Thrombi-Pad, Thrombi-Gel and
 Thrombi-Paste to King in exchange for a one-time license fee of $6,000,000.
 Under the Device Supply Agreement, the Company agreed to manufacture the
 licensed products for sale to King in exchange for two separate $1,000,000
 milestone payments; one upon the first commercial sale of Thrombi-Gel (which
 was received on May 31, 2007), and one upon the first commercial sale of
 Thrombi-Paste. The Company is amortizing the $6,000,000 license fee on a
 straight-line basis over 10 years. The Company is amortizing the $1,000,000
 milestone payment that was received on May 31, 2007 over the remaining
 10-year license period and will amortize the additional $1,000,000 milestone
 payment over the remaining 10-year license period when it is received. The
 unamortized license fee was $4,769,000 and $4,945,000 at March 31, 2010 and
 December 31, 2009, respectively. The amortization of license fee was $176,000
 for the three months ended March 31, 2010 and 2009, respectively.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Under the
 Device Supply Agreement the Company agreed to pursue a surgical indication
 for the use of the Thrombi-Gel and Thrombi-Paste products from the FDA. The
 Device Supply Agreement requires the Company to make a one-time payment of
 $2,500,000 to King if the FDA does not approve the surgical indication of
 Thrombi-Gel and a one-time payment of $2,500,000 to King if the FDA does not
 approve the surgical indication of Thrombi-Paste after performing a clinical
 study and submitting the application. The Company continues to pursue a
 surgical indication for the use of the Thrombi-Gel product. In 2009 King
 suspended further development of the Thrombi-Paste product. The Company
 believes the probability of paying these one-time payments to King is remote,
 and therefore has not recorded any provision for these payments.                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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Table of Contents

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

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | Nicolai, GmbH Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     | 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, which 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. The unamortized
 license fee was $436,000 and $472,000 at March 31, 2010 and December 31,
 2009, respectively. The amortization of license fee was $36,000 for the three
 months ended March 31, 2010 and 2009, respectively.                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(9)  | Lines of Credit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     | On December
 21, 2009, the Company entered into a secured asset-based revolving credit
 agreement with U.S. Bank National Association. The revolving credit agreement
 is a one-year, $10,000,000 facility with availability based primarily on
 eligible customer receivables, inventory and property and equipment. The
 revolving credit agreement bears interest equal to the one-month LIBOR rate
 plus 1.60% and is secured by a first security interest on all of the
 Companys assets. The revolving credit agreement requires a quarterly payment
 based on an annual fee of 0.125% of the average unused portion of the
 committed revolving line as determined by the bank and reviewed by
 management.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     | The
 revolving credit agreement includes one covenant that the Company cannot have
 a maximum cash flow leverage ratio greater than 2.5 to 1. The calculation of
 this covenant is determined by multiplying annual lease expense times six and
 adding any loans, then dividing this amount by the sum of earnings before
 interest, taxes, depreciation, amortization and annual operating lease
 payments. The covenant is computed quarterly based on a rolling 12-month
 period. The Company was in compliance with this covenant as of March 31,
 2010.                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     | As of March
 31, 2010, the Company had no outstanding balance against the revolving credit
 agreement. Based on the Companys eligible customer receivables, inventory,
 property and equipment and cash balances, $10,000,000 was available for
 borrowing as of March 31, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(10) | 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, 2010 and March 31, 2009,
 the Company recorded a tax provision of $2,096,000 and $577,000 on income
 before tax of $5,562,000 and $1,515,000, resulting in an effective income tax
 rate of 38%. 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.                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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Table of Contents

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

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 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 as of December 31,
 2008. 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.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | Effective
 January 1, 2007, the Company adopted ASC 740-10. Upon adoption, the Company
 had $425,000 of unrecognized income tax benefits and the adoption of ASC
 740-10 had no effect on shareholders equity. The Company has recorded an ASC
 740-10 reserve of $727,000 as of December 31, 2009. The impact of tax related
 interest and penalties is recorded as a component of income tax expense. For
 the three months ended March 31, 2010, 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, 2010, the
 Company was not under examination by any of these taxing authorities and the
 open tax years are 2007 through 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(11) | 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, |           
|                          |  | 2010                         |            | 2009            | 
|                          |  | Net
 Revenue                 |            | Percent
 Change |  | Net
 Revenue |    | Percent
 Change |           
|                         
|Catheter products         |  | $                            | 8,887,000  |                 |  | 25           | %  | $               | 7,112,000  |  |  | 29 | % 
|Hemostat products         |  |                              | 6,372,000  |                 |  | 9            | %  |                 | 5,868,000  |  |  | (2 | %)
|Vein products             |  |                              | 2,608,000  |                 |  | 7            | %  |                 | 2,436,000  |  |  | 9  | % 
|Total product revenue     |  | $                            | 17,867,000 |                 |  | 16           | %  | $               | 15,416,000 |  |  | 12 | % 
|License and collaboration |  |                              | 322,000    |                 |  | (18          | %) |                 | 395,000    |  |  | 5  | % 
|Total revenue             |  | $                            | 18,189,000 |                 |  | 15           | %  | $               | 15,811,000 |  |  | 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 products
are divided into three categories:

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Catheter
 products, consisting of the Pronto® V3 and Pronto LP extraction
 catheters, micro-introducer kits, Guideliner catheter, MICRO Elite and EXPRO Elite
 snares, the Guardian® hemostasis valve, guidewires used in
 connection with percutaneous access to the vasculature, and a variety of
 catheters for clinical niches including the Langston® dual lumen
 catheters, Twin-Pass® dual access catheters, Gandras® catheters, Minnie® support
 catheters, and Gopher catheters,
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | 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, and                                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | Vein
 products, principally consisting of the Vari-Lase® endovenous
 laser, a laser console and procedure kit used for the treatment of varicose
 veins,                                                                                                                                                                                                                                                                                                                                     

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, we made the strategic decision to develop additional
products. We have grown from net revenue of $6.2 million in 2000 to net revenue
of $68.4 million in 2009. This increase in revenue represents a compound annual
growth rate of 31% and is 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, create new
interventional medical devices, and then deliver these products to physicians
through our direct domestic sales force and our international distribution
network. We are currently developing several additional products that leverage
our existing infrastructure to bring additional solutions to the interventional
cardiologist and interventional radiologist.

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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, |    
|                                           |  | 2010                          |     | 2009 | 
|Revenue:                                   |  |                               |     |      |  |     |   
|Product revenue                            |  |                               | 98  | %    |  | 98  | % 
|License and collaboration revenue          |  |                               | 2   | %    |  | 2   | % 
|Total revenue                              |  |                               | 100 | %    |  | 100 | % 
|                                           |  |                               |     |      |  |     |   
|Product costs and operating expenses:      |  |                               |     |      |  |     |   
|Cost of goods sold                         |  |                               | 33  | %    |  | 33  | % 
|Collaboration expenses                     |  |                               | 1   | %    |  | 1   | % 
|Research and development                   |  |                               | 13  | %    |  | 12  | % 
|Clinical and regulatory                    |  |                               | 4   | %    |  | 4   | % 
|Sales and marketing                        |  |                               | 31  | %    |  | 33  | % 
|General and administrative                 |  |                               | 7   | %    |  | 7   | % 
|Litigation                                 |  |                               | (20 | %)   |  |    |   
|Total product costs and operating expenses |  |                               | 69  | %    |  | 90  | % 
|Operating income                           |  |                               | 31  | %    |  | 10  | % 
|Other income and expenses, net             |  |                               |    |      |  |    |   
|Income before income taxes                 |  |                               | 31  | %    |  | 10  | % 
|Income taxes                               |  |                               | (12 | %)   |  | (4  | %)
|Net income                                 |  |                               | 19  | %    |  | 6   | % 

Three months ended
March 31, 2010, compared to three months ended March 31, 2009

Net
revenue increased 15% to $18,189,000 for the quarter ended March 31, 2010 from
$15,811,000 for the quarter ended March 31, 2009. The increase in net revenue
was a result of an increased market penetration in each of our three product
lines as well as the introduction of new products, principally in the catheter
product line. Approximately 86% of our net revenue was earned in the United
States and 14% of our net revenue was earned in international markets for the quarters
ended March 31, 2010 and March 31, 2009.

We
recognized $212,000 of licensing revenue during the three month period ending
March 31, 2010, as the result of our License Agreement and Device Supply
Agreement with King and our distribution agreement with Nicolai in Germany. We
also recognized $110,000 of collaboration revenue during the three month period
ending March 31, 2010 as a result of performing clinical and development work
for King under the Device Supply Agreement.

Gross
margin across all product lines increased to 67% for the quarter ended March
31, 2010, compared to 66% for the quarter ended March 31, 2009, primarily due
to selling mix. We expect product gross margins to be in the range of 66% to
67% for the remainder of 2010, 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.

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Table of Contents

Research
and development expense for the first quarter of 2010 totaled $2,464,000, or
13% of revenue, compared to $1,916,000, or 12% of revenue for the first quarter
of 2009. The main reason for the increase in research and development expenses
was an increase in testing required by the FDA on our pending biopsy marker product.
We expect our continuing research and development expenses to be approximately
10% to 12% of revenue during 2010 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 2010 totaled $707,000, or 4% of
revenue, compared to $612,000, or 4% of revenue for the first quarter of 2009.
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 2010.

Sales
and marketing expense for the first quarter of 2010 totaled $5,603,000, or 31%
of revenue, compared to $5,253,000, or 33% of revenue for the first quarter of
2009. The decline in sales and marketing expenses as a percentage of revenue
primarily resulted from maintaining our direct sales force at between 85 and 90
full-time employees while continuing to grow revenue. We expect to maintain the
same relative size of our direct sales force during 2010. As a result, we
expect our sales and marketing expenses will continue to decline as a
percentage of revenue to between 27% and 29% of revenue by the end of 2010.

General
and administrative expense for the first quarter of 2010 totaled $1,307,000, or
7% of revenue, compared to $1,119,000, or 7% of revenue for the first quarter
of 2009. General and administrative expenses have remained relatively flat as
percent of total revenue. We expect general and administrative expenses to be
approximately 6% to 7% of revenue in 2010.

Litigation
income in the first quarter of 2010 was $3,529,000, or 20% of revenue. The
litigation income resulted from an award of damages the Company received in the
Marine Polymer Technologies, Inc. litigation. For a complete discussion of
litigation matters, see Note 9 to the Unaudited Consolidated Financial
Statements in Item 1 of Part I of this Form 10-Q.

Interest
income decreased to $10,000 for the first quarter of 2010 compared to $23,000
for the first quarter of 2009. The decrease in interest income was primarily
the result of lower interest rates being paid on our deposit funds held at the
bank.

Interest
expense decreased to $5,000 for the first quarter of 2010 compared to $9,000
for the first quarter of 2009. The decrease in interest expense was the result
of timing of banking charges as we switched banks in the first quarter of 2010.

Foreign
exchange loss was $23,000 for the first quarter of 2010 compared to $12,000 for
the first quarter of 2009.

Income
tax expense increased to $2,096,000 for the three months ending March 31, 2010
on income before tax of $5,562,000 resulting in an effective income tax rate of
38%. 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 months ended March 31, 2009, income tax expense was
$577,000 on income before tax of $1,515,000, resulting in an effective income
tax rate of 38%.

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Liquidity and Capital Resources

Our
cash and cash equivalents totaled $22,370,000 at March 31, 2010 compared to
$17,794,000 in cash and cash equivalents at December 31, 2009, an increase of
$4,576,000. Our cash equivalents are invested in a money market fund invested
in all types of high quality, short-term money market instruments denominated
in U.S. dollars such as debt instruments guaranteed by the governments of the
United States, Western Europe, Australia, Japan and Canada, high quality
corporate issuers and bank obligations. The money market funds assets are
rated in the highest short-term category by nationally recognized rating
agencies, such as Moodys or Standard & Poors.

Cash
provided by operations. We generated $5,810,000 of
cash from operations in the three months ended March 31, 2010. The cash
generated in the first quarter primarily resulted from our income before taxes
of $5,562,000, including the $3,529,000 litigation income, since essentially
all of our income taxes are offset by our deferred tax assets.

Cash
used for investing activities.We used $437,000 of
cash in investing activities in the three months ended March 31, 2010. We
incurred capital expenditures of $437,000 relating primarily to purchasing
additional manufacturing equipment and completing leasehold improvements and
purchasing additional research and development equipment.

Cash
provided by financing activities.We used $797,000 of
cash in financing activities in the three months ended March 31, 2010. We used
$593,000 of cash to repurchase 66,107 common shares on the open market under
our stock repurchase plan, and we used $387,000 of cash to repurchase 48,212
shares that vested under outstanding restricted stock awards for income tax
withholding purposes. This was offset by our receipt of $183,000 of cash upon
the exercise of outstanding stock options.

We
have a $10 million revolving line of credit with US Bank, which has a 12-month
term, bears interest at the rate of LIBOR plus 1.60% and is secured by a first
security interest on all of our assets. As of March 31, 2010, we were in
compliance with the bank covenant 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 $39.9 million at March 31, 2010 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.

Off-Balance Sheet Arrangements

We
did not have any off-balance sheet arrangements as of March 31, 2010.

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Table of Contents

Contractual Obligations

The
following table summarizes our contractual cash commitments as of March 31,
2010:

|                           |  |                        |           |                   |   |             |  |             |           |                    |   |           |  |   |         | 
|-------------------------- |  | ---------------------- | --------- | ----------------- | - | ----------- |  | ----------- | --------- | ------------------ | - | --------- |  | - | ------- | 
|                           |  | Payments Due by Period |          
|Contractual
 Obligations   |  | Total                  |           | Less than
 1 year |   | 1 - 3 years |  | 3 - 5 years |           | More than
 5 years |  
|Facility
 operating leases |  | $                      | 4,494,000 |                   | $ | 773,000     |  | $           | 1,617,000 |                    | $ | 1,683,000 |  | $ | 421,000 | 

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 2009 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.
Forward-looking statements such as these are based on managements current
expectations as of the date of this report but involve risks, uncertainties and
other factors which may cause actual results to differ materially from those
contemplated by such forward-looking statements. 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, 2009. 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 and do not intend to revise or update publicly any
forward-looking statement for any reason.

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|         |                                                            
|-------- | -----------------------------------------------------------
|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 one major
bank 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. In
international markets, we sell our products to independent distributors who, in
turn, sell to hospitals. Sales to independent distributors are denominated in
United States dollars, with the exception of Germany, where sales are
denominated in Euros.

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. A change of 0.1 in the Euro
exchange would result in an increase or decrease of approximately $20,000 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 LIBOR. 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, 2010,
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 0.1% decline in the current
market interest rates paid on deposits would result in interest income being
reduced by approximately $22,000 on an annual basis.

|         |                        
|-------- | -----------------------
|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.

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Changes in internal control over financial reporting.

During
the fiscal quarter ended March 31, 2010, 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 and
AngioDynamics, 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.

From
time to time, we are involved in additional legal proceedings arising in the
normal course of business. As of the date of this report we are 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 our results
of operations or financial condition.

|         |              
|-------- | -------------
|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 |        | Average
 Price Paid
 per Share |   | Total Number of
 Shares Purchased
 as Part of a Publicly
 Announced Plans or
 Programs(2) |  | Maximum Number of
 Shares that May Yet be
 Purchased Under the
 Plans or Programs |       
|January 1 
 31, 2010  |  |                                    | 22,434 | (1)                            | $ | 7.99                                                                                      |  |                                                                                   |       |  |  | 1,000,000 | 
|February 1 
 28, 2010 |  |                                    | 85,887 | (1)                            | $ | 8.69                                                                                      |  |                                                                                   | 60,109 |  |  | 939,891   | 
|March 1 
 31, 2010    |  |                                    | 5,998  |                                | $ | 9.04                                                                                      |  |                                                                                   | 5,998  |  |  | 933,893   | 

| |                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) At the
 request of our employees and pursuant to the terms of their Restricted Stock
 Awards, we purchased 22,434 shares of common stock in January and 25,778
 shares of common stock in February, all at the fair market value of the
 common stock on the day the employees awards vested to satisfy income tax
 withholding obligations for those employees.
| |                                                                                                                                                                                                                                                                                                                                                                      
| | (2) On
 January 29, 2010, our Board of Directors approved a Common Stock Repurchase
 Plan (the Repurchase Plan), whereby we have the option to repurchase up to
 a maximum of 1,000,000 shares of
 our common stock on the open market at the current market price. The
 Repurchase Plan expires on December 31, 2010.                                             

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|        |                                 
|------- | --------------------------------
|Item 3. | Defaults
 Upon Senior Securities

None.

|        |                        
|------- | -----------------------
|Item 4. | (Removed
 and Reserved)
|        |                        
|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
 20, 2010 |                           | By: | /s/ Howard
 Root                      | 
|                      |                           |     | Howard Root                          
|                      |                           |     | Chief
 Executive Officer and Director
|                      |                           |     | (principal executive officer)        
|                      |                           |     |                                       | 
|                      |                           | By: | /s/ James
 Hennen                     | 
|                      |                           |     | James Hennen                         
|                      |                           |     | Senior Vice
 President of Finance and
|                      |                           |     | Chief
 Financial Officer             
|                      |                           |     | (principal financial officer)        
|                      |                           |     |                                       | 
|                      |                           | By: | /s/ Timothy
 Slayton                  | 
|                      |                           |     | Timothy
 Slayton                     
|                      |                           |     | Controller                           
|                      |                           |     | (principal accounting officer)       

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