________________________


                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-Q


               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934.

                 For the quarterly period ended January 31, 2002


                          Commission File Number 0-944


                              POSSIS MEDICAL, INC.

                            9055 Evergreen Boulevard

                        Minneapolis, Minnesota 55433-8003

                                 (763) 780-4555

             A Minnesota Corporation IRS Employer ID No. 41-0783184

                        _________________________________


     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___

     The number of shares outstanding of the Registrant's Common Stock, $.40 par
value, as of February 26, 2002 was 17,115,941.


                        ________________________________

<PAGE>



                              POSSIS MEDICAL, INC.

                                      INDEX



                                                                          PAGE


PART I.     FINANCIAL INFORMATION

  ITEM 1.   Financial Statements

              Consolidated Balance Sheets, January 31, 2002
              and July 31, 2001......................................        3

              Consolidated Statements of Operations for the three
              and six months ended January 31, 2002 and 2001.........        4

              Consolidated Statements of Cash Flows for the
              six months ended January 31, 2002 and 2001 ............        5

              Notes to Consolidated Financial Statements.............      6-8

  ITEM 2.   Management's Discussion and Analysis of Financial
              Condition and Results of Operations....................     9-14

  ITEM 3.   Quantitative and Qualitative Disclosure about
              Market Risks ..........................................       15



PART II.    OTHER INFORMATION

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

  ITEM 5.   Other Items..............................................       16

  ITEM 6.   Exhibits and Reports on Form 8-K.........................       17

            SIGNATURES...............................................       18

<PAGE>


PART I   FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS


                      POSSIS MEDICAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                     January 31, 2002          July 31, 2001
ASSETS
<S>                                                                                    <C>                     <C>
CURRENT ASSETS:
     Cash and cash equivalents................................................         $13,544,511              $ 9,515,751
     Trade receivables (less allowance for doubtful
          accounts and returns of $523,000 and
          $659,000, respectively).............................................           5,131,431                4,268,114
     Inventories..............................................................           4,105,826                4,216,629
     Prepaid expenses and other assets........................................             218,267                  342,995
               Total current assets...........................................          23,000,035               18,343,489

PROPERTY AND EQUIPMENT, net...................................................           3,383,479                3,665,751

TOTAL ASSETS..................................................................         $26,383,514              $22,009,240

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
     Trade accounts payable...................................................         $   957,778              $ 1,321,485
     Accrued salaries, wages, and commissions.................................           1,693,931                1,532,912
     Current portion of long-term debt........................................                 --                    94,310
     Other liabilities........................................................           1,083,005                  989,556
               Total current liabilities......................................           3,734,714                3,938,263

COMMITMENTS AND CONTIGENCIES

SHAREHOLDERS' EQUITY:
     Common stock-authorized, 100,000,000 shares
          of $0.40 par value each; issued and outstanding,
          17,114,628 and 16,822,023 shares, respectively......................           6,845,852                6,728,809
     Additional paid-in capital...............................................          77,327,490               75,411,387
     Unearned compensation....................................................             (41,900)                 (22,700)
     Retained deficit.........................................................         (61,482,642)             (64,046,519)
               Total shareholders' equity.....................................          22,648,800               18,070,977

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY....................................         $26,383,514              $22,009,240


<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>

<PAGE>


                      POSSIS MEDICAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                      Three Months Ended                    Six Months Ended
                                                               Jan. 31, 2002      Jan. 31, 2001     Jan. 31, 2002      Jan. 31, 2001

<S>                                                             <C>                <C>               <C>                <C>
Product sales..............................................     $10,223,788         $6,947,017       $19,809,056        $13,525,127
     Cost of sales and other expenses:
     Cost of medical products..............................       3,210,495          2,953,671         6,210,477          6,068,717
     Selling, general and administrative...................       4,458,549          4,471,881         9,148,014          8,990,311
     Research and development..............................         990,719          1,241,348         2,022,039          2,728,855
        Total cost of sales and other expenses.............       8,659,763          8,666,900        17,380,530         17,787,883
Operating income (loss)....................................       1,564,025         (1,719,883)        2,428,526         (4,262,756)
     Interest income.......................................          61,324            121,474           135,351            292,387

Net income (loss)..........................................     $ 1,625,349        $(1,598,409)      $ 2,563,877        $(3,970,369)

Weighted average number of common
   shares outstanding:
     Basic.................................................      17,021,773         16,713,696        16,939,977         16,707,111
     Diluted...............................................      18,775,412         16,713,696        18,514,403         16,707,111

Net income (loss) per common share:
     Basic.................................................            $.10              $(.10)             $.15              $(.24)
     Diluted...............................................            $.09              $(.10)             $.14              $(.24)


<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>

<PAGE>



                      POSSIS MEDICAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE SIX MONTHS ENDED JANUARY 31, 2002 AND 2001
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                              2002                       2001

<S>                                                                                        <C>                       <C>
OPERATING ACTIVITIES:
Net income (loss)...................................................................      $ 2,563,877                $(3,970,369)
Adjustments to reconcile net income (loss) to net
  cash provided by (used in) operating activities:
Gain on asset disposal..............................................................           (5,661)                    (1,402)
Depreciation........................................................................        1,035,880                    916,965
Stock compensation expense..........................................................          153,440                    120,059
Expense reimbursement from city government..........................................          (83,866)                       --
Writedown due to impairment of assets...............................................           70,000                        --
Increase in trade receivables.......................................................         (863,317)                  (971,762)
Increase in inventories.............................................................         (245,197)                  (163,076)
Decrease in other assets............................................................          124,728                    150,661
Decrease in trade accounts payable..................................................         (363,707)                  (224,986)
Increase (decrease) in accrued and other liabilities................................          257,946                   (153,511)
Net cash provided by (used in) operating activities.................................        2,644,123                 (4,297,421)

INVESTING ACTIVITIES:
Additions to property and equipment.................................................         (467,608)                (1,018,808)
Proceeds from the disposal of assets................................................            5,661                      1,402
Proceeds from maturity of marketable securities.....................................              --                  14,245,000
Purchase of marketable securities...................................................              --                 (11,288,899)
Net cash (used in) provided by investing activities  ...............................         (461,947)                 1,938,695

FINANCING ACTIVITIES:
Proceeds from issuance of stock and exercise of
 options and warrants...............................................................        1,873,106                    193,967
Repayment of long-term debt.........................................................          (26,522)                    (5,134)
Proceeds from notes payable.........................................................              --                      36,504
Net cash provided by financing activities...........................................        1,846,584                    225,337

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ...................................        4,028,760                 (2,133,389)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD....................................        9,515,751                  4,053,429
CASH AND CASH EQUIVALENTS AT END OF PERIOD..........................................      $13,544,511                $ 1,920,040

SUPPLEMENTAL CASH FLOW DISCLOSURE:
Issuance of restricted stock........................................................      $    36,000                        --
Accrued payroll taxes related to restricted stock...................................          (12,600)                   $55,043

<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>

<PAGE>


                      POSSIS MEDICAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   BASIS OF PRESENTATION

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States  of  America  for  interim  financial  information  and  with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not  include  all  of the  information  and  footnotes  required  by  accounting
principles  generally  accepted  in the United  States of America  for  complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  The  accompanying  consolidated  financial  statements and notes
should  be read  in  conjunction  with  the  audited  financial  statements  and
accompanying notes thereto included in the Company's 2001 Annual Report.

2.   INTERIM FINANCIAL STATEMENTS

     Operating  results for the three and six month  periods  ended  January 31,
2002 are not necessarily  indicative of the results that may be expected for the
year ending July 31, 2002.

3.   INVENTORIES

     Inventories  are  stated at the lower of cost (on the  first-in,  first-out
basis) or market.  Inventory balances were as follows:

                                       January 31,           July 31,
                                          2002                 2001
           Finished goods...........   $1,932,264           $1,935,590
           Work-in-process..........    1,134,251            1,432,536
           Raw materials............    1,039,311              848,503
                                       $4,105,826           $4,216,629

4.   PROPERTY AND EQUIPMENT

     Property is carried at cost and depreciated using the straight-line  method
over the estimated  useful lives of the various  assets.  Property and equipment
balances and corresponding lives were as follows:
                                         January 31,     July 31,
                                           2002            2001     Life
    Leasehold improvements..........    $1,454,833      $1,454,833  10 years
    Equipment.......................     7,299,325       6,814,596  to 10 years
    Assets in construction..........       238,206         255,502  N/A
                                         8,992,364       8,524,931
    Less accumulated depreciation...     5,608,885       4,859,180
    Property and equipment - net....    $3,383,479      $3,665,751

<PAGE>


5.   SEGMENT AND GEOGRAPHIC INFORMATION AND CONCENTRATION OF CREDIT RISK

     The  Company's   operations  are  in  one  business  segment:  the  design,
manufacture and distribution of cardiovascular medical devices.  Possis Medical,
Inc. evaluates revenue performance based on the worldwide revenues of each major
product line and profitability  based on an enterprise-wide  basis due to shared
infrastructures to make operating and strategic decisions.

     Total  revenues  by United  States and  outside  the  United  States are as
follows:

                               Three Months Ended          Six Months Ended
                              Jan. 31      Jan. 31       Jan. 31       Jan. 31
                               2002         2001          2002          2001

   United States.......... $10,069,238   $6,838,582   $19,573,056   $13,281,982
   Non-United States......     154,550      108,435       236,000       243,145
   Total revenues......... $10,223,788   $6,947,017   $19,809,056   $13,525,127

6.   NET INCOME (LOSS) PER COMMON SHARE

     Basic  income  (loss) per common  share is computed by dividing  net income
(loss)  for  the  period  by  the  weighted  average  number  of  common  shares
outstanding  during the period.  Diluted  income per share is computed using the
treasury  stock method by dividing net income by the weighted  average number of
common  shares plus the dilutive  effect of  outstanding  stock  options,  stock
warrants and shares  issuable under the employee  stock  purchase plan.  Diluted
loss per share does not include  outstanding  stock options,  stock warrants and
shares issuable under the employee stock purchase plan in the computation  since
the impact would have been anti-dilutive because of the net loss.

7.   COMMON STOCK

     During the six months ended January 31 2002, stock options and warrants for
the purchase of 227,929  shares of the Company's  common stock were exercised at
prices between $5.13 and $16.69 per share.

     During the six months ended  January 31, 2002,  the Company  issued  62,552
shares in connection with its employee stock purchase plan.

     During the six months  ended  January 31,  2002,  the Company  issued 2,124
shares of restricted stock to the outside members of the Board of Directors.

<PAGE>


8.   NEW ACCOUNTING PRONOUNCEMENTS

     In August 2001,  the  Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting  Standards  (SFAS) No. 143,  "Accounting  for
Asset Retirement Obligations." SFAS No. 143 requires entities to record the fair
value of a liability for an asset  retirement  obligation in the period in which
it is incurred. When the liability is initially recorded, the entity capitalizes
the cost by increasing the carrying amount of the related long-lived asset. Over
time,  the  liability  is  accreted to its present  value each  period,  and the
capitalized cost is depreciated over the useful life of the related asset.  Upon
settlement of the  liability,  an entity either  settles the  obligation for its
recorded  amount  or  incurs a gain or loss  upon  settlement.  SFAS No.  143 is
effective for the Company in fiscal 2003. The Company has not yet determined the
impact of SFAS No. 143 on its financial position and results of operations.

     In  September  2001,  the FASB  issued SFAS No.  144,  "Accounting  for the
Impairment  or Disposal of  Long-Lived  Assets."  SFAS No. 144 replaces SFAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed  Of." The FASB  issued SFAS No. 144 to  establish a single
accounting  model,  based on the framework  established in SFAS No. 121, as SFAS
No. 121 did not address the accounting for a segment of a business accounted for
as a discontinued  operation  under  Accounting  Principle Board Opinion No. 30,
"Reporting  the Results of  Operations - Reporting  the Effects of Disposal of a
Segment of a Business and Extraordinary, Unusual and Infrequent Occurring Events
and Transactions." SFAS No. 144 also resolves significant  implementation issues
related to SFAS No. 121. The  provisions  of SFAS No. 144 are  effective for the
Company in fiscal 2003,  and  generally,  are to be applied  prospectively.  The
Company  has not yet  determined  the  impact of SFAS No.  144 on its  financial
position and results of operations.

<PAGE>


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

Forward-Looking Statements

     Certain  statements  made  in  Management's   Discussion  and  Analysis  of
Financial Condition and Results of Operations and certain other sections of this
Form 10-Q are "forward-looking  statements" as defined in the Private Securities
Litigation  Reform Act of 1995,  including  statements  regarding  the Company's
ability to increase  disposable  sales by  increasing  utilization  rates of the
AngioJet(R)  System  at  existing  customer  accounts;  its  ability  to  obtain
additional FDA-approvals;  the expected receipt of foreign regulatory approvals;
customer responses to the Company's marketing strategies;  the Company's ability
to introduce new catheter models; future revenue levels, gross margins, expenses
levels and earnings per share and the Company's ability to develop new products.
These   forward-looking   statements  are  based  on  current  expectations  and
assumptions and entail various risks and  uncertainties  that could cause actual
results  to differ  materially  from  those  expressed  in such  forward-looking
statements.  Certain factors that may affect whether these  anticipated  results
occur include market  acceptance of our products;  factors  affecting the health
care industry such as consolidation,  cost containment and trends toward managed
care;  delays;  unanticipated  costs or  other  difficulties  and  uncertainties
associated  with  lengthy  and costly new  product  development  and  regulatory
clearance  processes;  changes in governmental laws and regulations;  changes in
reimbursement; the development of new products and compounds by competitors that
may compete with our products or make our products obsolete; sudden restrictions
in supply of key  materials  and  deterioration  of general  market and economic
conditions.  These and other  risk  factors  that may  affect  our  results  are
included in the Company's  Form 10-K for the year ended July 31, 2001 filed with
the Securities and Exchange Commission.


Critical Accounting Policies

     The consolidated  financial  statements include accounts of the Company and
all  wholly-owned  subsidiaries.  The  preparation  of financial  statements  in
conformity with accounting  principles  generally  accepted in the United States
requires  management to make estimates and assumptions in certain  circumstances
that  affect  amounts  reported  in  the  accompanying   consolidated  financial
statements  and related  footnotes.  In preparing  these  financial  statements,
management has made its best estimates and judgments of certain amounts included
in the  financial  statements,  giving due  consideration  to  materiality.  The
Company does not believe there is a great  likelihood that materially  different
amounts would be reported  related to the accounting  policies  described below.
However,  application  of these  accounting  policies  involves  the exercise of
judgment and use of  assumptions  as to future  uncertainties  and, as a result,
actual results could differ from these estimates.


Revenue Recognition

     Revenues  associated with products that are already  maintained at customer
locations are recognized  when the Company  receives a valid purchase order from
the customer.  At this time,  ownership and risk of loss is  transferred  to the
customer.  Revenues  associated  with  products  that are not  maintained at the
customer  locations are  recognized  when a valid purchase order is received and
the products are received at the customer's  location.  At this time,  title and
risk of loss is transferred to the customer. Provisions for returns are recorded
for in the same period the related revenues are recognized.

<PAGE>


Allowance for Doubtful Accounts

     Accounts receivable are reduced by an allowance for amounts that may become
uncollectable in the future.  Substantially all of the Company's receivables are
due from health care  facilities  located in the United  States.  The  estimated
allowance  for  doubtful  accounts  is  based  upon  the age of the  outstanding
receivables and the payment history and credit worthiness of each customer.  The
adequacy of the reserve for doubtful  accounts is evaluated by  management  on a
quarterly basis.



Allowance for Returns

     Accounts  receivable  are  reduced  by an  allowance  for items that may be
returned  in the  future.  The  estimated  allowance  for  returns is based upon
historical  experience,  information  received from our customers and on various
other  assumptions that are believed to be reasonable  under the  circumstances.
The  adequacy  of the  reserve  for  returns is  evaluated  by  management  on a
quarterly basis.


Inventories

     Inventories  are  valued at the  lower of cost or  market.  On a  quarterly
basis,  management assesses the inventory quantities on hand to estimated future
usage and sales and, if  necessary,  writes down the value of  inventory  deemed
obsolete or excess to market.



Warranty Reserve

     The Company  provides a one year limited  warranty on its  AngioJet  System
drive unit and a unlimited  warranty on it AngioJet System disposable  products.
The warranty reserve is based upon historical  experience of defects relating to
the Company's products and the cost to replace disposable products and to repair
drive units  under  warranty.  On a quarterly  basis  management  evaluates  the
warranty reserve to ensure it is adequate.  The adequacy of the warranty reserve
is evaluated by management on a quarterly basis.


Results of Operations

Three and Six Month Periods Ended January 31, 2002 and 2001

     Total product  sales for the three months ended January 31, 2002  increased
$3,277,000,  or 47%, to  $10,224,000  compared to $6,947,000  for the comparable
period in fiscal 2001.  Total product sales for the six months ended January 31,
2002 increased  $6,284,000,  or 46%, to $19,809,000  compared to $13,525,000 for
the comparable  period in fiscal 2001. The Company recorded a net profit for the
quarter  ended  January  31,  2002 of  $1,625,000,  or $.09 per  diluted  share,
compared  to a net  loss  of  $1,598,000,  or $.10  per  diluted  share,  in the
comparable  quarter in 2001.  For the six months  ended  January 31,  2002,  the
Company recorded a net profit of $2,564,000 or $.14 per diluted share,  compared
to a net loss of $3,970,000,  or $.24 per diluted  share,  in the same period in
2001.

<PAGE>


Revenue - AngioJet System

     U.S.  AngioJet  System  revenue for the three months ended January 31, 2002
increased 47% to $10,069,000  from  $6,839,000 for the same period in 2001. U.S.
AngioJet System revenue for the six months ended January 31, 2002 also increased
47% to $19,573,000 from $13,282,000 in 2001. The Company markets the AngioJet(R)
Rheolytic(TM)  Thrombectomy  System (AngioJet  System)  worldwide.  The AngioJet
System consists of a drive unit (capital  equipment),  which powers a disposable
pump and a family of disposable catheters,  each aimed at a specific indication.
The main factors in the revenue increase were increased sales resulting from the
Company  commencing  U.S.  marketing of the AngioJet  System with an  additional
labeling claim for the XMI(TM)135  (XMI) catheter for the removal of blood clots
in leg (peripheral) arteries in March 2001 and for coronary use in December 2001
and  the  increased  acceptance  of  the  Company's   Xpeedior(R)  catheters  by
physicians.  The  Xpeedior  catheters  are the first  catheters  marketed by the
Company based upon its proprietary  Cross-Stream(R)  Technology.  This exclusive
technology  platform  intensifies  the action at the tip of the catheter,  which
doubles the clot removal rate and triples the treatable  vessel size compared to
other  available  mechanical  thrombectomy  devices  on  the  market  today.  In
addition,  Cross-Stream  Technology has been able to deal more  effectively with
"mural  thrombus,"  the older,  more  organized  material that adheres to vessel
walls and can complicate patient results.

     As of January 31, 2002, the Company had a total of 771 domestic drive units
in the field,  compared to 582 drive units at January 31, 2001, and 726 units as
of October 31, 2001.  During the three month period ended January 31, 2002,  the
Company's  catheter sales increased  approximately  35% to  approximately  8,100
catheters  versus  approximately  6,000 catheters in the same prior year period.
During the six month period ended January 31, 2002, the Company's catheter sales
increased   approximately   37%  to   approximately   15,600   catheters  versus
approximately  11,400  catheters  in the same prior  year  period.  The  average
catheter  utilization  rate per  installed  domestic  drive unit was 10.6 in the
second quarter of fiscal 2002, compared to a rate of 10.4 in the same prior year
period,  and compared to a rate of 10.5 in the first quarter of fiscal 2002. The
Company sold 42 and 87 drive units during the three and six months ended January
31, 2002 compared to 43 and 85 drive units, respectively, in the same periods in
the prior year.

     The Company employs a variety of flexible drive unit  acquisition  programs
including  outright  purchase and various  evaluation  programs.  The purchasing
cycle for the  AngioJet  System drive unit varies  depending  on the  customer's
budget cycle.  The Company has signed  contracts with six  purchasing  groups in
order to accelerate  orders and increase market  penetration.  These  purchasing
groups negotiate  pre-determined  discounts on the drive units and catheters for
their member hospitals.  Member hospitals are required, with some exceptions, to
purchase  products from approved  vendors,  such as the Company.  The purchasing
groups  receive a  marketing  fee on their  purchases  from the  Company.  These
discounts  and  marketing  fees have been offset by the increase in sales to the
member hospitals of the purchasing  group.  There has been no material  negative
effect on the Company's margins due to these discounts and marketing fees.

<PAGE>


     The  Company  expects  U.S.  AngioJet  System  sales  to  continue  to grow
primarily through obtaining additional  FDA-approved product uses,  introduction
of new  catheter  models for  existing  indications,  more face time  selling to
existing  accounts,  peer-to-peer  selling,  and  the  publication  of  clinical
performance and cost-effectiveness data.

     Foreign  sales of the AngioJet  System for the three and six month  periods
ended January 31, 2002 were $155,000 and $236,000,  respectively.  This compared
to foreign sales of the AngioJet System of $108,000 and $243,000,  respectively,
for the same periods the previous  year.  The limited  foreign  sales are due to
cost  constraints in overseas  markets that result in lower margins.  Due to the
lower  margins the Company is not  actively  seeking to expand its  distribution
network in Europe.  In Japan,  the coronary  AngioJet  System clinical study was
completed in April 1998 and a regulatory  filing was  completed in November 1999
with the Japanese  Ministry of Health and Welfare (MHW). The Company is actively
responding to MHW regulatory  issues and expects Japanese  approval for coronary
use of the AngioJet System in fiscal 2002.

     The Company  believes  that the  treatment  of blood clots in the  coronary
vessels,  peripheral  vessels,  dialysis  access  grafts and neuro  vessels  are
significant worldwide marketing opportunities for the AngioJet System.


Revenue - Vascular Grafts

     Vascular  graft sales were $0 and $75,000 for the six months ended  January
31,  2002  and  2001,  respectively.  All  of  the  vascular  graft  sales  were
Perma-Seal(R) Dialysis Access Grafts. No additional sales of Perma-Seal Dialysis
Access Grafts are expected.  Currently the Company has put all graft  activities
on hold as it concentrates its efforts on the development on new AngioJet System
applications.  All assets  relating to the  vascular  graft  business  have been
written off in prior periods.

Cost of Medical Products

     Cost of medical  products  increased  $257,000 to  $3,210,000  in the three
month period ended  January 31, 2002 over the same period in the previous  year,
and increased  $142,000 to $6,210,000 for the six month period ended January 31,
2002 over the same period in the previous  year.  These  increases are primarily
due to the significant  growth in the U.S. AngioJet System product sales.  Gross
margins improved by $3,020,000 to $7,013,000,  or 69% as a percentage of product
sales,  for the three months ended January 31, 2002, over the same period in the
previous year.  Gross margins  improved  $6,142,000 to $13,599,000,  or 69% as a
percentage  of sales,  for the six month period ended  January 31, 2002 over the
same period in the previous year.  This compares to gross margins of 57% and 55%
as a  percentage  of product  sales for each of the three and six month  periods
ended January 31, 2001. The improvement in gross margins was primarily driven by
higher  volumes of XMI and  Xpeedior  catheters  that have a lower per unit cost
compared to the  catheters  they  replaced  and an  improvement  in the coronary
product  catheter  mix in the three and six months  ended  January  31,  2002 as
compared to same periods in the previous fiscal year. The Company  believes that
gross  margins as a percentage  of product  sales will be in the high sixties to
low seventies as a percent to sales for the remainder of fiscal 2002.

<PAGE>


Selling, General and Administrative Expense

     Selling, general and administrative expense decreased $13,000 to $4,459,000
for the three months ended January 31, 2002 and increased $158,000 to $9,148,000
for the six  months  ended  January  31,  2002,  compared  to the same  year-ago
periods.  The primary factors in the expense decrease for the three months ended
January 31, 2002 were the cost  savings  related to the work force  reduction in
January 2001,  reduction in health insurance  premiums and a reduction in travel
expense.  These  expense  reductions  were  partially  offset by an  increase in
corporate  incentives,  higher  commissions  and  marketing  fees  paid to group
purchasing  organizations  due to increased  AngioJet System product sales.  The
primary  factors for the expense  increase for the six months ended  January 31,
2002 were an increase in corporate  incentives,  higher commission and marketing
fees paid to group  purchasing  organizations  due to increased  AngioJet System
product  sales.  The reduction in costs  related to the work force  reduction in
January  2001 and  reduction  in health  insurance  premiums  and a reduction in
travel expense  partially  offset these expense  increases.  The Company expects
that selling,  general and administrative  expense to increase for the remainder
of fiscal 2002 due to the anticipated growth in U.S. AngioJet System revenue.

Research and Development Expense

     Research and development expense decreased  $251,000,  or 20%, to $991,000,
in the three months ended January 31, 2002,  when compared to the same period in
the prior year. Research and development expense decreased $707,000,  or 26%, to
$2,022,000  in the six months  ended  January 31,  2002.  These  decreases  were
primarily  due  to  the  shifting  of  priorities  between  various  development
projects, slower than anticipated TIME 1 clinical trial patient enrollment,  and
the  reimbursement of costs from the National  Institutes of Health (NIH) grant.
The Company  believes that research and development  expense for AngioJet System
applications  will  increase  for the  remainder  of fiscal  2002 as the Company
completes the development of its current products and invests in the development
of new AngioJet System thrombectomy applications and related products.

     In  October  1999,   the  Company   received  full  FDA  approval  for  its
Investigational Device Exemption (IDE) application for the TIME 1 clinical trial
of the AngioJet  System in the  treatment of acute  ischemic  stroke.  The first
patient was enrolled in May 2000. After the first five patients had been treated
in the  TIME 1  clinical  trial  for  ischemic  stroke,  a  planned  review  was
conducted.  This review  concluded that the AngioJet NV150  neurocatheter  could
access the middle  cerebral artery where most ischemic  strokes occur,  and that
the  device  can  effectively  remove a clot from  this  territory.  The  review
suggested changes to the protocol covering a variety of areas, including patient
selection,  exclusion  criteria,  and specifications for physician  technique in
deploying and moving the device in the cerebral vasculature. Physician reviewers
also suggested changes to the device,  to improve the trackability,  flexibility
and  efficacy  profile.  In May 2001,  the FDA  approved the re-start of patient
enrollment in the TIME 1 clinical trial. TIME 1 clinical trial will enroll up to
30 patients at up to eight centers in the U.S. to determine safety of the device
for this indication. Six patients have been enrolled to date under the re-opened
trial.  The  results  support  continued  enrollment  of up to  four  additional
patients.  At that time the next planned review of the five additional  patients
will be summarized.

Interest Income

     Interest  income  decreased  $60,000 to $61,000 in the three  months  ended
January 31,  2002,  and  decreased  $157,000 to $135,000 in the six months ended
January 31, 2002 compared to the same periods in the prior year. These decreases
are due to the declining  market  interest rates.  The Company expects  interest
income on a quarterly basis to increase  slightly during the remainder of fiscal
2002 as cash is generated from operations.

<PAGE>


Liquidity and Capital Resources

     The Company's cash and cash equivalents totaled approximately $13.5 million
at January 31, 2002 versus $9.5 million at July 31, 2001.

     The $4,029,000 net increase in cash and cash equivalents in the most recent
six-month  period  was  primarily  due to the net  cash  provided  by  operating
activities  of  $2,644,000.  Net  cash  provided  by  operating  activities  was
primarily due to the net income of $2,564,000, depreciation of $1,036,000, stock
compensation  expense of $153,000, a decrease in other assets of $125,000 and an
increase in accrued expenses and other current liabilities of $258,000. This net
cash provided by operating  activities  was  partially  offset by an increase in
trade  receivables  of  $863,000,  an increase in  inventory  of $245,000  and a
decrease in accounts  payable of $364,000.  The decrease in other assets was due
to the expensing of prepaid assets, primarily insurance. The increase in accrued
liabilities was due to the timing of the payments of accrued liabilities and the
increase in accrued corporate incentives. Trade receivables increased due to the
increase  in revenue  for the three  month  period  ending  January  31, 2002 as
compared  to revenue for the last three  months of fiscal  2001.  Inventory  was
increased due to the increase in demand of the AngioJet System.  The decrease in
accounts payable was due to the timing of the payment of accounts payables. Cash
used in  investing  activities  of $468,000 was for the purchase of property and
equipment.  Net cash  provided by financing  activities  was  $1,847,000,  which
resulted from the cash received in connection with the exercise of stock options
and warrants of $1,873,000, offset by the repayment of debt of $27,000.

     The Company expects that fiscal 2002 product sales of the AngioJet  System,
primarily in the United States, will be in the previously estimated range of $39
million to $44  million.  Gross  margin for fiscal 2002 is expected to be in the
high  sixties  to low  seventies  as a  percent-of-sales.  The  Company  expects
selling,  general and administrative  expenses to increase in fiscal 2002 due to
anticipated growth in product sales.  Research and development  expenditures are
expected to increase  slightly for fiscal 2002 from the fiscal 2001 level as the
Company  completes  development  of projects and invests in  development  of new
AngioJet System  thrombectomy  applications  and related  products.  The Company
expects  its  diluted  earnings  per  share  for the  full  year to  exceed  the
previously  estimated  range of $0.18-$0.23  and to be  $0.31-$0.34  per diluted
share for the full year. The quarterly revenue progression should build steadily
through the year,  from a seasonal  low in the first  quarter,  with the profile
being affected by the timing of new product  introductions as well as the timing
of expenses related to marketing and clinical trials.  In addition,  the Company
expects that  increasing  working capital  investments in trade  receivables and
inventory  will be required to support  growing  product  sales.  Possis Medical
expects  its  business  to be cash flow  positive  for the balance of the fiscal
year,  and the Company  anticipates  no additional  equity  financing to support
these growths plans. The trends to support the Company's  expected positive cash
flow for the remainder for fiscal 2002 are the continued growth of the Company's
product  sales and the  continued  management  of the  Company's  expenses.  The
Company's  primary source of cash is from its product sales.  Collections of the
trade  receivables  resulting  from the product  sales are  reviewed  monthly to
ensure that the  customers are paying in a timely  manner.  The Company's use of
cash  is for  payment  of  normal  trade  accounts  payable,  capital  equipment
purchases,  employee  compensation  and other normal business  expenses,  all on
terms that are  customary  in the  industry.  The  Company  is current  with its
vendors.

<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company  invests  its excess cash in money  market  mutual  funds.  The
market risk on such investments is minimal.

     The product sales for the Company's foreign  subsidiary are in U.S. Dollars
("USD").  At the end of January  2002,  the amount of  currency  held in foreign
exchange was approximately  $1,000 USD. The market risk on the Company's foreign
subsidiary operations is
minimal.

     The Company does not have any debt or off balance sheet liabilities.

<PAGE>


                           PART II. OTHER INFORMATION

ITEM 4.  Submission of Matters to a Vote of Security Holders

     a. The 2001 annual meeting of shareholders of Possis Medical, Inc. was held
on December 13, 2001.

     b. By the following vote,  management's  nominees were elected as directors
of the  Corporation  for one year or until  their  successors  are  elected  and
qualified:

                                          FOR            AGAINST

        Mary K. Brainerd............   15,273,341        399,209
        Robert G. Dutcher...........   15,275,600        396,950
        Seymour J. Mansfield........   15,506,056        166,494
        William C. Mattison, Jr.....   15,530,150        142,400
        Whitney A. McFarlin.........   15,175,330        497,220
        Donald C. Wegmiller.........   15,475,494        197,056
        Rodney A. Young.............   15,166,559        505,991

     c. The proposal to amend the  Corporation's  1991 Employee  Stock  Purchase
Plan was approved,  with holders of 14,417,488 shares of common stock voting for
approval, 884,508 voting against approval, and 370,554 abstaining.

     d. By a vote of 15,563,954 in the  affirmative,  68,951 in the negative and
39,645 abstaining, the appointment of Deloitte & Touche LLP as the Corporation's
certified public accountants was ratified.


ITEM 5.  Other Items

     BOARD OF DIRECTOR'S COMPENSATION

     By actions  taken  effective  November 28, 2001 and December 12, 2001,  the
Board of Directors of the Company approved changes to its compensation  program.
Beginning in calendar year 2002,  directors  will receive an annual  retainer of
$6,000 (an  increase of $2,000),  meeting  fees of $1,500 per Board  meeting (an
increase of $1,000),  $500 for each telephonic  meeting attended (an increase of
$250),  4,000  stock  options  annually  (an  increase  of  1,000  shares),  and
restricted stock equal in value on the date of grant to the $6,000 retainer fee.
New  directors  will  receive an 8,000 share  stock  option  grant upon  initial
election to the Board.  The Board also adopted a stock option program to promote
retention  of  directors   for  a  period  long  enough  to  allow  for  a  full
understanding  of the  Company,  to  encourage  solid  judgments  that  lead  to
sustained  business  success  and to aid in  the  recruitment  of new  qualified
directors. Upon election to a sixth term, directors shall receive a 20,000 share
stock  option grant and annual  grants of 4,000  shares  annually for ten years.
Vesting  of these  grants  is  contingent  on  appreciation  of the value of the
Company's stock to specified price levels.  In addition,  all shares continue to
be eligible for vesting for five years  following  retirement  from service as a
director and vest, in any event,  five years following the date of the grant. At
adoption of this program, directors who had served on the Board for in excess of
the threshold  five-year term received  grants as though the program had been in
effect  during their  tenure as  directors,  resulting  in stock  option  awards
totaling 172,000 shares to three directors, effective November 28, 2001.

<PAGE>


     CHANGE OF CONTROL PLAN

     On September 15, 1999, the Company's  Board of Directors  approved a Change
in  Control  Termination  Pay Plan (the  "Plan")  that  provides  for salary and
benefit continuation  payments to executive officers and selected key management
and technical  personnel in the event they are terminated  within 24 months of a
change in control.  The Plan as adopted  also  provided for  discretionary  cash
bonus  payments  to  executive  officers  and  other  key  management  personnel
notwithstanding their employment status following a change in control in amounts
ranging from 1% and 4% of the value of the Company based on achievement of sales
revenue goals. On December 12, 2001, the Board of Directors  amended the Plan to
provide,  in lieu of the  discretionary  cash bonus  payments  described  above,
mandatory cash bonus payments upon a change in control,  to senior and other key
management  and  technical  personnel  who, in the  judgment of the Board,  made
significant  contributions to the growth and success of the Company and played a
vital role in  increasing  shareholder  value.  The Plan provides that the Board
shall create a cash bonus pool for the purpose of funding the cash bonus awards.
The cash bonus pool is to be in an amount  between  five-eighths  of one percent
(.625%)  and a maximum of four  percent  (4%) of the value of the Company at the
time of a Change in Control, as measured by stock value.



ITEM 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits

     Certain of the following  exhibits are incorporated by reference from prior
filings.  The form with which each  exhibit was filed and the date of filing are
indicated below.

Exhibit  Form       Date Filed                      Description


  3.1    10-K    Fiscal year ended      Articles of incorporation as amended
                 July 31, 1994          and restated to date.

  3.2    10-K    Fiscal year ended      Bylaws as amended and restated
                 July 31, 1999          to date.

 10.16   10-Q    Quarter ended          Change in Control Termination
                 January 31, 2002       Pay Plan December 1, 2001



     (b) Reports on Form 8-K

     Possis Medical,  Inc. filed no reports on Form 8-K during the quarter ended
January 31, 2002.

<PAGE>


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.



                                        POSSIS MEDICAL, INC.


DATE:  March 18, 2002               BY:      /s/
                                       ROBERT G. DUTCHER
                                       Chairman, President and
                                       Chief Executive Officer



DATE:  March 18, 2002               BY:     /s/
                                       EAPEN CHACKO
                                       Vice President of Finance and
                                       Chief Financial Officer