UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

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

For the quarterly period ended January 31, 2008

                                       or

[ ] 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 0-944

                              POSSIS MEDICAL, INC.
                              --------------------
             (exact name of registrant as specified in its charter)

         Minnesota                                           41-0783184
         ---------                                           ----------
(State or other jurisdiction                               (I.R.S. Employer
of incorporation organization)                             Identification No.)


9055 Evergreen Blvd NW      Minneapolis MN                      55433-8003
------------------------------------------                      -----------
(Address of principal executive offices)                         (Zip Code)

763-780-4555
------------
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required file such reports), and (2) has been subject to such
filing requirements for the past 90 days. X  Yes  No
                                         ---        ---

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.

 Large accelerated filer    Accelerated filer X    Non-accelerated filer
                        ---                  ---                        ---

Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes     No X
                                               ---    ---
The number of shares outstanding of the Registrant's Common Stock, $.40 par
value, as of February 28, 2008, was 17,034,157.


                                       1
<PAGE>

                              POSSIS MEDICAL, INC.

                                      INDEX


<TABLE>
<CAPTION>
<S>           <C>                                                                                                           <C>

                                                                                                                          PAGE
                                                                                                                          ----


PART I.                       FINANCIAL INFORMATION

         ITEM 1.              Financial Statements.............................................................             3

                              Consolidated Balance Sheets, January 31, 2008 and July 31, 2007..................             3

                              Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the
                              three and six months ended January 31, 2008 and 2007.............................             4

                              Consolidated Statements of Cash Flows for the six months ended
                              January 31, 2008 and 2007........................................................             5

                              Notes to Consolidated Financial Statements.......................................             6

         ITEM 2.              Management's Discussion and Analysis of Financial
                              Condition and Results of Operations..............................................            13

         ITEM 3.              Quantitative and Qualitative Disclosures about Market Risk.......................            20

         ITEM 4.              Controls and Procedures..........................................................            20

PART II.                      OTHER INFORMATION

         ITEM 1.              Legal Proceedings................................................................            20

         ITEM 1A.             Risk Factors.....................................................................            20

         ITEM 2.              Unregistered Sales of Equity Securities and Use of Proceeds......................            21

         ITEM 4.              Submission of Matters to a Vote of Security Holders..............................            21

         ITEM 6.              Exhibits.........................................................................            23

                              SIGNATURES.......................................................................            24

</TABLE>

                                       2
<PAGE>


PART 1    FINANCIAL INFORMATION

          ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                               POSSIS MEDICAL, INC.
                                                           CONSOLIDATED BALANCE SHEETS
                                                                   (UNAUDITED)

<S>                                                                                    <C>               <C>

ASSETS                                                                                 January 31, 2008   July 31, 2007
                                                                                       ----------------- ---------------

CURRENT ASSETS:
  Cash and cash equivalents........................................................... $      5,078,220  $    2,664,607
  Marketable securities...............................................................       35,505,164      40,207,324
  Trade receivables (less allowance for doubtful accounts and returns of $1,216,000
   and $1,131,000, respectively)......................................................        9,811,976       8,647,569
  Inventories.........................................................................       10,976,181       9,351,888
  Prepaid expenses and other assets...................................................        2,885,353       2,955,583
  Deferred tax asset..................................................................        2,010,000       2,010,000
                                                                                       ----------------- ---------------
    Total current assets..............................................................       66,266,894      65,836,971
PROPERTY AND EQUIPMENT, net...........................................................        4,510,492       4,872,574
DEFERRED TAX ASSET....................................................................        9,554,152       9,518,000
NOTE RECEIVABLE - RAFAEL MEDICAL......................................................        1,500,000              --
INVESTMENT IN RAFAEL MEDICAL..........................................................        2,612,887       2,612,887
PREPAYMENT TO VENDOR..................................................................        1,330,000              --
OTHER ASSET...........................................................................        1,100,277       1,080,889
                                                                                       ----------------- ---------------

TOTAL ASSETS.......................................................................... $     86,874,702  $   83,921,321
                                                                                       ================= ===============

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Trade accounts payable.............................................................. $      1,826,686  $    2,558,413
  Accrued salaries, wages, and commissions............................................        4,455,375       4,503,546
  Other liabilities...................................................................        2,569,507       2,369,801
                                                                                       ----------------- ---------------
     Total current liabilities........................................................        8,851,568       9,431,760
OTHER LIABILITES......................................................................        1,298,563       1,201,743

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
  Common stock-authorized, 100,000,000 shares of $0.40 par value each; issued and
   outstanding, 17,033,157 and 16,894,416 shares, respectively........................        6,813,263       6,757,766
  Additional paid-in capital..........................................................       79,757,028      77,538,548
  Accumulated other comprehensive gain (loss).........................................          159,000         (60,000)
  Retained deficit....................................................................      (10,004,720)    (10,948,496)
                                                                                       ----------------- ---------------
       Total shareholders' equity.....................................................       76,724,571      73,287,818
                                                                                       ----------------- ---------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............................................ $     86,874,702  $   83,921,321
                                                                                       ================= ===============
</TABLE>

                                       3
<PAGE>
<TABLE>
<CAPTION>
<S>                                             <C>                <C>                     <C>          <C>


                                                         POSSIS MEDICAL, INC.
                               CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
                                         FOR THE THREE AND SIX MONTHS ENDED JANUARY 2008 AND 2007
                                                           (UNAUDITED)


                                                          Three Months Ended                    Six Months Ended
                                                 ------------------------------------- ----------------------------------
                                                   Jan. 31, 2008      Jan. 31, 2007     Jan. 31, 2008     Jan. 31, 2007
                                                 ----------------- ------------------- ---------------- -----------------
Product sales...............................    $      20,632,570  $       15,806,085      $39,501,941  $     31,409,966
Cost of medical products....................            6,843,143           4,737,400       12,610,099         9,145,594
                                                ------------------ ------------------- ---------------- -----------------
Gross profit................................    $      13,789,427  $       11,068,685      $26,891,842  $     22,264,372

Selling, general and administrative.........           10,614,068           9,265,398       21,778,065        19,081,443
Research and development....................            2,562,865           1,943,999        4,885,076         4,358,673
                                                ------------------ ------------------- ---------------- -----------------
       Other operating expenses.............           13,176,933          11,209,397       26,663,141        23,440,116
                                                 ----------------- ------------------- ---------------- -----------------

Operating income (loss).....................              612,494            (140,712)         228,701        (1,175,744)
    Interest income.........................              481,978             536,620          985,361         1,076,112
    (Loss) on sale of securities............              (77,768)            (38,208)          (7,093)          (19,317)
                                                ------------------ ------------------- ---------------- -----------------

Income (loss) before income taxes...........            1,016,704             357,700        1,206,969          (118,949)
Provision (benefit) for income taxes........              447,143             184,000          533,193           (59,000)
                                                ------------------ ------------------- ---------------- -----------------

Net income (loss)...........................              569,561             173,700          673,776           (59,949)

Other comprehensive income, net of tax:.....
Unrealized gain (loss) on securities........              156,000              (5,000)         219,000           188,000
                                                ------------------ ------------------- ---------------- -----------------
Comprehensive income (loss).................    $         725,561  $          168,700         $892,776  $        128,051
                                                ================== =================== ================ =================

Weighted average number of common
    shares outstanding:
    Basic...................................           16,955,183          17,179,940       16,931,284        17,164,966
    Diluted.................................           17,733,749          17,734,245       17,624,759        17,164,966

Net income (loss) per common share:
    Basic...................................    $            0.03  $             0.01            $0.04  $           0.00
                                                ================== =================== ================ =================
    Diluted.................................    $            0.03  $             0.01            $0.04  $           0.00
                                                ================== =================== ================ =================


See notes to consolidated financial statements.
</TABLE>

                                       4
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                          <C>           <C>

                                                        POSSIS MEDICAL, INC.
                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                       FOR THE SIX MONTHS ENDED JANUARY 31, 2008 AND 2007
                                                           (UNAUDITED)
                                                                                                 2008          2007
                                                                                             ------------- -------------
OPERATING ACTIVITIES:
Net income (loss)............................................................................$    673,776  $    (59,949)
      Adjustments to reconcile net income to net cash........................................
        provided by operating activities:....................................................
      Depreciation...........................................................................   1,667,285     1,410,549
      (Gain) loss on asset disposal..........................................................      (7,196)       21,007
      Stock-based compensation expense.......................................................   1,809,606     2,446,144
      (Gain) loss on sale of marketable securities...........................................     (36,487)       19,317
      Deferred taxes.........................................................................      95,848      (194,000)
      Increase in trade receivables..........................................................  (1,164,407)     (516,982)
      Increase in inventories................................................................  (2,281,485)   (1,271,175)
      Increase in prepaid expenses and other assets..........................................  (1,279,158)     (550,109)
      Decrease in trade accounts payable.....................................................    (789,727)     (798,887)
      Decrease in accrued and other liabilities..............................................    (101,619)     (279,725)
                                                                                             ------------- -------------
         Net cash (used in) provided by operating activities.................................  (1,413,564)      226,190

INVESTING ACTIVITIES:
      Increase in Note Receivable - Rafael Medical                                             (1,500,000)           --
      Investment in Rafael Medical                                                                     --    (2,608,199)
      Additions of property and equipment                                                        (590,340)     (725,443)
      Proceeds from sale of fixed assets.....................................................       7,525         1,200
      Proceeds from sale of marketable securities............................................  25,223,916    56,318,945
      Purchase of marketable securities...................................................... (20,128,269)  (54,017,886)
                                                                                             ------------- -------------
         Net cash provided by (used in) investing activities.................................   3,012,832    (1,031,383)

FINANCING ACTIVITIES:
      Proceeds from issuance of common stock and exercise of options.........................     676,361       203,017
      Excess tax benefits from stock based compensation......................................     137,984            --
                                                                                             ------------- -------------
         Net cash provided by financing activities...........................................     814,345       203,017

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.............................................   2,413,613      (602,176)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.............................................   2,664,607     3,505,796
                                                                                             ------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD...................................................$  5,078,220  $  2,903,620
                                                                                             ============= =============

SUPPLEMENTAL CASH FLOW DISCLOSURE:
     Cash paid for income taxes..............................................................$    287,656  $    259,850
     Issuance of restricted stock............................................................     732,519       591,707
     FIN 48 Adjustment.......................................................................     270,000            --

See notes to consolidated financial statements.
</TABLE>

                                       5
<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 our
     Annual Report on Form 10-K for the year ended July 31, 2007.

     INTERIM FINANCIAL STATEMENTS

     Operating results for the three and six months ended January 31, 2008 are
     not necessarily indicative of the results that may be expected for the year
     ending July 31, 2008.

     INVESTMENT AND NOTE RECEIVABLE IN RAFAEL MEDICAL

     We hold an investment in Rafael Medical Technologies, Inc. (Rafael), a
     company developing an inferior vena cava (IVC) filter named SafeFlo(R). In
     December 2006, we invested $2.5 million in a series of preferred stock of
     Rafael that represents a 15 percent ownership interest and also executed a
     stock purchase agreement that provides us a right for a period of
     three-years to purchase the remaining capital stock of Rafael that is or
     may become outstanding. In December 2007, the Company provided an
     additional $1.5 million to Rafael in secured debt financing as agreed upon
     in the stock purchase agreement. Interest income on the $1.5 million note
     receivable will be recognized when received. The preferred stock purchase
     agreement provides us with a number of rights as an investor. The total
     investment on the balance sheet of $2,612,000 reflects $112,000 of
     transaction-related costs that were capitalized. As of January 31, 2008,
     management determined that there was no impairment in the value of its
     investment in Rafael which is accounted for under the cost method.

2.   NET INCOME (LOSS) PER COMMON SHARE

     Basic income (loss) per common share is computed by dividing net income 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, and
     shares issuable under the employee stock purchase plan (ESPP).

                                       6
<PAGE>

     The following table presents a reconciliation of the numerators and
     denominators of basic and diluted earnings per share:
<TABLE>
<CAPTION>
<S>                                                                      <C>         <C>         <C>         <C>
                                                                           Three Months Ended       Six Months Ended
                                                                               January 31,             January 31,
                                                                         ----------------------- ------------------------
                                                                            2008        2007        2008         2007
                                                                         ----------- ----------- ------------ -----------
     Numerator:
       Net income (loss)                                                 $   569,561 $   173,700 $   673,776 $   (59,949)
                                                                         =========== =========== =========== ============

     Denominator:
       Weighted average common shares outstanding
                                                                          16,955,183  17,179,940  16,931,284  17,164,966
       Effect of potentially dilutive securities:
             Stock options and other                                         778,566     554,305     693,475           -
                                                                         ----------- ----------- ----------- ------------
       Weighted average common shares
       outstanding, assuming dilution                                     17,733,749  17,734,245  17,624,759  17,164,966
                                                                         =========== =========== =========== ============

     Basic earnings per share                                            $      0.03 $      0.01 $      0.04 $      0.00
     Diluted earnings per share                                          $      0.03 $      0.01 $      0.04 $      0.00
</TABLE>


     Potential dilutive securities include stock options, non-vested share
     awards, and shares issuable under our ESPP.

     The computation of dilutive shares outstanding excluded options to purchase
     760,000 and 1,418,000 shares of common stock for the three months ended
     January 31, 2008 and 2007, and 879,000 and 1,423,000 shares of common stock
     for the six months ended January 31, 2008 and 2007, respectively. These
     amounts were excluded because the option exercise prices were greater than
     the weighted average closing market price of our common stock for the
     periods presented and therefore, the effect would be antidilutive (i.e.,
     including such options would result in higher earnings per share.) In
     addition, the computation of dilutive shares outstanding excluded options
     to purchase an additional 583,000 shares of common stock for the six months
     ended January 31, 2007 due to the Company having a net loss.

3.   STOCK-BASED COMPENSATION

     We have a stock-based compensation plan under which we grant stock options
     and restricted stock (non-vested share awards) and also have an Employee
     Stock Purchase Plan (ESPP). All stock options issued prior to July 31, 2005
     have a ten-year term. All stock options issued subsequent to July 31, 2005
     have a five-year term. Although outstanding stock options issued to
     employees generally vest over a four-year period, on occasion we have
     issued options that vest based upon achieving corporate objectives or stock
     price performance. Outstanding stock options issued to directors vest over
     the following periods, depending on the basis for issuance: a) six months -
     stock options in lieu of compensation for services rendered as directors,
     b) four years - annual grants of stock options and c) stock price
     performance with a five-year cliff period - service award options.
     Directors also receive an annual non-vested share award that vests upon
     continued service (time-based) of one year. Our ESPP permits employees to
     purchase stock at 85 percent of the market price of our common stock at the
     end of each quarterly purchase period.

     Total stock-based compensation expense included in our statement of income
     for the three months ended January 31, 2008 and 2007, was $536,000, net of
     tax and $662,000, net of tax, respectively. Total stock-based compensation
     expense included in our statement of income for the six months ended
     January 31, 2008 and 2007, was $1,810,000 and $2,446,000, net of tax,
     respectively.

                                       7
<PAGE>

     The following table summarizes the stock option transactions for the six
     months ended January 31, 2008:
<TABLE>
<CAPTION>
<S>                         <C> <C>                                    <C>        <C>                               <C>

                                                                                                          Weighted-
                                                                                  Weighted- Average  Average Remaining
                                                                                    Exercise Price     Contractual Term
                                                                   Options             Per Share         (in years)
     Outstanding on July 31, 2007                                      3,324,000  $            11.12
     Granted                                                             389,000  $            10.27
     Exercised                                                           (61,000) $            14.05
     Forfeited/Canceled                                                 (115,000) $            13.84
                                                             ==================== ==================
     Outstanding on January 31, 2008                                   3,537,000  $            11.03                4.03
                                                             ==================== ================== ===================
     Exercisable on January 31, 2008                                   2,448,000  $            11.03                1.95
                                                             ==================== ================== ===================
</TABLE>

     Note:  At January 31, 2008, shares associated with our ESPP were not
     significant and were excluded from the table above.

     The aggregate intrinsic value of options (the amount by which the market
     price of the stock on date of exercise exceeded the market price of the
     stock on the date of grant) exercised during the three months ended January
     31, 2008 and 2007, was $256,000 and $101,000, respectively; and during the
     six months ended January 31, 2008 and 2007, was $358,000 and$101,000,
     respectively.

     We estimated the fair values using the Actuarial Binomial option-pricing
     model, modified for dividends and using the following assumptions:
<TABLE>
<CAPTION>
<S>                            <C>                                            <C> <C>                     <C> <C>

                                                                                  Six Months Ended
                                                                                     January 31,
                                                                   ------------------------------------------------
                                                                              2008                  2007(1)
                                                                   --------------------       ---------------------
                 Risk-free rate(2).............................               3.1-4.7%                    4.7-4.9%

                 Expected dividend yield......................                      0%                          0%
                 Expected stock price volatility(3)............                    55%                      55-56%
                 Expected life of stock options(4).............             4.16 years                  4.15 years
                 Fair value per option........................             $4.82-$7.97                 $4.17-$8.31
</TABLE>

     1. Forfeitures are estimated based on historical experience.
     2. Based on the U.S. Treasury interest rates whose term is consistent with
        the expected life of our stock options.
     3. We used an outside valuation advisor to assist us in projecting expected
        stock price volatility. Historical market price data was used.
     4. We estimate the expected life of stock options based upon historical
        experience.

     Net cash proceeds from the exercise of stock options were $523,000 and
     $62,000 for the six months ended January 31, 2008 and 2007, respectively.

     The actual income tax benefit realized from stock option exercises was
     $138,000 and $13,000 for the six months ended January 31, 2008 and 2007,
     respectively.

     Non-Vested Share Awards

     The fair value of non-vested market-based and time-based share awards is
     determined based on generally accepted valuation techniques and the closing
     market price of our stock on the date of grant. A summary of the status of
     our non-vested market-based and time-based share awards as of January 31,
     2008 and changes during the six-month period ended January 31, 2008, is as
     follows:


                                       8
<PAGE>
<TABLE>
<CAPTION>
<S>                      <C> <C>                                         <C>       <C>

     Market-Based and Time-Based Share Awards                        Shares          Fair Value
     ----------------------------------------                        ------          ----------
     Outstanding at July 31, 2007                                        3,174     $        13.47
     Granted                                                            70,638              10.37
     Vested                                                            (14,511)             11.07
     Forfeited/Canceled                                                 (5,544)             10.19
                                                                 --------------    --------------
     Outstanding at January 31, 2008                                    53,757     $        13.98
                                                                 ==============    ==============
</TABLE>

     As of January 31, 2008, there was $468,000 of unrecognized compensation
     expense related to non-vested time-based share awards that is expected to
     be recognized over the life of the awards.

4.   ACCOUNTING PRONOUNCEMENTS

             SFAS No. 157

             In March 2006, the FASB issued FASB No. 157, "Fair Value
             Measurements." This Statement defines fair value, establishes a
             framework for measuring fair value in generally accepted accounting
             principles (GAAP), and expands disclosures about fair value
             measurements. This Statement applies under other accounting
             pronouncements that require or permit fair value measurements, the
             FASB having previously concluded in those accounting pronouncements
             that fair value is the relevant measurement attribute. Accordingly,
             this Statement does not require any new fair value measurements.
             However, for some entities, the application of this Statement will
             change current practice. This Statement is effective for financial
             statements issued for fiscal years beginning after November 15,
             2007, and interim periods within those fiscal years. Earlier
             application is encouraged, provided that the reporting entity has
             not yet issued financial statements for that fiscal year, including
             financial statements for an interim period within that fiscal year.
             Adoption is not expected to have a material impact on our
             consolidated earnings, financial position or cash flows.

             FIN No. 48

             The Company adopted the provisions of FASB Interpretation No. 48,
             Accounting for Uncertainty in Income Taxes, on August 1, 2007. See
             Footnote 9 of the financial statements for an additional
             description.

             SFAS No. 158

             The Company adopted the provisions FASB No. 158, "Employers'
             Accounting for Defined Benefit Pension and Other Postretirement
             Plans". This Statement improves financial reporting by requiring an
             employer to recognize the overfunded or underfunded status of a
             defined benefit postretirement plan (other than a multiemployer
             plan) as an asset or liability in its statement of financial
             position and to recognize changes in that funded status in the year
             in which the changes occur through comprehensive income of a
             business entity or changes in unrestricted net assets of a
             not-for-profit organization. This Statement also improves financial
             reporting by requiring an employer to measure the funded status of
             a plan as of the date of its year-end statement of financial
             position, with limited exceptions. This Statement is effective for
             financial statements issued for fiscal years beginning after
             December 15, 2006, and interim periods within those fiscal years.
             Adoption did not have a material impact on our consolidated
             earnings, financial position or cash flows.

             SFAS No. 159

             In February 2007, the FASB issued FASB No. 159, "The Fair Value
             Option for Financial Assets and Liabilities". This Statement
             permits entities to choose to measure many financial instruments
             and certain other items at fair value. The objective is to improve
             financial reporting by providing entities with the opportunity to
             mitigate volatility in reported earnings caused by measuring
             related assets and liabilities differently without having to apply
             complex hedge accounting provisions. This Statement is expected to
             expand the use of fair value measurement, which is consistent with
             the Board's long-term measurement objectives for accounting for
             financial instruments. This Statement is effective for financial
             statements issued for fiscal years beginning after November 15,
             2007, and interim periods within those fiscal years. Earlier
             application is encouraged, provided that the reporting entity has
             not yet issued financial statements for that fiscal year, including
             financial statements for an interim period within that fiscal year.
             Adoption is not expected to have a material impact on our
             consolidated earnings, financial position or cash flows.

                                       9
<PAGE>

             SFAS No. 160

             In December 2007, the FASB issued FASB No. 160, "Noncontrolling
             Interest in Consolidated Financial Statements" an amendment of ARB
             No. 51. This Statement objective is to improve the relevance,
             comparability, and transparency of the financial information that a
             reporting entity provides in its consolidated financial statements
             by establishing accounting and reporting standards that require:

               o    The ownership interests in subsidiaries held by parties
                    other than the parent be clearly identified, labeled, and
                    presented in the consolidated statement of financial
                    position within equity, separate from the parent's equity.
               o    The amount of consolidated net income attributable to the
                    parent and to the noncontrolling interest be clearly
                    identified and presented on the face of the consolidated
                    statement of income.
               o    Changes in a parent's ownership interest while the parent
                    retains its controlling financial interest in its subsidiary
                    be accounted for consistently. A parent's ownership interest
                    in a subsidiary changes if the parent purchases additional
                    ownership interests in its subsidiary. It also changes if
                    the subsidiary reacquires some of its ownership interests or
                    the subsidiary issues additional ownership interests. All of
                    those transactions are economically similar, and this
                    Statement requires that they be accounted for similarly, as
                    equity transactions.
               o    When a subsidiary is deconsolidated, any retained
                    noncontrolling equity investment in the former subsidiary is
                    measured at fair value. The gain or loss on the
                    deconsolidation of the subsidiary is measured using the fair
                    value of any noncontrolling equity investment rather than
                    the carrying amount of that retained investment.
               o    Entities provide sufficient disclosures that clearly
                    identify and distinguish between the interests of the
                    parents and the interests of the noncontrolling owners.

             This Statement is effective for financial statements issued for
             fiscal years beginning after December 15, 2008, and interim periods
             within those fiscal years. Earlier adoption is prohibited. Adoption
             is not expected to have a material impact on our consolidated
             earnings, financial position or cash flows.

5.   MARKETABLE SECURITIES

     During the quarters ended January 31, 2008 and 2007, we primarily invested
     excess cash and cash equivalents in a professionally managed portfolio of
     marketable securities. All securities in this portfolio are classified as
     available-for-sale and consist of U.S. government securities, municipal
     bonds, mortgaged-back securities, asset-backed securities and corporate
     bonds. These investments are reported at fair value. The unrealized gain,
     net of taxes, on these investments of approximately $156,000 for the three
     months ended January 31, 2008 and of approximately $219,000 and $188,000
     for the six months ended January 31, 2008 and 2007 is included within other
     comprehensive gain. The unrealized loss, net of taxes, on these
     investments, of approximately $5,000 for the three months ended January 31,
     2007 is included within other comprehensive loss. The net unrealized gain
     included in shareholders' equity as of January 31, 2008 was $159,000, net
     of tax. The net unrealized loss included in shareholders' equity as of
     January 31, 2007 was $141,000, net of tax.

     Of the $35,505,000 marketable securities portfolio at January 31, 2008,
     $8,019,000 is invested in mortgage-backed securities, $3,376,000 is
     invested in asset-backed securities and $3,400,000 is invested in auction
     rate securities. These securities are rated AAA. We have not recorded an
     impairment charge or similar write-down of the reported values as the
     investments are reported at quoted market values. However, if these
     securities were to begin trading below these values in the future or they
     become illiquid, we may be required to record losses on these investments,
     which would in turn negatively impact our results of operations and our
     financial condition.

     In February 2008, one of our auction rate securities ($250,000 at cost)
     failed auction due to sell orders exceeding buy orders. The funds
     associated with failed auctions will not be accessible until a successful
     auction occurs or a buyer is found outside the auction process. These
     securities are rated AAA. The values of the securities have not been
     written down as the Company believes that any impairment in the fair market
     value of these securities is only temporary. These securities will continue
     to be analyzed each reporting period for other-than-temporary impairment
     factors.

                                       10
<PAGE>

6.   INVENTORIES

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


                                                         January 31, 2008              July 31, 2007
                                                       ---------------------    ------------------------

             Finished goods.........................   $        5,845,484      $            4,206,290
             Work-in-process........................            1,827,424                   2,544,172
             Raw materials..........................            3,303,273                   2,601,426
                                                       ---------------------    ------------------------
                                                       $       10,976,181       $           9,351,888
                                                       =====================    ========================
</TABLE>


     AngioJet System Ultra Consoles/drive units of $5,154,000 and $3,095,000
     respectively are included in Finished Goods as of January 31, 2008 and July
     31, 2007. The increase as of January 31, 2008, is due to the introduction
     of the new Ultra Console in January 2007 which replaces the first
     generation drive unit. The AngioJet System Ultra Consoles are primarily
     evaluation units at customer locations.

7.   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:
<TABLE>
<CAPTION>
<S>                                                    <C>                      <C>                       <C>

                                                        January 31, 2008           July 31, 2007              Life
                                                       ---------------------    ------------------    -------------------
         Leasehold improvements.....................   $       3,016,769        $    2,928,531            5-10 years
         Equipment..................................          12,658,947            12,437,219            3-10 years
         Assets in construction.....................             739,080               468,623                   N/A
                                                       ---------------------    ------------------
                                                              16,414,796            15,834,373
         Less accumulated depreciation...............        (11,904,304)          (10,961,799)
                                                       ---------------------    ------------------

         Property and equipment - net...............   $       4,510,492        $    4,872,574
                                                       =====================    ==================
</TABLE>


8.   PREPAYMENT TO VENDOR

     In October 2007 we made a payment of $2,653,000 to an inventory vendor to
     purchase inventory that will be utilized when the inventory is shipped to
     us. At January 31, 2008, the estimated amount of the inventory prepayment
     to be utilized beyond twelve months is $1,330,000.

9.   INCOME TAXES

     The Company adopted the provisions of FASB Interpretation 48, Accounting
     for Uncertainty in Income Taxes (FIN No. 48), on August 1, 2007.
     Previously, the Company had accounted for tax contingencies in accordance
     with Statement of Financial Accounting Standards 5, Accounting for
     Contingencies. As required by FIN 48, which clarifies Statement 109,
     Accounting for Income Taxes, the Company recognizes the financial statement
     benefit of a tax position only after determining that the relevant tax
     authority would more likely than not sustain the position. For tax
     positions meeting the more likely than not threshold, the amount recognized
     in the financial statements is the largest benefit that has a greater than
     50 percent likelihood of being realized upon ultimate settlement with the
     relevant tax authority. At the adoption date, the Company applied FIN 48 to
     all tax positions for which the statute of limitations remained open.

     The Company computed the net impact of the adoption of FIN 48 to increase
     retained earnings by $270,000. The total gross amount of unrecognized tax
     benefits as of August 1, 2007 and January 31, 2008 was approximately
     $1,955,000. If recognized, approximately $427,000 of the unrecognized tax
     benefits would affect the effective tax rate.

                                       11
<PAGE>

     It is the Company's practice to recognize penalties and/or interest related
     to income tax matters in income tax expense. As of August 1, 2007, the
     Company had $16,000 of accrued interest and penalties included in the
     $1,955,000 of unrecognized tax benefit.

     The Company is subject to income taxes in the U.S. federal jurisdiction,
     foreign jurisdictions and various state jurisdictions. Tax regulations
     within each jurisdiction are subject to the interpretation of the related
     tax laws and regulations and require significant judgment to apply. With
     few exceptions, the Company is no longer subject to U.S. federal, foreign,
     state or local income tax examinations by tax authorities for the years
     before 2003. The Company is not currently under examination by any taxing
     authority.

     During the first two quarters of 2008, our total liability for unrecognized
     tax benefits did not materially change. The Company does not anticipate
     that total unrecognized tax benefits will significantly change within the
     next 12 months.

10. SEGMENT AND GEOGRAPHIC INFORMATION

     Our operations are in one business segment: the design, manufacture and
     distribution of endovascular medical devices. We evaluate 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 from sales in the United States and outside the United
     States are as follows:
<TABLE>
<CAPTION>
<S>                                          <C>                   <C>                   <C>                  <C>

                                                       Three Months Ended                          Six Months Ended
                                                           January 31,                                January 31,
                                             ----------------------------------------    --------------------------------------
                                                    2008                 2007                  2008                 2007
                                             -------------------   ------------------    -----------------    -----------------

           United States...................  $     19,916,004      $    15,301,243       $     38,253,326     $     30,482,289
           Non-United States..............            716,566              504,842              1,248,615              927,677
                                             -------------------   ------------------    -----------------    -----------------
           Total Revenues.................   $     20,632,570      $    15,806,085       $     39,501,941     $     31,409,966
                                             ===================   ==================    =================    =================
</TABLE>

11.  COMMON STOCK

     During the six months ended January 31, 2008, stock options for the
     purchase of 60,695 shares of the Company's common stock were exercised at
     prices between $3.94 and $13.93 per share resulting in proceeds of
     $523,000. During the six months ended January 31, 2007, stock options for
     the purchase of 12,557 shares of the Company's common stock were exercised
     at prices between $3.94 and $10.63 per share resulting in proceeds of
     $62,000.

     During the six months ended January 31, 2008 and 2007, we issued 12,952
     and 14,900 shares in connection with our employee stock purchase plan.

     On August 8, 2007, we issued 67,470 shares of restricted stock to
     management and executives as part of the fiscal 2007 management incentive
     program. The fair market value of the restricted stock was $688,000. The
     restricted stock vests over four years or earlier if the stock price closes
     at $12.23, $14.67, $17.63 and $20.38, respectively, for twenty consecutive
     trading days. The accelerated vesting occurs at the appreciated stock
     prices in four equal installments. The stock price closed at greater than
     $12.23 for twenty consecutive trading days on October 9, 2007. The first
     quarterly installment vested at this time at a price $14.29. Accordingly,
     $283,000 was expensed in the six months ended January 31, 2008 as
     compensation expense. We cancelled 5,544 shares of restricted stock due to
     the management and executives electing to receive fewer shares in lieu of
     paying the withholding taxes. In January 2008, 3,168 shares of restricted
     stock was issued to the Board of Directors as part of their normal
     compensation. These shares of restricted stock will vest in one year.

     On August 15, 2006, we issued 63,390 shares of restricted stock to
     executives and key management as part of the fiscal 2006 management
     incentive program. The fair market value of the restricted stock was
     $549,000. The restricted stock vests over four years or earlier if the
     stock price closes at $11.26 or greater for twenty consecutive trading
     days. On December 22, 2006 the restricted stock vested due to the Company's
     stock price closing for the twentieth consecutive day greater than $11.26.
     In the six months ended January 31, 2007, $567,500 was expensed as
     compensation expense. We cancelled 20,684 shares of restricted stock due to
     the executives and key management electing to receive fewer shares in lieu
     of paying the withholding taxes. In January 2007, 3,174 shares of
     restricted stock was issued to the Board of Directors as part of their
     normal compensation. These restricted stock will vest in one year.

                                       12
<PAGE>

     During the six months ended January 31, 2008 and 2007, there were no stock
     repurchases.

12.  ACCRUED WARRANTY COSTS

     We estimate the amount of warranty claims on sold product that may be
     incurred based on current and historical data. The actual warranty expense
     could differ from the estimates made by the Company based on product
     performance. The following table presents the changes in our product
     warranty liability:
<TABLE>
<CAPTION>
<S>                                           <C> <C>                                <C>
               Accrued warranty costs at July 31, 2007............................   $        142,500
               Payments made for warranty costs...................................           (372,700)
               Accrual for product costs..........................................            437,700
                                                                                     -------------------
               Accrued warranty costs at January 31, 2008.........................   $       207,500
                                                                                     ===================
</TABLE>

13.  SUBSEQUENT EVENT

     Effective February 11, 2008, we signed a definitive Agreement and Plan of
     Merger with MEDRAD, Inc., a subsidiary of Bayer AG, and with Phoenix
     Acquisition, Inc., a subsidiary of MEDRAD formed to facilitate the
     transaction, pursuant to which Phoenix commenced a tender offer for all of
     our outstanding common stock at a price of $19.50 per share on February 25,
     2008. The tender offer is scheduled to terminate on March 25, 2008, and
     assuming that the conditions to acceptance of tendered shares are
     satisfied, including the condition that at least two-thirds of our shares
     on a fully diluted basis are tendered, Phoenix will accept the tendered
     shares, and the tender offer will be followed by a merger under which we
     will become a wholly-owned subsidiary of MEDRAD. Completion of the tender
     offer and the merger are subject to a number of conditions in addition to
     the minimum tender condition, including the receipt of, or passage of time
     requirements for, regulatory and governmental approvals, and the absence of
     any material adverse change in our business.

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

Forward Looking Statements

We make a number of forward-looking statements in this Management's Discussion
and elsewhere in this 10-Q that are based on our current expectations and on
assumptions that may not prove correct. The realization of these forward-looking
statements is subject to various risks and uncertainties that are identified in
our Form 10-K for the year ended July 31, 2007 under Item 1A Risk Factors and
are summarized below under in Part II, Item 1A of this Form 10-Q. You should
read these factors when assessing these forward looking statements.

Our Business

Possis Medical, Inc., develops, manufactures, and markets pioneering medical
devices for mechanical thrombectomy in native coronary arteries and coronary
bypass grafts, leg arteries, upper- and lower- extremity peripheral veins and in
kidney dialysis access grafts. Our primary product, the AngioJet(R) RheolyticTM
Thrombectomy System (AngioJet System) uses miniaturized waterjet technology,
which enables interventional cardiologists, interventional radiologists,
vascular surgeons, and other specialists to rapidly, safely and effectively
remove blood clots throughout the body.

The original proprietary AngioJet System consists of the first generation 3000
drive unit (capital equipment), a disposable pump set that delivers pressurized
saline to a catheter, and a variety of disposable catheters that are
specifically designed for particular clinical indications. In December 2006 we
received approval from the FDA for the new AngioJet Ultra Thrombectomy System.
The AngioJet Ultra System consists of the next-generation Ultra Console (capital
equipment) and a combined single disposable Thrombectomy Set (catheter and pump)
that delivers pressurized saline. Thrombectomy Set models are specifically
designed to treat particular clinical indications. The new Ultra System is
simpler and faster to setup, is compatible with a broad range of catheters, is
sleeker and lighter, and significantly easier to maneuver than the first
generation drive unit. AngioJet coronary catheters are Class III medical devices
marketed in the U.S. under an approved pre-market approval (PMA). The AngioJet
AV-Access and peripheral arterial catheters are Class II devices that are
marketed in the U.S. under 510(k) clearance.

                                       13
<PAGE>

We expect U.S. AngioJet Systems sales to grow primarily through obtaining
additional FDA approved product uses, introduction of new catheter models for
existing indications, introduction of Ultra System and other AngioJet
System-related products, more face-time selling to existing accounts,
peer-to-peer selling, and the publication of clinical performance and
cost-effectiveness data.

The new combined disposable Thrombectomy Sets that are used with the Ultra
Console cannot be used with the prior generation 3000 Drive Unit. In addition,
the first generation separate pump and catheters that are used with the 3000
Drive Unit cannot be used with the new Ultra Console. We believe that the new
Ultra Console will replace the 3000 Drive Unit over the next several years.

To further expand the range of products we offer, in May 2006 we began selling
the SafeSeal(TM) Hemostasis Patch, which is designed to control bleeding from
the puncture made to perform endovascular procedures. In October 2006, we
started selling a manual aspiration device, the Fetch(TM) Aspiration Catheter,
as an alternative for the aspiration of small, fresh blood clots.

Accounting Policies

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires us 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, we have made our best estimates and
applied our best judgment of certain amounts included in the financial
statements, giving due consideration to materiality. Our most critical
accounting policies are those described below. 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 AngioJet drive units and the Ultra Consoles
         maintained at customer locations are recognized, and title and risk of
         loss on those drive units and consoles is transferred to the customer,
         when we receive a valid purchase order from the customer. Revenue is
         not recognized for AngioJet drive units and Ultra Consoles that are
         maintained at customer locations as evaluation drive units and
         consoles. We do not lease AngioJet drive units and Ultra Consoles.
         Revenues associated with products that are shipped to customers from
         our facilities are recognized, and title and risk of loss are
         transferred to the customer, when a valid purchase order is received
         and the products are received at the customer's location. Revenue
         recognition for drive unit and Ultra Console extended warranties are
         amortized on a straight-line basis over the life of the warranty
         period, generally twelve months.

         Allowance for Returns

         We record an allowance for returns that reduces the amount of product
         sales and of trade receivables. We estimate the appropriate allowance
         at the time the account receivable is recorded by estimating the
         likelihood of returns. The estimate is based upon our historical
         product return experience, customer complaint rates, information
         received from our customers and other assumptions that we believe are
         reasonable under the circumstances. We review, on a quarterly basis,
         the actual returns for the previous quarter and evaluate the adequacy
         of the allowance for future returns. Although we believe the amount of
         the allowance for returns is appropriate, actual returns incurred could
         differ from our original estimate, requiring adjustments to the
         allowance that effect the results during the period of adjustment.

                                       14
<PAGE>

         Allowance for Doubtful Accounts

         Substantially all of our trade receivables are due from health care
         facilities located in the United States. We provide for an allowance
         for uncollectible or "doubtful" accounts based upon the age of our
         outstanding receivables and the payment history and creditworthiness of
         each customer. We evaluate the adequacy of the allowance for doubtful
         accounts on a quarterly basis. Although we believe the amount of the
         allowance for doubtful accounts is appropriate, nonpayment of accounts
         could differ from our original estimate, requiring adjustments to the
         allowance.

         Inventories

         We value inventories at the lower of cost or market. In order to
         determine the market value of inventory, on a quarterly basis, we
         assess the inventory on hand to estimate future usage and sales and
         provide for additions to an obsolescence reserve for inventory that is
         deemed obsolete or that is carried at a value in excess of estimated
         market value. Although we believe the amount of the reserve for
         inventory obsolescence is appropriate, the amount of our inventory that
         becomes obsolete may differ from our original estimate, requiring
         adjustments to the reserve.

         Warranty Reserve

         We provide a one-year limited warranty on our AngioJet System 3000
         Drive Unit (first generation) and Ultra Console (new generation) and a
         limited warranty on AngioJet System disposable products. We establish a
         warranty reserve at the time products are sold that is based upon
         historical frequency of claims relating to our products and the cost to
         replace disposable products and to repair drive units under warranty.
         We evaluate the adequacy of the warranty reserve on a quarterly basis.
         Although we believe the amount of the warranty reserve is appropriate
         given our historical experience, if actual claims incurred differ from
         historical experience, we would be required to adjust the reserve.


                                       15
<PAGE>

Results of Operations

Three and Six Month Periods Ended January 31, 2008 and 2007

Operating Expenses

The following table compares dollars (in thousands) and percentage changes in
the Statements of Income between 2008 and 2007.
<TABLE>
<CAPTION>
<S>                                   <C>            <C>         <C>          <C>    <C>     <C>     <C>          <C>
                                                For the Three Months Ended                For the Six Months Ended
                                      ---------------------------------------------- -----------------------------------
                                              January 31,        Increase (Decrease)   January 31,   Increase (Decrease)
                                           2008          2007     Dollars   Percent    2008    2007  Dollars   Percent
Product Sales                         $       20,633 $    15,806 $   4,827    30.5%  $39,502 $31,410 $ 8,092      25.8%
Cost of medical products                       6,843       4,737     2,106    44.5%   12,610   9,146   3,464      37.9%
Gross Profit                                  13,790      11,069     2,721    24.6%   26,892  22.264   4,628      20.8%

Operating expenses
Selling, general and admin.                   10,614       9,265     1,349    14.6%   21,778  19,081   2,697      14.1%
Research and development                       2,563       1,944       619    31.8%    4,885   4,359     526      12.1%
Other operating expenses                      13,177      11,209     1,968    17.6%   26,663  23,440   3,223      13.8%
Operating income (loss)                          613        (140)      753  (537.9%)     229  (1,176)  1,405    (119.5%)
Other income                                     404         498       (94)  (18.9%)     978   1,057     (79)     (7.5%)
Income (loss) before income taxes              1,017         358       659   184.1%    1,207    (119)  1,326  (1,114.3%)
Income tax provision                            (447)       (184)     (263)  142.9%     (533)     59    (592) (1,003.4%)
Net income (loss)                     $          570 $       174 $     396   227.6%  $   674 $   (60)$   734  (1,223.3%)
Fully Diluted Shares                          17,924      17,734                      17,838  17,165
EPS                                   $         0.03 $      0.01                     $  0.04 $ (0.00)
</TABLE>

The following tables show the Statement of Income as a percentage of product
sales for the three and six months ended January 31, 2008 and 2007.
<TABLE>
<CAPTION>
<S>                                                                   <C>          <C>             <C>            <C>
                                                                  For the Three Months               For the
                                                                          Ended                   Six Months Ended
                                                                -------------------------- ------------------------------
                                                                   2008          2007          2008            2007
                                                                ------------- ------------ --------------- --------------
Product sales                                                         100.0%       100.0%          100.0%         100.0%
Cost of medical products                                               33.2%        30.0%           31.9%          29.1%
Gross profit margin                                                    66.8%        70.0%           68.1%          70.9%

Operating expenses
Selling, general and administrative                                    51.4%        58.6%           55.1%          60.7%
Research and development                                               12.4%        12.3%           12.4%          13.9%
Other operating expenses                                               63.9%        70.9%           67.5%          74.6%

Operating income (loss)                                                 3.0%        (0.9%)           0.6%          (3.7%)
Other income                                                            2.0%         3.2%            2.5%           3.4%
Income (loss) before income taxes                                       4.9%         2.3%            3.1%          (0.4%)
Income taxes provision                                                 (2.2%)       (1.2%)          (1.3%)          0.2%
Net income (loss)                                                       2.8%         1.1%            1.7%          (0.2%)
</TABLE>

Revenue

Worldwide product sales for the three months ended January 31, 2008 increased 31
percent to $20,633,000 from $15,806,000 for the same period in 2007. For the six
months ended January 31, 2008, worldwide product sales increased 26 percent to
$39,502,000 from $31,410,000 for the same period in 2007. The revenue increase
during fiscal 2008 relates to the introduction of the AngioJet Ultra
Thrombectomy System and increased disposable AngioJet catheters primarily
peripheral (medium length catheters) and coronary (long length catheters). The
increase was also partially due to an increase in SafeSeal Hemostasis Patch and
Fetch Aspiration Catheter revenues in 2008 versus 2007. Fiscal 2008 revenue was
negatively impacted somewhat due to a trade-in program designed to facilitate
customer conversion to the new Ultra System Console from the first generation
drive unit. Customers who upgrade to an Ultra System Console within one year of
the first generation drive unit purchase were eligible for this trade-in program
and receive a credit towards the purchase of an Ultra Console. Subsequent to
January 31, 2008 the effect of this trade-in program should be minimal.

                                       16
<PAGE>

Our fiscal 2008 allowance for sales returns increased due to the introduction of
the AngioJet Ultra Thrombectomy System. First generation disposable catheter and
pumps can not be used with the new Ultra System. Conversely, Ultra System
disposable thrombectomy sets are not usable with the first generation AngioJet
System. Customers who either purchased the Ultra Console or received an Ultra
Console under an evaluation program could return their first generation
catheters and pump sets for credit. As a result, our allowance for sales returns
increased to 2.4 percent of gross revenue for the three months ended January 31,
2008 compared to approximately 1.6 percent for the year-ago quarter. This is
down from the first quarter ended October 31, 2007 which was 2.6 percent of
gross revenue.

The following table shows the worldwide Ultra Consoles and the first generation
drive units placed with customers as of January 31, 2008, July 31, 2007, and
January 31, 2007:
<TABLE>
<CAPTION>
<S>                                               <C>                           <C>                             <C>
                                          January 31, 2008               July 31, 2007                January 31, 2007
                                    ----------------------------- ----------------------------- -----------------------------
Ultra Console                                     525                           244                             22
First generation drive unit                     1,817                         1,900                          1,877
                                    ----------------------------- ----------------------------- -----------------------------
          Total                                 2,342                         2,144                          1,899
                                    ============================= ============================= =============================
</TABLE>

The following table shows the worldwide Ultra Consoles and first generation
drive units sold for the three and six months ended January 31, 2008 and 2007:
<TABLE>
<CAPTION>
<S>                                        <C>               <C>                  <C>              <C>
                                            Three Months Ended                      Six Months Ended
                                                January 31,                            January 31
                                    ------------------------------------    ---------------------------------
                                         2008               2007                 2008             2007
                                    ---------------- -------------------    ---------------- ----------------
Ultra Console                              80                10                   141               10
First generation drive unit                 4                19                    20               54
                                    ---------------- -------------------    ---------------- ----------------
         Total                             84                29                    161              64
                                    ================ ===================    ================ ================
</TABLE>


During the three month period ended January 31, 2008, our worldwide catheter
sales increased approximately 10 percent to 13,000 catheters versus 11,800
catheters the same period last year. During the six month period ended January
31, 2008, our worldwide catheter sales increased approximately 9 percent to
25,600 catheters versus 23,500 catheters the same period last year.

International product sales were $717,000 and $505,000 for the three months
ended January 31, 2008 and 2007. International product sales were $1,249,000 and
$928,000 for the six months ended January 31, 2008 and 2007. The increase in
sales is primarily due to the introduction of the Fetch manual aspiration
catheter and AngioJet SpiroFlex catheter sales in the European market. The
AngioJet Ultra Thrombectomy System is currently sold internationally on a
limited basis.

Cost of Medical Products/Gross Profit Margin

Cost of medical products increased $2,106,000 and $3,465,000 to $6,843,000 and
$12,610,000 in the three and six month periods ended January 31, 2008 over the
same periods in the previous year. The increase was primarily due to an increase
in product unit sales including AngioJet Ultra Console, Fetch and SafeSeal
combined with slightly higher product costs on the new Ultra System product
line.

Gross profit increased by $2,721,000 to $13,789,000 for the three months ended
January 31, 2008, from $11,069,000 in the same period last year. Gross profit
increased by $4,627,000 to $26,892,000 for the six months ended January 31,
2008, from $22,264,000 in the same period last year. The increase in gross
profit was primarily due to the increase in sales volume.

                                       17
<PAGE>

Gross profit margin was 66.8 percent and 70.3 percent for the three months ended
January 31, 2008 and 2007 and was 68.1 percent and 70.9 percent for the six
months ended January 31, 2008 and 2007. The decrease in the gross profit margin
was primarily due to the shift in overall sales mix to lower-margin Ultra System
Consoles from higher margin disposables, combined with slightly higher product
costs on the new Ultra System line.

Selling, General and Administrative Expense

Selling, general and administrative expense increased $1,349,000 to $10,614,000
or 51.4 percent of sales for the three months ended January 31, 2008, from
$9,265,000 or 58.6 percent of sales in the comparable period in the prior year.
Sales force additions and commissions on higher sales levels; combined with
additional marketing expenses to support new product launches and an increase in
incentive compensation all contributed to the higher level of spending.

Selling, general and administrative expense increased $2,697,000 to $21,778,000
for the six months ended January 31, 2008, compared to the same period in the
previous year. The expense increase for the six months ended January 31, 2008
relates primarily to higher sales expense under our new compensation plan,
additional sales staff, and an increase in management incentive compensation.

Research and Development Expense

Research and development expense increased $619,000 to $2,563,000 or 12.4
percent of sales, in the three months ended January 31, 2008, from $1,944,000 or
12.3 percent of sales in the same period in the prior year. Research and
development expense increased $526,000 to $4,885,000 or 12.4 percent of sales,
in the six months ended January 31, 2008, from $4,359,000 or 13.9 percent of
sales in the same period in the prior year. The increases in the fiscal 2008
three and six month periods were due to the continued development of the distal
occlusion guidewires and 3 French catheter.

Interest Income

Interest income decreased $54,000 and $91,000 in the three and six months ended
January 31, 2008 to $482,000 and $985,000 compared to the same periods in the
prior year. The decreased interest income in fiscal 2008 is attributable to the
decrease in the marketable securities balance. The majority of excess cash is
invested in a portfolio of marketable securities. Future levels of interest
income in fiscal 2008 are dependent on investment balances and fluctuating
interest rates.

Loss On Sale of Securities

Loss on sales of securities was $78,000 and $38,000 for the three months ended
January 31, 2008 and 2007, respectively. Loss on sales of securities was $7,000
and $19,000 for the six months ended January 31, 2008 and 2007, respectively.
The losses in fiscal 2008 and 2007 were due to interest rate decreases that
increased the fair market value of the investments in marketable securities.
Future gain (loss) on sale of securities is dependent on interest rate
fluctuations.

Provision For Income Taxes

The effective income tax rate differed from the U.S. federal statutory rate for
the six months ended January 31, 2008 and 2007 as follows:
<TABLE>
<CAPTION>
<S>                           <C>                                                        <C>      <C>
                                                                                          Six Months Ended
                                                                                             January 31,
                                                                                           2008      2007
                                                                                        --------------------
           Tax (benefit) expense on (loss) income from continuing operations computed at
            statutory rate of 34%                                                        $410,000 $ (40,000)
           Research and development tax credits                                           (14,000) (150,000)
           FASB 123(R) compensation expense                                                36,000   231,000
           Other                                                                          101,193  (100,000)
                                                                                         -------------------
           Total income (benefit) expense                                                $533,193 $ (59,000)
                                                                                         ===================
           Percent of income (loss) before income taxes                                        44%       50%
                                                                                         ===================
</TABLE>

                                       18
<PAGE>


The increase in the GAAP effective tax rate in the current year is primarily
attributable to the treatment of incentive stock options (or ISO's) under SFAS
123 (R) and the level of income before income taxes. Unless there is a
disqualifying disposition, we are not entitled to a deduction upon exercise of
an ISO and although SFAS 123(R) now requires us to recognize expense over the
vesting period, there is no offsetting tax benefit. In contrast, we are entitled
to a deduction, and tax benefit, upon exercise of non-qualified stock
Approximately 22 percent and 37 percent of stock-based compensation expense for
the six months ended January 31, 2008 and 2007 was related to ISO's so the
impact on Possis Medical's effective tax rate is significant.

Net Income

We recorded net income for the three months ended January 31, 2008 and 2007 of
$570,000 and $174,000, or $0.03 and $0.01 per diluted share. For the six months
ended January 31, 2008, we recorded net income of $674,000 or $0.04 per diluted
share. This compared to a net loss of $60,000, or $0.00 per diluted share for
the three months ended January 31, 2007.

Liquidity and Capital Resources

Our cash, cash equivalents and marketable securities totaled $40,583,000 at
January 31, 2008 versus $42,872,000 at July 31, 2007.

We used $1,414,000 of cash in operating activities during the six months ended
January 31, 2008. This use of cash resulted primarily from increases in accounts
receivable of $1,164,000, inventory of $2,281,000, prepaid expenses and other
assets of $1,279,000; combined with a decrease in accrued and other liabilities
of $891,000. These uses of cash from operations were partially offset by
non-cash charges for depreciation of $1,667,000 and stock-based compensation
expense of $1,810,000. We depreciate company-owned first generation drive units
and Ultra Consoles at customer locations, as well as property and equipment.
Accounts receivable increased due to the year-over-year increase in revenue.
Inventory increased to support the market launch of new products including the
Ultra System. The increases in prepaid expenses and other assets were due to
advance payments to a third party manufacturer of the Ultra Consoles and the
timing of insurance premium payments. The decreases in accrued liabilities were
due to the timing of payments and included the payment of fiscal 2007 corporate
incentives in August 2007 (fiscal 2008).

Cash provided in investing activities was $3,013,000 including the net proceeds
from the sale of marketable securities of $5,096,000. The cash provided in
investing activities was partially offset by the purchase of $590,000 of
property and equipment and the lending of $1.5 million to Rafael Medical.

Net cash provided by financing activities was $814,000, which resulted primarily
from cash received in connection with the exercise of stock options of $676,000.
There were no repurchases of our common stock during the first half of fiscal
2008.

We contract with a third-party to manufacture our Ultra Console and have
committed to purchases of the Ultra Console from that third party manufacturer
of $14,659,000 over the next 22 months. Except with respect to these
commitments, there have been no changes in our capital or contractual
commitments. We expect our cash on hand and funds from operations to be
sufficient to cover both short-term and long-term operating requirements of our
business and the repurchase of our common stock as authorized by our Board of
Directors.

Off-Balance Sheet Obligations

We do not have any material off-balance-sheet arrangements.

                                       19
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We invest our excess cash in a professionally managed, institutional fixed
income portfolio of short duration. The market risk on a diversified portfolio
of relatively short duration is minimal, while enhancing returns above money
market levels.

Our foreign product sales are in U.S. Dollars ("USD") except for product sales
in Germany, which are in euro's. The German product sales were minimal during
the third quarter. We have a foreign bank account in which the German product
sales receipts are deposited and immediately transferred to the operating bank
account in the United States. The balance in the German bank account was zero as
of January 31, 2008.

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 in ensuring that information required to
be disclosed by us in the reports we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in applicable rules and forms and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, in a manner that allows timely decisions regarding required
disclosure.

Changes in internal control over financial reporting
----------------------------------------------------

During the fiscal quarter ended October 31, 2007, 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 likely to materially
affect, our internal control over financial reporting.

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

We were served with a shareholder lawsuit filed with the Minnesota Federal
District Court on June 3, 2005, alleging that Possis Medical, Inc. and named
individual officers violated federal securities laws. The Complaint seeks class
action status and unspecified damages. The suit was dismissed with prejudice by
order of the Court on February 1, 2007. Plaintiffs have filed an appeal from the
Court's order and the appeal is still pending. We continue to believe that the
allegations of the lawsuit are without merit and are contesting the lawsuit
vigorously.

ITEM 1A.  RISK FACTORS

We identify a number of risks that affect our operations in our annual report on
Form 10-K under Item 1A. In addition to those risks, which are summarized below,
since the filing of our Form 10-K, we have become subject to the following risk:

Our business would be adversely affected if the announced acquisition fails to
close.

Our acquisition by MEDRAD pursuant to the Agreement and Plan of Merger that we
signed and announced on February 11, 2008 is subject to a number of conditions
over which we do not have control, including a condition that two-thirds of our
shares, calculated on a fully-diluted basis, be tendered in the tender offer
commenced on February 25, 2008 in accordance with that agreement, a condition
that all regulatory and governmental approvals are received, or the time periods
required have expired, all of the representations regarding our capital
structure are correct and the other representations in the agreement are
materially correct, and that there has been no event that constitutes a
"material adverse effect." We cannot assure you that all of these conditions
will be satisfied. If the transaction is not completed, it is possible that it
will cause distraction, uncertainty and possible attrition of employees and
customers, changes in management, and other adverse impacts on our business.
Further, if the transaction is not completed, we will have considerable expenses
that will impact our operating results in the period the transaction is
terminated, and could, in certain instances, be obligated to pay a termination
fee of up to $11.1 million. Failure to complete the transaction would also
likely negatively impact our stock price.

                                       20
<PAGE>

There have been no material changes in the risks that are included in our annual
report on Form 10-K, which are summarized below. You should read the Form 10-K
for a complete description of the risks of our business. Among the risks we have
identified are:

     o    our dependence on a single product line--the AngioJet Rheolytic
          System;
     o    the effects of adverse clinical studies;
     o    the effects of extensive regulation of our product development,
          product manufacturing and product sales;
     o    our dependence on our current manufacturing facility;
     o    our dependence upon a contract manufacturer for our AngioJet Ultra
          console;
     o    unanticipated costs or other difficulties and uncertainties associated
          with lengthy and costly new product development and regulatory
          clearance processes;
     o    the existence of larger entities in our industry which may develop new
          competitive products such as inexpensive aspiration devices, combined
          aspiration/occlusion products and compounds with which we would have
          difficulty competing or that may make our products obsolete;
     o    the effect of changes in the health care industry generally, such as
          restrictions imposed on sales time at interventional labs,
          consolidation of industry participants, cost containment and trends
          toward managed care;
     o    the cost and effectiveness of our intellectual property protection;
     o    the effects of changes in reimbursement;
     o    our ability to retain key personnel and motivate skilled employees,
          especially for sales positions;
     o    the possibility of medical product liability issues;
     o    the protections we have adopted may cause takeover offers to be
          decided by the Board rather than our shareholders;
     o    possible sudden restrictions in supply of key materials; and
     o    investments in third-party device companies and/or products may not
          provide the anticipated returns.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) In December 2006, our Board of Directors authorized the repurchase of up to
an additional $15,000,000 of our common stock in open-market transactions
through December 2008. During the three months ended January 31, 2008, no shares
of our common stock were repurchased pursuant to this program.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Our annual meeting of shareholders was held at 4:00 p.m. on Tuesday, December
13, 2007. Shareholders holding 15,562,104 shares, or approximately 91.6 percent
of the outstanding shares, were represented at the meeting by proxy or in
person. Matters submitted at the meeting for vote by the shareholders were as
follows:

a. Election of Directors

The following nominees were elected to serve as members of the Board of
Directors until the annual meeting in 2008 or until such time as a successor may
be elected:
<TABLE>
<CAPTION>
<S>                                                    <C>                       <C>

                                                           For               Withhold Authority
                                                   --------------------    -----------------------
                 Robert G. Dutcher                     11,804,681                3,771,587
                 Mary K. Brainerd                      11,811,529                3,764,739
                 Seymour J. Mansfield                  11,810,141                3,766,127
                 William C. Mattison, Jr.              11,820,013                3,756,255
                 Whitney A. McFarlin                   11,816,441                3,759,827
                 Donald C. Wegmiller                   11,813,381                3,771,587
                 Rodney A. Young                       11,812,581                3,763,687
</TABLE>

                                       21
<PAGE>

b. Ratification of the Appointment of Deloitte & Touche LLP as Independent
Auditors.

Shareholders approved the ratification of the appointment of Deloitte & Touche
LLP as independent auditors by a vote of 15,443,676 shares in favor, 117,762
shares against and 14,829 shares abstained. There were no broker non-votes.

                                       22
<PAGE>

ITEM 6.           EXHIBITS

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                            Description
     ----------------- ---------------------------------------------------------

           31.1        Certification of the Chief Executive Officer pursuant to
                       Section 302 of the Sarbanes-Oxley Act of 2002.
           31.2        Certification of the Chief Financial Officer pursuant to
                       Section 302 of the Sarbanes-Oxley Act of 2002.
           32.1        Certification of the Chief Executive Officer pursuant to
                       Section 906 of the Sarbanes-Oxley Act of 2002.
           32.2        Certification of the Chief Financial Officer pursuant to
                       Section 906 of the Sarbanes-Oxley Act of 2002.


                                       23
<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 10, 2008                 By:  /s/ Robert G. Dutcher
                                           -------------------------------------
                                           ROBERT G. DUTCHER
                                           Chairman, President and Chief
                                           Executive Officer





DATE:  March 10, 2008                 By:  /s/ Jules L. Fisher
                                           -------------------------------------
                                           JULES L. FISHER
                                           Vice President of Finance and Chief
                                           Financial Officer

                                       24
<PAGE>

                                  EXHIBIT INDEX

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                           Description
     ----------------- ---------------------------------------------------------

           31.1        Certification of the Chief Executive Officer pursuant to
                       Section 302 of the Sarbanes-Oxley Act of 2002.
           31.2        Certification of the Chief Financial Officer pursuant to
                       Section 302 of the Sarbanes-Oxley Act of 2002.
           32.1        Certification of the Chief Executive Officer pursuant to
                       Section 906 of the Sarbanes-Oxley Act of 2002.
           32.2        Certification of the Chief Financial Officer pursuant to
                       Section 906 of the Sarbanes-Oxley Act of 2002.

                                       25