<PAGE>

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                       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 quarterly period ended January 31, 2002
                                       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 0-13907

               ---------------------------------------------------


                               BIO-VASCULAR, INC.
             (Exact name of Registrant as specified in its charter)

                        State of Incorporation: Minnesota
                 I.R.S. Employer Identification No.: 41-1526554

               Principal Executive Offices: 2575 University Avenue
                            St. Paul, Minnesota 55114
                        Telephone Number: (651) 603-3700

               ---------------------------------------------------



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

On March 1, 2002, there were 9,310,973 shares of the Registrant's common stock,
par value $.01 per share, outstanding.

<PAGE>

PART I.  FINANCIAL INFORMATION
------------------------------------------------------------------------------


ITEM 1.  FINANCIAL STATEMENTS

BIO-VASCULAR, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF JANUARY 31, 2002 AND OCTOBER 31, 2001
------------------------------------------------------------------------------

(in thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                                 January 31,   October 31,
                                                                    2002          2001
                                                                ------------   -----------
                                                                (Unaudited)
<S>                                                             <C>            <C>
ASSETS
Current assets:
Cash and cash equivalents .....................................   $  6,155       $  7,090
Accounts receivable, net ......................................      4,256          3,835
Inventories, net ..............................................      5,440          4,898
Deferred income taxes .........................................        223            223
Other .........................................................        416            446
                                                                  --------       --------
    Total current assets ......................................     16,490         16,492

Equipment and leasehold improvements, net .....................      5,146          4,994
Goodwill and other intangible assets, net .....................      7,175          7,201
Deferred income taxes and other ...............................        275            221
                                                                  --------       --------
    Total assets ..............................................   $ 29,086       $ 28,908
                                                                  ========       ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ..............................................   $  1,172       $  1,387
Accrued expenses ..............................................      1,860          2,010
Current maturities of long-term obligations ...................        168            182
                                                                  --------       --------
    Total current liabilities .................................      3,200          3,579
                                                                  --------       --------

Other liabilities .............................................        173            210
                                                                  --------       --------
    Total liabilities .........................................      3,373          3,789
                                                                  --------       --------

Shareholders' equity:
Preferred stock: authorized 5,000,000 shares of $.01 par value;
    none issued or outstanding at January 31, 2002 and
    October 31, 2001 ..........................................       --             --
Common stock: authorized 20,000,000 shares of $.01 par value;
    issued and outstanding, 9,263,198 at January 31, 2002 and
    9,246,170 at October 31, 2001 .............................         93             92
Additional paid-in capital ....................................     29,228         29,163
Unearned compensation .........................................        (88)          (114)
Accumulated deficit ...........................................     (3,520)        (4,022)
                                                                  --------       --------
    Total shareholders' equity ................................     25,713         25,119
                                                                  --------       --------
    Total liabilities and shareholders' equity ................   $ 29,086       $ 28,908
                                                                  ========       ========
</TABLE>

      The accompanying notes are an integral part of the interim unaudited
                  consolidated condensed financial statements.

                                        2

<PAGE>

BIO-VASCULAR, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED JANUARY 31, 2002 AND 2001
------------------------------------------------------------------------------

(in thousands, except per share data)

                                                      Three Months Ended
                                                         January 31,
                                                       2002        2001
                                                      ------      ------
                                                         (Unaudited)

Net revenue ..................................        $8,029      $6,306
Cost of revenue ..............................         4,025       3,161
                                                      ------      ------
Gross margin .................................         4,004       3,145

Operating expenses:
Selling, general and administrative ..........         2,792       2,259
Research and development .....................           460         386
                                                      ------      ------

Operating income .............................           752         500

Other income, net ............................            18          48
                                                      ------      ------

Income before provision for income taxes......           770         548

Provision for income taxes ...................           268         215
                                                      ------      ------

Net income ...................................        $  502      $  333
                                                      ======      ======

Basic and diluted earnings per share .........        $ 0.05      $ 0.04
                                                      ======      ======

      The accompanying notes are an integral part of the interim unaudited
                  consolidated condensed financial statements.

                                        3

<PAGE>

BIO-VASCULAR, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED JANUARY 31, 2002 AND 2001
------------------------------------------------------------------------------

(in thousands)

                                                           Three Months Ended
                                                              January 31,
                                                          2002           2001
                                                         -------       -------
                                                              (Unaudited)

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES      $  (551)      $   503
                                                         -------       -------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and leasehold improvements ..         (348)         (305)
Investments in patents and trademarks .............          (28)           (9)
Other .............................................          (23)           95
                                                         -------       -------
Net cash used in investing activities .............         (399)         (219)
                                                         -------       -------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds related to stock-based compensation plans            66            32
Repayment of capital lease obligations ............          (11)          (70)
Repayments of other long-term obligations .........          (40)          (36)
                                                         -------       -------
Net cash provided by (used in) financing activities           15           (74)
                                                         -------       -------

NET CHANGE IN CASH AND CASH EQUIVALENTS ...........         (935)          210
                                                         -------       -------

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ..        7,090         5,480
                                                         -------       -------

CASH AND CASH EQUIVALENTS AT END OF PERIOD ........      $ 6,155       $ 5,690
                                                         =======       =======

      The accompanying notes are an integral part of the interim unaudited
                  consolidated condensed financial statements.

                                        4

<PAGE>

BIO-VASCULAR, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

(1) BASIS OF PRESENTATION:

The accompanying unaudited consolidated condensed financial statements of
Bio-Vascular, Inc. ("Bio-Vascular" or "the Company") have been prepared by the
Company 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 Rule 10-01 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. For further information, refer to the financial statements
and footnotes thereto included in the Company's Annual Report to Shareholders
and incorporated by reference in the Company's Form 10-K for the year ended
October 31, 2001.

In the opinion of management, all adjustments considered necessary, consisting
only of items of a normal recurring nature, for a fair presentation of the
financial position, results of operations and cash flows of the Company as of
and for the interim periods presented have been included. Operating results and
cash flows for the three months ended January 31, 2002 are not necessarily
indicative of the results of operations and cash flows of the Company that may
be expected for the year ending October 31, 2002.

(2) ACQUISITION OF BUSINESS:

On March 6, 2002, Synovis Interventional Solutions (IS), a wholly owned
subsidiary of Bio-Vascular, Inc., has completed the purchase of the stock of
Emtech, Inc., a privately held company with manufacturing capabilities in
injection molding, computer numerical control machining and tool building. The
$2.1 million cash and stock transaction includes the purchase of the Emtech
business, as well as a 20,000-square-foot building in which it is located just
minutes from Synovis IS in Lino Lakes, Minnesota.

The Company issued 140,434 shares of its common stock at a price based on a fair
market value of $8.04 per share and paid $95,000 in cash in exchange for all the
outstanding stock of Emtech. Additionally, the Company $850,000 for the
building.

As the acquisition occurred in March 2002, Emtech's operating results are not
included in the consolidated financial statements for the three month period
ended January 31, 2002. Pro forma combined financial information has not been
provided as Emtech's operating results are not considered significant in
relation to the Company's results.

(3) SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION:

                                              January 31,      October 31,
                                                 2002              2001
                                              -----------      -----------
                                              (Unaudited)
Inventories:
Raw materials and supplies..................  $1,717,000       $1,389,000
Work in process.............................   2,146,000        1,974,000
Finished goods..............................   1,577,000        1,535,000
                                              ----------       ----------
                                              $5,440,000       $4,898,000
                                              ==========       ==========

                                       5

<PAGE>

BIO-VASCULAR, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - CONTINUED
--------------------------------------------------------------------------------

(4) EARNINGS PER SHARE:

The following table sets forth the presentation of shares outstanding used in
the calculation of basic and diluted earnings per share:

                                                          Three Months Ended
                                                             January 31,
                                                          2002          2001
                                                        ---------    ---------
                                                            (Unaudited)
Denominator for basic earnings per share -
Weighted-average common shares..................        9,221,039    8,902,931

Effect of dilutive securities:
Shares associated with deferred
compensation....................................           31,511       74,264

Shares associated with option plans.............          444,282      129,859
                                                        ---------    ---------
Dilutive potential common shares................          475,793      204,123
                                                        ---------    ---------
Denominator for diluted earnings per share -
Weighted-average common shares and dilutive
potential common shares.........................        9,696,832    9,107,054
                                                        =========    =========

Options outstanding with exercise prices
greater than the average market price of the
Company's common stock..........................          109,446      613,144


                                                  As of January 31,
                                            2002                    2001
                                        --------------         --------------
                                                    (Unaudited)

Options outstanding....................      1,370,934              1,269,743
Exercise prices........................ $2.00 - $12.21         $1.87 - $12.21
Expiration dates.......................    2002 - 2009            2001 - 2009
Non-vested stock awards................         31,511                 74,264

                                       6

<PAGE>

BIO-VASCULAR, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - CONTINUED
--------------------------------------------------------------------------------

(5) SEGMENT INFORMATION:

The following table presents certain financial information by business segment
for the three month periods ended January 31, 2002 and 2001:

                                                   Three Months Ended
                                                      January 31,
                                                  2002            2001
                                               ----------      ----------
                                                    (Unaudited)
Net revenue:
     Surgical Device Business...............   $4,159,000      $3,640,000
     Interventional Business................    3,870,000       2,666,000
                                               ----------      ----------
         Total..............................   $8,029,000      $6,306,000
                                               ==========      ==========

Operating income:
     Surgical Device Business...............   $  109,000      $  285,000
     Interventional Business................      643,000         215,000
                                               ----------      ----------
          Total.............................   $  752,000      $  500,000
                                               ==========      ==========

(6) SHAREHOLDERS EQUITY:

During the three months ended January 31, 2002, stock options for the purchase
of 17,028 shares of the Company's common stock were exercised at prices between
$2.688 and $4.938 per share.

(7) NEW ACCOUNTING PRONOUNCEMENTS:

In July of 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets. SFAS No. 142 requires that goodwill as well as other
intangibles determined to have an indefinite life will no longer be amortized;
however, these assets will be reviewed for impairment on a periodic basis. SFAS
No. 142 also requires the identification of reporting units for purposes of
assessing potential future impairment of goodwill.

The Company adopted SFAS No. 142 on November 1, 2001. The effect, net of related
tax, of implementing this statement are as follows:

                                                      Three Months Ended
                                                         January 31,
                                                   2002               2001
                                                 ---------         ---------
                                                        (Unaudited)
Reported net income...........................   $ 502,000         $ 333,000
Add back: Goodwill amortization...............          -             53,000
                                                 ---------         ---------
Adjusted net income...........................   $ 502,000         $ 386,000
                                                 =========         =========

Basic and diluted earnings per share:
     Reported net income......................      $ 0.05            $ 0.04
     Add back: Goodwill amortization..........          -                 -
                                                    ------            ------
     Adjusted net income......................      $ 0.05            $ 0.04
                                                    ======            ======

                                       7

<PAGE>


BIO-VASCULAR, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - CONTINUED
--------------------------------------------------------------------------------

The following table summarizes the Company's amortized intangible assets:

<TABLE>
<CAPTION>
                                         As of January 31,                As of October 31,
                                                2002                            2001
                                   -----------------------------    -----------------------------
                                            (Unaudited)
                                   Gross Carrying    Accumulated    Gross Carrying   Accumulated
                                       Amount       Amortization        Amount       Amortization
                                   --------------   ------------    --------------   ------------
<S>                                 <C>              <C>             <C>             <C>
Amortized intangible assets
     Patents and trademarks.......  $ 1,365,000      $   743,000     $ 1,337,000     $   727,000
     Developed technology.........    1,102,000           66,000       1,102,000          39,000
     Noncompete agreements........    1,050,000          340,000       1,050,000         312,000
                                    -----------      -----------     -----------     -----------
         Total....................  $ 3,517,000      $ 1,149,000     $ 3,489,000     $ 1,078,000
                                    ===========      ===========     ===========     ===========
</TABLE>

Amortization expense for the three months ended January 31, 2002, was $ 71,000.
The estimated amortization expense for each of the next five years is
approximately $ 285,000 per year.

The change in goodwill is attributable to increases in the cost of acquired
goodwill. No impairment losses or changes due to discontinued operations were
incurred during the three months ended January 31, 2002.

The following is the breakdown of goodwill by business segment:

                                 Surgical Device   Interventional     Total
                                 ---------------   --------------     -----
Goodwill at:
     January 31, 2002 (Unaudited)     $714,000      $4,093,000      $4,807,000
     October 31, 2001                 $697,000      $4,093,000      $4,790,000

In August 2001, the FASB issued SFAS no. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 requires entities to record the fair value of a
liability for an asset retirement obligation in the period in which is incurred.
Also, in September 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 144 requires that
long-lived assets to be disposed of by sale, including discontinued operations,
to be measured at the lower of the carrying cost or fair value less cost to
sell, whether reported in continuing operations or in discontinued operations.
SFAS No. 144 also broadens the reporting of discontinued operations to include
all components of an entity with operations that can be distinguished from the
rest of the entity and that will be eliminated from the ongoing operations of
the entity in a disposal transaction. The Company expects to adopt SFAS Nos. 143
and 144 in fiscal 2003. The Company's management has not yet determined the
impact adoption of SFAS Nos. 143 and 144 will have on its consolidated financial
position and results of operations.

                                       8

<PAGE>



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


Forward-Looking Statements:

Except for the historical information contained herein, the disclosures in this
Form 10-Q are "forward-looking statements" made under the Private Securities
Litigation Reform Act of 1995. All forward-looking statements in this document
are based upon information available to the Company as of the date hereof, and
the Company assumes no obligation to update any forward-looking statements.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results to differ materially from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors may include, among others, the risk
factors listed from time to time in the Company's filings with the Securities
and Exchange Commission, such as the year-end Annual Report on Form 10-K for the
year ended October 31, 2001.

Overview

Bio-Vascular, Inc. (the Company) is a diversified medical device company engaged
in developing, designing, manufacturing and bringing to market products to
improve the quality of human life. The Company's businesses provide medical
devices for the surgical and interventional treatment of disease. Bio-Vascular's
implantable biomaterials products offer biocompatible solutions to reduce risks
of critical surgeries, leading to better patient outcomes and lower costs. The
Micro Companies Alliance (MCA) subsidiary serves the niche market of
microsurgery, and its products are used across several surgical specialties.
Bio-Vascular's Synovis Interventional Solutions (Synovis IS) subsidiary custom
designs, develops and manufactures complex micro-wire forms that are used in
interventional devices for cardiac rhythm management, neurostimulation and
vascular procedures.

Acquisition of Emtech, Inc.

On March 6, 2002, the Synovis IS business subsidiary of the Company purchased
the stock of Emtech, Inc., a private company located in Lino Lakes, Minnesota
with manufacturing capabilities including injection molding, computer numerical
control machining and tool building. The Company believes that Emtech's
capabilities will expand the scope of the Company's offerings to its OEM
customers and could be used to manufacture components of some current
Bio-Vascular products at a lower cost. The Company will discontinue the use of
the Emtech, Inc., name and will operate this business as a division of Synovis
Interventional Solutions.

The $2.1 million cash and stock transaction includes the purchase of the Emtech
business, as well as a 20,000-square-foot building in which it is located just
minutes from Synovis IS in Lino Lakes, Minnesota. The Company issued 140,434
shares of its common stock at a price based on a fair market value of $8.04 per
share and paid $95,000 in cash in exchange for all the outstanding stock of
Emtech. Additionally, the Company paid $850,000 for the building.

As the acquisition occurred in March 2002, Emtech's operating results are not
included in the consolidated financial statements for the three month period
ended January 31, 2002. Pro forma combined financial information has not been
provided as Emtech's operating results are not considered significant in
relation to the Company's results.

                                       9

<PAGE>


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


Results of Operations

Comparison of the Three Months Ended January 31, 2002 with
the Three Months Ended January 31, 2001

Consolidated net revenue increased 27% to $8,029,000 in the first quarter of
fiscal 2002 from $6,306,000 in the first quarter of last year. The Company's
consolidated operating income grew by 50% to $752,000 from $500,000 in the
prior-year quarter. Consolidated net income increased to $502,000, or five cents
per diluted share, up 51% from $333,000, or four cents per diluted share, in the
first quarter of fiscal 2001.

The surgical device unit's net revenue grew 14% to $4,159,000 from $3,640,000 in
the year-ago quarter. Net worldwide revenue from the sales of Peri-Strips(R)
increased by 15% and contributed $1.32 million in revenue for the quarter to the
surgical device business, compared to $1.14 million in revenue in the first
quarter of 2001. Peri-Strips are used to reduce risks and improve patient
outcomes in gastric bypass surgery, a surgical treatment for morbid obesity
which is considered epidemic in the United States. In November 2001,
Bio-Vascular received a U.S. patent for Veritas(TM), the Company's revolutionary
implantable biomaterial tissue. Bio-Vascular received FDA marketing clearance
for the use of Veritas as a sling for stress urinary incontinence and as a
reconstructive material for pelvic floor reconstruction, a surgical treatment
for prolapse, the falling or sliding of organs in the pelvic area. Prolapse is a
frequent condition in women caused by childbearing, age and lifting. The Company
anticipates a full market launch of the Veritas product for these two
indications in the second half of the year, using early results from marketing
clinical trials as support.

The microsurgery business, acquired in July 2001, contributed net revenue of
$249,000 in the first quarter, compared to $170,000 in the fourth quarter of
fiscal 2001, a consecutive quarter increase of 46%. Of the first quarter
revenue, $202,000 was from the sales of the Microvascular Anastomotic Coupler
System (the Coupler), the focal product of the microsurgery business. The
Coupler is a device that enables microsurgeons to connect small arteries or
veins, without using sutures, quickly, easily and with consistently excellent
results.

The interventional business, conducted through the Company's Synovis
Interventional Solutions (IS) subsidiary, generated net revenue of $3,870,000 in
the first quarter, a 45% increase over $2,666,000 revenue in the first quarter
last year. Net revenue during the first quarter of fiscal 2002 include $415,000
in milestone payments, resulting from work done by the Synovis IS Technology
Development Center under an agreement to develop and manufacture an embolic
distal protection device designed and patented by Metamorphic Surgical Devices,
LLC, an unrelated company.

The consolidated gross margin percentage for the first quarters of fiscal 2002
and 2001 remained constant at 50%. Factors which affect the gross margin include
the relative revenue of each business unit, product mix, volume and other
production activities. The Company's consolidated gross margin may fluctuate
quarter to quarter based on variations in these factors.

Consolidated selling, general and administrative (SG&A) expense during the first
quarter of fiscal 2002 increased $533,000 or 24%, to $2,792,000 from $2,259,000
in the comparable fiscal 2001 quarter. This, however, represented a decrease as
a percentage of net revenue from 36% in the fiscal 2001 quarter to 35% in the
fiscal 2002 quarter as result of higher revenue levels combined with a
comparatively smaller increase in SG&A spending during the quarter.

Consolidated research and development (R&D) expense during the first quarter of
fiscal 2002 was $460,000, an increase of $74,000, or 19%, from the fiscal 2001
first quarter R&D expense of $386,000. In both business units, R&D expense
fluctuates from quarter to quarter based on the timing of projects. This
forward-looking statement will be influenced primarily by the number of projects
and the related R&D personnel requirements, development and regulatory approval
path, expected costs and the timing of those costs for each project.

                                       10

<PAGE>


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


The Company's consolidated operating income for the first quarter of fiscal 2002
was $752,000, representing an increase of $252,000 from $500,000 during the
first quarter of fiscal 2001. Operating income from the interventional business
climbed to $643,000, a 199% increase over $215,000 in the same period last year.
This substantial increase in operating income comes primarily from the milestone
payments from Metamorphic Surgical Devices, LLC. This increase was offset by the
surgical device unit's first quarter operating income decrease to $109,000 in
fiscal 2002 from $285,000 in fiscal 2001. Operating income from the surgical
device business was in line with the Company's plans and reflects decisions to
increase investment spending for R&D and for the first phase of developing the
infrastructure to market and sell the Microvascular Anastomotic Coupler System
more widely.

Other income, primarily interest income, was $18,000 in the fiscal 2002 quarter
and $48,000 in the fiscal 2001 quarter. The decrease in other income is
attributable to lower interest income yields in fiscal 2002 as compared to the
first quarter of fiscal 2001. The Company's income before income taxes was
$770,000 in the fiscal 2002 quarter as compared to $548,000 in the fiscal 2001
quarter.

The Company recorded a provision for income taxes of $268,000 in the first
quarter of fiscal 2002, at an effective tax rate of 35%, as compared to $215,000
at an effective tax rate of 39% for the first quarter last year. The effective
tax rate of 35% for the first quarter represents the expected annual effective
tax rate to be applied for fiscal 2002 based on forecasted income before income
taxes for the year.

The Company's consolidated first quarter 2002 net income increased to $502,000,
or five cents per diluted share, from $333,000, or four cents per diluted share,
in the same quarter of fiscal 2001.

Liquidity and Capital Resources

Cash and cash equivalents were $6,155,000 at January 31, 2002 as compared to
$7,090,000 at October 31, 2001, a decrease of $935,000.

Operating activities used cash of $551,000 in the first three months of fiscal
2002, as compared to providing cash of $503,000 during the same period in fiscal
2001. Cash was used by operations during the fiscal 2002 first quarter through a
net decrease in working capital primarily used for inventory, accounts
receivable and accounts payable partially offset by the combination of net
income and non-cash expenses.

Investing activities used $399,000 of cash during the first quarter of fiscal
2002, which included $348,000 in purchases of equipment and leasehold
improvements, $28,000 of investments in patents and trademarks, and $23,000 for
acquisition payments.

Financing activities provided $15,000 of cash during the first quarter of fiscal
2002, which consisted of proceeds of $66,000 received upon the exercise of stock
options, offset by $51,000 in cash repayments of capital equipment lease and
other long-term obligations. The Company has long-term obligations (including
current portions) of $341,000 at January 31, 2002, requiring payments through
2004.

The Company believes existing cash and investments will be sufficient to satisfy
its cash requirements for the next twelve months. This forward-looking
statement, as well as the Company's long-term cash requirements, will be a
function of a number of variables, including research & development priorities,
acquisition opportunities and the growth and profitability of the business.

                                       11

<PAGE>

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


New Accounting Standards

In August 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 requires entities to record the fair value
of a liability for an asset retirement obligation in the period in which is
incurred. Also, in September 2001, the FASB issued SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 requires that
long-lived assets to be disposed of by sale, including discontinued operations,
to be measured at the lower of the carrying cost or fair value less cost to
sell, whether reported in continuing operations or in discontinued operations.
SFAS No. 144 also broadens the reporting of discontinued operations to include
all components of an entity with operations that can be distinguished from the
rest of the entity and that will be eliminated from the ongoing operations of
the entity in a disposal transaction. The Company expects to adopt SFAS Nos. 143
and 144 in fiscal 2003. The Company's management has not yet determined the
impact adoption of SFAS Nos. 143 and 144 will have on its consolidated financial
position and results of operations.

Change in Company Name

In November, 2001 the Board of Directors voted to propose an amendment to the
Company's restated articles of incorporation for the purpose of changing the
Company's name from "Bio-Vascular, Inc." to "Synovis Life Technologies, Inc."
The name change was approved by the shareholders at the Company's 2002 annual
meeting on February 26, 2002, and will become effective upon the filing of a
certificate of amendment of the articles of incorporation with the Secretary of
State of Minnesota.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The principal financial instruments the Company maintains are in accounts
receivable and long-term obligations. The Company believes that the interest
rate, credit and market risk related to these accounts is not significant. The
Company manages the risk associated with these accounts through periodic reviews
of the carrying value for non-collectibility of assets and establishment of
appropriate allowances in connection with the Company's internal controls and
policies.

                                       12

<PAGE>

PART II.  OTHER INFORMATION
--------------------------------------------------------------------------------

ITEM 1. LEGAL PROCEEDINGS

The Company is currently involved in litigation which is ordinary and incidental
to its business. Management believes losses, if any, that might eventually be
sustained from such litigation would not be material to the Company's
consolidated financial position, results of operations or cash flows for any
period. Further, product liability claims may be asserted in the future relative
to events not known to management at the present time. Management believes that
the Company's risk management practices, including its insurance coverage, are
reasonably adequate to protect against potential material product liability
losses.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

       (a)  Exhibits. None.

            Form 8-K. No reports on Form 8-K were filed by the Company
            during the quarter ended January 31, 2002.

                                       13

<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 hereunto duly authorized.

                                        BIO-VASCULAR, INC.



Dated:  March 18, 2002                  /s/ Connie L. Magnuson
                                        --------------------------------------
                                        Connie L. Magnuson

                                        Vice President of Finance and Chief
                                        Financial Officer
                                        (Principal Financial Officer)
[{"type": "10-Q", "sequence": "1", "filename": "d10q.txt", "description": "FORM 10-Q", "secsgml_size_bytes": 39881}]
{"company-data": {"conformed-name": "BIO VASCULAR INC", "cik": "0000780127", "assigned-sic": "3842", "irs-number": "411526554", "state-of-incorporation": "MN", "fiscal-year-end": "1031"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-13907", "film-number": "02577430"}, "business-address": {"street1": "2575 UNIVERSITY AVENUE", "city": "ST PAUL", "state": "MN", "zip": "55114-1024", "phone": "6516033700"}}
-------------------------------------------------------------------------------

                       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 quarterly period ended January 31, 2002
                                       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 0-13907

               ---------------------------------------------------

                               BIO-VASCULAR, INC.
             (Exact name of Registrant as specified in its charter)

                        State of Incorporation: Minnesota
                 I.R.S. Employer Identification No.: 41-1526554

               Principal Executive Offices: 2575 University Avenue
                            St. Paul, Minnesota 55114
                        Telephone Number: (651) 603-3700

               ---------------------------------------------------

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

On March 1, 2002, there were 9,310,973 shares of the Registrant's common stock,
par value $.01 per share, outstanding.
PART I.  FINANCIAL INFORMATION
------------------------------------------------------------------------------

ITEM 1.  FINANCIAL STATEMENTS

BIO-VASCULAR, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF JANUARY 31, 2002 AND OCTOBER 31, 2001
------------------------------------------------------------------------------

(in thousands, except share and per share data)
January 31,   October 31,
                                                                    2002          2001
                                                                ------------   -----------
                                                                (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents .....................................   $  6,155       $  7,090
Accounts receivable, net ......................................      4,256          3,835
Inventories, net ..............................................      5,440          4,898
Deferred income taxes .........................................        223            223
Other .........................................................        416            446
                                                                  --------       --------
    Total current assets ......................................     16,490         16,492

Equipment and leasehold improvements, net .....................      5,146          4,994
Goodwill and other intangible assets, net .....................      7,175          7,201
Deferred income taxes and other ...............................        275            221
                                                                  --------       --------
    Total assets ..............................................   $ 29,086       $ 28,908
                                                                  ========       ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ..............................................   $  1,172       $  1,387
Accrued expenses ..............................................      1,860          2,010
Current maturities of long-term obligations ...................        168            182
                                                                  --------       --------
    Total current liabilities .................................      3,200          3,579
                                                                  --------       --------

Other liabilities .............................................        173            210
                                                                  --------       --------
    Total liabilities .........................................      3,373          3,789
                                                                  --------       --------

Shareholders' equity:
Preferred stock: authorized 5,000,000 shares of $.01 par value;
    none issued or outstanding at January 31, 2002 and
    October 31, 2001 ..........................................       --             --
Common stock: authorized 20,000,000 shares of $.01 par value;
    issued and outstanding, 9,263,198 at January 31, 2002 and
    9,246,170 at October 31, 2001 .............................         93             92
Additional paid-in capital ....................................     29,228         29,163
Unearned compensation .........................................        (88)          (114)
Accumulated deficit ...........................................     (3,520)        (4,022)
                                                                  --------       --------
    Total shareholders' equity ................................     25,713         25,119
                                                                  --------       --------
    Total liabilities and shareholders' equity ................   $ 29,086       $ 28,908
                                                                  ========       ========
The accompanying notes are an integral part of the interim unaudited
                  consolidated condensed financial statements.

                                        2
BIO-VASCULAR, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED JANUARY 31, 2002 AND 2001
------------------------------------------------------------------------------

(in thousands, except per share data)

                                                      Three Months Ended
                                                         January 31,
                                                       2002        2001
                                                      ------      ------
                                                         (Unaudited)

Net revenue ..................................        $8,029      $6,306
Cost of revenue ..............................         4,025       3,161
                                                      ------      ------
Gross margin .................................         4,004       3,145

Operating expenses:
Selling, general and administrative ..........         2,792       2,259
Research and development .....................           460         386
                                                      ------      ------

Operating income .............................           752         500

Other income, net ............................            18          48
                                                      ------      ------

Income before provision for income taxes......           770         548

Provision for income taxes ...................           268         215
                                                      ------      ------

Net income ...................................        $  502      $  333
                                                      ======      ======

Basic and diluted earnings per share .........        $ 0.05      $ 0.04
                                                      ======      ======

      The accompanying notes are an integral part of the interim unaudited
                  consolidated condensed financial statements.

                                        3
BIO-VASCULAR, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED JANUARY 31, 2002 AND 2001
------------------------------------------------------------------------------

(in thousands)

                                                           Three Months Ended
                                                              January 31,
                                                          2002           2001
                                                         -------       -------
                                                              (Unaudited)

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES      $  (551)      $   503
                                                         -------       -------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and leasehold improvements ..         (348)         (305)
Investments in patents and trademarks .............          (28)           (9)
Other .............................................          (23)           95
                                                         -------       -------
Net cash used in investing activities .............         (399)         (219)
                                                         -------       -------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds related to stock-based compensation plans            66            32
Repayment of capital lease obligations ............          (11)          (70)
Repayments of other long-term obligations .........          (40)          (36)
                                                         -------       -------
Net cash provided by (used in) financing activities           15           (74)
                                                         -------       -------

NET CHANGE IN CASH AND CASH EQUIVALENTS ...........         (935)          210
                                                         -------       -------

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ..        7,090         5,480
                                                         -------       -------

CASH AND CASH EQUIVALENTS AT END OF PERIOD ........      $ 6,155       $ 5,690
                                                         =======       =======

      The accompanying notes are an integral part of the interim unaudited
                  consolidated condensed financial statements.

                                        4
BIO-VASCULAR, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

(1) BASIS OF PRESENTATION:

The accompanying unaudited consolidated condensed financial statements of
Bio-Vascular, Inc. ("Bio-Vascular" or "the Company") have been prepared by the
Company 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 Rule 10-01 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. For further information, refer to the financial statements
and footnotes thereto included in the Company's Annual Report to Shareholders
and incorporated by reference in the Company's Form 10-K for the year ended
October 31, 2001.

In the opinion of management, all adjustments considered necessary, consisting
only of items of a normal recurring nature, for a fair presentation of the
financial position, results of operations and cash flows of the Company as of
and for the interim periods presented have been included. Operating results and
cash flows for the three months ended January 31, 2002 are not necessarily
indicative of the results of operations and cash flows of the Company that may
be expected for the year ending October 31, 2002.

(2) ACQUISITION OF BUSINESS:

On March 6, 2002, Synovis Interventional Solutions (IS), a wholly owned
subsidiary of Bio-Vascular, Inc., has completed the purchase of the stock of
Emtech, Inc., a privately held company with manufacturing capabilities in
injection molding, computer numerical control machining and tool building. The
$2.1 million cash and stock transaction includes the purchase of the Emtech
business, as well as a 20,000-square-foot building in which it is located just
minutes from Synovis IS in Lino Lakes, Minnesota.

The Company issued 140,434 shares of its common stock at a price based on a fair
market value of $8.04 per share and paid $95,000 in cash in exchange for all the
outstanding stock of Emtech. Additionally, the Company $850,000 for the
building.

As the acquisition occurred in March 2002, Emtech's operating results are not
included in the consolidated financial statements for the three month period
ended January 31, 2002. Pro forma combined financial information has not been
provided as Emtech's operating results are not considered significant in
relation to the Company's results.

(3) SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION:

                                              January 31,      October 31,
                                                 2002              2001
                                              -----------      -----------
                                              (Unaudited)
Inventories:
Raw materials and supplies..................  $1,717,000       $1,389,000
Work in process.............................   2,146,000        1,974,000
Finished goods..............................   1,577,000        1,535,000
                                              ----------       ----------
                                              $5,440,000       $4,898,000
                                              ==========       ==========

                                       5
BIO-VASCULAR, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - CONTINUED
--------------------------------------------------------------------------------

(4) EARNINGS PER SHARE:

The following table sets forth the presentation of shares outstanding used in
the calculation of basic and diluted earnings per share:

                                                          Three Months Ended
                                                             January 31,
                                                          2002          2001
                                                        ---------    ---------
                                                            (Unaudited)
Denominator for basic earnings per share -
Weighted-average common shares..................        9,221,039    8,902,931

Effect of dilutive securities:
Shares associated with deferred
compensation....................................           31,511       74,264

Shares associated with option plans.............          444,282      129,859
                                                        ---------    ---------
Dilutive potential common shares................          475,793      204,123
                                                        ---------    ---------
Denominator for diluted earnings per share -
Weighted-average common shares and dilutive
potential common shares.........................        9,696,832    9,107,054
                                                        =========    =========

Options outstanding with exercise prices
greater than the average market price of the
Company's common stock..........................          109,446      613,144

                                                  As of January 31,
                                            2002                    2001
                                        --------------         --------------
                                                    (Unaudited)

Options outstanding....................      1,370,934              1,269,743
Exercise prices........................ $2.00 - $12.21         $1.87 - $12.21
Expiration dates.......................    2002 - 2009            2001 - 2009
Non-vested stock awards................         31,511                 74,264

                                       6
BIO-VASCULAR, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - CONTINUED
--------------------------------------------------------------------------------

(5) SEGMENT INFORMATION:

The following table presents certain financial information by business segment
for the three month periods ended January 31, 2002 and 2001:

                                                   Three Months Ended
                                                      January 31,
                                                  2002            2001
                                               ----------      ----------
                                                    (Unaudited)
Net revenue:
     Surgical Device Business...............   $4,159,000      $3,640,000
     Interventional Business................    3,870,000       2,666,000
                                               ----------      ----------
         Total..............................   $8,029,000      $6,306,000
                                               ==========      ==========

Operating income:
     Surgical Device Business...............   $  109,000      $  285,000
     Interventional Business................      643,000         215,000
                                               ----------      ----------
          Total.............................   $  752,000      $  500,000
                                               ==========      ==========

(6) SHAREHOLDERS EQUITY:

During the three months ended January 31, 2002, stock options for the purchase
of 17,028 shares of the Company's common stock were exercised at prices between
$2.688 and $4.938 per share.

(7) NEW ACCOUNTING PRONOUNCEMENTS:

In July of 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets. SFAS No. 142 requires that goodwill as well as other
intangibles determined to have an indefinite life will no longer be amortized;
however, these assets will be reviewed for impairment on a periodic basis. SFAS
No. 142 also requires the identification of reporting units for purposes of
assessing potential future impairment of goodwill.

The Company adopted SFAS No. 142 on November 1, 2001. The effect, net of related
tax, of implementing this statement are as follows:

                                                      Three Months Ended
                                                         January 31,
                                                   2002               2001
                                                 ---------         ---------
                                                        (Unaudited)
Reported net income...........................   $ 502,000         $ 333,000
Add back: Goodwill amortization...............          -             53,000
                                                 ---------         ---------
Adjusted net income...........................   $ 502,000         $ 386,000
                                                 =========         =========

Basic and diluted earnings per share:
     Reported net income......................      $ 0.05            $ 0.04
     Add back: Goodwill amortization..........          -                 -
                                                    ------            ------
     Adjusted net income......................      $ 0.05            $ 0.04
                                                    ======            ======

                                       7
BIO-VASCULAR, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - CONTINUED
--------------------------------------------------------------------------------

The following table summarizes the Company's amortized intangible assets:
As of January 31,                As of October 31,
                                                2002                            2001
                                   -----------------------------    -----------------------------
                                            (Unaudited)
                                   Gross Carrying    Accumulated    Gross Carrying   Accumulated
                                       Amount       Amortization        Amount       Amortization
                                   --------------   ------------    --------------   ------------
Amortized intangible assets
     Patents and trademarks.......  $ 1,365,000      $   743,000     $ 1,337,000     $   727,000
     Developed technology.........    1,102,000           66,000       1,102,000          39,000
     Noncompete agreements........    1,050,000          340,000       1,050,000         312,000
                                    -----------      -----------     -----------     -----------
         Total....................  $ 3,517,000      $ 1,149,000     $ 3,489,000     $ 1,078,000
                                    ===========      ===========     ===========     ===========
Amortization expense for the three months ended January 31, 2002, was $ 71,000.
The estimated amortization expense for each of the next five years is
approximately $ 285,000 per year.

The change in goodwill is attributable to increases in the cost of acquired
goodwill. No impairment losses or changes due to discontinued operations were
incurred during the three months ended January 31, 2002.

The following is the breakdown of goodwill by business segment:

                                 Surgical Device   Interventional     Total
                                 ---------------   --------------     -----
Goodwill at:
     January 31, 2002 (Unaudited)     $714,000      $4,093,000      $4,807,000
     October 31, 2001                 $697,000      $4,093,000      $4,790,000

In August 2001, the FASB issued SFAS no. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 requires entities to record the fair value of a
liability for an asset retirement obligation in the period in which is incurred.
Also, in September 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 144 requires that
long-lived assets to be disposed of by sale, including discontinued operations,
to be measured at the lower of the carrying cost or fair value less cost to
sell, whether reported in continuing operations or in discontinued operations.
SFAS No. 144 also broadens the reporting of discontinued operations to include
all components of an entity with operations that can be distinguished from the
rest of the entity and that will be eliminated from the ongoing operations of
the entity in a disposal transaction. The Company expects to adopt SFAS Nos. 143
and 144 in fiscal 2003. The Company's management has not yet determined the
impact adoption of SFAS Nos. 143 and 144 will have on its consolidated financial
position and results of operations.

                                       8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
------------------------------------------------------------------------------

Forward-Looking Statements:

Except for the historical information contained herein, the disclosures in this
Form 10-Q are "forward-looking statements" made under the Private Securities
Litigation Reform Act of 1995. All forward-looking statements in this document
are based upon information available to the Company as of the date hereof, and
the Company assumes no obligation to update any forward-looking statements.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results to differ materially from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors may include, among others, the risk
factors listed from time to time in the Company's filings with the Securities
and Exchange Commission, such as the year-end Annual Report on Form 10-K for the
year ended October 31, 2001.

Overview

Bio-Vascular, Inc. (the Company) is a diversified medical device company engaged
in developing, designing, manufacturing and bringing to market products to
improve the quality of human life. The Company's businesses provide medical
devices for the surgical and interventional treatment of disease. Bio-Vascular's
implantable biomaterials products offer biocompatible solutions to reduce risks
of critical surgeries, leading to better patient outcomes and lower costs. The
Micro Companies Alliance (MCA) subsidiary serves the niche market of
microsurgery, and its products are used across several surgical specialties.
Bio-Vascular's Synovis Interventional Solutions (Synovis IS) subsidiary custom
designs, develops and manufactures complex micro-wire forms that are used in
interventional devices for cardiac rhythm management, neurostimulation and
vascular procedures.

Acquisition of Emtech, Inc.

On March 6, 2002, the Synovis IS business subsidiary of the Company purchased
the stock of Emtech, Inc., a private company located in Lino Lakes, Minnesota
with manufacturing capabilities including injection molding, computer numerical
control machining and tool building. The Company believes that Emtech's
capabilities will expand the scope of the Company's offerings to its OEM
customers and could be used to manufacture components of some current
Bio-Vascular products at a lower cost. The Company will discontinue the use of
the Emtech, Inc., name and will operate this business as a division of Synovis
Interventional Solutions.

The $2.1 million cash and stock transaction includes the purchase of the Emtech
business, as well as a 20,000-square-foot building in which it is located just
minutes from Synovis IS in Lino Lakes, Minnesota. The Company issued 140,434
shares of its common stock at a price based on a fair market value of $8.04 per
share and paid $95,000 in cash in exchange for all the outstanding stock of
Emtech. Additionally, the Company paid $850,000 for the building.

As the acquisition occurred in March 2002, Emtech's operating results are not
included in the consolidated financial statements for the three month period
ended January 31, 2002. Pro forma combined financial information has not been
provided as Emtech's operating results are not considered significant in
relation to the Company's results.

                                       9
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
------------------------------------------------------------------------------

Results of Operations

Comparison of the Three Months Ended January 31, 2002 with
the Three Months Ended January 31, 2001

Consolidated net revenue increased 27% to $8,029,000 in the first quarter of
fiscal 2002 from $6,306,000 in the first quarter of last year. The Company's
consolidated operating income grew by 50% to $752,000 from $500,000 in the
prior-year quarter. Consolidated net income increased to $502,000, or five cents
per diluted share, up 51% from $333,000, or four cents per diluted share, in the
first quarter of fiscal 2001.

The surgical device unit's net revenue grew 14% to $4,159,000 from $3,640,000 in
the year-ago quarter. Net worldwide revenue from the sales of Peri-Strips(R)
increased by 15% and contributed $1.32 million in revenue for the quarter to the
surgical device business, compared to $1.14 million in revenue in the first
quarter of 2001. Peri-Strips are used to reduce risks and improve patient
outcomes in gastric bypass surgery, a surgical treatment for morbid obesity
which is considered epidemic in the United States. In November 2001,
Bio-Vascular received a U.S. patent for Veritas(TM), the Company's revolutionary
implantable biomaterial tissue. Bio-Vascular received FDA marketing clearance
for the use of Veritas as a sling for stress urinary incontinence and as a
reconstructive material for pelvic floor reconstruction, a surgical treatment
for prolapse, the falling or sliding of organs in the pelvic area. Prolapse is a
frequent condition in women caused by childbearing, age and lifting. The Company
anticipates a full market launch of the Veritas product for these two
indications in the second half of the year, using early results from marketing
clinical trials as support.

The microsurgery business, acquired in July 2001, contributed net revenue of
$249,000 in the first quarter, compared to $170,000 in the fourth quarter of
fiscal 2001, a consecutive quarter increase of 46%. Of the first quarter
revenue, $202,000 was from the sales of the Microvascular Anastomotic Coupler
System (the Coupler), the focal product of the microsurgery business. The
Coupler is a device that enables microsurgeons to connect small arteries or
veins, without using sutures, quickly, easily and with consistently excellent
results.

The interventional business, conducted through the Company's Synovis
Interventional Solutions (IS) subsidiary, generated net revenue of $3,870,000 in
the first quarter, a 45% increase over $2,666,000 revenue in the first quarter
last year. Net revenue during the first quarter of fiscal 2002 include $415,000
in milestone payments, resulting from work done by the Synovis IS Technology
Development Center under an agreement to develop and manufacture an embolic
distal protection device designed and patented by Metamorphic Surgical Devices,
LLC, an unrelated company.

The consolidated gross margin percentage for the first quarters of fiscal 2002
and 2001 remained constant at 50%. Factors which affect the gross margin include
the relative revenue of each business unit, product mix, volume and other
production activities. The Company's consolidated gross margin may fluctuate
quarter to quarter based on variations in these factors.

Consolidated selling, general and administrative (SG&A) expense during the first
quarter of fiscal 2002 increased $533,000 or 24%, to $2,792,000 from $2,259,000
in the comparable fiscal 2001 quarter. This, however, represented a decrease as
a percentage of net revenue from 36% in the fiscal 2001 quarter to 35% in the
fiscal 2002 quarter as result of higher revenue levels combined with a
comparatively smaller increase in SG&A spending during the quarter.

Consolidated research and development (R&D) expense during the first quarter of
fiscal 2002 was $460,000, an increase of $74,000, or 19%, from the fiscal 2001
first quarter R&D expense of $386,000. In both business units, R&D expense
fluctuates from quarter to quarter based on the timing of projects. This
forward-looking statement will be influenced primarily by the number of projects
and the related R&D personnel requirements, development and regulatory approval
path, expected costs and the timing of those costs for each project.

                                       10
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
------------------------------------------------------------------------------

The Company's consolidated operating income for the first quarter of fiscal 2002
was $752,000, representing an increase of $252,000 from $500,000 during the
first quarter of fiscal 2001. Operating income from the interventional business
climbed to $643,000, a 199% increase over $215,000 in the same period last year.
This substantial increase in operating income comes primarily from the milestone
payments from Metamorphic Surgical Devices, LLC. This increase was offset by the
surgical device unit's first quarter operating income decrease to $109,000 in
fiscal 2002 from $285,000 in fiscal 2001. Operating income from the surgical
device business was in line with the Company's plans and reflects decisions to
increase investment spending for R&D and for the first phase of developing the
infrastructure to market and sell the Microvascular Anastomotic Coupler System
more widely.

Other income, primarily interest income, was $18,000 in the fiscal 2002 quarter
and $48,000 in the fiscal 2001 quarter. The decrease in other income is
attributable to lower interest income yields in fiscal 2002 as compared to the
first quarter of fiscal 2001. The Company's income before income taxes was
$770,000 in the fiscal 2002 quarter as compared to $548,000 in the fiscal 2001
quarter.

The Company recorded a provision for income taxes of $268,000 in the first
quarter of fiscal 2002, at an effective tax rate of 35%, as compared to $215,000
at an effective tax rate of 39% for the first quarter last year. The effective
tax rate of 35% for the first quarter represents the expected annual effective
tax rate to be applied for fiscal 2002 based on forecasted income before income
taxes for the year.

The Company's consolidated first quarter 2002 net income increased to $502,000,
or five cents per diluted share, from $333,000, or four cents per diluted share,
in the same quarter of fiscal 2001.

Liquidity and Capital Resources

Cash and cash equivalents were $6,155,000 at January 31, 2002 as compared to
$7,090,000 at October 31, 2001, a decrease of $935,000.

Operating activities used cash of $551,000 in the first three months of fiscal
2002, as compared to providing cash of $503,000 during the same period in fiscal
2001. Cash was used by operations during the fiscal 2002 first quarter through a
net decrease in working capital primarily used for inventory, accounts
receivable and accounts payable partially offset by the combination of net
income and non-cash expenses.

Investing activities used $399,000 of cash during the first quarter of fiscal
2002, which included $348,000 in purchases of equipment and leasehold
improvements, $28,000 of investments in patents and trademarks, and $23,000 for
acquisition payments.

Financing activities provided $15,000 of cash during the first quarter of fiscal
2002, which consisted of proceeds of $66,000 received upon the exercise of stock
options, offset by $51,000 in cash repayments of capital equipment lease and
other long-term obligations. The Company has long-term obligations (including
current portions) of $341,000 at January 31, 2002, requiring payments through
2004.

The Company believes existing cash and investments will be sufficient to satisfy
its cash requirements for the next twelve months. This forward-looking
statement, as well as the Company's long-term cash requirements, will be a
function of a number of variables, including research & development priorities,
acquisition opportunities and the growth and profitability of the business.

                                       11
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
------------------------------------------------------------------------------

New Accounting Standards

In August 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 requires entities to record the fair value
of a liability for an asset retirement obligation in the period in which is
incurred. Also, in September 2001, the FASB issued SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 requires that
long-lived assets to be disposed of by sale, including discontinued operations,
to be measured at the lower of the carrying cost or fair value less cost to
sell, whether reported in continuing operations or in discontinued operations.
SFAS No. 144 also broadens the reporting of discontinued operations to include
all components of an entity with operations that can be distinguished from the
rest of the entity and that will be eliminated from the ongoing operations of
the entity in a disposal transaction. The Company expects to adopt SFAS Nos. 143
and 144 in fiscal 2003. The Company's management has not yet determined the
impact adoption of SFAS Nos. 143 and 144 will have on its consolidated financial
position and results of operations.

Change in Company Name

In November, 2001 the Board of Directors voted to propose an amendment to the
Company's restated articles of incorporation for the purpose of changing the
Company's name from "Bio-Vascular, Inc." to "Synovis Life Technologies, Inc."
The name change was approved by the shareholders at the Company's 2002 annual
meeting on February 26, 2002, and will become effective upon the filing of a
certificate of amendment of the articles of incorporation with the Secretary of
State of Minnesota.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The principal financial instruments the Company maintains are in accounts
receivable and long-term obligations. The Company believes that the interest
rate, credit and market risk related to these accounts is not significant. The
Company manages the risk associated with these accounts through periodic reviews
of the carrying value for non-collectibility of assets and establishment of
appropriate allowances in connection with the Company's internal controls and
policies.

                                       12
PART II.  OTHER INFORMATION
--------------------------------------------------------------------------------

ITEM 1. LEGAL PROCEEDINGS

The Company is currently involved in litigation which is ordinary and incidental
to its business. Management believes losses, if any, that might eventually be
sustained from such litigation would not be material to the Company's
consolidated financial position, results of operations or cash flows for any
period. Further, product liability claims may be asserted in the future relative
to events not known to management at the present time. Management believes that
the Company's risk management practices, including its insurance coverage, are
reasonably adequate to protect against potential material product liability
losses.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

       (a)  Exhibits. None.

            Form 8-K. No reports on Form 8-K were filed by the Company
            during the quarter ended January 31, 2002.

                                       13
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 hereunto duly authorized.

                                        BIO-VASCULAR, INC.

Dated:  March 18, 2002                  /s/ Connie L. Magnuson
                                        --------------------------------------
                                        Connie L. Magnuson

                                        Vice President of Finance and Chief
                                        Financial Officer
                                        (Principal Financial Officer)