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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003

Commission file number 0-19841

i-STAT Corporation
(Exact name of Registrant as specified in its charter)

            Delaware   22-2542664        
                                (State or other jurisdiction of
                                   incorporation or organization)		  (I.R.S. Employer   
Identification No.)

104 Windsor Center Drive, East Windsor, NJ           08520                   
                        (Address of Principle Executive Offices)  (Zip Code)          

(609) 443-9300
(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 to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

  Yes ___X____ No_______

  Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act)

  Yes _____ No____X__

  The number of shares outstanding of each Issuer's classes of Common Stock as of the latest practicable date.

Class                                     May 1, 2003

                   Common Stock, $0.15 par value           20,137,342

i-STAT CORPORATION

TABLE OF CONTENTS

PART I        FINANCIAL INFORMATION

Item 1.     Financial Statements

Consolidated Condensed Statements of Operations for the
three months ended March 31, 2003 and 2002

Consolidated Condensed Balance Sheets as of March 31, 2003 and December 31, 2002

Consolidated Condensed Statements of Cash Flows for the three months
ended March 31, 2003 and 2002

Notes to Consolidated Financial Statements

Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations

Item 4 - Controls and Procedures

PART II        OTHER INFORMATION

Item 4 - Submission of Matters to a Vote of Security Holders

Item 6 - Exhibits and Reports on Form 8-K

SIGNATURES

CERTIFICATIONS

2



i-STAT CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(In thousands of dollars, except share and per share data)
(unaudited)



Three Months Ended
March 31,
                 
       2003
       2002
 
Net revenues:  
    Related party net revenues   $ 12,971      $11,556  
    Third party net revenues    2,237        2,669  
    Other related party net revenues    175        175  
  
     
 
       Total net revenues    15,383        14,400  
 
Cost of net revenues    11,481        12,748  
  
     
 
Gross margin on total net revenues    3,902        1,652  
Operating expenses:  
    Research and development    1,721        1,886  
    Sales and marketing    2,670        2,180  
    General and administrative    1,616        1,527  
  
     
 
       Total operating expenses    6,007        5,593  
  
     
 
            Operating loss    (2,105 )    (3,941 )
 
    Other income, net    1,542    189  
  
     
 
Net loss    (563 )    (3,752 )
 
Accretion of Preferred Stock    (114 )    (112 )
Dividends on Preferred Stock    (413 )    (549 )
  
     
 
Net loss available to Common Stockholders    ($ 1,090 )    ($ 4,413 )
  
     
 
Basic and diluted net loss per share  
available to Common Stockholders    ($ 0.05 )    ($ 0.22 )
  
     
 
Shares used in computing basic and diluted net  
loss per share available to Common Stockholders    20,117,110        19,980,887  
  
     
 

The accompanying notes are an integral part of these consolidated financial statements.

3



i-STAT CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands of dollars, except share and per share data)
(unaudited)

       March 31, 2003     
    December 31, 2002  
  
Assets  
Current assets:  
    Cash and cash equivalents   $ 11,612   $ 27,059  
    Martketable securities, current   11,796   –  
    Accounts receivable from related party, net    5,990    7,070  
    Accounts receivable, net    1,030    393  
    Inventories (Note 2)    13,622    14,509  
    Prepaid expenses and other current assets    1,210    2,089  
  
 
 
       Total current assets    45,260    51,120  
Martketable securities, long-term   4,595   –  
Plant and equipment, net of accumulated depreciation of $39,299 as  
      of March 31, 2003 and $36,130 as of December 31, 2002    11,900    11,858  
Other assets    978    980  
  
 
 
       Total assets   $62,733   $63,958  
  
 
 
Liabilities, Redeemable Preferred Stock and Stockholders' Deficit  
Current liabilities:  
    Accounts payable   $ 1,603   $2,927  
    Accrued expenses    3,879    4,860  
    Related party liability, current    10,019    10,019  
    Deferred revenue, current    120    30  
  
 
 
       Total current liabilities    15,621    17,836  
Deferred revenue, non-current    1,900    –  
Related party liability, non-current (Note 11)    47,000  47,000
  
 
 
       Total liabilities    64,521  64,836
  
 
 
Series D Redeemable Convertible Preferred Stock, liquidation value  
    $33,270 in 2003 and $32,617 in 2002    28,988    28,223  
Stockholders' deficit:  
    Preferred Stock, $0.10 par value, shares authorized 7,000,000:  
       Series A Junior Participating Preferred Stock, $0.10 par  
          value, 1,500,000 shares authorized; none issued    –    –  
       Series C Convertible Preferred Stock, 25,000 shares  
          authorized; none issued    –    –  
    Common Stock, $0.15 par value, 50,000,000 shares authorized;  
       20,157,927 shares issued and 20,117,110  
       shares outstanding as of March 31, 2003 and December 31, 2002    3,024    3,024  
    Treasury Stock, at cost, 40,817 shares    (750 )  (750 )
    Additional paid-in capital    252,006    252,771  
    Loan to officer, net    (12 )  (93 )
    Accumulated deficit    (283,568 )  (283,005 )
    Accumulated other comprehensive loss    (1,476 )  (1,048 )
  
 
 
       Total stockholders' deficit    (30,776 )  (29,101 )
  
 
 
       Total liabilities, redeemable preferred stock and stockholders' deficit   $62,733   $63,958  
  
 
 

The accompanying notes are an integral part of these consolidated financial statements.

4



i-STAT CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands of dollars)
(unaudited)

Three Months Ended
March 31, 
       2003  
        2002  
  
Cash flows from operating activities:  
    Net loss    ($563 )    ($3,752 )
    Adjustment to reconcile net loss to net cash  
    provided by (used in) operating activities    (133 )    736
    Change in assets and liabilities    2,203    2,558
  
 
       Net cash provided by (used in) operating activities    1,507    (458 )
  
 
 
Cash flows from investing activities:  
    Purchases of marketable securities    (16,391 )    –
    Purchases of equipment    (502 )    (858 )
    Other    (20 )      (21 )
  
 
       Net cash used in investing activities    (16,913 )    (879 )
  
 
 
Cash flows from financing activities:  
    Proceeds from stock options exercised    –        77  
    Expenses related to private placement of Series D  
    Redeemable Convertible Preferred Stock  
      and Warrants    –      (47 )
  
 
       Net cash provided by financing activities    –        30  
  
 
 
Effect of currency exchange rate changes on cash    (41 )    (16 )
  
 
    Net decrease in cash and cash equivalents    (15,447 )      (1,323 )
     
    Cash and cash equivalents at beginning of period    27,059        43,112  
  
 
    Cash and cash equivalents at end of period   $ 11,612       $ 41,789  
  
 

The accompanying notes are an integral part of these consolidated financial statements.

5



i-STAT CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(unaudited)

1.                  General

                     Basis of Presentation

  The information presented as of March 31, 2003, and for the three months ended March 31, 2003 and 2002, is unaudited, but includes all adjustments (consisting of normal recurring accruals except for the inventory adjustment that was recorded in the first quarter of 2002, see Note 2) which the management of i-STAT Corporation (the “Company”) believes to be necessary for the fair presentation of results for the periods presented. The results for the interim periods are not necessarily indicative of results to be expected for the year. The December 31, 2002 consolidated condensed balance sheet data was derived from the audited financial statements, but does not include all disclosures required by generally accepted accounting principles. These consolidated condensed financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2002, including the Notes thereto, which were included as part of the Company’s Annual Report on Form 10-K, File No. 0-19841.

                     Reclassification

  Certain reclassifications have been made to 2002 amounts in order to conform them to the 2003 presentation.

                     Marketable Securities

  Marketable securities, current and long-term, consist of fixed-income investments in United States Treasury securities with a maturity of greater than three months from the date of purchase. The Company applies Statement of Financial Accounting Standards (‘SFAS”) No. 115 “Accounting for Certain Investments in Debt and Equity Securities” to its investments in marketable securities. The Company’s marketable securities are classified as held-to-maturity and are recorded at amortized cost.

  At March 31, 2003, marketable securities consisted of the following:

Amortized Cost 
 Market Value 
 Unrealized Gain 
(in thousands of dollars)
U.S. Treasury securities - current     $ 11,796   $ 11,799   $ 3  
    U.S. Treasury securities - long-term    4,595    4,600    5  
  
 
 
 
    $ 16,391   $ 16,399   $ 8  
  
 
 
 

                     Basic and Diluted Loss per Share

  Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of Common Shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock or resulted in the issuance of Common Stock that then shared in the earnings of the Company. The Company has not included potentially dilutive Common Shares in the diluted per-share computation for the periods presented, as the result is antidilutive due to the Company’s net loss.

  Options to purchase 4,042,471 shares of common stock at $2.24 – $32.58 per share, which expire on various dates from May 2003 to February 2013, were outstanding at March 31, 2003. In addition, warrants to purchase 1,875,357.5 shares of Common Stock at $8.00 per share were outstanding at March 31, 2003. The options and warrants were not included in the computation of diluted loss per share because the effect would be antidilutive (i.e., decrease the net loss per share) due to the Company’s net loss.

6



                     Comprehensive Income

  SFAS No. 130, “Reporting Comprehensive Income,” requires certain items to be included in other comprehensive income. The only component of accumulated other comprehensive income (loss) for the Company is foreign currency translation adjustments resulting from the translation of the financial statements of the Company’s Canadian subsidiary.

   Three Months  
 Ended March 31, 
(In thousands of dollars)  
 2003 
 2002  
Net loss                                             ($563 )  ($3,752 )    
         Other comprehensive income (loss):  
    Foreign currency translation             (428)    16    
     
 
   
Comprehensive loss                      ($ 991 )  ($3,736 )