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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 June 30, 2003

TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from __________ to __________
Commission file number 0-29486

Merge Technologies Incorporated
(Exact name of Registrant as specified in its charter.)

Wisconsin 39-1600938
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)

1126 South 70th Street, Milwaukee, WI 53214-3151
(Address of principal executive offices)

(414) 977-4000
(Issuer's telephone number)


Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 Exchange Act). Yes X No

As of August 13, 2003, the issuer had 12,151,664 shares of common
stock outstanding.





INDEX
-------

Page
------
PART I FINANCIAL INFORMATION
- ------------------------------


Item 1. Financial Statements......................................... 1

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 10

Item 3. Quantitative and Qualitative Disclosures About Market Risk... 17

Item 4. Controls and Procedures...................................... 17


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

Item 1. Legal Proceedings............................................ 18

Item 2. Changes in Securities and Use of Proceeds.................... 18

Item 3. Defaults upon Senior Securities.............................. 18

Item 4. Submission of Matters to a Vote of Security Holders.......... 18

Item 5. Other Information............................................ 19

Item 6. Exhibits and Reports on Form 8-K............................. 19

Signatures................................................... 20

Exhibit Index................................................ 21





PART I
--------

ITEM 1. FINANCIAL STATEMENTS
- ------------------------------





MERGE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)

June 30, December 31,
2003 2002
--------- ---------
(Unaudited)


ASSETS

Current assets:
Cash............................................................ $ 9,150 $ 4,411
Accounts receivable, net of allowance for doubtful accounts of
$292 and $293 at June 30, 2003 and December 31, 2002,
respectively................................................... 5,572 7,069
Unbilled accounts receivable.................................... 344 79
Inventory....................................................... 828 453
Prepaid expenses................................................ 410 176
Other current assets............................................ 29 25
--------- ---------
Total current assets............................................. 16,333 12,213
--------- ---------

Property and equipment:
Computer equipment.............................................. 4,170 3,725
Office equipment................................................ 517 501
Leasehold improvements.......................................... 171 147
--------- ---------
4,858 4,373

Less accumulated depreciation and amortization.................. 3,767 3,531
--------- ---------
Net property and equipment....................................... 1,091 842

Purchased and developed software, net of accumulated amortization
of $6,341 and $5,522 at June 30, 2003 and December 31, 2002,
respectively.................................................... 6,144 5,703
Intangibles - customer contracts, net of accumulated amortization
of $193 and $97 at June 30, 2003 and December 31, 2002,
respectively.................................................... 773 869
Long-term accounts receivable.................................... 123 144
Goodwill......................................................... 7,377 7,406
Other............................................................ 51 69
--------- ---------
Total assets.................................................... $ 31,892 $ 27,246
========= =========

LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:
Accounts payable................................................ $ 710 $ 1,493
Current portion of obligations under capital leases............. ---- 7
Accrued wages................................................... 865 685
Other accrued liabilities....................................... 688 264
Deferred revenue................................................ 2,551 1,892
--------- ---------
Total current liabilities........................................ 4,814 4,341
Notes payable.................................................... 203 167
Put options related to redeemable common stock................... 280 1,038
Other............................................................ 52 17
--------- ---------
Total liabilities............................................... 5,349 5,563
--------- ---------

Shareholders' equity
Preferred stock, $0.01 par value: 4,000,000 shares authorized;
one share issued and outstanding at June 30, 2003 and
December 31, 2002.............................................. $ ---- $ ----
Series A Preferred Stock, $0.01 par value: 1,000,000 shares
authorized; zero shares issued and outstanding at June 30,
2003 and December 31, 2002..................................... ---- ----
Series 2 Special Voting Preferred stock, no par value: one
share authorized; one share issued and outstanding at June 30,
2003 and December 31, 2002..................................... ---- ----
Common stock, $0.01 par value: 30,000,000 shares authorized;
10,132,775 shares and 9,481,683 shares issued and outstanding
at June 30, 2003 and December 31, 2002, respectively........... 101 95
Common stock subscribed: 5,544 and 3,542 shares at June 30,
2003 and December 31, 2002, respectively....................... 33 15
Additional paid-in capital...................................... 29,878 28,035
Common stock subscription receivable............................ ---- (25)
Accumulated deficit............................................. (3,579) (6,295)
Accumulated other comprehensive loss - cumulative translation
adjustment..................................................... 110 (142)
--------- ---------
Total shareholders' equity....................................... 26,543 21,683
--------- ---------
Total liabilities and shareholders' equity....................... $ 31,892 $ 27,246
========= =========

See accompanying notes to financial statements.









MERGE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for share data)


Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- ---------------------------
2003 2002 2003 2002
----------- ----------- ------------ -----------


Net sales............................... $ 6,434 $ 4,183 $ 12,552 $ 8,718
Cost of sales........................... 1,628 1,629 3,680 3,417
----------- ----------- ------------ -----------
Gross profit............................ 4,806 2,554 8,872 5,301
----------- ----------- ------------ -----------
Operating costs and expenses:
Sales and marketing.................... 1,477 899 2,802 1,766
Product research and development....... 397 350 836 714
General and administrative............. 865 480 1,587 1,149
Depreciation and amortization.......... 117 119 223 232
Acquired in-process research and
development........................... ---- 148 ---- 148
----------- ----------- ------------ -----------
Total operating costs and expenses...... 2,856 1,996 5,448 4,009
----------- ----------- ------------ -----------
Operating income........................ 1,950 558 3,424 1,292
----------- ----------- ------------ -----------
Other income (expense):
Interest expense....................... (4) (5) (8) (12)
Interest income........................ 12 10 25 16
Other, net............................. (249) 51 (236) 42
----------- ----------- ------------ -----------
Total other income (expense)............ (241) 56 (219) 46
----------- ----------- ------------ -----------
Income before income taxes.............. 1,709 614 3,205 1,338
Income tax expense...................... 309 14 489 34
----------- ----------- ------------ -----------
Net income.............................. $ 1,400 $ 600 $ 2,716 $ 1,304
=========== =========== ============ ===========


Net income per share - basic............ $ 0.13 $ 0.07 $ 0.25 $ 0.16
=========== =========== ============ ===========
Weighted average number of common
shares outstanding - basic............. 10,762,195 7,751,870 10,612,970 7,415,664
=========== =========== ============ ===========

Net income per share - diluted.......... $ 0.12 $ 0.06 $ 0.23 $ 0.12
=========== =========== ============ ===========
Weighted average number of common shares
outstanding - diluted................ 11,677,051 9,910,400 11,479,134 9,740,228
=========== =========== ============ ===========


See accompanying notes to financial statements.









MERGE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

Six Months Ended
June 30,
----------------------------
2003 2002
----------- ------------

Cash flows from operating activities:
Net income................................................... $ 2,716 $ 1,304

Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................ 1,107 759
Amortization of discount on note acquired in merger.......... 7 6
Issuance of stock for services rendered...................... ---- 15

Change in assets and liabilities:
Accounts receivable, net................................... 1,361 24
Inventory.................................................. (375) (48)
Prepaid expenses............................................. (231) (159)
Accounts payable............................................. (844) 260
Accrued wages................................................ 165 (265)
Other accrued expenses....................................... 27 8
Deferred revenue............................................. 553 298
Other........................................................ 438 (1)
----------- ------------
Net cash provided by operating activities..................... 4,924 2,201
----------- ------------

Cash flows from investing activities:
Acquisitions of business, net of cash acquired............... ---- 80
Leasehold improvements....................................... (22) ----
Purchases of property and equipment.......................... (418) (308)
Capitalized software development............................. (1,004) (863)
----------- ------------
Net cash used in investing activities......................... (1,444) (1,091)
----------- ------------

Cash flows from financing activities:
Proceeds from notes receivable from related party............ 25 ----
Proceeds from exercise of stock options...................... 1,046 694
Proceeds from exercise of warrants........................... ---- 1,118
Proceeds from employee stock purchase plan................... 61 40
Principal payments under capital leases...................... (7) (15)
----------- ------------
Net cash provided by financing activities..................... 1,125 1,837
----------- ------------
Effect of exchange rate changes on cash....................... 134 3
Net increase in cash and cash equivalents..................... 4,739 2,950
Cash, beginning of period..................................... 4,411 1,043
----------- ------------
Cash, end of period........................................... $ 9,150 $ 3,993
=========== ============


Supplemental Disclosures of Cash Flow Information:

Cash paid for income taxes................................... $ 146 $ ----
Cash paid for interest....................................... $ 1 $ 6

Non-cash Financing and Investing Activities:

Payment of preferred stock dividends through issuance of
common stock................................................ $ ---- $ 11
Common stock issued for acquisitions......................... $ ---- $ 792
Redemption value related to exchangeable common stock........ $ 33 $ 54


See accompanying notes to financial statements.









MERGE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands)


Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- ---------------------------
2003 2002 2003 2002
----------- ----------- ------------ -----------


Net income............................ $ 1,400 $ 600 $ 2,716 $ 1,304
Accumulated other comprehensive
income - cumulative translation
adjustment........................... 155 34 252 31
----------- ----------- ------------ -----------
Comprehensive net income.............. $ 1,555 $ 634 $ 2,968 $ 1,335
=========== =========== ============ ===========

See accompanying notes to financial statements.






MERGE TECHNOLOGIES INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1) BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements have been
prepared pursuant to the rules and regulations for reporting on Form 10-Q.
Accordingly, certain information and footnotes required by accounting principles
generally accepted in the United States of America for complete financial
statements are not included herein. The interim statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the latest Annual Report on Form 10-KSB of Merge Technologies
Incorporated, a Wisconsin corporation dba Merge eFilm, and its subsidiaries and
affiliates (the "Company" or "Merge eFilm").

Our accompanying unaudited consolidated financial statements of reflect
all adjustments of a normal recurring nature, which are, in the opinion of
management, necessary to present a fair statement of our financial position and
results of operations.

As a result of the eFilm Medical Inc. ("eFilm") acquisition on June
28, 2002, we have presented costs associated with service revenues as a
component of cost of sales. Where appropriate, certain items relating to the
prior years have been reclassified to conform to the presentation in the
current period.

We maintain two stock-based employee compensation plans and one
director option plan. We apply the provisions of the SFAS 123, Accounting for
Stock-Based Compensation ("SFAS No. 123"), as amended ("SFAS No. 148"), which
requires entities to recognize as expense over the vesting period the fair
value of all stock-based awards on the date of grant. Alternatively, SFAS No.
123 also allows entities to continue to apply the provision of APB Opinion No.
25 and provide pro forma disclosures as if the fair-value-based method defined
in SFAS No. 123 had been applied.

We have elected to continue to apply the provisions of APB Opinion No.
25 in accounting for our plans. All stock options under the plans have been
granted at exercise prices of not less than the market value at the date of
the grant. Had we determined compensation cost based on the fair value at the
grant date for its stock options under SFAS No. 123, our net income would have
been decreased in the three and six months ended June 30, 2003 and 2002 to the
pro forma amounts indicated below:




Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- ---------------------------
2003 2002 2003 2002
----------- ----------- ------------ -----------


Net income, as reported................ $ 1,400 $ 600 $ 2,716 $ 1,304
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax benefits........... (253) (64) (386) (111)
Pro forma net income................... $ 1,147 $ 536 $ 2,330 $ 1,193

Earnings per share:
Basic - as reported................... $ 0.13 $ 0.07 $ 0.25 $ 0.16
Basic - pro forma..................... $ 0.10 $ 0.06 $ 0.21 $ 0.15

Diluted - as reported................. $ 0.12 $ 0.06 $ 0.23 $ 0.12
Diluted - pro forma................... $ 0.10 $ 0.05 $ 0.20 $ 0.12







MERGE TECHNOLOGIES INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(2) GOODWILL AND OTHER TANGIBLES

Goodwill is our only unamortized intangible asset. Goodwill decreased
mainly due to finalization of the Scientific Research and Experimental Research
Credit ("SR&ED") received by eFilm. There were no changes to the carrying
amount of amortizable intangibles during the six months ended June 30, 2003.

Our intangible assets, other than internally developed software,
subject to amortization, are summarized as follows:


June 30, 2003
(in thousands)
---------------------------------------------
Weighted
Average
Remaining Gross
Amortization Carrying Accumulated
Period (Years) Amount Amortization
------------- ---------- -------------

Purchased software 3.6 $ 1,418 $ (375)
Customer contracts 4.0 $ 966 $ (193)
---------- -------------
Total 3.8 $ 2,384 $ (568)
========== =============

Amortization expense was $122 and $7 in the three months ended June
30, 2003 and 2002, respectively, and $244 and $14 in the six months ended June
30, 2003 and 2002, respectively. Estimated aggregate amortization expense for
each of the next five years is as follows (in thousands):

For the remaining six months: 2003 $ 244
For the year ended: 2004 $ 481
2005 $ 444
2006 $ 432
2007 $ 216

(3) INCOME PER SHARE

Basic earnings per share are computed by dividing income available to
common shareholders by the weighted-average number of common shares and share
exchange rights outstanding if conversion is dilutive to the calculation.
Diluted earnings per share reflects the potential dilution that could occur
based on the effect of the conversion of outstanding convertible preferred
shares and the exercise of stock options and warrants with an exercise price
of less than the average market price of our common stock. The following
table sets forth the computation of basic and diluted earnings per share for
the three and six months ended June 30, 2003 and 2002.



(in thousands, except for share data)


Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- ---------------------------
2003 2002 2003 2002
----------- ----------- ------------ -----------


Numerator:

Net income............................. $ 1,400 $ 600 $ 2,716 $ 1,304
Preferred stock dividends.............. ---- (9) ---- (20)
Accretion of redemption value related
to Interpra exchangeable shares....... (12) (23) (33) (54)
Allocation of income to Interpra
exchangeable shares................... (17) (22) (48) (55)
----------- ----------- ------------ -----------
Numerator for net income per share -
basic................................. $ 1,371 $ 546 $ 2,635 $ 1,175
----------- ----------- ------------ -----------

Adjustment for effect of assumed
conversion of preferred stock......... ---- 9 ---- 20
----------- ----------- ------------ -----------
Numerator for net income per share -
diluted............................... $ 1,371 $ 555 $ 2,635 $ 1,195
----------- ----------- ------------ -----------




MERGE TECHNOLOGIES INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Denominator:

Weighted average number of shares of
common stock and participating
securities outstanding................ 10,762,195 7,751,870 10,612,970 7,415,664
----------- ----------- ------------ -----------
Effect of convertible preferred stock.. ---- 555,869 ---- 596,328
Effect of stock options................ 857,476 1,062,779 788,230 1,155,378
Effect of warrants..................... 57,379 539,882 77,934 572,858
----------- ----------- ------------ -----------
Denominator for net income per share -
diluted............................... 11,677,051 9,910,400 11,479,134 9,740,228
----------- ----------- ------------ -----------


Net income per share - basic........... $ 0.13 $ 0.07 $ 0.25 $ 0.16

Net income per share - diluted......... $ 0.12 $ 0.06 $ 0.23 $ 0.12




For the three months ended June 30, 2003 and 2002, 15,769 and
1,062,779, respectively, weighted average options and warrants to purchase
shares of the our common stock had exercise prices greater than the average
market price of the shares of common stock.

For the six months ended June 30, 2003 and 2002, 7,928 and 1,155,378,
respectively, weighted average options and warrants to purchase shares of our
common stock had exercise prices greater than the average market price of
the shares of common stock.


(4) ACQUISITIONS

In May 2002, we acquired certain assets of Aurora Technologies, Inc.
("Aurora") pursuant to an Asset Acquisition Agreement dated April 18, 2002. On
June 28, 2002, we acquired all the outstanding capital stock of eFilm pursuant
to a Stock Acquisition Agreement dated April 15, 2002.

The acquisitions were accounted for using the purchase method of
accounting. The accompanying consolidated statements of operations include
the results of operations for Aurora, acquired on May 28, 2002, and for eFilm,
acquired on June 28, 2002 since the respective acquisition dates. The amounts
allocated to purchased and developed software are being amortized over periods
ranging from three to five years. The estimated asset lives are determined
based on projected future economic benefits and expected life cycles of the
technologies. The amounts allocated to goodwill are not being amortized, but
will be tested for impairment annually or under certain circumstances that may
indicate a potential impairment, and written-off when impaired. The following
is a summary of purchase consideration for the acquisitions:

Aurora eFilm
Form of Consideration Fair Value Fair Value
- -------------------------------------------------------------------
Cash................................. $ 100 $ ----
93,901 shares of common stock........ 792 ----
1,000,000 eFilm exchangeable shares.. ---- 7,737
Vested stock options................. ---- 437
Transaction costs.................... 25 186
---------- ----------
TOTAL: $ 917 $ 8,360
========== ==========

The fair value of shares issued to Aurora was determined to be $8.43
per share or equal to the closing price of our common stock as of May 17, 2002.
The fair values of exchangeable shares issued in the eFilm acquisition was
determined using a three-day average $7.736 closing price of our common stock
after signing the definitive agreement.





MERGE TECHNOLOGIES INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


We paid a significant premium above eFilm's tangible and intangible
assets principally for two reasons: eFilm's knowledge of our software products
through the joint development projects that were undertaken prior to the
acquisition and the ability to sell our products to existing eFilm customers.
Also, eFilm's software development ability is particularly important because as
we looked to the future, we foresaw the need to expand our software product
offerings to healthcare institutions as many of our competitors are promising
more integrated solutions. In addition, we expect to be able to sell our
higher price and high margin software products to eFilm's customers and to use
the eFilm Workstation as a way to have the healthcare institutions become aware
of us.

Each holder of eFilm exchangeable shares has the right, at any time
within five years of the acquisition date, to exchange their shares for our
common stock on a one for one basis, subject to adjustment provisions. At June
28, 2007, any remaining shares will automatically be converted to our common
stock.

Each eFilm exchangeable share is entitled to vote together with our
common stock on our matters and be included in dividend rights equivalent to
our common stock. We established an escrow holdback of 116,590 exchangeable
shares for 18 months, for indemnification with respect to certain potential
claims.

We also established an escrow holdback of 18,780 shares related to the
Aurora transaction for 12 months, for indemnification with respect to certain
potential claims. We expect to release the escrow holdback in the third
quarter 2003.

The total purchase considerations of approximately $917 and $8,360 was
allocated to the fair value of the net assets acquired as follows (in
thousands):

Aurora eFilm
-------------------------
Current assets........................ $ 59 $ 403
Other assets.......................... 29 44
Purchased and developed technologies.. 85 1,193
Purchased contracts................... ---- 966
Goodwill.............................. 744 6,269
In-process research and development... ---- 148
Liabilities assumed................... ---- (663)
-------- ---------
Total consideration:.................. $ 917 $ 8,360
======== =========


The value assigned to acquired in-process technology was determined by
identifying the acquired specific in-process research and development projects
that would be continued, and for which (1) technological feasibility had not
been established at the acquisition date, (2) there was no alternative future
use, and (3) the fair value was estimable with reasonable reliability. We
estimated the fair value of the eFilm eRis (eRIS) project to be $148.
Accordingly, this amount was immediately expensed in the consolidated statement
of operations upon the acquisition date.

The estimated fair value of these projects was determined by the
utilization of the income or consumption approach. Appraisal assumptions
utilized under this method included a forecast of estimated future net cash
flows, as well as discounting the future net cash flows to their present
value. We used a 25% discount rate, which was calculated using an industry
beta and capital structure.

Of the amounts allocated to goodwill in the acquisitions of eFilm and
Aurora, $6,269 and $744, respectively, the $6,269 relating to the eFilm
transaction will not be deductible for federal income tax purposes, and the
$744 relating to the Aurora transaction will be deductible for federal income
tax purposes.

Additionally, in the Aurora acquisition, we assumed an operating lease
obligation for office space located in the Chicago, Illinois metropolitan area.
The aggregate minimum lease payment assumed amounted to $122. In October of
2002, we terminated the operating lease acquired in the Aurora acquisition.
The total cost to terminate the lease was $14.





MERGE TECHNOLOGIES INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The following unaudited pro forma information shows our results of
operations the six months ended June 30, 2002, as if the business combinations
had occurred at the beginning of the period. This data is not indicative of
the results of operations that would have arisen if the business combinations
had occurred at the beginning of the respective periods. Moreover, this data
is not intended to be indicative of future results of operations.


Six Months ended June 30, 2002
(in thousands, except share data)

Revenue....................... $ 10,385
Net income.................... 1,158

Earnings per share:
Basic....................... $ 0.12
Diluted..................... $ 0.10


(5) SUBSEQUENT EVENTS

On July 17, 2003 we acquired 100% of the outstanding shares of RIS
Logic, Incorporated ("RIS Logic"), by merger into a newly formed subsidiary of
ours, in exchange for 772,000 shares of our common stock, cash of $2,724,000,
the payment of $1,700,000 of liabilities as a closing condition of the sale and
the issuance of 128,000 options (to replace existing fully vested options
previously issued to RIS Logic employees) from the our 2003 Stock Option Plan.
We have agreed to file a registration statement to register shares issued from
our 2003 Stock Option Plan. We have also agreed to make this filing within
30 days of closing the merger.

RIS Logic has been in the business of the development and sales of
Radiology Information Systems ("RIS") to end user imaging centers. Its assets
included accounts receivable, capital equipment and intangible assets. We
intend to utilize the RIS Logic assets in a similar manner as RIS Logic.

The purchase consideration includes a premium over the net book value
of assets based upon our assessment of the market value of RIS Logic's assets
and the benefits of combining RIS Logic with us.

In connection with the transaction, an escrow of 173,093 of the shares
issued by us to the stockholders of RIS Logic was established as a reserve
against any claims regarding breaches or representations and warranties. More
details of the transaction are set forth in the Form 8-K previously filed by
us with the Securities and Exchange Commission on July 30, 2003.

In July 2003, we sold 667,000 shares of common stock in an offering
exempt from registration as a private offering, which raised $8,000,000 of
gross proceeds to us before any expenses associated with the offering of these
shares. The monies were raised are for general corporate purposes. The
private placement memorandum setting forth the terms of the offering and the
risk factors associated with the RIS Logic acquisition is attached to the
Form 8-K referred to above. We have agreed to file a registration statement
to register these shares within 60 days of closing the private offering.





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


SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
- --------------------------------------------

Certain statements in this report that are not historical facts
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the Securities Act,
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Discussions containing such forward-looking statements may
be included herein in the material set forth under Management's Discussion and
Analysis of Financial Condition and Results of Operations, as well as within
this report generally. In addition, when used in this report, the words:
believes, intends, anticipates, expects and similar expressions are intended
to identify forward-looking statements. These statements are subject to a
number of risks and uncertainties, including, among others, our lack of
consistent profitability, fluctuations in operating results, credit and payment
risks associated with end-user sales, involvement with rapidly developing
technology in highly competitive markets, acquisition and development of new
technologies, dependence on major customers, expansion of our international
sales effort, broad discretion of management and dependence on key personnel,
risks associated with product liability and product defects, costs of complying
with government regulation, changes in external competitive market factors
which might impact trends in our results of operation, unanticipated working
capital and other cash requirements, general changes in the industries in which
we compete, and various other competitive factors that may prevent us from
competing successfully in the marketplace. Actual results could differ
materially from those projected in the forward-looking statements. We
undertake no obligation to publicly release the result of any revisions to
these forward-looking statements that may be made to reflect any future events
or circumstances.

OVERVIEW
- ---------

We are in the business of integrating digital radiology images and
information into healthcare enterprise networks, and providing software
solutions that manage diagnostic imaging workflow processes. Our solutions
and services improve radiology workflow efficiencies, reduce healthcare
operating costs and improve clinical decision making processes. We deliver
this tangible value to healthcare facilities of all sizes, but specifically
target small to medium size hospitals, multi-hospital groups, clinics and
diagnostic imaging centers. We offer modular, cost effective software
solutions that improve our customers' image and information management and
radiology workflow. Our product and service offerings are commonly
categorized as PACS and Radiology Information Systems ("RIS"). We believe the
combination of PACS and RIS define the breadth and depth of integrated
radiology workflow, with the added value of enterprise image and information
access. This broader definition is our focus and the manner in which our
solutions are positioned to our target market.

Founded in 1987, we have historically been viewed as a leading provider
of medical diagnostic imaging and information connectivity technologies and
professional consulting services for original equipment manufacturers ("OEMs"),
value added resellers ("VARs") and healthcare facilities worldwide. Now doing
business as Merge eFilm, we believe we are at the forefront of integrated
radiology workflow research and development, bringing modular software
applications to the marketplace that will enable the seamless integration of
images, information, technology and people across the electronic healthcare
enterprise.

Through our founder and Chairman, William C. Mortimore, we have been
a key contributor to the development of the industry's standard network
communications protocol known as Digital Imaging Communications in Medicine
("DICOM"), open medical standards such as HL-7, and the Integrated Healthcare
Enterprise ("IHE") framework that has been created through an initiative
co-sponsored by the Radiological Society of North America ("RSNA") and the
Healthcare Information and Management Systems Society ("HIMSS"). The IHE
initiative represents a consortium of more than 30 companies in the Radiology
and Healthcare Information Systems fields. This set of requirements has paved
the way for healthcare organizations to begin in earnest to integrate the
complex workflow systems of the radiology department with the entire
healthcare system by using equipment and software applications that connect
the various image and communication components. We have incorporated these
standards in all our radiology workflow technologies and software applications
establishing the basis for seamless integration of images and healthcare
information across an organization's intranet or over the internet.





Radiology departments, diagnostic imaging centers and their patients
benefit from our solutions in a variety of ways including: (i) networking of
multiple image-producing and image-using devices to eliminate duplication and
reduce the need for capital equipment expenditures to build digital image and
information networks; (ii) creating permanent electronic archives of
diagnostic-quality images to enable the retrieval of these images and reports
at any time in the future; (iii) accessing our modular architecture of software
products that allow radiology departments, clinics and diagnostic imaging
centers to build their electronic image and information management systems in
a modular, flexible and cost-effective way; (iv) delivering the capability to
integrate diagnostic radiology images into the radiologist's report to make it
a permanent part of the patient's electronic medical record; and (v) providing
the means to view images and reports from any number of remote locations.

RESULTS OF OPERATIONS
- ----------------------
(in thousands)

Three Months Ended June 30, 2003 Compared to Three Months Ended June 30, 2002

NET SALES.

Net sales increased 54% to $6,434 in the three months ended June 30,
2003 from $4,183 in the three months ended June 30, 2002. Net sales of
products and software made directly to healthcare facilities increased 41% to
$1,869 in the three months ended June 30, 2003 from $1,326 in the three months
ended June 30, 2002. Net sales to OEM/VARs and dealers increased 44% to $3,177
in the three months ended June 30, 2003 from $2,203 in the three months ended
June 30, 2002. We anticipate continued growth in the OEM/VAR group, although
at a lower rate than sales made directly to healthcare facilities and the
professional services group. Net sales from the professional services group
increased 112% to $1,389 in the three months ended June 30, 2003 from $654 in
the three months ended June 30, 2002. The net sales growth from the
professional services group is due to the growth in sales made directly to
healthcare facilities and imaging centers, where such sales are accompanied by
installation services and service contracts, and to the revenue related to the
acquisition of eFilm completed in June 2002. We anticipate net sales from the
professional services group to continue to grow as part of the overall growth
in the sales made directly to healthcare facilities and imaging centers. Given
our sales growth during 2003 and our assessment of the market, we believe
information technology spending on new technologies by our targeted customer
base will continue to grow. Based upon this expected demand and customer
receptiveness to the our suite of products, we anticipate sales for the
remainder of 2003 to continue to increase, largely driven by sales made
directly to healthcare facilities and imaging centers and the services to be
provided relating to these customers.

COST OF SALES.

Cost of sales consists of purchased components, service costs
associated with revenues, amortization of purchased and developed software and
amortization of customer contracts. The cost of purchased components decreased
as a percentage of net sales to 8% in the three months ended June 30, 2003 from
24% in the three months ended June 30, 2002. This decrease in the cost of
purchased components as a percentage of net sales is primarily due to our sales
mix, which consists of a greater percentage of higher margin products and
services and reduced component costs, and a recovery of a provision of $270
associated with inventory returned from a 2002 sale. Service costs associated
with revenues increased to $648 in the three months ended June 30, 2003 from
$353 in the three months ended June 30, 2002. The increase is due to our
acquisition of eFilm and additional service department staff. Amortization of
purchased and developed software increased to $447 or 7% of net sales in the
three months ended June 30, 2003 from $268 or 6% of net sales in the three
months ended June 30, 2002. The increase is due to the commencement of
amortization on software available for general release and the amortization of
the intellectual property and customer contracts acquired in the acquisition
of eFilm.

As a result of the eFilm acquisition on June 28, 2002, we have
presented costs associated with service revenues as a component of cost of
sales. The prior period presentation has been reclassified to conform to the
current period presentation.





GROSS PROFIT.

Gross profit increased 88% to $4,806 in the three months ended June
30, 2003 from $2,554 in the three months ended June 30, 2002. As a percentage
of net sales, gross profit increased to 75% of net sales in the three months
ended June 30, 2003 compared to 61% in the three months ended June 30, 2002.
We implemented a number of initiatives to improve gross profit in 2002,
including the acquisition of eFilm, targeted price increases, reductions in
component costs and a gradual shift in product mix to higher margin software
applications. We anticipate that these initiatives will increase overall
margins in 2003 in comparison to 2002.

SALES AND MARKETING.

Sales and marketing expense increased 64% to $1,477 in the three months
ended June 30, 2003 from $899 in the three months ended June 30, 2002. The
increase is the result of our objective to invest in sales and marketing
activities by participating in more trade shows and increasing our staff in
order to grow net sales.

PRODUCT RESEARCH AND DEVELOPMENT.

Research and development expense increased 13% to $397 in the three
months ended June 30, 2003 from $350 in three months ended June 30, 2002. We
anticipate research and development costs will continue to increase in 2003 as
we increase our new product development, particularly related to developing
our Fusion application modules, including RIS functionality. Capitalization
of software development costs increased $145 to $526 in the three months ended
June 30, 2003 from $381 in the three months ended June 30, 2002.

GENERAL AND ADMINISTRATIVE.

General and administrative expense increased 80% to $865 in the three
months ended June 30, 2003 from $480 in the three months ended June 30, 2002.
The increase is due mainly to the accrual for our bonus program, increases in
travel due to increased airfares, and increases in professional fees related
to compliance with the Sarbanes-Oxley Act of 2002. General and administrative
expense includes costs for information systems, accounting, human resources,
administrative support, management personnel, bad debt expenses and general
corporate matters.

DEPRECIATION AND AMORTIZATION.

Depreciation and amortization expense decreased 2% or $2 to $117 in
the three months ended June 30, 2003 from $119 in the three months ended June
30, 2002. The decrease is due primarily to certain assets becoming fully
depreciated. Depreciation and amortization is assessed on capital equipment
and intangible assets with estimable useful lives. This category excludes the
amortization of capitalized software, which is a component of cost of sales.

OTHER INCOME, EXPENSE.

Interest expense decreased to $4 in the three months ended June 30,
2003 from $5 in three months ended June 30, 2002, and interest income was $12
compared to interest income of $10 in three months ended June 30, 2002. The
increase in interest income was relatively small compared to the increase in
our cash balance due to declining interest rates. Other expense, net, was
$249 in the three months ended June 30, 2003 compared to other income, net,
in the three months ended June 30, 2002 of $51. The increase in other
expense, net, is due primarily to unrealized foreign exchange losses on US
dollar receivables and cash held in our Canadian subsidiary, where the
functional currency is the Canadian dollar.





INCOME TAXES.

We recorded an income tax expense of $309 in the three months ended
June 30, 2003 and $14 in the three months ended June 30, 2002. The 2003
expense reflects our estimated domestic and international effective tax rate
of 15%, which has been applied to the six-month period, ended June 30, 2003,
as compared with our 12% estimated tax rate in the period ended March 31,
2003.


Six Months Ended June 30, 2003 Compared to Six Months Ended June 30, 2002

NET SALES.

Net sales increased 44% to $12,552 in the six months ended June 30,
2003 from $8,718 six months ended June 30, 2002. Net sales of products and
software made directly to healthcare facilities increased 24% to $3,207 in the
six months ended June 30, 2003 from $2,590 in the six months ended June 30,
2002. Net sales in the six months ended June 30, 2003 were reduced by a $430
return from one customer related to a sale made in 2002. Net sales to OEM/VARs
and dealers increased 38% to $6,599 in the six months ended June 30, 2003 from
$4,791 in the six months ended June 30, 2002. We anticipate continued growth
in the OEM/VAR group, although at a lower rate than sales made directly to
healthcare facilities and the professional services group. Net sales from the
professional services group increased 105% to $2,746 in the six months ended
June 30, 2003 from $1,337 in the six months ended June 30, 2002. The net sales
growth from the professional services group is due to the growth in sales made
directly to healthcare facilities and imaging centers, where such sales are
accompanied by installation services and service contracts, and to the revenue
related to the acquisition of eFilm completed in June 2002. We anticipate net
sales from the professional services group to continue to grow as part of the
overall growth in the sales made directly to healthcare facilities and imaging
centers. Given our sales growth during 2003 and our assessment of the market,
we believe information technology spending on new technologies by our targeted
customer base will continue to grow. Based upon this expected demand and
customer receptiveness to the our suite of products, we anticipate sales for
the remainder of 2003 to continue to increase, largely driven by sales made
directly to healthcare facilities and imaging centers and the services to be
provided relating to these customers.

COST OF SALES.

Cost of sales consists of purchased components, service costs
associated with revenues, amortization of purchased and developed software and
amortization of customer contracts. The cost of purchased components decreased
as a percentage of net sales to 12% in the six months ended June 30, 2003 from
25% in the six months ended June 30, 2002. This decrease in the cost of
purchased components as a percentage of net sales, is primarily due to our
sales mix, which consists of a greater percentage of higher margin products and
services and reduced component costs. Service costs associated with revenues
increased to $1,253 in the six months ended June 30, 2003 from $709 in the six
months ended June 30, 2002. The increase is due to our acquisition of eFilm
and additional service department staff. Amortization of purchased and
developed software increased to $909 or 7% of net sales in the six months ended
June 30, 2003 from $528 or 6% of net sales in the six months ended June 30,
2002. The increase is due to the commencement of amortization on software
available for general release and the amortization of the intellectual property
and customer contracts acquired in the acquisition of eFilm.

As a result of the eFilm acquisition on June 28, 2002, we have
presented costs associated with service revenues as a component of cost of
sales. The prior period presentation has been reclassified to conform to the
current period presentation.

GROSS PROFIT.

Gross profit increased 67% to $8,872 in the six months ended June 30,
2003 from $5,301 in the six months ended June 30, 2002. As a percentage of net
sales, gross profit increased to 71% of net sales in the six months ended June
30, 2003 compared to 61% in the six months ended June 30, 2002. We implemented
a number of initiatives to improve gross profit in 2002, including the





acquisition of eFilm, targeted price increases, reductions in component costs
and a gradual shift in product mix to higher margin software applications. We
anticipate that these initiatives will increase overall margins in 2003 in
comparison to 2002.

SALES AND MARKETING.

Sales and marketing expense increased 59% to $2,802 in the six months
ended June 30, 2003 from $1,766 in the six months ended June 30, 2002. The
increase is the result of our objective to invest in sales and marketing
activities by participating in more trade shows and increasing our staff in
order to grow net sales.

PRODUCT RESEARCH AND DEVELOPMENT.

Research and development expense increased 17% to $836 in the six
months ended June 30, 2003 from $714 in six months ended June 30, 2002. We
anticipate research and development costs will continue to increase in 2003 as
we increase our new product development, particularly related to developing its
Fusion application modules, including RIS functionality. Capitalization of
software development costs increased $141 to $1,004 in the six months ended
June 30, 2003 from $863 in the six months ended June 30, 2002.

GENERAL AND ADMINISTRATIVE.

General and administrative expense increased 38% to $1,587 in the six
months ended June 30, 2003 from $1,149 in the six months ended June 30, 2002.
The increase is due mainly to the accrual for our bonus program, increases in
travel due to increased airfares, and increases in professional fees related
to compliance with the Sarbanes-Oxley Act of 2002. General and administrative
expense includes costs for information systems, accounting, human resources,
administrative support, management personnel, bad debt expenses and general
corporate matters.

DEPRECIATION AND AMORTIZATION.

Depreciation and amortization expense decreased 4% or $9 to $223 in
the six months ended June 30, 2003 from $232 in the six months ended June 30,
2002. The decrease is due primarily to certain assets becoming fully
depreciated. Depreciation and amortization is assessed on capital equipment
and intangible assets with estimable useful lives. This category excludes the
amortization of capitalized software, which is a component of cost of sales.

OTHER INCOME, EXPENSE.

Interest expense decreased to $8 in the six months ended June 30, 2003
from $12 in six months ended June 30, 2002, and interest income was $25
compared to interest income of $16 in six months ended June 30, 2002. The
increase in interest income was relatively small compared to the increase in
our cash balance due to declining interest rates. Other expense, net, was
$236 in the six months ended June 30, 2003 compared to other income, net, in
the six months ended June 30, 2002 of $42. The increase in other expense, net,
is due primarily to unrealized foreign exchange losses on US dollar receivables
and cash held in our Canadian subsidiary, where the functional currency is the
Canadian dollar.

INCOME TAXES.

We recorded an income tax expense of $489 in the six months ended June
30, 2003 and $34 in the six months ended June 30, 2002. We have estimated our
domestic and international effective rate to be 15%, which has been applied to
the six-month period, ended June 30, 2003.





LIQUIDITY AND CAPITAL RESOURCES
- --------------------------------
(in thousands)

OPERATING CASH FLOWS.

Cash provided by operating activities was $4,924 in the six months
ended June 30, 2003. Our positive operating cash flow in the six months ended
June 30, 2003 is due primarily to our net income of $2,716, depreciation and
amortization expense of $1,107, a decrease of $1,362 in accounts receivable
and a $553 increase in deferred revenue, offset by a decrease of $844 in
accounts payable. The deferred revenue increase is a result of the increase
in net sales.

The total days sales outstanding for the six months ended June 30,
2003, improved to 88 days compared to 130 days for the year ended December 31,
2002. The decrease in days sales outstanding is attributed to the collection
of receivables from healthcare facilities in 2003.

INVESTING CASH FLOWS.

Cash used in investing activities was $1,444 in the six months ended
June 30, 2003, due primarily to cash outflows for capitalized software
development costs of $1,004 and purchases of capital equipment of $418. We
expect to continue to invest in software development projects that will
continue to accelerate sales.

FINANCING CASH FLOWS.

Cash provided by financing activities was $1,125 in the six months
ended June 30, 2003. We received net proceeds of $1,046 from employee and
director stock option exercises and $61 from purchases of common stock under
its employee stock purchase plan.

Total outstanding commitments at June 30, 2003 were as follows:




Less than 1 - 3 4 - 6 6 - 10
Contractual Obligations Total 1 Year Years Years Years
---------------------------------------------------------------------------------------------


Long Term Debt $ 223 $ ---- $ 223 $ ---- $ ----
Operating Leases 2,849 325 1,097 662 765
-------- ------- -------- ------- -------
Total Contractual Cash Obligations $ 3,072 $ 325 $ 1,320 $ 662 $ 765
======== ======= ======== ======= =======




We also recorded a liability of $280 for put options on the remaining
68,484 of 420,000 Interpra exchangeable shares, which may be exercised for a
price of $4.50 per share during the period from August 31, 2004, through
September 30, 2004.

In December 2002, we negotiated a new revolving line of credit
agreement with our bank, increasing our line to $5,000 effective December 30,
2002, and maturing December 30, 2005. The interest rate on the line of credit
is a variable rate that is equal to the prime rate as published in The Wall
Street Journal, less 0.75 percentage points and is collateralized by our assets.
At June 30, 2003, the interest rate on the line of credit was 3.25%.
Availability under the new line of credit is subject to a borrowing base
consisting of 50% of inventory balances under $2,000, 80% of qualified accounts
receivable under 90 days and 100% of our depository cash balances held at the
bank if borrowings exceed the existing base of inventory and qualified accounts
receivable. Under the formula, $5,000 was calculated to be available at June
30, 2003. No amounts were outstanding on the line of credit as of June 30,
2003.

We do not have any other significant long-term obligations, contractual
obligations, lines of credit, standby letters of credit, guarantees, standby
repurchase obligations or other commercial commitments.

We believe that existing cash, together with the availability under
its revolving credit agreement and future cash flows from operations will be
sufficient to execute the business plan in 2003. However, any projections of
future cash inflows and outflows are subject to uncertainty. In 2003, it may
be necessary to raise additional capital for activities necessary to meet our
business objectives or our long-term liquidity needs. If it is determined
that additional capital is needed, it may be raised by selling additional
equity or raising debt from third party sources. The sale of additional
equity or convertible debt securities could result in dilution to current
stockholders. In addition, debt financing, if available, could involve
restrictive covenants, which could adversely affect operations. There can
be no assurance that any of these financing alternatives will be available
in amounts or on terms acceptable to us.

RECENTLY ISSUED ACCOUNTING STANDARDS
- --------------------------------------

In November 2002, the Emerging Issues Task Force ("EITF") reached a
consensus on Issue 00-21, addressing how to account for arrangements that
involve the delivery or performance of multiple products, services, and/or
rights to use assets. Revenue arrangements with multiple deliverables are
divided into separate units of accounting if the deliverables in the
arrangement meet the following criteria: (1) the delivered item has value to
the customer on a standalone basis; (2) there is objective and reliable
evidence of the fair value of undelivered items; and (3) delivery of any
undelivered item is probable. Arrangement consideration should be allocated
among the separate units of accounting based on their relative fair values,
with the amount allocated to the delivered item being limited to the amount
that is not contingent on the delivery of additional items or meeting other
specified performance conditions. The final consensus is applicable to
agreements entered into in fiscal periods beginning after June 15, 2003. The
provisions of this consensus is not expected to have a significant effect on
the Company's results of operations or financial position.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity.
SFAS No. 150 establishes standards for how an issuer classifies and measures
in its statement of financial position certain financial instruments with
characteristics of both liabilities and equity. It requires that an issuer
classify a financial instrument that is within the scope as a liability (or
an asset in some circumstances) because that financial instrument embodies
an obligation of the issuer. SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June
15, 2003. This statement is not expected to have a significant impact on
the Company's financial position or results of operations.





ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Not Applicable


ITEM 4. CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer have
concluded, based on their evaluation as of a date within 90 days prior to the
filing date of this report, that our disclosure controls and procedures are
effective for gathering, analyzing and disclosing the information we are
required to disclose in our reports filed under the Securities Exchange Act
of 1934. There have been no significant changes in our internal controls or
in other factors that could significantly affect these controls subsequent to
the date of the previously mentioned evaluation.





PART II
---------

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

In the three months ended June 30, 2003, we sold no shares of our
common stock in transactions that were not registered under the Securities
Act of 1933, as amended (the "Securities Act").

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Our Annual Meeting of Shareholders was held on May 21, 2003. Matters
voted on and the results of such votes are listed below.



Votes
Against or
Votes For Withheld Abstained Result
--------- ---------- ---------- --------


Elect William C. Mortimore to serve as
Director until the next annual meeting
of Shareholders 9,718,700 175,317 ---- Elected

Elect Richard A. Linden to serve as
Director until the next annual meeting
of Shareholders 9,876,515 17,502 ---- Elected


Elect Robert A. Barish, M.D. to serve
as Director until the next annual
meeting of Shareholders 9,876,515 17,502 ---- Elected

Elect Patrice M. Bret, M.D. to serve
as Director until the next annual
meeting of Shareholders 9,829,115 64,902 ---- Elected


Elect Dennis Brown to serve as
Director until the next annual meeting
of Shareholders 9,876,515 17,502 ---- Elected

Elect Michael D. Dunham to serve as
Director until the next annual meeting
of Shareholders 9,876,515 17,502 ---- Elected

Elect Robert T. Geras to serve as
Director until the next annual meeting
of Shareholders 9,876,515 17,502 ---- Elected

Elect Anna M. Hajek to serve as
Director until the next annual meeting
of Shareholders 9,876,515 17,502 ---- Elected

Elect Richard A. Reck to serve as
Director until the next annual meeting
of Shareholders 9,876,515 17,502 ---- Elected

Approve a 750,000 increase in the
number of shares of common stock which
may be issued under the Amended and
Restated 1996 Stock Option Plan for
Employees of Merge Technologies
Incorporated. 6,189,809 3,657,345 37,863 Approved







ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

See Exhibit Index.

(b) On April 22, 2003, we filed a Form 8-K to report in Item 12,
that we would hold an earnings announcement conference call on
April 30, 2003.

On April 30, 2003, we filed a Form 8-K to report in Item 12,
the financial results for its first quarter of its fiscal year
2003.




SIGNATURES

In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.


MERGE TECHNOLOGIES INCORPORATED




August 14, 2003 By: /s/ Richard A. Linden
---------------------------------------
Richard A. Linden
President and Chief Executive Officer




August 14, 2003 By: /s/ Scott T. Veech
----------------------------------------
Scott T. Veech
Chief Financial Officer, Treasurer and
Secretary (Principal Financial Officer
and Principal Accounting Officer)




EXHIBIT INDEX

3.1 Articles of Incorporation of Registrant (2), Articles of Amendment as
of June 16, 1998 (3), Articles of Amendment as of September 1, 1999
(6), and Articles of Amendment as of November 29, 2000 (6)

3.2 Amended and Restated Bylaws of Registrant as of February 3, 1998 (1)

10.2 Employment Agreement entered into as of November 29, 2001, between
Registrant and Richard A. Linden (7)

10.3 Employment Agreement entered into as of December 21, 2001, between
Registrant and William C. Mortimore (7)

10.5 1996 Stock Option Plan for Employees of Registrant dated May 13, 1996
(2)

10.6 Office Lease for West Allis Center dated May 24, 1996, between
Registrant and Whitnall Summit Company, LLC, Supplemental Office Lease
dated July 3, 1997 (1), Supplemental Office Space Lease dated January
30, 1999 (2), Supplemental Office Space Lease for 1126 West Allis
Operating Associates Limited Partnership dated April 11, 2000 (4) and
Second Amendment to Lease dated January 11, 2002, between Registrant
and 1126 West Allis Operating Associates, Limited Partnership (7)

10.8 1999 Stock Option Plan For Directors (1)

10.9 Merge Technologies Incorporated 2000 Employee Stock Purchase Plan (5)

10.10 Loan Agreement dated as of December 30, 2002, by and between Registrant
and Lincoln State Bank (8)

10.11 Employment Agreement entered into as of July 15, 2002, between
Registrant and Scott T. Veech (8)

10.12 First Amendment to Employment Agreement entered into as of May 21,
2003, between Registrant and Richard A. Linden

10.13 First Amendment to Employment Agreement entered into as of May 21,
2003, between Registrant and William C. Mortimore

31 Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 13a-14(a) of the Securities Act of 1934

32 Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 13a-14(a) of the Securities Act of 1934 (Section
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes - Oxley Act of 2002)


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

(1) Incorporated by reference to Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1997.

(2) Incorporated by reference to Registration Statement on Form SB-2
(No. 333-39111) effective January 29, 1998.

(3) Incorporated by reference to Quarterly Report on Form 10-QSB for the
three months ended March 31, 1999.

(4) Incorporated by reference to Quarterly Report on Form 10-QSB for the
three months ended March 31, 2000.

(5) Incorporated by reference to Proxy Statement for 2000 Annual Mailing
of Shareholders dated May 9, 2000.

(6) Incorporated by reference to Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2000.

(7) Incorporated by reference to Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2001.

(8) Incorporated by reference to Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2002.





- --------------
EXHIBIT 10.12
- --------------

FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT

THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is made and
entered into as of May 21, 2003 by and between RICHARD A. LINDEN (the
"Executive") and MERGE TECHNOLOGIES INCORPORATED, a Wisconsin corporation (the
"Company"). This agreement is an amendment to that certain Employment
Agreement between the Executive and the Company dated as of November 29, 2001
(the "Employment Agreement").

Recitals:

For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:

1. Paragraph 11 of the Employment Agreement is hereby amended in its
entirety to read as follows:

"11. Change in Control. In the event of a "change in control" of the
Company ("change in control" of the Company shall mean a change in the
ownership of fifty percent (50%) or more of the outstanding stock of the
Company in a single transaction or series of transactions effected by any third
party or third parties acting in concert or a change of fifty percent (50%) or
more of the members of the Board in a single transaction or series of
transactions effected by any third party or third parties acting in concert,
other than pursuant to nomination of a new slate of directors where there has
been no material change in beneficial ownership of the Company within 180 days
preceding such nomination), all of the options will immediately vest and become
exercisable. In the event of a change in control as (described above) and the
Executive is: (i) involuntarily terminated within 180 days following the
change in control; or (ii) voluntarily terminates his employment with the
Company within 180 days, following either: (a) any reduction in Executive's
responsibilities or authority with respect to the Business; (b) a reduction in
Executive's compensation package, including then current salary, in effect
immediately prior to the change in control; or (c) the relocation of the
Company's principal place of business more than 30 miles further from
Executive's residence as of the date of this Agreement; then the Executive
will be entitled to twelve (12) months then current salary as a change in
control allowance, to be paid in a single payment within thirty (30) days of
the termination of Executive's employment."

2. Paragraph 15 of the Employment Agreement is hereby amended in its
entirety to read as follows:

"15. Severance. In the event that the Executive is terminated for
any reason other than gross negligence, commission of a felony in connection
with his employment or material violation of any established Company policies,
the Company shall pay the Executive, as a severance allowance, an amount equal
to six (6) months of his then current salary. The amount of the severance
allowance provided for in this Section 15 shall be paid in a single lump sum
within thirty (30) days of the termination of the Executive's employment.
From time to time after November 29, 2001, the Executive's severance allowance
shall be subject to review and adjustment at the time reviews and adjustments
of the severance allowance for other senior executives of Company are to be
conducted. Notwithstanding anything to the contrary contained herein, in the
event the Executive elects to receive (pursuant to the operation of Section
11) twelve (12) months' then current salary following a change in control
event and Executive's voluntary or involuntary termination, then Executive
shall not be entitled to any payment of severance pursuant to this Section
15. In the event a change in control occurs and the Executive is not entitled
to twelve (12) months' then current salary pursuant to Section 11, then the
Executive shall continue to be entitled to receive severance payments per
this Section 15."


3. Except as amended hereby the Employment Agreement is ratified
and confirmed in all respects.






IN WITNESS WHEREOF, this Amendment is entered into as of the day and
year first above written.


COMPANY:


MERGE TECHNOLOGIES INCORPORATED


By: /s/ Anna Marie Hajek
------------------------------------------------
Anna Marie Hajek, Chairman
Compensation Committee of the Board of Directors



EXECUTIVE:


By: /s/ Richard A. Linden
------------------------------------------------
Richard A. Linden




- --------------
EXHIBIT 10.13
- --------------

FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT

THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is made and
entered into as of May 21, 2003 by and between WILLIAM C. MORTIMORE (the
"Executive") and MERGE TECHNOLOGIES INCORPORATED, a Wisconsin corporation (the
"Company"). This agreement is an amendment to that certain Employment
Agreement between the Executive and the Company dated as of December 21, 2001
(the "Employment Agreement").

Recitals:

For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:

1. Paragraph 1 of the Employment Agreement is hereby amended in its
entirety to read as follows:

"1. Employment and Duties. On the terms and subject to the
conditions set forth in this Agreement, the Company agrees to employ
the Executive as the Chief Strategy Officer of the Company, to perform
such duties as may be assigned, from time to time, by the Chief
Executive Officer or the Board of Directors of the Company (the
"Board") and to render such additional services and discharge such
other responsibilities as the Chief Executive Officer or Board may,
from time to time, stipulate."

2. Paragraph 2 of the Employment Agreement is hereby amended in its
entirety to read as follows:

"2. Performance. The Executive accepts the employment
described in Section 1 of this Agreement and agrees to devote
substantially all of his working time and efforts to the faithful and
diligent performance of the services described herein, including the
performance of such other services and responsibilities as the Chief
Executive Officer or Board may, from time to time, stipulate."

3. Paragraph 10 of the Employment Agreement is hereby amended in its
entirety to read as follows:

"10. Change in Control. In the event of a "change in control"
of the Company ("change in control" of the Company shall mean a change
in the ownership of fifty percent (50%) or more of the outstanding
stock of the Company in a single transaction or series of transactions
effected by any third party or third parties acting in concert or a
change of fifty percent (50%) or more of the members of the Board in a
single transaction or series of transactions effected by any third
party or third parties acting in concert, other than pursuant to
nomination of a new slate of directors where there has been no
material change in beneficial ownership of the Company within 180 days
preceding such nomination), all of the options granted as of the
Commencement Date (options to purchase one hundred forty-two thousand
two hundred seventy-eight (142,278) shares) will immediately vest and
become exercisable. In the event of a change in control (as described
above) and the Executive is: (i) involuntarily terminated within 180
days following the change in control; or (ii) voluntarily terminates
his employment with the Company within 180 days, following either:
(a) any reduction in Executive's responsibilities or authority with
respect to the Business; (b) a reduction in Executive's compensation
package, including then current salary, in effect immediately prior
to the change in control; or (c) the relocation of the Company's
principal place of business more than 30 miles further from
Executive's residence as of the date of this Agreement; then the
Executive will be entitled to twelve (12) months then current salary
as a change in control allowance, to be paid in a single payment
within thirty (30) days of the termination of Executive's employment."





4. Paragraph 13 of the Employment Agreement is hereby amended in its
entirety to read as follows:

"13. Severance. In the event that the Executive is
terminated for any reason other than gross negligence, commission
a felony in connection with his employment or material violation of
any established Company policies, the Company shall pay the Executive,
as a severance allowance, an amount equal to six (6) months of his
then current salary. The amount of the severance allowance provided
for in this Section 13 shall be paid in a single lump sum within
thirty (30) days of the termination of the Executive's employment.
From time to time after December 21, 2001, the Executive's severance
allowance shall be subject to review and adjustment at the time
reviews and adjustments of the severance allowance for other senior
executives of Company are to be conducted. Notwithstanding anything
to the contrary contained herein, in the event the Executive elects to
receive (pursuant to the operation of Section 10) twelve (12) months'
then current salary following a change in control event and
Executive's voluntary or involuntary termination, then Executive shall
not be entitled to any payment of severance pursuant to this Section
13. In the event a change in control occurs and the Executive is not
entitled to twelve (12) months' then current salary pursuant to Section
10, then the Executive shall continue to be entitled to receive
severance payments per this Section 13."


5. Except as amended hereby the Employment Agreement is ratified
and confirmed in all respects.

IN WITNESS WHEREOF, this Amendment is entered into as of the day and
year first above written.



COMPANY:


MERGE TECHNOLOGIES INCORPORATED


By: /s/ Anna Marie Hajek
------------------------------
Anna Marie Hajek, Chairman
Compensation Committee of the
Board of Directors


EXECUTIVE:


By: /s/ William C. Mortimore
- ---------------------------
William C. Mortimore





- ------------
Exhibit 31
- ------------

CERTIFICATION

Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002

I, Richard A. Linden, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Merge
Technologies Incorporated;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;

4. The Registrant's other certifying officer and I (herein, the
"Certifying Officers") are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the Registrant and we have:

a) designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the Registrant, including its consolidated subsidiaries
(collectively, the "Company") is made known to the Certifying
Officers by others within the Company, particularly during
the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures, and presented in this quarterly
report our conclusions about the effectiveness of the
disclosure controls and procedures as of the end of the
period covered by this report base upon such evaluation;
disclosed in this quarterly report any change in the
registrant's internal control over financial reporting that
occurred during the registrant's most recent quarter that has
materially affected, or is reasonably likely to affect the
registrant's internal control over financial reporting.

5. The Registrant's Certifying Officers have disclosed, based on the
Certifying Officers' most recent evaluation of internal control over
financial reporting, to the Registrant's auditors and the audit
committee of the Registrant's board of directors:

a) all significant deficiencies and material weaknesses in the
design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect
the Registrant's ability to record, process, summarize and
report financial information; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the
Registrant's internal controls.


Date: August 14, 2003


/s/ Richard A. Linden
- -------------------------------------------
Richard A. Linden, Chief Executive Officer


See also the certification pursuant to Section 906 of the Sarbanes - Oxley Act
of 2002, which is included as an exhibit to this report.





- ------------
Exhibit 31
- ------------
CERTIFICATION
---------------

Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002

I, Scott T. Veech, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Merge
Technologies Incorporated;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;

4. The Registrant's other certifying officer and I (herein, the
"Certifying Officers") are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the Registrant and we have:

a) designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the Registrant, including its consolidated subsidiaries
(collectively, the "Company") is made known to the Certifying
Officers by others within the Company, particularly during
the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures, and presented in this quarterly
report our conclusions about the effectiveness of the
disclosure controls and procedures as of the end of the
period covered by this report base upon such evaluation;
disclosed in this quarterly report any change in the
registrant's internal control over financial reporting that
occurred during the registrant's most recent quarter that has
materially affected, or is reasonably likely to affect the
registrant's internal control over financial reporting.

5. The Registrant's Certifying Officers have disclosed, based on the
Certifying Officers' most recent evaluation of internal control over
financial reporting, to the Registrant's auditors and the audit
committee of the Registrant's board of directors:

a) all significant deficiencies and material weaknesses in the
design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect
the Registrant's ability to record, process, summarize and
report financial information; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the
Registrant's internal controls.


Date: August 14, 2003


/s/ Scott T. Veech
- ----------------------------------------
Scott T. Veech, Chief Financial Officer


See also the certification pursuant to Section 906 of the Sarbanes - Oxley Act
of 2002, which is included as an exhibit to this report.





- -----------
Exhibit 32
- -----------


CERTIFICATION of CHIEF EXECUTIVE OFFICER and CHIEF FINANCIAL OFFICER

Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes - Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of MERGE
TECHNOLOGIES INCORPORATED (the "Company") for the quarterly period ended
June 30, 2003, as filed with the Securities and Exchange Commission on the
date hereof (the "Report"), Richard A. Linden, as Chief Executive Officer of
the Company, and Scott T. Veech, as Chief Financial Officer of the Company,
each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes - Oxley Act of 2002, that, to the
best of their knowledge:

(1) The Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Company.



Date: August 14, 2003 By: /s/ Richard A. Linden
--------------------------
Richard A. Linden
Chief Executive Officer



Date: August 14, 2003 By: /s/ Scott T. Veech
--------------------------
Scott T. Veech
Chief Financial Officer


This certification accompanies the Report pursuant to Section 906
of the Sarbanes - Oxley Act of 2002 and shall not, except to the extent
required by the Sarbanes - Oxley Act of 2002, be deemed filed by the Company for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

See also the certification pursuant to Section 302 of the Sarbanes -
Oxley Act of 2002, which is included in this quarterly report on Form 10-Q.