<SUBMISSION>
<ACCESSION-NUMBER>0000950134-03-008524
<TYPE>S-3/A
<PUBLIC-DOCUMENT-COUNT>2
<FILING-DATE>20030522
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ADVANCED NEUROMODULATION SYSTEMS INC
<CIK>0000351721
<ASSIGNED-SIC>3841
<IRS-NUMBER>751646002
<STATE-OF-INCORPORATION>TX
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-3/A
<ACT>33
<FILE-NUMBER>333-104182
<FILM-NUMBER>03716872
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>6501 WINDCREST DRIVE SUITE 100
<CITY>PLANO
<STATE>TX
<ZIP>75024
<PHONE>9723098000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>6501 WINDCREST DRIVE SUITE 100
<CITY>PLANO
<STATE>TX
<ZIP>75024
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>QUEST MEDICAL INC
<DATE-CHANGED>19920703
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>S-3/A
<SEQUENCE>1
<FILENAME>d06262a2sv3za.htm
<DESCRIPTION>AMENDMENT NO. 2 TO FORM S-3
<TEXT>
<HTML>
<HEAD>
<TITLE>sv3za</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<HR size="4" noshade color="#000000" style="margin-top: -5px">
<HR size="1" noshade color="#000000" style="margin-top: -10px">




<DIV align="left"><FONT size="1">

</FONT></DIV>
<P align="center"><FONT size="2">As filed with the Securities and Exchange Commission on May&nbsp;22, 2003.
</FONT>
<DIV align="left"><FONT size="1">

</FONT></DIV>


<P align="right"><FONT size="2">Registration No.&nbsp;333-104182</FONT>

<P>
<HR size="1" noshade color="#000000" style="margin-top: -2px">
<HR size="4" noshade color="#000000" style="margin-top: -10px">




<P align="center"><FONT size="2"><B>SECURITIES AND EXCHANGE COMMISSION<BR>
WASHINGTON, D.C. 20549</B>
</FONT>

<P align="center"><HR align="center" size="1" width="15%" noshade>


<DIV align="left"><FONT size="1">

</FONT></DIV>
<P align="center"><FONT size="2"><B>PRE-EFFECTIVE AMENDMENT NO. 2</B>
</FONT>
<DIV align="left"><FONT size="1">

</FONT></DIV>
<P align="center"><FONT size="2"><B>
TO<BR>
FORM S-3<BR>
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933</B>
</FONT>

<P align="center"><FONT size="2"><B>ADVANCED NEUROMODULATION SYSTEMS, INC.</B><BR>
(Exact name of registrant as specified in its charter)
</FONT>


<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2"><B>Texas</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<B>75-1646002</B></FONT></TD>
</TR>
<TR>
    <TD align="center" valign="top"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">(State or other jurisdiction of</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
(I.R.S. Employer</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">incorporation or organization)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Identification No.)</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2"><B>6501 Windcrest Drive, Suite&nbsp;100<BR>
Plano, Texas 75024<BR>
(972)&nbsp;309-8000</B><BR>
(Address, including zip code, and telephone number, including area<BR>
code, of registrant&#146;s principal executive offices)
</FONT>


<P align="center"><HR align="center" size="1" width="15%" noshade>


<P align="center"><FONT size="2">F. Robert Merrill III<BR>
Executive Vice President &#151; Finance,<BR>
Chief Financial Officer and Treasurer<BR>
6501 Windcrest Drive, Suite&nbsp;100<BR>
Plano, Texas 75024<BR>
(972)&nbsp;309-8000<BR>
(Name, address, and telephone number,<BR>
including area code, of agent for service)
</FONT>


<P align="center"><HR align="center" size="1" width="15%" noshade>


<P><FONT size="2">Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.

</FONT>


<P><FONT size="2">If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: <FONT face="Wingdings">&#111;</FONT>

</FONT>


<P><FONT size="2">If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule&nbsp;415 of the Securities Act of 1933,
other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: <FONT face="Wingdings">&#120;</FONT>

</FONT>


<P><FONT size="2">If this Form is filed to register additional securities for an offering
pursuant to Rule&nbsp;462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. <FONT face="Wingdings">&#111;</FONT>

</FONT>


<P><FONT size="2">If this Form is a post-effective amendment filed pursuant to Rule&nbsp;462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. <FONT face="Wingdings">&#111;</FONT>

</FONT>


<P><FONT size="2">If delivery of the prospectus is expected to be made pursuant to Rule&nbsp;434,
please check the following box: <FONT face="Wingdings">&#111;</FONT>

</FONT>


<P align="center"><FONT size="2"><B>CALCULATION OF REGISTRATION FEE</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Amount</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Proposed Maximum</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Proposed Maximum</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Amount of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Title of Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>to be</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Aggregate Price</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Aggregate</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Registration</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>to be Registered</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Registered</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>per Unit<sup>(1)</sup></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Offering Price<sup>(1)</sup></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Fee</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Common Stock,
$.05 par value</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" nowrap><FONT size="2">75,000<sup>(2)</sup></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><FONT size="2">$</FONT></TD>
    <TD align="right" nowrap><FONT size="2">38.64<sup>(3)</sup></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><FONT size="2">$</FONT></TD>
    <TD align="right" nowrap><FONT size="2">2,898,000<sup>(3)</sup></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>


<P>
<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Estimated solely for the purpose of calculating the registration fee.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">This registration statement is being used to register 75,000 shares of
common stock that have been or may be issued to the selling shareholders
pursuant to provisions of a merger agreement described herein.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Calculated pursuant to Rule&nbsp;457(c) of the Securities Act of 1933, as
amended, based upon the average of the high and low prices on March&nbsp;26,
2003, as reported by the Nasdaq National Market.</FONT></TD>
</TR>
</TABLE>
<DIV align="left"><FONT size="1">

</FONT></DIV>

<P><FONT size="2"><HR align="center" size="1" width="65%" noshade>

</FONT>


<P><FONT size="2"><B>The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment that specifically states that this Registration Statement
shall thereafter become effective in accordance with Section&nbsp;8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section&nbsp;8(a),
may determine.</B>

</FONT>


<P><FONT size="2"><HR align="center" size="1" width="65%" noshade>

</FONT>


<P align="center"><FONT size="2">&nbsp;</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>ADVANCED NEUROMODULATION SYSTEMS, INC.</B>
</FONT>

<P align="center"><FONT size="2"><B>75,000 Shares<BR>
Common Stock</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are registering for resale pursuant to this prospectus 75,000 shares of
our common stock that we have issued or may issue to the selling shareholders
named in this prospectus. The offering of shares of our common stock under
this prospectus is being made by the selling shareholders only. It is not part
of an original issuance by us of shares of our common stock. Accordingly, all
of the net proceeds from the sale of shares of our common stock offered under
this prospectus will go to the selling shareholders who offer and decide to
sell their shares.

</FONT>


<DIV align="left"><FONT size="1">

</FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock is quoted on the Nasdaq and trades under the symbol
&#147;ANSI.&#148; On May&nbsp;20, 2003, the closing price of one share of our common stock,
as reported on the Nasdaq, was $40.95. The selling shareholders may offer
their shares of our common stock in transactions on the Nasdaq Stock Market&#146;s
National Market, in negotiated transactions, through a combination of these
methods or in any other legal way. The selling shareholders may offer their
shares of our common stock at prevailing market prices, at prices related to
market prices, at fixed prices that may change or at privately negotiated
prices. See below under the caption &#147;Plan of Distribution.&#148;

</FONT>
<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center"><FONT size="2"><B>An investment in shares of our common stock involves risk.<BR>
You should carefully consider the risks we describe under the caption &#147;Risk<BR>
Factors&#148; beginning on page 4.</B>
</FONT>


<P align="center"><FONT size="2"><B>NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR<BR>
ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED<BR>
OF THESE SECURITIES OR PASSED UPON<BR>
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS.<BR>
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.</B>
</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information contained in this prospectus is accurate only as of the
date of this prospectus, regardless of the time of delivery of this prospectus
or of any sale of shares of our common stock offered under this prospectus.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No dealer, salesman or any other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained in this prospectus and, if given or made, such other
information and representations must not be relied upon as having been
authorized by us or the selling shareholders. This prospectus does not
constitute an offer to sell, or a solicitation of any offer to buy, any
securities other than the registered securities to which it relates. This
prospectus does not constitute an offer to sell, or a solicitation of any offer
to buy, such securities in any circumstances or jurisdiction in which such
offer or solicitation is unlawful.

</FONT>


<DIV align="left"><FONT size="1">

</FONT></DIV>
<P align="center"><FONT size="2">This prospectus is dated May&nbsp;22, 2003.
</FONT>
<DIV align="left"><FONT size="1">

</FONT></DIV>


<P align="center"><FONT size="2">&nbsp;</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">SUMMARY</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">RISK FACTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">WHERE YOU CAN FIND MORE INFORMATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">DOCUMENTS INCORPORATED BY REFERENCE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">SELLING SHAREHOLDERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">PLAN OF DISTRIBUTION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">USE OF PROCEEDS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">LEGAL MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">EXPERTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">INDEMNIFICATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="d06262a2exv23w2.htm">EX-23.2 Consent of Ernst & Young LLP</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="center"><FONT size="2">TABLE OF CONTENTS
</FONT>


<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="82%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Summary
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Risk Factors
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">4</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Where You Can Find More Information
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">16</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Documents Incorporated by Reference
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">17</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Selling Shareholders
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">18</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Plan of Distribution
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">20</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Use of Proceeds
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">20</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Legal Matters
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">20</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Experts
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">20</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Indemnification
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">21</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>


<P align="center"><FONT size="2">2</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "SUMMARY" -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="center"><FONT size="2"><B>SUMMARY</B>
</FONT>

<DIV align="left"><FONT size="1">

</FONT></DIV>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are registering 75,000 shares of our common stock for resale under this
prospectus. These are shares that we have issued or may issue pursuant to a
merger agreement dated November&nbsp;4, 2002 among us, MicroNet Medical, Inc. and
certain shareholders of MicroNet. MicroNet, a developer and manufacturer of
medical devices based on proprietary microlead technology, became our
wholly-owned subsidiary in the merger. Under the merger agreement and a
related exchange agent agreement, we are required to issue shares of our common
stock to the former MicroNet shareholders when certain product or sales
milestones described below are met. In addition, under these agreements and a
related escrow agreement, we are required to release from escrow shares of our
previously-issued common stock that are being held in escrow until these
product or sales milestones are met. On March&nbsp;1, 2003 we instructed the
exchange agent to issue an additional 13,412 shares of our common stock to the
former MicroNet shareholders and instructed the escrow agent to release from
escrow 14,934 shares of our common stock from escrow, because the first two
parts of the first product milestone had been satisfied. If additional
milestones are met, we will issue additional shares, the number of which cannot
be determined until the milestones are met, and we will release additional
shares from escrow, the number of which is defined in the escrow agreement.
The 75,000 shares we are registering for resale under this prospectus include
the 28,346 shares referred to above and a sufficient number of shares to cover
our obligations if and when the other two parts of the first product milestone,
which depend on the receipt of regulatory approvals, are satisfied.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The product and sales milestones referred to above consist of three
principal product milestones and a sales milestone. Each of the product
milestones has sub-milestones that relate to the delivery of specific leads
(catheters that contain electrodes and connecting wires) that are used with our
stimulation devices. The product sub-milestones will be met if and when we are
able to submit, and if and when we receive, regulatory approvals for products
that have been adapted for use with our electrical stimulation devices. The
sales milestone will be met if and when we and our subsidiaries generate $5
million in cumulative net sales of MicroNet lead products during the four years
following the closing of the merger.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we will not receive any of the proceeds from the selling
shareholders&#146; sale of their shares, we will pay the costs of registering the
shares covered by this prospectus, other than commissions, fees and discounts
of underwriters, brokers, dealers and agents, if any.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We design, develop, manufacture and market advanced implantable
neuromodulation devices that improve the quality of life for people suffering
from chronic pain. Neuromodulation devices include implantable neurostimulation
devices, which deliver electric current directly to targeted nerves, and
implantable drug pumps, which deliver small, precisely controlled doses of
drugs directly to targeted sites within the body. Our products utilize
innovative technologies that offer advanced programming features, user-friendly
interfaces and smaller implanted devices, resulting in greater patient comfort.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal executive offices are located at 6501 Windcrest Drive, Suite
100, Plano, Texas 75024, and our telephone number is (972)&nbsp;309-8000. We have
been involved in the medical device business since 1979, and in the
neuromodulation industry since 1995. We are a Texas corporation.

</FONT>
<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center"><FONT size="2">3</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "RISK FACTORS" -->
<DIV align="left"><A NAME="001"></A></DIV>
<P align="center"><FONT size="2"><B>RISK FACTORS</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>You should carefully consider the following risk factors before you decide
to buy our common stock. If any of these risks actually occur, our business,
financial condition, operating results or cash flows could be materially
adversely affected. This could cause the trading price of our common stock to
decline, and you could lose part or all of your investment.</I>

</FONT>


<P><FONT size="2"><B><I>Failure of our Genesis and GenesisXP IPG systems to gain and maintain market
acceptance would adversely affect our revenue growth and profitability.</I></B>

</FONT>


<P><FONT size="2">We formally introduced our <I>Genesis </I>IPG system in the U.S. in January 2002 and
our <I>GenesisXP </I>IPG system (offering increased battery capacity and longevity) in
the U.S. in December 2002. We believe that the size and potential for growth of
the IPG portion of the neurostimulation market are greater than in the RF
portion. Accordingly, our ability to generate increased revenue and
profitability, and thus our general success, will depend, in large part, on the
market&#146;s acceptance of our IPG systems. As a new entrant into the IPG portion
of the neurostimulation market, there are many reasons we might not achieve
market acceptance on a timely basis, if at all, including the following:

</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">competing products, technologies and therapies are available, and
others may be introduced that gain greater and faster physician and
patient acceptance than our IPG systems; and</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">our only competitor in the IPG portion of the market has had its IPG
product on the market for some time and enjoys significant brand
awareness and other advantages among pain management specialists.</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">If the IPG portion of the neurostimulation market grows at a faster rate than
the RF portion, our failure to successfully market and sell our IPG systems
could negatively affect our revenue growth and profitability.

</FONT>


<P><FONT size="2"><B><I>Because our main competitor has significantly greater resources than we do and
new competitors may enter the neuromodulation market, it may be difficult for
us to compete in this market.</I></B>

</FONT>


<P><FONT size="2">The medical device market is highly competitive, subject to rapid change and
significantly affected by new product introductions and other market activities
of industry participants. Medtronic, Inc. is one of the largest competitors in
the medical device sector, and is currently our sole competitor in the
neurostimulation market and our largest competitor in the implantable drug pump
market. Medtronic is a large publicly-traded company and enjoys several
competitive advantages over us, including:

</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">substantially greater name recognition;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">greater resources for product research and development, sales and
marketing, distribution, patent protection and pursuing regulatory
approvals;</FONT></TD>
</TR>
</TABLE>


<P align="center"><FONT size="2">4</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">a greater number of established relationships with health care
professionals and third-party payors; and</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">multiple product lines and the ability to bundle products together
or offer discounts, rebates or other incentives to secure a competitive
advantage.</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">Medtronic will continue to develop new products that compete directly with our
products, and its greater resources may allow it to respond more quickly to new
technologies, new treatment indications or changes in customer requirements.
Further, we generally price our products at a premium to those of Medtronic.
Additionally, because the neuromodulation market is a high growth-potential
market, other companies may attempt to bring new products or therapies into
this market. For example, we are aware that Advanced Bionics, Inc., a
privately-held company that currently manufactures and markets a cochlear
implant product, is developing and may be testing an IPG system for the
treatment of chronic pain. For all of these reasons, we may not be able to
compete successfully against Medtronic or against future competitors.

</FONT>


<P><FONT size="2"><B><I>If pain management specialists do not recommend and endorse our products, our
sales could be negatively impacted and we may be unable to increase our
revenues and profitability.</I></B>

</FONT>


<P><FONT size="2">Our products are based on evolving concepts and techniques in pain management.
Acceptance of our products depends on educating the medical community as to the
distinctive features, benefits, clinical efficacy, safety and
cost-effectiveness of our products compared to alternative therapies and
competing products, and on training pain management specialists in the proper
use of our products. To sell our products, we must successfully educate and
train pain management specialists so that they will understand our products and
feel comfortable recommending and endorsing them. We may not be able to
accomplish this, and even if we are successful in educating and training pain
management specialists, there is no guarantee that we will obtain their
recommendations and endorsements.

</FONT>


<P><FONT size="2"><B><I>The launch of Genesis and GenesisXP and other market factors could impede
growth in or reduce sales of Renew, which would adversely affect our revenues
and profitability.</I></B>

</FONT>


<P><FONT size="2">Our Genesis and <I>GenesisXP </I>IPG systems are currently the newest neurostimulation
products on the market. Although Genesis and our Renew RF system are targeted
towards patients with different types of pain and Genesis is not intended to
replace Renew in the neurostimulation market, some pain management specialists
may recommend Genesis to their patients when they would have otherwise
recommended Renew, and, consequently, Genesis may &#147;cannibalize&#148; or substitute
for some sales of Renew. Further, we believe our principal market competitor
has chosen to emphasize the IPG as the therapy of choice in the
neurostimulation market. These factors could lead to a slowdown in growth, or a
reduction, in sales of Renew and similar RF-based neurostimulation products.
Although Renew and Genesis are targeted for different patients, sales growth of
Renew has slowed since the launch of Genesis. If Renew sales growth continues
to slow or sales are reduced, and we do not gain enough market share through
IPG sales to compensate for these reduced sales, our revenues and profitability
will be adversely affected.

</FONT>


<P align="center"><FONT size="2">5</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P><FONT size="2"><B><I>If patients choose less invasive or less expensive alternatives to our
products, our sales could be negatively impacted.</I></B>

</FONT>


<P><FONT size="2">We sell medical devices for invasive and minimally-invasive surgical
procedures. Patient acceptance of our products depends on a number of factors,
including device and associated procedure costs, the failure of less invasive
therapies to help the patient, the degree of invasiveness involved in the
procedures used to implant our products, the rate and severity of complications
from the procedures used to implant our products and any adverse side effects
caused by the implanting of our products. If patients choose to use existing
less invasive or less expensive alternatives to our products, or if effective
new alternatives are developed, our revenues and profitability could be
materially adversely affected.

</FONT>


<P><FONT size="2"><B><I>Any adverse changes in coverage or reimbursement amounts by Medicare and
Medicaid, private insurance companies and managed care organizations, or
workers&#146; compensation programs could limit our ability to market and sell our
products.</I></B>

</FONT>


<P><FONT size="2">In the U.S., our products are generally covered by Medicare and Medicaid and
other third-party payors, such as private insurance companies and managed care
organizations, and workers&#146; compensation programs, which reimburse patients for
all or part of the cost of our products and related medical procedures. The
cost of our products and related procedures are significant, and third-party
payors carefully scrutinize whether to cover new products and the level of
reimbursement for covered products. Further, for certain types of procedures,
gaps exist between the rate of reimbursement paid by Medicare and Medicaid and
the rates paid by private insurers. In addition, gaps exist in reimbursement
levels depending on the health care setting in which physicians perform
procedures using our products. In the future, these gaps may narrow and public
and private payors may reduce levels of reimbursement for neuromodulation
devices in an effort to control increasing costs. If Medicare or other
third-party payors decide to eliminate or reduce coverage amounts on patient
reimbursements for our products, this could limit our ability to market and
sell our products in the U.S., which would materially adversely affect our
revenues and profitability. In November 2002, for example, the Center for
Medicare and Medicaid Services issued a final ruling establishing new 2003
reimbursement rates for Medicare hospital outpatient procedures, including
spinal cord stimulation procedures. Reimbursement levels for permanent implants
of spinal cord stimulation devices in the hospital outpatient setting were
moderately reduced as a result of the ruling, which decreased the amount that
hospitals would be reimbursed by Medicare for these procedures. However,
because the new rates continue to provide hospitals with adequate margins to
cover their facility costs and yield a fair profit to the hospitals, the new
rates have not had an adverse effect on the prices we charge hospitals for our
systems. If in the future CMS reduces rates to such an extent that hospitals&#146;
ability to continue operating profitably in these procedures were at risk, then
there could be price pressure on our products at that time.

</FONT>


<P><FONT size="2">International market acceptance of our products may also depend, in part, upon
the availability of reimbursement within prevailing health care payment
systems. Reimbursement and health care payment systems in international markets
vary significantly by country, and include both
government-sponsored health care and private insurance. We may not obtain
international

</FONT>


<P align="center"><FONT size="2">6</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P><FONT size="2">reimbursement approvals in a timely manner, if at all. Where
reimbursement in foreign markets is available, it tends to be at levels
significantly below those in the U.S. Our failure to receive international
reimbursement approvals may negatively impact market acceptance of our products
in the international markets in which those approvals are sought.

</FONT>


<P><FONT size="2"><B><I>If we fail to protect our intellectual property rights, our competitors may
take advantage of our ideas and compete directly against us.</I></B>

</FONT>


<P><FONT size="2">We rely in part on patents, trade secrets and proprietary technology to remain
competitive. We may not be able to obtain or maintain adequate U.S. patent
protection for new products or ideas, or prevent the unauthorized disclosure or
use of our technical knowledge or other trade secrets by employees.
Additionally, the laws of foreign countries may not protect our intellectual
property rights to the same extent as the laws of the U.S. Even if our
intellectual property rights are adequately protected, litigation may be
necessary to enforce them, which could result in substantial costs to us and
substantial diversion of the attention of our management and key technical
employees. If we are unable to adequately protect our intellectual property,
our competitors could use our intellectual property to develop new products or
enhance their existing products. This could harm our competitive position,
decrease our market share or otherwise harm our business.

</FONT>


<P><FONT size="2">U.S. Patent No.&nbsp;4,793,353 covers a non-invasive multiprogrammable tissue
stimulator and method wherein only the programming data need be transmitted.
The programming data may define the stimulator&#146;s electrode selection, electrode
polarity as either positive, negative or high impedence state, and simulation
pulse parameter. This patent is scheduled to expire on December&nbsp;27, 2005. The
expiration of this patent may allow competitors to offer programmable
stimulators that define electrode selection, polarity and stimulation pulse
parameters, and thus could have an adverse effect on our business. A request
for an extension of the term of this patent has been filed with the United
States Patent Office pursuant to a federal statute that permits us to seek such
an extension based on a regulatory approval delay. A final ruling on the
extension request has not been made at the present time. While six other U.S.
patents owned or licensed by us are due to expire prior to 2006, the expiration
of these other patents would not have a material effect on our ability to
protect the intellectual property rights currently utilized in our business,
because the patents cover technologies that are not currently utilized in our
existing products or services.

</FONT>


<P><FONT size="2"><B><I>Other parties may sue us for infringing their intellectual property rights, or
we may have to sue them to protect our intellectual property rights.</I></B>

</FONT>


<P><FONT size="2">There has been a substantial amount of litigation in the medical technology
industry regarding patents and intellectual property rights. The
neuromodulation market is characterized by extensive patent and other
intellectual property rights, which can create greater potential than in
less-developed markets for possible allegations of infringement, particularly
with respect to newly-developed technology. We may be forced to defend
ourselves against allegations that we are infringing the intellectual property
rights of others. In addition, we may find it necessary, if
threatened, to initiate a lawsuit seeking a declaration from a court that we
are not infringing the

</FONT>


<P align="center"><FONT size="2">7</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P><FONT size="2">intellectual property rights of others or that these
rights are invalid or unenforceable, or to protect our own intellectual
property rights. Intellectual property litigation is expensive and complex and
its outcome is difficult to predict. If we do not prevail in any litigation, in
addition to any damages we might have to pay, we would be required to stop the
infringing activity, obtain a license, or concede intellectual property rights.
Any required license may not be available to us on acceptable terms, if at all.
In addition, some licenses may be nonexclusive, and, therefore, our competitors
may have access to the same technology licensed to us. If we fail to obtain a
required license or are unable to design around a patent, we may be unable to
sell some of our products, which could adversely affect our revenues and
profitability.

</FONT>


<P><FONT size="2"><B><I>Failure to obtain necessary government approvals for new products or for new
applications for existing products would mean we could not sell those new
products, or sell our existing products for those new applications.</I></B>

</FONT>


<P><FONT size="2">Our products are medical devices, which are subject to extensive government
regulation in the U.S. and in foreign countries where we do business. Unless an
exemption applies, each medical device that we wish to market in the U.S. must
first receive either a premarket approval or a 510(k) clearance from FDA with
respect to each application for which we intend to market it. Either process
can be lengthy and expensive. According to FDA, the average 510(k) review
period was 100&nbsp;days in 2002, but reviews may take longer and approvals may be
revoked if safety or effectiveness problems develop. The premarket approval
process is much more costly, lengthy and uncertain. According to FDA, the
average premarket approval submission-to-decision period was 364&nbsp;days in 2002;
however, reviews may take much longer and completing a premarket approval
application can require numerous clinical trials and require the filing of
amendments over time. The result of these lengthy approval processes is that a
new product, or a new application for an existing product, often cannot be
brought to market for a number of years after it is developed. Additionally, we
anticipate that many of the products we bring to market in the future will
require us to seek premarket approvals rather than 510(k) clearances. If we
fail to obtain or maintain necessary government approvals of our new products
or new applications for existing products on a timely and cost-effective basis,
we will be unable to market the affected products for their intended
applications.

</FONT>


<P><FONT size="2"><B><I>Modification of any marketed device could require a new 510(k) clearance or
premarket approval or require us to cease marketing or recall the modified
device until we obtain this clearance or approval.</I></B>

</FONT>


<P><FONT size="2">Any modification we want to make to an FDA-cleared or approved device that
could significantly affect its safety or effectiveness, or that would
constitute a major change in its intended use, would require a new 510(k)
clearance, or possibly a new or supplemental premarket approval. Under FDA
procedures, we would make the initial determination of whether to seek a new
510(k) clearance or premarket approval, but FDA could review our decision. If
FDA disagrees with our decision not to seek a new 510(k) clearance or premarket
approval and requires us to seek either 510(k) clearance or premarket approval
for modifications we have already made to a previously-cleared product, we
might be required to cease marketing or recall
the modified device until we obtain this clearance or approval. We could also
be subject to significant regulatory fines or

</FONT>


<P align="center"><FONT size="2">8</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P><FONT size="2">penalties.

</FONT>


<P><FONT size="2"><B><I>We will be unable to sell our products if we fail to comply with manufacturing
regulations.</I></B>

</FONT>


<P><FONT size="2">To commercially manufacture our products, we must comply with government
manufacturing regulations that govern design controls, quality systems and
documentation policies and procedures. FDA and equivalent foreign governmental
authorities periodically inspect our manufacturing facilities. Our failure to
comply with these manufacturing regulations may prevent or delay our marketing
or distribution of our products, which would negatively impact our business.

</FONT>


<P><FONT size="2"><B><I>Our products are subject to product recalls even after receiving FDA clearance
or approval, which would negatively affect our financial performance and could
harm our reputation.</I></B>

</FONT>


<P><FONT size="2">Any of our products may be found to have significant deficiencies or defects in
design or manufacture. FDA and similar governmental authorities in other
countries have the authority to require the recall of any such defective
product. A government-mandated or voluntary recall could occur as a result of
component failures, manufacturing errors or design defects. We do not maintain
insurance to cover losses incurred as a result of product recalls. Any product
recall would divert managerial and financial resources and negatively affect
our financial performance, and could harm our reputation with customers.

</FONT>


<P><FONT size="2"><B><I>We are subject to potential product liability and other claims and we may not
have the insurance or other resources to cover the cost of any successful
claim.</I></B>

</FONT>


<P><FONT size="2">Defects in our implantable medical devices could subject us to potential
product liability claims that our devices were ineffective or caused some harm
to the human body. Our current product liability litigation involves assertions
that our products did not perform as intended and, in some cases, that they
caused discomfort or harm to the patient. Our product liability insurance may
not be adequate to cover current or future claims. Product liability insurance
is expensive and, in the future, may not be available on terms that are
acceptable to us, if it is available to us at all. Plaintiffs may also advance
other legal theories supporting their claims that our products or actions
resulted in some harm. A successful claim brought against us in excess of our
insurance coverage could significantly harm our business and financial
condition.

</FONT>


<P><FONT size="2"><B><I>We are subject to substantial government regulation and our failure to comply
with all applicable government regulations could subject us to numerous
penalties, any of which could adversely affect our business.</I></B>

</FONT>


<P><FONT size="2">We are subject to numerous government regulations relating to, among other
things, our ability to sell our products, third-party reimbursement, fraud and
abuse of Medicare or Medicaid and patient privacy. If we do not comply with all
applicable government regulations, government authorities could do any of the
following:

</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">impose fines and penalties on us;</FONT></TD>
</TR>
</TABLE>


<P align="center"><FONT size="2">9</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">prevent us from manufacturing our products;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">bring civil or criminal charges against us;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">delay the introduction of our new products into the market;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">recall or seize our products;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">disrupt the manufacture or distribution of our products; or</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">withdraw or deny approvals for our products.</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">Any one of these results could materially adversely affect our revenues and
profitability and harm our reputation.

</FONT>


<P><FONT size="2"><B><I>Our reliance on single suppliers for critical components used in our main
products could adversely affect our ability to deliver products on time.</I></B>

</FONT>


<P><FONT size="2">We continue to rely upon sole source suppliers for certain materials and
services used in manufacturing our products, including the custom chip used in
the receiver of our RF system, the computer chip used in the IPG programmer and
<I>Renew </I>transmitter, the batteries used in our IPG system and the medical-grade
polyurethane (bionate)&nbsp;that we use in all of our products, for reasons of
quality assurance, component availability or cost effectiveness. We work
closely with our vendors to assure continuity of supply while maintaining high
quality and reliability. With the exception of the custom chip used in our RF
receiver, which we discuss below, we believe that alternative suppliers exist
for the other components used to manufacture our products. FDA requirements
regarding the design and manufacture of our products require an investment in
time and money to establish additional or replacement sources for certain
components or materials. We believe that in some cases, the cost of pursuing
and qualifying alternative sources and/or redesigning specific components of
our products would significantly outweigh the benefits of doing so and consume
significant resources that are better devoted to other aspects of our business.
Similarly, qualifying alternative sources or product designs require costly
and time-consuming regulatory submissions and approvals that again may not be
justified from a cost-benefit standpoint for all components used in our
products. The reduction or interruption in supply, or our inability to develop
alternative sources of supply, could adversely affect our operations.

</FONT>


<P><FONT size="2">Although there are currently no alternative suppliers for the custom chip used
in our RF system, we have sufficient chips in stock to meet our near-term
requirements and will be able to order more chips to meet our future needs. In
the meantime, we are designing and developing our own replacement chip. The
sole supplier of this chip first indicated its desire to cease manufacturing
and supplying the RF system chip several years ago. The supplier has continued
to supply the chip, however, and to date has not determined if and when it will
cease to supply the chip. The
supplier has agreed to notify us when it does decide to cease supplying the
chip and has promised

</FONT>


<P align="center"><FONT size="2">10</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P><FONT size="2">to permit us to place a final one-time purchase order for
the chip. In the interim, we have maintained and will continue to maintain a
higher than normal inventory of the chip. We currently have enough of the
chips in stock to meet our requirements through the end of 2003, and we
recently placed an order with the supplier to supply our requirements through
the end of 2005. Our engineers are developing a new chip to be used with our
next-generation RF receiver. Our engineers estimate that this new chip and the
next-generation RF receiver would be completed and have received the
appropriate regulatory approvals by the second half of 2005. Consequently,
under the circumstances, we do not believe that a single source of supply for
the RF system chip poses a serious risk to our business. Our RF system sales
accounted for approximately 60% of our total Neuro Product segment sales in
2002, and approximately 49% of our total sales.

</FONT>


<P><FONT size="2"><B><I>One distributor currently accounts for a significant percentage of our revenue
from our neuromodulation products segment, and our major competitor in the
neuromodulation market currently accounts for a significant percentage of our
revenue from our O.E.M. segment.</I></B>

</FONT>


<P><FONT size="2">During 2002, we had one independent distributor, Sun Medical, Inc., that
accounted for $6.33&nbsp;million, or 13.5%, of our net revenue from our
neuromodulation products segment. In March 2003, we acquired Sun Medical&#146;s pain
management business and hired substantially all of the salespeople who had
generated those sales, but we continue to rely in large part on two other
distributors and on numerous independent sales representatives to buy and/or
sell our products. The loss of a major distributor or sales representative, or
a significant decrease in their sales volumes, could materially adversely
affect our revenues and profitability, at least in the short term.

</FONT>


<P><FONT size="2">In addition, during 2002, we had two major customers that accounted for $9.52
million, or 89.3%, of our net revenue from our O.E.M. segment. Medtronic, Inc.,
our most significant competitor, accounted for $6.74&nbsp;million, or 63.2% and
Arrow International, Inc. accounted for $2.78&nbsp;million, or 26.1%. Either of
these customers could cease doing business with us at any time. If this were to
occur, our revenues and profitability could be materially adversely affected,
at least in the short term.

</FONT>


<P><FONT size="2"><B><I>We are dependent upon the success of neuromodulation technology. Our inability
to continue to develop innovative neuromodulation products, or the failure of
the neuromodulation market to develop as we anticipate, would adversely affect
our business.</I></B>

</FONT>


<P><FONT size="2">Our current products focus on the treatment of chronic pain using
neuromodulation. Our development efforts focus on leveraging our
neuromodulation expertise. The neuromodulation market is subject to rapid
technological change and product innovation. Our competitors may succeed in
developing or marketing products, using neuromodulation technology or other
technologies, that may be superior to ours. If we are unable to compete
successfully in the development of new neuromodulation products, or if new and
effective therapies not based on neuromodulation are developed, our products
could be rendered obsolete or non-competitive. This would materially adversely
affect our business.

</FONT>


<P align="center"><FONT size="2">11</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P><FONT size="2"><B><I>Our success will depend on our ability to attract and retain key personnel and
scientific staff.</I></B>

</FONT>


<P><FONT size="2">We believe our future success will depend on our ability to manage our growth
successfully, including attracting and retaining scientists, engineers and
other highly-skilled personnel. Our key employees are subject to
confidentiality, trade secret and non-competition agreements, but may terminate
their employment with us at any time. Hiring qualified management and technical
personnel is difficult due to the limited number of qualified professionals.
Competition for these types of employees is intense in the medical device
field. If we fail to attract and retain personnel, particularly management and
technical personnel, we may not be able to continue to succeed in the
neuromodulation market.

</FONT>


<P><FONT size="2"><B><I>If we choose to acquire complementary businesses, products or technologies
instead of developing them ourselves, we may be unable to complete these
acquisitions or to successfully integrate an acquired business, product or
technology in a cost-effective and non-disruptive manner.</I></B>

</FONT>


<P><FONT size="2">Our success depends on our ability to continually enhance and broaden our
product offerings in response to changing technologies, customer demands and
competitive pressures. Accordingly, we may, as we have in the past, acquire
complementary businesses, products or technologies instead of developing them
ourselves. We do not know if we will be able to identify prospective
acquisition targets or complete any future acquisitions, or whether we will be
able to successfully integrate any acquired business, operate it profitably or
retain its key employees. Integrating any business, product or technology we
acquire could be expensive and time-consuming, disrupt our ongoing business and
distract our management and key technical personnel. If we are unable to
integrate any acquired entities, products or technologies effectively, our
business will suffer. In addition, any impairment of goodwill or other
intangible assets or charges resulting from the costs of acquisitions could
harm our business and operating results.

</FONT>


<P><FONT size="2"><B><I>We are subject to additional risks associated with international operations.</I></B>

</FONT>


<P><FONT size="2">Internationally, we market our products through 18 independent distributors who
represent us in 22 countries, except in Germany where we are represented by
direct salespersons. In 2002, 8% of our sales revenue from our neuromodulation
products segment came from international sales. International sales are subject
to a number of additional risks, including the following:

</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">establishment by foreign regulatory agencies of requirements
different from those in place in the U.S.;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">fluctuations in exchange rates of the U.S. dollar against foreign
currencies that may affect demand for our products overseas;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">export license requirements, changes in tariffs, and other general
trade restrictions;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">difficulties in staffing and managing international operations;</FONT></TD>
</TR>
</TABLE>


<P align="center"><FONT size="2">12</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">political or economic instability; and</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">lower and more restrictive third-party reimbursement for our
products.</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">Any of these risks could make it difficult or impossible for us to continue to
expand our overseas operations, which could have an adverse effect on our
revenues.

</FONT>


<P><FONT size="2"><B><I>Our operations are conducted at three locations, and a disaster at any of these
facilities could result in a prolonged interruption of our business.</I></B>

</FONT>


<P><FONT size="2">We currently conduct all of our development, manufacturing and management
activities at our facilities in Plano, Texas and Budd Lake and Hackettstown,
New Jersey. However, a natural disaster, such as a tornado, fire or flood, or a
man-made disaster, could cause substantial delays in our operations, damage or
destroy our manufacturing equipment or inventory and cause us to incur
significant additional expenses. A disaster could seriously harm our business
and affect our reputation with customers. The insurance we maintain may not be
adequate to cover our losses in any particular case.

</FONT>


<P><FONT size="2"><B><I>We may be obligated to issue shares of our common stock in the future and the
number of shares could increase if our stock price decreases.</I></B>

</FONT>


<P><FONT size="2">In connection with the acquisition of MicroNet Medical, Inc. in November 2002,
as part of the purchase price, we agreed to pay the former MicroNet
shareholders additional shares of our common stock if certain product,
regulatory approval and sales milestones are met. The aggregate value of the
additional potential milestone earnout payments payable in shares of our common
stock was $9&nbsp;million as measured at the time the transaction was completed. Of
this $9&nbsp;million in additional shares, we issued a fixed number of shares
totaling 89,606 with an aggregate value at closing of $3&nbsp;million into an escrow
account. If and when specified product and regulatory milestones are achieved,
we will release a specified and fixed number of shares of common stock from
escrow to the former MicroNet shareholders. In addition, if and when those
same product and regulatory milestones are achieved, we will also issue at that
time a number of shares of our common stock with an aggregate value of up to $3
million. Finally, if and when we generate $5&nbsp;million in cumulative net sales
of MicroNet lead products during the four years following the closing, we will
issue at that time a number of shares of our common stock with an aggregate
value of $3&nbsp;million. Thus, we agreed to issue shares of our common stock with
an aggregate value of up to $6&nbsp;million in the future upon the achievement of
specific milestones, the number of shares of which will depend on the average
trading price of our common stock. The average trading price for this purpose
is the per share average closing price of our common stock on the Nasdaq
National Market for the 30 consecutive trading days immediately prior to two
business days before the applicable milestone payment date. Because the number
of shares we could be required to issue depends on the average trading price at
the time of payment, if the average trading price of our common stock declines
significantly, we could be required to issue more shares of our common stock.
For example, if our stock price were $40 per share and we were required to
issue $3&nbsp;million of our common stock on satisfaction of the sales milestone, we
would be required to issue 75,000 shares of our common stock to the former
MicroNet shareholders. If

</FONT>


<P align="center"><FONT size="2">13</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P><FONT size="2">our stock price declined 50% from that level to $20
per share, however, we would be required to issue twice as many shares, or
150,000 shares.

</FONT>


<P><FONT size="2">On March&nbsp;1, 2003, two parts of one of the product milestones were satisfied,
entitling the former MicroNet shareholders to $1&nbsp;million in milestone
payments payable in shares of our common stock. Accordingly, we issued an
additional 13,412 shares of our common stock to the former MicroNet
shareholders (valued at the average trading price on the date of issuance of
$37.28 per share, for an aggregate of $500,000 in our common stock), and
instructed our escrow agent to release from escrow 14,934 shares of our
common stock from escrow. As a result, our remaining obligation is to issue
up to an additional $5.5&nbsp;million in common stock and release 74,672 shares of
common stock from escrow if certain additional product, regulatory approval
and sales milestones are met. Important additional product milestone
deadlines occur in November 2003 and May 2003, while other milestones depend
on the receipt of regulatory approvals and meeting the aggregate net sales
milestone referred to above. All milestones must be met by November 2006 or
November 2007, depending on the milestone.

</FONT>


<P><FONT size="2"><B><I>Our shareholders&#146; rights plan and Texas law may inhibit a takeover that our
shareholders consider favorable.</I></B>

</FONT>


<P><FONT size="2">We adopted a shareholders&#146; rights plan in 1996 that permits shareholders to
purchase shares of our common stock at significant discounts in the event a
person or group acquires more than 15% of our outstanding common stock or
announces a tender or exchange offer for more than 20% of our outstanding
common stock. In addition, we are governed by the provisions of Article&nbsp;13.03
of the Texas Business Corporation Act, which may inhibit shareholders owning
20% or more of our outstanding voting shares from merging or combining with
us. Our shareholders&#146; rights plan and this provision of Texas law could
reduce the price that investors would be willing to pay for shares of our
common stock in the future and result in the market price being lower than it
would be in their absence.

</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2"><B><I>Future sales of our common stock may depress our stock price, even if our
business is doing well.</I></B></FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">Sales of a substantial number of shares of our common stock in the public
market could depress the market price of our common stock and impair our
ability to raise capital through the sale of additional equity securities.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2"><B><I>Our stock price may be volatile and you may not be able to resell your
shares at or above the price you paid for them.</I></B></FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">The stock market in general, and the stock prices of medical device
companies and other technology-based companies in particular, have
experienced significant volatility that has often been unrelated to the
operating performance of and beyond the control of any specific public
companies. Factors that may have a significant and adverse impact on the
market price of our common stock include:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">our actual financial results differing from guidance provided by
management or from results expected by securities analysts;</FONT></TD>
</TR>
</TABLE>


<P align="center"><FONT size="2">14</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">changes in recommendations of securities analysts;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">government regulation, including the FDA&#146;s review of our new products
and new applications for existing products;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">future announcements concerning us or our competitors, including the
announcement of acquisitions;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">developments regarding our patents or other proprietary rights or those
of our competitors;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">deficiencies in the quality of our products;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">competitive developments, including technological innovations by us or
our competitors;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">changes in third-party reimbursement for medical devices;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">public perceptions of risks associated with our products or operations;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">conditions or trends in the medical device industry;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">conditions in the financial markets in general;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">additions or departures of key personnel;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">sales or purchases of our common stock; or</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">seasonal variations in patients&#146; choice of timing of medical procedures
involving our products.</FONT></TD>
</TR>
</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2"><B><I>We do not intend to pay dividends in the foreseeable future.</I></B>
</FONT></TD>
</TR>
<tr><td>&nbsp;</td></tr>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">We do not currently pay any cash dividends on our common stock and do not
anticipate paying any cash dividends in the foreseeable future. We intend to
retain future earnings to fund our growth. Accordingly, you will not receive
a return on your investment in our common stock through the payment of cash
dividends in the foreseeable future, and you may not realize a return on
your investment even if you sell your shares. As a result, you may not be
able to resell your shares at or above the price you paid for them.</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">15</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "WHERE YOU CAN FIND MORE INFORMATION" -->
<DIV align="left"><A NAME="002"></A></DIV>
<P align="center"><FONT size="2"><B>WHERE YOU CAN FIND MORE INFORMATION</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. Our SEC filings are
available to the public over the Internet at the SEC&#146;s website at
http://www.sec.gov. You may also read and copy any document we file with the
SEC at its public reference facilities at 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on
the operation of the public reference facilities. Our SEC filings are also
available at the office of the Nasdaq National Market. For further information
on obtaining copies of our public filings from the Nasdaq National Market,
please call 212-656-5060.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to furnish our shareholders with annual reports containing
audited consolidated financial statements and other periodic reports as we may
determine or as may be required by law.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus constitutes a part of a registration statement on Form&nbsp;S-3
that we have filed with the SEC under the Securities Act of 1933, as amended.
This prospectus does not contain all information included in the registration
statement. Certain parts of the registration statement have been omitted in
accordance with the rules and regulations of the SEC. For further information,
please refer to the registration statement, which can be inspected on the SEC&#146;s
web site or at the public reference rooms at the offices of the SEC.

</FONT>


<P align="center"><FONT size="2">16</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "DOCUMENTS INCORPORATED BY REFERENCE" -->
<DIV align="left"><A NAME="003"></A></DIV>
<P align="center"><FONT size="2"><B>DOCUMENTS INCORPORATED BY REFERENCE</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The SEC allows us to &#147;incorporate by reference&#148; certain information and
reports that we file with it. Accordingly, this prospectus incorporates by
reference the following documents previously filed by us with the SEC pursuant
to the Securities Act and the Securities and Exchange Act of 1934, as amended,
and these documents are deemed a part of this prospectus:

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp; our latest Annual Report on Form&nbsp;10-K, as amended, which contains
audited financial statements for the fiscal year ended December&nbsp;31, 2002;

</FONT>


<DIV align="left"><FONT size="1">

</FONT></DIV>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp; our Quarterly Report on Form&nbsp;10-Q for the fiscal quarter ended March
31, 2003;

</FONT>
<DIV align="left"><FONT size="1">

</FONT></DIV>


<DIV align="left"><FONT size="1">

</FONT></DIV>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp; our Current Report on Form&nbsp;8-K filed on March&nbsp;17, 2003, as amended
on April&nbsp;30, 2003; and

</FONT>
<DIV align="left"><FONT size="1">

</FONT></DIV>


<DIV align="left"><FONT size="1">

</FONT></DIV>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp; a description of our common stock contained in our registration
statement on Form&nbsp;SB-2, dated September&nbsp;28, 1995 (Commission File Number
33-62991), including any amendment or reports filed for the purpose of updating
such description.

</FONT>
<DIV align="left"><FONT size="1">

</FONT></DIV>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of the documents that we file with the SEC pursuant to Sections&nbsp;13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus and
before the termination of the offering relating to this prospectus will be
deemed to be incorporated by reference in this prospectus and to constitute a
part of this prospectus from the date that such documents are filed with the
SEC. For purposes of this prospectus, any statement that is incorporated or
deemed to be incorporated by reference in this prospectus will be deemed to be
modified, replaced, or superseded by a statement contained in this prospectus
or contained in any other subsequently filed document that also is or is deemed
to be incorporated by reference in this prospectus. Such modified or
superseded statement will be deemed, except as so modified or superseded, to
constitute a part of this prospectus.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You may request, at no cost, copies of any or all of the documents
incorporated by reference in this prospectus (other than the exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
the information that this prospectus incorporates) by writing or telephoning us
at:

</FONT>


<P align="center"><FONT size="2">Advanced Neuromodulation Systems, Inc.<BR>
6501 Windcrest Drive<BR>
Suite&nbsp;100<BR>
Plano, Texas 75024<BR>
Attn: General Counsel<BR>
Telephone: (972)&nbsp;309-8000
</FONT>






<P align="center"><FONT size="2">17</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>



<!-- link1 "SELLING SHAREHOLDERS" -->
<DIV align="left"><A NAME="004"></A></DIV>
<P align="center"><FONT size="2"><B>SELLING SHAREHOLDERS</B>
</FONT>

<DIV align="left"><FONT size="1">

</FONT></DIV>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The shares of our common stock being offered in this offering have been or
may be acquired by the selling shareholders in connection with our acquisition
of MicroNet Medical, Inc., as described above. The table below assumes that we
issue new shares and release from escrow an aggregate of 75,000 shares of our
common stock to the selling shareholders in connection with the merger, and
sets forth the pro rata beneficial ownership of shares of the common stock by
selling shareholder, and as adjusted to reflect the assumed sale of all of the
shares of common stock registered under this registration statement pursuant to
the offering. All information with respect to the beneficial ownership has
been furnished by the selling shareholders, except the aggregate number of
shares we are assuming we would issue and release from escrow.

</FONT>
<DIV align="left"><FONT size="1">

</FONT></DIV>


<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="62%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Number of Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Number of Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Prior to</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Shares Being</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name of Beneficial Owner</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Offering<sup>(1)</sup></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Offered<sup>(2)</sup></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>After Offering<sup>(2)</sup></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Brust Limited Partnership<sup>(3)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">53,074</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24,309</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Brust, Thomas E.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">46,435</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,269</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ascent Medical Technology Fund<sup>(4)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,295</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,005</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">BioMed Venture AG<sup>(5)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,192</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,835</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Brandt, Leonard</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,643</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,127</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Brust Family Partnership
c/o John Bartlett Brust<sup>(6)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,085</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Kellen, Scott</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,895</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,326</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Shearon, Lawrence W.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,491</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Barry, John</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">976</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Erickson, John</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">902</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Humphries, Sam</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mueller, Keith and Jennifer<sup>(8)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">695</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Hanson, Eric S.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">695</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Vendrami, Mauro</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,182</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Nicholson, Ford J.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,277</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">585</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Weist, Lynn</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,092</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Alo Family Limited Partnership
c/o Kenneth Alo, M.D.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Maple Investment &#038; Development
Corporation c/o James Bell</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Schutz, Ronald J. and Janet Jayne</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,366</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">626</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">MacDonald, Brian</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">774</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">354</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Martinson, Thomas<sup>(8)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">774</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">354</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Schrom, Mark</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">737</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">338</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Erickson, Barbara J.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">728</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">334</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Kepple, Lloyd G.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">728</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">334</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mueller, Craig P.<sup>(8)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">728</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">334</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mueller, Keith (IRA)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">728</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">334</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Draft Co.<sup>(7)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">729</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">334</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Benjamin, Albert S.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">547</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">251</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Frankenberg, Michael T.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mogilyansky, Dmitry</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Peterson, Steve</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Nikolai, Thomas J.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">410</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Sillers-Rudebusch, Heather</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">365</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">167</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cristiani, Juan</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">273</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Dubbs, Michael H. &#038; Dubbs, Susan W.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">182</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gilbert, Lou</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">182</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Oakley, John C.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">182</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Wigart, Daniel W.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Wirth, S. E.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Young, Carla</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">163,739</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>


<P align="center"><FONT size="2">18</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Includes an aggregate of (a)&nbsp;135,393 shares acquired by the selling
shareholders upon the closing of the acquisition of MicroNet, which were
registered by us on December&nbsp;17, 2002 on Form&nbsp;S-3 (Commission File No.
333-101911) for resale by the selling shareholders, (b)&nbsp;13,412 shares that
were issued to the selling shareholders upon the achievement of certain
milestones described elsewhere in this prospectus, and (c)&nbsp;14,934 shares
that were released from escrow to the selling shareholders upon the
achievement of certain milestones described elsewhere in this prospectus.
Does not include the balance of the 75,000 shares registered for resale
pursuant to this prospectus, or 46,654 shares, all or part of which could
be issued or released from escrow to the selling shareholders upon the
achievement of certain milestones (as described elsewhere in this
prospectus) in the future, because the selling shareholders do not
beneficially own these shares. We are registering pursuant to this
prospectus the shares described in (b), (c)&nbsp;and (d)&nbsp;for resale by the
selling shareholders.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Assumes that the selling shareholders acquire and offer for sale all
75,000 shares of common stock that may be offered under this prospectus
and all of the 135,393 shares they acquired upon the closing of the
MicroNet acquisition that we previously registered for resale.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">The owners of the Brust Limited Partnership are Thomas Edwin Brust, Susan
E. Brust, Kelsie E. Brust, Thomas Erik Brust and Kristina D Brust.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">(4)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Ascent Medical Technology Fund Ltd. is a Delaware limited partnership.
The general partner is Ascent Private Equity LLC, which is owned 25% each
by Peggy Farley, Karl Growth, Sam Humphries and Ascent/Meredith Asset
Management, Inc. Two limited partners own more than 10% of the limited
partnership interests but are passive investors: CDP Capital and Michael
Jaharis.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">(5)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">BIO Med Ventures is owned by Sparkasse Hannover, a German bank. The bank
is a &#147;professional bank&#148; under German law and has no &#147;controlling
shareholders.&#148;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">(6)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">The owners of the Brust Family Partnership are John Bartlett Brust, John
Brandon Brust and James Fredrick Brust.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">(7)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">The owners of Draft Co. are David Nicholson, Richard Nicholson, Ford
Nicholson and Todd Nicholson.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">(8)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Keith Mueller, Thomas Martinson and Craig Muller are broker-dealers, and
thus could be deemed underwriters.</FONT></TD>
</TR>
</TABLE>


<P align="center"><FONT size="2">19</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>



<!-- link1 "PLAN OF DISTRIBUTION" -->
<DIV align="left"><A NAME="005"></A></DIV>
<P align="center"><FONT size="2"><B>PLAN OF DISTRIBUTION</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The shares of common stock are being registered to permit public secondary
trading of such common stock by the holders thereof from time to time after the
date of this prospectus. The sale of the common stock offered by this
prospectus may be effected from time to time directly, or by one or more
broker-dealers or agents, in one or more transactions (which may involve block
transactions) on the Nasdaq (or other national securities exchange or quotation
services on which the common stock may be listed or quoted at the time of sale)
or otherwise. Such common stock may be sold in one or more negotiated
transactions, or through a combination of such methods of distribution, at
prices related to prevailing market prices, fixed prices, varying prices
determined at the time of sale or at negotiated prices.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event one or more broker-dealers or agents agree to sell the common
stock, they may do so by purchasing the common stock as principals or by
selling the common stock as agent for the selling shareholders. Any such
broker-dealers or agents may receive compensation in the form of discounts,
concessions or commissions from the selling shareholders or the purchasers of
the shares of common stock for which such broker-dealer or agent may act as
agent or to whom they may sell as principal, or both (which compensation as to
a particular broker-dealer or agent may be in excess of customary
compensation).

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling shareholders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of the common stock by the selling
shareholders. The foregoing may affect the marketability of the common stock.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to comply with certain states&#146; securities laws, if applicable,
the common stock will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states, the common stock may not be
sold unless the common stock has been registered or qualified for sale in such
state or an exemption from registration or qualification is available and is
complied with.

</FONT>


<!-- link1 "USE OF PROCEEDS" -->
<DIV align="left"><A NAME="006"></A></DIV>
<P align="center"><FONT size="2"><B>USE OF PROCEEDS</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will not receive any proceeds from the offering.

</FONT>


<!-- link1 "LEGAL MATTERS" -->
<DIV align="left"><A NAME="007"></A></DIV>
<P align="center"><FONT size="2"><B>LEGAL MATTERS</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The validity of the common stock offered by this prospectus will be passed
upon for us by Hughes &#038; Luce, LLP in Dallas, Texas.

</FONT>


<!-- link1 "EXPERTS" -->
<DIV align="left"><A NAME="008"></A></DIV>
<P align="center"><FONT size="2"><B>EXPERTS</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated
financial statements and schedule of Advanced Neuromodulation Systems,
Inc. incorporated by reference in Advanced Neuromodulation Systems, Inc.&#146;s
Annual Report on Form&nbsp;10-K/A for the year ended December&nbsp;31, 2002, have been
audited by Ernst &#038; Young LLP, independent auditors, as set forth in their report included therein and
incorporated herein by

</FONT>


<P align="center"><FONT size="2">20</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P><FONT size="2">reference. Such consolidated financial statements
and schedule are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.

</FONT>


<!-- link1 "INDEMNIFICATION" -->
<DIV align="left"><A NAME="009"></A></DIV>
<P align="center"><FONT size="2"><B>INDEMNIFICATION</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Articles of Incorporation include a provision eliminating or limiting
director liability to Advanced Neuromodulation Systems, Inc. and its
shareholders for monetary damages arising from acts or omissions in the
director&#146;s capacity as a director. Consistent with the Texas Business
Corporation Act, our Articles of Incorporation do not eliminate or limit a
director&#146;s liability to the extent the director is found liable for (i)&nbsp;a
breach of the director&#146;s duty of loyalty to us or our shareholders, (ii)&nbsp;an act
or omission not in good faith that constitutes a breach of duty of the director
to us or an act or omission that involves intentional misconduct or a knowing
violation of the law, (iii)&nbsp;a transaction from which the director received an
improper benefit, whether or not the benefit resulted from an action taken
within the scope of the director&#146;s office, (iv)&nbsp;an act or omission for which
the liability of a director is expressly provided by an applicable statute, or
(v)&nbsp;an act related to an unlawful stock repurchase or payment of a dividend.
In addition, we maintain insurance on behalf of our directors and executive
officers, insuring them against any liability asserted against them in their
capacities as directors or officers or arising out of such status.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers or controlling
persons under Texas law, our Articles of Incorporation or otherwise, we have
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that a claim for indemnification against such liabilities
(other than the payment by us of expenses incurred or paid by a director,
officer, or controlling person in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification
by us is against public policy as expressed in the Securities Act, and we will
be governed by the final adjudication of such issue.

</FONT>


<P align="center"><FONT size="2">21</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>PART II</B>
</FONT>




<P><FONT size="2"><B>Item&nbsp;14. Other Expenses of Issuance and Distribution.</B>
</FONT>




<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="73%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Registration fee</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accounting fees and expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,000</FONT></TD>
    <TD><FONT size="2">*</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Legal fees and expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,000</FONT></TD>
    <TD><FONT size="2">*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Miscellaneous expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,000</FONT></TD>
    <TD><FONT size="2">*</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" nowrap colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">6,235</FONT></TD>
    <TD><FONT size="2">*</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">*</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Estimated</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">We will pay all of the above expenses.

</FONT>


<P><FONT size="2"><B>Item&nbsp;15. Indemnification of Directors and Officers.</B>
</FONT>




<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consistent with the Texas Business Corporation Act, our Articles of
Incorporation include a provision eliminating or limiting director liability to
us or our shareholders for monetary damages arising from certain acts or
omissions in the director&#146;s capacity as a director. In addition, we maintain
insurance on behalf of our directors and executive officers insuring them
against any liability asserted against them in their capacities as directors or
officers or arising out of such status.

</FONT>


<P><FONT size="2"><B>Item&nbsp;16. Exhibits.</B>
</FONT>




<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Exhibits to this Registration Statement are listed in the Index to
Exhibits on page II-5 of this registration statement, which Index is
incorporated herein by reference.

</FONT>


<P><FONT size="2"><B>Item&nbsp;17. Undertakings.</B>
</FONT>




<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp; The undersigned registrant hereby undertakes:

</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="6%"></TD>
        <TD width="94%"></TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;To include any prospectus required by Section
10(a)(3) of the Securities Act.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="6%"></TD>
        <TD width="94%"></TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if
the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the
low or high and of the estimated maximum offering range may be reflected in the form of </FONT></TD>
</TR>
</TABLE>


<P align="center"><FONT size="2">II-1</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="6%"></TD>
        <TD width="94%"></TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">prospectus filed
with the Commission pursuant to Rule&nbsp;424(b) if, in the
aggregate, the changes in volume and price represent no more
than 20&nbsp;percent change in the maximum aggregate offering
price set forth in the &#147;Calculation of Registration Fee&#148;
table in the effective registration statement.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="6%"></TD>
        <TD width="94%"></TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial <I>bona fide </I>offering thereof.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp; The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant&#146;s annual report pursuant to Section&nbsp;13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan&#146;s annual
report pursuant to Section&nbsp;15(d) of the Exchange Act) that is incorporated by
reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial <I>bona
fide </I>offering thereof.

</FONT>


<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp; Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.

</FONT>


<P align="center"><FONT size="2">II-2</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>SIGNATURES</B>
</FONT>




<DIV align="left"><FONT size="1">

</FONT></DIV>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form&nbsp;S-3 and has duly caused this amendment no. 1 to
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Plano, State of Texas, on May&nbsp;22, 2003.

</FONT>
<DIV align="left"><FONT size="1">

</FONT></DIV>


<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"> </FONT></TD>
    <TD colspan="3" valign="top"><FONT size="2">ADVANCED
NEUROMODULATION SYSTEMS, INC.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="1" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">By: </FONT></TD>
    <TD colspan="1" valign="top"><FONT size="2">/s/ Christopher G. Chavez</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="1" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="1" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><HR align="left" size="1" width="75%" noshade></TD>
</TR>

<TR valign="bottom">
    <TD colspan="1" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="1" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Christopher G. Chavez</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="1" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="1" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">President</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated:

</FONT>


<DIV align="left"><FONT size="1">

</FONT></DIV>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Signature</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Title</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Date</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">/s/ Christopher G. Chavez
<HR size="1" noshade>
Christopher G. Chavez</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Chief Executive Officer, President and<br>
Director of Advanced Neuromodulation<br>Systems, Inc. (Principal Executive Officer)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">May&nbsp;22, 2003</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD valign="top"><FONT size="2">/s/ F. Robert Merrill III
<HR size="1" noshade>
F. Robert Merrill III</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Executive Vice President &#151; Finance,<br>Chief Financial Officer and Treasurer of <br>Advanced Neuromodulation Systems, Inc.<br>(Principal Financial and Accounting Officer)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">May&nbsp;22, 2003</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR>
    <TD valign="top"><FONT size="2">*
<HR size="1" noshade>
Hugh M. Morrison</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Chairman of the Board and Director of<br>
Advanced Neuromodulation Systems, Inc.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">May&nbsp;22, 2003</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2"><HR size="1" noshade>
Robert C. Eberhart</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Director of Advanced Neuromodulation<br>
Systems, Inc.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">May &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2003</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">*
<HR size="1" noshade>
Joseph E. Laptewicz, Jr.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Director of Advanced Neuromodulation<br>
Systems, Inc.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">May&nbsp;22, 2003</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">*
<HR size="1" noshade></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Director of Advanced Neuromodulation<br>Systems, Inc.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">May&nbsp;22, 2003</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">A. Ronald Lerner</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2"></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">*
<HR size="1" noshade>
Richard D. Nikolaev</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Director of Advanced Neuromodulation<br>
Systems, Inc.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">May&nbsp;22, 2003</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">*
<HR size="1" noshade>
Michael J. Torma</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Director of Advanced Neuromodulation<br>
Systems, Inc.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">May&nbsp;22, 2003</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="center"><FONT size="2">II-3</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<TABLE align="left" cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="84%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">*By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
/s/ F. Robert Merrill III</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<HR size="1" width="65%" align="left" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
F. Robert Merrill III</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Executive Vice President &#151; Finance,</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Chief Financial Officer and Treasurer</FONT></TD>
</TR>
</TABLE>

<br clear="all">

<P align="center"><FONT size="2">II-4</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>



<P align="center"><FONT size="2">INDEX TO EXHIBITS
</FONT>




<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="5"><FONT size="1"><B>Exhibit Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description of Exhibits</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2.1</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Agreement and Plan of Merger, dated as of November&nbsp;4, 2002,
by and among Advanced Neuromodulation Systems, Inc.,
MicroNet Acquisition, Inc., and MicroNet Medical, Inc.,
filed as an exhibit to the Company&#146;s Current Report on Form
8-K dated November&nbsp;26, 2002, and incorporated herein by
reference. Upon request, the Company will furnish a copy
of any omitted schedule, exhibit or annex to the
Commission.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
4.1</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Rights Agreement, dated as of August&nbsp;30, 1996, between
Advanced Neuromodulation Systems, Inc. (f/k/a Quest
Medical, Inc.) and KeyCorp Shareholder Services, Inc., as
Rights Agent, filed as an exhibit to the Company&#146;s Current
Report on Form&nbsp;8-K dated September&nbsp;3,1996, and incorporated
herein by reference.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
4.2</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Amendment to Rights Agreement, dated as of January&nbsp;25, 2002
between Advanced Neuromodulation Systems, Inc. and
Computershare Investor Services, LLC (formerly KeyCorp
Shareholder Services, Inc.) as Rights Agent, filed as an
exhibit to the Company&#146;s Current report on Form&nbsp;8-K dated
January&nbsp;30, 2002, and incorporated herein by reference.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
*5.1</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Opinion of Hughes &#038; Luce, LLP</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
*23.1</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Consent of Hughes &#038; Luce, LLP (included in Exhibit&nbsp;5.1)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
**23.2</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Consent of Ernst &#038; Young LLP</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
*24.1</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Power of Attorney</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">*</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Previously filed.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">**</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Filed herewith.</FONT></TD>
</TR>
</TABLE>


<P align="center"><FONT size="2">II-5</FONT>



</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>3
<FILENAME>d06262a2exv23w2.htm
<DESCRIPTION>EX-23.2 CONSENT OF ERNST & YOUNG LLP
<TEXT>
<HTML>
<HEAD>
<TITLE>exv23w2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P align="center"><FONT size="2"><B>EXHIBIT 23.2</B>
</FONT>




<P align="center"><FONT size="2"><B>CONSENT OF INDEPENDENT AUDITORS</B>
</FONT>




<P><FONT size="2">We consent to the reference to our firm under the caption &#147;Experts&#148; in the
Registration Statement on Form&nbsp;S-3 (333-104182) and related prospectus of
Advanced Neuromodulation Systems, Inc. for the registration of 75,000 shares of
its common stock and to the incorporation by reference therein of our report
dated March&nbsp;27, 2003, with respect to the consolidated financial statements and
schedule of Advanced Neuromodulation Systems, Inc. included in its Annual
Report on Form&nbsp;10-K/A for the year ended December&nbsp;31, 2002, filed with the
Securities and Exchange Commission.

</FONT>


<P align="center"><FONT size="2">/s/ Ernst &#038; Young LLP
</FONT>




<DIV align="left"><FONT size="1">

</FONT></DIV>
<P><FONT size="2">Dallas, Texas<BR>
May&nbsp;22, 2003
</FONT>
<DIV align="left"><FONT size="1">

</FONT></DIV>






<P align="center"><FONT size="2"></FONT>


</BODY>
</HTML>

</TEXT>
</DOCUMENT>
</SUBMISSION>
