UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM 10-QSB

(Mark One)
(X)      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
                  For the quarterly period ended: June 30, 2003

( )      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
                  For the transition period from __________ to __________


                         Commission File Number: 0-28260

                               EP MEDSYSTEMS, INC.
        (Exact name of small business issuer as specified in its charter)

                              New Jersey 22-3212190
                (State or other jurisdiction of         (I.R.S. Employer
               incorporation or organization)           Identification No.)

            575 Route 73 N. Building D, West Berlin, New Jersey 08091
               (Address of principal executive offices) (Zip Code)



                                 (856) 753-8533
                           (Issuer's telephone number)

Check  whether  the issuer (1) has filed all reports  required  to be filed by
Section 13 or 15(d) of the  Exchange Act during the past 12 months (or for such
shorter  period that the  registrant was required to file such reports), and (2)
been subject to such filing requirements for the past 90 days. X Yes ___No

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the  registrant  filed all  documents and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
 securities under a plan confirmed by a court. ___ Yes ___ No

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the  number of shares  outstanding  of each of the  issuer's  classes  of
common  equity,  as of the  latest practicable date:

 Class                                            Outstanding at August 1, 2003
 Common Stock, without par value                       18,544,490 shares

      Transitional Small Business Disclosure Format (check one): Yes__ No X

<PAGE>


                      EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                                   FORM 10-QSB
                                    CONTENTS
<TABLE>
<CAPTION>
<S>                                                                                                <C>
PART I -- FINANCIAL INFORMATION                                                                    Page
                                                                                                -----------

           Item 1.      Financial Statements.

                        Consolidated Balance Sheets at June 30, 2003
                        (unaudited) and December 31, 2002                                           3

                        Consolidated Statements of Operations for three months
                        ended June 30, 2003 and 2002 (unaudited)                                    4

                        Consolidated Statements of Operations for the six
                        months ended June 30, 2003 and 2002 (unaudited)                             5

                        Consolidated Statements of Changes in Shareholders' Equity for the
                        six months ended June 30, 2003 (unaudited)
                                                                                                    6

                        Consolidated Statements of Cash Flows for the six
                        months ended June 30, 2003 and 2002 (unaudited)                             7

                        Notes to Consolidated Financial Statements (unaudited)                      8

           Item 2.      Management's Discussion and Analysis or Plan of
                        Operation.                                                                  15


           Item 3.      Controls and Procedures.                                                    20

PART II -- OTHER INFORMATION

           Item 1.      Legal Proceedings.                                                          21

           Item 2.      Changes in Securities.                                                      21

           Item 3.      Defaults Upon Senior Securities.                                            21

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

           Item 5.      Other Information.                                                          21

           Item 6.      Exhibits and Reports on Form 8-K.                                           21

           Signatures                                                                               23

           Exhibit Index                                                                            24


</TABLE>

                                        2
<PAGE>
<TABLE>
<CAPTION>


                                                    PART I FINANCIAL INFORMATION

Item 1.  Financial Statements.

                                       EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                                            CONSOLIDATED BALANCE SHEETS
<S>                                                                                  <C>                     <C>
ASSETS                                                                         June 30, 2003           December 31,
                                                                                (unaudited)                2002
                                                                            --------------------     -----------------
Current assets:
   Cash and cash equivalents                                             $            1,834,844   $         2,012,809
   Accounts receivable, net of allowances for doubtful
      accounts of $98,600                                                             1,809,793             3,438,980
   Inventories, net of reserves                                                       2,219,835             2,037,100
   Prepaid expenses and other current assets                                            314,606               361,782
   Deferred tax asset, net of valuation allowance                                            --               438,000
                                                                            --------------------     -----------------
                                                                            --------------------     -----------------
          Total current assets                                                        6,179,078             8,288,671

Property, plant and equipment, net                                                    1,929,236             2,250,327
Intangible assets, net                                                                  352,378               358,282
Other assets                                                                             17,463                31,198
                                                                            --------------------     -----------------
          Total assets                                                   $            8,478,155  $         10,928,478
                                                                            ====================     =================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Promissory note payable                                                $                   --   $           995,585
  Current portion of notes payable                                                    2,700,000                    --
  Accounts payable                                                                    1,110,035             2,586,050
  Accrued expenses                                                                    1,145,780               623,681
  Deferred warranty revenue and prepaid rent income                                     128,308               223,245
                                                                            --------------------     -----------------
     Total current liabilities                                                        5,084,123             4,428,561

Accrued interest on long term debt - non-current                                             --               520,162
Deferred warranty revenue - non-current                                                 411,920               326,773
Notes payable                                                                                --             3,950,000
                                                                            --------------------     -----------------
          Total liabilities                                              $            5,496,043   $         9,225,496
                                                                            --------------------     -----------------
Commitments and contingencies                                                                --                    --
Shareholders' equity:
  Preferred stock, no par value, 5,000,000 shares
     authorized, 373,779 shares issued and outstanding at
     June 30, 2003 and December 31, 2002, respectively
                                                                                        618,161               618,161
  Common stock, $.001 stated value, 25,000,000 shares authorized,
     18,370,758 and 15,098,736 shares issued and outstanding at
     June 30, 2003 and December 31, 2002, respectively
                                                                                         18,370                15,099
  Additional paid-in capital                                                         37,601,548            32,372,087
  Accumulated other comprehensive (loss) income                                        (95,085)                   613
  Treasury stock                                                                      (100,000)                    --
  Receivable from officer                                                                    --             (100,000)
  Accumulated deficit                                                              (35,060,882)          (31,202,978)
                                                                            --------------------     -----------------
          Total shareholders' equity                                                  2,982,112             1,702,982
                                                                            --------------------     -----------------
          Total liabilities and shareholders' equity                     $            8,478,155  $         10,928,478
                                                                            ====================     =================
                          The accompanying notes are an integral part of this statement.
</TABLE>
                                       3
<PAGE>

<TABLE>
<CAPTION>

                                            EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                     (unaudited)

<S>                                                                             <C>                           <C>
                                                                                 For the Three Months Ended
                                                                              June 30,                 June 30,
                                                                                2003                      2002
                                                                        ---------------------      -------------------
                                                                        ---------------------      -------------------

Net sales                                                            $             2,338,432    $           3,095,109
Cost of products sold                                                              1,102,613                1,302,737
                                                                        ---------------------      -------------------
                                                                        ---------------------      -------------------
   Gross profit                                                                    1,235,819                1,792,372

Operating costs and expenses:
Sales and marketing expenses                                                       1,287,956                1,085,210
General and administrative expenses                                                  549,155                  461,476
Research and development expenses                                                    590,804                  832,265
Mortgage conversion expense                                                          222,084                       --
                                                                        ---------------------      -------------------
   Loss from operations                                                          (1,414,180)                (586,579)

Interest expense, net                                                               (53,894)                 (52,680)
Other income, net                                                                        --                    5,194
                                                                        ---------------------      -------------------
                                                                        ---------------------      -------------------
   Net loss                                                          $           (1,468,074)    $           (634,065)
                                                                        ====================      ===================
                                                                        ====================      ===================

Basic and diluted loss per share                                     $                (0.08)    $              (0.04)
                                                                        ====================      ===================
                                                                        ====================      ===================

Weighted average shares outstanding used
to compute basic and diluted loss per share                                       18,160,652               14,838,377
                                                                        =====================      ===================



                         The accompanying notes are an integral part of these statements.

</TABLE>
                                       4
<PAGE>


                                       EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                                    (unaudited)
<TABLE>
<CAPTION>
<S>                                                                                <C>                      <C>


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

Net sales                                                            $             4,628,948    $           6,084,084
Cost of products sold                                                              2,264,714                2,527,926
                                                                        ---------------------      -------------------
                                                                        ---------------------      -------------------
   Gross profit                                                                    2,364,234                3,556,158

Operating costs and expenses:
Sales and marketing expenses                                                       2,605,842                2,193,456
General and administrative expenses                                                1,092,391                1,038,698
Research and development expenses                                                  1,184,062                1,557,912
Mortgage conversion expense                                                          222,084                       --
                                                                        ---------------------      -------------------
   Loss from operations                                                          (2,740,145)              (1,233,908)

Interest expense, net                                                              (117,759)                (107,144)
Interest expense, debt conversion                                                (1,000,000)                     --
                                                                        ---------------------      -------------------
Other income, net                                                                        --                    5,370
                                                                        ---------------------      -------------------
                                                                        ---------------------      -------------------
   Net loss                                                          $           (3,857,904)    $         (1,335,682)
                                                                        ====================      ===================
                                                                        ====================      ===================

Basic and diluted loss per share                                     $                (0.22)    $              (0.09)
                                                                        ====================      ===================
                                                                        ====================      ===================

Weighted average shares outstanding used
to compute basic and diluted loss per share                                       17,398,394               14,673,804
                                                                        =====================      ===================


                         The accompanying notes are an integral part of these statements.

</TABLE>
                                       5
<PAGE>

<TABLE>
<CAPTION>





                                       EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                      FOR THE SIX MONTHS ENDED JUNE 30, 2003
                                                    (unaudited)
<S>                              <C>       <C>      <C>       <C>       <C>         <C>           <C>             <C>         <C>


                                                                              Accumulated   Receivable
                                                                               Other        from
                           Common    Common   Preferred Preferred Additional   Comp-        Officer/
                           Stock      Stock   Stock     Stock       Paid-in    rehensive    Treasury      Accumulated
                           Shares    Amount   Shares    Amount      Capital    Income       Stock           Deficit        Total
                         ---------- -------- --------- --------- ------------ ------------ ------------ --------------- -----------

Balance, December 31,
2002                     15,098,736  $15,099   373,779  $618,161  $32,372,087         $613   $(100,000)  $ (31,202,978)  $1,702,982
                         ----------- -------- --------- --------- ------------ ------------ ------------ --------------- -----------

Issuance of common
stock in connection
with joint development
contract, net of
offering costs              669,313      669        --        --      984,317           --           --              --     984,986

Issuance of common
stock in private
placement including
conversion of
promissory note, net of
offering costs            2,007,475    2,007        --        --    2,071,155           --           --              --   2,073,162

Conversion of
convertible promissory
bridge notes,
beneficial conversion
feature                          --      --         --        --           --    1,000,000           --              --    1,000,000

Foreign currency
translation                      --       --        --        --           --     (95,968)           --              --    (95,698)


Issuance of common                                                                                                          202,500
stock in private
placement, net of
offering costs              120,000      120        --        --      202,380           --           --              --

Issuance of common                                                                                                          972,084
stock in connection
with conversion of
mortgage to equity
including non-cash debt
conversion costs of
$222,084                    475,234      475        --        --      971,609           --           --              --

Net Loss                         --       --        --        --           --           --           --     (3,857,904)  (3,857,904)
                         ----------- -------- --------- --------- ------------ ------------ ------------ --------------- -----------

Balance, June 30, 2003   18,370,758   $18,370   373,779  $618,161  $37,601,548  $(95,085)    $(100,000)   $(35,060,882)   $2,982,112
                         =========== ======== ========= ========= ============ ============ ============ =============== ===========


</TABLE>



        The accompanying notes are an integral part of these statements.
                                       6
<PAGE>
<TABLE>
<CAPTION>


                                       EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (unaudited)
<S>                                                                                 <C>                    <C>
                                                                                    For the Six Months Ended
                                                                                June 30,                June 30,
                                                                                  2003                    2002
                                                                            ------------------      ------------------
                                                                            ------------------      ------------------
Cash flows from operating activities:
Net loss                                                               $          (3,857,904)    $        (1,335,682)
Adjustments to reconcile net loss to net cash used in operating
activities:
  Depreciation and amortization                                                       380,235                 344,828
  Interest expense. debt conversion                                                 1,000,000                      --
  Mortgage conversion expense                                                         222,084                      --
  Compensation expense related to employee agreement                                       --                  27,000
Changes in assets and liabilities:
  Decrease in accounts receivable                                                   1,629,187                 739,192
  Increase in inventories                                                           (148,499)               (301,502)
  Decrease (increase) in prepaid expenses and other current assets                     47,176               (115,839)
  Decrease in deferred tax asset                                                      438,000                 474,688
  Decrease (increase) in other assets                                                  13,735                 (5,437)
  Decrease (increase) in accounts payable                                         (1,476,015)                 121,972
  Decrease in accrued expenses, deferred revenue, and accrued
    interest                                                                          (7,877)               (138,218)
                                                                            ------------------      ------------------
                                                                            ------------------      ------------------
          Net cash used in operating activities                        $          (1,759,878)    $          (188,998)
                                                                            ------------------      ------------------
                                                                            ------------------      ------------------

Cash flows from investing activities:
  Capital expenditures                                                               (80,936)                (94,290)
  Patent costs                                                                        (6,540)                 (7,311)
                                                                            ------------------      ------------------
                                                                            ------------------      ------------------
         Net cash used in investing activities                         $             (87,476)    $          (101,601)
                                                                            ------------------      ------------------
                                                                            ------------------      ------------------

Cash flows from financing activities:
   Payments under term notes payable                                                (500,000)               (436,111)
   Proceeds from issuance of common stock, net of offering expenses
                                                                                    2,265,087                       -
                                                                            ------------------      ------------------
                                                                            ------------------      ------------------
      Net cash provided by (used in) financing activities              $            1,765,087    $          (436,111)
                                                                            ------------------      ------------------
                                                                            ------------------      ------------------

Effect of exchange rate changes                                                      (95,698)                 (5,851)
                                                                            ------------------      ------------------

Net decrease in cash and cash equivalents                                           (177,965)               (732,561)
Cash and cash equivalents, beginning of period                                      2,012,809               2,343,303
                                                                            ------------------      ------------------
Cash and cash equivalents, end of period                               $            1,834,844    $          1,610,742
                                                                            ==================      ==================
                                                                            -=================      ==================

</TABLE>

        The accompanying notes are an integral part of these statements.

                                       7
<PAGE>


                      EP MEDSYSTEMS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 1. Basis of Presentation

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance  with  generally  accepted  accounting  principles in the
United  States for interim  financial  information  and in  accordance  with the
instructions  to  Form  10-QSB.  Accordingly,  they  do not  include  all of the
financial  information and footnotes required by generally  accepted  accounting
principles for complete financial statements. In the opinion of management,  all
adjustments (including normal recurring adjustments)  considered necessary for a
fair presentation have been included.

     The  preparation  of financial  statements  in  conformity  with  generally
accepted accounting  principles in the United States requires management to make
estimates  and  assumptions  that affect the amounts  reported in the  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

     The  results of  operations  for the  respective  interim  periods  are not
necessarily  indicative  of the  results to be expected  for the full year.  The
accompanying  unaudited  consolidated  financial  statements  should  be read in
conjunction  with the audited  consolidated  financial  statements and the notes
thereto  included in EP MedSystems,  Inc.'s (the "Company" or "EP  MedSystems")
Annual Report on Form 10-KSB for the year ended December 31, 2002 filed with the
Securities and Exchange Commission (the "SEC" or the "Commission").

Note 2. Inventories

     Inventories  are  valued  at the lower of cost or  market  with cost  being
determined on a first-in,  first-out basis. Inventories at June 30, 2003 consist
of the following:

           Raw materials                    $      1,059,254
           Work in process                           590,937
           Finished goods                            705,344
           Reserve for obsolescence                (135,700)
                                                -------------
                                            $      2,219,835
                                                =============


Note 3. Notes Payable

     The Company has  outstanding a $2.7 million note payable to Medtronic Asset
Management,  Inc.,  an affiliate of  Medtronic,  Inc.  ("Medtronic"),  one of EP
MedSystems' shareholders. On March 12, 2003, Medtronic agreed to an extension of
the due date of this Note from November 15, 2003 to April 1, 2004. In connection
with that  extension,  the Company agreed to increase the interest rate by 1% to
the prime rate plus 3% per annum and to prepay up to $1 million of the principal
amount of the note, contingent upon receipt of certain equity proceeds. The note
is collateralized by a pledge by David Jenkins, the Chairman of the Board of the
Company, of shares of common stock of a privately-held corporation owned by him.
                                       8
<PAGE>

     On November 21, 2002,  the Company  entered into a mortgage on its facility
in West  Berlin,  New Jersey and  received  $750,000  in  exchange  for  issuing
promissory notes for that aggregate amount.  Interest on the promissory notes is
payable quarterly at 8% per annum and the promissory notes are collateralized by
the building.  The  promissory  notes are  convertible  into common stock of the
Company,  at the option of the holder of the  promissory  notes over their three
-year term, as follows:

 -   November 21, 2002 through December 31, 2003 convertible at $2.14 per share
 -   January 1, 2004 through December 31, 2004 convertible at $2.50 per share
 -   January 1, 2005 through December 31, 2005 convertible at $3.00 per share

     On April 2, 2003,  the holders of the  mortgage  notes which are secured by
the $750,000  mortgage on EP MedSystems'  facility in West Berlin,  converted an
aggregate of $375,000 of the mortgage  notes into 300,000 shares of common stock
of EP MedSystems.  In connection  with the  conversion,  the Company reduced the
conversion price from $2.14 per share to $1.25 per share,  which resulted in the
recording of a non-cash  mortgage  conversion  charge of  $222,084.  On June 30,
2003,  the holders of the  mortgage  notes  converted  the final  portion of the
mortgage  notes into 175,234  shares of common  stock at a  conversion  price of
$2.14 as stated in the agreement.

     On December 30, 2002,  the Company  issued  convertible  promissory  bridge
notes,  in  an  aggregate  amount  of  $1,000,000,  to  EGS  Private  Healthcare
Partnership  L.P.  and  EGS  Private  Healthcare   Counterpart  L.P.  (the  "EGS
Entities").  The maturity date of those  promissory notes was June 30, 2003, and
interest  accrued at 10% per annum,  payable upon maturity.  In connection  with
that  financing,  the Company issued warrants to the EGS Entities to purchase an
aggregate  of 50,000  shares of the common  stock of the  Company at 105% of the
closing  trading  price of its common stock on December 30, 2002. On January 31,
2003,  the  Company  issued  common  stock in a private  placement.  The  entire
principal  amount of the  promissory  notes  issued to the EGS  Entities and all
accrued and unpaid interest thereon were converted into 819,783 shares of common
stock and warrants to purchase 327,913 shares of the common stock of the Company
in and on the same  terms  as the  private  placement.  In  connection  with the
conversion, the warrants to purchase 50,000 shares of common stock issued to the
EGS  Entities on December  30, 2002 were  cancelled  and the Company  recorded a
$1,000,000 non-cash charge in connection with the conversion.  The charge is for
interest expense in connection with the conversion of the convertible promissory
bridge  notes as a result of  certain  beneficial  conversion  features  and the
intrinsic value of embedded  conversion  options within the promissory  notes. A
managing  member of the EGS  Entities is also a member of the Board of Directors
of the Company.

     EP  MedSystems  entered into a financing  arrangement  with a bank in March
1999,  consisting of a $2,000,000  revolving  line of credit and a $500,000 term
loan,  collateralized by EP MedSystems'  facility in West Berlin, New Jersey and
the machinery,  equipment and inventory  located at the facility.  EP MedSystems
borrowed approximately  $2,000,000 under the revolving line of credit, which was
subsequently  repaid with the proceeds of the Medtronic  note payable  discussed
above. The related term loan was repaid in March 2002.
                                       9
<PAGE>

Note 4. Shareholder's Equity

Preferred Stock

     On October  23,  2001,  EP  MedSystems  consummated  the  private  sale and
issuance of newly-designated  Series A convertible preferred stock to Medtronic,
a shareholder and creditor of EP MedSystems,  and Century Medical, Inc. ("CMI"),
EP MedSystems' Japanese distributor.  An aggregate of 1,259,717 preferred shares
were issued in those  transactions.  On December 31, 2001,  each preferred share
became  convertible into one share of EP MedSystems  common stock, at the option
of the  holder.  The  transaction  with CMI  involved  the sale of the shares of
preferred  stock at a price of $2.048 per share,  as well as an  amendment to EP
MedSystems'  Distribution  Agreement  with CMI. The  transaction  with Medtronic
involved  the sale of  preferred  stock  at a price  of  $1.781  per  share.  EP
MedSystems  received  aggregate  gross  proceeds  of  $2,400,000  from those two
transactions.  The preferred stock is recorded in shareholders'  equity,  net of
issuance  costs.  In the first quarter of 2002, CMI converted all of its 585,938
shares of  preferred  stock  into an equal  number  of shares of EP  MedSystems'
common stock. In the second quarter of 2002,  Medtronic converted 300,000 of its
shares of preferred  stock into an equal number of EP MedSystems'  common stock.
The  remaining   373,779  preferred  shares  held  by  Medtronic  are  currently
convertible into 387,946 common shares of the Company.

Common Stock

     On September 5, 2002, EP MedSystems entered into a stock purchase agreement
and license agreement with Boston Scientific  Corporation  ("BSC") in connection
with a strategic joint development  project.  The agreement  provides that if EP
MedSystems  abandons the project without cause, an abandonment fee of $1 million
in cash or EP MedSystems stock would be payable to BSC. Following the completion
of the  development,  EP MedSystems will have marketing rights to the technology
and pay royalties to BSC based on the market value of the technology at the time
of sale.  The stock  purchase  agreement  with BSC  allows for the sale of up to
$3,000,000 of common stock based on the achievement by the Company of milestones
in the development of certain cardiac electrophysiology  technology.  The common
stock is sold at the lesser of the ten-day  trailing  average  trading price per
share prior to the closing of each  installment  purchase,  and $5.00 per share.
Upon  signing of the  agreement,  EP  MedSystems  received  $500,000 for 210,084
shares issued at the ten-day  trailing average trading price of $2.38 per share.
On  February 4, 2003,  the  Company  issued  311,915  shares of common  stock in
exchange for $500,000.  These shares were  registered  for resale on Form S-3 on
April 2, 2003. On April 21, 2003,  the Company  issued  357,398 shares of common
stock in exchange for another payment of $500,000.  Subsequent to the end of the
second  quarter,  the Company  issued 173,732 shares of common stock in exchange
for another payment of $500,000.

     On January 31, 2003, the Company  completed a $2,470,000  private placement
of its  common  stock  to  various  accredited  investors.  The  Company  issued
2,007,475 shares of its common stock for a purchase price of $1.23 per share and
warrants to purchase  802,990  shares of common  stock at an exercise  price per
share  of 110% of the  closing  trading  price on the  date of  closing  of that
transaction,  or  $1.6943.  In  the  private  placement,  the  Company  received
approximately  $1,570,000  in cash,  net of offering  costs.  The balance of the
private placement included the conversion of the entire principal amount of, and
accrued  interest on, the  promissory  notes from the EGS  Entities  into common
stock of the Company and the  securities  issued in that private  placement were
issued on the same  terms and  conditions  as those of the other  investors.  In
connection with that conversion,  the 50,000 warrants issued to the EGS Entities
on  December  30, 2002 were  cancelled  and the  Company  recorded a  $1,000,000
non-cash charge in connection  with the  conversion.  The charge is for interest
conversion expense associated with certain  beneficial  conversion  features and
the intrinsic value of embedded  conversion options within the promissory notes.
With  prior  notice  to  the  holders  of  the  warrants,  the  warrants  may be
repurchased  by the  Company at $.01 per  warrant at any time after the  average
closing price of the Company's common stock, for any twenty consecutive  trading
days, has equaled or exceeded $2.54. Subsequent to the end of the second quarter
the closing price requirement for repurchase of the warrants was met, and notice
to  repurchase  the warrants was given to the warrant  holders by the Company on
July 23, 2003.
                                       10
<PAGE>

     On April 4, 2003,  the  principal  amount of,  and all  accrued  and unpaid
interest  on, the note  receivable  from a Company  officer  were repaid by that
officer  through  return to treasury of the 50,000 shares of common stock to the
Company which collateralized that loan. The market price of the Company's common
stock on the date of such  return was $2.08.  The  shares  are  recorded  on the
balance sheet under the caption "Treasury stock."

     On April 11, 2003, the Company  completed a $210,000  private  placement of
its common stock with various accredited  investors.  The Company issued 120,000
shares of its common stock for a purchase price of $1.75 per share.

Note 5. Sale of State Net Operating Losses

     During the six months ended June 30, 2003 and 2002, EP MedSystems  received
approximately $438,000 and $475,000, respectively, from the sale of a portion of
its  cumulative  unused  New  Jersey  State Net  Operating  Loss  ("State  NOL")
carryforwards  for its statutory  subsidiaries.  The sales of the cumulative net
operating  losses are a result of a New Jersey State law enacted January 1, 1999
allowing emerging  technology and biotechnology  companies to transfer or "sell"
their unused State NOL carryforwards and New Jersey research and development tax
credits to any  profitable  New Jersey  company  qualified to purchase  them for
cash. As of December 31, 2002 and 2001, EP MedSystems had recorded approximately
$438,000 and  $475,000,  respectively,  in deferred tax assets  related to these
sales.  These  deferred tax assets were  realized  upon receipt of cash from the
sales of these  benefits to third  parties in the six months ended June 30, 2003
and 2002.

Note 6. Industry Segment and Geographic Information

     EP MedSystems  manages its business  based on one reportable  segment,  the
manufacture and sale of cardiac electrophysiology products. EP MedSystems' chief
operating  decision-makers  use  consolidated  results  to  make  operating  and
strategic decisions.

     The following table sets forth product sales by geographic  segment for the
six months ended June 30, 2003 and 2002.

                                                  For The Six Months
                                                     Ended June 30,
                                              2003                  2002
United States                               $2,756,000            $3,705,000
Europe/Middle East                           1,235,000             1,309,000
Asia and Pacific Rim                           638,000             1,070,000

                                            $4,629,000            $6,084,000
                                       11
<PAGE>

     Sales of EP  MedSystems'  cardiac  electrophysiology  equipment and related
catheters aggregated approximately $4,081,000 and $548,000 respectively, for the
six months ended June 30, 2003, and $5,487,000 and $597,000,  respectively,  for
the comparable  period in 2002. EP MedSystems'  long-lived  assets are primarily
located in the U.S.

     Net sales for the  three  months  ended  June 30,  2003 were  billed in two
currencies:  $4,483,000 in U.S. dollars and the equivalent of $146,000 in Euros.
Management  has  determined  the impact of foreign  currency risk on sales to be
minimal since a majority of sales are billed in U.S. dollars. EP MedSystems does
incur  translation  gains/losses,  which are recorded in  shareholders'  equity.
Cumulative  translation losses amounted to approximately  $96,000 as of June 30,
2003. EP MedSystems  had not entered into any derivative  financial  instruments
for hedging or other purposes.

Note 7. Net Loss Per Share

     Basic net loss per share is computed using the  weighted-average  number of
shares of common stock  outstanding  for the period.  Due to the losses incurred
for the quarter,  diluted net loss per share does not differ from basic net loss
per share,  since potential shares of common stock issuable upon the exercise of
stock options, warrants,  convertible preferred shares, and convertible debt are
anti-dilutive for all periods presented. Accordingly, potential common shares of
approximately 4,062,000 and 3,054,000 for the six months ended June 30, 2003 and
2002, respectively, have been excluded from the diluted per share calculation.

Note 8. Comprehensive Income

     For the three and six months ended June 30, 2003 and 2002,  EP  MedSystems'
comprehensive   loss   approximated  net  loss,   except  for  foreign  currency
translation  adjustments.  The  comprehensive  losses for the three months ended
June 30, 2003 and 2002 were approximately $1,537,000 and $584,000, respectively.
The  comprehensive  losses for the six months ended June 30, 2003 and 2002, were
approximately $3,954,000 and $1,342,000, respectively.

Note 9. Stock Based Compensation

     EP  MedSystems   accounts  for  stock  options  granted  to  employees  and
non-employee directors in accordance with the "intrinsic value" method set forth
in Accounting  Principles  Board Opinion No. 25 ("APB No. 25"),  "Accounting for
Stock Issued to Employees",  with  supplemental  pro forma  disclosures of "fair
value" as required by Statement of Financial Accounting Standards No. 123 ("SFAS
No.123"), "Accounting for Stock Based Compensation."

     EP MedSystems  records the fair value of stock  issuances to  non-employees
based  on  the  market  price  on the  date  issued.  The  amount  is  expensed,
capitalized  or recorded as a reduction  of paid-in  capital,  depending  on the
purpose for which the stock is issued,  based upon SFAS No. 148  "Accounting For
Stock-Based   Compensation-Transition   and  Disclosure-an   Amendment  to  FASB
Statement  No.  123",  and the fair value is  measured  using the  Black-Scholes
option  pricing  model under SFAS No. 123. EP  MedSystems  has not issued  stock
options to non-employees for any of the periods presented.
                                       12
<PAGE>

     The  following  disclosure  complies  with the  adoption  of SFAS No.  123,
amended by SFAS No. 148 and  includes  proforma  net loss as if fair value based
method of accounting had been used.

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

                                                                                           For the Three
                                                  For the Six Months             Months Ended
                                                   Ended June 30,                               June 30,
                                               2003               2002                  2003              2002

   Net loss, as reported                      $(3,857,904)      $(1,335,682)          $(1,468,074)        $(634,065)

Add:  Stock-based employee
compensation expense included in
reported net income
                                                        --                --                    --                --

Deduct:  Total stock-based
employee compensation expense
determined under fair value based
method for all options

                                                 (214,930)          (91,974)             (107,465)          (91,064)
                                        ------------------- -----------------
                                                                                  ----------------- -----------------

Pro forma net loss                           $(4,072,834)      $(1,427,656)          $(1,575,539)        $(725,129)
                                        =================== =================     ================= =================
                                                                                  ================= =================

Earnings per share:
    Basic and diluted - as
    reported                                       $(0.22)           $(0.09)               $(0.08)           $(0.04)
                                        ------------------- -----------------     ----------------- -----------------
    Basic and diluted - pro
    forma                                          $(0.23)           $(0.10)               $(0.09)           $(0.05)
                                        ------------------- -----------------     ----------------- -----------------

</TABLE>

Note 10. Recently Issued Accounting Standards

     In August 2001, the FASB issued Statement of Financial Accounting Standards
No. 143 ("SFAS No. 143"),  "Accounting for Asset Retirement  Obligations."  This
standard  requires that  obligations  associated with the retirement of tangible
long-lived  assets  be  recorded  as  liabilities  when  those  obligations  are
incurred,  with the amount of the  liability  initially  measured at fair value.
Upon initially  recognizing a liability for an asset retirement  obligation,  an
entity must  capitalize  the cost by  recognizing  an  increase in the  carrying
amount of the related long-lived asset. Over time, this liability is accreted to
its present value,  and the capitalized cost is depreciated over the useful life
of the related asset. Upon settlement of the liability, an entity either settles
the obligation for its recorded amount or incurs a gain or loss upon settlement.
SFAS No. 143 is  effective  for  financial  statements  issued for fiscal  years
beginning  after June 15, 2002. EP MedSystems  adopted this statement on January
1, 2003.  The  adoption  had no impact on its results of  operations,  financial
position or cash flows.
                                       13
<PAGE>

     On April 30,  2002,  the FASB  issued  Statement  of  Financial  Accounting
Standards No. 145 ("SFAS No. 145"),  "Rescission  of FASB  Statements No. 4, 44,
64,  Amendment  of  FASB  No.  13 and  Technical  Corrections".  This  statement
eliminates the requirement that gains and losses from the extinguishment of debt
be aggregated and classified as an extraordinary item, net of the related income
tax. In addition,  SFAS No.145 requires that capital leases that are modified so
that the  resulting  lease  agreement is  classified  as an  operating  lease be
accounted for in the same manner as sale-lease back  transactions.  SFAS No. 145
is  generally  effective  for  transactions  occurring  after May 15,  2002.  EP
MedSystems  adopted this standard.  The adoption had no impact on its results of
its operations, financial position or cash flows.

     On July 30,  2002,  the  FASB  issued  Statement  of  Financial  Accounting
Standards No. 146 ("SFAS No. 146"),  "Accounting for Costs  Associated with Exit
or Disposal  Activities."  This  statement  requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability is
incurred. SFAS No. 146 also establishes that fair value is the objective for the
initial measurement of the liability. SFAS No. 146 will be effective for exit or
disposal  activities  that are initiated  after December 31, 2002. EP MedSystems
adopted  this  standard on January 1, 2003.  The  adoption  had no impact on its
results of its operations, financial position or cash flows.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation  - Transition  and  Disclosure - an amendment of FASB Statement No.
123." This standard  provides  alternate  methods of transition  for a voluntary
change  to  the  fair  value  method  of  accounting  for  stock-based  employee
compensation and requires more prominent  disclosure about the method used. This
statement is effective for fiscal years ending after  December 15, 2002.  For EP
MedSystems,  this means it is effective  for  December  31,  2002.  Currently EP
MedSystems applies the disclosure-only  provisions of SFAS No. 123,  "Accounting
for  Stock-Based  Compensation"  and we do not  expense our stock  options.  The
adoption  of the  disclosure  provisions  of SFAS No.  148 had no  impact  on EP
MedSystems' results of operations, financial position or cash flows.

     In  November  2002,  the FASB issued FASB  Interpretation  No.  ("FIN") 45,
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees of  Indebtedness of Others." FIN 45 requires that an entity
issuing a guarantee  (including those embedded in a purchase or sales agreement)
must recognize, at the inception of the guarantee, a liability equal to the fair
value of the guarantee.  FIN 45 also requires  detailed  information  about each
guarantee or group of guarantees  even if the  likelihood of making a payment is
remote.  The disclosure  requirements of this  interpretation  are effective for
financial statements of periods ending after December 15, 2002, which makes them
effective  for  EP  MedSystems  for  December  31,  2002.  The  recognition  and
measurement  provisions of this  Interpretation  are applicable on a prospective
basis to guarantees  issued or modified  after  December 31, 2002. EP MedSystems
adopted  this  standard  on January 1, 2003.  FIN 45 could have an impact on the
future results of the Company,  depending on guarantees issued; however, at this
time the  adoption of FIN 45 has not had an impact on our results of  operation,
financial position or cash flows.

     In  January  2003,  the FASB  issued  FIN 46,  "Consolidation  of  Variable
Interest Entities -- an Interpretation of Accounting Research Bulletin (ARB) No.
51." FIN 46 requires the primary  beneficiary to consolidate a variable interest
entity ("VIE") if it has a variable  interest that will absorb a majority of the
entity's  expected  losses if they  occur,  receive a majority  of the  entity's
expected residual returns if they occur, or both. FIN 46 applies  immediately to
VIEs created after January 31, 2003,  and to VIEs in which the entity obtains an
interest  after  that date.  For VIEs  acquired  before  February  1, 2003,  the
effective  date for EP MedSystems  is July 1, 2003.  The Company does not expect
FIN 46 will have a  material  impact on our  results  of  operations,  financial
position, or cash flows.
                                       14
<PAGE>

Note 11. Subsequent Event

     Subsequent to the end of the quarter, the Company issued 173,732 shares of
common  stock  for a payment  of  $500,000  in  connection  with the  previously
discussed joint development project with Boston Scientific Corporation.

Item 2.  Management's Discussion and Analysis or Plan of Operation.


Overview.

     EP  MedSystems  was  incorporated  in January 1993 and operates in a single
industry segment.  We develop,  manufacture,  market and sell a line of products
for the cardiac  electrophysiology  market used to  diagnose,  monitor and treat
irregular heartbeats known as arrhythmias.  Since EP MedSystems'  inception,  we
have acquired  technology and marketing rights,  have developed new products and
have  begun  marketing  various   electrophysiology   products,   including  the
EP-WorkMate(R)   computerized   electrophysiology   workstation,   the  EP-3(TM)
Stimulator,  diagnostic  electrophysiology  catheters  and the ALERT(R)  System,
including the ALERT(R) Companion and ALERT(R) internal  cardioversion  catheters
and related disposable  supplies.  To date, these products have generated nearly
all of EP MedSystems' sales.

     EP  MedSystems'  leading  diagnostic  product  is  the  EP-WorkMate(R),   a
computerized  electrophysiology  workstation that monitors,  displays and stores
cardiac  electrical  activity and arrhythmia  data. The  EP-WorkMate(R)  offers,
among other  features,  display and storage of up to 192  intracardiac  signals,
real-time analysis and integration with our own proprietary systems, such as the
EP-3(TM)  Stimulator,  as well as  with  other  technologies  and  systems.  The
EP-3(TM) Stimulator is a computerized signal generator and processor which, when
integrated  with  the  EP-WorkMate(R),  is  used to  stimulate  the  heart  with
electrical impulses in order to produce, and thereby locate, an arrhythmia.  For
the six months ended June 30, 2003, the EP-WorkMate(R)  and EP-3(TM)  Stimulator
accounted for  approximately  88% of total sales.  EP MedSystems  also markets a
line of diagnostic  electrophysiology  catheters for  stimulation and sensing of
electrical   signals  during   electrophysiology   studies,   which  represented
approximately 5% of EP MedSystems' total sales revenues for the six months ended
June 30, 2003.

     We have  identified the diagnosis and treatment of atrial  fibrillation,  a
particular  type of arrhythmia,  as a primary focus for our ongoing  development
efforts. Atrial fibrillation is a condition where erratic electrical signals are
present within the atria, the upper chambers of the heart,  causing fibrillation
of the atria,  which  prevents the atria from providing  appropriate  blood flow
output.  In an effort to address this  medical  condition,  we have  developed a
product for internal  cardioversion of atrial fibrillation known as the ALERT(R)
System, which uses a patented electrode catheter to deliver measured, low-energy
bi-phasic  electrical  impulses  directly  to the inside of the heart to convert
atrial  fibrillation to a normal heart rhythm. We have obtained Class III Design
Examination Certification from a European Notified Body allowing us to label the
ALERT(R) System with a CE Mark, an international  symbol of adherence to quality
assurance  standards,  design reviews and hazard  analysis,  which permits us to
sell the  ALERT(R)  System in the  European  Community.  In  November  2002,  we
received  pre-market  approval  from the FDA to sell the ALERT(R)  System in the
United States.  Sales of the ALERT(R) System and related catheters accounted for
approximately  7% of EP  MedSystems'  total  sales  revenues  for the six months
ending June 30, 2003.
                                       15
<PAGE>

     We have also developed the  ViewMate(R)  intracardiac  ultrasound  catheter
system  consisting of ViewMate(R)  ultrasound  imaging console and  Viewflex(TM)
intracardiac imaging catheters. These products offer high-resolution,  real-time
ultrasound  capability  designed to improve a physician's or clinician's ability
to  visualize  the  inside of the  chambers  of the heart.  We believe  that the
ViewMate(R)  ultrasound  system may play an important  diagnostic  role allowing
more  effective  treatment of complex  cardiac  arrhythmias  such as ventricular
tachyarrhythmia and atrial  fibrillation.  We filed for CE Mark authorization in
January  2003 and filed for  510(K)  approval  to sell the  system in the United
States on April 2, 2003. On May 1, 2003, the Company received  approval from the
European  Notified  Body  allowing  the  sale  of the  system  in  the  European
Community.  We do not  anticipate  receiving  approval  to sell the  ViewMate(R)
ultrasound  system in the United  States  until the third  quarter  of 2003,  if
approved at all.

     EP MedSystems  has a history of operating  losses and we expect to continue
to  incur  operating  losses  in  the  near  future  as we  continue  to  expend
substantial  funds for research and  development,  clinical trials in support of
regulatory approvals,  increased  manufacturing  activity and expansion of sales
and  marketing  activities.  The  amount  and  timing of future  losses  will be
dependent upon,  among other things,  increased sales of our existing  products,
the timing of regulatory  approval and market  acceptance of the ALERT(R) System
and  ultrasound  products,  developmental,  regulatory and market success of new
products under development,  and EP MedSystems'  ability to establish,  preserve
and  enforce  intellectual  property  rights  to its  products.  There can be no
assurance  that any of our  development  projects will be successful or that, if
development is successful, the products will generate any sales.

Six Months Ended June 30, 2003 and 2002.

     The Company had net sales of  $4,629,000  for the six months ended June 30,
2003 as  compared  to  $6,084,000  for  the  comparable  period  in  2002.  This
$1,455,000  (or 24%)  decrease was  primarily due to a slower first quarter than
expected in the U.S. The second  quarter  revenue was impacted by lower sales in
Asia,  excluding  Japan,  due to the impact of SARS on medical  spending in that
region.

     Gross profit on sales for the six months ended June 30, 2003 was $2,364,000
as  compared  with  $3,556,000  for the same period in 2002.  Gross  profit as a
percentage of sales decreased from 58% to 51%, primarily the result of the above
mentioned  decrease in sales and a higher percentage of sales outside the United
States  where  overall  margins  are lower.  We  anticipate  improvement  in the
Company's overall gross profit  percentage as sales of the ALERT(R) System,  the
ViewMate(R) System and other catheter products increase, which should offset the
fixed costs associated with maintaining a catheter manufacturing operation.
                                       16
<PAGE>

     Sales and marketing  expenses increased $412,000 or (19%) to $2,606,000 for
the six months ended June 30, 2003 as compared to the same period in 2002.  This
increase was primarily  related to an increase in head count in connection  with
the rollout of new products,  partially  offset by lower  variable  selling cost
with lower overall sales in 2003.

     General and administrative expenses increased $54,000 (or 5%) to $1,092,000
for the six months  ended June 30,  2003 as  compared  to the same  period in of
2002. This increase in general and administrative  expenses was primarily due to
an increase in business  insurance and legal and accounting  services  partially
offset  by a  higher  foreign  exchange  gain in  2003  versus  2002  due to the
strengthening of the Euro against the dollar,  coupled with the favorable impact
of the consolidation of our executive offices with our manufacturing facility.

     Research and development expenses decreased $374,000 (or 24%) to $1,184,000
for the six months  ended June 30,  2003 as compared to the same period in 2002.
This decrease was primarily due to decreases in (i) professional fees related to
our latest  development  initiatives  around the  ALERT(R)  System,  ViewMate(R)
ultrasound  imaging console and  intracardiac  imaging  catheters and (ii) costs
related to regulatory and submission requirements.

     Interest  expense  increased  $11,000 to $118,000  for the six months ended
June 30,  2003 as  compared to the same  period in 2002.  This  increase  can be
attributed  to the fact that,  while the overall  interest rate was lower during
the period, the amount of debt increased.

     For the six months ended June 30, 2003, EP  MedSystems  recorded a non-cash
interest  expense,  debt  conversion  in connection  with the  conversion of the
$1,000,000 convertible promissory bridge notes which converted into common stock
of the Company on January 31, 2003.

Three Months Ended June 30, 2003.

     The Company had net sales of $2,338,000 for the three months ended June 30,
2003, as compared to $3,095,000 for the comparable period in 2002. This $757,000
(or 25%)  decrease  was  primarily  a result  of  significantly  lower  sales of
WorkMate units in Asia.  Sales to Asia,  excluding  Japan,  were impacted by the
recent SARS epidemic in that region.

     Gross  profit  on sales  for the  three  months  ended  June  30,  2003 was
$1,236,000,  as compared to  $1,792,000  for the same period in 2002.  The gross
profit as a percentage of sales  decreased  from 58% to 53% due to lower overall
sales in the quarter and a higher percentage of sales from Europe, where overall
margins are lower.

     Sales and marketing  expenses increased $203,000 (or 19%) to $1,288,000 for
the three months  ended June 30,  2003,  as compared to the same period in 2002.
Costs as a percentage of total sales  increased  from 35% for the second quarter
of 2002 to 55% for the same period in 2003.  This  increase was primarily due to
an increase in headcount in the EP  MedSystems'  sales and service  departments,
net of lower variable selling costs as a result of lower sales.

     General and administrative  expenses increased $88,000 (or 19%) to $549,000
for the three  months  ended June 30,  2003,  as  compared to the same period in
2002.  This increase was primarily due to an increase in business  insurance and
legal and  accounting  services  partially  offset by the  consolidation  of our
executive offices with our manufacturing facility.
                                       17
<PAGE>

     Research and development  expenses  decreased $241,000 (or 29%) to $591,000
for the three  months  ended June 30,  2003,  as  compared to the same period in
2002.  This  decrease  was  primarily  due to a reduction in  professional  fees
related to the completion of the development projects around the ALERT(R) System
and ViewMate(R) intracardiac ultrasound catheter system.

     Interest  expense was  approximately  the same for the three month  periods
ended June 30, 2003 and June 30, 2002.

Liquidity and Capital Resources.

     From EP  MedSystems'  incorporation  in January 1993, to December 31, 2002,
the Company accumulated a deficit of approximately  $31,203,000.  As of June 30,
2003, the Company's accumulated deficit was approximately $35,061,000.

     We have a history of operating  losses and the Company  expects to continue
to incur operating  losses in the near future as substantial  funds are expended
for research and development,  increased manufacturing activity and expansion of
sales and  marketing  activities.  The amount and timing of future  losses  will
depend  upon,  among other  things,  volume of sales of existing  products,  the
timing of  regulatory  approval  and market  acceptance  of the ALERT System and
ultrasound  products,  developmental,  regulatory  and  market  success  of  new
products under development,  and EP MedSystems'  ability to establish,  preserve
and enforce intellectual  property rights related to our products.  There can be
no assurance that any of the Company's  development  projects will be successful
or that, if development is successful, the products will generate any sales. The
Company has a $2.7 million note outstanding to Medtronic which is payable,  plus
interest,  in April 2004.  Estimated  operating  cash flows through the maturity
date of the note are not sufficient to meet this obligation. The Company intends
to seek refinancing of that note prior to its maturity date.  However,  there is
no  assurance  that the  Company  will be able to  identify or close a financing
transaction  to  generate   proceeds  to  repay  the  note,  or  that  any  such
transactions will provide sufficient funds to repay the note.

     In October 2001, EP MedSystems consummated the private sale and issuance of
newly-designated  Series A convertible preferred stock to Medtronic and CMI, the
Company's Japanese distributor.  An aggregate of 1,259,717 shares were issued in
the  transactions.  The preferred shares were issued to CMI at a price of $2.048
per  share,  and  in  connection  with  that  transaction,  an  amendment  to EP
MedSystems'  Distribution Agreement was entered into with CMI, which included an
extension of the original Distribution Agreement. The transaction with Medtronic
involved  the sale of the  shares of  preferred  stock at a price of $1.781  per
share.  EP MedSystems  received  aggregate  gross  proceeds of $2.4 million from
those two transactions.

     CMI  converted  all of its shares of Series A  Preferred  Stock into common
shares  of EP  MedSystems  in the first  quarter  of 2002.  Medtronic  converted
300,000  of its  shares of Series A  Preferred  Stock  into  common  stock of EP
MedSystems in April 2002.  The converted  shares of both CMI and Medtronic  were
registered for resale by EP MedSystems  pursuant to a registration  statement on
Form S-3, which was declared effective by the SEC in May 2002.

     In January  2003,  EP MedSystems  received  approximately  $438,000 in cash
related  to  the  sale  of  a  portion  of  its  unused   cumulative  State  NOL
carryforwards.
                                       18
<PAGE>

     On September 5, 2002, EP MedSystems entered into a stock purchase agreement
and license agreement with Boston Scientific  Corporation  ("BSC") in connection
with a strategic joint development project by EP MedSystems and BSC in the field
of cardiac electrophysiology.  It is expected that this development plan will be
completed during 2003.  Should EP MedSystems  abandon the project without cause,
an abandonment fee of $1 million in cash or EP MedSystems stock would be payable
to  BSC.  Following  the  successful  completion  of the  development  plan,  EP
MedSystems  will have marketing  rights to the technology and will pay royalties
to BSC based on the market  value of the  technology  at the time of sale.  This
stock  purchase  agreement  with BSC allows for the sale of up to  $3,000,000 of
common  stock  based  on  milestones  in  the  development  of  certain  cardiac
electrophysiology  technology.  The  common  stock is sold at the  lesser of the
ten-day  trailing  average  trading price per share prior to the closing of each
installment purchase,  and $5.00 per share. Upon execution of the agreement,  EP
MedSystems  received  $500,000 for 210,084 shares issued at the ten-day trailing
average  trading  price of $2.38 per share.  On  February  4, 2003,  the Company
issued 311,915 shares of common stock at the ten-day  trailing  average  trading
price of $1.60 per share in exchange for $500,000.  These shares were registered
for  resale  on Form S-3 on April 2,  2003.  In April  2003,the  Company  issued
357,398  shares of common stock in exchange  for another  payment of $500,000 at
the ten-day trailing average trading price of $1.39 per share.

     Subsequent to the end of the quarter,  the Company issued 173,732 shares of
common  stock  for a payment  of  $500,000  in  connection  with the  previously
discussed joint development project with Boston Scientific Corporation.


     On November 21, 2002,  the Company  entered into a mortgage on its facility
in West  Berlin,  New Jersey and  received  $750,000  in  exchange  for  issuing
promissory notes for that aggregate amount.  Interest on the promissory notes is
payable quarterly at 8% per annum and the promissory notes are collateralized by
the building.  The  promissory  notes are  convertible  into common stock of the
Company,  at the  option  of the  holder  of the  promissory  notes  over  their
three-year term, as follows:

-   November 21, 2002 through December 31, 2003 convertible at $2.14 per share
-   January 1, 2004 through December 31, 2004 convertible at $2.50 per share
-   January 1, 2005 through December 31, 2005 convertible at $3.00 per share

     On April 2, 2003,  the holders of the  mortgage  notes which are secured by
the $750,000  mortgage on EP MedSystems'  facility in West Berlin,  converted an
aggregate of $375,000 of the mortgage  notes into 300,000 shares of common stock
of EP MedSystems,  Inc. In connection with the  conversion,  the Company reduced
the conversion price from $2.14 per share to $1.25 per share. In accordance with
SFAS No. 84, "Induced  Conversions of Convertible  Debt", the Company recorded a
non-cash charge of $222,084. On June 30, 2003, the holders of the mortgage notes
converted the final  portion of the mortgage  notes into an aggregate of 176,234
shares  of  common  stock  at a  conversion  price of  $2.14  as  stated  in the
agreement.

     Net cash used in operating activities in the six months ended June 30, 2003
was approximately $1,760,000 as compared with a net cash used of $189,000 in the
same period in 2002.  The increase in our net use of cash in  operations  during
2003 was primarily  due to a net loss of  $3,858,000,  a $1,476,000  decrease in
accounts  payable,  partially  offset  by  a  $1,629,000  decrease  in  accounts
receivable   and  the  collection  of  $438,000  from  the  sale  of  State  NOL
carryforwards and the non-cash  interest  expense,  debt conversion and mortgage
conversion expense of $1,222,000.  Payments to related parties are made on terms
similar to those of other  suppliers.  Capital  expenditures,  net of disposals,
were $81,000 for the six months  ended June 30, 2003,  as compared to $94,000 in
the same period in 2002. We expect to purchase  capital  equipment and to expand
our manufacturing and assembly  capabilities as we continue to grow, however, we
currently  do not have any  commitments  for  purchases.  We  lease  office  and
manufacturing space and certain office equipment under operating leases.
                                       19
<PAGE>

     Assets  decreased  $2,450,000  from  $10,928,000  at  December  31, 2002 to
$8,478,000  at June 30,  2003.  The  change in  assets  was  primarily  due to a
decrease in accounts  receivable.  Accounts receivable  decreased  approximately
$1,629,000 as a result of an increased effort in collections and lower sales for
the six months ended June 30, 2003, as compared to the same period in 2002.

     Liabilities  decreased  $3,729,000  from $9,225,000 at December 31, 2002 to
$5,496,000  at June 30, 2003.  Of that balance,  accounts  payable  decreased by
$1,476,000  to $1,110,000 at June 30, 2003 as the result of the use of cash from
the January 2003 private placement to pay accounts payable, lower purchases, and
lower research and development costs. In connection with that private placement,
the promissory notes payable to the EGS Entities of $996,000 were converted into
equity.  In  addition,  since  the note  payable  and  accrued  interest  due to
Medtronic is due in April, 2004, it was reclassified to current liabilities.

     EP MedSystems  evaluates the  collectability of its receivables  quarterly.
The allowance for bad debts is based upon  specific  identification  of customer
accounts for which  collection  is doubtful and EP  MedSystems'  estimate of the
likelihood of potential loss. To date, EP MedSystems has experienced only modest
credit  losses with respect to its accounts  receivable.  To date, EP MedSystems
has  experienced  insignificant  inventory  write-downs,   and  the  reserve  is
consistent with management's expectations.

Item 3.  Controls and Procedures.

     As of the end of the period covered by this report,  the Company  conducted
an evaluation, under the supervision and with the participation of our principal
executive officer and principal  financial officer,  of the effectiveness of the
Company's  disclosure  controls and  procedures  (as defined in Rules 13a-15 and
15d-15 of the Exchange Act). Based on this evaluation,  our principal  executive
officer and principal  financial officer concluded that our disclosure  controls
and procedures are effective to ensure that information required to be disclosed
by the Company in reports  that it files or submits  under the  Exchange  Act is
recorded,  processed,  summarized and reported within the time periods specified
in the Securities and Exchange  Commission  rules and forms.  It should be noted
that the  design  of any  system  of  controls  is based  in part  upon  certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving  its stated goals under all  potential
future conditions, regardless of how remote.

     There  was no change  in the  Company's  internal  control  over  financial
reporting  during the Company's most recently  completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal controls over financial reporting.
                                       20
<PAGE>

                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.

Not Applicable.

Item 2.  Changes in Securities.

         (a) Not applicable.

         (b) Not applicable.

         (c) In July 2003,  the Company  issued  173,732  shares of common stock
             to BSC in exchange for the payment of  $500,000  in  accordance
             with a  previously  disclosed  joint  development  project in a
             private transaction pursuant to Rule 506 of Regulation D
             promulgated under the Securities Act of 1933.

         (d) Not applicable.

Item 3.  Defaults Upon Senior Securities.

None.

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

None.

Item 5.  Other Information.

     On April 28, 2003, the Company  issued a press release  stating that it had
received notice from Nasdaq  confirming  Nasdaq's  conditional  transfer of, and
resulting  continued  listing  of,  the  Company's  common  stock on The  Nasdaq
SmallCap Market and that the hearing file had been closed. Nasdaq's confirmation
was based on the  Company's  demonstration,  through a filing by the  Company on
Form 8-K on April 14, 2003, of compliance with a $4,000,000 stockholders' equity
condition required by an April 1, 2003 determination by Nasdaq. The rules of the
Nasdaq SmallCap Market require the Company to maintain  shareholders'  equity of
at least $2,500,000.

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

(a)      Exhibits

         The exhibits are listed in the Exhibit Index appearing at page 24
         herein.

 (b)     Reports on Form 8-K.

         The following reports on form 8-K were filed during the quarter ended
         June 30, 2003:

         April 8, 2003, under Item 9, Regulation FD Disclosure, attaching a
         press release regarding the Company's submittal of its ViewMate(R)
         intracardiac ultrasound catheter system 510(K) filing to the U.S.
         Food and Drug Administration.
                                       21
<PAGE>

         April 14, 2003, under Item 9, Regulation FD Disclosure, filing
         required by Nasdaq to demonstrate compliance with Nasdaq's stated $4
         million stockholders' equity condition for continued listing of the
         Company's common stock on The Nasdaq SmallCap Market.  The Form 8-K
         furnished historical pro forma balance sheet information of the
         Company, as of February 28, 2003, demonstrating compliance with the
         condition.


         May 13, 2003, under Item 9, Regulation FD Disclosure, attaching a
         press release regarding the Company's first quarter operating results
         and receipt of a CE approval for one of the Company's products.

                                       22

<PAGE>


                                   SIGNATURES

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





                                        EP MEDSYSTEMS, INC.
                                        (Registrant)

Date:  August 19, 2003         By:      /s/  Reinhard Schmidt
                                        Reinhard Schmidt
                                        President and Chief Executive Officer
                                        and Director
                                        (Principal Executive Officer)


Date:  August 19, 2003         By:      /s/ Matthew C. Hill
                                        Matthew C. Hill
                                        Chief Financial Officer
                                        (Principal Financial Officer)












                                       23
<PAGE>


                                                   EXHIBIT INDEX

Exhibit Number    Description

         3.1               Amended and Restated  Certificate of  Incorporation
                           of EP MedSystems,  Inc., filed with the Secretary of
                           State of the State of New Jersey on April 8, 1996.(1)

         3.2**             Certificate  of Amendment to the Amended and Restated
                           Certificate of  Incorporation  of EP  MedSystems,
                           Inc.,  filed with the  Secretary of State of the
                           State of New Jersey on November 6, 1998.

         3.3               Certificate  of Amendment to the Amended and Restated
                           Certificate of  Incorporation  of EP  MedSystems,
                           Inc.,  filed with the  Secretary of State of the
                           State of New Jersey on October 23, 2001. (2)

         4.1**             Agreement  made as of June 27,  2003,  by and between
                           EP  MedSystems,  Inc.  and Anthony Varrichio.

         4.2**             Agreement  made as of June 27,  2003,  by and between
                           EP  MedSystems, Inc. and William  Winstrom.

         4.3**             Notice of EP MedSystems' Right to Repurchase Warrant,
                           dated July 23, 2003.

         10.6*             EP MedSystems, Inc. Amended and Restated 1995
                           Long-Term Incentive Plan. (3)

         10.7*             EP MedSystems, Inc. Amended and Restated 1995
                           Director Option Plan. (3)

         10.8*             Amendment to EP MedSystems, Inc. 1995 Director
                           Option Plan. (4)

         31.1**            Certification  Pursuant to Rule 13a-14(a) and
                           15d-14(a)  under the  Securities  Exchange
                           Act of 1934, as amended.

         31.2**            Certification  Pursuant to Rule 13a-14(a) and
                           15d-14(a)  under the  Securities  Exchange
                           Act of 1934, as amended.

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

         32.2**            Certification  Pursuant to 18 U.S.C.  Section 1350,
                           as Adopted  Pursuant to Section 906 of the
                           Sarbanes-Oxley Act of 2002.
     ______________________
     *Denotes management contract or compensatory plan or arrangement.
     **Filed herewith.
                                       24
<PAGE>

(1)      Incorporated  by  reference  from  EP  MedSystems,   Inc.'s
         Registration   Statement  on  Form  SB-2  and Pre-Effective  Amendments
         No. 1 and 2 thereto  previously  filed with the Commission on April 18,
         1996, May 28, 1996 and June 13, 1996, respectively.

(2)      Incorporated by reference from exhibit 3.1 of EP MedSystems,  Inc.'s
         Quarterly  Report on Form 10-QSB for the quarter ended September 30,
         2001, previously filed with the Commission.

(3)      Incorporated  by  reference  from EP  MedSystems,  Inc.'s  Proxy
         Statement  for  the  Annual  Meeting  of  Shareholders held on July
         18, 2000, previously filed with the Commission.

(4)      Incorporated  by  reference  from EP  MedSystems,  Inc.'s  Proxy
         Statement  for  the  Annual  Meeting  of Shareholders held on August
         29, 2002, previously filed with the Commission.