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 period ended: MARCH 31, 2004

( ) 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)
has 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 MAY 11, 2004
   -----                                         ---------------------------
   Common Stock, without par value                23,434,316 shares


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




<PAGE>



                      EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                                   FORM 10-QSB
                                    CONTENTS

PART I -- FINANCIAL INFORMATION
<TABLE>
<S>                                                                                             <C>
                                                                                                Page
                                                                                            -------------

 Item 1.  Financial Statements

            Consolidated  Balance  Sheets at March 31, 2004  (unaudited)  and December 31,
            2003                                                                                 3

            Consolidated  Statements of  Operations  for three months ended March 31, 2004
            and 2003 (unaudited)                                                                 4

            Consolidated Statements of Changes in Shareholders' Equity for the Three
            Months Ended March 31, 2004 (unaudited)                                              5

            Consolidated  Statements  of Cash Flows for the three  months  ended March 31,
            2004 and 2003 (unaudited)                                                            6

            Notes to Consolidated Financial Statements (unaudited)                               7

 Item 2.  Management's Discussion and Analysis or Plan of Operation                             16

            Item 3.       Controls and Procedures                                               24

PART II -- OTHER INFORMATION

            Item 1.       Legal Proceedings                                                     25

            Item 2.       Changes in Securities                                                 25

            Item 3.       Defaults Upon Senior Securities                                       25

            Item 4.       Submission of Matters to a Vote of Security Holders                   25

            Item 5.       Other Information                                                     25

            Item 6.       Exhibits and Reports on Form 8-K                                      25

            Signatures                                                                          26
            Exhibit Index                                                                       27

</TABLE>


<PAGE>



                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                                       EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                                            CONSOLIDATED BALANCE SHEETS

<TABLE>
<S>                                                                                <C>                   <C>
                                                                             MARCH 31, 2004
ASSETS                                                                        (UNAUDITED)          DECEMBER 31, 2003
                                                                           -------------------     -------------------
Current assets:
   Cash and cash equivalents                                            $           7,084,194   $          11,248,983
   Restricted cash                                                                  1,000,000               1,000,000
   Accounts receivable, net of allowances for doubtful
      accounts of $98,600                                                           2,907,344               3,035,426
   Inventories, net of reserves                                                     2,585,589               2,330,830
   Prepaid expenses and other current assets                                          739,693                 846,132
   Deferred tax asset, net of valuation allowance                                           -                 397,720
                                                                           -------------------     -------------------
                                                                           -------------------     -------------------
          Total current assets                                                     14,316,820              18,859,091

Property, plant and equipment, net                                                  2,079,905               1,951,640
Goodwill                                                                              341,730                 341,730
Other intangible assets, net                                                           41,655                  13,033
Other assets                                                                          394,116                 495,530
                                                                           -------------------     -------------------
          Total assets                                                  $          17,174,226  $           21,661,024
                                                                           ===================     ===================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Current portion of notes payable                                     $                   -   $           2,200,000
   Current portion of secured convertible note                                        820,053                       -
   Accounts payable                                                                 2,032,672               1,962,556
   Accrued expenses                                                                   728,220               1,645,842
   Deferred revenue                                                                   382,377                 507,824
                                                                           -------------------     -------------------
     Total current liabilities                                                      3,963,322               6,316,222

Deferred warranty revenue, non-current                                                271,310                 271,629
Secured convertible note, non-current                                               2,211,841               3,446,865
                                                                           -------------------     -------------------
          Total liabilities                                             $           6,446,473   $          10,034,716
                                                                           -------------------     -------------------
Commitments and contingencies
Shareholders' equity:
  Preferred stock, no par value, 5,000,000 shares
     authorized, 373,779 shares issued and outstanding                                618,161                 618,161
  Common stock, $.001 stated value, 30,000,000 shares authorized
     23,319,316 and 23,098,179 shares issued and outstanding at
     March 31, 2004 and December 31, 2003, respectively                                23,319                  23,098
  Additional paid-in capital                                                       49,986,678              49,414,829
  Accumulated other comprehensive loss                                              (182,232)               (177,728)
  Treasury stock                                                                    (100,000)               (100,000)
  Accumulated deficit                                                            (39,618,173)            (38,152,052)
                                                                           -------------------     -------------------
          Total shareholders' equity                                               10,727,753              11,626,308
                                                                           -------------------     -------------------
          Total liabilities and shareholders' equity                    $          17,174,226  $           21,661,024
                                                                           ===================     ===================


                         The accompanying notes are an integral part of these statements.
</TABLE>

                                       3
<PAGE>



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

                                                                                 FOR THE THREE MONTHS ENDED
                                                                             MARCH 31,                 MARCH 31,
                                                                                2004                      2003
                                                                        ---------------------      -------------------
                                                                        ---------------------      -------------------

Net sales                                                            $             2,884,001    $           2,290,516
Cost of products sold                                                              1,213,196                1,162,101
                                                                        ---------------------      -------------------
                                                                        ---------------------      -------------------
   Gross profit                                                                    1,670,805                1,128,415

Operating costs and expenses:
   Sales and marketing expenses                                                    1,580,374                1,317,886
   General and administrative expenses                                               723,347                  543,236
   Research and development expenses                                                 601,115                  593,258
                                                                        ---------------------      -------------------

Total operating expenses                                                           2,904,836                2,454,380

   Loss from operations                                                          (1,234,031)              (1,325,965)

Interest expense, net                                                              (232,090)                 (63,865)
Interest expense, debt conversion                                                         -               (1,000,000)
                                                                        ---------------------      -------------------
   Net loss                                                          $           (1,466,121)    $         (2,389,830)
                                                                        =====================      ===================
Basic and diluted loss per share                                     $                 (.06)    $               (.14)
                                                                        =====================      ===================
Weighted average shares outstanding used
to compute basic and diluted loss per share                                       23,234,914               16,627,667
                                                                        =====================      ===================


</TABLE>



     The accompanying notes are an integral part of these statements.


                                       4

<PAGE>


<TABLE>

                                       EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                     FOR THE THREE MONTHS ENDED MARCH 31, 2004

<S>                <C>         <C>        <C>       <C>        <C>          <C>          <C>        <C>          <C>
                                                                        Accumulated
                  Common     Common    Preferred Preferred Additional     Other
                  Stock      Stock     Stock     Stock       Paid-in    Comprehensive Treasury   Accumulated     Total
                   Shares     Amount    Shares    Amount     Capital        Loss         Stock      Deficit
                  ---------- --------- --------- --------- ------------ -------------- ---------- ------------ ------------
BALANCE,
DECEMBER 31,
2003              23,058,179  $23,098   373,779  $618,161  $49,414,829     $(177,728)  $(100,000) $(38,152,052)  11,626,308
                  ---------- --------- --------- --------- ------------ -------------- ---------- ------------ ------------

Issuance of
stock in
connection with
conversion of
secured
convertible
note                196,000       196        --        --      499,604             --         --           --      499,800

Issuance of
stock in
connection with
exercise of
options              25,137        25        --        --       72,245             --         --           --       72,270

Foreign
currency
translation              --        --        --        --           --        (4,504)         --           --      (4,504)

Net loss                 --        --        --        --           --             --         --  (1,466,121)  (1,466,121)
                  ---------- --------- --------- --------- ------------ -------------- ---------- ------------ ------------
BALANCE, MARCH
31,
2004               23,319,316  $23,319   373,779  $618,161  $49,986,678     $(182,232)  $(100,000) $(39,618,173) 10,727,753
                  ========== ========= ========= ========= ============ ============== ========== ============ ============


                         The accompanying notes are an integral part of these statements.


</TABLE>

                                       5
<PAGE>


                                       EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (UNAUDITED)
<TABLE>
<S>                                                                              <C>                      <C>
                                                                                   FOR THE THREE MONTHS ENDED
                                                                                MARCH 31,               MARCH 31,
                                                                                  2004                    2003
                                                                            ------------------      ------------------
                                                                            ------------------      ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                $         (1,466,121)    $        (2,389,830)
Adjustments to reconcile net loss to net cash
 used inoperating activities:
 Depreciation and amortization                                                        171,906                 200,252
 Interest expense, debt conversion                                                          -               1,000,000
 Accretion of note discount                                                            84,829                       -
 Amortization of beneficial conversion feature                                         96,779                       -
Changes in assets and liabilities:
  Decrease in accounts receivable                                                     128,082               1,312,584
  Increase in inventories                                                           (535,492)                (41,128)
  Decrease in prepaid expenses and other assets                                       111,074                  23,503
  Decrease in deferred tax asset                                                      397,720                 438,000
  Increase (decrease) in accounts payable                                              70,116             (1,154,536)
  Decrease in accrued expenses and deferred revenue                               (1,043,388)                (65,028)
                                                                            ------------------      ------------------
          NET CASH USED IN OPERATING ACTIVITIES                         $         (1,984,495)    $          (676,183)
                                                                            ------------------      ------------------
                                                                            ------------------      ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                               (15,400)                (12,030)
  Patent costs                                                                       (32,660)                 (5,989)
                                                                            ------------------      ------------------
         NET CASH USED IN INVESTING ACTIVITIES                          $            (48,060)    $           (18,019)
                                                                            ------------------      ------------------
                                                                            ------------------      ------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Payments under notes payable                                                     (2,200,000)                       -
   Net  proceeds from issuance of common stock, net of
         offering expenses                                                             72,270               1,570,070
                                                                            ------------------      ------------------
                                                                            ------------------      ------------------
   NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                  $         (2,127,730)    $          1,570,070
                                                                            ------------------      ------------------
                                                                            ------------------      ------------------

EFFECT OF EXCHANGE RATE CHANGES                                                       (4,504)                (27,048)

Net (decrease) increase in cash and cash equivalents                              (4,164,789)                 848,820
Cash and cash equivalents, beginning of period                                     11,248,983               2,012,809
                                                                            ------------------      ------------------
Cash and cash equivalents, end of period                                $           7,084,194    $          2,861,629

                                                                            ==================      ==================
Supplemental cash flow information
   Cash paid for interest                                               $             775,205    $              6,820


                         The accompanying notes are an integral part of these statements.


</TABLE>

                                        6
<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  of  America  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 of America  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,
     2003  filed  with  the  Securities  and  Exchange   Commission   ("SEC"  or
     "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  consist of the
     following at March 31, 2004 and December 31, 2003:

                                           March 31,              December 31,
                                              2004                     2003
                                          (unaudited)
                                        -----------------      ---------------
   Raw materials                    $      1,229,478    $        1,202,711
   Work in process                           402,989               561,008
   Finished goods                          1,111,122               725,111
   Reserve for obsolescence                 (158,000)             (158,000)
                                     -----------------      ------------------
                                  $        2,585,589    $          2,330,830
                                      =================      =================


NOTE 3. NOTES PAYABLE

          On November 15, 2000, EP MedSystems,  Inc.  completed a debt financing
     for $3.2 million with  Medtronic  Asset  Management,  Inc., an affiliate of
     Medtronic, Inc., and one of EP MedSystems' shareholders. Approximately $2.3
     million was utilized to repay  outstanding  amounts on EP MedSystems'  then
     existing revolving credit facility.  The principal and all accrued interest
     on the note was to be repaid on November 15, 2003, and the note was secured
     by a pledge by David Jenkins, EP MedSystems'  Chairman, of shares of common
     stock of a privately-held  corporation.  On March 12, 2003, the due date of
     the note was extended to April 1, 2004. In connection  with the  extension,
     the  Company  paid $1  million of the note upon  receipt of certain  equity
     proceeds and  increased  the  interest  rate to the prime rate plus 3%. The
     prime  rate  was  4% at  December  31,  2003.  EP  MedSystems  had  accrued
     approximately  $707,000 of interest  expense as of December  31,  2003.  In
     February  2004, the principal  amount of this note,  along with all accrued
     interest totaling approximately $2,920,000, was repaid.

                                       7
<PAGE>

NOTE 4. SHAREHOLDER'S EQUITY

PREFERRED STOCK

          EP MedSystems is authorized to issue 5,000,000  shares of undesignated
     preferred  stock,  no par value per share.  The Board of Directors  has the
     authority  to  issue  preferred  stock in one or more  classes,  to fix the
     number of shares constituting a class and the stated value thereof,  and to
     fix the terms of any such class, including dividend rights, dividend rates,
     conversion  or  exchange  rights,   voting  rights,  rights  and  terms  of
     redemption,  the redemption  price and the  liquidation  preference of such
     shares or class.

          During the year ended December 31, 2001, EP MedSystems consummated the
     private  sale and  issuance  of  Series A  convertible  preferred  stock to
     Medtronic,  Inc.  ("Medtronic").  In 2002, Medtronic converted a portion of
     its  preferred  stock into shares of common stock of the Company.  At March
     31,  2004 and  December  31,  2003,  Medtronic,  Inc.  held  373,779 of the
     Company's  Series A Preferred  Shares  which are  convertible  into 387,946
     shares of common  stock of the  Company at the option of  Medtronic  or the
     Company in accordance with the terms of the agreement with Medtronic.

COMMON STOCK

          EP  MedSystems  is  authorized  to issue  30,000,000  shares of common
     stock,  no par value,  $.001  stated  value per share,  of which a total of
     23,319,316  and  23,098,179  shares were  outstanding at March 31, 2004 and
     December 31, 2003, respectively.

          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.  Following the
     completion of the development, which occurred in the third quarter 2003, EP
     MedSystems has marketing rights to the technology and will pay royalties to
     BSC based on the market value of the  technology at the time of sale of the
     product.  The stock purchase  agreement with BSC allowed 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 was 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.  During the third quarter of 2003,  the Company issued
     601,631 shares of common stock in exchange for the final payments  totaling
     $1,500,000.

          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,  which  was  $1.6943.  In  the  private


                                       8
<PAGE>

     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  in 2003 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. In July of
     2003, the closing price requirement for repurchase of the warrants was met,
     notice to repurchase  the warrants was given to the warrant  holders by the
     Company,  and 794,790  shares of common stock were issued upon  exercise of
     these warrants. In April 2003, the Company completed an additional $210,000
     private  placement  of  120,000  shares  of its  common  stock  to  various
     accredited investors.

          On April 4, 2003, the principal  amount of, and all accrued and unpaid
     interest on, a 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 December 26, 2003,  the Company  completed  an  $8,200,000  private
     placement of its common stock to various accredited investors.  The Company
     issued  3,200,000  shares of its common stock at a purchase  price of $2.56
     per share.

NOTE 5. 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.  It  is EP
     MedSystems' policy to account for stock options granted to non-employees in
     accordance with Emerging Issues Task Force Issue No. 96-18, "Accounting for
     Equity  Instruments  That Are Issued to Other Than Employees for Acquiring,
     or in Conjunction  with Selling,  Goods or Services," 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.

          Had  compensation  costs for EP  MedSystems'  stock  option plans been
     determined  consistent  with  SFAS  No.  123  "Accounting  for  Stock-Based
     Compensation",  EP MedSystems' proforma net loss and loss per share for the
     three months ended March 31, 2004 and 2003 would have been as follows:



<PAGE>

                                       9


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

                                                                        2004                   2003
                                                                         ----                   ----

       Net loss, as reported                                      $(1,466,121)           $(2,389,830)

       Less:  Stock-based employee compensation expense
       included in reported net income, net of related tax
       effects                                                       (129,596)              (108,305)
                                                             ------------------     ------------------

       Pro forma net loss                                        $(1,595,717)           $(2,498,135)
                                                             ==================     ==================

       Earnings per share:
           Basic and diluted - as reported                             $(0.06)                $(0.14)
                                                             ------------------     ------------------
           Basic and diluted - pro forma                               $(0.07)                $(0.15)
                                                             ------------------     ------------------

</TABLE>

NOTE 6. SALE OF STATE NET OPERATING LOSSES

          During the three months ended March 31, 2004 and 2003,  EP  MedSystems
     received approximately $398,000 and $438,000,  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, 2003
     and 2002, EP MedSystems had recorded  approximately  $398,000 and $438,000,
     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 three  months  ended  March 31, 2004 and
     2003.

NOTE 7. 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 three months ended March 31, 2004 and 2003.

                                             FOR THE THREE MONTHS
                                                ENDED MARCH 31,
                                              2004                  2003
                                              ----                  ----
United States                               $2,260,000            $1,219,000
Europe/Middle East                             393,000               428,000
Asia and Pacific Rim                           231,000               644,000
                                             ---------              --------
                                            $2,884,000            $2,291,000
                                            ==========            ==========

          Sales  of  EP  MedSystems'  cardiac  electrophysiology  equipment  and
     related  catheters   aggregated   approximately   $2,531,000  and  $353,000
     respectively, for the three months ended March 31, 2004, and $2,008,000 and
     $283,000,  respectively,  for the comparable period in 2003. EP MedSystems'
     long-lived assets are primarily located in the U.S. One customer  accounted
     for 10% of the Company's sales for the three months ended March 31, 2004.

                                       10

<PAGE>


          Net sales for the three months ended March 31, 2004 were billed in two
     currencies:  $2,775,000 in U.S.  dollars and the  equivalent of $109,000 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 $182,000 as of March 31, 2004. In addition, EP MedSystems had
     not entered into any derivative financial  instruments for hedging or other
     purposes.

NOTE 8. NET LOSS PER SHARE

          Basic net loss per share is computed using the weighted-average number
     of shares of common stock  outstanding.  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 4,350,867 and 4,536,947 for the three months ended March 31, 2004
     and 2003,  respectively,  have been  excluded  from the  diluted  per share
     calculation.

NOTE 9. COMPREHENSIVE INCOME

          For the three  months  ended March 31, 2004 and 2003,  EP  MedSystems'
     comprehensive  loss consisted of net loss and foreign currency  translation
     adjustments.  The comprehensive losses for the three months ended March 31,
     2004 and 2003, were approximately $1,471,000 and $2,416,700, respectively.

NOTE 10. RECENTLY ISSUED ACCOUNTING STANDARDS

          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. FIN 45 could have an
     impact on the  future  results  of the  Company,  depending  on  guarantees
     issued;  however, at this time, the adoption of this Statement did not have
     a material 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.  In December  2003,  the FASB  published a revision to FIN 46
     ("FIN 46R") to clarify some of the  provisions  of the  interpretation  and
     defer to the effective date of implementation  for certain entities.  Under
     the guidance of FIN 46R,  entities that do not have interests in structures
     that are commonly  referred to at special purpose  entities are required to
     apply the  provisions of the  interpretation  in financials  statements for
     periods  ending after March 14, 2004. FIN 46 could have an impact on future
     results  of the  Company;  however,  at  this  time  the  adoption  of this
     Statement  did not have a material  impact on our  results  of  operations,
     financial position or cash flow.

                                       11

<PAGE>


          In April 2003,  the FASB issued SFAS No. 149,  "Amendment of Statement
     133 on Derivative Instruments and Hedging Activities." This standard amends
     and  clarifies   financial   accounting   and   reporting  for   derivative
     instruments,  including certain  derivative  instruments  embedded in other
     contracts  (collectively  referred  to  as  derivatives)  and  for  hedging
     activities  under  FASB  Statement  No.  133,  "Accounting  for  Derivative
     Instruments  and  Hedging  Activities."  This  standard  is  effective  for
     contracts  entered into or modified  after June 30, 2003,  except as stated
     below and for hedging  relationships  designated  after June 30,  2003.  In
     addition,  except as stated below,  all provisions of this Statement should
     be applied prospectively. SFAS No. 149 could have a future impact depending
     on transactions  entered into,  however,  at this time the adoption of SFAS
     No. 149 had no impact on the  Company's  results of  operations,  financial
     position or cash flows.

          In May 2003,  the FASB issued SFAS No.  150,  "Accounting  for Certain
     Financial Instruments with Characteristics of Both Liabilities and Equity."
     This standard requires an issuer to classify certain financial  instruments
     as  liabilities.  It also  changes  the  classification  of certain  common
     financial instruments from either equity or presentation to liabilities and
     requires an issuer of those  financial  statements to recognize  changes in
     fair value or redemption  amount, as applicable,  in earnings.  SFAS 150 is
     effective for financial  instruments entered into or modified after May 31,
     2003,  and with one  exception,  is effective at the beginning of the first
     interim period  beginning after June 15, 2003. SFAS 150 could have a future
     impact depending on transactions  entered into,  however,  at this time the
     adoption  SFAS 150 had no impact on the  Company's  results of  operations,
     financial position or cash flows.

NOTE 11. GUARANTOR CONDENSED FINANCIAL STATEMENTS

          In  connection  with the issuance of a Secured  Convertible  Note (the
     "Convertible Note") by the Company to Laurus Master Fund, Ltd.  ("Laurus"),
     one  of  the  Company's  subsidiaries  (the  "Guarantor")   guaranteed  the
     Convertible  Note. We believe that the  non-guarantor  subsidiaries  of the
     Company are minor and would not provide any additional information material
     to investors.  Therefore, the non-guarantor subsidiaries of the Company are
     combined in the presentation  below. There are no significant  restrictions
     on the ability of the Guarantor to make distributions to EP MedSystems. The
     following  tables represent the results of operations,  financial  position
     and  cash  flows  of EP  MedSystems,  the  Guarantor  and the  eliminations
     necessary to arrive at the  information  for the Company on a  consolidated
     basis.

          General  corporate  expenses  have been  allocated  to the  Guarantor.
     Additionally, all of the indebtedness of the Company historically has been,
     and continues to be, carried at the Company level and therefore is included
     in the EP MedSystems' column in the following tables.

                                       12



<PAGE>


<TABLE>

                                                                 EP MEDSYSTEMS, INC.
                                                 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

                                                             THREE MONTHS ENDED MARCH 31, 2004
                                         ---------------------------------------------------------------------------
                                         ---------------------------------------------------------------------------
                                            EP MEDSYSTEMS AND       GUARANTOR      ELIMINATIONS      CONSOLIDATED
                                             NON-GUARANTOR
                                              SUBSIDIARIES
                                         -----------------------  --------------  ---------------  -----------------
<CAPTION>
                                         ----------------------  ---------------  ---------------  -----------------

<S>                                                  <C>                <C>               <C>               <C>
Net sales                                            $2,528,632         $355,369                         $2,884,001

Cost of products sold                                   909,897          303,299                          1,213,196
                                                ----------------  --------------  ---------------   ----------------
                                                ----------------  --------------  ---------------  -----------------

          Gross profit                                1,618,735           52,070                          1,670,805

Operating costs and expenses:

   Sales and marketing expenses                       1,055,450          524,924                          1,580,374
   General and administrative
       expenses                                         522,413          200,934                            723,347

   Research and development expenses                    418,399          182,716                            601,115
                                                ----------------  --------------   -------------    -----------------

          Loss from operations                        (377,527)        (856,504)                        (1,234,031)

Interest expense, net                                 (232,090)                -                          (232,090)
                                               -----------------  --------------   -------------     -----------------

      Net loss                                       $(609,617)       $(856,504)                       $(1,466,121)
                                              =================   ==============   =============      =================

</TABLE>

                                       13
<PAGE>


<TABLE>
<CAPTION>

                                                                        EP MEDSYSTEMS, INC.
                                                                 CONDENSED CONSOLIDATING BALANCE SHEET

                                                                             MARCH 31, 2004
                                                   -------------------------------------------------------------------
                                                     EP MEDSYSTEMS AND     GUARANTOR    ELIMINATIONS    CONSOLIDATED
                                                      NON-GUARANTOR
                                                       SUBSIDIARIES
                                                  --------------------------------------------------------------------
                                                  --------------------------------------------------------------------
ASSETS
Current assets:

<S>                                                           <C>               <C>          <C>             <C>
Cash and cash equivalents                                     $7,077,375        $6,819              -     $ 7,084,194

   Restricted Cash                                             1,000,000             -              -       1,000,000

   Accounts receivable, net                                    2,482,791       424,553              -       2,907,344

   Inventories, net                                            1,407,518     1,178,071              -       2,585,589

   Prepaid expenses and other current assets                     685,511        54,182              -         739,693
                                                       -------------------  -------------   -------------   -----------

          Total current assets                                12,653,195     1,663,625              -      14,316,820

Property, plant and equipment, net                               980,949     1,098,956              -       2,079,905

Intangible assets, net                                                 -       383,385              -         383,385

Other assets                                                     394,116             -              -         394,116
                                                      --------------------  ------------   ---------------  ------------

          Total assets                                       $14,028,260    $3,145,966              -     $17,174,226
                                                      ===================== ============== =============  =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of secured convertible note                    820,053             -              -         820,053

  Accounts payable                                             1,538,464       494,208              -       2,032,672

  Accrued expenses                                               528,341       189,360              -         728,220

  Deferred revenue                                               382,377             -              -         382,377
                                                        -----------------  -------------  --------------  -------------

     Total current liabilities                                 3,279,754       683,568              -       3,963,322

Deferred warranty revenue - non current                          271,310             -              -         271,310


Intercompany balances                                        (3,318,902)    20,720,711   (17,401,809)               -

Secured convertible note                                       2,211,841             -              -       2,211,841
                                                       -----------------  ------------  ---------------  ------------

          Total liabilities                                    2,444,003    21,404,279   (17,401,809)       6,446,473
                                                       -----------------  ------------  ---------------  ------------

Total shareholders' equity (deficit)                     11,584,257        (18,258,313)     17,401,809      10,727,753
                                                       -----------------    -------------- -------------  ------------

Total liabilities and shareholders' equity              $14,028,260        $3,145,966              -     $17,174,226
                                                  =================       ==============  ==============  ============

</TABLE>


                                       14
<PAGE>


<TABLE>
<CAPTION>

                                                                          EP MEDSYSTEMS, INC.
                                                                 CONDENSED CONSOLIDATING STATEMENT OF
                                                                                CASH FLOWS

                                                                    FOR THE THREE MONTHS ENDED MARCH 31, 2004
                                                     -------------------------------------------------------------------------
                                                     --------------------- -------------- ----------------- ------------------
                                                       EP MEDSYSTEMS AND     GUARANTOR      ELIMINATIONS       CONSOLIDATED
                                                        NON-GUARANTOR
                                                         SUBSIDIARIES
                                                     --------------------- -------------- ----------------- ------------------
                                                     --------------------- -------------- ----------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                            <C>            <C>                      <C>       <C>
Net loss                                                       $(609,616)     $(856,505)               $ -       $(1,466,121)
Adjustments to reconcile net loss to net cash used
in operating activities:
  Depreciation and amortization                                   132,906         39,000                              171,906

Amortization of beneficial conversion feature                      96,779              -                               96,779
Accretion of discount                                              84,829              -                               84,829
Changes in assets and liabilities:
  Accounts receivable                                              12,055        116,027                              128,082
  Inventories                                                   (503,008)       (32,484)                            (535,492)
  Prepaid expenses and other assets                                80,149         30,925                              111,074
  Deferred tax asset                                              179,494         28,220                              397,720
  Accounts payable                                              (263,001)        333,117                               70,116
 Accrued expenses, deferred revenue, and accrued
    interest                                                    (837,931)      (205,457)                          (1,043,388)
                                                     --------------------- -------------- ----------------- ------------------


          NET CASH USED IN OPERATING ACTIVITIES              $(1,627,344)     $(357,151)               $ -       $(1,984,495)
                                                     ===================     ============  ===============  ==================

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                           (15,400)              -                             (15,400)
  Patent costs                                                          -       (32,660)                             (32,660)
                                                     --------------------- -------------- ----------------- ------------------

         NET CASH USED IN INVESTING ACTIVITIES                  $(15,400)      $(32,660)               $ -          $(48,060)
                                                     --------------------- -------------- ----------------- ------------------


CASH FLOWS FROM FINANCING ACTIVITIES:

   Payments under term notes payable                          (2,200,000)                                         (2,200,000)
   Change in intercompany balances                              (354,266)        354,266                                    -

   Proceeds from issuance of common stock, net of
    offering expenses                                              72,270              -                               72,270
                                                     --------------------- -------------- ----------------- ------------------

      NET CASH (USED IN) PROVIDED BY FINANCING
      ACTIVITIES                                             $(2,481,996)       $354,266               $ -       $(2,127,730)

EFFECT OF EXCHANGE RATE CHANGES                                   (4,504)                                             (4,504)
                                                     --------------------- -------------- ----------------- ------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS
                                                              (4,129,244)       (35,545)                          (4,164,789)
                                                     --------------------- -------------- ----------------   ------------------

Cash and cash equivalents, beginning of period
                                                               11,206,619         42,364                           11,248,983
                                                     --------------------  -------------- -----------------  ------------------

Cash and cash equivalents, end of period
                                                               $7,077,375         $6,819               $ -       $7,084,194
                                                     ===================== ============== ================= ==================


                         The accompanying notes are an integral part of these statements.
</TABLE>

                                       15

<PAGE>



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,  visualize and treat  irregular  heartbeats  known as arrhythmias.
     Since our 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  RPM   RealTime   Position   Management(TM)   navigation
     technology,  the  EP-4(TM)  Computerized  Cardiac  Stimulator,   diagnostic
     electrophysiology  catheters,  including our unique one-piece  catheter and
     the  ALERT(R)  System,  including  the  ALERT(R)  Companion II and ALERT(R)
     family  of  internal  cardioversion  catheters,   ViewMate(R)  intracardiac
     ultrasound catheter system and related disposable supplies.

          In 2003,  we  received  the  following  product  approvals  or  market
     clearances:

<TABLE>
<S>      <C>                                                                        <C>
      PRODUCT                                                                    REGULATORY BODY
ViewMate(R)                                                                   FDA and European Notified Body
ALERT(R) Companion II energy source                                           FDA
ALERT(R) CS/RA catheter set                                                   European Notified Body
ALERT(R) Deflectable CS catheter                                              European Notified Body
Integration  of the  EP-WorkMate(R)  with Boston  Scientific's  RPM RealTime  FDA
Position Management(TM) System
</TABLE>

          Our core  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  diagnosis,  analysis and  integration  with our own  proprietary
     systems,  such as our  EP-3(TM)  Stimulator,  as well as  those  of  market
     leaders,  such  as the  RPM  RealTime  Position  Management(TM)  navigation
     system, as well as with other  technologies and systems.  Late in the third
     quarter  of  2003,   we  received   FDA  market   clearance   to  sell  the
     EP-WorkMate(R) integrated with Boston Scientific Corporation's RPM RealTime
     Position  Management(TM)  System.  This approval was the  culmination  of a
     strategic joint development  project between Boston Scientific  Corporation
     and EP Med. It is the only EP  recording  system on the market to integrate
     advanced recording and stimulation with anatomic modeling, advanced mapping
     and 3-D navigation features,  allowing electrophysiology studies to be more
     efficient and user  friendly.  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 locate  arrhythmia.  For the three months ended March 31, 2004 and
     2003, the EP-WorkMate(R),  the RPM RealTime Position Management(TM) System,
     the EP-3(TM) and the EP-4(TM)  Stimulator  accounted for  approximately 82%
     and  87%,  respectively,  of our  total  sales.  We also  market  a line of
     diagnostic  electrophysiology  catheters  for  stimulation  and  sensing of
     electrical  signals during  electrophysiology  studies,  which  represented
     approximately  4% of our total sales  revenues for each of the three months
     ended March 31, 2004 and 2003, respectively.


                                       16
<PAGE>

          We  have  also  developed  a  product  for  the  treatment  of  atrial
     fibrillation known as the ALERT(R) System,  which uses a patented electrode
     catheter to deliver  measured,  variable,  low-energy  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
     September  2003,  we  received  pre-market  approval  to sell the  ALERT(R)
     Companion II in the United States. Sales of the ALERT(R) System and related
     catheters accounted for approximately 5% and 9% of our total sales revenues
     for the three months ended March 31, 2004 and 2003, respectively.

          We  have  also  developed  the  ViewMate(R)   intracardiac  ultrasound
     catheter system  including the ViewMate(R)  ultrasound  imaging console and
     ViewFlexTM   intracardiac   imaging   catheters.   These   products   offer
     high-resolution,  real-time  ultrasound  capability  designed  to improve a
     physician or  clinician's  ability to visualize  inside the chambers of the
     heart. We believe the ViewMate(R)  Ultrasound  System may play an important
     role for a broad range of potential  applications in electrophysiology  and
     cardiology.  In April of 2003,  we  received  CE  approval  to  market  the
     ViewMate(R) in Europe. In October 2003, we received FDA market clearance to
     sell the ViewMate(R) System in the United States.  Sales of the ViewMate(R)
     system and related ViewFlex(TM) catheters accounted for approximately 9% of
     our total sales  revenues in the three months ended March 31, 2004.  We did
     not have approval to market the system until after the end of March 2003.

CRITICAL ACCOUNTING POLICIES

          Financial Reporting Release No. 60 requires all companies to include a
     discussion  of  critical   accounting  policies  or  methods  used  in  the
     preparation  of financial  statements.  The SEC  indicated  that a critical
     accounting  policy  is one  which  is  important  to the  portrayal  of the
     company's  financial  condition and results and requires  management's most
     difficult,  subjective or complex judgements, often as a result of the need
     to  make  estimates  about  the  effect  of  matters  that  are  inherently
     uncertain.  Note 1 of our Notes to the  Consolidated  Financial  Statements
     includes a summary of the significant  accounting policies and methods used
     in the preparation of our Consolidated  Financial Statements.  In addition,
     Financial  Reporting  Release No. 61 requires  all  companies  to include a
     discussion to address,  among other things,  liquidity,  off-balance  sheet
     arrangements,  contractual  obligations  and  commercial  commitments.  The
     information  provided below  describing our debt and future  commitments is
     provided to facilitate a review of our liquidity and capital resources. The
     following is a brief discussion of the more significant accounting policies
     and methods used by us.

GENERAL

          The preparation of financial  statements in conformity with accounting
     principles  generally  accepted  in the United  States of America  requires
     management  to make  estimates  and  assumptions  that  affect the  amounts
     reported in the financial  statements and  accompanying  notes. The primary
     estimates used by management are in the  determination of the allowance for
     doubtful  accounts,  inventory  obsolescence  reserve and warranty reserve.
     Although these estimates are based upon  management's  knowledge of current
     events, the estimates may ultimately differ from actual results.


                                       17
<PAGE>



REVENUE RECOGNITION

          We ship products to our customers  based on FOB shipping point and, as
     such recognize  product sales on the date of shipment.  Installation of the
     products  is  considered  perfunctory.  Payments  received  in  advance  of
     shipment of product are deferred until such products are shipped. We do not
     have royalty agreements that result in revenue to EP Med. We do not provide
     distributors   or  end-users  with  a  general  right  to  return  products
     purchased.

          We have two sales  channels:  sales to  independent  distributors  and
     sales directly to customers.  Our products do not require "installation" in
     the traditional  sense, but the  EP-WorkMate(R)  does require a set up. For
     distributor  sales,  distributors  are  responsible  for all  set-up of all
     electronic  hardware  products and we have no obligation  after shipment of
     products to the  distributors.  For direct sales,  the customer can perform
     the set-up on its own,  however,  EP Med  personnel  generally  will assist
     customers in this process.  The set-up process,  which takes  approximately
     1-2 hours to complete, is usually performed within the week of shipment and
     primarily  consists of assembling the workstation  cart and plugging in the
     monitors,  printer, isolation transformer,  and the EP-3(TM) Stimulator (or
     catheter) to the main computer and then  answering any customer  questions.
     This  process  does not impact our  standard  payment  terms.  For sales to
     distributors,  payment terms are defined in the  distributor  agreements as
     100% of the purchase price being due 30-60 days after shipment.  For direct
     sales,  payment  terms are  agreed  in  advance  of the sale and  generally
     require a 50% deposit  prior to  shipment,  with the balance due 30-60 days
     after shipment.

          We provide a standard one-year warranty on all of our products, and in
     accordance  with  Statement  of  Financial   Accounting   Standard  No.  5,
     "Accounting for  Contingencies",  we accrue the estimated cost of providing
     the  warranty at the time of sale.  The  estimates  of the future costs are
     based on historical data.

          We also sell various  types of warranty  contracts  to our  customers.
     These contracts range in term from one to five years. Revenue is recognized
     on these contracts on a straight line basis over the life of the contract.

VALUATION OF ACCOUNTS RECEIVABLE

          We continuously monitor customers' balances, collections and payments,
     and  maintain  a  provision  for  estimated  credit  losses  based upon our
     historical  experience and any specific customer  collection issues that we
     have  identified.  We may request letters of credit from our customers when
     we believe  that there is a  significant  risk of credit  loss.  While such
     credit  losses  have  historically  been  within our  expectations  and the
     provisions  established,  we  cannot  guarantee  that we will  continue  to
     experience the same credit loss rates that we have in the past.

VALUATION OF INVENTORY

          We value our inventory at the lower of cost or market, with cost being
     determined  on a first-in,  first-out  basis.  We  continually  monitor our
     slow-moving   items,   and   establish   reserve   amounts  on  a  specific
     identification basis, as necessary.  In addition,  due to the fact that our
     business is dependent on the latest  computer  technology,  we  continually
     monitor our inventory and products for obsolescence. If we determine market
     value  to be less  than  cost,  we  write  down  the  cost  to that  value.
     Generally, we do not experience significant  writedowns,  losses, etc. with
     the valuation of our  inventory;  however,  these  reserves are  estimates,
     which  could  change   significantly,   either  favorably  or  unfavorably,
     depending on market and competitive conditions.



                                       18

<PAGE>

VALUATION OF GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS

          We assess  the  impairment  of  identifiable  intangibles,  long-lived
     assets  and  enterprise  level  goodwill  whenever  events  or  changes  in
     circumstances  indicate  that the  carrying  value may not be  recoverable.
     Factors we consider  important  which could  trigger an  impairment  review
     include the following:

     o    significant   underperformance  relative  to  expected  historical  or
          projected future operating results;

     o    significant changes in the manner of our use of the acquired assets or
          the strategy for our overall business;

     o    significant negative industry or economic trends;

     o    significant decline in our stock price for a sustained period; and

     o    our market capitalization relative to net book value.

          When we determine that the carrying value of  intangibles,  long-lived
     assets and  related  goodwill  and  enterprise  level  goodwill  may not be
     recoverable based upon the existence of one or more of the above indicators
     of impairment,  we measure any impairment  based on a projected  discounted
     cash flow method using a discount rate  determined by our  management to be
     commensurate with the risk inherent in our current business model.

RESULTS OF OPERATIONS.

THREE MONTHS ENDED MARCH 31, 2004 VERSUS MARCH 31, 2003

               Net sales were  $2,884,000  for the three  months ended March 31,
          2004, as compared to  $2,291,000  for the  comparable  period in 2003.
          This  $593,000 (or 26%) increase is primarily due to new product sales
          in the United States of approximately  $562,000,  which includes sales
          of  ViewMate(R)  Consoles,   ViewFlex(TM)  catheters,   EP-WorkMate(R)
          integrated  with Boston  Scientific  Corporation's  RPM Technology and
          sales of RPM upgrades into our installed  base. This increase in sales
          in the United States was partially offset by decreased sales in Europe
          and Asia.

               Gross  profit on sales for the three  months ended March 31, 2004
          was $1,671,000, as compared to $1,128,000 for the same period in 2003.
          The gross profit  increased as a percentage  of sales from 49% to 58%,
          due to sales of new products in the United  States,  discussed  above.
          Sales  margins  in the United  States are higher  than the rest of the
          world.  Sales and marketing  expenses  increased  $262,000 (or 20%) to
          $1,580,000  for the three months ended March 31, 2004,  as compared to
          the  same  period  in  2003.  Costs as a  percentage  of  total  sales
          decreased  from 58% for the first quarter of 2003, to 55% for the same
          period in 2004.  This was  primarily due to an increase in revenue and
          was offset by an increase in  headcount in the EP  Medsystems'  Sales,
          Marketing  and Service  departments,  an increase in  depreciation  of
          products used for demonstration, travel, advertising and royalities in
          connection  with the new  product  roll  outs in 2004.  We  anticipate
          continuing  to invest in sales and  marketing in  connection  with the
          product launches.

               General and  administrative  expenses increased $180,000 (or 33%)
          to $723,000 for the three months ended March 31, 2004,  as compared to
          the same  period in 2003.  This was  primarily  due to an  increase in
          business insurance of $27,000, amortization of deferred offering costs
          related  to  the  convertible   note  issued  to  Laurus  of  $43,000,
          fluctuations in foreign currency of $32,000, and increases in expenses
          related to investor relations of $35,000.

                                       19

<PAGE>


               Research  and  Development   costs  for  the  two  quarters  were
          approximately  the same for the three  months ended March 31, 2004 and
          2003 at $600,000.  Costs for Research and Development can fluctuate on
          a  quarter-by-quarter  basis  depending  on  status  of  projects  and
          intellectual property strategies.

               Interest  expense  increased  $168,000 for the three months ended
          March 31, 2004,  as compared to the same period in 2003.  This was the
          result of the interest  expense related to the convertible note issued
          to  Laurus  including  accretion  of  note  discount  of  $85,000  and
          amortization  of the  beneficial  conversion  of $97,000,  offset by a
          reduction  in  expense  from  the  payoff  of the  note  payable  with
          Medtronic.

               In 2003,  the Company  recorded a $1,000,000  non-cash  charge to
          interest expense, debt conversion 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.

LIQUIDITY AND CAPITAL RESOURCES

               Since our  incorporation  in  January  1993,  our  expenses  have
          exceeded sales,  resulting in an accumulated  deficit of approximately
          $38.2 million at December 31, 2003 and approximately  $39.6 million at
          March 31, 2004.

               On November 15, 2000, we completed a $3.2 million debt  financing
          with  Medtronic  Asset  Management,  Inc.,  an affiliate of Medtronic,
          Inc.,  one of our  shareholders.  Approximately  $2.3  million of that
          amount  was used to repay  outstanding  amounts  on our  then-existing
          revolving credit  facility.  The principal and all accrued interest on
          the Medtronic  note was to be repaid on November 15, 2003 and the note
          was secured by a pledge by David Jenkins, the Chairman of our Board of
          Directors, of shares of common stock of a privately-held  corporation.
          On March 12,  2003,  the due date of the note was extended to April 1,
          2004. In connection with the extension, we paid $1 million of the note
          upon receipt of certain  equity  proceeds and  increased  the interest
          rate to the prime  rate plus 3% from the prime rate plus 2%. The prime
          rate  was  4% at  December  31,  2003.  We had  accrued  approximately
          $728,000 of  interest  expense as of December  31,  2003.  In February
          2004,  the  principal  amount  of this  note  along  with all  accrued
          interest was repaid.

               During the year ended  December  31,  2001,  we  consummated  the
          private sale and issuance of our Series A convertible  preferred stock
          to  Medtronic,  Inc.  ("Medtronic").  In 2002,  Medtronic  converted a
          portion of its  preferred  stock into shares of our common  stock.  At
          March 31, 2004 and December 31,  2003,  Medtronic  held 373,779 of our
          Series A Preferred Shares which are convertible into 387,946 shares of
          our common stock at the option of Medtronic or us in  accordance  with
          the terms of the agreement with Medtronic.

               On September 5, 2002, we entered into a stock purchase  agreement
          and license  agreement with Boston Scientific  Corporation  ("BSC") in
          connection with a strategic joint development project. The development
          project was completed in the third  quarter of 2003.  As a result,  we
          have  marketing  rights  to the  developed  technology  and  will  pay
          royalties  to BSC based on the market value of the  technology  at the
          time  of our  sale  of the  integrated  product.  The  stock  purchase
          agreement  with BSC allowed for the sale of up to $3,000,000 of common
          stock based on the  achievement by us of milestones in the development
          of certain cardiac  electrophysiology  technology. We achieved each of
          the  milestones,  and the  common  stock was 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, we received $500,000 for 210,084 shares of our common stock
          issued at the  ten-day  trailing  average  trading  price of $2.38 per
          share.  On February 4, 2003, we 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, we issued 357,398 shares
          of common  stock in exchange for another  payment of $500,000.  During
          the third quarter of 2003, we issued 601,631 shares of common stock in
          exchange for the final payments totaling $1,500,000.

                                       20

<PAGE>


               On November 21, 2002,  we issued  $750,000 of notes  secured by a
          mortgage on our  facility in West  Berlin,  New Jersey.  Interest  was
          payable  quarterly  at 8% and the  notes  were  collateralized  by the
          building.  The  notes  were  convertible  into  our  common  stock  at
          escalating amounts over its three year term as follows:

          o    November 21, 2002 through  December 31, 2003 convertible at $2.14
               per share

          o    January 1, 2004 through  December 31, 2004  convertible  at $2.50
               per share

          o    January 1, 2005 through  December 31, 2005  convertible  at $3.00
               per share

               On April 2, 2003, the holders of the mortgage notes  converted an
          aggregate of $375,000 of the mortgage notes into 300,000 shares of our
          common  stock.  In  connection  with the  conversion,  we 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,  we 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, we issued warrants to the EGS Entities
          to purchase an aggregate of 50,000  shares of our common stock at 105%
          of the closing trading price of its common stock on December 30, 2002.
          On January  31,  2003,  we issued  common  stock in a related  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 our  common  stock in and on the same  terms as the
          private  placement.  A managing  member of the EGS  Entities is also a
          member of our Board of Directors.

               On January 31, 2003, we completed a $2,470,000  private placement
          of our  common  stock  to  various  accredited  investors.  We  issued
          2,007,475 shares of our 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, which was $1.6943. In the private
          placement,  we  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 our common stock 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 in 2003 and we recorded a
          $1,000,000  non-cash charge in connection with the conversion in 2003.
          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  issued in connection  with
          the private  placement may be repurchased by us at $.01 per warrant at
          any time after the average closing price of our common stock,  for any
          twenty  consecutive  trading days, has equaled or exceeded  $2.54.  In
          July of 2003,  the closing  price  requirement  for  repurchase of the
          warrants  was met, we gave notice to  repurchase  the  warrants to the
          warrant  holders,  and 794,790 shares of common stock were issued upon
          exercise of these warrants.  In April 2003, we completed an additional
          $210,000  private  placement of 120,000  shares of our common stock to
          various accredited investors.


                                       21

<PAGE>

               On August 28,  2003,  we issued a Secured  Convertible  Note (the
          "Laurus  Convertible Note") to Laurus Master Fund, Ltd. ("Laurus") and
          entered into a related  Security  Agreement  with Laurus,  pursuant to
          which  Laurus  provided  us with a  $4,000,000  revolving  asset-based
          credit facility in the form of a three-year  Laurus  Convertible  Note
          secured by our accounts receivable, inventory, real property and other
          assets, other than intellectual property.

               At  the  closing  of  the  transaction,   we  issued  the  Laurus
          Convertible Note to Laurus having a principal amount of $4,000,000 and
          received net proceeds of $2,661,600. The remaining $1,000,000 has been
          funded  by  Laurus  and is  expected  to be  available  to us upon the
          fulfillment  of  certain  requirements   associated  with  documenting
          Laurus' security  interest in our real property and is included on the
          Balance Sheet under the caption  "Restricted Cash". The balance of the
          proceeds  was  used to pay  fees  incurred  in  connection  with  this
          transaction. Deferred financing fees are being amortized over the life
          of the Laurus Convertible Note using the effective interest method. In
          addition,  we paid a portion of the fees  payable to an  intermediary,
          Biscayne Capital Markets, Inc.  ("Biscayne"),  in 40,000 shares of our
          common  stock  having a market  value on the date of  closing  of this
          transaction  equal  to  $100,000.  The  net  proceeds  of  the  Laurus
          Convertible Note will be used for working capital purposes and payment
          of outstanding debt.

               The portion of the Laurus  Convertible  Note against which Laurus
          advances funds based on our accounts  receivable bears interest at the
          prime rate, with a floor of 4%, which is an effective interest rate of
          approximately 17% (including accretion of discount and amortization of
          beneficial   conversion  feature),   and  the  balance  (the  "Advance
          Amounts")  bears  interest  at the  prime  rate  plus 2%,  which is an
          effective  interest  rate  of  5.16%.  One  half  of  Advance  Amounts
          outstanding on February 28, 2005  (approximately  $681,000 as of March
          31, 2004) is required to be repaid on or before February 28, 2005. The
          remaining  balance of the Advance  Amounts  outstanding on the date of
          the  closing is required  to be repaid on or before  August 28,  2006.
          Subject to certain  rights of  cancellation,  we may extend the credit
          facility by Laurus,  on a year-by-year  basis,  commencing  August 28,
          2006.  We may repay in cash,  without  penalty,  up to $500,000 of the
          Laurus  Convertible  Note in any one calendar  year,  plus all Advance
          Amounts.

               Subject to certain volume  limitations and other conditions,  all
          or a portion of the Laurus  Convertible  Note is convertible  into our
          common  stock at our  option if the market  price of our common  stock
          reaches a level, for 11 consecutive  trading days, which is above 120%
          of $2.55 (the  "Fixed  Conversion  Price"),  which is a price that was
          greater  than  the  market  price of our  common  stock on the date of
          closing.  Subject to certain volume  limitations and other conditions,
          Laurus  has the  option  to  convert  all or a portion  of the  Laurus
          Convertible  Note  into  shares  of our  common  stock  at  the  Fixed
          Conversion Price.

               Following  the  conversion  into our  common  stock by us  and/or
          Laurus of an aggregate of $2,000,000  of the  principal  amount of the
          Laurus Convertible Note (a "Conversion  Event"),  the Fixed Conversion
          Price will be adjusted  upward to a price which is 115% of the average
          of the closing  price of our common  stock for the three  trading days
          prior  to  the  Conversion  Event.  Subject  to  certain  limitations,
          including the repayment  obligations  with respect to Advance  Amounts
          described  above,  the dollar amounts of the Laurus  Convertible  Note
          converted may be re-borrowed.


                                       22

<PAGE>

               The  Fixed  Conversion  Price  is  subject  to  adjustment,  with
          customary  exceptions and on a  weighted-average  basis, in connection
          with sales of our securities  below the Fixed Conversion Price then in
          effect,   and  is  also  subject  to  adjustment   for  stock  splits,
          combinations,  stock  dividends  and  similar  events.  As part of the
          credit facility transaction, Laurus and the intermediary also received
          warrants  to  purchase an  aggregate  of 240,750  shares of our common
          stock (the "Warrants"), with exercise prices set as follows: $2.93 per
          share for the purchase of up to the first  133,750  shares,  $3.19 per
          share for the purchase of up to the next 80,250 shares,  and $3.70 per
          share  for  the  purchase  of up  to  the  final  26,750  shares.  The
          expiration date of the Warrants is August 28, 2010. The exercise price
          of the Warrants and the number of shares  underlying  the Warrants are
          subject to adjustments for stock splits, combinations, stock dividends
          and similar events.

               We  registered,  under the  Securities  Act of 1933,  as amended,
          1,500,000  shares of our common  stock which may be received by Laurus
          upon  conversion  of the Laurus  Convertible  Note and exercise of the
          Warrant and will be required to register the  remainder of such shares
          (approximately 300,000 shares) on the date which is the earlier of (i)
          one  year  from the  closing  of the  transaction  or (ii) the date of
          conversion of the $2 million portion of the Laurus  Convertible  Note.
          In accordance with the provisions of Emerging Issues Task Force (EITF)
          Issue  00-27,  "Application  of EITF Issue No.  98-5  `Accounting  for
          Convertible   Securities  with  Beneficial   Conversion   Features  of
          Contingently  Adjustable  Conversion  Ratios',  to Certain Convertible
          Securities",  the  allocated  value  of the  Laurus  Convertible  Note
          contained a  beneficial  conversion  feature  calculated  based on the
          difference  between the  effective  conversion  price of the  proceeds
          allocated to the Laurus  Convertible Note and the Warrants at the date
          of issuance. The amount arising from the beneficial conversion feature
          aggregated  approximately  $486,000 and is being amortized as interest
          expense from the date of the issuance of the Laurus  Convertible  Note
          to the  mandatory  redemption  date of August 28, 2006.  We valued the
          Laurus  Convertible Note and the Warrants at issuance.  The fair value
          of the Warrants at the time of issue was $407,500.  In accordance with
          EITF 00-19,  "Accounting for Derivative Financial  Instruments Indexed
          to, and Potentially  Settled in, a Company's Own Stock," we marked the
          Warrants to market at September 30, 2003  incurring a non-cash  charge
          of $264,000.  The registration  rights  agreement  associated with the
          Laurus  Convertible  Note was amended on  November  25, 2003 and, as a
          result,  the amount  associated  with the warrants was  transferred to
          equity.  We marked the Warrants to market at the date of the amendment
          which  reduced  the  overall  expense to  $210,750  for the year ended
          December 31, 2003.  The net carrying  value of the Laurus  Convertible
          Note,  after  allocation of the fair value of the  Warrants,  is being
          accreted to interest  expense over the life of the agreement using the
          effective interest method.

               On  December  26,  2003,  we  completed  an  $8,200,000   private
          placement of our common stock to various accredited  investors whereby
          we issued  3,200,000 shares of our common stock at a purchase price of
          $2.56 per share.

               Net cash used in operating activities for the three months ending
          March 31, 2004 increased  $1,308,000 as compared to the same period in
          2003.  The increase in our net use of cash in  operations  during 2004
          was  primarily  due to an  increase  in  inventory  and a decrease  in
          accrued  expenses.  Inventory  on hand  increased  as a result  of the
          number of new  product  lines  approved in the second half of 2003 and
          accrued  expenses  decreased  with the payment of accrued  interest to
          Medtronic.  Payments to related  parties are made on terms  similar to
          those of other suppliers. Capital expenditures, net of disposals, were
          $15,000  for the three  months  ended  March 31,  2004 as  compared to
          $12,000 in 2003. We expect to purchase capital equipment in 2004 as we
          grow, however, we currently do not have any commitments for purchases.
          We lease office and  manufacturing  space and certain office equipment
          under operating leases.

                                       23

<PAGE>


               Assets decreased $4,487,000 from $21,661,000 at December 31, 2003
          to  $17,174,000  at March 31, 2004.  The change in assets was due to a
          number of factors.  Cash and cash  equivalents,  including  restricted
          cash, decreased by $4,165,000 from $11,249,000 at December 31, 2003 to
          $7,084,000  at March 31,  2004,  mainly  due to the  repayment  of the
          Medtronic  debt and  accrued  interest  of  approximately  $2,920,000.
          Prepaid expenses and other assets, both short and long term, decreased
          approximately  $208,000. The decrease in these balance sheet items was
          primarily  a result of the  reduction  of both the  deferred  offering
          costs and the  beneficial  conversion  feature in connection  with the
          convertible note of $44,000 and $97,000 respectively.

               Liabilities decreased  approximately  $3,588,000 from $10,035,000
          at December 31, 2003 to  $6,446,000  at March 31, 2004.  This decrease
          was  primarily  due to the  repayment of  approximately  $2,920,000 in
          principal and interest to Medtronic in February 2004.

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

               We have 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,    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 our existing products,  market
          acceptance  of  the  ALERT  System  and   ultrasound   products,   and
          developmental,  regulatory  and market  success of new products  under
          development, as well as our ability to establish, preserve and enforce
          intellectual property rights related to our 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.  Based upon our current plans and projections,  we believe that
          our  existing  capital  resources  will  be  sufficient  to  meet  our
          anticipated capital needs for at least the next twelve months.

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.

                                       24

<PAGE>


               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.

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Not Applicable.

ITEM 2. CHANGES IN SECURITIES.

         (a) Not applicable.

         (b) Not applicable.

         (c) Not applicable.

         (d) Not applicable.

         (e) 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.

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Exhibits

          The  exhibits  are listed in the Exhibit  Index  appearing  at page 27
     herein.

(b)      Reports on Form 8-K.

          The  following  report on Form 8-K was filed during the quarter  ended
     March 31, 2004:

          On March 15, 2004,  under Item 12, Results of Operations and Financial
     Condition,  attaching a press release  regarding our financial  results and
     certain highlights from the fourth quarter and year end 2003.

                                       23



<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:  MAY 12, 2004     By: /S/  REINHARD SCHMIDT
     --------------         ---------------------
                            Reinhard Schmidt
                            President and Chief Executive Officer and Director
                            (Principal Executive Officer)


Date:  MAY 12, 2004     By: /S/ MATTHEW C. HILL
     --------------         -------------------
                            Matthew C. Hill
                            Chief Financial Officer
                            (Principal Financial and Accounting Officer)


                                       26

<PAGE>




                                  EXHIBIT INDEX
<TABLE>
<S>                                 <C>
EXHIBIT NUMBER                  DESCRIPTION


3.1  Amended and Restated  Certificate of Incorporation  of EP MedSystems,  Inc.
     filed with the Secretary 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 State of New Jersey on
     November 6, 1998 (16)

3.3  Certificate  of  Amendment  to the  Amended  and  Restated  Certificate  of
     Incorporation of EP MedSystems, Inc., filed with the Secretary of the State
     of New Jersey on October 21, 2001 (14)

3.4  Certificate  of  Amendment  to the  Amended  and  Restated  Certificate  of
     Incorporation of EP MedSystems, Inc., filed with the Secretary of the State
     of New Jersey on December 22, 2003 (17)

3.5  Bylaws, as amended (1)

4.1  Form of Common Stock and Warrant Purchase Agreement, dated as of August 31,
     1999, between EP Med and the Purchasers named therein (including Exhibit A:
     Form of Registration Rights Agreement and Exhibit B: Form of Warrant) (7)

4.2  Form of Replacement Warrant,  dated as of February 15, 2000, between EP Med
     and the  Purchasers  named  therein  (including  Amendment to  Registration
     Rights Agreement and Form of Replacement Warrant) (10)

4.3  Form of Amended and Restated Common Stock and Warrant  Purchase  Agreement,
     dated as of February 16, 2001, between EP Med and the Purchasers (including
     Exhibit A: Form of  Registration  Rights  Agreement  and Exhibit B: Form of
     Warrant) (8)

4.4  Registration Rights Agreement, dated March 28, 2001, between EP Med and the
     Purchasers identified therein (8)

4.5  Warrant, dated March 28, 2001, issued by EP Med to Cardiac Capital, LLC (8)

4.6  Warrant, dated March 28, 2001, issued by EP Med to Texada Trust (8)

4.7  Warrant,  dated as of July 20, 2001,  issued by EP Med to Reinhard  Schmidt
     (13)

4.8  Preferred Stock Purchase  Agreement,  dated as of October 23, 2001, between
     EP MedSystems and Medtronic, Inc. (14)

4.9  Registration  Rights  Agreement,  dated as of October 23, 2001,  between EP
     MedSystems and Medtronic, Inc. (14)

                                       27

<PAGE>




4.10 Common Stock and Warrant Purchase Agreement,  dated as of January 31, 2003,
     by and between EP MedSystems, Inc. and each of the several purchasers named
     in Exhibit A thereto. (9)

4.11 Registration Rights Agreement, dated as of January 31, 2003, by and between
     EP MedSystems, Inc. and the Initial Investors referred to therein. (9)

4.12 Warrant,  dated January 31, 2003, issued by EP MedSystems,  Inc. to Michael
     R. Hamblett. (9)

4.13 Warrant, dated January 31, 2003, issued by EP MedSystems,  Inc. to Heimdall
     Investments Ltd. (9)

4.14 Warrant,  dated  January 31,  2003,  issued by EP  MedSystems,  Inc. to EGS
     Private Healthcare Partnership, L.P. (9)

4.15 Warrant,  dated  January 31,  2003,  issued by EP  MedSystems,  Inc. to EGS
     Private Healthcare Counterpart, L.P. (9)

4.16 Amended  and  Restated   Secured   Promissory   Note  issued  to  Medtronic
     International  Limited on March 13, 2003,  together with First Amendment to
     Note  Purchase   Agreement,   dated  March  13,  2003,   between  Medtronic
     International Limited and EP MedSystems, Inc. (9)

4.17 Stock  Purchase  Agreement,  dated as of  September  5,  2002,  between  EP
     MedSystems, Inc. and Boston Scientific Corporation. (15)

4.18 Registration  Rights Agreement,  dated as of September 5, 2002,  between EP
     MedSystems, Inc. and Boston Scientific Corporation (15).

4.19 Mortgage Note, dated November 21, 2002, issued to William Winstrom,  in the
     principal  amount of $375,000,  together with related Mortgage and Security
     Agreement. (21)

4.20 Mortgage Note, dated November 21, 2002, issued to Anthony Varrichio, in the
     principal  amount of $375,000,  together with related Mortgage and Security
     Agreement. (21)

4.21 Agreement between Anthony Varrichio and EP MedSystems, Inc., dated April 2,
     2003,  effecting  conversion of the Mortgage Note into 150,000 shares of EP
     MedSystems common stock. (19)

4.22 Agreement between William Winstrom and EP MedSystems,  Inc., dated April 2,
     2003,  effecting  conversion of the Mortgage Note into 150,000 shares of EP
     MedSystems common stock. (19)

4.23 Common Stock Purchase Agreement between EP MedSystems, Inc. and the several
     purchasers named therein, dated as of April 11, 2003. (18)


                                       28

<PAGE>



4.24 Amendment No. 1, dated April 11, 2003, to  Registration  Rights  Agreement,
     dated as of January 31, 2003,  by and between EP  MedSystems,  Inc. and the
     Initial Investors referred to therein. (18)

4.25 Agreement made as of June 27, 2003, by and between EP MedSystems,  Inc. and
     Anthony Varrichio. (16)

4.26 Agreement made as of June 27, 2003, by and between EP MedSystems,  Inc. and
     William Winstrom. (16)

4.27 Notice of EP MedSystems' Right to Repurchase Warrants, dated July 23, 2003.
     (16)

4.28 Secured  Convertible  Note, dated August 28, 2003, with Laurus Master Fund,
     Ltd.  in  the  principal  amount  of  $4,000,000,   together  with  related
     Registration Rights Agreement, Guaranty, and Security Agreement. (20)

4.29 Amendment,  dated November 25, 2003 to Registration  Rights Agreement dated
     August 28, 2003 with Laurus Master Fund, Ltd. (23)

4.30 Warrant,  dated August 28, 2003,  issued by EP  MedSystems,  Inc. to Laurus
     Masterfund, Ltd. (11)

4.31 Warrant,  dated August 28, 2003, issued by EP MedSystems,  Inc. to Biscayne
     Capital Markets, Inc. (13)

4.32 Form of Common Stock Purchase  Agreement dated December 26, 2003 (identical
     agreements,  except for  number of shares of Common  Stock  acquired,  were
     executed by each of the selling shareholders) (17)

4.33 Form of Registration  Rights  Agreement dated December 26, 2003 (identified
     agreements were executed by each of the selling shareholders) (17)

10.1 License  Agreement,  dated as of November  1, 1995,  between EP Med and Dr.
     Eckhard Alt, as amended (1)

10.2 License Agreement, dated as of November 1, 1995, between EP Med and Sanjeev
     Saksena (1)

10.3 License  Agreement,  dated  February  27, 1997  between EP  MedSystems  and
     EchoCath,  Inc. (2) together with settlement  agreement,  dated November 6,
     2001 between EP MedSystems and EchoCath, Inc.

10.4 Master Manufacturing Agreement, dated April 16, 1996, between EP Med and Hi
     Tronics Designs, Inc. (1)

10.5* Amended and Restated 1995 Long-Term Incentive Plan (3)

10.6* Amended and Restated 1995 Director Option Plan (3)

10.7* Amendment to EP MedSystems, Inc. 1995 Director Option Plan (22)



                                       29

<PAGE>

10.8* 2002 Stock Option Plan (22)

10.9 Agreement of Lease,  dated August 25,  1997,  between EP Med and  Provident
     Mutual Life Insurance Company, as landlord (5)

10.10Note Purchase Agreement,  dated as of November 15, 2000, between EP Med and
     Medtronic Asset Management, Inc. (11)

10.11Secured  Promissory  Note,  dated  November 15,  2000,  issued by EP Med to
     Medtronic Asset Management, Inc. (11)

10.12Stock Pledge  Agreement,  dated as of November 15, 2000,  between Medtronic
     Asset Management, Inc. and David Jenkins (11)

10.13Subordination  Agreement,  dated as of November 15, 2000, between Medtronic
     Asset Management, Inc. and Fleet National Bank (11)

10.14Agreement,  dated as of March 9,  1998,  between  ProCath  Corporation  and
     Allan Willis (12)

10.15License  Agreement,  dated  as of  January  21,  1998,  between  EP Med and
     Incontrol, Inc. (13)

10.16Employment  Agreement,  dated  as of  July  20,  2001,  between  EP Med and
     Reinhard Schmidt (13)

10.17Promissory  Note dated  December 30, 2002 between EP  MedSystems,  Inc. and
     EGS Healthcare Limited Partnership (21)

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.


     ------------------------------
<FN>

     *Denotes management contract or compensatory plan or arrangement.
     **Filed herewith.

1.   Incorporated by reference from EP MedSystem,  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 EP Med's Annual  Report on Form 10-KSB for
     the year ended December 31, 1996 previously filed with the Commission.


                                       30

<PAGE>


3.   Incorporated  by  reference  from EP Med'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 Med's Current  Report on Form 8-K dated
     April 14, 1998, previously filed with the Commission.

5.   Incorporated  by reference from the Commission in connection  with EP Med's
     Form 10-KSB for the year ended December 31, 1997 previously  filed with the
     Commission.

6.   Incorporated  by reference  from EP Med's Current Report on Form 8-K, dated
     August 25, 1998, previously filed with the Commission.

7.   Incorporated  by reference  from EP Med's Current Report on Form 8-K, dated
     August 31, 1999, previously filed with the Commission.

8.   Incorporated  by reference  from EP Med's Proxy  Statement  for the special
     meeting of shareholders  held on March 27, 2001  previously  filed with the
     Commission on March 5, 2001.

9.   Incorporated  by referenced from EP Med's Current Report on Form 8-K, dated
     June 11, 2001, previously filed with the Commission.

10.  Incorporated by reference from EP Med's Quarterly Report on Form 10-QSB for
     the quarter ended March 31, 1999 previously filed with the Commission.

11.  Incorporated by reference from EP Med's Quarterly Report on Form 10-QSB for
     the quarter ended September 30, 2000 previously filed with the Commission.

12.  Incorporated  by reference  from EP Med's Annual  Report on Form 10-KSB for
     the year ended  December 31, 2000,  as amended,  previously  filed with the
     Commission.

13.  Incorporated by reference from EP Med's Registration Statement on Form SB-2
     and  Pre-Effective  Amendments  No.1  through 4  previously  filed with the
     Commission  on June 26,  2001,  August 24,  2001,  September  28,  2001 and
     October 12, 2001, respectively.

14.  Incorporated by reference from EP Med's Quarterly Report on Form 10-QSB for
     the quarter ended September 30, 2001.

15.  Incorporated by reference form EP Med's Quarterly Report on Form 10-QSB for
     the quarter ended September 30, 2002.

16.  Incorporated by reference from EP MedSystems,  Inc.'s  Quarterly  Report on
     Form 10-QSB for the quarter ended June 30, 2003  previously  filed with the
     commission.

17.  Incorporated by reference form EP MedSystems, Inc.'s Registration Statement
     on Form S-3 previously filed with the commission on January 22, 2004.

18.  Incorporated by reference to EP MedSystems,  Inc.'s Registration  Statement
     on Form S-3 previously filed with the commission on April 18, 2003.

19.  Incorporated by reference to EP MedSystems,  Inc.'s Registration  Statement
     on Form S-3 previously filed with the commission on October 28, 2003.

20.  Incorporated  by reference to EP MedSystems,  Inc.'s current report on Form
     8-K previously filed with the commission on September 12, 2003.

21.  Incorporated  by reference to EP  MedSystems,  Inc.'s Annual Report on Form
     10-KSB for the year ended December 31, 2002.

22.  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 on July 30, 2002.

23.  Incorporated by reference from EP MedSystems,  Inc.'s Annual Report on Form
     10-KSB for the year ended December 31, 2003.
</FN>

</TABLE>


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