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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q

|  |  |                                                                                        
|- |  | ---------------------------------------------------------------------------------------
|þ |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|  |  |                                                                                        
|  |  | For the Quarterly period Ended December 31, 2003                                       

OR

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|  |  |                                                                                         
|  |  | For the transition period from
 to .                                                    

Commission File No. 0-9407

COMPEX TECHNOLOGIES, INC.


(Exact name of registrant as specified in its charter)


|                                                                         |  |                                                
|------------------------------------------------------------------------ |  | -----------------------------------------------
|Minnesota
(State or other jurisdiction of
incorporation or organization) |  | 41-0985318
(I.R.S. Employer Identification No.)

1811 Old Highway 8
New Brighton, Minnesota 55112
(Address of principal executive offices)

(651) 631-0590
(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. (Yes
[X]  No [   ])

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act) (Yes
[   ] No [X])

Indicate the number of shares outstanding of each of the issuers classes of
common stock as of February 2, 2004 was:

|                             |  |                  
|---------------------------- |  | -----------------
|Common Stock, $.10 par value |  | 12,142,249 Shares

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|                                         |                                                                                               |                                            |  |  |  |  |  | 
|---------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|                                         |                                                                                               | CONSOLIDATED BALANCE SHEETS               
|                                         |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                         |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                         |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                         | ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|PART II  OTHER INFORMATION             
|                                         | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                                         | ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES    
|                                         | ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                      
|                                         | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                                         | ITEM 5. OTHER INFORMATION                                                                    
|                                         | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                              
|Certification of Chief Executive Officer
|Certification of Chief Financial Officer
|Certification Pursuant to Section 906   



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CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains a number of forward-looking
statements where we indicate that we anticipate, believe, expect,
estimate or use similar words to indicate what might happen in the future.
These forward looking statements represent our expectations about future
events, including anticipated product introductions; changes in markets,
customers and customer order rates; changes in third party reimbursement rates;
expenditures for research and development; growth in revenue; taxation levels;
and the effects of pricing decisions. When used in this 10-Q, the words
anticipate, believe, expect, estimate and similar expressions are
generally intended to identify forward-looking statements. You should evaluate
these forward-looking statements in the context of a number of factors that may
affect our financial condition and results of operations, including the
following:



| |  | The rates at which our United States medical products are reimbursed
varies with each third party payer, and also with each product we
sell. Further, the third party payers, including both private payers
such as HMOs and insurance companies, and governmental payers such as
Medicare and Medicaid, adjust their rates of payment from time to
time. We recognize revenue for sale of our products when we have
completed documentation based on the overall percentage of our quoted
historical experience. Because of the variation in payment, it is not
possible for us to estimate and record revenue based on what will be
paid by each third party payer for each product we sell. If the mix
of products we sell and the payers for the patients to whom we sell
products changes, the rate of payment we receive may change. These
changes may require an adjustment in our revenue recognition rates and
policies, resulting in lower revenue.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Like many medical device companies that rely on third party
reimbursement entities for payment, we have a large balance of
uncollected accounts receivable. We also have a reserve for the
portion of those receivables that we estimate will not be collected
based on our historical experience. If we cannot collect an amount of
receivables that is consistent with historical collection rates, we
might be required to increase our reserve and charge off the portion
of receivables we cannot collect. This additional provision for
uncollectible accounts could significantly impact our operating
results.                                                                                                                                                                                                                                                                                                                                     
| 
| |  | In the United States, our products are subject to reimbursement by
private and public healthcare reimbursement entities that generally
impose limits on reimbursement and strict rules on applications for
reimbursement. Changes in the rates, eligibility or requirements for
reimbursement, or failure to comply with reimbursement requirements,
could cause a reduction in our income from operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| 
| |  | We maintain significant amounts of finished goods inventory on
consignment at clinics for distribution to patients. We may not be
able to completely control losses of this inventory and, if inventory
losses are not consistent with historical experience, we might be
required to write off a portion of the carrying value of inventory.
Any write-off could both decrease our income currently, and increase
the rate at which we provide for additions to the reserve for
inventory losses in the future. This increase in the rate of
additions to the reserve could affect our income in future periods.                                                                                                                                                                                                                                                                                                                                            
| 
| |  | The clinical effectiveness of our electrotherapy products has
periodically been challenged and the effectiveness of electrotherapy
products such as those offered by Compex SA for fitness and health
applications has sometimes been questioned. Publicity about the
effectiveness of electrotherapy for pain relief or other clinical
applications and continued questions about the effectiveness of
electrotherapy for conditioning could negatively impact revenue and
income from operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| 
| |  | We operate in both the medical and consumer fitness markets, both of
which are subject to a significant amount of regulation that affects
the way we can advertise our products, sell our products, bill
customers for our products and collect payment for our products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



| |  |  | The products we sell in our United States medical products
business may only be sold on physician prescription and, for most of
those products where there is a government sponsored payer, only if
we receive detailed documentation from the physician indicating the
medical necessity of the product together with forms which we must
submit to the paying agency. In most cases, the reimbursement
agency, including Medicare, requires strict adherence to the
requirements of the form and the failure to properly obtain and
maintain the documentation can result in significant fines,
penalties, and civil litigation. For example, we were subject to a
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |   |  | Medicare whistleblower suit that we settled in 2000 for
approximately $1.6 million. Although we believe we have
implemented a compliance program designed to detect errors in
complying with these regulations, if our program fails, our
operations and results could be adversely affected.                                                                                                                                                                                                                                                                                                                                                                             
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The manufacture of medical products, and the labeling of
those products for sale in the United Sates, requires compliance
with quality assurance and labeling regulations of the Food and Drug
Administration. Although we believe our manufacturing facilities
and operations comply with such regulations, a failure to comply
could result in our inability to manufacture and refurbish products
until compliance is achieved.                                                                                                                                                                                                                                        
|
| |  |  | The marketing of our consumer products is subject to
regulations and oversight by both the FDA and the Federal Trade
Commission relating to misleading advertising. The FTC has
commenced several enforcement actions against advertisers of
abdominal belts during the past few years based on unsubstantiated
claims. Although we have attempted to limit the claims made in our
advertisements to matters that can be substantiated, if the FTC were
to disagree with our conclusions, it could enjoin our marketing of
these products for a period of time and impose fines and penalties.
Any such actions would have a significant adverse impact on our
operations.



| |  | Approximately 38% of our revenue for the six months ended December 31, 2003 was generated by Compex SA, a subsidiary
headquartered in Switzerland that does business primarily in Europe. There are risks in doing business in international
markets which could adversely affect our business, including:
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | regulatory requirements;                                           
| | - |  | -------------------------------------------------------------------
|
| |  |  | export restrictions and controls, tariffs and other trade barriers;
|
| |  |  | difficulties in staffing and managing international operations;    
|
| |  |  | fluctuations in currency exchange rates;                           
|
| |  |  | reduced protection for intellectual property rights;               
|
| |  |  | seasonal reductions in business activity; and                      
|
| |  |  | potentially adverse tax assessments.                               



| |  | We have not sold substantial volumes of consumer products in the United States, but intend to devote significant resources
to market consumer products for health and fitness applications. The consumer market for electrical stimulation products
is new and developing, and our success in this market will depend on a number of factors, including:
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to obtain clearance from the FDA and other
regulatory authorities to market the products for all relevant
consumer applications;                                   
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | our ability to maintain distribution rights with, and to
obtain adequate quantities of product from, the manufacturers of
consumer products for which we serve as distributors;
|
| |  |  | our ability to establish consumer demand with a limited marketing budget;                                                                                                      
|
| |  |  | our ability to secure contracts and shelf space in the United States with significant retailers;                                                                             
|
| |  |  | the effectiveness of our products for their intended applications.                                                                                                             

        We market and sell several products manufactured by third parties, including
abdominal belts and other garment-based consumer products purchased from a
manufacturer in Ireland, iontophoresis products manufactured by a company in
Utah, traction devices manufactured by a company in Minnesota, and electrodes
manufactured by a number of different companies. We generally have less
control over the quality and reliability of these third-party products. If the
products do not comply with their specifications or otherwise fail to properly
function, we may receive an increased amount of returns for which we are
primarily responsible, may be required to recall products, may suffer a
decrease in product reputation and goodwill in the marketplace, and may be
unable to sell products currently on hand. Any of these events could
negatively impact our operations, particularly if sale of these third party
products becomes a substantial part of our business.

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|                               |                              |                                                                             |                                                                                                           
|------------------------------ | ---------------------------- | --------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------
|PART I  FINANCIAL INFORMATION
|                               | ITEM 1. FINANCIAL STATEMENTS
|                               |                              | Included herein is the following unaudited condensed financial information:
|                              
|                               |                              |                                                                             | Consolidated Balance Sheets as of December 31, 2003 and June 30, 2003                                     
|                              
|                               |                              |                                                                             | Consolidated Statements of Operations for the three months and six months ended
December 31, 2003 and 2002
|                              
|                               |                              |                                                                             | Consolidated Statements of Cash Flows for the six months
ended December 31, 2003 and 2002                 
|                              
|                               |                              |                                                                             | Notes to Consolidated Financial Statements                                                                

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COMPEX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

|                                     |                                                                                                                                   |                 |                            |            |            |            |            |              |            |            |  | 
|------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------- | --------------- | -------------------------- | ---------- | ---------- | ---------- | ---------- | ------------ | ---------- | ---------- |  | 
|                                     |                                                                                                                                   |                 |                            |            |            | June 30,   |            | December 31,
|                                     |                                                                                                                                   |                 |                            |            |            | 2003       |            | 2003        
|                                     |                                                                                                                                   |                 |                            |            |            |            |            |             
|ASSETS                               |                                                                                                                                   |                 |                            |            |            |            |            |             
|Current Assets:                      |                                                                                                                                   |                 |                            |            |            |            |            |             
|                                     | Cash and cash equivalents                                                                                                         |                 | $                          | 5,056,007  |            |            | $          | 2,920,406    |           
|                                     | Receivables, less reserve of $15,200,590
and $16,028,109                                                                          |                 |                            | 24,955,130 |            |            |            | 27,403,202   |           
|                                     | Inventories:                                                                                                                      |                 |                            |            |            |            |            |              |           
|                                     |                                                                                                                                   | Raw materials   |                            |            | 1,393,470  |            |            |              | 1,334,383  |           
|                                     |                                                                                                                                   | Work in process |                            |            | 33,670     |            |            |              | 33,608     |           
|                                     |                                                                                                                                   | Finished goods  |                            |            | 10,301,198 |            |            |              | 13,798,988 |           
|                                     | Deferred tax assets                                                                                                               |                 |                            | 4,675,394  |            |            |            | 4,675,394    |           
|                                     | Prepaid expenses                                                                                                                  |                 |                            | 2,378,044  |            |            |            | 2,325,397    |           
|                                     |                                                                                                                                   |                 |                            |            |            |            |            |             
|                                     |                                                                                                                                   |                 | Total current assets       |            |            | 48,792,913 |            |              |            | 52,491,378 | 
|                                     | Property, plant and equipment, net                                                                                                |                 |                            | 4,536,804  |            |            |            | 4,598,704    |           
|                                     | Goodwill, net                                                                                                                     |                 |                            | 10,583,287 |            |            |            | 15,691,113   |           
|                                     | Other intangible assets, net                                                                                                      |                 |                            | 883,634    |            |            |            | 750,781      |           
|                                     | Deferred tax assets                                                                                                               |                 |                            | 750,926    |            |            |            | 826,170      |           
|                                     | Other assets                                                                                                                      |                 |                            | 104,743    |            |            |            | 149,935      |           
|                                     |                                                                                                                                   |                 |                            |            |            |            |            |             
|                                     |                                                                                                                                   | $               | 65,652,307                 |            |            | $          | 74,508,081 |             
|                                     |                                                                                                                                   |                 |                            |            |            |            |            |             
|LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                                                   |                 |                            |            |            |            |            |             
|Current Liabilities:                 |                                                                                                                                   |                 |                            |            |            |            |            |             
|                                     | Current maturities of long-term debt                                                                                              |                 | $                          | 5,363,850  |            |            | $          | 2,208,284    |           
|                                     | Note payable                                                                                                                      |                 |                            | 4,500,000  |            |            |            | 1,000,000    |           
|                                     | Accounts payable                                                                                                                  |                 |                            | 4,028,608  |            |            |            | 4,799,576    |           
|                                     | Accrued liabilities:                                                                                                              |                 |                            |            |            |            |            |              |           
|                                     |                                                                                                                                   | Payroll         |                            |            | 1,567,710  |            |            |              | 1,869,911  |           
|                                     |                                                                                                                                   | Commissions     |                            |            | 679,015    |            |            |              | 1,045,199  |           
|                                     |                                                                                                                                   | Income taxes    |                            |            | 2,725,341  |            |            |              | 1,464,689  |           
|                                     |                                                                                                                                   | Other           |                            |            | 3,349,986  |            |            |              | 5,249,380  |           
|                                     |                                                                                                                                   |                 |                            |            |            |            |            |             
|                                     |                                                                                                                                   |                 | Total current liabilities  |            |            | 22,214,510 |            |              |            | 17,637,039 | 
|Long-Term Liabilities:               |                                                                                                                                   |                 |                            |            |            |            |            |             
|                                     | Long-term debt                                                                                                                    |                 |                            | 1,217,268  |            |            |            | 3,085,460    |           
|                                     | Deferred tax liabilities                                                                                                          |                 |                            | 675,885    |            |            |            | 733,527      |           
|                                     |                                                                                                                                   |                 |                            |            |            |            |            |             
|                                     |                                                                                                                                   |                 | Total liabilities          |            |            | 24,107,663 |            |              |            | 21,456,026 | 
|Stockholders Equity:                |                                                                                                                                   |                 |                            |            |            |            |            |             
|                                     | Common stock, $.10 par value; 30,000,000 shares authorized;
issued and outstanding 10,948,469 and 12,115,925 shares,
respectively |                 |                            | 1,094,847  |            |            |            | 1,211,592    |           
|                                     | Preferred stock, no par value; 5,000,000 shares authorized; none
issued and outstanding                                           |                 |                            |           |            |            |            |             |           
|                                     | Additional paid-in capital                                                                                                        |                 |                            | 21,650,978 |            |            |            | 30,397,975   |           
|                                     | Accumulated other non-owner changes in equity                                                                                     |                 |                            | 1,870,183  |            |            |            | 2,931,112    |           
|                                     | Retained earnings                                                                                                                 |                 |                            | 16,928,636 |            |            |            | 18,511,376   |           
|                                     |                                                                                                                                   |                 |                            |            |            |            |            |             
|                                     |                                                                                                                                   |                 | Total stockholders equity |            |            | 41,544,644 |            |              |            | 53,052,055 | 
|                                     |                                                                                                                                   |                 |                            |            |            |            |            |             
|                                     |                                                                                                                                   | $               | 65,652,307                 |            |            | $          | 74,508,081 |             
|                                     |                                                                                                                                   |                 |                            |            |            |            |            |             

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COMPEX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                  |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |            |            |            | 
|------------------------------------------------- | ----------------------------------- | ---------------------- | -------------------------- | ---------- | ------------------ | ---------- | ---------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | 
|                                                  |                                     |                        |                            |            | Three Months Ended |            | Six Months Ended
|                                                  |                                     |                        |                            |            | December 31        |            | December 31     
|                                                  |                                     |                        |                            |            |                    |            |                 
|                                                  |                                     |                        |                            |            | 2002               |            | 2003             |            | 2002       |            | 2003      
|                                                  |                                     |                        |                            |            |                    |            |                  |            |            |            |           
|Net sales and rental revenue                      |                                     | $                      | 18,735,080                 |            |                    | $          | 22,464,599       |            |            | $          | 36,472,820 |            |            | $          | 41,620,865 |           
|Cost of sales and rentals                         |                                     |                        | 5,777,255                  |            |                    |            | 7,160,507        |            |            |            | 11,224,682 |            |            |            | 13,597,753 |           
|                                                  |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |           
|                                                  |                                     | Gross profit           |                            |            | 12,957,825         |            |                  |            | 15,304,092 |            |            |            | 25,248,138 |            |            |            | 28,023,112 |           
|Operating expenses:                               |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |           
|                                                  | Selling, general and administrative |                        |                            | 10,749,933 |                    |            |                  | 12,489,166 |            |            |            | 20,710,537 |            |            |            | 23,892,408 |           
|                                                  | Research and development            |                        |                            | 517,503    |                    |            |                  | 646,673    |            |            |            | 1,041,576  |            |            |            | 1,275,150  |           
|                                                  |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |           
|                                                  |                                     |                        | Total operating expenses   |            |                    | 11,267,436 |                  |            |            | 13,135,839 |            |            |            | 21,752,113 |            |            |            | 25,167,558 | 
|                                                  |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |           
|                                                  |                                     | Income from operations |                            |            | 1,690,389          |            |                  |            | 2,168,253  |            |            |            | 3,496,025  |            |            |            | 2,855,554  |           
|Other income (expense):                           |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |           
|                                                  | Interest expense                    |                        |                            | (101,647   | )                  |            |                  | (142,868   | )          |            |            | (214,115   | )          |            |            | (296,611   | )         
|                                                  | Other                               |                        |                            | 35,510     |                    |            |                  | 22,198     |            |            |            | 43,349     |            |            |            | 77,797     |           
|                                                  |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |           
|                                                  |                                     |                        | Income before income taxes |            |                    | 1,624,252  |                  |            |            | 2,047,583  |            |            |            | 3,325,259  |            |            |            | 2,636,740  | 
|Income tax provision                              |                                     |                        | 682,000                    |            |                    |            | 819,000          |            |            |            | 1,396,000  |            |            |            | 1,054,000  |           
|                                                  |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |           
|                                                  |                                     | Net income             |                            | $          | 942,252            |            |                  | $          | 1,228,583  |            |            | $          | 1,929,259  |            |            | $          | 1,582,740  |           
|                                                  |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |           
|Net income per common and
common equivalent share |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |           
|                                                  |                                     | Basic                  |                            | $          | 0.09               |            |                  | $          | 0.11       |            |            | $          | 0.18       |            |            | $          | 0.14       |           
|                                                  |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |           
|                                                  |                                     | Diluted                |                            | $          | 0.08               |            |                  | $          | 0.10       |            |            | $          | 0.17       |            |            | $          | 0.13       |           
|                                                  |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |           
|Weighted average number of shares
outstanding     |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |           
|                                                  |                                     | Basic                  |                            |            | 10,965,635         |            |                  |            | 11,561,292 |            |            |            | 10,951,112 |            |            |            | 11,293,216 |           
|                                                  |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |           
|                                                  |                                     | Diluted                |                            |            | 11,145,024         |            |                  |            | 12,593,070 |            |            |            | 11,095,913 |            |            |            | 12,217,516 |           
|                                                  |                                     |                        |                            |            |                    |            |                  |            |            |            |            |            |            |            |            |           

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COMPEX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                 |                                                       |                                                                                  |                                                                                   |                                                      |   |                  |            |            |   |         |            |  
|------------------------------------------------ | ----------------------------------------------------- | -------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ---------------------------------------------------- | - | ---------------- | ---------- | ---------- | - | ------- | ---------- | -
|                                                 |                                                       |                                                                                  |                                                                                   |                                                      |   | Six Months Ended
|                                                 |                                                       |                                                                                  |                                                                                   |                                                      |   | December 31     
|                                                 |                                                       |                                                                                  |                                                                                   |                                                      |   |                 
|                                                 |                                                       |                                                                                  |                                                                                   |                                                      |   | 2002             |            | 2003      
|                                                 |                                                       |                                                                                  |                                                                                   |                                                      |   |                  |            |           
|Operating Activities:                            |                                                       |                                                                                  |                                                                                   |                                                      |   |                  |            |           
|                                                 | Net income                                            |                                                                                  | $                                                                                 | 1,929,259                                            |   |                  | $          | 1,582,740  |  
|                                                 |                                                       | Adjustments to reconcile net income to net cash
provided by operating activities |                                                                                   |                                                      |   |                  |            |            |   |        
|                                                 |                                                       |                                                                                  | Depreciation and amortization                                                     |                                                      |   | 882,243          |            |            |   | 945,944 |           
|                                                 |                                                       |                                                                                  | Amortization of unearned compensation                                             |                                                      |   | 54,375           |            |            |   | 33,078  |           
|                                                 |                                                       |                                                                                  | Change in deferred taxes                                                          |                                                      |   | 4,688            |            |            |   | (10,909 | )         
|                                                 |                                                       |                                                                                  | Change in current assets and liabilities  net of
amounts acquired in acquisition |                                                      |   |                  |            |            |   |         |           
|                                                 |                                                       |                                                                                  |                                                                                   | Receivables                                          |   |                  | 1,102,576  |            |   |         | (2,176,616 | )
|                                                 |                                                       |                                                                                  |                                                                                   | Inventories                                          |   |                  | 796,139    |            |   |         | (1,160,881 | )
|                                                 |                                                       |                                                                                  |                                                                                   | Prepaid expenses                                     |   |                  | 728,974    |            |   |         | 940,289    |  
|                                                 |                                                       |                                                                                  |                                                                                   | Accounts payable                                     |   |                  | (754,563   | )          |   |         | (1,011,991 | )
|                                                 |                                                       |                                                                                  |                                                                                   | Accrued liabilities                                  |   |                  | (1,581,076 | )          |   |         | (223,119   | )
|                                                 |                                                       |                                                                                  |                                                                                   |                                                      |   |                  |            |           
|                                                 |                                                       |                                                                                  |                                                                                   | Net cash provided by (used in) operating activities  |   |                  | 3,162,615  |            |   |         | (1,081,465 | )
|Investing Activities:                            |                                                       |                                                                                  |                                                                                   |                                                      |   |                  |            |           
|                                                 | Purchases of property and equipment                   |                                                                                  |                                                                                   | (1,035,049                                           | ) |                  |            | (630,515   | )
|                                                 | Cash paid in acquisition, net of cash received        |                                                                                  |                                                                                   |                                                     |   |                  |            | (3,389,912 | )
|                                                 | Change in other assets, net                           |                                                                                  |                                                                                   | 15,508                                               |   |                  |            | (246,855   | )
|                                                 |                                                       |                                                                                  |                                                                                   |                                                      |   |                  |            |           
|                                                 |                                                       |                                                                                  |                                                                                   | Net cash used in investing activities                |   |                  | (1,019,541 | )          |   |         | (4,267,282 | )
|Financing Activities:                            |                                                       |                                                                                  |                                                                                   |                                                      |   |                  |            |           
|                                                 | Proceeds from new debt financing                      |                                                                                  |                                                                                   |                                                     |   |                  |            | 3,835,501  |  
|                                                 | Principal payments on long-term obligations           |                                                                                  |                                                                                   | (1,274,909                                           | ) |                  |            | (6,296,205 | )
|                                                 | Proceeds from (Payments on) line of credit, net       |                                                                                  |                                                                                   | 700,000                                              |   |                  |            | (3,500,000 | )
|                                                 | Proceeds from stock offering                          |                                                                                  |                                                                                   |                                                     |   |                  |            | 8,335,754  |  
|                                                 | Proceeds from exercise of stock options               |                                                                                  |                                                                                   | 114,975                                              |   |                  |            | 398,493    |  
|                                                 | Proceeds from employee stock purchase plan            |                                                                                  |                                                                                   | 20,909                                               |   |                  |            | 96,417     |  
|                                                 |                                                       |                                                                                  |                                                                                   |                                                      |   |                  |            |           
|                                                 |                                                       |                                                                                  |                                                                                   | Net cash (used in) provided by financing activities  |   |                  | (439,025   | )          |   |         | 2,869,960  |  
|                                                 | Effect of exchange rates on cash and cash equivalents |                                                                                  |                                                                                   | (182,139                                             | ) |                  |            | 343,186    |  
|                                                 |                                                       |                                                                                  |                                                                                   |                                                      |   |                  |            |           
|                                                 |                                                       |                                                                                  |                                                                                   | Net increase (decrease) in cash and cash equivalents |   |                  | 1,521,910  |            |   |         | (2,135,601 | )
|Cash and Cash Equivalents at Beginning of Period |                                                       |                                                                                  | 2,086,650                                                                         |                                                      |   |                  | 5,056,007  |           
|                                                 |                                                       |                                                                                  |                                                                                   |                                                      |   |                  |            |           
|Cash and Cash Equivalents at End of Period       |                                                       | $                                                                                | 3,608,560                                                                         |                                                      |   | $                | 2,920,406  |           
|                                                 |                                                       |                                                                                  |                                                                                   |                                                      |   |                  |            |           
|Supplemental Cash Flow Information:              |                                                       |                                                                                  |                                                                                   |                                                      |   |                  |            |           
|                                                 |                                                       |                                                                                  |                                                                                   | Interest paid                                        |   | $                | 209,435    |            |   | $       | 296,611    |  
|                                                 |                                                       |                                                                                  |                                                                                   |                                                      |   |                  |            |           
|                                                 |                                                       |                                                                                  |                                                                                   | Income taxes paid                                    |   | $                | 1,600,200  |            |   | $       | 1,834,183  |  
|                                                 |                                                       |                                                                                  |                                                                                   |                                                      |   |                  |            |           

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COMPEX TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003



|1. |  | Accounting Policies
|-- |  | -------------------

The amounts set forth in the preceding financial statements are unaudited as
of and for the periods ended December 31, 2003 and 2002 but, in the opinion
of management, reflect all adjustments (consisting only of normal recurring
adjustments) necessary for a fair statement of the results for the periods
presented. Such results are not necessarily indicative of results for the
full year. The accompanying financial statements of the Company should be
read in conjunction with the audited consolidated financial statements for
the year ended June 30, 2003 included in the Companys Annual Report on Form
10-K.



|2. |  | Reclassification
|-- |  | ----------------

Certain prior year items have been reclassified to conform with the
current year presentation.



|3. |  | Stock-Based Compensation
|-- |  | ------------------------

The Company has adopted the disclosure-only provisions of SFAS No. 123, as
amended by SFAS No. 148. Accordingly, the Company continues to account for
stock-based compensation using the intrinsic value method as prescribed
under Accounting Principles Board Opinion (APB) No. 25 and related
Interpretations.

Had compensation expense for the Companys stock-based compensation plans
been determined based on the fair value at the grant dates consistent with
the method of SFAS No. 123, the Companys net income and earnings per share
would have been reduced to the pro forma amounts indicated below:

|                 |  |                                      |  |                            |          |                          |  |      |           |      |  |   |           |   |  |   |           |  
|---------------- |  | ------------------------------------ |  | -------------------------- | -------- | ------------------------ |  | ---- | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                 |  |                                      |  | For the Three Months Ended |          | For the Six Months Ended
|                 |  |                                      |  | December
31                |          | December 31             
|                 |  |                                      |  |                            |          |                         
|                 |  |                                      |  | 2002                       |          | 2003                     |  | 2002 |           | 2003
|                 |  |                                      |  |                            |          |                          |  |      |           |     
|Net Income       |  | As reported                          |  | $                          | 942,252  |                          |  | $    | 1,228,583 |      |  | $ | 1,929,259 |   |  | $ | 1,582,740 |  
|                 |  | Pro forma option
expense, net of tax |  |                            | (131,585 | )                        |  |      | (207,682  | )    |  |   | (232,061  | ) |  |   | (392,655  | )
|                 |  | Pro forma                            |  | $                          | 810,667  |                          |  | $    | 1,020,901 |      |  | $ | 1,697,198 |   |  | $ | 1,190,085 |  
|Basic Earnings   |  | As reported                          |  | $                          | .09      |                          |  | $    | .11       |      |  | $ | .18       |   |  | $ | .14       |  
|                 |  | Pro forma                            |  |                            | .07      |                          |  |      | .09       |      |  |   | .15       |   |  |   | .11       |  
|Diluted Earnings |  | As reported                          |  | $                          | .08      |                          |  | $    | .10       |      |  | $ | .17       |   |  | $ | .13       |  
|                 |  | Pro forma                            |  |                            | .07      |                          |  |      | .08       |      |  |   | .15       |   |  |   | .10       |  

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 2003 and 2004: dividend yield of 0%; expected
volatility of 57.6% and 52.3%; risk-free interest rate of 2.94% and 3.22%;
and expected lives of 5 years.

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|4. |  | Goodwill and Intangibles
|-- |  | ------------------------

The Company adopted the new rules on accounting for goodwill and other
intangible assets effective July 1, 2001. Amounts previously recorded as
separately identifiable intangibles for acquired work force and customer
list have been subsumed to goodwill in accordance with FAS 141, increasing
goodwill by $1.6 million as of the date of adoption. Effective with the
adoption of FAS 142, goodwill is no longer amortized but is instead subject
to an annual impairment test. Annual impairment tests conducted in
connection with the adoption of FAS 142 resulted in no required provision
for impairment.

Goodwill and other intangible assets consist of the following:

|                              |                              |   |               |            |                   |   |            |            | 
|----------------------------- | ---------------------------- | - | ------------- | ---------- | ----------------- | - | ---------- | ---------- | 
|                              |                              |   | June 30, 2003 |            | December 31, 2003
|                              |                              |   |               |            |                  
|Goodwill                      |                              | $ | 12,254,717    |            |                   | $ | 17,362,543 |           
|Less accumulated amortization |                              |   | 1,671,430     |            |                   |   | 1,671,430  |           
|                              |                              |   |               |            |                   |   |            |           
|                              | Net goodwill                 |   |               | 10,583,287 |                   |   |            | 15,691,113 | 
|                              |                              |   |               |            |                   |   |            |           
|Other intangible assets:      |                              |   | 1,783,686     |            |                   |   | 1,783,686  |           
|Less accumulated amortization |                              |   | 900,052       |            |                   |   | 1,032,905  |           
|                              |                              |   |               |            |                   |   |            |           
|                              | Net other intangible assets  |   |               | 883,634    |                   |   |            | 750,781    | 
|                              |                              |   |               |            |                   |   |            |           
|                              | Total intangible assets, net |   | $             | 11,466,921 |                   |   | $          | 16,441,894 | 
|                              |                              |   |               |            |                   |   |            |           



|5. |  | Stock Offering
|-- |  | --------------

Compex received net proceeds from sale of common stock to the
shareholders in a private placement, completed on November 20, 2003, of
approximately $8.3 million and may receive up to approximately $2.3
million if the additional investment rights are exercised prior to
February 18, 2004. Compex has used these proceeds to reduce
indebtedness, and intends to use the balance of the proceeds for
marketing and other expenses incurred in expanding its consumer
business, and for other general working capital requirements.

On December 4, 2003, the Company filed a registration statement on Form
S-3 to register the sale of 1,000,000 shares of common stock held by,
and up to 250,000 shares of common stock that may be acquired upon
exercise of additional investment rights held by, three shareholders who
purchased these securities in the previously mentioned private placement.



|6. |  | Note Payable and Long Term Debt
|-- |  | -------------------------------

The Company has a $20,000,000 U. S. credit facility which provides for both
term and revolving borrowings at varying rates based either on the banks
prime rate or LIBOR. As of December 31, 2003, there were borrowings
outstanding of $1,000,000 on the revolving credit line. The Company
currently has $4,000,000 available under the revolving credit line.
Borrowings under the U. S. credit facility are secured by substantially all
assets of the Company other than those pledged as collateral on existing
lease or mortgage obligations. The weighted average rate on borrowings
under the revolving line of credit was 4.00%.

The Company was in compliance with all financial covenants in its U. S.
credit agreement as of December 31, 2003 and for the period then ended.

The Company has a $4,975,000 Swiss credit facility that provides for a
three-year term loan at varying rates. As of December 31, 2003, there were
borrowings outstanding of $3,067,898 under this credit facility.
Borrowings under this credit facility were used to fund the acquisition of
Filsport Assistance S.r.l. on July 3, 2003. Borrowings under the Swiss
credit facility are secured by all of the equity interest held by the

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Companys Swiss subsidiary in Filsport. The first advance on the loan bears interest at 3.69%, the second advance
bears interest at 4.09%, and the third and final advance bears interest at
4.40%.

The Company was in compliance with all financial covenants in its Swiss
Credit agreement as of December 31, 2003 and for the period then ended.



|7. |  | Per Share Data
|-- |  | --------------

Net income per share is calculated in accordance with Financial
Accounting Standards Board Statement No. 128, Earnings Per Share.
Potential common shares are included in the diluted net income per share
calculation when dilutive. Potential common shares consisting of common
stock issuable upon exercise of outstanding common stock options are
computed using the treasury stock method. Our basic net income per share is
computed by dividing net income by the weighted average number of common
                     shares outstanding during the period. Diluted net income per share is
computed by dividing net income by the weighted average number of common
                     shares outstanding during the period, increased to include dilutive
potential common shares issuable upon the exercise of stock options that
were outstanding during the period. The table below is a reconciliation of
the numerator and denominator in the basic and diluted net income per share
calculation.

|                                                                                   |                                                                                  |   |                            |            |                          |   |            |            |      |   |            |            |  |   |            |            | 
|---------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | - | -------------------------- | ---------- | ------------------------ | - | ---------- | ---------- | ---- | - | ---------- | ---------- |  | - | ---------- | ---------- | 
|                                                                                   |                                                                                  |   | For the Three Months Ended |            | For the Six Months Ended
|                                                                                   |                                                                                  |   | December 31                |            | December 31             
|                                                                                   |                                                                                  |   |                            |            |                         
|                                                                                   |                                                                                  |   | 2002                       |            | 2003                     |   | 2002       |            | 2003
|                                                                                   |                                                                                  |   |                            |            |                          |   |            |            |     
|Numerator                                                                          |                                                                                  |   |                            |            |                          |   |            |            |      |   |            |            |  |   |            |           
|                                                                                   | Net income                                                                       |   | $                          | 942,252    |                          |   | $          | 1,228,583  |      |   | $          | 1,929,259  |  |   | $          | 1,582,740  | 
|Denominator                                                                        |                                                                                  |   |                            |            |                          |   |            |            |      |   |            |            |  |   |            |           
|                                                                                   | Denominator for basic net
income per share - weighted
average shares outstanding |   |                            | 10,965,635 |                          |   |            | 11,561,292 |      |   |            | 10,951,112 |  |   |            | 11,293,216 | 
|                                                                                   | Effect of dilutive stock options                                                 |   |                            | 179,389    |                          |   |            | 1,031,778  |      |   |            | 144,801    |  |   |            | 924,300    | 
|                                                                                   |                                                                                  |   |                            |            |                          |   |            |            |      |   |            |            |  |   |            |           
|Denominator for diluted net
income per share - weighted
average shares outstanding |                                                                                  |   | 11,145,024                 |            |                          |   | 12,593,070 |            |      |   | 11,095,913 |            |  |   | 12,217,516 |           
|                                                                                   |                                                                                  |   |                            |            |                          |   |            |            |      |   |            |            |  |   |            |           
|Basic net income per share                                                         |                                                                                  | $ | .09                        |            |                          | $ | .11        |            |      | $ | .18        |            |  | $ | .14        |           
|Diluted net income per share                                                       |                                                                                  |   | .08                        |            |                          |   | .10        |            |      |   | .17        |            |  |   | .13        |           

Employee stock options of 54,478 and 27,239 for the second quarter and six
months ended December 31, 2003, have been excluded from the diluted net
income per share calculation because their effect would be anti-dilutive.
For the second quarter and six months ended December 31, 2002, employee
options of 263,696 and 262,609 have been excluded from the diluted net
income per share calculation because their effect would be anti-dilutive.



|8. |  | Comprehensive Income
|-- |  | --------------------

SFAS No. 130, Reporting Comprehensive Income, establishes standards for
the reporting and display of comprehensive income and its components.
Adjustments to comprehensive income for the six months ended December 31,
2003 consisted solely of gains on translation of its foreign subsidiary
financial statements from the functional currency to US dollars of $1,061,000,
resulting in total comprehensive income of $2,644,000.

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|9. |  | Business Acquisition
|-- |  | --------------------

Acquisition of Filsport Assistance S.r.l.:

On July 3, 2003, the Company acquired substantially all the capital stock of
Filsport Assistance S.r.l., an independent distributor of the Compex® brand
of consumer products in Italy. The transaction involved an exchange of
approximately $4.9 million in cash for stock and provides for additional
contingent consideration of up to 950,000 Euros if a certain performance
milestone is achieved following the transaction. The acquisition was
financed through a newly-established credit facility and with existing
funds. Prior to the acquisition, Filsport operated under an exclusive
distribution arrangement and accounted for 25% of Compex SA total sales (10%
of consolidated sales) in fiscal 2003. The purchase consideration exceeded
the net fair value of tangible assets by $4,511,888 and was assigned to
goodwill.

Pro forma operating results of the Company as if Filsport had been acquired
at the beginning of fiscal 2003 are as follows (unaudited):

|                    |         |   |                      |      |                    |   |            |      | 
|------------------- | ------- | - | -------------------- | ---- | ------------------ | - | ---------- | ---- | 
|                    |         |   | For the Three Months |      | For the Six Months
|                    |         |   | Ended                |      | Ended             
|                    |         |   | December 31, 2002    |      | December 31, 2002 
|                    |         |   |                      |      |                   
|Net Sales           |         | $ | 21,891,912           |      |                    | $ | 42,721,929 |     
|Income before taxes |         |   | 1,572,333            |      |                    |   | 3,460,219  |     
|Net Income          |         |   | 912,333              |      |                    |   | 2,076,219  |     
|Earnings per share  |         |   |                      |      |                    |   |            |     
|                    | Basic   |   | $                    | 0.08 |                    |   | $          | 0.19 | 
|                    | Diluted |   |                      | 0.08 |                    |   |            | 0.19 | 

The Company used a new term loan and a credit line to finance a business
acquisition during the first quarter of fiscal 2004. The fair value of the
assets and liabilities of the acquired company are presented as follows:

|                            |                     |   |                   |           | 
|--------------------------- | ------------------- | - | ----------------- | --------- | 
|                            |                     |   | As of            
|                            |                     |   | December 31, 2003
|                            |                     |   |                  
|Accounts Receivable         |                     | $ | 2,193,589         |          
|Inventories                 |                     |   | 1,775,876         |          
|Prepaid Expenses            |                     |   | 681,888           |          
|Property and equipment, net |                     |   | 135,748           |          
|Intangible assets           |                     |   | 4,511,888         |          
|Other long-term assets      |                     |   | 39,821            |          
|Accounts payable            |                     |   | (1,415,652        | )        
|Accrued liabilities         |                     |   | (1,179,090        | )        
|Liabilities forgiven        |                     |   | (2,563,870        | )        
|Long-term liabilities       |                     |   | (790,286          | )        
|                            |                     |   |                   |          
|                            | Net assets acquired |   | $                 | 3,389,912 | 
|                            |                     |   |                   |          



|10. |  | Segment Information
|--- |  | -------------------

Compex Technologies, Inc. and its consolidated subsidiaries operate in one
reportable segment, manufacture and distribution of electrical stimulation
products for pain management, rehabilitation and fitness applications. The
Companys chief operating decision makers use consolidated results to make
operating and strategic decisions. Net revenue from the United States and
foreign sources (primarily Europe) are as follows:

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|                |  |                          |            |      |  |   |            | 
|--------------- |  | ------------------------ | ---------- | ---- |  | - | ---------- | 
|                |  | For the Six Months Ended
|                |  | December 31             
|                |  |                         
|                |  | 2002                     |            | 2003
|                |  |                          |            |     
|U.S. revenue    |  | $                        | 24,103,382 |      |  | $ | 25,923,574 | 
|Foreign revenue |  |                          | 12,369,438 |      |  |   | 15,697,291 | 
|                |  |                          |            |      |  |   |            | 
|                |  | $                        | 36,472,820 |      |  | $ | 41,620,865 | 
|                |  |                          |            |      |  |   |            | 

Net revenue by product line was as follows:

|                         |  |                          |            |      |  |   |            | 
|------------------------ |  | ------------------------ | ---------- | ---- |  | - | ---------- | 
|                         |  | For the Six Months Ended
|                         |  | December 31             
|                         |  |                         
|                         |  | 2002                     |            | 2003
|                         |  |                          |            |     
|Rehabilitation products  |  | $                        | 7,613,711  |      |  | $ | 9,049,828  | 
|Pain management          |  |                          | 7,739,827  |      |  |   | 7,920,380  | 
|Consumer products        |  |                          | 8,879,219  |      |  |   | 12,012,482 | 
|Accessories and supplies |  |                          | 12,240,063 |      |  |   | 12,638,175 | 
|                         |  |                          |            |      |  |   |            | 
|                         |  | $                        | 36,472,820 |      |  | $ | 41,620,865 | 
|                         |  |                          |            |      |  |   |            | 

During the first six months of fiscal 2003, one customer accounted for
approximately 10% of consolidated revenue. This customer represented
approximately 5% of total accounts receivable at December 31, 2003.



|11. |  | Commitments
|--- |  | -----------

The Company currently has a commitment to purchase additional Slendertone
inventory in Europe of approximately $1.5 million. The Company plans to
fund this purchase with cash from operations. However, the Company expects
to invest in sales and marketing, and in inventory and infrastructure, over
the next twelve months to introduce these products and the Compex sport
products to the United States markets. The Company started this process
during fiscal 2003 and intends to invest more in fiscal 2004 based on our
experience. The Company may also apply cash to acquisitions during future
periods.

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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Overview

We discuss the factors that significantly affected our financial results and
our financial condition in this Managements Discussion and Analysis of
Financial Condition and Results of Operations. For a more complete
understanding of these factors, you should also review our consolidated balance
sheets at June 30, 2002 and June 30, 2003, our consolidated statements of
operations, statements of shareholders equity and statements of cash flows for
the three years ended June 30, 2003, and the notes to those financial
statements. These financial statements and the report of Ernst & Young LLP on
our financial statements are included at Item 8 of our Form 10-K for the year
ended June 30, 2003.

Critical Accounting Policies

We prepare our financial statements in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires that we make estimates and judgments that affect the
reported amounts of our assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. We base these estimates on
historical experience and on various other assumptions that we believe are
reasonable under the circumstances. It is our policy to evaluate and update
these estimates on an ongoing basis. The judgments and policies that we
believe would have the most significant impact on the presentation of our
financial position and results are as follows:

Revenue Recognition and Provisions for Credit Allowances and Returns. In our
U.S. direct distribution electrotherapy business, we recognize revenue upon
notification from a health care provider that equipment has been prescribed and
provided to a patient and approved by the patient or his/her insurance
provider. Many providers reimburse at rates that differ from our invoice rate
based on contracts, buying agreements or negotiated rate adjustments. In
addition, patients sometimes return units after initial acceptance when they
determine that their responsibilities for co-payments, deductibles or other
charges are more than expected. We provide for these credit allowances and
returns by reducing gross revenue by a portion of the invoiced amount and by
recording such amount as part of the reserve for uncollectible accounts
receivable. We estimate the amount of this provision for credit allowances and
returns based on our historical experience with the various reimbursement
entities, any recent notifications of changes in reimbursement rates and our
historic rates of product returns. It is not possible for us to estimate and
record revenue based on what will be paid by each third party payer for each
product we sell, because of variation in the amount of payment as a percentage
of our invoice amount not only among different payers, but within a single
payer among our different products, because we receive third party payments
from several thousand payers, and because of constant change in the rates of
payment. If the mix of products we sell and the payers for the patients to
whom we sell products changes, the rate of payment we receive may change and
our estimate of the rate of payment based on historical experience may prove
inaccurate. These changes, as well as changes in the rate of returns, could
cause our provision for credit allowances and returns to be inadequate.

Reserve for Uncollectible Accounts Receivable.Managing our accounts
receivable represents one of our biggest business challenges. The process of
determining what products will be reimbursed by third party payors and the
amounts that they will reimburse is very complex and the reimbursement
environment is constantly changing. We maintain a reserve for uncollectible
receivables and provide for additions to the reserve to account for the risk of
nonpayment. We set the amount of the reserve and adjust the reserve at the end
of each reporting period based on a number of factors, including historical
rates of collection, trends in the historical rates of collection and current
relationships and experience with insurance companies or other third party
payors. If the rates of collection of past-due receivables recorded for
previous fiscal periods changes, or if there is a trend in the rates of
collection on those receivables, we may be required to change the rate at which
we provide for additions to the reserve. Such a change can significantly
affect operating results in current periods. A change in the rates of our
collection can result from a number of factors, including turnover in
personnel, changes in the reimbursement policies or practices of payors, or
changes in industry rates of reimbursement. Further, the reserve may be
affected by significant charge-offs if a related group of receivables become
doubtful. Accordingly, the provision for uncollectible accounts recorded in
the income statement has fluctuated and may continue to fluctuate significantly
from quarter to quarter as such trends change.

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Carrying Value of Inventory.We maintain a large balance of electrotherapy
products on consignment at clinics and other health care providers that are not
under our control. In the course of our business, some of this product is
lost. Although we have the right in most cases to seek reimbursement for the
lost product from our sales representatives or the health care providers, in
many instances we forgo that right in order to maintain favorable
relationships. We maintain a reserve for the amount of consignment inventory
that may be lost based on our experience as developed through periodic field
audits. We cannot be certain that future rates of product loss will be
consistent with our historical experience and we could be required to increase
the rate at which we provide for such lost inventory, thus adversely affecting
our operating results.

Carrying Value of Intangible Assets.We had a balance of intangible assets of
approximately $16.4 million at December 31, 2003, most of which constituted
goodwill and the value of acquired technology from several acquisitions. We are
required to charge-off the carrying value of identifiable intangibles,
long-lived assets and related goodwill to the extent it may not be recoverable.
We annually assess the impairment of identifiable intangibles, long-lived
assets and related goodwill or whenever events or changes in circumstances
indicate the carrying value may not be recoverable. Factors we consider
important which could trigger an impairment provision include the following:



| |  |  | significant under-performance relative to expected historical or projected future operating results;                   
| | - |  | -----------------------------------------------------------------------------------------------------------------------
|
| |  |  | significant changes in the manner of use of the acquired assets or our overall business strategy;                      
|
| |  |  | significant negative industry or economic trends;                                                                      
|
| |  |  | significant decline in our stock price for a sustained period and
our market capitalization relative to net book value.

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

14



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##### Table of Contents



Results of Operations

The following table sets forth information from the statements of
operations as a percentage of revenue for the periods indicated:

|                                                        |                          |                          |       |                    |      |  |                  |     |      |      |       |     |      |  |       |     |      | 
|------------------------------------------------------- | ------------------------ | ------------------------ | ----- | ------------------ | ---- |  | ---------------- | --- | ---- | ---- | ----- | --- | ---- |  | ----- | --- | ---- | 
|                                                        |                          |                          |       | Three Months Ended |      |  | Six Months Ended |    
|                                                        |                          |                          |       | December 31        |      |  | December 31      |    
|                                                        |                          |                          |       |                    |      |  |                  |    
|                                                        |                          |                          |       | 2002               |      |  | 2003             |     |      | 2002 |       |     | 2003 | 
|                                                        |                          |                          |       |                    |      |  |                  |     |      |      |       |     |      | 
|Net sales and rental revenue                            |                          |                          | 100.0 | %                  |      |  | 100.0            | %   |      |      | 100.0 | %   |      |  | 100.0 | %  
|Cost of sales and rentals                               |                          |                          | 30.8  |                    |      |  | 31.9             |     |      |      | 30.8  |     |      |  | 32.7  |    
|Gross profit                                            |                          |                          | 69.2  |                    |      |  | 68.1             |     |      |      | 69.2  |     |      |  | 67.3  |    
|Operations expenses
Selling, general and administrative |                          |                          | 57.4  |                    |      |  | 55.6             |     |      |      | 56.7  |     |      |  | 57.5  |    
|                                                        | Research and development |                          |       | 2.8                |      |  |                  | 2.9 |      |      |       | 2.9 |      |  |       | 3.0 |     
|                                                        |                          | Total operating expenses |       |                    | 60.2 |  |                  |     | 58.5 |      |       |     | 59.6 |  |       |     | 60.5 | 
|Income from operations                                  |                          |                          | 9.0   |                    |      |  | 9.6              |     |      |      | 9.6   |     |      |  | 6.9   |    
|Other expense, net                                      |                          |                          | 0.4   |                    |      |  | 0.5              |     |      |      | 0.5   |     |      |  | 0.6   |    
|Income tax provision                                    |                          |                          | 3.6   |                    |      |  | 3.6              |     |      |      | 3.8   |     |      |  | 2.5   |    
|Net income                                              |                          |                          | 5.0   | %                  |      |  | 5.5              | %   |      |      | 5.3   | %   |      |  | 3.8   | %  

Our revenue increased by 20% to $22,465,000 during the quarter ended December
31, 2003 from $18,735,000 during the quarter ended December 31, 2002, and
increased 14% to $41,621,000 during the six months ended December 31, 2003 from
$36,473,000 during the six months ended December 31, 2002. Increases in both
our direct sales business in the United States and in our consumer business in
Europe, accounted for 12% of the increase with 8% of the increase a result of
favorable exchange rates. For the six-month period again, increases in both
business segments accounted for 8% of the increase with 6% due to favorable
exchange rates.

U.S. revenue for the quarter was $13.5 million, up 9% from the prior years
quarter of $12.4 million. On a sequential basis, U.S. revenue was up 8% versus
the fiscal first quarter. Our direct sales business in the United States
posted a revenue increase of 7% for the quarter and 6% for the six-month period
ended December 31, 2003, as compared to the comparable periods last year. This
increase is primarily due to an increase in volumes of our direct unit sales
and rental business, and a slight increase in our accessories and supplies. We
continued to expand our direct unit sales and rental business through the
acquisition of BMR-Neurotech, which was included in our results of operations
for the period ended December 31, 2003, but not the period ended December 31,
2002, as the acquisition occurred in May 2003.

Our consumer business in the U.S. has seen a very modest, but steady, ramp in
sales. We began actively promoting the Slendertone line in October 2003,
received favorable publicity in December 2003 and January 2004 in two fitness
magazine articles, and obtained very favorable results from a sports study
conducted at the University of Wisconsin  La Crosse in January 2004. We feel
we have to overcome what could be conceived as a negative image for abdominal
belt products and do not expect to generate substantial sales of these products
until we have secured sales arrangements with major retail chains. We recently
signed an endorsement contract with Sarah Ferguson, Duchess of York, whose
assistance may help overcome the market image of these products.

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Our European operations, conducted primarily under our Compex SA subsidiary,
posted a revenue increase of 42% for the quarter and 27% for the six-month
period. A majority of this growth, approximately 19% for the quarter and 22%
for the six-month period, was generated by a favorable impact of exchange rates
reflecting
the strength of the euro versus the dollar. Revenue from the addition of our
Slendertone product line also contributed 10% to the growth in the quarter and
9% for the six-month period ended December 31, 2003. The incremental revenue
in Italy due to the July 3, 2003 acquisition of Filsport was 12 %. In prior
periods, Filsport was our independent distributor of our products in Italy, but
is now generating direct sales, so we now capture both the additional revenue
between the consumer sale price of the product and the wholesale price we used
to receive from Filsport. This increase in revenue was partially offset by a
3% decrease in revenue across all of Europe. We believe the extreme heat wave
Europe experienced during the summer was a major factor in reducing consumer
spending on Compex and Slendertone products during the current period. Our
largest retail customer in Spain reduced their order rates and we continued
with the management transition in Germany. A general manager has been hired in
Germany and we anticipate the retail customer order patterns in Spain to
stabilize in the remainder of fiscal 2004.

Revenue by product line during the quarter ended December 31, 2003 was roughly
$5.0 million in rehabilitation products, $4.1 million in pain management
products, $6.8 million in consumer products, and $6.6 million in accessories
and supplies. All revenue segments are above prior year amounts with consumer
products, primarily Slendertone product sales in Europe, reflecting the largest
nominal increase.

Our gross profit was $15,304,000 or 68.1% of revenue during the quarter, and
$28,023,000 or 67.3% of revenue during the six months ended December 31, 2003.
This compares to gross profit of $12,958,000 or 69.2% of revenue in the quarter
and $25,248,000 or 69.2% of revenue during the six months ended December 31,
2002. The overall decrease in margin percentage is primarily due to a decrease
in our higher margin accessories and supplies as a percentage of total revenue
in both the three months and the six months ended December 31, 2003 as compared
to prior year. We anticipate grow profit to stabilize in the middle-to-lower
60% range as our domestic consumer business becomes a greater percentage of our
revenue. Cost of sales and gross profit for periods ended December 31, 2003
also reflect the sale of inventory that was acquired in the Filsport
acquisition which, because Filsport was a distributor, has a higher cost than
inventory we have manufactured and sold through Filsport after this acquired
inventory was sold. Subsequently, all of the inventory that was acquired as a
part of the Filsport acquisition was sold. In the future, our margin in Italy
is expected to be consistent with the margin in our other European countries.

For the quarter ended December 31, 2003, our selling, general and
administrative expenses increased 16% to $12,489,000 or 55.6% of revenue, from
$10,750,000 or 57.4% of revenue for the same quarter last year. Our selling,
general and administrative expenses increased 15% to $23,892,000 or 57.4% of
revenue during the six months ended December 31, 2003, compared to $20,711,000
or 56.8% of revenue during the six months ended December 31, 2002. Selling,
general and administrative expenses associated with the July 2003 acquisition
of Filsport and the marketing expenses for our new consumer products both
domestically and in Europe contributed significantly to the increases in 2004.
We have increased our number of direct sales employees to 54 as of December 31,
2003 as compared to 41 for the same period last year. Additionally, foreign
currency exchange rates, which effectively increase our recorded revenue, but
also increase the recorded expense from our European operations, also
contributed to the increases. We expect to continue to devote substantial
resources to marketing our consumer products during the remainder of fiscal
2004 and currently expect to increase our promotion and advertising
expenditures for both Slendertone and Compex in our European markets over the
next several months as these products require a continuous marketing push. We
have finalized contracts with several individuals who have expressed an
interest in endorsing our products that will require specific payments as part
of these expenditures. We also expect to incur additional administrative
expense as we work to complete the documentation of internal controls for
purposes of Section 404 of the Sarbanes Oxley Act of 2002; a process we started
in the second quarter. Accordingly, we do not expect the rate of selling,
general, and administrative expenditures to decrease during the remainder of
the year.

Our research and development expenses increased 25% to $647,000 in the second
quarter of fiscal 2004 from $518,000 in the second quarter of fiscal 2003. For
the six months ended December 31, 2003, research and development costs
increased 22% to $1,275,000 from $1,042,000 for the same period ended December
31, 2002. Approximately 19% and 16% of the increases, respectively, are due to
the effects of foreign exchange rates. We anticipate that research and
development spending will increase slightly in absolute dollars as we

16



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continue
to pursue new complementary products, but will decrease as a percentage of
revenue in future periods as our quarterly revenue from consumer products
increases.

Interest expense increased 40% to $143,000 in the second quarter of fiscal year
2004 from $102,000 in the second quarter of fiscal year 2003. Interest expense
increased 39% to $297,000 from $214,000 for the
comparable six-month periods. The increase was due to balances outstanding
under the newly established $3,300,000 credit facility with a bank in
Switzerland that we used to finance the acquisition of Filsport on July 3,
2003. We repaid $3,500,000 under our US credit facility in November 2003, and
therefore anticipate reduced interest expense in coming quarters.

The provision for income taxes was 40% for the fiscal 2004 as compared to 42%
in fiscal 2003. We lowered the tax rate from 42% to 40% after a review of the
tax rates in several of our European tax jurisdictions. We believe that 40% is
a reasonable estimate of the effective rate for fiscal 2004 based on our most
recent estimates of tax liabilities in the U.S. and in the various European tax
authorities.

As a result of the above activity, our net income increased to $1,229,000 in
the second quarter of fiscal 2004 from $942,000 in the second quarter of fiscal
2003. For the six months ended December 31, 2003, net income decreased to
$1,583,000 from $1,929,000 during the same period in fiscal 2003. Diluted
earnings per share increased from $0.08 during the quarter ended December 31,
2002 to $0.10 during the quarter ended December 31, 2003 and diluted earnings
per share decreased from $.17 to $.13 per share for the six-month period.

Liquidity and Capital Resources

On July 3, 2003, we acquired all the capital stock of Filsport Assistance
S.r.l., an independent distributor of the Compex® brand of consumer products in
Italy. The transaction involved an exchange of approximately $4.9 million in
cash for stock and requires that we pay additional contingent consideration if
a certain performance milestone is achieved following the transaction. The
acquisition was financed through a newly-established credit facility and with
existing funds. Prior to the acquisition, Filsport operated under an exclusive
distribution arrangement and accounted for 25% of Compex SA total sales (10% of
consolidated sales) in fiscal 2003. The purchase consideration exceeded the net
fair value of tangible assets by $4,103,298 that was assigned to goodwill.

On November 19, 2003, we entered into definitive agreements with three
independent institutional accredited investors for the private placement of
1,000,000 units of our securities at a purchase price of $8.9072 per unit.
Each unit consisted of one share of our common stock, $.10 par value per share,
and an additional right to purchase a quarter of a share of our common stock at
$9.3526 per share. The additional investment rights expire 90 days after the
date of the agreement. The net proceeds, excluding the proceeds of any
exercise of the additional investor rights, were approximately $8,300,000. We
have used a majority of the proceeds to reduce borrowings under our long-term
and short-term credit facilities.

For the six months ended December 31, 2003, our operating activities used cash
of $1,081,000. The $2,529,000 that we generated during the quarter through net
income, after adjustment for non-cash depreciation and amortization, was offset
by a $2,177,000 increase in accounts receivable, a $1,161,000 increase in
inventory and a $1,235,000 decrease in accounts payable and accrued
liabilities. The increase in receivables was primarily a result of increased
revenue, the translation effect when converting our European receivables to
U.S. dollars, slower collections in Europe as a result of the slow economy and
a slight change in mix in U.S. products. Our reserve for uncollectible
receivables increased by approximately $1.1 million during the six months ended
December 31, 2003, but decreased as a percentage of receivables from 38% to
36.8%. The reserve will continue to decrease as a percentage of total
receivables as our consumer business continues to grow as a percentage of our
overall revenue. The increase in inventory is primarily due to additional
purchases of Slendertone inventory in Europe. The decrease in accounts payable
and accrued liabilities related to year-end June 30,2003 timing differences and
the payment of estimated income taxes.

17



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We used $4,267,000 in investing activities in the first six months of fiscal
2004, including $3,390,000 to fund the net cash purchase price of Filsport
Assistance S.r.l. and $877,000 for net purchases of property and equipment,
primarily clinical and rental equipment.

Our financing activities generated $2,870,000 of cash during the six months
ended December 31, 2003. We raised, $8,336,000 through the sale of the units
described above and an additional $3,836,000 through borrowings under our Swiss
credit line to finance the Filsport Assistance acquisition. We used $9,796,000
to repay borrowings under our U. S. credit facility. At December 31, 2003, a
total of $1,000,000 remains outstanding under the U. S. facility. Our U. S.
credit facility has a maturity date of June 30, 2004, and we expect that all of
the
borrowings under this credit facility will be repaid prior to the maturity
date. We believe that the agreement could be extended, with similar terms,
with the current financial institution or another facility could be put in
place.

We currently have a commitment to purchase additional Slendertone inventory in
Europe of approximately $1.5 million. Currently, we plan to fund this with
cash from operations. We expect, however, to invest in sales and marketing,
and in inventory and infrastructure, over the next twelve months to introduce
these products and the Compex sport products to the United States markets. We
started this process during fiscal 2003 and intend to invest more in fiscal
2004 based on our experience. We may also apply cash to acquisitions during
future periods.

We believe that available cash and borrowings under our credit lines will be
adequate to fund cash requirements for the current fiscal year and the
foreseeable future.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the quarter ended December 31, 2003, our revenue originating outside the
U.S. was 38% of total revenue, substantially all of which was denominated in
the local functional currency. Currently, we do not employ currency-hedging
strategies to reduce the risks associated with the fluctuation of foreign
currency exchange rates.

Our international business is subject to risks typical of an international
business, including, but not limited to: differing economic conditions, changes
in political climate, differing tax structures, other regulations and
restrictions, and foreign exchange rate volatility. Accordingly, our future
results could be materially adversely impacted by changes in these or other
factors.

We are exposed to market risk from changes in the interest rates on certain
outstanding debt. The outstanding loan balance under our $20 million credit
facility bears interest at a variable rate based on the banks prime rate or
LIBOR. Based on the average outstanding bank debt for fiscal 2003, a 100 basis
point change in interest rates would not change interest expense by a material
amount.

ITEM 4. CONTROLS AND PROCEDURES

(a)  Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-14(c) under the Exchange Act) as of the end
of the period covered by this quarterly report on Form 10-Q. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective to ensure that
information we are required to disclose in the reports that we file or submit
under the Securities Exchange Act of 1934 are recorded, processed, summarized,
and reported within the time periods specified in Securities and Exchange
Commission rules and forms.

(b)  Changes in internal controls.

There were no changes made in our internal controls over financial reporting
during the period covered by this report that has materially affected, or is
reasonable likely to materially affect, our internal controls over financial
reporting.

18



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##### Table of Contents






PART II - OTHER INFORMATION






| |                          
| | -------------------------
| | ITEM 1. LEGAL PROCEEDINGS



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In late January 2001, we were served with documents in connection with a
product liability case brought in the California Superior Court for
Solano County. Although we had no record of the proceedings, the action
had progressed to the entry of a default judgment on January 11, 2001.
We appealed the default judgment to the California Court of Appeals in
March 2001. On May 10, 2002, the appeals court overturned the default
judgment holding that there was no valid complaint against us. The
plaintiff in this case has indicated that they intend to submit an
amended complaint, but unless and until they do, there is no pending suit
in this matter.
|
| | From time to time, we have also been a party to claims, legal actions and
complaints arising in the ordinary course of our business. We do not
believe that the resolution of such matters has had or will have a
material impact on our results of operations or financial position.                                                                                                                                                                                                                                                                                                                                                                                   






| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF
EQUITY SECURITIES



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (f) Securities Sold without registration under the Securities Act
of 1933.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | On November 20, 2003, and in accordance with a purchase agreement we
signed on November 19, 2003, we privately placed a total of 1,000,000
units of our equity securities at a purchase price of $8.9072 per
unit. Each unit consists of one share of our common stock, $.10 par
value per share, and an additional right to purchase a quarter of a
share of our common stock at $9.3526 per share. These additional
investment rights will expire on the latter of (i) 90 days from the
date of the additional investment right agreement (on February 18,
2004), or (ii) the date on which a registration statement relating to
resale of the common stock issued upon exercise of the rights is
declared effective by the Securities and Exchange Commission. We
filed the registration statement relating to resale of the common
stock included in the units, and the common stock issuable upon
exercise of the additional investment rights, on December 4, 2003 and
the registration statement was declared effective on December 12,
2003.
|
| | Credit Lyonnais Securities (USA) Inc. acted as our selling agent in
connection with the sale of the units. The units were privately
placed with three institutional investors: Mainfield Enterprises,
Inc., Smithfield Fiduciary LLC, and Portside Growth and Opportunity
Fund.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | We received an aggregate of $8,907,200 in cash for the units. We
paid Credit Lyonnais Securities a total of $512,164 in commissions
for their services in the placement from these proceeds and
reimbursed the sellers for $25,000 of their expenses. If the
additional investment rights included in the units are exercised, we
would receive an additional $2,338,150 in cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | In offering and selling the units, we relied on the exemptions from
registration contained in Section 4(2) of the Securities Act of 1933,
and in Rule 506 of the Securities and Exchange Commission. We did
not, and our agent represented that it did not, use any form of
public solicitation in locating the purchasers. Each of the
purchasers represented to us that they were an accredited investor,
that they were purchasing for investment, and they understood that
the units could not be resold without registration or an exemption
from registration. We placed legends on the common stock
certificates and the additional investment rights noting these
restrictions.                                                                                                                                                                                                                                                                                                                                                             
|
| | The additional investment rights are exercisable at any time until
the close of business on February 18, 2004 upon notice to us
accompanied by payment of the $9.3526 exercise price. No additional
investment right is exercisable, however, if it would cause the
holder to beneficially own more than 4.999% of our common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | We used the majority of the $8,300,000 of proceeds from the sale of
the units to repay borrowings under our credit facilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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| |                                                            
| | -----------------------------------------------------------
| | ITEM 3. DEFAULTS UPON SENIOR SECURITIES None              
|
| | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



| |                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our annual meeting of shareholders was held on November 6, 2003.
Shareholders holding 9,334,894 shares, or approximately 84.2% of
outstanding shares, were represented at the meeting by proxy or in
person. Two matters were submitted for vote by the shareholders as
follows:



| |                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)     Election of Directors                                                                                                                                                       
|
| | The following nominees were elected to serve as members of the
Board of Directors until the annual meeting of shareholders in
2004 or until such time as a successor may be elected.

|                   |  |          |           |          |  |  |         | 
|------------------ |  | -------- | --------- | -------- |  |  | ------- | 
|                   |  | In Favor |           | Withheld
|                   |  |          |           |         
|Frederick H. Ayers |  |          | 8,698,799 |          |  |  | 636,095 | 
|Dan W. Gladney     |  |          | 8,562,346 |          |  |  | 772,548 | 
|Rick E. Jahnke     |  |          | 8,696,207 |          |  |  | 638,687 | 
|John H.P. Maley    |  |          | 8,559,821 |          |  |  | 775,073 | 
|Richard Nigon      |  |          | 8,682,116 |          |  |  | 652,778 | 



| |                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b)     Amendment to Employee Stock Incentive Plan                                                                                                                                                                             
|
| | An amendment to our employee stock purchase plan to amend the
1998 Stock Incentive Plan was approved by a vote of 3,613,287
shares in favor, 899,295 shares against, 110,847 shares
abstaining, and 4,711,465 broker non-votes.






| |                                
| | -------------------------------
| | ITEM 5. OTHER INFORMATION- None






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



| |             
| | ------------
| | (a) Exhibits

|     |  |                                                                                                                                             
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer
pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and
Section 302 of the Sarbanes-Oxley Act of 2002 
|     |  |                                                                                                                                             
|31.2 |  | Certification of Chief Financial Officer
pursuant to Rule 15d-14(a)(17 CFR 240, 15d-14(a)) and
Section 302 of the Sarbanes-Oxley Act of 2002
|     |  |                                                                                                                                             
|32   |  | Certification of Chief Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Furnished but not filed)                



| |                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------
| | (b) Reports on Form 8-K. The following reports on Form 8-K were
filed during the quarter ended December 31, 2003.



| |                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A Form 8-K, filed November 13, 2003 furnishing (but not filing)
the earnings release for the quarter ended September 30, 2003
and the script for the conference call relating to such earning
release.
|
| | A Form 8-K, filed November 20, 2003 announcing private
placement.                                                                                                                                     

20



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                       |  |                                                                                                                    
|---------------------- |  | -------------------------------------------------------------------------------------------------------------------
|                       |  | COMPEX TECHNOLOGIES, INC.                                                                                          
|                       |  |                                                                                                                    
|February 12,
2004
Date |  | /s/ Dan W. Gladney

Dan W. Gladney
President and Chief Executive Officer                                           
|                       |  |                                                                                                                    
|February 12, 2004
Date |  | /s/ Scott P. Youngstrom

Scott P. Youngstrom
Vice President of Finance
(Principal Financial and Accounting Officer)

21