------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

[X]      Annual  report  pursuant  to  Section  13 or  15(d)  of the  Securities
         Exchange Act of 1934 for the fiscal year ended December 31, 2003 or

[ ]      Transition  report  pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934.

                           MERIT MEDICAL SYSTEMS, INC.
        ----------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

      Utah                         0-18592                    87-0447695
------------------          ----------------------       --------------------
(State or other             (Commission File No.)         (IRS Employer
  jurisdiction                                            Identification No.)
of incorporation)
                             1600 West Merit Parkway
                            South Jordan, Utah 84095
        ----------------------------------------------------------------
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (801) 253-1600

        Securities registered pursuant to Section 12(b) of the Act: None
                                                                    ----

           Securities registered pursuant to Section 12(g) of the Act:
                   Title of Class: Common Stock, No Par Value

         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 if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of the  Registrant's  knowledge,  in definitive proxy or information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

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

         The aggregate  market value of the Common Stock held by  non-affiliates
of the Registrant,  on June 30, 2003,  which is the last day of the Registrant's
most recently completed second fiscal quarter (based upon the closing sale price
of the Common Stock on the NASDAQ National Market System on June 30, 2003),  was
approximately  $263  million.  Shares of Common  Stock held by each  officer and
director  and by each  person  who may be  deemed to be an  affiliate  have been
excluded.

         As of March 10, 2004, the  Registrant  had 26,095,533  shares of Common
Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the  following  document are  incorporated  by reference in
Part III of this Report: the Registrant's definitive Proxy Statement relating to
the Annual Meeting of Shareholders scheduled for May 25, 2004.





                                                     TABLE OF CONTENTS

                                                                                                     
PART I    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .     1
Item 1.     Business  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1
            GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1
            PRODUCTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     2
            MARKETING AND SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     7
            CUSTOMERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     9
            RESEARCH AND DEVELOPMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     9
            MANUFACTURING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    10
            COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    10
            PATENTS, PATENT APPLICATIONS, LICENSES, TRADEMARKS AND COPYRIGHTS . . . . . . . . . . .    11
            REGULATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    12
            EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    12
            AVAILABLE  INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    12
            FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
            AND EXPORT SALES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    13
            FACTORS THAT MAY AFFECT FUTURE RESULTS. . . . . . . . . . . . . . . . . . . . . . . . .    13

Item 2.     Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    17

Item 3.     Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    18

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

PART II.    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    18

Item 5.     Market for Registrant's Common Equity and Related Shareholder Matters
                and Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . .    18

Item 6.     Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    20

Item 7.     Management's Discussion and Analysis of Financial Condition
               and Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    21

Item 7A.    Quantitative and Qualitative Disclosure About Market Risk.  . . . . . . . . . . . . . .    26

Item 8.     Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . .    27

Item 9.     Changes in and Disagreements with Accountants on Accounting
               and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    51

Item 9A.    Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    51

PART III.   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    51

Items 10, 11, 12, 13 and 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    51

PART IV.    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    51

Item 15.    Exhibits,  Financial Statement Schedule and Reports on Form 8-K . . . . . . . . . . . .    51

Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    55




                                     PART I.

DISCLOSURE REGARDING FORWARD -LOOKING STATEMENTS

         This Report includes "Forward-Looking Statements" within the meaning of
Section  27A of the  Securities  Act of 1933,  as amended and Section 21E of the
Securities  Exchange  Act  of  1934,  as  amended.  All  statements  other  than
statements of historical fact are  "Forward-Looking  Statements" for purposes of
these  provisions,  including  any  projections  of earnings,  revenues or other
financial  items,  any  statements of the plans and objectives of management for
future operations,  any statements concerning proposed new products or services,
any statements  regarding  future economic  conditions or  performance,  and any
statements of assumptions  underlying any of the foregoing.  All Forward-Looking
Statements  included  in this  document  are made as of the date  hereof and are
based on  information  available  to the  Company as of such date.  The  Company
assumes no obligation to update any  Forward-Looking  Statement.  In some cases,
Forward-Looking  Statements can be identified by the use of terminology  such as
"may,"  "will,"  "expects,"  "plans,"   "anticipates,"   "intends,"  "believes,"
"estimates,"  "potential,"  or  "continue,"  or the  negative  thereof  or other
comparable  terminology.  Although the Company  believes  that the  expectations
reflected in the  Forward-Looking  Statements  contained  herein are reasonable,
there can be no assurance that such  expectations or any of the  Forward-Looking
Statements will prove to be correct,  and actual results could differ materially
from  those  projected  or  assumed in the  Forward-Looking  Statements.  Future
financial  condition and results of operations,  as well as any  Forward-Looking
Statements are subject to inherent  risks and  uncertainties,  including  market
acceptance of the Company's products,  product introductions,  potential product
recalls, delays in obtaining regulatory approvals, cost increases,  fluctuations
in and obsolescence of inventory, price and product competition, availability of
labor and materials,  development of new products and techniques that render the
Company's  products  obsolete,   product  liability  claims,   foreign  currency
fluctuations,  changes in health  care  markets  related to health  care  reform
initiatives  and other factors  referred to in the Company's  press releases and
reports  filed with the  Securities  and Exchange  Commission  (the "SEC").  All
subsequent  Forward-Looking  Statements  attributable  to the Company or persons
acting  on its  behalf  are  expressly  qualified  in  their  entirety  by these
cautionary statements.  Additional factors that may have a direct bearing on the
Company's  operating results are described under "Factors That May Affect Future
Results" beginning on page 12.

Item 1.  Business.

GENERAL

         Merit Medical  Systems,  Inc. (the "Company" or "Merit," "we," or "us")
was formed in 1987 by a few members of its current management for the purpose of
producing  single-use  medical  products  of high  quality  and  superior  value
primarily  for use in diagnosis  and treatment of  cardiovascular  disease.  The
Company's  products  are  designed to provide  physicians  and other health care
professionals  with  devices  that  enable  them to perform  interventional  and
diagnostic procedures safely and effectively. Initially, the Company's expertise
in product  design,  proprietary  technology  and skills in injection and insert
molding enabled it to introduce  innovative new products and capture significant
market share. The Company subsequently  combined its plastics molding capability
with the application of proprietary electronics and sensor-based technologies to
develop a line of angioplasty  inflation  products with  electronic  sensing and
display  features.  These  devices are now  included in a group of  sensor-based
products  designed to address a broad range of needs related to  diagnostic  and
interventional  catheterization  procedures performed in hospitals.  The Company
has expanded  its product  offerings to include  angiographic  catheters,  guide
wires, needles, safety products, therapeutic infusion catheters and accessories,
drainage  catheters  and  accessories,  and a number of line  extensions to core
products.
                                       1

         The  Company's  strategy  is to  offer  a  broad  line  of  innovative,
disposable  products for diagnosis and intervention in radiology and cardiology.
Merit  continues to increase  market  acceptance  and  penetration  for both its
existing and new  products in the United  States and in  international  markets.
Longer  term,  the  Company's  strategy  is to  extend  the  application  of its
sensor-based   technologies,   plastics  molding,   catheter,  guide  wire,  and
electronic   capabilities   and  to  develop   products   for   diagnostic   and
interventional   procedures  in  additional   markets  such  as  neuroradiology,
nephrology,   pain   management  and  critical  care.  The  Company's  sales  of
stand-alone products in combination with custom kits have increased as additions
have been made to the Company's product lines. In 2003, approximately 51% of the
Company's sales were made directly to U. S. hospitals and  approximately  24% of
sales  were  made to  custom  packagers,  distributors  and  original  equipment
manufacturers  ("OEM")  companies  who  also  distribute  to  U.  S.  hospitals.
Approximately  25% of the  Company's  sales in 2003 were  made in  international
markets.

         The Company was organized in July 1987 as a Utah  corporation.  In July
1994, the Company purchased a controlling interest in Merit Sensor Systems, Inc.
(formerly Sentir, Inc.), a California-based manufacturer of silicon sensors, and
during  1999,  the Company  purchased  the  remaining  interest in Merit  Sensor
Systems, Inc. The Company also has established subsidiaries in Ireland, Germany,
France,  the  United  Kingdom,  Belgium,  and the  Netherlands  to  conduct  its
international  business.  In January 1997,  the Company  purchased the operating
assets and product lines of Universal  Medical  Instruments  Corp.  ("UMI").  In
August 1999, the Company purchased the operating assets and product lines of the
Angleton, Texas division of Mallinckrodt Inc. ("Mallinckrodt"). Unless otherwise
specified  or evident from the context,  references  to the Company  include its
consolidated  subsidiaries.  The  Company's  principal  offices are located in a
manufacturing and office facility at 1600 West Merit Parkway, South Jordan, Utah
84095, and its telephone number is (801) 253-1600. See "Item 2. Properties."

PRODUCTS

         The Company's  products have been designed and developed in response to
the needs of customers and patients.  These needs have been identified primarily
through  observation  of  procedures  in cardiac  catheterization  and radiology
laboratories,  consultation  with the Company's medical advisors and consultants
and direct  communication with customers.  Since 1988, the Company has developed
and introduced several product lines, including the following:

o   coronary  control  syringes  (CCS(TM),   Smart  Tip(TM)   Inject8(TM),   and
    Inject10(TM));

o   inflation devices (IntelliSystem(R),  Monarch(R), Basix(R),  BasixCOMPAK(TM)
    including new 30-atmosphere versions), and monitors (IntelliSystem II);

o   specialty syringes (Medallion(R)and VacLok(R));

o   high-pressure tubing and connectors (Excite(TM),  flexible,  braided, rigid,
    pvc, and Sherlock(TM));

o   waste   management   products  (Merit  Disposal   Depot(R),   Backstop(R)and
    ShortStop(R), Dugout(TM));

o   disposable blood pressure transducer (Meritrans(R)), and pressure monitoring
    tubing;

o   disposable  hemostasis  valves  (MBA(TM),  Passage(R),   Access-9,(TM)Access
    Plus(TM), Double-Play(TM)) and guide wire torque devices;

o   manifolds and stopcocks (Marquis(R)series);

o   radial artery compression systems (Radstat(TM));

                                       2


o   contrast  management systems  (Miser(R)and  In-Line(TM)  Contrast Management
    System(TM), drip sets and spikes);

o   angiography needles  (Majestik(R)  series,  Majestik(R) Shielded Needle, and
    Merit A.S.K. Kits(TM));

o   drainage catheters and accessories (Resolve, One Step(R)and Percustay(R));

o   pericardiocentesis catheters and procedure trays;

o   thrombolytic   infusion   catheters   (Fountain(R)and    Mistique(TM))   and
    accessories (Squirt(R));

o   diagnostic   angiographic  pigtail  catheters,   diagnostic  cardiology  and
    radiology   catheters   (SofTouch(R)  and  Performa(R)),   and  marker  band
    catheters;

o   guide catheters (Trax(R));

o   sheath introducers  (DialEase(TM)),  and vessel dilators,  fixed and movable
    core;

o   diagnostic  guide  wires   (Inqwire(R)),   and  accessories   (Keep(TM)  and
    Ringmaster(TM)), and hydrophilic guide wires, (Merit H20(TM));

o   and pressure infusor bags.


These products are sold  separately and many are sold in custom kits  consisting
primarily of selected combinations of products.

         The Company  has not  experienced  any  significant  product  liability
claims;  however,  the sale and use of its products entail an inherent risk that
product  liability  claims may be  asserted  against  the  Company.  The Company
maintains product liability insurance in the amount of $5,000,000 per occurrence
and in the  aggregate,  which may not be adequate  for  expenses or  liabilities
actually incurred.

         The following  paragraphs  contain a brief  description of, and provide
other information regarding, Merit's key products:

         Inflation  Devices and Angioplasty  Accessories.  Inflation devices are
large, specialized syringes used in interventional catheterization procedures to
inflate  balloon-tipped  catheters.  Each  of the  Company's  inflation  devices
incorporates  patented,  proprietary design features which contribute to ease of
use,  including allowing the clinicians to engage or release the syringe plunger
with one hand  while  increasing  or  decreasing  pressure.  Each  syringe  also
provides  a  clear  view  of the  fluid  path  that  simplifies  debubbling  and
contributes to accurate measurement of pressure.

         The Company's  IntelliSystem(R)  inflation device,  which was the first
such device to incorporate electronic sensing and display features,  consists of
a disposable 20cc inflation  syringe and an internal  pressure  transducer which
connects to a monitor outside of the sterile field. The IntelliSystem(R) monitor
measures,  times,  records,  and digitally displays  information  concerning the
pressure, duration and number of each inflation and deflation of the angioplasty
balloon.   The  Company  believes  that  electronic   sensing  display  of  such
information  is much more  accurate  and precise than that which can be obtained
from  conventional  analog  gauges.  The data is  stored  and may be  displayed,
retrieved, graphed and printed.
                                       3

         In  2003,  Merit  launched  the  patented  IntelliSystem  II(TM)  color
monitor,  an advanced balloon  inflation  system.  It gives  physicians  several
highly desirable options,  including a large touch screen, an instant readout of
positive  and  negative  pressures,  and an  enlarged  graphing  display to show
extremely subtle changes in pressure measurements. In addition, the readouts are
available in four  languages by touching the screen.  Management  believes  that
Merit is the only  company  with  digital  technology  sensitive  enough to show
subtle changes in pressure.

         The  Monarch(R)  is  a  disposable  inflation  device  which  digitally
displays data concerning pressure and duration of inflations and deflations on a
small digital readout mounted on the barrel of the inflation syringe.  The small
monitor does not offer the same display, storage or printing capabilities of the
IntelliSystem(R) & IntelliSystem  II(TM) but offers the convenience of portable,
digital  operation.  In 2003,  Merit  launched  a  30-atmosphere  version of the
Monarch(R) to provide clinicians with additional options.

         The Basix(R) and the BasixCOMPAK(TM) are disposable  inflation syringes
which incorporate a conventional  analog pressure gauge mounted on the barrel of
the inflation  syringe.  The Basix(R) more closely resembles devices marketed by
the Company's competitors but includes the Company's proprietary design features
and  benefits.  The  Company  believes  that the  Basix(R)  and  BasixCOMPAK(TM)
represent  a  significant  addition  to its line of  inflation  devices and will
contribute  to  increased  sales where both  clinical  outcomes  and price are a
priority.

         Hemostasis Valves. The MBA(TM), Passage(R),  AccessPlus(TM), and Double
Play(TM), hemostasis valves are used in conjunction with the Company's inflation
devices and as a component of the Company's  angioplasty packs. These valves are
made of polycarbonate  plastic for clarity and include Sherlock(TM)  connectors.
The devices differ in size and function.  The MBA(TM) features a valve mechanism
that minimizes  blood loss during  exchange of wires,  catheters and other tools
through  the  valve.  The  Access  Plus(TM)  and  Access  9(TM)  are  large-bore
configurations.  The Double Play(TM) incorporates a double "Y" configuration for
kissing-balloon techniques.

         Torque  Device.  The Merit torque  device is a guide wire steering tool
with a tapered design and contrasting colors for improved visibility. The torque
device typically is included as a component of the Company's angioplasty packs.

         Coronary Control Syringes.  The Company's  disposable  control syringes
are utilized for one-handed control of the injection of contrast media and other
fluids during angiography, angioplasty and stent placement. (A stent is a device
that is inserted  into a vessel or passage to keep it open and  prevent  closure
due to  stricture  or  external  pressure).  Control  syringes  are molded  from
polycarbonate material,  which is stronger than glass and other plastics used in
the medical products industry.  The Company offers different models and sizes of
the control syringes with varying features,  according to physician  preference.
These features include different configurations of syringe handles, plungers and
connectors which allow operation of the syringe in a fixed or rotating  position
and varying  volume sizes,  including a popular 8ml model,  Inject8(TM)  and the
new, streamlined Inject10(TM).  In response to customer requests, Merit launched
latex-free control syringes.

         Specialty  Syringes.   Merit's   Medallion(R)   syringes,   a  line  of
disposable,  latex-free,  color-coded specialty syringes, are used for injection
of medications,  flushing  manifolds and other general purposes.  These syringes
are molded of  polycarbonate  material for added  strength and are  available in
hundreds of sizes,  colors and custom printing  combinations.  The  color-coding
minimizes  medication  errors by allowing a clinician to assign a color for each
medication to be dispensed and to differentiate  syringes by their contents. The
syringes  also can be custom  printed  to the  specifications  of the user.  The

                                       4


The Company  believes that the design,  color coding and  materials  used in its
specialty syringes  contribute to patient safety and more efficient  procedures.
The specialty syringes are sold separately and are an important component of the
Company's custom kits.

         The 60ml VacLok(R) syringe is used to create negative  pressure.  There
are many  clinical  applications  for a  negative  pressure  syringe,  including
abscess drainage and biopsy,  balloon  preparation,  nephrostomy  drainage,  and
more.

         Large-Bore  Stopcock(TM).  The  Large-Bore(TM)  Stopcock is designed to
facilitate  movement of fluid. The large internal  diameter (0.120") is designed
for  moving  drainage  fluid  from the  body.  Like  all  Merit  stopcocks,  the
large-bore version incorporates a clear body for easy visualization and a large,
easy-to-manipulate handle.

         Marquis(TM) Series Stopcock.  The Company's Marquis(TM) Series Stopcock
offers  improvements  to  competitive  stopcock  devices,   including  a  large,
easy-grip  handle.  The  Marquis(TM)  Series Stopcock is used in connection with
Sherlock(TM) connectors to provide improved connections during procedures.

         Manifolds.  The  administration of saline,  imaging and contrast fluids
and the  management  of  blood-pressure  monitoring,  fluid  injection and waste
collection in angiography or angioplasty  procedures are accomplished  through a
series of valves on a manifold  which  control the flow of various  fluids.  The
Company has designed its own manifold  consisting  of one, two,  three,  four or
five  valves.  When  compared  to  manifolds  sold by  competitors,  the Company
believes its manifold offers greater ease of use,  simplified  identification of
flow  direction  and  leak-free  operation  under  the  pressures  of  manual or
mechanical  injection of fluids.  The Merit  Manifold is sold  separately but is
also a key component of the Company's custom kits.

         Percu-Stay(R) - Catheter Fixation Device.  Percu-Stay(R) is a one piece
catheter tube securing device and site dressing for percutaneous drainage sites.
The product  provides a comfortable,  low-profile  fixation device for catheters
and tubes. The device is used in interventional  radiology,  special procedures,
cardiology, urology, home health care, and skilled nursing facilities.

         MDD600(TM).  The Merit Drainage  Depot(TM) is specifically  designed to
temporarily  collect fluids. It incorporates a drainage spout for quick and easy
fluid  disposal,  and an internal  anti-reflux  valve to help prevent fluid from
backing up the line. The bag also comes packaged with an adjustable velcro strap
that can be used to attach the device to the patient's waist or leg.

         High-Pressure  Contrast  Injection  Line and  Sherlock(TM)  Connectors.
During angiographic and diagnostic radiology procedures,  contrast media must be
injected  through a catheter into a patient's  artery or vein. This is sometimes
accomplished  by a mechanical  injector which can generate  pressures up to 1200
pounds per square inch ("psi"),  and requires  tubing that can  withstand  these
pressures. The Company offers high-pressure, braided and clear, specialty tubing
with  proprietary  Sherlock(TM)  connectors.  Excite(TM)  is a  line  of  clear,
flexible,  high-pressure tubing that combines the features of tubing clarity and
strength.  Sherlock(TM)  connectors allow coupling and uncoupling of tubing with
injectors,  syringes and  manifolds  without  over-tightening  or breakage.  The
Company is currently offering specialty tubing that can handle pressures ranging
from 500 to 1200 psi. The specialty  tubing with  Sherlock(TM)  connectors is an
important component of custom kits.

         RadStat(TM)  Radial Artery  Compression  Device. The RadStat(TM) Radial
Artery Compression Device is intended to be used to apply direct pressure to the
radial artery puncture site after diagnostic and interventional  procedures.  In
addition to rapid controlled hemostasis,  the RadStat(TM)  immobilizes the wrist
comfortably, permitting rapid patient ambulation.

                                       4

         Waste Containment Systems. Because of heightened awareness of the risks
associated with blood and related waste  materials,  hospitals have moved toward
closed systems  whenever  possible.  To address these concerns,  the Company has
designed a waste containment bag which connects to a manifold in a closed system
and collects waste  materials such as blood and other fluids during  angioplasty
or other procedures.  The Merit Disposal Depot(TM) is self-contained for ease of
disposal and reduces the risk of contamination.  The Backstop(R) is a unique and
proprietary  alternative  fluid disposal  basin  designed to reduce  exposure to
blood-borne pathogens.  The DugOut(TM),  a large volume (1000 ml) line extension
to the Backstop(R).  The DugOut(TM) also contains an additional  compartment for
the storage of accessories.

         Contrast Management Systems. The Miser(TM) and the In-Line(TM) Contrast
Management   System  have  been   designed  to  increase   catheterization   lab
efficiencies  by reducing  contrast  media  waste.  This small system helps save
hospitals thousands of dollars a year in wasted contrast.

         Majestik(R)  Angiographic  Needles.  The angiography needle creates the
percutaneous   (through  the  skin)  access  site  for  virtually  all  invasive
diagnostic and interventional  procedures performed in cardiology and radiology.
The needle  provides the initial point of entry site for the introducer  sheath,
guide  wires,  catheters  and  any  other  interventional   devices.  The  Merit
Majestik(R)  Needle helps the physician achieve  precision  vascular access with
one of the sharpest angiography needles on the market.

         Majestik(R)  Shielded  Angiography  Needles. The Needlestick Safety and
Prevention  Act passed by the United  States  Congress in November 2000 requires
healthcare  employers  to document  their  exposure  control  plan and  evaluate
safety-engineered  products to protect clinicians. In 2002, Merit launched a new
line  of  shielded,  18-gauge  angiography  introducer  needles  that  meet  the
requirements of the law. Merit's  management  believes the Majestik(R)  shielded
needle is one of the first  safety-engineered  devices designed to promote safer
needles in cardiology  and  radiology.  Access  Safety Kits (A.S.K.  Merit) were
launched  in early 2003 and include  protected  scalpels  and  needles  used for
vascular access.

         Fountain(R) and Mistique(TM) Infusion Catheters.  Vascular occlusion is
a  common  anomaly  that  affects  millions  of  patients  each  year.  Both the
Fountain(R) and the  Mistique(TM)  catheters  deliver  therapeutic  solutions to
dissolve   thrombolytic   occlusions  (blood  clots)  in  peripheral   arteries,
hemodialysis  grafts and deep veins. The Fountain catheter utilizes an occluding
wire to  effectively  block off the end hole and  direct  the  infusion  therapy
uniformly through the laser-drilled  side holes. The Mistique(TM) is designed to
be used over  standard  0.035 or 0.038 guide wires to block off the end hole and
direct the infusion therapy uniformly through the side holes.

         Squirt(R)  Fluid  Dispensing  System.  The Squirt(R)  fluid  dispensing
system is a unique and proprietary product designed specifically for therapeutic
infusion for controlled,  accurate and consistent fluid delivery.  Some Fountain
catheter configurations contain a Squirt(R) packaged with them.

         InQwire(R)   Diagnostic   Guide  Wires.   Guide  wires   consist  of  a
small-diameter wire tightly wrapped in a coated wire coil. The technology needed
to produce these wires is considerable, and Merit utilizes its guide wire center
of excellence in Ireland to manufacture the InQwire Diagnostic Guide Wire. Guide
wires vary in length,  outside diameter and tip  configuration,  and are used to
place either a diagnostic or therapeutic  catheter into a patient's heart artery
or other area of the body. In late 2003,  Merit  launched a line of  hydrophilic
guide wires (H20).

         RingMaster(TM).  The RingMaster(TM)  guide wire basin allows clinicians
to conveniently  store guide wires to maintain  sterility and  organization.  It
separates  wires for quick  selection,  uses less table space than  conventional
basins because it's stackable,  and it helps keep wires hydrated  throughout the
procedure.
                                       5


         Vessel Dilators.  Dilators are used to dilate puncture sites.  They are
commonly used in radiology and cardiology  over a 0.035" or 0.038" guide wire to
dilate the site prior to placing sheaths and catheters in the femoral artery.

         DialEase(R)  Introducer  Sheath.  The  DialEase(R)  Sheath  is a  short
introducer ideally suited for dialysis graft  intervention.  It is commonly used
in  conjunction  with the  Fountain(R)  and  Mistique(TM)  therapeutic  infusion
catheters to declot dialysis grafts.

         Angiography Pigtail Catheter. In 1997, Merit acquired new product lines
and technologies from UMI, a small specialty medical  manufacturing  firm in the
State of New York.  At that time,  the  Company  began  marketing  a new line of
thin-wall,  (Teflon(R)),  high-flow, pigtail angiographic catheters designed for
smaller patients.

         Pericardiocentesis  Kit. On occasion,  the pericardial sack surrounding
the  heart  becomes  filled  with  blood or fluid.  To remove  the fluid and the
potential  for heart  strangulation  (tamponade),  a  catheter  is placed in the
pericardial   sack  to  drain  the  excess   fluid.   Merit  offers  a  complete
pericardiocentesis  kit  which  combines  a  high-flow  drainage  catheter  with
virtually all components needed to place the device in the pericardial sack. The
kit combination saves the physician both time and money by having all components
in one convenient tray.

         One-Step(TM)  Centesis Catheter.  The One Step(TM) Catheter is intended
to be used for short-term  centesis  procedures.  It  incorporates a luer-locked
introducer needle for secure,  one-handed  placement.  The tip of the introducer
needle is  echogenically  enhanced for  visualization  during  ultrasound-guided
placement.  The  transition  between  the  catheter  and  needle  is  smooth  to
facilitate  insertion.  In  2003,  Merit  launched  a new  line of  safety  kits
including the One-Step centesis catheter.

         Resolve(TM)  Universal Drainage Catheter with Non-Locking  Pigtail. The
Resolve(TM)  Universal Drainage Catheter with non-locking  pigtail is a standard
drainage catheter designed to expand Merit's offering of drainage products.

         Meritrans(R)  Pressure  Transducer and  Accessories.  Diagnostic  blood
pressure  monitoring  is a critical  priority in virtually  all  diagnostic  and
interventional  procedures.  The Meritrans(R)  provides clinicians with reliable
and precise blood pressure  measurement.  The clear,  flow-through  design makes
flushing and debubbling  simple and safe. The transducer is a vital component of
many custom kit  configurations.  Pressure  Monitoring  Tubing and Stopcocks are
common ancillary products to complement the Meritrans(R). Merit provides several
reusable  accessories  to support the  Meritrans(R).  The Merit  Mentor(TM) is a
transducer  calibration  and  troubleshooting  device  to  insure  accuracy  and
repeatability of physiologic pressure  measurements.  Reusable transducer cables
connect  the  Meritrans(R)  to the bedside  monitor.  Organizing  brackets  hold
multiple transducers to beds and IV poles.

         Pressure  Infusor Bag. In 2001,  Merit signed a distribution  agreement
for a line of Pressure  Infusor Bags.  These devices are used  hospital-wide  to
apply pressure to a sealed bag of fluid, such as IV solutions or blood products.
The pressure  exerted is shown by a color-coded  pressure gauge,  and the device
has a valve that releases pressure to prevent  inadvertent  over-pressurization.
In 2003,  Merit  launched  its own  pressure  infustor  bags with a  proprietary
over-pressure relief valve.

         ShortStop(R).  In 2000,  Merit  introduced the  ShortStop(R),  a small,
temporary  sharps container with an adhesive base that fits on the back table in
a clinical lab. It is used for the temporary  containment  of needles,  scalpels
and other sharp tools to help prevent inadvertent clinician injury.

                                       6


         Custom Kits. Custom kits allow physicians to obtain the medical devices
and  accessories  they most frequently use during  angiography,  angioplasty and
similar  procedures in a convenient,  pre-packaged and preassembled form. Custom
kits also  provide  cost  savings  over  purchasing  single  products and reduce
hospitals'   administrative  costs  associated  with  maintaining  inventory  of
individual, sterile products.

         Universal  Fluid  Dispensing  Syringe.  In 1997,  the Company  received
510(k) approval from the U.S. Food and Drug  Administration  (the "FDA") for use
of its digital inflation devices  (IntelliSystem(R) and Monarch(R) products) for
a wide range of additional clinical applications such as discography, esophageal
dilatation,  trigeminal nerve  compression,  and retinal  detachment.  Universal
fluid dispensing  syringes  incorporate  patented,  proprietary  design features
which contribute to ease of use,  including allowing the clinicians to engage or
release  the  syringe  plunger  with one hand  while  increasing  or  decreasing
pressure.  Each  syringe  also  provides  a clear  view of the  fluid  path that
simplifies debubbling and contributes to accurate measurement of pressure.  When
used in other clinical  applications such as discography,  the  IntelliSystem(R)
accurately dispenses fluid while documenting and graphing pressures in the disc.
The Company believes that electronic sensing display of such information is much
more accurate and precise than the tactile feel of standard syringes and that of
conventional analog gauges. The data is stored and may be displayed,  retrieved,
graphed and printed.

         Diagnostic Cardiology Catheters.  Cardiac  catheterization is performed
to diagnose the nature,  severity,  and precise  location of blockages and other
abnormalities  of the  heart.  This  technique  represents  the  most  essential
diagnostic tool in the management of patients with cardiovascular  disease.  The
Company  manufactures and sells a complete line of diagnostic catheters used for
these procedures.

         Diagnostic Radiology Catheters.  Radiology catheters are engineered and
designed with distinct tip  configurations to access specific vessels and organs
outside the heart (head, kidneys,  legs, etc). Merit acquired a strong radiology
catheter product portfolio from Mallinckrodt's Angleton Division in 1999.

         Vessel-Sizing  Catheters.  In 2000, Merit introduced a complete line of
adult  vessel-sizing  catheters,  which are used by  radiologists to measure the
internal diameter and length of a blood vessel under fluoroscopy.  Procedures in
which these  catheters  are used include  angioplasty,  embolization,  abdominal
aortic aneurysm (AAA)  stent-grafts  and vena cava filter  placements.  In 2001,
pediatric vessel-sizing catheters were introduced to complement the line.

         Guide Catheters.  The Company's acquisition of the operating assets and
product  lines of  Mallinckrodt's  Angleton  division in 1999  brought a line of
high-quality guide catheters used in cardiology.  Coronary  angioplasty requires
the use of a guiding catheter to place the balloon within the  vasculature.  The
catheter is inserted through a sheath into the arterial  system.  Once in place,
the guiding  catheter acts as a conduit for the guide wire, the dilating balloon
catheter,   coronary   stents  and  radiopaque  dye  that  is  used  to  provide
fluoroscopic visualization during the procedure.

MARKETING AND SALES

         Target Market/Industry. Cardiovascular disease is the number-one health
problem in the United States. According to American Heart Association estimates,
nearly 60 million Americans, or approximately 25% of the population, have one or
more types of heart disease.  Cardiovascular  disease  accounts for an estimated
one million deaths annually,  more than 40% of the U.S. total. A majority of the
Company's sales revenues are derived from products used in coronary  angiography
and angioplasty procedures designed to treat cardiovascular disease. The Company
believes that  transcatheter  modalities  (products and  technologies  utilizing


                                       7

heart catheterization  procedures) such as balloons, bare metal and drug eluding
stents, and defect repair currently represent the greatest potential to diagnose
and treat the disease.  The Company  intends to build upon its  existing  market
position in both  catheter  technology  and  accessory  products to continue its
sales growth.

         The  global  market  for  transcatheter  products  stands  at  a  major
crossroad,  even when  considering the continued  dynamic  evolution in vascular
stent  placement.  The core  diagnostic and therapeutic  applications  for basic
transcatheter  technologies  (balloons,  stents  and  defect  repair)  are  well
established,  with the future growth of procedures  and products  dependent upon
demographic trends. This has not, however,  prevented significant  investment in
new  technologies  and  applications  designed to enhance  patient  outcomes and
enable the treatment of new populations that have been traditionally  limited to
surgical intervention. Much of this additional investment relates to procedures,
devices and drugs for the treatment and  prevention of coronary  artery  disease
that have been  developed  and are  currently  being used by  physicians.  These
procedures, devices and drugs include laser angioplasty,  atherectomy procedures
and  drug  therapies,  the  effect  of which  may be to  render  certain  of the
Company's products obsolete or to limit the markets for Merit products. However,
with the advent of vascular stents and other procedures, such as discography and
kyphoplasty,  the Company has  experienced  continued  growth in its proprietary
inflation  technology.  The Company is  monitoring  trends in the  industry  and
believes  it is in a position to launch  catheters  and  accessories  to support
growing clinical applications.

         There are a large number of projects focused on improving the diagnosis
of  cardiovascular  disease,  solving  the issue of  restenosis  and other  less
invasive  alternatives to open-heart  surgery.  In recent years researchers have
focused their interests on technologies  and products that support the growth of
transcatheter   approaches   to  reducing  the   morbidity   and   mortality  of
cardiovascular  disease,  including  drug-coated  stents,  radiated  stents  and
balloons,   anti-platelet   therapy,   gene   therapy,   percutaneous   coronary
thrombectomy  and  transmyocardial  revascularization.   One  area  of  specific
interest to the Company is transradial catheterization which is the introduction
of vascular  catheters  through the radial artery allowing for rapid  ambulation
which  ultimately  reduces total patient cost.  The Company plans to continue to
develop and launch innovative products to support these clinical trends.

         Market  Strategy.  The  Company's  marketing  strategy  is  focused  on
identifying and introducing highly profitable, differentiated products that meet
customer needs.  The Company has targeted  selected  hospital market segments in
cardiology  and  radiology  where its  products  are used.  Suggestions  for new
products  and  product  improvements  may come from  engineers,  sales  persons,
physicians and technicians who perform the clinical procedures.

         When  a  product  suggestion   demonstrates   sustainable   competitive
advantage, meets customer needs, fits strategically and technologically with the
Company's business,  and has a good potential financial return, a "project team"
is  chartered  with  individuals  from  the  Company's  marketing,  engineering,
manufacturing, legal and quality assurance departments. This team identifies the
customer   requirements,   integrates   the  design,   compiles  all   necessary
documentation and testing, and prepares the product for market introduction. The
Company believes that one of its marketing  strengths is its capacity to rapidly
conceive, design, develop, and introduce new products.

         U. S. Sales. The Company's  direct sales force currently  consists of a
vice  president of sales,  an  executive  sales  manager,  five  regional  sales
managers and 46 direct sales representatives located in major metropolitan areas
throughout  the  United  States.  The  Company's  sales  people  are  trained by
personnel  at the  Company's  facilities  by a  senior  sales  person  in  their
respective  territories,  at regular  national  and regional  sales  meetings by
consulting  cardiologists  and employees of the Company,  and by  observation of
procedures in catheterization laboratories.

                                       8


         International Sales. Approximately 100 independent dealer organizations
distribute the Company's products worldwide, including territories in Europe and
Asia. Approximately 17 direct sales representatives presently sell the Company's
products in Germany,  France,  the United  Kingdom,  Belgium,  Netherlands,  and
Ireland.  In 2003, the Company's  international  sales grew by 27% and accounted
for approximately 25% of total sales. The Company has appointed a vice president
for international  sales and established an international sales and distribution
office in Maastricht, The Netherlands.  With the recent and planned additions to
its  product  lines,  the Company  believes  that its  international  sales will
continue to increase.

         International  dealers are  required  to  inventory  products  and sell
directly to customers  within defined sales  territories.  Each of the Company's
products  must be approved for sale under the laws of the country in which it is
sold.  International  dealers are responsible for compliance with all applicable
laws and regulations in their respective countries.

         OEM Sales. The Company  currently has an OEM division that manufactures
and sells molded  components  sub-assembled  goods, and bulk non-sterile  goods,
which may be combined with other  components  and/or goods from other  companies
and then sold under a non-Merit label. Merit has both international and domestic
OEM sales.


CUSTOMERS

         The  Company   serves   hospital-based   cardiologists,   radiologists,
anesthesiologists,  physiatrists  (pain  management  physicians),  neurologists,
technicians  and nurses,  all of whom  influence  the  purchasing  decision  for
Merit's  products.  Hospitals  and acute care  facilities  in the United  States
purchase  the  Company's  products  through the  Company's  direct  sales force,
distributors,  OEM relationships,  custom packagers and packers who assemble and
combine products in custom kits and packs. Outside the United States,  customers
(hospitals  and acute care  facilities)  purchase  through the Company's  direct
sales force, or in the absence of a sales force,  purchase  through  independent
distributors and OEM relationships.

           In 2003, approximately 51% of the Company sales were made directly to
domestic hospitals,  approximately 14% to custom tray manufacturers and domestic
dealers, and approximately 25% to international  markets. Sales to the Company's
single largest customer, a packer, accounted for approximately 7% of total sales
during the year ended December 31, 2003. Merit  manufactures  products for other
medical device companies through its OEM program. During the year ended December
31, 2003,  OEM sales  represented  approximately  12% of Merit's total  revenue,
which includes 2% purchased by international OEM companies.

RESEARCH AND DEVELOPMENT

         The Company believes that one of its historic  strengths is its ability
to quickly adapt its expertise and experience in injection  molding and to apply
its electronic  and sensor  technologies  as well as its recently  developed and
acquired technologies of guide wires and catheters to a perceived need for a new
product or product improvement.  The Company's development efforts are presently
focused on disposable,  innovative single-patient or single-use items, which can
be  included  in the  Company's  custom  kits  or sold  separately.  Longer-term
projects  include  the  use  of  sensor-based   technologies  in  a  variety  of
applications  and  additional   inflation  devices  with  added  capacities  and
features.  There is a new focus on interventional vascular access products, such
as needles,  guide wires,  and  catheters.  Several of the  Company's  executive
officers  also  devote a  substantial  portion  of their  time to  research  and
development.  Research and development expenses were $4,626,459,  $4,007,622 and


                                       9

$4,117,839 in 2003, 2002 and 2001, respectively. The Company did not conduct any
customer-sponsored  research and development  during those periods.  The Company
anticipates  that its  research  and  development  expenses  will range  between
approximately 3% and 4% of net sales during the year ending December 31, 2004.

MANUFACTURING

         Many  of  the  Company's   products  are  manufactured   utilizing  its
proprietary  technology and expertise in plastic  injection and insert  molding.
Tooling of molds is contracted  with third parties,  but the Company designs and
owns all of its molds.  The Company  utilizes its  experience  in injection  and
insert molding  technologies in the manufacture of most of the custom components
used in its products.

         The   electronic   monitors   and   sensors   used  in  the   Company's
IntelliSystem(R)  and Monarch(R)  inflation  devices are assembled from standard
electronic  components or purchased  from  suppliers.  In July 1994, the Company
acquired a 73%  interest and in August 1999 the Company  acquired the  remaining
interest in Merit Sensor  Systems,  Inc.,  which  develops  and markets  silicon
sensors.  Merit Sensor Systems, Inc. is presently providing virtually all of the
sensors utilized by the Company in its digital inflation devices.

         The Company's products are manufactured at several facilities including
South Jordan, Utah; Santa Clara,  California;  Galway, Ireland;  Angleton, Texas
and a leased expansion facility in Murray, Utah. See "Item 2.
Properties."

         Merit's variety of suppliers for raw materials and components necessary
for the manufacture of its products, as well as its long term relationships with
such suppliers,  promote stability in its manufacturing  process.  Historically,
Merit has not been  materially  affected by  interruptions  with such suppliers.
Further,  contingency  plans are in place to engage  back-up  suppliers  so that
materials and components continue to be available.

COMPETITION

         The  radiology  and  cardiology  markets  encompass  a large  number of
suppliers of many different sizes.  The Company competes with small firms,  such
as Possis Medical and Microtherapeutics; medium-sized companies like Cook, Arrow
and Angio Dynamics;  and large,  international,  multi-supply medical companies,
such as Johnson & Johnson, Boston Scientific,  Guidant, Medtronic and C.R. Bard.
Many  of  the  Company's   competitors  have  substantially  greater  financial,
technical and marketing resources than the Company.

         The principal competitive factors in the markets in which the Company's
products  are sold are  quality,  performance,  service  and price.  The Company
believes that its products have achieved rapid market  acceptance  due, in part,
to the  quality of  materials  and  workmanship,  innovative  design and ease of
operation,  and the  Company's  prompt  attention  to  customer  inquiries.  The
Company's products are priced competitively,  but generally not below prices for
competing products.

           The Company's management  believes,  based on available industry data
with respect to the number of procedures performed, that it is one of two market
leaders in the United  States for control  syringes,  tubing and  manifold  kits
(together with NAMIC USA Corporation, a subsidiary of Boston Scientific), and is
the leader in the U.S. market for inflation devices and hemostasis  accessories.
The Company's  management also believes that the recent and planned additions to
the Merit  product lines will enable Merit to compete more  effectively  in both
U.S. and  international  markets.  The Company's new  IntelliSystem(R)  II color
monitor provides considerable  improvements,  including sensitivity,  in Merit's
existing,  patented digital  technology.  Management believes the Company is the
only  provider  of  digital  inflation  technology  in the  world.  There  is no
assurance,  however,  that the  Company  will be able to maintain  its  existing
competitive advantages or to compete successfully in the future.
                                       10


         A substantial  majority of the Company's revenues are presently derived
from sales of products used in coronary angiography and angioplasty  procedures.
Other procedures, devices and drugs for the treatment and prevention of coronary
artery  disease have been  developed and are currently  being used such as laser
angioplasty,  atherectomy procedures and drug therapies, the effect of which may
be to render certain of the Company's  products obsolete or to limit the markets
for its  products.  However,  with the  advent  of  vascular  stents  and  other
procedures such as discography,  the Company has experienced continued growth in
its proprietary inflation technology.

PATENTS, LICENSES, TRADEMARKS AND COPYRIGHTS

         The Company considers its proprietary technology to be important in the
development  and manufacture of its products and seeks to protect its technology
through  a  combination  of  patents  and  confidentiality  agreements  with its
employees and others. Merit has received 93 issued U.S. and foreign patents, and
many  more are  pending.  Two U.S.  patents  were  issued in 1991  covering  the
mechanical aspects of the Company's  angioplasty  inflation devices which relate
to the  ability  of the user to engage or  release  the  syringe  plunger  while
increasing or decreasing  pressure,  and two U.S.  patents were obtained in 1992
and 1993 covering  digital  control  aspects of the  Company's  IntelliSystem(R)
inflation device and for displaying,  storing and retrieving inflation data. The
Company has obtained other patents  covering each of its Monarch(R) and Basix(R)
inflation  devices  and  additional  features of the  IntelliSystem(R).  Patents
granted to the  Company  prior to 1995  expire 17 years after the date of grant,
and patents  granted to the Company after 1995 expire 20 years after the date of
application.

          Corresponding patent applications  covering the claims included in the
Company's U.S.  patents and patent  applications  have been initiated in several
foreign  countries.  The Company  deems its  patents  and patents  pending to be
materially  important  to its  business  but does not  believe  its  business is
dependent on securing such patents. Moreover,  although certain of the Company's
key patents will expire in 2008 and other  patents will expire  thereafter,  the
Company  expects that related  products  will  continue to be valuable,  in part
because of proprietary  innovations  made since the issue of the initial patent.
The  Company  negotiated  a license in 1992 with  respect to patents  concerning
technology utilized in its  IntelliSystem(R) and Monarch(R) inflation devices in
consideration  of a 5.75%  ongoing  royalty,  not to exceed  $450,000  annually.
Royalties paid in each of 2003, 2002 and 2001 were $450,000.

         While the Company has obtained U.S.  patents and filed  additional U.S.
and foreign patent  applications as discussed  above,  there can be no assurance
that issued  patents will provide the Company with any  significant  competitive
advantages  or will not be  challenged  by third  parties or that the patents of
others will not have an adverse  effect on the ability of the Company to conduct
its business.  The Company could incur substantial costs in seeking  enforcement
of its patents against  infringement or the  unauthorized use of its proprietary
technology by others or in defending  itself  against  similar claims of others.
Insofar as the  Company  relies on trade  secrets  and  proprietary  know-how to
maintain its competitive position, there can be no assurance that others may not
independently develop similar or superior technologies.

         The Company has registered or applied for registration of several trade
names or trademarks.  See "Products"  above.  The Company also places  copyright
notices  on its  instructional  and  advertising  materials  and has  registered
copyrights  relating  to  certain  software  used  in its  electronic  inflation
devices.

                                       11


REGULATION

         The development,  testing, packaging, labeling and marketing of medical
devices and the manufacturing procedures relating to these devices are regulated
under  the  Federal  Food,  Drug and  Cosmetic  Act and  additional  regulations
promulgated  thereunder by the FDA. In general,  these statutes and  regulations
require that  manufacturers  adhere to certain standards  designed to ensure the
safety  and  effectiveness  of  medical  devices.  The  Company  employs  a Vice
President of regulatory  affairs and a Vice President of quality systems who are
responsible  for compliance  with all applicable FDA  regulations.  Although the
Company believes it is currently in material compliance with these requirements,
the Company's  business could be adversely  affected by a failure to comply with
all  applicable  FDA and other  government  regulations  presently  existing  or
promulgated in the future.

         The FDA's Good Manufacturing Practices standards regulate the Company's
manufacturing processes,  require the maintenance of certain records and provide
for unscheduled inspections of the Company's facilities. Certain requirements of
state,  local  and  foreign  governments  must  also  be  complied  with  in the
manufacture and marketing of the Company's products.

         New medical  devices  may also be subject to either the Section  510(k)
Pre-Market   Notification   regulations  or  the  Pre-Market   Approval  ("PMA")
regulations promulgated by the FDA and similar regulatory authorities in foreign
countries.  New products in either  category  require  extensive  documentation,
careful  engineering  and  manufacturing  controls to ensure  quality.  Products
needing PMA approval  require  extensive  pre-clinical  and clinical testing and
approval by the FDA prior to marketing.  Products  subject to the Section 510(k)
of the  Federal  Food Drug and  Cosmetic  Act  require  FDA  clearance  prior to
marketing.  To date, the Company's  products have required only  compliance with
Section  510(k).  The  Company's  products  are  subject to  foreign  regulatory
approvals before they may be marketed  abroad.  The Company places the "CE" mark
on devices and  products  sold in Europe.  The Company  has  received  ISO 13485
certification for its South Jordan,  and Murray,  Utah facilities,  and Angleton
facilities.  The  Company  has  received  ISO 9001 and  EN46001  for its Galway,
Ireland facility.  The Company has also received ISO 9002  certification for its
Merit Sensor Systems, Inc. facility in Santa Clara, California.

EMPLOYEES

         As of December 31, 2003, the Company employed 1,210 persons,  including
917 in  manufacturing,  116 in  sales  and  marketing,  94 in  engineering,  and
research and development, and 83 in administration.

         Many  of the  Company's  present  employees  are  highly  skilled.  The
Company's  failure or success will depend,  in part,  upon its ability to retain
such employees.  Management is of the opinion that an adequate supply of skilled
employees  is  available.  The Company has from time to time  experienced  rapid
turnover among its entry-level  assembly workers as well as occasional shortages
of such workers,  resulting in increased labor costs and administrative expenses
related to hiring and training of replacement and new entry-level employees. All
Merit employees are bound by policies of confidentiality.  None of the Company's
employees is represented  by a union or other  collective  bargaining  group and
management of the Company  believes  that its  relations  with its employees are
good.

AVAILABLE INFORMATION

      The  Company  files  annual,  quarterly  and  current  reports  and  other
information  with the SEC.  These  materials  can be inspected and copied at the
SEC's Public Reference Room at 450 Fifth Street, N.W.,  Washington,  D.C. 20549.
Copies of these materials may also be obtained by mail at prescribed  rates from

                                       12


the SEC's Public  Reference  Room at the above  address.  Information  about the
Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.  The
SEC also maintains an Internet site that contains reports, proxy and information
statements,  and other information  regarding  issuers that file  electronically
with the SEC. The address of the SEC's Internet site is http://www.sec.gov.

         The Company makes available,  free of charge,  on its Internet website,
located at http://www.merit.com, its most recent Annual Report on Form 10-K, its
most recent Quarterly Report on Form 10-Q, any current reports on Form 8-K filed
since the Company's most recent Annual Report on Form 10-K and any amendments to
such reports as soon as reasonably  practicable  following the electronic filing
of such report with the SEC. In addition,  the Company  provides  electronic  or
paper copies of its filings free of charge upon request.

FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

         For  financial  information  relating  to  the  Company's  foreign  and
domestic sales,  transfers between geographic areas, net income and identifiable
assets, see Note 9 to the Company's  Consolidated  Financial Statements included
in this report.

FACTORS THAT MAY AFFECT FUTURE RESULTS

         The business,  operations  and  financial  condition of the Company are
subject to certain risks and uncertainties. Should one or more of these risks or
uncertainties materialize, or should any underlying assumptions prove incorrect,
actual results may vary materially from those anticipated,  estimated, projected
or  expected.  Among  the key  factors  that may have a  direct  bearing  on the
Company's   business,   operations  and  financial  condition  are  the  factors
identified below:

The Company's products may be subject to recall or product liability claims.
--------------------------------------------------------------------------------
         Merit's products are used in connection with surgical procedures and in
other medical  contexts in which it is important  that those  products  function
with  precision  and  accuracy.  If the  Company's  products do not  function as
designed,  or are designed  improperly,  the Company may be forced by regulatory
agencies to withdraw  such  products  from the market.  In addition,  if medical
personnel  or their  patients  suffer  injury as a result of any  failure of the
Company's  products to function as designed,  or an  inappropriate  design,  the
Company may be subject to lawsuits seeking significant compensatory and punitive
damages.  Any product recall or lawsuit seeking significant monetary damages may
have  a  material  adverse  effect  on  the  Company's  business  and  financial
condition.

         Substantially  all of Merit's products are backed by a limited warranty
for returns due to defects in quality and workmanship. Merit maintains a reserve
for these  future  returned  products,  but the actual costs of such returns may
significantly exceed the reserve,  which could have a material adverse effect on
the Company's financial condition.

Termination of relationships  with the Company's  suppliers,  or failure of such
suppliers to perform, could disrupt the Company's business.
--------------------------------------------------------------------------------
         Merit relies on raw materials,  component parts, finished products, and
services supplied by outside third parties in connection with its business.  For
example,  substantially  all of the  Company's  products are  sterilized  by two
entities.  In  addition,  some of the  Company's  products are  manufactured  or
assembled  by  third  parties.  If a  supplier  of  significant  raw  materials,
component  parts,  finished goods or services were to terminate its relationship
with the Company,  or otherwise cease supplying raw materials,  component parts,


                                       13


finished goods or services consistent with past practice,  the Company's ability
to meet its obligations to its end customers may be disrupted. A disruption with
respect to numerous  products,  or with respect to a few  significant  products,
could have a material  adverse  effect on the  Company's  business and financial
condition.

The Company may be unable to compete in its markets,  particularly if there is a
significant change in relevant practices and technology.
--------------------------------------------------------------------------------
         The market for each of the Company's existing and potential products is
highly competitive.  The Company faces competition from several companies,  many
of which are larger,  better established and have greater  financial,  technical
and other resources and greater market presence than does Merit.  Such resources
and market  presence may enable the Company's  competition  to more  effectively
market competing  products or to market competing  products at reduced prices in
order to gain market share.

         In addition,  Merit's ability to compete successfully is dependent,  in
part, upon the Company's ability to respond effectively to changes in technology
and to  develop  and  market  new  products  which  achieve  significant  market
acceptance.  Competing  companies with substantially  greater resources than the
Company are  actively  engaged in research and  development  of  diagnostic  and
interventional  methods,  treatments and procedures  that could limit the market
for the Company's  products and eventually  make certain  products  obsolete.  A
reduction in the demand for a significant number of the Company's products, or a
few key products, could have a material adverse effect on the Company's business
and financial condition.

The Company may be unable to protect its proprietary  technology or may infringe
on the proprietary technology of others.
--------------------------------------------------------------------------------
      The Company's  ability to remain  competitive is dependent,  in part, upon
its ability to prevent other  companies  from using its  proprietary  technology
incorporated  into its  products.  The Company  seeks to protect its  technology
through  a  combination  of  patents  and  trade  secrets,  as well as  license,
proprietary know-how and confidentiality  agreements. The Company may be unable,
however, to prevent others from using its proprietary  information,  or continue
to use such information itself, for numerous reasons, including the following:

         o    Merit's  issued patents may not be  sufficiently  broad to prevent
              others from copying its proprietary technologies;

         o    Merit's  issued  patents may be  challenged  by third  parties and
              deemed to be overbroad or unenforceable;

         o    Merit's products may infringe on the patents of others,  requiring
              it to  alter  or  discontinue  its  manufacture  or  sale  of such
              products;

         o    Costs  associated  with  seeking  enforcement  of Merit's  patents
              against  infringement,  or defending itself against allegations of
              infringement, may be significant;

         o    Merit's pending patent applications may not be granted for various
              reasons,  including  overbreadth  or  conflict  with  an  existing
              patent; and

         o    Other  persons  may  independently  develop,  or  have  developed,
              similar or superior technologies.

                                       14


A  significant  adverse  change  in,  or  failure  to  comply  with,   governing
regulations could adversely affect the Company's business.
--------------------------------------------------------------------------------
         Substantially  all of the Company's  products are "devices," as defined
in the Federal Food, Drug and Cosmetic Act, and the  manufacture,  distribution,
record keeping,  labeling and  advertisement  of Merit's  products is subject to
regulation  by the  FDA in the  United  States  and  its  equivalent  regulatory
agencies  in  various   foreign   countries  in  which   Merit's   products  are
manufactured,  distributed,  labeled,  offered and sold. Further, the Company is
subject to continual review and periodic  inspections at its current  facilities
with respect to the FDA's Good Manufacturing  Practices and similar requirements
of  foreign  countries.  Merit's  business  and  financial  condition  could  be
adversely  affected  if it is  found  to be out  of  compliance  with  governing
regulations.  In  addition,  if such  regulations  are  amended  to become  more
restrictive  and costly to comply with, the costs of compliance  could adversely
affect the Company's business and financial condition.

A significant  portion of the Company's revenues are derived from a few products
and procedures.
--------------------------------------------------------------------------------
         A significant  portion of the Company's  revenues are  attributable  to
sales of its inflation  devices.  During the year ended December 31, 2003, sales
of the Company's  inflation devices (including  inflation devices sold in custom
kits)  accounted for  approximately  33% of the Company's  total  revenues.  Any
material decline in market demand for the Company's inflation devices could have
an adverse effect on the Company's business and financial condition.

         In addition,  the products that account for a majority of the Company's
historical  revenues  are  designed  for use in  connection  with a few  related
medical procedures,  including  angioplasty and stent placement  procedures.  If
subsequent  developments  in  medical  technology  or  drug  therapy  make  such
procedures  obsolete,  or alter  the  methodology  of such  procedures  so as to
eliminate the usefulness of the Company's products, the Company may experience a
material  decrease  in demand  for its  products  and  experience  deteriorating
financial performance.

The Company is subject to work stoppage, transportation and related risks.
--------------------------------------------------------------------------------
         Merit  manufactures  its  products at various  locations  in the United
States and in Ireland and sells its products  throughout the United  States,  in
Europe  and in other  parts of the world.  The  Company  depends on  third-party
transportation  companies to deliver  supplies  necessary to  manufacture  Merit
products  from vendors to the  Company's  various  facilities  and to move Merit
products to customers, operating divisions and other subsidiaries located within
and  outside  the  United  States.  Merit's  manufacturing  operations,  and the
operations of the transportation  companies on which the Company depends, may be
adversely affected by natural disasters and significant human events,  such as a
war, terrorist attack,  riot, strike,  slowdown or similar event. Any disruption
in the Company's  manufacturing or  transportation  could  materially  adversely
affect  the  Company's  ability  to  meet  customer  demands  or its  operations
generally.

Limits on reimbursement imposed by governmental and other programs may adversely
affect the Company's business.
--------------------------------------------------------------------------------
         The  cost  of a  significant  portion  of  medical  care is  funded  by
governmental,   social   security  or  other  insurance   programs.   Limits  on
reimbursement  imposed by such  programs  may  adversely  affect the  ability of
hospitals and others to purchase  Merit  products.  In addition,  limitations on
reimbursement for procedures which utilize Merit products could adversely affect
sales.
                                       15


Fluctuations  in  Euro  exchange  rates  may  negatively  impact  the  Company's
financial results.
--------------------------------------------------------------------------------
         Fluctuations  in the  rate of  exchange  between  the Euro and the U.S.
Dollar  could have a negative  impact on the  Company's  margins  and  financial
results.  For example,  during 2003,  the exchange rate between the Euro and the
U.S.  Dollar  resulted in an increase of the  Company's  gross  revenues of $2.4
million and 0.3% in gross profit.

         For the year ended  December 31, 2003,  approximately  $13 million,  or
9.6%,  of  Merit's  sales were  denominated  in Euros.  If the rate of  exchange
between the Euro and the U.S.  Dollar  declines,  the Company may not be able to
increase the prices it charges its European  customers for products whose prices
are denominated in Euros. Furthermore, the Company may be unable or elect not to
enter into  hedging  transactions  which could  mitigate the effect of declining
exchange rates. As a result,  as the rate of exchange between Euros and the U.S.
Dollars declines, the Company's financial results may be negatively impacted.

The  Company  may be unable  to  successfully  manage  growth,  particularly  if
accomplished through acquisitions.
--------------------------------------------------------------------------------
         Successful  implementation  of Merit's  business  strategy will require
that the Company  effectively  manage any  associated  growth.  To manage growth
effectively, the Company's management will need to continue to implement changes
in  certain  aspects  of  the  Company's  business,  to  enhance  the  Company's
information  systems and operations to respond to increased  demand,  to attract
and retain  qualified  personnel and to develop,  train and manage an increasing
number of management-level and other employees. Growth could place an increasing
strain  on the  Company's  management,  financial,  product  design,  marketing,
distribution  and other resources,  and the Company could  experience  operating
difficulties.  Any failure to manage  growth  effectively  could have a material
adverse effect on the Company's results of operations and financial condition.

         To the extent that the Company grows through acquisition,  it will face
the  additional  challenges  of  integrating  its current  operations,  culture,
informational  management  systems  and other  characteristics  with that of the
acquired entity.  The Company may incur significant  expenses in connection with
negotiating  and  consummating  one or  more  transactions,  and it may  inherit
certain  liabilities  in  connection  with the  acquisition  as a result  of its
failure to conduct adequate due diligence or otherwise. In addition, the Company
may not realize competitive advantages,  synergies or other benefits anticipated
in  connection  with such  acquisition(s).  If the Company  does not  adequately
identify targets for, or manage issues related to our future acquisitions,  such
acquisitions  may have a negative  adverse effect on the Company's  business and
financial results.

The market price of the Company's Common Stock has been, and may continue to be,
volatile.
--------------------------------------------------------------------------------
The market price of Merit's common stock (the "Common  Stock") has been, and may
continue to be, highly volatile for various reasons, including the following:

         o    Merit's announcement of new products or technical innovations,  or
              similar announcements by its competitors;

         o    Development  of new  procedures  that use, or do not use,  Merit's
              technology;

         o    Quarter-to-quarter variances in the Company's financial results;

         o    Claims  involving  potential  infringement  of  patents  and other
              intellectual property rights;

                                       16


         o    Analyst and other  projections  or  recommendations  regarding the
              Common Stock or medical technology stocks generally;

         o    Any  restatement  of the  Company's  financial  statements  or any
              investigation  into the  Company by the SEC or another  regulatory
              authority; and

         o    A general decline, or rise, of stock prices in the capital markets
              generally.


The Company is dependent upon key personnel.
--------------------------------------------------------------------------------
         The  Company's   continued  success  is  dependent  on  key  management
personnel,  including Fred P. Lampropoulos, the Company's Chairman of the Board,
President and Chief Executive  Officer.  Mr.  Lampropoulos is not subject to any
agreement  prohibiting his departure,  and the Company does not maintain key man
life  insurance  on his life.  Mr.  Lampropoulos  announced  his  candidacy  for
Governor of Utah in January 2004 and is actively  campaigning  as one of several
candidates  vying for that  seat.  The loss of Mr.  Lampropoulos,  or of certain
other key management personnel,  could materially adversely affect the Company's
business  and  operations.  The  Company's  success  also  depends,  among other
factors,  on  the  successful  recruitment  and  retention  of  key  operations,
manufacturing, sales and other personnel.

Item 2. Properties.

         The  Company is the owner of  approximately  22 acres of real  property
situated in the City of South Jordan,  Utah,  surrounding an additional 10 acres
of leased real  property on which is located the Company's  175,000  square foot
principal office and manufacturing  facility.  The Company sold the 10-acre site
to an unrelated  developer in order to facilitate  construction of such facility
and entered into a 25-year  lease  agreement  (beginning in 1995) to finance the
new facility.  Monthly lease payments are  approximately  $122,000.  The Company
also holds an option to purchase the facility, exercisable at market value after
10  years  and  25  years.   The  facility  was  constructed  to  the  Company's
specifications  and the Company  estimates  that it is presently at or near full
capacity.  See  "Item 7.  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations - Liquidity and Capital Resources".

         The Company owns a building of  approximately  26,500  square feet with
approximately  three  acres of land,  in  Galway,  County  Galway,  Republic  of
Ireland,  as its  principal  office  and  manufacturing  facility  for  European
operations.  Of the three acres of land,  the Company added 1.6 acres in January
2003 in  preparation  for a facility  expansion  which started in late 2003. The
existing Galway facility is used as the  administrative  headquarters to support
the Company's  European direct sales force.  The facility also houses a research
and development  team,  which has developed a new diagnostic  guide wire, and is
developing  other new  products.  Beginning in the fourth  quarter of 1997,  the
Company initiated manufacturing operations for several new and existing products
at the Galway facility, including custom kits and the BASIX(R) inflation device.
In 1998,  the Company began the  manufacture of the Company's  hemostasis  valve
products in Ireland. Toward the end of 2001, the Company finished an R&D project
and began  manufacturing  a new  diagnostic  guide wire.  The  Company's  Galway
property has been  improved  and  equipped on terms  favorable to the Company in
connection with economic development incentives and grants provided by the Irish
Government.

          The Company leases a manufacturing  facility of  approximately  50,000
square  feet  comprised  of seven  units,  located in Murray,  Utah.  The Murray
facility is used for  production  of several of the  Company's  well-established
products.  The leases related to three of the these units at the Murray facility

                                       17


will  expire in 2004 and leases  related to four of these  units will  expire in
2007.  The  aggregate  monthly  lease  payments  on our  Murray  facilities  are
approximately   $29,000.   The  Company   also  leases   8,500  square  feet  of
manufacturing  and office  space  located  in Santa  Clara,  California  for the
production of sensors.  The lease runs through  September 2004 at a monthly cost
of  approximately  $18,000.  The Company does not plan to renew its Santa Clara,
California lease as it currently  intends to relocate its sensor operations to a
new facility being built in South Jordan, Utah scheduled for completion in 2005.

          In August 1999, the Company purchased the operating assets and product
lines of Mallinckrodt's  Angleton,  Texas division,  including  approximately 19
acres of land and a 75,000 square foot building.

          The Company believes that its existing and proposed facilities will be
generally  be  adequate  for  its  present  and  future   anticipated  level  of
operations.

Item 3.   Legal Proceedings.

          In the course of conducting its business  operations,  the Company is,
from time to time,  involved in litigation and other  disputes.  Management does
not  currently  anticipate  that any pending  litigation  or dispute will have a
materially adverse effect on the Company's operations.

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

          No matters  were  submitted to a vote of security  holders  during the
fourth quarter of the year ended December 31, 2003.

                                     PART II

Item 5.   Market for Registrant's Common Stock and Related Shareholder Matters.

MARKET PRICE FOR THE COMMON STOCK

          The Common Stock is traded on the NASDAQ  National Market System under
the symbol  "MMSI." The  following  table sets forth high and low  closing  sale
price for the Common Stock for the periods indicated.

                           Quarter Ended             High*             Low*
                           -------------             -----             ----
                           March 31, 2002            $  9.88           $  6.28
                           June 30, 2002             $ 11.88           $  8.21
                           September 30, 2002        $ 12.06           $  8.72
                           December 31, 2002         $ 13.95           $ 10.28

                           March 31, 2003            $ 11.86           $  9.14
                           June 30, 2003             $ 12.30           $ 10.08
                           September 30, 2003        $ 18.00           $ 10.92
                           December 31, 2003         $ 24.00           $ 16.17

         *  Effective  as of April 12,  2002,  the  Company  effected  a 5 for 4
forward  stock  split of the  Common  Stock  by  means  of a stock  split of one
additional  share  of  Common  Stock  for  each  four  shares  of  Common  Stock
outstanding.  Also,  on August 15,  2003,  and  December  3, 2003,  the  Company
effected a 4 for 3 forward  stock split of the Common  Stock by means of a stock
split of one  additional  share of Common  Stock for each three shares of Common
Stock  outstanding.  Data related to periods prior to the effective dates of the
three stock splits have been adjusted to reflect the terms of such stock splits.

                                       18


OUTSTANDING SHARES AND NUMBER OF SHAREHOLDERS

         As of March 10, 2004, the number of shares of Common Stock  outstanding
was 26,095,533,  held by approximately 214 shareholders of record, not including
shareholders whose shares are held in securities position listings.

DIVIDENDS

         The Company has never  declared  or paid cash  dividends  on the Common
Stock.  The Company  presently  intends to retain any future earnings for use in
its business and,  therefore,  does not  anticipate  paying any dividends on the
Common Stock in the foreseeable  future.  In addition,  the Company's  revolving
line of credit contains  covenants  prohibiting the declaration and distribution
of a cash dividend at any time prior to the termination of such line of credit.
*****
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

         The following table contains information regarding the Company's equity
compensation plans as of December 31, 2003.



                                                                                               Number of
                                      Number of                                           securities remaining
                                   securities to be                                       available for future
                                 issued upon exercise         Weighted-average               issuance under
                                    of outstanding           exercise price of         equity compensation plans
                                  options, warrants         outstanding options,         (excluding securities
   Plan category                      and rights            warrants and rights        reflected in column (a) )
                                         (a)                        (b)                           (c)
                                                                                      
   Equity
   compensation
   plans approved by
   security holders                     4,188,474 (1)(3)              $7.63                       557,357(2)(3)

   Equity
   compensation
   plans not approved
   by security holders                        0                                                    0

   Total                                4,188,474                                              557,357


(1)  Consists  of  4,188,474  shares  subject to the options  granted  under the
Company's 1999 Omnibus Stock Incentive Plan.

(2) Consists of 557,357 shares available to be issued under the Company's
Employee  Stock  Purchase  Plans.

(3) See Note 8 to the Company's  consolidated  financial statements set forth in
Item 8 of this report for additional information regarding these plans.

                                       19

Item 6.   Selected Financial Data  (In thousands except share data)



                                                          Year Ended  December 31,
                                          2003         2002         2001         2000        1999
                                      ---------------------------------------------------------------

                                                                           
Operating Data:
 Net Sales                             $ 135,954    $ 116,227    $ 104,036    $  91,448   $  77,960

 Cost of  Sales                           75,230       67,712       65,938       60,824      47,918

 Gross Profit                             60,724       48,515       38,098       30,624      30,042

 Selling, General and Administrative
   Expenses                               30,468       27,732       24,040       23,300      20,407

 Research and Development
   Expenses                                4,627        4,008        4,118        3,864       3,618

 Severance Costs                            --           --           --            331        --

 Income from Operations                   25,629       16,775        9,940        3,129       6,017

 Other Expense (Income)                     (411)          13          938        2,355       1,256

 Gain on Sale of Land                       (508)        --           (786)        --          --

 Litigation Settlement                      (475)        --           --           --          --

 Income Before Income Tax Expense         27,023       16,762        9,788          774       4,761

 Income Tax Benefit (Expense)             (9,728)      (5,452)      (3,052)          53      (1,454)

 Minority Interest in Subsidiary            --           --           --           --           (81)

 Net Income                            $  17,295    $  11,310    $   6,736    $     827   $   3,226

 Net Income Per Share (Diluted)        $     .64    $    0.43    $    0.28    $    0.04   $    0.15

Weighted Average
Shares Outstanding  (Diluted)             27,034       26,238       23,876       21,836      21,015

Balance Sheet Data:

Working Capital                        $  56,931    $  34,582    $  26,911    $  32,447   $  33,934

 Total Assets                            107,301       78,305       66,659       71,447      72,360

 Long-Term Debt                                0           17        5,727       24,102      27,817

Stockholders' Equity                   $  88,243    $  63,399    $  47,658    $  34,773   $  32,690


                                       20

Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations.
          ----------------------------------------------------------------------
OVERVIEW

          During 2003 Merit  experienced  its most successful year ever in terms
of revenue and  profitability.  Not only did the Company's  revenues grow by 17%
during 2003,  but virtually  every area of the Company's  financial  performance
improved in 2003,  including net income, which increased 53% over the year ended
December  31, 2002  (previously  the year in which the Company had  achieved its
highest level of net income).

          Gross  margins as a  percentage  of sales  improved  300 basis  points
during the year  ended  December  31,  2003,  compared  to 2002,  a  significant
contribution  to the growth in income  during  2003 over 2002.  Inventory  turns
improved during the twelve months  preceding  December 31, 2003 to 3.8 times per
year from 3.4 times per year for the twelve months preceding December 31, 2002.

         The  Company's  productivity  increased  to over  $118,000 of sales per
employee for the year ended  December 31,  2003,  up 8% from the previous  year.
Higher employee productivity, along with Merit's upgraded management information
systems and new incentive pay system,  worked  together to make the Company more
productive and profitable.

          The  Company's  financial  condition  strengthened  during 2003 as the
Company's cash position rose to $30.2 million, compared to $9.7 million in 2002,
an increase of 212%.  Accounts  receivable days outstanding  improved during the
twelve  months  ending  December 31, 2003 to 44 days from 49 days for the twelve
months ending December 31, 2002.

          The Company  anticipates that it will make significant  investments in
new  manufacturing  space in 2004. The Company has announced plans to expand its
South Jordan, Utah facility by approximately 180,000 square feet, an increase of
approximately  103% and its Galway,  Ireland  facility by  approximately  40,000
square feet, an increase of approximately 151%. Construction of these facilities
is needed to expand  Merit's  manufacturing  capacity to meet current and future
demand of the  Company's  products as well as a  consolidation  to South Jordan,
Utah of the Company's  Murray,  Utah facility (56,000 square feet) and its Merit
Sensor System,  Inc.,  wafer fab facility  (8,500 square feet) from Santa Clara,
California.

          Merit's management continues to leverage long-term investments in: (1)
product  breadth,  quality and  innovation (2) direct sales forces in the United
States and Europe and (3) quality  systems and facilities.  Management  believes
there are many more  opportunities  for growth within the Company in addition to
the continued  growth of the markets in which the Company's,  products are sold.
Furthermore,  management  believes  market  acceptance  of the Company's new and
existing products,  if achieved,  will further enhance and leverage the position
Merit has attained.

RESULTS OF OPERATIONS

         The following table sets forth certain operational data as a percentage
of sales for the periods indicated:

                                         2003     2002     2001
                                       -------- -------- --------

Sales                                   100.0%   100.0%   100.0%
Gross margin                             44.7     41.7     36.6
Selling, general and administrative      22.4     23.9     23.1
Research and development                  3.4      3.4      4.0
Income from operations                   18.9     14.4      9.6
Income before income tax expense         19.9     14.4      9.4
Net income                               12.7      9.7      6.5

                                       21


          Sales  increased  by $19.7  million,  or 17%, in 2003,  compared to an
increase of $12.2 million,  or 11.7%, in 2002, and an increase of $12.6 million,
or 13.8%, in 2001. The increase in sales for 2003 resulted  primarily from a 19%
increase  in  stand-alone  product  revenues,  an 18%  increase  in  custom  kit
revenues,  a 17%  increase  in  inflation  device  revenues,  and a 9%  increase
catheter product revenues. The Company's revenues increased  notwithstanding the
fact that the markets for many of the Company's products are experiencing slight
pricing declines;  therefore  substantially all of the increase in the Company's
revenues was attributable to increased unit sales, except for an increase in the
exchange rate between the EURO and the U.S. Dollar which increased sales by 1.8%
in 2003  compared  to 2002.  Unit  growth in 2003  over  2002 was the  result of
procedural growth rate of approximately  seven to nine percent,  introduction of
new products which accounted for growth of approximately  three to four percent,
with the remainder of unit growth coming from market share gains.  International
sales in 2003 were approximately $34.3 million, or 25% of total sales,  compared
to  approximately   $27.1  million,   or  23%  of  total  sales,  in  2002,  and
approximately  $23.8 million,  or 23% of total sales,  in 2001.  These increases
were primarily a result of greater acceptance of the Company's products in other
international  markets,  ongoing growth in European direct sales,  and increased
sales related to  improvement in the exchange rate between the EURO and the U.S.
Dollar,  compared to 2002. Direct sales in France,  Germany,  the U.K., Belgium,
the Netherlands and Ireland were $15.6 million,  $12.3 million and $10.6 million
in 2003, 2002 and 2001, respectively.

          Gross profit as a percentage of sales was 44.7%,  41.7%,  and 36.6% in
2003, 2002, and 2001, respectively.  The increase in the gross margin percentage
in 2003 over 2002 was  favorably  effected  by an  increase  in  efficiency  and
productivity gains achieved by the Company's  operations groups, and an increase
of the exchange  rate of the EURO against the U.S.  Dollar when  compared to the
same  period in 2002,  resulting  in an increase  in gross  profit of 0.3%.  The
Company has also reduced the material costs from some of its principal  vendors.
The Company is operating in a gradually declining price market.  There is also a
general cost-increasing manufacturing environment. However, management presently
anticipates  that the  Company  will  maintain or  slightly  improve  2004 gross
margins over those achieved in 2003.

          Selling,  general and administrative  expenses increased $2.7 million,
or 9.9%, in 2003 over 2002 and $3.7 million,  or 15.4%, in 2002 over 2001. These
additional  expenditures  for 2003 were related to increases in commissions paid
commensurate  with sales growth,  costs of expanding the Company's  direct sales
force in the U.S. and Europe,  and an increase of the exchange  rate of the EURO
against the U.S.  Dollar when compared to the same period in 2002,  resulting in
an increase in selling  expenses for the Company's direct sales force in Europe.
Total selling,  general and administrative expenses decreased as a percentage of
sales to 22.4 % in 2003 from 23.9% in 2002.

          Research  and  development  expenses  for 2003 were $4.6  million,  an
increase  of 15.4%,  compared  to $4.0  million  for 2002,  a  decrease  of 2.7%
compared  to $4.1  million in 2001.  This  slight  increase  in R&D during  2003
related primarily to head count additions and indirect costs to support catheter
development.  The  decline  in R&D  during  2002 was  primarily  a result of the
completion  of R&D  activities in Ireland  relating to the Company's  guide wire
product  line and the  transition  of much of the  Company's  R&D  resources  to
manufacturing  of the new  diagnostic  guide wire  product  line.  Research  and
development  costs as a percentage  of sales were 3.4%,  3.4% and 4.0% for 2003,
2002 and 2001, respectively.  Management believes that the development of ten to
twelve  projects  at any  given  time  is an  appropriate  level  of R&D for the
Company,  and is likely to provide six to eight new products a year through R&D,
regulatory, manufacturing, marketing and sales introduction.

          The  Company's  effective  tax rate for 2003 was 36%, up from 32.5% in
2002 and 31.2% in 2001,  mostly  because of lower taxable income in 2003 for the

                                       22

Company's  Irish  operations,  which  are  taxed at a lower  rate  than the U.S.
operations.  The change in taxable  income for Ireland from 2003 to 2002 was the
result of increased costs associated with the development of a new product which
is scheduled to be released during 2005.

          Other income was $1.4 million for 2003,  compared to other  expense of
$13,209 and $151,231 for 2002 and 2001,  respectively.  The  generation of other
income  during  2003 was result of a gain on sale of land  adjacent to our South
Jordan,  Utah  facility of $507,928,  and the  settlement  of a legal dispute of
$475,000.  Other  income for 2003 was also  effected  by an increase in interest
income of $288,654 and a decrease in interest expense of $84,145,  when compared
to the same period in 2002.

          Net income for 2003 was $17.3 million, an increase of 52.9%,  compared
to $11.3  million for 2002.  Net income for 2001 was $6.7 million for 2001.  Net
income for 2003 was favorably  effected by higher gross profits,  lower selling,
general and administrative  expenses as a percentage of sales and an increase in
other income.

         Effective  January 1, 2002, the Company adopted  Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. Under
SFAS  No.  142,  the  Company  no  longer   amortizes   goodwill  from  business
acquisitions and reviews annually the impairment of goodwill, or more frequently
if impairment  indicators  arise.  The Company  completed its initial testing of
goodwill as of January 1, 2002 and determined that there was no impairment.  The
Company has elected to perform its annual  testing of goodwill  impairment as of
July 1 of the applicable  fiscal year. As of July 1, 2003,  the Company  updated
its  testing  of  goodwill  for  impairment  and  determined  that  there was no
impairment.  The  unamortized  amount  of  goodwill  at  December  31,  2003 was
approximately $4.8 million.

         With the  adoption of SFAS No. 142, the Company  reassessed  the useful
lives  and  residual  values  of all  acquired  intangible  assets  to make  any
necessary  amortization  period  adjustments.   Based  on  that  assessment,  no
adjustments  were made to the  amortization  period or residual  values of other
intangible assets.

         Other recently adopted or issued financial  accounting standards are as
follows,  SFAS No. 144,  Accounting for the impairment or Disposal of Long-Lived
Assets,  SFAS  No.  133,  Accounting  for  Derivative  Instruments  and  Hedging
Activities,  SFAS No.146,  Accounting for Costs Associated with Exit or Disposal
Activities, SFAS No. 148, Accounting for Stock-Based Compensation Transition and
Disclosure. See discussion of the effect of these accounting standards in Note 1
of the Company's  consolidated  financial statements set forth in Item 8 of this
report.

                                       23


LIQUIDITY AND CAPITAL RESOURCES

Capital Commitments

         The following table  summarizes the Company's  capital  commitments and
contractual  obligations  as of December 31,  2003,  including  long-term  debt,
operating  lease  payments,  and office  lease  payments,  as well as the future
periods in which such payments are currently anticipated to become due:



                                           Payment due by period (in thousands)
                                     ------------------------------------------------
                                              Less than                      After 5
    Contractual Obligations           Total    1 Year   1-3 Years 4-5 Years   Years
----------------------------------   -------  --------  --------- ---------  -------
                                                              
Long-term debt                       $    17   $    17      --        --        --
Operating leases                      26,423     2,446   $ 4,257   $ 3,478   $16,242
Royalty obligations                    2,475       525     1,050       900      --
                                     -------   -------   -------   -------   -------
Total contractual cash obligations   $28,915   $ 2,988   $ 5,307   $ 4,378   $16,242
                                     =======   =======   =======   =======   =======


          Additional information regarding the Company's capital commitments and
contractual obligations,  including royalty payments, is contained in Notes 5, 6
and 10 of the Notes to the  Company's  Consolidated  Financial  Statements,  set
forth in Item 8..

          As of December  31,  2003,  the  Company's  working  capital was $56.9
million,  an  increase  of 64.5%,  from the  Company's  net  working  capital on
December 31, 2002 of $34.6  million.  As of December 31, 2003, the Company had a
current  ratio of 4.9 to 1,  compared to 4.0 to 1, as of December 31, 2002.  The
increase in working  capital during 2003 was primarily due to an increase in the
Company's  cash  balance  during  2003 of  $20.5  million.  The  Company  had $0
outstanding  under its line of credit at December 31,  2003.  Merit has financed
leasehold  improvements and equipment acquisitions through secured notes payable
and  capital  lease  arrangements  with an  outstanding  balance  of  $16,693 at
December 31, 2003. For the year ended  December 31, 2003, the Company  generated
cash from operations in the amount of $24.8 million,  the most in the history of
the Company.

          Historically,   the  Company  has  incurred  significant  expenses  in
connection  with  product   development   and   introduction  of  new  products.
Substantial  capital  has also been  required  to finance  the  increase  in our
receivables and inventories  associated with our increased  sales.  During 2004,
substantial  funds will be needed to construct  additional  facilities  in South
Jordan,  Utah  and in  Galway,  Ireland.  Construction  of these  facilities  is
currently  estimated to cost  approximately $26 million in the aggregate.  It is
anticipated  that an  additional  $5 million,  in excess of the  Company's  2003
annual capital  expenditures,  will be spent on a finished good handling  system
and other production equipment for these new facilities. Our principal source of
funding for these and other expenses has been cash  generated  from  operations,
sale of  equity,  cash  from  loans  on  equipment  and bank  lines  of  credit.
Management  believes  that its  present  sources of  liquidity  and  capital are
adequate for the current operations.

Critical Accounting Policies and Estimates

         The SEC has requested that all registrants  address their most critical
accounting  policies.  The SEC has indicated that a "critical accounting policy"

                                       24


is one which is both important to the representation of the Company's  financial
condition and results and requires  management's  most difficult,  subjective or
complex  judgments,  often as a result of the need to make  estimates  about the
effect of matters that are inherently uncertain.  The Company bases estimates on
past  experience  and on  various  other  assumptions  that are  believed  to be
reasonable  under the  circumstances,  the  results  of which form the basis for
making  judgments about carrying  values of assets and liabilities  that are not
readily  apparent  from other  sources.  Actual  results  may differ  from these
estimates  under  different  assumptions  or  conditions.  The following are the
Company's most critical accounting policies:

         Inventory  Obsolescence  Reserve: The Company writes down its inventory
for estimated obsolescence for unmarketable and/or slow moving products that may
expire prior to being sold.  If market  conditions  become less  favorable  than
those projected by management, additional inventory write-downs may be required.

         Allowance for Doubtful Accounts:  The Company maintains  allowances for
doubtful accounts for estimated losses resulting from the inability of customers
to make required payments. The allowance is based upon historical experience and
a review of individual  customer  balances.  If the  financial  condition of the
Company's  customers  were to  deteriorate,  resulting in an impairment of their
ability to make payments, additional allowances may be required.

        Stock-Based   Compensation:   The   Company   accounts   for  its  stock
compensation  arrangements  under the provisions of Accounting  Principles Board
Opinion No. 25,  Accounting for Stock Issued to Employees,  (APB 25) and intends
to continue to do so. Accordingly,  no compensation cost has been recognized for
its stock compensation arrangements.  If the compensation cost for the Company's
compensation  plans had been  determined  consistent with Statement of Financial
Accounting  Standards (SFAS) No. 123,  Accounting for Stock-Based  Compensation,
the Company's  net income and net income per common and common share  equivalent
would have changed to the pro forma amounts indicated below:



                                                 2003             2002             2001
                                           --------------   --------------   --------------
                                                                    
Net income, as reported                    $   17,295,398   $   11,310,030   $    6,735,978
Compensation cost under fair value-based
 accounting method, net of tax                  2,957,570        1,436,313        1,356,742
                                           --------------   --------------   --------------
  Net income, pro forma                        14,337,828        9,873,717        5,379,236

Net income per common share:
  Basic:
    As reported                            $      0.68      $      0.47      $      0.30
    Pro forma                                     0.56             0.41             0.24

  Diluted:
    As reported                                   0.64             0.43             0.28
    Pro forma                                     0.53             0.38             0.23


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,  2002,  and 2001:  dividend  yield of 0%;
expected  volatility of 63.81%,  63.24%,  and 63.48% for 2003,  2002,  and 2001,
respectively; risk-free interest rates ranging from 2.32% to 6.71%; and expected
lives ranging from 2.33 to 4.98 years.
                                       25


Item 7A.  Quantitative and Qualitative Disclosure About Market Risk
          ---------------------------------------------------------
         The Company's  principal market risk relates to changes in the value of
the Euro relative to the value of the U.S.  Dollar.  The Company's  Consolidated
Financial  Statements are denominated in, and the Company's  principal  currency
is, the U.S. Dollar.  A portion of the Company's  revenues in 2003 ($13 million,
representing approximately 9.6% of aggregate revenues) came from sales that were
denominated in Euros.  Certain of the Company's expenses are also denominated in
Euros,  partially  offsetting  any  risk  associated  with  fluctuations  of the
Euro/Dollar  exchange rate. Because of the Company's  Euro-denominated  revenues
and expenses, in a year in which the Company's  Euro-denominated revenues exceed
its Euro-based expenses, the value of such Euro-denominated net income increases
if the value of the Euro increases relative to the value of the U.S. Dollar, and
decreases if the value of the Euro decreases  relative to the value of the U. S.
Dollar.  During  2003,  the exchange  rate between the Euro and the U.S.  dollar
resulted in an increase of the Company's gross revenues of $2.4 million and 0.3%
in gross profit.

          At December 31, 2003, the Company had a net exposure (representing the
difference between Euro denominated  receivables and Euro denominated  payables)
of approximately $3 million. In order to partially offset such risk, at December
31, 2003,  the Company  entered into a 30 day forward EURO hedge  contract.  The
Company enters into similar hedging  transactions  various times during the year
to  partially  offset  exchange  rate risks it bears  throughout  the year.  The
Company  does  not  purchase  or  hold  derivative  financial   instruments  for
speculative  or trading  purposes.  During the year ended December 31, 2003, the
Company  experienced a net loss of $89,708 on hedging  transactions  it executed
during  2003  in an  effort  to  limit  its  exposure  to  fluctuations  in  the
Euro/Dollar exchange rate.

          As of December 31,  2003,  the Company had no variable  rate debt.  As
long as the Company does not have  variable rate debt,  the  Company's  interest
expense would not be affected by changes in interest rates.


                                       26


Item 8. Financial Statement and Supplement Data



INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
of Merit Medical Systems, Inc.:

We have audited the  accompanying  consolidated  balance sheets of Merit Medical
Systems, Inc. and subsidiaries as of December 31, 2003 and 2002, and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
each of the three years in the period ended  December 31, 2003.  Our audits also
included the  financial  statement  schedule  listed in the Table of Contents at
Item 15. These  financial  statements and financial  statement  schedule are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements and the financial statement schedule based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the financial  position of Merit Medical Systems,  Inc. and
subsidiaries  as of  December  31,  2003  and  2002,  and the  results  of their
operations  and their cash flows for each of the three years in the period ended
December 31, 2003, in conformity with accounting  principles  generally accepted
in the United States of America.  Also, in our opinion, such financial statement
schedule,  when  considered  in  relation  to the basic  consolidated  financial
statements  taken as a whole,  presents  fairly  in all  material  respects  the
information set forth therein.

As  discussed  in Notes 1 and 3, the  Company  adopted  Statement  of  Financial
Accounting  Standards No. 142, Goodwill and Other Intangible  Assets, on January
1, 2002.



/s/ DELOITTE & TOUCHE LLP
------------------------------
DELOITTE & TOUCHE LLP
Salt Lake City, Utah
February 27, 2004


                                       27



MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2003 AND 2002
------------------------------------------------------------------------------------------------------------------------

ASSETS                                                            2003             2002
                                                             -------------    -------------
                                                                        
CURRENT ASSETS:
  Cash and cash equivalents                                  $  30,204,083    $   9,683,578
  Short-term investments                                           572,988          217,451
  Trade receivables--net of allowance for uncollectible
    accounts:  2003--$749,003; 2002--$476,294                   17,728,457       15,247,892
  Other receivables                                                374,644        1,209,804
  Employee and related party receivables                           267,288          299,751
  Inventories                                                   21,269,380       18,699,217
  Prepaid expenses and other assets                                823,221          667,151
  Deferred income tax assets                                       220,625          143,265
                                                             -------------    -------------
          Total current assets                                  71,460,686       46,168,109
                                                             -------------    -------------
PROPERTY AND EQUIPMENT:
  Land                                                           2,740,394        2,034,522
  Building                                                       5,268,260        5,118,683
  Manufacturing equipment                                       29,480,421       25,577,837
  Furniture and fixtures                                        11,953,358       10,823,852
  Leasehold improvements                                         4,615,947        4,345,620
  Automobiles                                                       87,536           87,536
  Construction-in-progress                                       4,886,530        3,008,734
                                                             -------------    -------------

          Total                                                 59,032,446       50,996,784
  Less accumulated depreciation and amortization               (29,835,769)     (25,584,648)
                                                             -------------    -------------
          Property and equipment--net                           29,196,677       25,412,136
                                                             -------------    -------------

OTHER ASSETS:
  Patents and trademarks--net of accumulated amortization:
    2003--$1,311,918; 2002--$1,153,965                           1,846,392        1,927,160
  Goodwill                                                       4,764,596        4,764,596
  Deposits                                                          32,163           33,213
                                                             -------------    -------------

          Total other assets                                     6,643,151        6,724,969
                                                             -------------    -------------

TOTAL ASSETS                                                 $ 107,300,514    $  78,305,214
                                                             =============    =============

                                                                     (Continued)




                                       28



MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------------------


LIABILITIES AND STOCKHOLDERS' EQUITY                               2003                2002
                                                                           
 CURRENT LIABILITIES:
  Current portion of long-term debt                          $      16,693    $     400,182
  Trade payables                                                 5,700,491        4,121,577
  Accrued expenses                                               8,567,093        6,618,407
  Advances from employees                                          158,885          161,529
  Income taxes payable                                              86,973          284,148
                                                             -------------    -------------

         Total current liabilities                              14,530,135       11,585,843

DEFERRED INCOME TAX LIABILITIES                                  3,020,217        2,443,156

LONG-TERM DEBT                                                        --             16,693

DEFERRED CREDITS                                                 1,506,753          860,931
                                                             -------------    -------------

          Total liabilities                                     19,057,105       14,906,623
                                                             -------------    -------------

COMMITMENTS AND CONTINGENCIES (Notes 6 and 10)

STOCKHOLDERS' EQUITY:
  Preferred stock--5,000,000 shares authorized as of
    December 31, 2003 and 2002, no shares issued
  Common stock--no par value; 50,000,000 shares
    authorized; 26,002,544 and 24,647,204 shares issued
    at December 31, 2003 and 2002, respectively                 37,701,629       30,265,963
  Retained earnings                                             50,958,481       33,663,083
  Accumulated other comprehensive loss                            (416,701)        (530,455)
                                                             -------------    -------------

           Total stockholders' equity                           88,243,409       63,398,591
                                                             -------------    -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $ 107,300,514    $  78,305,214
                                                             =============    =============


                                                                     (Concluded)

                See notes to consolidated financial statements.

                                       29



MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001
--------------------------------------------------------------------------------

                                             2003              2002             2001
                                                                  
NET SALES                                $ 135,953,508    $ 116,227,201    $ 104,035,806

COST OF SALES                               75,229,716       67,711,728       65,938,044
                                         -------------    -------------    -------------

GROSS PROFIT                                60,723,792       48,515,473       38,097,762
                                         -------------    -------------    -------------

OPERATING EXPENSES:
  Selling, general, and administrative      30,467,921       27,732,363       24,040,297
  Research and development                   4,626,459        4,007,622        4,117,839
                                         -------------    -------------    -------------

          Total operating expenses          35,094,380       31,739,985       28,158,136
                                         -------------    -------------    -------------

INCOME FROM OPERATIONS                      25,629,412       16,775,488        9,939,626
                                         -------------    -------------    -------------

OTHER INCOME (EXPENSE):
  Interest income                              385,596           96,942           40,530
  Interest expense                              (9,961)         (94,106)        (978,009)
  Miscellaneous income (expense)             1,018,334          (16,045)         786,248
                                         -------------    -------------    -------------

          Other income (expense)--net        1,393,969          (13,209)        (151,231)
                                         -------------    -------------    -------------

INCOME  BEFORE INCOME TAXES                 27,023,381       16,762,279        9,788,395

INCOME TAX EXPENSE                           9,727,983        5,452,249        3,052,417
                                         -------------    -------------    -------------

NET INCOME                               $  17,295,398    $  11,310,030    $   6,735,978
                                         =============    =============    =============

EARNINGS  PER COMMON SHARE:
  Basic                                  $         .68    $         .47    $         .30
                                         =============    =============    =============
  Diluted                                $         .64    $         .43    $         .28
                                         =============    =============    =============

AVERAGE COMMON SHARES:
  Basic                                     25,401,445       24,226,100       22,537,975
                                         =============    =============    =============
  Diluted                                   27,033,964       26,238,450       23,874,818
                                         =============    =============    =============


                See notes to consolidated financial statements.

                                       30




MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001 [split table]
--------------------------------------------------------------------------------


                                                                         Common Stock            Accumulated
                                                                  ----------------------------  Other Compre-      Retained
                                                    Total           Shares         Amount        hensive Loss      Earnings
                                                 ------------    ------------    ------------    ------------    ------------
                                                                                                  
BALANCE--January 1, 2001                         $ 34,772,702      21,633,911    $ 19,779,765    $   (624,138)   $ 15,617,075
Comprehensive income:
  Net income                                        6,735,978            --              --              --         6,735,978
  Other comprehensive loss--
    Foreign currency translation adjustment
     (net of tax)                                     (28,802)           --              --           (28,802)           --
                                                 ------------
Comprehensive income                                6,707,176            --              --              --              --
Tax benefit attributable to appreciation
  of common stock options exercised                 2,514,392            --         2,514,392            --              --
Deferred compensation                                 (37,084)        (13,244)        (37,084)           --              --
Issuance of common stock under Employee
  Stock Purchase Plans                                257,702          98,843         257,702            --              --
Options and warrants exercised                      5,019,939       2,302,843       5,019,939            --              --
Shares surrendered in exchange for the payment
  of payroll tax liabilities                         (537,375)        (76,987)       (537,375)           --              --
Shares surrendered in exchange for the
  extinguishment of related party receivable         (214,558)        (43,172)       (214,558)           --              --
Shares surrendered in exchange for the
  exercise of stock options                          (824,486)       (120,823)       (824,486)           --              --
                                                 ------------    ------------    ------------    ------------    ------------

BALANCE--December 31, 2001                         47,658,408      23,781,371      25,958,295        (652,940)     22,353,053
Comprehensive income:
  Net income                                       11,310,030            --              --              --        11,310,030
  Other comprehensive income--
    Foreign currency translation adjustment
      (net of tax)                                    122,485            --              --           122,485            --
                                                 ------------
Comprehensive income                               11,432,515            --              --              --              --
Tax benefit attributable to appreciation
  of common stock options exercised                 2,684,444            --         2,684,444            --              --
Sale of treasury stock                                142,096          13,244         142,096            --              --
Issuance of common stock under Employee Stock
  Purchase Plans                                      349,622          41,984         349,622            --              --
Options and warrants exercised                      1,927,525         876,427       1,927,525
Shares surrendered in exchange for the
  payment of payroll tax liabilities                 (468,668)        (36,487)       (468,668)           --              --
Shares surrendered in exchange for
  the exercise of stock options                      (327,351)        (29,335)       (327,351)           --              --
                                                 ------------    ------------    ------------    ------------    ------------

                                                                                                                  (Continued)

                                       31




MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001 [continuation of table]
--------------------------------------------------------------------------------

                                                                         Common Stock            Accumulated
                                                                  ----------------------------  Other Compre-      Retained
                                                    Total           Shares         Amount        hensive Loss      Earnings
                                                 ------------    ------------    ------------    ------------    ------------
                                                                                                  
BALANCE--December 31, 2002                         63,398,591      24,647,204      30,265,963        (530,455)     33,663,083
Comprehensive income:
  Net income                                       17,295,398            --              --              --        17,295,398
  Other comprehensive income--
    Foreign currency translation adjustment
      (net of tax)                                    113,754            --              --           113,754            --
                                                 ------------
Comprehensive income                               17,409,152
Tax benefit attributable to appreciation
  of common stock options exercised                 4,740,850            --         4,740,850            --              --
Sale of treasury stock                                    (41)           --               (41)           --              --
Issuance of common stock under Employee
  Stock Purchase Plans                                304,958          32,592         304,958            --              --
Options and warrants exercised                      3,718,839       1,407,855       3,718,839            --              --
Shares surrendered in exchange for the
  payment of payroll tax liabilities                 (780,606)        (49,173)       (780,606)           --              --
Shares surrendered in exchange for the
  exercise of stock options                          (548,334)        (35,934)       (548,334)           --              --
                                                 ------------    ------------    ------------    ------------    ------------

BALANCE--DECEMBER 31, 2003                       $ 88,243,409    $ 26,002,544    $ 37,701,629    $   (416,701)   $ 50,958,481
                                                 ============    ============    ============    ============    ============

                                                                                                                 (Concluded)


                See notes to consolidated financial statements.


                                       32




MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001
--------------------------------------------------------------------------------


                                                          2003            2002            2001
                                                                             
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                          $ 17,295,398    $ 11,310,030    $  6,735,978
                                                      ------------    ------------    ------------
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation and amortization                        4,485,924       4,576,609       4,767,588
    (Gains) losses on sales and abandonment of
      property and equipment                              (516,603)          4,022        (784,729)
    Write-off of certain patents and trademarks             25,469         391,217          93,291
    Amortization of deferred credits                      (257,746)       (195,472)       (203,131)
    Deferred income taxes                                  429,985       1,293,735         (45,152)
    Tax benefit attributable to appreciation of
      common stock options exercised                     4,740,850       2,684,444       2,514,392
    Changes in operating assets and liabilities:
      Short-term investments                              (355,537)       (132,165)        (85,286)
      Trade receivables                                 (2,480,565)       (499,871)     (1,512,163)
      Employee and related party receivables               537,063         (32,846)        (40,809)
      Inventories                                       (2,570,163)      2,124,399       4,449,812
      Prepaid expenses and other assets                   (156,070)       (152,364)        148,315
      Other receivables                                    330,560      (1,111,723)        668,036
      Deposits                                               1,050           1,630           6,430
      Trade payables                                     1,578,916        (537,718)       (176,222)
      Accrued expenses                                   1,948,686       1,800,812       1,346,556
      Advances from employees                               (2,644)         32,905          31,846
      Income taxes payable                                (197,175)       (202,615)        453,343
                                                      ------------    ------------    ------------

          Total adjustments                              7,542,000      10,044,999      11,632,117
                                                      ------------    ------------    ------------

          Net cash provided by operating activities     24,837,398      21,355,029      18,368,095
                                                      ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures for:
    Property and equipment                              (8,165,678)     (7,954,191)     (4,091,399)
    Patents and trademarks                                (102,655)        (97,467)       (263,427)
  Proceeds from the sale of property and equipment         569,768           2,575         952,308
                                                      ------------    ------------    ------------

           Net cash used in investing activities        (7,698,565)     (8,049,083)     (3,402,518)
                                                      ------------    ------------    ------------

                                                                                       (Continued)


                                       33



MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001
--------------------------------------------------------------------------------

                                                          2003            2002            2001
                                                                            
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net payments on revolving credit facility          $       --      $ (5,115,241)   $(17,884,761)
  Proceeds from:
    Issuance of common stock                            2,694,816       1,586,140       3,915,780
    Deferred credits                                      903,568         128,123         175,572
  Principal payments on notes payable to
    financial institutions and capital leases            (400,182)       (793,352)     (1,164,444)
  Sale (purchase) of treasury stock for deferred
    compensation                                             --            37,084         (37,084)
                                                     ------------    ------------    ------------

          Net cash provided by (used in)
             financing activities                       3,198,202      (4,157,246)    (14,994,937)
                                                     ------------    ------------    ------------

EFFECT OF EXCHANGE RATES ON CASH                          183,470         193,188         (41,334)
                                                     ------------    ------------    ------------

NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                                     20,520,505       9,341,888         (70,694)

CASH AND CASH EQUIVALENTS:
  Beginning of year                                     9,683,578         341,690         412,384
                                                     ------------    ------------    ------------

  End of year                                        $ 30,204,083    $  9,683,578    $    341,690
                                                     ============    ============    ============

SUPPLEMENTAL DISCLOSURES OF CASH
  FLOW INFORMATION--Cash paid during
    the year for:
      Interest (including capitalized interest of
        approximately $-0-, $17,000, and $105,000
        during 2003, 2002, and 2001, respectively)   $     15,904    $    109,002    $  1,286,872
                                                     ============    ============    ============

      Income taxes                                   $  4,354,047    $  2,396,885    $    127,553
                                                     ============    ============    ============

                                                                                      (Concluded)

                                       34


MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001
--------------------------------------------------------------------------------


SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:

o    During 2001, the Company  entered into capital lease  obligations and notes
     payable for approximately $271,000 for manufacturing equipment.

o    During 2003, 2002, and 2001, options to purchase 49,173, 36,487, and 76,987
     shares of the Company's  common stock were  surrendered in exchange for the
     Company's   recording  of  payroll  tax   liabilities   in  the  amount  of
     approximately $780,000, $469,000, and $537,000.

o    During 2003, 2002, and 2001, 35,934,  29,335, and 120,823 shares of Company
     common  stock  with  a  value  of  approximately  $548,000,  $327,000,  and
     $824,000,  respectively,  were  surrendered in exchange for the exercise of
     stock options.


                See notes to consolidated financial statements.
                                                                     (Concluded)


MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001
--------------------------------------------------------------------------------

1.       ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Organization--Merit   Medical   Systems,   Inc.   ("Merit")   and   its
         wholly-owned  subsidiaries,  Merit Holdings,  Inc.  ("MHI"),  and Merit
         Sensor Systems,  Inc. collectively own 100% of Merit Medical Systems LP
         ("MMSLP").  Combined  with its  other  wholly-owned  subsidiary,  Merit
         Medical  International,  Inc.  ("MMI"),  Merit,  MHI,  and Merit Sensor
         Systems,  Inc.  collectively  own 100% of Merit Services,  Inc. ("MSI")
         (collectively,  the "Company"). The Company develops, manufactures, and
         markets  disposable medical products primarily for use in the diagnosis
         and treatment of  cardiovascular  disease which is considered to be one
         segment  line of  business.  The Company  manufactures  its products in
         plants  located in the United  States and in  Ireland.  The Company has
         export  sales to  dealers  and has  direct  sales  forces in the United
         States, and Western Europe (see Note 9).

         The consolidated financial statements of the Company have been prepared
         in accordance  with  accounting  principles  generally  accepted in the
         United  States of  America.  The  following  is a  summary  of the more
         significant of such policies.

         Use of Estimates in Preparing Financial Statements--The  preparation of
         financial statements in conformity with accounting principles generally
         accepted in the United  States of America  requires  management to make
         estimates and  assumptions  that affect the reported  amounts of assets
         and liabilities and disclosure of contingent  assets and liabilities at
         the  date of the  financial  statements  and the  reported  amounts  of
         revenues and expenses during the reporting period. Actual results could
         differ from those estimates.

                                       35

         Principles  of  Consolidation--The  consolidated  financial  statements
         include those of Merit,  MMI, MHI, MSI, MMSLP and Merit Sensor systems,
         Inc. Intercompany balances and transactions have been eliminated.

         Receivables--The  allowance for  uncollectible  accounts  receivable is
         based  on  the  Company's   historical  bad  debt   experience  and  on
         management's evaluation of collectibility of the individual outstanding
         balances.

         Revenue Recognition--The Company recognizes revenues from product sales
         when the goods are  shipped or  delivered  depending  on when title and
         risk passes to the customer. Provisions for certain product returns and
         discounts to customers are provided for as  reductions  in  determining
         sales in the same period the related sales are recorded.

         Inventories--The  Company values its  inventories at the lower of cost,
         determined on a first-in,  first-out  method,  or market value.  Market
         value for raw  materials is based on  replacement  costs and, for other
         inventory   classifications,   on  net  realizable   value.  We  review
         inventories  on hand at  least  quarterly  and  record  provisions  for
         estimated  excess,  slow  moving,  and obsolete  inventory,  as well as
         inventory with a carrying value in excess of net realizable  value. The
         regular and systematic  inventory  valuation  reviews include a current
         assessment of future product demand, historical experience, and product
         expiration.

         Income Taxes--The  Company utilizes an asset and liability approach for
         financial  accounting and reporting for income taxes.  Deferred  income
         taxes are provided for temporary differences in the bases of assets and
         liabilities  as  reported  for  financial   statement  and  income  tax
         purposes.

         Intangible  Assets--Effective  January 1,  2002,  the  Company  adopted
         Statement of Financial  Accounting Standards ("SFAS") No. 142, Goodwill
         and Other Intangible Assets.  Under SFAS No. 142, the Company no longer
         amortizes goodwill from business  acquisitions and reviews annually the
         impairment of goodwill,  or more  frequently  if impairment  indicators
         arise.  The Company  completed  its  initial  testing of goodwill as of
         January  1,  2002 and  determined  that  there was no  impairment.  The
         Company  has  elected  to  perform  its  annual   testing  of  goodwill
         impairment  as of July 1. As of July 1,  2003  and  2002,  the  Company
         updated its testing of goodwill  for  impairment  and  determined  that
         there was no impairment. The unamortized amount of goodwill at December
         31, 2001, was approximately $4.8 million.

         With the  adoption of SFAS No. 142, the Company  reassessed  the useful
         lives and residual values of all acquired intangible assets to make any
         necessary amortization period adjustments. Based on that assessment, no
         adjustments were made to the amortization  period or residual values of
         other intangible assets.

         Long-Lived  Assets--In August 2001, the Financial  Accounting Standards
         Board  ("FASB")  issued SFAS No. 144,  Accounting for the Impairment or
         Disposal of Long-Lived  Assets.  SFAS No. 144 supercedes  SFAS No. 121,
         Accounting for the  Impairment of Long-Lived  Assets and for Long-Lived
         Assets to be  Disposed  Of, but retains  the  requirements  relating to
         recognition and measurement of an impairment loss and resolves  certain
         implementation  issues  resulting  from SFAS No. 121.  SFAS No. 144 was
         adopted  by the  Company on January 1, 2002 and did not have a material
         impact on the  results of  operations  or  financial  condition  of the
         Company.

                                       36


         The Company  periodically reviews the carrying amount of its long-lived
         assets for impairment.  An asset is considered  impaired when estimated
         future cash flows are less than the  carrying  amount of the asset.  In
         the  event  the  carrying  amount  of  such  asset  is  considered  not
         recoverable,  the asset is adjusted  to its fair  value.  Fair value is
         generally  determined based on discounted  future cash flow. There were
         no impairments of long-lived  assets as of December 31, 2003,  2002, or
         2001.

         Property  and  Equipment--Property  and  equipment  is  stated  at  the
         historical cost of construction or purchase. Construction costs include
         payroll-related  costs,  an  allocation  of general and  administrative
         costs, and interest  capitalized during  construction.  Maintenance and
         repairs  of  property  and  equipment  are  charged  to  operations  as
         incurred.   Depreciation   and  amortization  are  computed  using  the
         straight-line method over estimated useful lives as follows:

         Building                                        25 years
         Automobiles                                     4 years
         Manufacturing equipment                         5 to 12 years
         Furniture and fixtures                          3 to 10 years
         Leasehold improvements                          4 to 25 years

         During  2003,  the  Company  recorded  a gain  from the sale of land of
         approximately $508,000 which is included in miscellaneous income.

         Accrued Expenses--Accrued expenses consist of the following at December
         31, 2003 and 2002:

                                                       December 31,
                                              ---------------------------
                                                  2003              2002

         Payroll taxes                       $   536,135        $  317,522
         Payroll                               1,146,335           940,088
         Bonuses                               1,884,868         1,445,888
         Commissions                             416,062           304,943
         Vacation                              1,435,862         1,025,407
         Other accrued expenses                3,147,831         2,584,559
                                              ----------        ----------

         Total                               $ 8,567,093       $ 6,618,407
                                             ===========       ===========

         Deferred Credits--Deferred credits consist of grant money received from
         the  Irish   government   and   deferred   gains  on  sales   leaseback
         transactions.  Grant money is received for a percentage of expenditures
         on eligible  property and equipment,  specific research and development
         projects,  and costs of hiring and training employees.  Amounts related
         to the  acquisition  of  property  and  equipment  are  amortized  as a
         reduction of depreciation  expense over the lives of the  corresponding
         property.  Deferred gains on sales leaseback transactions are amortized
         as a reduction  of rent  expense  over  periods  ranging from six to 10
         years (see Note 6).

         Research and  Development--Research  and development costs are expensed
         as incurred.

         Stockholders'  Equity--On  November 19, 2003,  the  Company's  Board of
         Directors approved a four-for-three stock split of the Company's common
         stock  effective  December 3, 2003,  for  stockholders  of record as of

                                       37


         November 28, 2003. On July 31, 2003,  the Company's  Board of Directors
         approved a  four-for-three  stock split of the  Company's  common stock
         effective  August 15, 2003, for stockholders of record as of August 11,
         2003. On March 27, 2002,  the Company's  Board of Directors  approved a
         five-for-four  split of the Company's  common stock effective April 11,
         2002 for stockholders of record as of April 8, 2002.  Additionally,  on
         August  14,  2001,  the  Company's   Board  of  Directors   approved  a
         five-for-four  split of the Company's common stock effective August 27,
         2001 for  stockholders  of record as of August 24, 2001. All historical
         share and per share  amounts have been  restated to reflect these stock
         splits.

         Earnings per Common  Share--Net  income per common share is computed by
         both the basic method,  which uses the weighted  average  number of the
         Company's  common shares  outstanding,  and the diluted  method,  which
         includes the dilutive common shares from stock options and warrants, as
         calculated using the treasury stock method.

         Financial Instruments--The Company's financial instruments, when valued
         using market interest rates, would not be materially different from the
         amounts presented in the consolidated financial statements.

         Stock-Based   Compensation--The   Company   accounts   for  its   stock
         compensation arrangements under the provisions of Accounting Principles
         Board Opinion No. 25,  Accounting  for Stock Issued to Employees,  (APB
         25) and intends to continue to do so. Accordingly, no compensation cost
         has been  recognized for its stock  compensation  arrangements.  If the
         compensation  cost  for  the  Company's  compensation  plans  had  been
         determined  consistent  with SFAS No. 123,  Accounting for  Stock-Based
         Compensation,  the  Company's  net income and net income per common and
         common share  equivalent  would have  changed to the pro forma  amounts
         indicated below:



                                                  2003             2002            2001

                                                                    
Net income, as reported                    $   17,295,398   $   11,310,030   $   6,735,978
Compensation cost under fair value-based
  accounting method, net of tax                 2,957,570        1,436,313       1,356,742
                                           --------------   --------------   -------------
Net income, pro forma                          14,337,828        9,873,717       5,379,236

Net income per common share:
  Basic:
    As reported                            $         0.68   $        0.47    $        0.30
    Pro forma                                        0.56            0.41             0.24

  Diluted:
    As reported                                      0.64            0.43             0.28
    Pro forma                                        0.53            0.38             0.23



         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, 2002, and 2001:
         dividend yield of 0%; expected volatility of 63.81%, 63.24%, and 63.48%
         for  2003,  2002,  and 2001,  respectively;  risk-free  interest  rates
         ranging from 2.32% to 6.71%;  and expected  lives  ranging from 2.33 to
         4.98 years.

                                       38


         Statements of Cash Flows--For purposes of the statements of cash flows,
         the  Company  considers  interest  bearing  deposits  with an  original
         maturity date of three months or less to be cash equivalents.

         Concentration  of Credit  Risk--Financial  instruments that potentially
         subject the Company to  concentrations of credit risk consist primarily
         of temporary cash and cash  equivalents  and accounts  receivable.  The
         Company provides credit, in the normal course of business, primarily to
         hospitals and independent  third-party  packers and  distributors.  The
         Company  performs  ongoing  credit  evaluations  of its  customers  and
         maintains allowances for potential credit losses.

         Foreign Currency  Translation  Adjustment--The  financial statements of
         the Company's foreign subsidiaries,  which are included within MHI, are
         measured using local  currencies as the functional  currency,  with the
         exception of Ireland,  which uses a U.S.  dollar  functional  currency.
         Assets and  liabilities  are translated  into U.S.  dollars at year-end
         rates of exchange and results of operations  are  translated at average
         rates for the year. Gains and losses resulting from these  translations
         are  included in  accumulated  other  comprehensive  loss as a separate
         component of stockholders' equity.

         Accumulated Other Comprehensive  Loss--Accumulated  other comprehensive
         loss consists entirely of foreign currency translation adjustments.

         Recently Issued Financial Accounting  Standards--In June 2002, SFAS No.
         146, Accounting for Costs Associated with Exit or Disposal  Activities,
         was issued.  SFAS No. 146 requires recording costs associated with exit
         or disposal  activities  at their fair values when a liability has been
         incurred. Under previous guidance, certain exit costs were accrued upon
         management's  commitment to an exit plan,  which is generally  before a
         liability has been  incurred.  The Company  adopted SFAS No. 146 in the
         third quarter of 2003.  The adoption of SFAS No. 146 did not materially
         impact the  Company's  consolidated  results of  operations,  financial
         position, or cash flow.

         In  December  2002,  the FASB  issued  SFAS  No.  148,  Accounting  for
         Stock-Based  Compensation--Transition  and  Disclosure.  SFAS  No.  148
         amends SFAS No. 123 to provide  alternative methods of transition for a
         voluntary  change to the fair  value  based  method of  accounting  for
         stock-based employee compensation. In addition, SFAS No. 148 amends the
         disclosure   requirements   of  SFAS  No.  123  to  require   prominent
         disclosures in both annual and interim  financial  statements about the
         method of accounting  for  stock-based  employee  compensation  and the
         effect of the method used on reported  results.  The provisions of SFAS
         No. 148 are  effective for  financial  statements  for fiscal years and
         interim   periods  ending  after  December  15,  2002.  The  disclosure
         provisions  of SFAS No.  148 have  been  adopted  by the  Company  (see
         Stock-Based  Compensation  above).  SFAS No.  148 did not  require  the
         Company  to change to the fair value  based  method of  accounting  for
         stock-based compensation.

         SFAS  No.  150,  Accounting  for  Certain  Financial  Instruments  with
         Characteristics  of both  Liability  and Equity  ("SFAS  No.  150") was
         issued in May  2003.  SFAS No.  150  establishes  standards  for how an
         issuer  classifies  and measures  certain  financial  instruments  with
         characteristics  of both  liability  and  equity  in its  statement  of
         financial  position.  SFAS No. 150 became effective for the Company for
         new or modified financial  instruments  beginning June 1, 2003, and for
         existing instruments  beginning June 28, 2003. The adoption of SFAS No.
         150  did not  have a  material  impact  on the  Company's  Consolidated
         Financial Statements.

                                       39

         In November 2002,  the Financial  Accounting  Standards  Board ("FASB")
         issued Financial  Accounting Standards Board Interpretation No. ("FIN")
         45, Guarantor's Accounting and Disclosure  Requirements for Guarantees,
         Including Indirect Guarantees of Indebtedness of Others, which requires
         the  guarantor  to  recognize  as a  liability  the  fair  value of the
         obligation  at  the  inception  of  the   guarantee.   The   disclosure
         requirements  in FIN 45  are  effective  for  financial  statements  of
         interim or annual periods  ending after  December 15, 2002.  Management
         believes  the  Company  has  no  guarantees  that  are  required  to be
         disclosed in the financial statements.  The recognition  provisions are
         to be  applied  on a  prospective  basis  to  guarantees  issued  after
         December 31, 2002. The adoption of the recognition provisions of FIN 45
         did not have a material impact on the Company's financial statements.

         In January 2003, the FASB issued FIN No. 46,  Consolidation of Variable
         Interest  Entities,  an interpretation of Accounting  Research Bulletin
         ("ARB")  No. 51. FIN No. 46, as  revised in  December  2003,  addresses
         consolidation by business  enterprises of variable  interest  entities.
         FIN No. 46 applies  immediately to variable  interest  entities created
         after January 31, 2003, and to variable  interest  entities in which an
         enterprise  obtains an interest  after that date. FIN No. 46 applies in
         the first year or interim  period  ending after  December 15, 2003,  to
         variable  interest  entities  in which an  enterprise  holds a variable
         interest that it acquired  before February 1, 2003. The adoption of FIN
         No.  46 did not  have a  material  impact  on the  Company's  financial
         statements.

         Short-term  Investments--Trading  securities  are recorded at estimated
         fair value with unrealized  gains and losses included in  miscellaneous
         income. The basis of cost used in determining realized gains and losses
         is specific identification.  The estimated fair value of all securities
         is determined by quoted market prices.

         Deferred  Compensation--During  2001, the Company  established  certain
         non-qualified  deferred  compensation  plans for eligible  participants
         (the "deferred  compensation  plans"). The deferred  compensation plans
         permit each  participant  to defer a portion of their  salary until the
         future.   The  deferred  salary  may  be  invested  on  behalf  of  the
         participant  in  marketable  securities,  money  market  funds  or  the
         Company's  own  stock.  However,  as the  Company  is the  owner of the
         invested assets, such assets are reflected in the consolidated  balance
         sheet as cash  equivalents  and short-term  investments at December 31,
         2003. The deferred compensation  obligation is classified as an accrued
         expense  and  adjusted,  with a  corresponding  charge  (or  credit) to
         compensation  cost,  to  reflect  changes  in  the  fair  value  of the
         underlying assets. Because the deferred compensation  obligation may be
         settled by delivery of cash,  shares of Company  stock,  or diversified
         assets,  Company shares acquired are not included in basic earnings per
         share but are  included  in the  calculation  of diluted  earnings  per
         share.  All shares of  treasury  stock were sold  during the year ended
         December 31, 2002.

2.       INVENTORIES

         Inventories consist of the following at December 31, 2003 and 2002:

                                                     2003           2002
                                                 ------------   ------------

         Finished goods                          $ 11,996,307   $  8,348,940
         Work-in-process                            3,581,197      2,343,501
         Raw materials                              5,691,876      8,006,776
                                                 ------------   ------------
         Total                                   $ 21,269,380   $ 18,699,217
                                                 ============   ============
                                       40


3.       GOODWILL AND OTHER INTANGIBLE ASSETS

         Goodwill and  intangibles  consisted  of the  following at December 31,
         2003.


                                                                        2003         2002
                                                                        
         Patents, net of accumulated amortization of $710,922
           and $594,160, respectively                               $1,502,048   $1,557,006

         License agreements, net of accumulated amortization
           of $419,703 and $378,512, respectively                      171,301      212,492

         Trademarks (not subject to amortization)                      173,043      157,662
                                                                   -----------   -----------

         Total                                                      $1,846,392   $1,927,160
                                                                   ===========   ===========
         Cost in excess of the fair value of assets acquired
           (goodwill)                                               $4,764,596   $4,764,596
                                                                   ===========   ===========


         The  following  table  recociles  net  income  and  earnings  per share
         information   for  the  year  ended   December   31,   2001,   for  the
         non-amortization  provision  of goodwill  for SFAS No. 142:

                                                           Year Ended
                                                          December 31,
                                                              2001
                                                         -------------

         Reported net income                             $   6,735,978
         Add back--goodwill amortization, net of tax           196,589
                                                         -------------

         Adjusted net income                             $   6,932,567
                                                         =============

         Basic earnings per share:
           Reported earnings per common share            $        0.30
           Add back--goodwill amortization, net of tax            0.01
                                                         -------------

         Adjusted earnings per common share              $        0.31
                                                         =============

         Diluted earnings per share:
           Reported earnings per common share            $        0.28
           Add back--goodwill amortization, net of tax            0.01
                                                         -------------

         Adjusted earnings per common share              $        0.29
                                                         =============

         Aggregate  amortization  expense for the years ended December 31, 2003,
         2002,  and  2001 is  approximately  $158,000,  $227,000,  and  $298,000
         respectively.

         Estimated  amortization  expense for the intangible assets for the five
         succeeding fiscal years is as follows
                                       41


         Estimated amortization expense:
           Year ended December 31:
             2004                               $150,000
             2005                                165,000
             2006                                165,000
             2007                                157,000
             2008                                155,000

4.       INCOME TAXES

         Deferred  income tax assets and  liabilities  at December  31, 2003 and
         2002 consist of the following  temporary  differences and  carryforward
         items:


                                                            Current                      Long-Term
                                                  --------------------------    --------------------------
                                                       2003           2002           2003           2002
                                                                                   
         Deferred income tax assets:
           Allowance for uncollectible
             accounts receivable                  $   299,601    $   174,700    $      --      $      --
           Accrued compensation expense               627,299        509,339           --             --
           Inventory capitalization for
             tax purposes                             198,679        107,202           --             --
           Inventory obsolescence reserve             608,078        855,315           --             --
           Tax credits                                   --             --           90,000        249,328
           Net operating losses of subsidiaries        52,853         66,283        302,527        227,957
           Other                                      224,560        114,846        387,839        325,117
                                                  -----------    -----------    -----------    -----------

         Total deferred income tax assets           2,011,070      1,827,685        780,366        802,402

         Deferred income tax liabilities:
           Prepaid expenses                        (1,790,445)    (1,683,603)          --             --
           Property and equipment                        --             --       (3,598,467)    (3,005,013)
           Other                                         --             (817)      (202,116)      (240,545)
                                                  -----------    -----------    -----------    -----------

         Net                                      $   220,625    $   143,265    $(3,020,217)   $(2,443,156)
                                                  ===========    ===========    ===========    ===========


                                       42

         Income tax expense  differs  from  amounts  computed  by  applying  the
         statutory Federal rate to pretax income as follows:


                                                              2003           2002           2001
                                                          -----------    -----------    -----------
                                                                               
         Computed Federal income tax expense at
           statutory rate of 35%                          $ 9,458,183    $ 5,866,798    $ 3,425,938
         State income taxes                                   811,042        384,358        159,770
         Creation of tax credits                             (375,344)      (355,684)      (399,001)
         Tax benefit of foreign sales corporation            (297,437)      (118,057)      (141,565)
         Income of subsidiaries recorded at
           foreign tax rates                                  (92,913)      (286,424)       (63,517)
         Other--including the effect of graduated rates       224,452        (38,742)        70,792
                                                          -----------    -----------    -----------
         Total income tax expense                         $ 9,727,983    $ 5,452,249    $ 3,052,417
                                                          ===========    ===========    ===========

         The components of the provision for income taxes are as follows:

                                  2003            2002          2001
                               -----------    -----------    -----------
           Current expense:
             Federal           $ 7,993,940    $ 3,614,502    $ 2,608,391
             State               1,199,839        435,612        370,707
             Foreign               104,219        108,400        118,471
                               -----------    -----------    -----------
                                 9,297,998      4,158,514      3,097,569
                               -----------    -----------    -----------

           Deferred expense:
             Federal               388,854      1,029,364        (57,070)
             State                  47,917        139,787       (124,908)
             Foreign                (6,786)       124,584        136,826
                               -----------    -----------    -----------
                                   429,985      1,293,735        (45,152)
                               -----------    -----------    -----------

           Total               $ 9,727,983    $ 5,452,249    $ 3,052,417
                               ===========    ===========    ===========


5.       REVOLVING CREDIT FACILITY AND LONG-TERM DEBT

         Revolving Credit Facility--The  Company maintains a long-term revolving
         credit  facility (the Facility) with a bank,  which enables the Company
         to borrow funds at variable  interest  rates.  The credit  facility was
         voluntarily reduced to $500,000 in August 2002. The Facility expires on
         June 30,  2006.  The  weighted  average  interest  rate  applied to the
         outstanding  balance at December 31, 2001 was 3.42%. Under the terms of
         the Facility, among other things, the Company is required to maintain a
         ratio of total  liabilities  to tangible net worth not to exceed 2.0 to
         1.0,  maintain a ratio of current  assets to current  liabilities of at
         least 1.5 to 1.0, maintain minimum working capital of $25,000,000,  and
         is  restricted  from paying  dividends to  shareholders.  For the years
         ended  December 31, 2003 and 2002,  management of the Company  believes
         the Company was in compliance  with all debt  covenants.  There were no
         outstanding  borrowings  on the facility at December 31, 2003 and 2002.
         The  Facility  is  collateralized  by trade  receivables,  inventories,
         property and equipment, and intangible assets.
                                       43

         Long-term  Debt--Long-term  debt  consists of the following at December
         31, 2003 and 2002:

                                                          2003         2002
         Notes payable to  financial  institutions;
           payable in monthly  installments through
           2004, including interest at rates ranging
           from 6.26% to 8.89%; collateralized by
           equipment                                   $  16,693    $ 416,875
         Less current portion                            (16,693)    (400,182)
                                                       ---------    ---------

         Long-term portion                             $    --      $  16,693
                                                       =========    =========

6.       COMMITMENTS AND CONTINGENCIES

         Leases--The  Company has  noncancelable  operating lease agreements for
         off-site office and production facilities and equipment. The leases for
         the off-site  office and  production  facilities are for five years and
         have renewal options of one to five years.  The terms of the leases for
         equipment range from five to seven years. Total rental expense on these
         operating leases and on the Company's manufacturing and office building
         (see below) for the years  ended  December  31,  2003,  2002,  and 2001
         approximated $2,568,000, $2,978,000, and $2,539,000, respectively.

         In June 1993, the Company entered into a 25 year lease agreement with a
         developer for a manufacturing and office building. Under the agreement,
         the  Company was  granted an option to  purchase  the  building at fair
         market value after 10 years and, if not exercised,  after 25 years.  In
         connection with this lease  agreement,  in 1993 the Company sold to the
         developer 10 acres of land on which the building was  constructed.  The
         $166,136  gain on the sale of the land has been  recorded as a deferred
         credit and is being  amortized  as a reduction of rent expense over ten
         years.  In connection with the lease  agreement,  the Company issued to
         the  developer  warrants to purchase  431,836  shares of the  Company's
         common stock at $1.78 per share subject to carrying  cost  increases of
         3% per year  ($2.19 as of  December  31,  2003).  These  warrants  were
         exercised  in  January  2003 with  total  proceeds  to the  Company  of
         approximately $950,000.

         On December  22, 2000,  the Company  sold certain of its  manufacturing
         equipment  with a net carrying value of  approximately  $1,210,000 to a
         financial  institution.  The  Company  then  entered  into  a  six-year
         operating  lease  agreement  for the same  equipment.  The  approximate
         $70,000  gain on sale has been  recorded  as a  deferred  credit and is
         being amortized as a reduction of rental expense over six years.

         The future minimum lease  payments for operating  leases as of December
         31, 2003 are as follows:
                                                          Operating
                                                           Leases

         Year ending December 31:
         2004                                           $ 2,445,789
         2005                                             2,138,746
         2006                                             2,118,793
         2007                                             2,012,962
         2008                                             1,465,404
         Thereafter                                      16,241,561
                                                        -----------

         Total minimum lease payments                   $26,423,255
                                                        ===========

                                       44

         Irish Government Development Agency Grants--Through  December 31, 2003,
         the Company had entered into several  grant  agreements  with the Irish
         Government  Development Agency of which  approximately $-0- remained in
         receivables  at both  December  31,  2003 and  2002.  The  Company  has
         recorded the grants  related to research and  development  projects and
         costs of hiring and  training  employees  as a reduction  of  operating
         expenses in 2003, 2002, and 2001 in the amounts of approximately  $-0-,
         $163,000, and $36,000, respectively.  Grants related to the acquisition
         of property  and  equipment  purchased  in Ireland are  amortized  as a
         reduction  to  depreciation  expense  over lives  corresponding  to the
         depreciable  lives of such  property.  The balance of deferred  credits
         related  to  such  grants  as  of  December   31,  2003  and  2002  are
         approximately $1,454,000 and $710,000, respectively. During 2003, 2002,
         and 2001, approximately $229,000, $167,000, and $175,000, respectively,
         of the  deferred  credit was  amortized  as a  reduction  of  operating
         expenses.  There is a commitment to repay the Irish  government  grants
         received  from them if the Company were to cease  production in Ireland
         within  ten  years  of the  receipt  of the  last  government  payment.
         Management  does not  believe  it will  ever have to repay any of these
         grant monies.

         Preferred Share Purchase Rights--In August 1997, the Company declared a
         dividend of one  preferred  share  purchase  right (a "Right") for each
         outstanding  share of Common Stock which entitles the holder of a Right
         to  purchase  one   one-hundredth   of  a  share  of  Series  A  Junior
         Participating  Preferred Stock at an exercise price of $40 in the event
         a person or group acquires,  or announces an intention to acquire,  15%
         or more of the Company's common stock.  Until such an event, the Rights
         are not exercisable and are transferable  with the common stock and may
         be redeemed at a price of $.0001 per Right.

         Litigation--In the ordinary course of business, the Company is involved
         in  litigation  and claims which  management  believes  will not have a
         materially  adverse  effect  on the  Company's  financial  position  or
         results of operations.  During 2003,  the Company  recorded a gain from
         the  settlement of a legal dispute of  approximately  $475,000 which is
         included in miscellaneous income.

                                       45


7.       EARNINGS PER COMMON SHARE (EPS)

         The  following  table sets forth the  computation  of basic and diluted
         earnings per common share:


                                                               Net                     Per Share
                                                              Income        Shares      Amount
                                                           -----------   -----------   --------
                                                                              
         Year ended December 31, 2003:
           Basic EPS                                       $17,295,398    25,401,445   $   0.68
                                                                                       ========
           Effect of dilutive stock options and warrants          --       1,632,519
                                                           -----------   -----------

         Diluted EPS                                       $17,295,398    27,033,964   $   0.64
                                                           ===========   ===========   ========
         Year ended December 31, 2002:
           Basic EPS                                       $11,310,030    24,226,100   $   0.47
                                                                                       ========
           Effect of dilutive stock options and warrants                   2,012,350
                                                           -----------   -----------

         Diluted EPS                                       $11,310,030    26,238,450   $   0.43
                                                           ===========   ===========   ========
         Year ended December 31, 2001:
           Basic EPS                                       $ 6,735,978    22,537,975   $   0.30
                                                                                       ========
           Effect of dilutive stock options and warrants                   1,336,843
                                                           -----------    ----------

         Diluted EPS                                       $ 6,735,978    23,874,818   $   0.28
                                                           ===========   ===========   ========

         For the years ended December 31, 2003,  2002,  and 2001,  approximately
         449,000,  -0-,  and 486,000  respectively,  of stock  options  were not
         included in the computation of diluted  earnings per share because they
         would have been antidilutive.

8.       EMPLOYEE STOCK PURCHASE PLAN AND STOCK OPTIONS AND WARRANTS

         The Company  offers to its  employees an Employee  Stock  Purchase Plan
         ("ESPP")  which  allows the  employee on a quarterly  basis to purchase
         shares of the Company's common stock at the lesser of 85% of the market
         value on the offering  commencement date or offering  termination date.
         The Company has a qualified and a non-qualified  ESPP,  which expire on
         June 30,  2006.  The total  number of shares  available to employees to
         purchase  under the  qualified  plan is 1,194,444 of which 788,184 have
         been  purchased  as of December  31,  2003.  The total number of shares
         available  to  employees to purchase  under the  non-qualified  plan is
         194,444 of which 43,347 have been purchased as of December 31, 2003.

         The Company  has a  long-term  incentive  plan which  provides  for the
         issuance of incentive stock options,  nonstatutory  stock options,  and
         certain  corresponding stock appreciation rights. The maximum number of
         shares of common stock for which options may be granted is  11,111,111.
         Options may be granted to directors, officers, outside consultants, and
         key  employees  of the Company  and may be granted  upon such terms and
         such  conditions as the  Compensation  Committee in its sole discretion
         shall determine.  Options vest 20% per year over either a 4.5 or 5 year
         life  with  contractual  lives of 5 and 10 years,  respectively.  In no
         event,  however,  shall the exercise price be less than the fair market
         value on the date of grant.
                                       46




         Changes in stock  options and warrants (see Note 6) for the years ended
         December 31, 2003, 2002, and 2001 are as follows:

                                                                   Options                           Warrants
                                                       ---------------------------------  -------------------------------
                                                                           Weighted                          Weighted
                                                                           Average                           Average
                                                                           Exercise                          Exercise
                                                           Shares           Price             Shares          Price
         2003:
                                                                                                 
           Granted                                        1,532,061        $ 13.33
           Exercised                                        976,019           2.84            431,836         $ 2.19
           Forfeited/expired                                 49,487           5.66
           Outstanding at December 31                     4,188,474           7.63
           Exercisable                                    1,529,679           5.67

         Weighted average fair value of
           options granted during year                                     $  7.46

         Weighted average fair value of
           shares issued under Employee
           Stock Purchase Plan                                             $  2.67




                                                                   Options                           Warrants
                                                       ---------------------------------  -------------------------------
                                                                           Weighted                          Weighted
                                                                           Average                           Average
                                                                           Exercise                          Exercise
                                                            Shares          Price             Shares          Price
         2002:
           Granted                                          148,889     $  9.47
           Exercised                                        876,427        2.20
           Forfeited/expired                                 50,854        3.92
           Outstanding at December 31                     3,681,919        3.96               431,836        $ 2.19
           Exercisable                                    1,567,776        3.30               431,836          2.19

         Weighted average fair value of
           options granted during year                                  $  3.59

         Weighted average fair value of
           shares issued under Employee
           Stock Purchase Plan                                          $  1.47


                                       47


                                                                Options                           Warrants
                                                       ------------------------------  -------------------------------
                                                                        Weighted                           Weighted
                                                                        Average                            Average
                                                                        Exercise                           Exercise
                                                            Shares       Price                Shares        Price
         2001:
           Granted                                        2,515,358     $  4.52
           Exercised                                      2,302,843        2.18
           Forfeited/expired                                552,055        2.96
           Outstanding at December 31                     4,460,311        3.44               431,836      $ 2.13
           Exercisable                                    1,431,940        2.06               431,836        2.13

         Weighted average fair value of
           options granted during year                                  $  2.47

         Weighted average fair value of
           shares issued under Employee
           Stock Purchase Plan                                          $  0.46
         


         The  following  table  summarizes  information  about stock options and
         warrants outstanding at December 31, 2003:



                                     Options Outstanding                                         Options Exercisable
         --------------------------------------------------------------------------          ---------------------------
                                                          Weighted
                                                         Average
                                                          Remaining    Weighted                             Weighted
                Range of                                Contractual     Average                              Average
                Exercise                 Number            Life         Exercise                 Number      Exercise
                 Prices                Outstanding      (in years)      Price                 Exercisable      Price

         Options:
                                                                                           
         $1.62 - $2.07                 1,356,225           5.08           $ 1.95                664,455      $ 1.83
         $2.12 - $7.61                 1,178,505           7.25             6.55                513,448        5.57
         $8.86 - $10.47                1,204,404           9.07             9.83                261,776       10.11
         $21.67 - $21.67                 449,340           9.95            21.67                 90,000       21.67


9.       SEGMENT REPORTING AND FOREIGN OPERATIONS

         During the years ended  December 31, 2003,  2002, and 2001, the Company
         had  foreign  sales  of  approximately  $34,263,000,  $27,062,000,  and
         $23,801,000 or approximately 25%, 23%, and 23%, respectively,  of total
         sales, primarily in Japan, Germany, France, and the United Kingdom.

         The Company  operates  primarily  in one segment in which it  develops,
         manufactures,  and markets disposable medical products, principally for
         use in the  diagnosis and treatment of  cardiovascular  disease.  Major
         operations  outside the United States include a manufacturing  facility
         in  Ireland,  a  distribution  facility in the  Netherlands,  and sales
         subsidiaries  in Europe.  The  following is a summary of the  Company's
         foreign  operations by geographic area for fiscal years 2003, 2002, and
         2001:
                                       48



                                                                    Transfers
                                                     Sales to         Between                             Net
                                                   Unaffiliated      Geographic                         Income        Identifiable
                                                    Customers          Areas           Revenue          (Loss)           Assets
                                                                                                      
          Fiscal year ended December 31, 2003:
            United States, Canada, and
              international distributors         $ 115,847,199    $   1,891,109    $ 117,738,308    $  16,620,172    $  88,876,413
            Europe direct and European
              distributors                          20,106,309        9,374,000       29,480,309          351,019       18,424,101
            Eliminations                                  --        (11,265,109)     (11,265,109)         324,207             --
                                                 -------------    -------------    -------------    -------------    -------------

          Consolidated                           $ 135,953,508    $        --      $ 135,953,508    $  17,295,398    $ 107,300,514
                                                 =============    =============    =============    =============    =============

          Fiscal year ended December 31, 2002:
            United States, Canada, and
              international distributors         $  99,694,349    $   1,787,099    $ 101,481,448    $  11,415,816    $  65,104,920
            Europe direct and European
              distributors                          16,532,852        9,077,730       25,610,582          117,886       13,200,294
            Eliminations                                  --        (10,864,829)     (10,864,829)        (223,672)            --
                                                 -------------    -------------    -------------    -------------    -------------

          Consolidated                           $ 116,227,201    $        --      $ 116,227,201    $  11,310,030    $  78,305,214
                                                 =============    =============    =============    =============    =============

          Fiscal year ended December 31, 2001:
            United States, Canada, and
              international distributors         $  89,208,943    $   1,770,388    $  90,979,331    $   7,807,510    $  57,151,956
            Europe direct and European
              distributors                          14,826,863        6,101,400       20,928,263         (884,181)       9,506,859
            Eliminations                                  --         (7,871,788)      (7,871,788)        (187,351)            --
                                                 -------------    -------------    -------------    -------------    -------------

          Consolidated                           $ 104,035,806    $        --      $ 104,035,806    $   6,735,978    $  66,658,815
                                                 =============    =============    =============    =============    =============

         Transfers  between  geographic areas are accounted for at amounts which
         are generally  above cost and consistent with the rules and regulations
         of governing tax  authorities.  Such  transfers  are  eliminated in the
         consolidated  financial  statements.  Net  income by  geographic  areas
         reflects   foreign   earnings   reported  by  the   foreign   entities.
         Identifiable  assets are those  assets that can be directly  associated
         with a particular  foreign  entity and thus do not include  assets used
         for general corporate purposes.

10.      ROYALTY AGREEMENTS

         Pursuant to a 1992  settlement  agreement,  the Company  entered into a
         license  agreement  with  another  medical  product  manufacturer  (the
         "Licensor"), whereby the Licensor granted to the Company a nonexclusive
         right and license to manufacture and sell products which are subject to
         the  patents  issued  to  the  Licensor.  The  license  agreement  will
         terminate  upon the  expiration  or  invalidation  of the last  related
         patents.  For the rights and license  granted under the agreement,  the
         Company paid the Licensor a nonrefundable prepaid royalty in the amount
         of $600,000.  In addition to the prepaid royalty, the Company agreed to
         pay the Licensor a continuing royalty of 5.75% of sales (which will not
         exceed  $450,000 for any calendar year) made in the United  States,  of
         products covered by the license  agreement.  Royalties of $450,000 were
         paid or accrued in each of the years ended December 31, 2003, 2002, and
         2001.
                                       49

         During 2002, the Company entered into a license  agreement with another
         medical product  manufacturer  (the  "Licensor"),  whereby the Licensor
         granted to the Company an exclusive  worldwide  license to  manufacture
         and sell  products  which  are  subject  to the  patents  issued to the
         Licensor.  For the rights and license granted under the agreement,  the
         Company agreed to pay the Licensor a royalty of 5% of net sales,  which
         will not exceed $62,500 for calendar year 2003 and $75,000 per year for
         calendar year 2004 through 2006.

11.      EMPLOYEE BENEFIT PLAN

         The Company has a  contributory  401(k) savings and profit sharing plan
         (the "Plan") covering all full-time employees who are at least 18 years
         of age. The Plan has no minimum  service  requirement.  The Company may
         contribute  at  its  discretion  matching  contributions  based  on the
         employees' compensation.  Contributions made by the Company to the Plan
         for  the  years  ended  December  31,  2003,  2002,  and  2001  totaled
         approximately $629,000, $499,000, and $361,000, respectively.

12.      QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

         Quarterly data for the years ended December 31, 2003, 2002, and 2001 is
         as follows:



                                                                                 Quarter Ended
                                                  -----------------------------------------------------------------------
         2003                                            March 31          June 30        September 30       December 31

                                                                                                
         Net sales                                     $ 31,741,573     $ 34,577,305      $ 34,506,889      $ 35,127,741
         Gross profit                                    13,271,189       15,180,921        15,977,441        16,294,241
         Income from operations                           4,965,240        6,351,453         7,084,321         7,228,398
         Income tax expense                               2,081,644        2,404,031         2,557,307         2,685,001
         Net income                                       3,752,197        4,205,546         4,651,887         4,685,768
         Basic earnings per common share                       0.15             0.17              0.18              0.18
         Diluted earnings per common share                     0.14             0.16              0.17              0.17


         2002

         Net sales                                     $ 28,672,168     $ 28,789,370      $ 29,341,129      $ 29,424,534
         Gross profit                                    11,151,780       12,033,078        12,556,666        12,773,949
         Income from operations                           3,483,243        4,104,019         4,624,051         4,564,175
         Income tax expense                               1,095,974        1,376,107         1,509,412         1,470,756
         Net income                                       2,326,907        2,701,814         3,125,403         3,155,906
         Basic earnings per common share                       0.10             0.11              0.13              0.13
         Diluted earnings per common share                     0.09             0.10              0.12              0.12


         2001

         Net sales                                     $ 26,788,373     $ 26,264,015      $ 25,694,128      $ 25,289,290
         Gross profit                                     9,219,374        9,426,157         9,725,611         9,726,620
         Income from operations                           2,083,229        2,177,236         2,730,338         2,948,823
         Income tax expense                                 460,737          785,935           854,528           951,217
         Net income                                       1,186,425        1,858,793         1,744,996         1,945,764
         Basic earnings per common share                       0.06             0.08              0.08              0.08
         Diluted earnings per common share                     0.06             0.08              0.07              0.07


                                   * * * * * *

                                       50

SUPPLEMENTARY FINANCIAL DATA

         The  supplementary  financial  information  required  by  Item  302  of
         Regulation  S-K is contained in Note 12 to the  Consolidated  Financial
         Statements of the Company set forth above.

Item 9.  Changes and Disagreements with Accountants on Accounting and Financial
         Disclosure
         ----------------------------------------------------------------------
         None

Item 9A. Controls and Procedures
         -----------------------
     (a) Under the  supervision  and with the  participation  of our management,
including our principal  executive officer and principal  financial officer,  we
conducted an evaluation of our disclosure controls and procedures,  as such term
is defined under Rule 13a-14(c) promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), within 90 days of the filing date of this
report. Based on this evaluation,  our principal executive officer and principal
financial  officer  concluded  that our  disclosure  controls and procedures are
effective in alerting them on a timely basis to material information relating to
our Company (including its consolidated subsidiaries) required to be included in
our reports filed or submitted under the Exchange Act


There have been no significant changes (including corrective actions with regard
to significant  deficiencies or material weaknesses) in our internal controls or
in other factors that could  significantly  affect these controls  subsequent to
the date of the evaluation referenced in paragraph (a) above.

                                    PART III

Items 10, 11, 12, 13 and 14

         These items are  incorporated by reference to the Company's  definitive
Proxy Statement relating to the Annual Meeting of Shareholders scheduled for May
25, 2004. The definitive  Proxy  Statement will be filed with the Commission not
later than 120 days after  December 31, 2003,  pursuant to Regulation 14A of the
Securities Exchange Act of 1934, as amended.

                                     PART IV

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.
          ---------------------------------------------------------------
          (a) Documents filed as part of this report:

                (1) Financial Statements.  The following  consolidated financial
                    statements and the  notes  thereto,   and  the   Independent
                    Auditors'  Report  are incorporated by reference as provided
                    in Item 8 of this report:

                    --   Independent Auditors' Report

                    --   Consolidated Balance Sheets as of December 31, 2003 and
                         2002

                    --   Consolidated  Statements  of  Operations  for the Years
                         Ended December 31, 2003, 2002 and 2000

                    --   Consolidated Statements of Stockholders' Equity for the
                         Years Ended December 31, 2003, 2002 and 2001

                                       51


                    --   Consolidated  Statements  of Cash  Flows  for the Years
                         Ended December 31, 2003, 2002 and 2001

                    --   Notes to Consolidated Financial Statements


(2)  Financial Statement Schedule

                    --   Schedule II - Valuation and qualifying accounts



                        VALUATION AND QUALIFYING ACCOUNTS
                  YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

                                         Additions
                          Balance at     Charged to                  Balance at
                           Beginning       Costs                      End of
Description                of Year       Expenses      Deductions      Year

ALLOWANCE FOR UNCOLLECTIBLE
  ACCOUNTS:

2001                   $  (440,275)   $   (50,892)   $    82,316   $  (408,851)

2002                      (408,851)       (81,026)        13,583      (476,294)

2003                      (476,294)      (322,454)        49,745      (749,003)


RESERVE FOR INVENTORY
  OBSOLESCENCE:

2001                   $(1,986,315)   $(3,119,864)   $ 1,710,818   $(3,395,361)

2002                    (3,395,361)    (1,830,633)     2,457,572    (2,768,422)

2003                    (2,768,422)      (931,430)     1,322,641    (2,377,211)




All other  schedules  have  been  omitted  because  they are not  required,  not
applicable,  or  the  information  is  otherwise  set  forth  in  the  financial
statements or notes thereto.

         (b) Reports on Form 8-K:


             Form 8-K          Date of Event                      Description
             --------          -------------                      -----------
                                           
             Item 12 & 7       10-24-03          Company's financial  and operating results
                                                 for the quarter ended September 30, 2003


                                       52


 (c) Exhibits:

                  The following  exhibits required by Item 601 of Regulation S-K
                  are filed herewith or have been filed  previously with the SEC
                  as indicated below:



           Description                                                                         Exhibit No.
                                                                                      ------------------------------
                                                                                
       3.1       Articles of Incorporation of the Company, as amended and             [Form 10-Q  filed  August 14,
                 restated*                                                            1996, Exhibit No. 1]

       3.2       Bylaws of the Company*                                               [Form S-18 filed  October 19,
                                                                                      1989, Exhibit No. 2]

         4       Specimen Certificate of the Company's Common Stock, no par value*    [Form S-18 filed  October 19,
                                                                                      1989, Exhibit No. 10]

      10.1       Merit Medical Systems, Inc. Long Term Incentive Plan (as amended     [Form 10-Q  filed  August 14,
                 and restated) dated March 25, 1996*                                  1996, Exhibit No. 2]

      10.2       Merit Medical Systems, Inc. 401(k) Profit Sharing Plan (as           [Form S-1 filed  February 14,
                 amended effective January 1, 1991*                                   1992, Exhibit No. 8]

      10.3       License Agreement, dated April 8, 1992 between the Company and       [Form S-1 filed  February 14,
                 Utah Medical Products, Inc.*                                         1992, Exhibit No. 5]

      10.4       Lease Agreement dated as of June 8, 1993 for office and              [Form  10-K  for  year  ended
                 manufacturing facility*                                              December  31,  1994,  Exhibit
                                                                                      No. 10.5]

      10.5       Amended and Restated Loan Agreement with Zion's First National       [Form  10-K  for  year  ended
                 Bank dated August 11, 1999                                           December  31,  1995,  Exhibit
                                                                                      No. 10.5

      10.6       Amendment to Loan Agreement with Zion's First National Bank          Form  10-K  for  year   ended
                 3/11/2002*                                                           December  31,  2000,  Exhibit
                                                                                      No. 10.6]

      10.7       Fifth Amendment to Loan Agreement with Zion's First National         [Form  10-K  for  year  ended
                 Bank Date November 15, 2002*                                         December  31,  2003,  Exhibit
                                                                                      No. 10.7]

      10.8       Employment agreement between the Company and Fred P.                 [Form  10-K  for  year  ended
                 Lampropoulos*                                                        December  31,  2003,  Exhibit
                                                                                      No. 10.8]

      10.9       Employment agreement between the Company and Kent W. Stanger*        [Form  10-K  for  year  ended
                                                                                      December  31,  2003,  Exhibit
                                                                                      No. 10.9]

     10.10       Employment agreement between the Company and B. Leigh Weintraub*     [Form  10-K  for  year  ended
                                                                                      December  31,  2003,  Exhibit
                                                                                      No. 10.10]

     10.11       Employment agreement between the Company and Brian Ferrand*          [Form  10-K  for  year  ended
                                                                                      December  31,  2003,  Exhibit
                                                                                      No. 10.11]

                                       53


     10.12       Amended and Restated Deferred Compensation plan                      Filed herewith

        21       Subsidiaries Of Merit Medical Systems, Inc                           Filed herewith

      23.1       Consent of Independent Auditors                                      Filed herewith

      31.1       Certification of Chief Executive Officer                             Filed herewith

      31.2       Certification of Chief Financial Officer                             Filed herewith

      32.1       Certification of Chief Executive Officer                             Filed herewith

      32.2       Certification of Chief Financial  Officer                            Filed herewith


* These exhibits are incorporated herein by reference.








                                       54



                                   SIGNATURES


              Pursuant  to  the  requirements  of  Section  13 or  15(d)  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, on March
10, 2004.

                                      MERIT MEDICAL SYSTEMS, INC.

                                      By:  /s/:  FRED P. LAMPROPOULOS
                                         ----------------------------
                                          Fred P. Lampropoulos, President and
                                          Chief Executive Officer


                   ADDITIONAL SIGNATURE AND POWER OF ATTORNEY

                  Pursuant to the requirements of the Securities Exchange Act of
1934,  this report has been signed below by the  following  persons on behalf of
the Registrant  and in the capacities  indicated on March 10, 2004. In addition,
each person whose signature to this report appears below hereby  constitutes and
appoints Fred P. Lampropoulos and Kent W. Stanger, and each of them, as his true
and lawful attorney-in-fact and agent, with full power of substitution,  to sign
on his behalf  individually  and in the capacity stated below and to perform any
acts  necessary to be done in order to file all  amendments  and  post-effective
amendments to this report,  and any and all  instruments  or documents  filed as
part of or in connection with this report or the amendments  thereto and each of
the  undersigned  does hereby ratify and confirm all that said  attorney-in-fact
and agent, or his substitutes, shall do or cause to be done by virtue hereof.



                       Signature                                           Capacity in Which Signed
                       ---------                                           ------------------------


                                                          
/s/:  FRED P. LAMPROPOULOS                                   President, Chief Executive Officer and Director
----------------------------------------------
Fred P. Lampropoulos


/s/:  KENT W. STANGER                                        Chief Financial Officer, Secretary, Treasurer and
----------------------------------------------               Director (Principal financial and accounting officer)
Kent W. Stanger


/s/:  RICHARD W. EDELMAN                                     Director
----------------------------------------------
Richard W. Edelman


/s/:  REX C. BEAN                                            Director
----------------------------------------------
Rex C. Bean


/s/:  JAMES J. ELLIS                                         Director
----------------------------------------------
James J. Ellis


/s/:  MICHAEL E. STILLABOWER                                 Director
----------------------------------------------
Michael E. Stillabower



                                       55