INTERNATIONAL REMOTE IMAGING SYSTEMS INC /DE/ - 10-Q Quarterly Report

For the quarter ended		Commission File No.
March 31, 2003		No. 1-9767

Delaware

94-2579751

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

9172 Eton Avenue , Chatsworth , CA .	91311
(Address of principal executive offices)	(Zip Code)

Registrant's Telephone Number: (818) 709-1244

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the

The registrant had 11,050,457 shares of common stock outstanding as of April 25, 2003.

The accompanying notes are an integral part of these consolidated financial statements.

PART I - FINANCIAL INFORMATION			Page
	Item 1 - Consolidated Financial Statements
		Consolidated Balance Sheets .............................................................................	2
		Consolidated Statements of Operations ...............................................................	3
		Consolidated Statements of Cash Flows .............................................................	4
		Consolidated Statements of Comprehensive Income .............................................	5
		Notes to Consolidated Financial Statements ........................................................	6
	Item 2 - Management's Discussion and Analysis of
		Financial Condition and Results of Operations ......................................................	11
	Item 3 - Quantitative and Qualitative Disclosure
		About Market Risk .............................................................................................	15
	Item 4 - Controls and Procedures ...................................................................................		17

PART II - OTHER INFORMATION
	Item 1 - Legal Proceedings ...........................................................................................		17
	Item 6 - Exhibits and Reports on Form 8-K
		(a) Exhibits .......................................................................................................	17
		(b) Reports on Form 8-K .....................................................................................	17

	SIGNATURE ..............................................................................................................		17

	At March 31, 2003 (unaudited)	At December 31, 2002
Current assets:
Cash and cash equivalents	$1,284,366	$2,336,973
Accounts receivable, net of allowance for doubtful accounts of $271,803 in 2003 and $298,324 in 2002	3,946,682	4,312,965
Inventories	5,426,375	5,423,684
Prepaid expenses and other current assets	500,340	330,245
Investments available for sale	362,249	847,816
Deferred tax asset	998,663	998,663
Total current assets	12,518,675	14,250,346

Property and equipment, at cost, net of accumulated depreciation of $5,186,463 in 2003 and $5,050,140 in 2002	3,278,762	2,896,008
Goodwill	188,911	188,911
Software development costs, net of accumulated amortization of $1,545,007 in 2003 and 2002	2,052,207	1,907,782
Deferred tax asset	7,813,550	7,280,718
Loan to related party	125,000	125,000
Other assets	524,192	574,729
Total assets	$26,501,297	$27,223,494

Current liabilities:
Short-term borrowings	$ 1,000,000	$ 1,000,000
Current portion of long-term debt	1,445,128	1,383,192
Accounts payable	2,390,406	2,654,076
Accrued expenses	2,121,721	1,857,164
Deferred income - service contracts and other	1,112,502	910,515
Total current liabilities	8,069,757	7,804,947

Long term debt	1,472,310	1,862,276
Deferred income - service contracts and other	170,222	206,982
Total liabilities	9,712,289	9,874,205

Shareholders' equity:
Common stock, $.01 par value; Authorized: 50,000,000 shares Shares issued and outstanding: 2003 – 11,007,857 and 2002 – 10,844,990	110,077	108,448
Additional paid-in capital	42,159,298	41,891,355
Unearned compensation	(66,422)	(16,378)
Accumulated other comprehensive income (loss)	(331,804)	(40,464)
Accumulated deficit	(25,082,141)	(24,593,672)
Total shareholders' equity	16,789,008	17,349,289
Total liabilities and shareholders' equity	$26,501,297	$27,223,494

Sales of IVD systems	$ 584,292	$1,134,980
Sales of IVD supplies and services	4,130,216	3,991,316
Sales of small instruments and supplies	1,290,029	1,534,957
Royalties and licensing revenues	129,603	79,973

Net revenues	6,134,140	6,741,226

Cost of goods – IVD systems	806,241	684,510
Cost of goods - IVD supplies and services	1,474,596	1,521,161
Cost of goods – small instruments and supplies	685,857	724,421

Cost of goods sold	2,966,694	2,930,092

Gross margin	3,167,446	3,811,134

Marketing and selling	968,918	905,145
General and administrative	1,777,000	1,179,809
Research and development, net	1,154,024	1,010,370

Total operating expenses	3,899,942	3,095,324

Operating income (loss)	(732,496)	715,810

Other income (expense):
Interest income	13,032	15,150
Interest expense	(94,649)	(181,172)
	____________	______________
Income (loss) before income taxes	(814,113)	549,788

Income tax provision (benefit)	(325,645)	219,915

Net income (loss)	$(488,468)	$329,873

Net income (loss) per common share - basic	$(0.04)	$0.03

- diluted	$(0.04)	$0.03

Weighted average number of common shares outstanding - basic	10,953,229	10,327,979
- diluted	10,953,229	11,374,948

	For the three months ended March 31,
		2003	2002
Operating activities:
Net income (loss)		$(488,468)	$329,873
Adjustments to reconcile net income (loss) to net cash provided (used) by operations:

Deferred taxes		(338,605)	211,918
Depreciation and amortization		203,747	257,009
Common stock and stock option compensation amortization		20,356	18,167
Allowance for doubtful accounts		(26,521)	--
Changes in assets and liabilities:
Accounts receivable - trade and other		518,400