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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2003

Commission File No. 1-9767

IRIS INTERNATIONAL, INC.

(formerly known as International Remote Imaging Systems, Inc.)

9172 Eton Avenue, Chatsworth, California 91311

(Address of principal executive offices) (Zip Code)

Telephone Number: (818) 709-1244

Securities registered pursuant to Section 12(b) of the Act:

Common Stock (American Stock Exchange)

Securities registered pursuant to Section 12(g) of the Act:

None

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 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  ¨    No  x

The aggregate market value of the shares of Common Stock held by non-affiliates of the Registrant was approximately $28.3 million based upon the closing price of $3.56 per share of Common Stock as reported on the American Stock Exchange on June 30, 2003. Solely for the purpose of determining “non-affiliates” in this context, shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded. This determination of affiliate status is not necessarily a determination for other purposes.

The Registrant had 12,272,272 shares of Common Stock outstanding on March 19, 2004.

Part III incorporates information by reference from the Proxy Statement for the Registrant’s 2003 Annual Meeting of Stockholders.

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IRIS INTERNATIONAL, INC.

FORM 10-K ANNUAL REPORT

Fiscal Year Ended December 31, 2003

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PART I

Item 1. Business

Overview

IRIS International, Inc., formerly International Remote Imaging Systems, Inc., was incorporated in California in 1979 and reincorporated in Delaware in 1987. Our company consists of three operating units. Our largest unit, Iris Diagnostics Division, designs, manufactures and markets in vitro diagnostics (IVD) systems, consumables and supplies for urinalysis. In August 2003, we launched our next generation system, the iQ200. We believe this is the only system in the world that automates all components of routine urinalysis: chemistry and microscopic particle analysis. StatSpin, Inc. our subsidiary markets small centrifuges and other processing equipment and accessories for rapid specimen processing. Our Advanced Digital Imaging and Research LLC (ADIR) subsidiary assists in the advancement of proprietary imaging technology while conducting government-sponsored research and contract development in imaging and pattern recognition.

Iris Diagnostics

Our Iris Diagnostics Division is a leader in automated urinalysis technology with urine microscopy and urine chemistry instruments. Our systems provide customers more accurate and rapid results and labor cost-savings over traditional manual methods. We sell our products directly in the U.S. and through distributors internationally. Our end-use customers consist of hospitals and clinical reference laboratories throughout the world.

Routine urinalysis encompasses two different modalities: urine chemistry and urine microscopy. Urine chemistry consists of a panel of tests that identify a variety of chemical constituents in urine such as glucose, ketones, bilirubin, protein, nitrite, etc. Urine microscopy is the microscopic analysis of solid particles and cells suspended in urine. The particles analyzed include red blood cells, white blood cells, hyaline casts, pathological casts, crystals, bacteria, sperm, yeast, etc. These tests are performed as part of most routine medical examinations and are necessary for diagnosis and monitoring of certain diseases including, kidney and bladder disease, and urinary track infections.

Current urine testing requires the clinical laboratory to split samples, perform automated and manual procedures and recombine the separate results into one report. Urine chemistry is broadly used and fairly generic, however, urine sediment analysis is used less frequently despite the fact that it provides significant clinical information. The manual procedure for microscopy requires a highly experienced technologist to accurately categorize the formed elements observed under the microscope. However, inherent variability in sample preparation, (i.e. initial sample volume, spin down time and speed, and slide preparation volume) all contribute to significant variability in the quantitative accuracy of the diagnostic result. Furthermore, its a very tedious and costly process for the clinical laboratory. We believe the full automation and integration of results of the iQ200 System will accelerate the adoption of automated urine microscopy as a routine test.

iQ200 Automated Urine Microscopy Analyzer

Our next generation model, the iQ200 Automated Urine Microscopy Analyzer, was launched in August 2003 and have sold of 100 iQ200 analyzers as of December 31, 2003. The iQ200 utilizes image flow cytometry, and our patented Automated Intelligent Microscopy technology (AIM) to achieve significant reductions in cost and time consuming steps for manual microscopic analysis. Our AIM technology combines our patented capabilities in slide-less specimen presentation, our proprietary neural network-based Auto-Particle Recognition technology and high-speed digital processing to classify and display images of microscopic particles in an easy-to-view graphical interface. We believe the iQ200 Automated Urine Microscopy Analyzer has numerous benefits over competing products, including, increased accuracy, fully automated walk-away urinalysis, automatic identity of 12 formed elements and user-defined reflexive testing.

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iQ200 System

The iQ200 Automated Urine Microscopy Analyzer was engineered as a modular platform. We have U.S. distribution rights to sell a urine chemistry analyzer manufactured by ARKRAY, a Japanese diagnostics company. When the iQ200 Automated Urine Microscopy Analyzer is combined with ARKRAY’s AUTION MAX AX-4280 Automated Urine Chemistry Analyzer (“AX-4280”), this system constitutes the first fully automated urinanalysis system performing both urine chemistry and microscopy simultaneously. This system allows us to focus on the mid-sized laboratory market, a segment that was not previously accessible to us with our legacy products due to price considerations. Domestically, we sell the two major sub-systems, the AX-4280 and the iQ200 Automated Microscopy Analyzer, as stand-alone units or together as a fully integrated product, the iQ200 System. Internationally, we sell the iQ200 Automated Microscopy Analyzer as a stand alone instrument since we do not have international distribution rights for the AX-4280. However, our distributor network focuses on the installed base of AX-4280 in service throughout the world as a readily available target for integration with the iQ200 Automated Microscopy Analyzer. Our international distributors also sell the bridge system necessary for the integration of the analyzers.

Legacy Products

Prior to the iQ200, we sold larger and more expensive workstations, which perform microscopy and chemistry testing, our legacy products Models 500 and 939 UDx^TM. Model 500 is an operator attended workstation that performs IVD testing on urine and eight other body fluids but it requires a medical technologist to characterize the microscopic particles manually. The 939UDx is a semi-automated workstation that performs IVD testing on urine only, but uses IRIS’ first generation neural-network algorithms to automatically characterize the microscopic particles. As of December 31, 2003, we have an installed base of approximately 400 models of M500s and 939 UDxs, our legacy products. These products have a considerable consumable revenue stream, which in 2003 accounted for substantially all of our consumable sales and service. We have stopped marketing our legacy instruments and anticipate these sales to be minimal in the future.

Consumables and Service

We provide recurring sales of consumables for our legacy products, the iQ200 System and our urine chemistry products sourced from ARKRAY. Consumables include reagents, calibrators and controls for our microscopy systems and chemical strips for the urine chemistry analyzers we distribute. In the U.S., many of our customers purchase consumables under annual standing orders.

All domestic sales of our systems include installation, customer training and a one-year warranty. Following the initial warranty period, the majority of domestic customers purchase annual service contracts from us. Such services are provided by our qualified service technicians located throughout the US. Internationally, our products are serviced by our distributors.

StatSpin

Our StatSpin^® subsidiary is a worldwide leader in accelerated sample preparation for blood, body fluids and urine analysis. StatSpin makes centrifuges and blood analysis products, including the world’s fastest blood separator, which separates blood in under 30 seconds. StatSpin’s worldwide markets include medical institutions, commercial laboratories, clinics, doctors’ offices, veterinary labs and research facilities. Our bench top centrifuges are dedicated to applications for manual specimen preparation for coagulation, cytology, hematology, and urinalysis.

Advanced Digital Imaging Research

Our research and development subsidiary, Advanced Digital Imaging Research, LLC, assists in the advancement of proprietary imaging technology while conducting government-sponsored research and development in medical imaging and software. In addition, it pursues contract research for corporate clients.

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Our Growth Strategy

Our objective is to be the leading provider of diagnostic instrumentation in the urinalysis market and to diversify our business through internal development and selective acquisitions of related medical device companies. Our growth strategy consists of the following key elements:

Increase market penetration. With the release of the iQ200 system, we are able to reposition our product line to the broader market. We expect to penetrate market segments that were not previously accessible to us due to price considerations. The lower price point of the iQ200 system with its value added features allows us to enter the mid-range domestic laboratory market, as well as the international reagent-rental (fee-per-test) market. The iQ200 system has superior clinical performance, is smaller in size and consolidates clinical results to significantly increase the value proposition of our product offering. To further our market penetration, we have initiated relationships with key opinion leaders that may result in peer-reviewed scientific papers describing the importance of urine microscopy and the advantages of the iQ200 system compared to manual microscopy and competitive automated systems.

Expand into new geographic markets. Historically, a significant portion of our revenues has been derived domestically. During 2003, our international sales comprised approximately 13% of our total revenue. However, we believe there are significant growth opportunities internationally for our products and have increased our marketing efforts abroad. Over the past year, we have expanded our international distribution network to approximately 20 distributors covering 37 countries and opened two sales support offices in Milan and Hong Kong. We believe the sales and service support systems are in place to sustain our rapidly expanding network of distributors. Domestically, our diagnostics sales and support staff has more than doubled since January 1, 2003 providing increased coverage throughout the United States.

Increase sales of consumables and service. Currently, we have an installed base of over 400 of our legacy urinalysis workstations, which provides significant recurring revenue of consumables and service. In 2003, sales from consumables and service comprised 55% of our total revenues. We anticipate phasing out the test strips and replacement readers of our legacy workstations with the introduction of the new iQ200 systems. As we continue to increase our installed base of iQ200s domestically, we should benefit from an increase in consumables, both for chemistry and microscopy, and service contracts after the expiration of the one-year warranty period. Internationally, we expect to increase revenues related to our microscopy consumables and spare parts.

Continuously enhance and expand system features. Another key element of our growth strategy is to continuously expand and improve the features of the iQ200 system. We plan to expand the iQ200 clinical applications to (i) increase the clinical utility of the platform providing new information that is not available in routine testing today, (ii) diversify the technology applications beyond the field of urinalysis and (iii) improve efficiency for medical professionals. We have initiated a program to increase the testing capabilities of the iQ200 on various bodily fluids. As a result, we anticipate this will expand the potential market for the system.

Pursue selective acquisitions. We intend to pursue selective acquisitions to augment our organic growth. Our acquisition strategy is to target companies and/or technologies that complement our product offering and provide synergies with our existing infrastructure. We plan to maximize the utilization of our manufacturing capabilities, distribution channels and technical and managerial expertise in the field of medical devices and scientific instrumentation.

Technology

An effective system for most automated microscopy applications requires technology for fast, consistent and easily discernable presentation of the specimen to the microscope (“front end processing”) and for rapidly capturing, analyzing, classifying, enhancing, arranging and displaying images of the specimen (“back end imaging”). Over the past twenty-five years, we have created and developed our patented and proprietary Automated Intelligent Microscopy, or AIM, technology to address both of these requirements. AIM technology

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involves the synthesis of visual microscopy, digital image processing and automated image interpretation/pattern recognition to analyze microscopic specimens.

Traditional urine sediment analysis requires manual preparation of a slide from the specimen requiring several steps, including centrifugation followed by carefully positioning, staining and coverslipping a sample extracted from the specimen. The slide is then placed under the microscope and manually manipulated and scanned by a technologist. This procedure is time-consuming, imprecise, and potentially hazardous. In contrast, our patented slide-less microscope automates the front end processing and allows microscopic examination of a moving specimen precisely positioned in a stream of fluid. This eliminates the need for manual slide preparation, manipulation and scanning. The slide-less microscope positions the specimen to within microns as it flows past the microscope at high-speed, ensheathed within a larger stream of fluid. This method of alignment, particle orientation, focus and measurement is called “imaging flow cytometry.” We hold patents on this method, and we are unaware of any other company that has developed similar technology.

Once the specimen is located and presented to the microscope, AIM’s back end processing automatically captures, digitizes, classifies, organizes and presents the microscopic images displayed on a video monitor for review by the medical specialist. These digital images of the specimen can then be stored on magnetic or optical media for later retrieval, even years later.

Summary of Revenues by Product Line

The following tables presents a summary of revenues for each segment by product line for the three years ended December 31, 2003:

See Note 13 to the Consolidated Financial Statements, “Segment and Geographic Information,” for financial information regarding our operating segments and geographic areas.

Backlog

We did not have a material amount of backlog at December 31, 2003 or 2002. Products are usually shipped within ninety days of receipt of sales orders. The Company believes that backlog is not necessarily indicative of sales for any succeeding period.

Research and Development

In 1999, we began a major project to completely redesign our family of urinalysis workstations and develop the next generation operating platform, now introduced as the iQ200. Consequently, over the past two years our product technology investments (including amounts reimbursed by third parties under research and development contracts and amounts capitalized) amounted to $6.4 million in 2001 to $6.3 million in 2002 and $5.9 million in 2003.

We have devoted substantially all of our research and development efforts over the past three years to development of the iQ200 program. By incorporating more than 20 years of experience and the latest

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developments in computer technology, we developed the iQ200 analyzer which: (1) significantly improves the image quality of our systems, (2) further reduces the time required to operate the system and (3) reduces our cost of goods and our historical dependence on single-source suppliers by incorporating more “off-the-shelf” components. We plan on continuing development efforts throughout the balance of 2004, however at a reduced level. We also expect to continue the funding of the research and development efforts of our sample separation business at StatSpin.

ADIR applies for government grants related to projects that have potential applications to the imaging part of our business. Under a typical government grant program, the government has the right to use any new technology royalty-free, but ADIR retains the right to commercially exploit the new technology. During 2003 ADIR suffered from a shortage of governmental research funding which required us to reduce the staff at ADIR. Although we have received notification of high scores for recent research grants submitted to NIST and NIH, realization of these grants depends on governmental approval and funding which is uncertain at this time.

Marketing and Sales

In the United States, we sell and service our products through our own sales and service forces. Sales activities consist of direct sales by field sales representatives, telemarketing to initiate and aid in pursuing sales opportunities, logistics support of the field sales representatives and support to customers in the operation of their systems. In addition to our sales activities, we promote our products through advertising in trade journals, attendance at trade shows, direct mail, and our website. All domestic sales of our urinalysis instruments include installation, customer training and a one year warranty. Our small instruments, targeted primarily at smaller customers, are sold through distributors. We also maintain a rental program for our urinalysis systems. Under the terms of the rental agreements, payments generally are based on the number of tests performed, with a guaranteed monthly minimum payment. We are responsible for supply and service of the systems. Alternatively, some customers lease our systems from medical equipment leasing companies that, in turn purchase the systems from us.

Internationally, we sell and service our products through distributors in markets around the world. With the recent introduction of our new iQ200 platform, we have negotiated many new distributor agreements throughout the world. We anticipate the international market to play a major role in the success of our new product. As of March 1, 2004, we have negotiated agreements with distributors covering 35 countries in comparison to 3 countries at the end of 2002.

We market most of the supplies used in the operation of our urinalysis systems and maintain them through our own national service organization domestically, and through our distributor network internationally. Domestic service contracts are sold under annual service agreements or, less frequently, on a per-call basis.

Competition

Our primary product is the iQ200 analyzer. The principal competitive factors in the urinalysis market are cost-per-test, ease of use, and quality of result. We believe our systems compete favorably with regard to these factors in its target markets.

Bayer Diagnostics and Roche Diagnostics sell lines of urine test strips that are used in determining the concentration of various chemical substances found in urine. Despite the Company obtaining FDA clearance to claim improved performance of our urine microscopy instruments over urine test strip measures in detecting microscopic abnormalities in urine, a substantial portion of the urinalysis market has subscribed to the theory that these test strips can be relied upon to reduce the number of microscopic examinations. We believe that this is largely due to laboratories’ reacting to cost-cutting pressures and has resulted in significantly slower growth in the demand for microscopic examinations at certain hospitals and reference laboratories. We believe the lower price and ease of use of our iQ200 instrument will result in a better economic return for clinical laboratories and

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hospitals utilizing manual microscopy, therefore accelerating the adoption of IRIS automated microscopy technology. As urine chemistry test strips remain a large segment of the urinalysis market and a revenue source for the Company, the exclusive US distribution agreement with ARKRAY for the Aution Max AX-4280 Automated Urine Chemistry Analyzer offers a competitive alternative in the form of a compact, high-throughput analyzer with a complete test strip menu.

Our urinalysis systems currently support automated test strip readers supplied by Roche Diagnostics and Arkray, Inc. Some potential customers who have previously purchased automated test strip readers from Bayer Diagnostics (the dominant company in the urine test strip business) cannot connect those readers to our legacy products. Our ability to modify our legacy products to support a connection to test strip readers from Bayer Diagnostics and other suppliers is presently subject to significant restrictions under our existing agreements with Roche Diagnostics. Roche Diagnostics has exercised its right to terminate its agreements with us, however, in accordance with the term and conditions contained in these agreements, Roche Diagnostics will continue to supply its test strips through 2009. Our new iQ200 Automated Microscopy Analyzer can be used as a stand-alone system for those laboratories that continue using Bayer or Roche urine chemistry analyzers.

Sysmex Corporation (Kobe, Japan) markets its automated urine sediment analyzers globally, and remains the Company’s principal competitor in the urine microscopy business segment. While the Sysmex systems, are automated and easy to use, they are believed to have several limitations. Their systems are not capable of direct integration of both the chemistry and sediment analysis of urine. These systems are not designed to perform body fluid analysis and are limited in terms of quantitatively reported analyses. Additionally, when further examination is needed, Sysmex systems, which do not use image analysis, require the technologist to remove the sample, prepare a slide and conduct a manual microscopic analysis.

In addition to industry competitors, we are experiencing increased domestic and international pricing pressures in the urinalysis market due to the ongoing consolidation of both hospitals and medical device suppliers. Large hospital chains and groups of affiliated hospitals are negotiating comprehensive supply contracts with the larger medical device suppliers, who can offer one-stop shopping for a variety of laboratory instruments, supplies and service. In the US, they typically offer hospitals annual rebates based on the total volume of business with the suppliers. These rebates create financial incentives against purchasing instruments or supplies from others and act as a barrier to the penetration of hospital laboratories covered by the contract.

Intellectual Property

Our commercial success depends on our ability to protect and maintain our proprietary rights. We protect our proprietary technology by filing various patent applications. We have received numerous United States patents for our AIM technology and related applications, as well as a number of corresponding foreign patents. These patents also cover developments in image analysis and blood processing. We have applied for a number of additional patent applications covering the iQ200 which are pending in the United States and abroad. Also, we maintain numerous patents relating to digital refractometers, centrifuges, automated slide handling and disposable urinalysis products sold by Iris Diagnostics and StatSpin.

We granted Sysmex a royalty-bearing license to use pre-1989 technology for urine sediment analyzers and non-medical industrial instruments which will expire in 2004.

We have trade secrets and unpatented technology and proprietary knowledge about the sale, promotion, operation, development and manufacturing of our products. We have confidentiality agreements with our employees and consultants to protect these rights.

We claim copyright in our software and the ways in which it assembles and displays images, and have filed copyright registrations with the United States Copyright Office. We also own various federally registered trademarks, including “IRIS”, “iQ”, “The Yellow IRIS” and “StatSpin.” We own other registered and

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unregistered trademarks, and have certain trademark rights in foreign jurisdictions. We intend to aggressively protect our patents, copyrights and trademarks.

Government Regulations

Most of our products are subject to stringent government regulation in the United States and other countries. These laws and regulations govern product testing, manufacture, labeling, storage, record keeping, distribution, sale, marketing, advertising and promotion. The regulatory process can be lengthy, expensive and uncertain, and securing clearances or approvals often requires the submission of extensive testing and other supporting information. If we do not comply with regulatory requirements, we may be subject to fines, recall or seizure of products, total or partial suspension of production, withdrawal of existing product approvals or clearances, refusal to approve or clear new applications or notices and criminal prosecution. Further, any change in existing federal, state or foreign laws or regulations, or in their interpretation or enforcement, or the enactment of any additional laws or regulations, could affect us both materially and adversely.

In the United States, the Federal Drug Administration regulates medical devices under the Food, Drug, and Cosmetic Act (the “FDC Act”). Before a new medical device can be commercially introduced in the United States, the manufacturer usually must obtain FDA clearance by filing a pre-market notification under Section 510(k) of the FDC Act (a “510(k) Notification”) or obtain FDA approval by filing a pre-market approval application (a “PMA Application”). The PMA Application process is significantly more complex, expensive, time-consuming and uncertain than the 510(k) Notification process. To date, we have cleared all of our regulated products with the FDA through the 510(k) Notification process. We cannot guarantee that we will be able to use the 510(k) Notification process for future products. Furthermore, FDA clearance of a 510(k) Notification or approval of a PMA Application is subject to continual review, and the subsequent discovery of previously unknown facts may result in restrictions on a product’s marketing or withdrawal of the product from the market.

We are also required to register as a medical device manufacturer with the FDA and comply with FDA regulations concerning good manufacturing practices for medical devices (“GMP Standards”). In 1997, the FDA expanded the scope of the GMP Standards with new regulations requiring medical device manufacturers to maintain control procedures for the design process, component purchases and instrument servicing. The FDA periodically inspects our manufacturing facilities for compliance with GMP Standards. We believe that we are in substantial compliance with the expanded GMP Standards.

The FDA also regulates computer software of the type used in our urinalysis workstations and is currently reevaluating the regulation of such software. We can’t predict the extent to which the FDA will regulate such software in the future.

Labeling, advertising and promotional activities for medical devices are subject to scrutiny by the FDA and, in certain instances, by the Federal Trade Commission. The FDA also enforces statutory and policy prohibitions against promoting or marketing medical devices for unapproved uses.

Many states have also enacted statutory provisions regulating medical devices. The State of California’s requirements in this area, in particular, are extensive, and require registration with the state and compliance with regulations similar to the GMP Standards established by the FDA. While the impact of such laws and regulations has not been significant to date, it is possible that future developments in this area could affect us both materially and adversely.

In addition to domestic regulation of medical devices, many of our products are subject to regulations in foreign jurisdictions. The requirements for the sale of medical devices in foreign markets vary widely from country to country, ranging from simple product registrations to detailed submissions similar to those required by the FDA. Our business strategy includes expanding the geographic distribution of these and other products, and we cannot guarantee that we will be able to secure the necessary clearances and approvals in the relevant foreign

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jurisdictions. Furthermore, the regulations in certain foreign jurisdictions continue to develop and we cannot be sure that new laws or regulations will not have a material adverse effect on our existing business or future plans. Among other things, CE Mark certifications are required for the sale of many products in certain international markets such as the European Community. We secured CE Mark certification for our existing lines including our new iQ200.

The Company obtained the ISO 9001 and EN 46001 certification for its StatSpin division in 2002, and in February 2003 received these and EN 13485 certification for its Iris Diagnostics division.

Our products are also subject to regulation by the United States Department of Commerce export controls, primarily as they relate to the associated computers and peripherals. We have not experienced any material difficulties in obtaining necessary export licenses to date.

Employees

We had 156 full-time employees at March 19, 2004. We also use outside consultants and part-time and temporary employees in production, administration, marketing and engineering. No employees are covered by collective bargaining agreements, and we believe that our employee relations are satisfactory.

Item 2. Properties

We lease all of our facilities. The leases expire at various times over the next five years. Our headquarters are located at 9172 Eton Avenue, Chatsworth, California 91311. The table below sets forth certain information regarding our leaseholds as of March 1, 2004:

We believe our facilities are adequate to meet our current and near-term needs.

Item 3. Legal Proceedings

From time to time, the Company is party to certain litigation arising in the normal course of business. Management believes that the resolution of such matters will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

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

We did not submit any matters to vote of security holders during the quarter ended December 31, 2003.

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PART II

Item 5. Market for the Registrant’s Common Stock and Related Stockholder Matters

Our Common Stock is traded on the American Stock Exchange under the symbol “IRI.” The closing price of the Common Stock on March 19, 2004 was $6.12 per share. The table below sets forth high and low closing prices reported by American Stock Exchange during the period January 1, 2002 through December 31, 2003:

As of March 19, 2004, we had approximately 2,900 beneficial holders of record of our common stock.

We intend to use all available funds in business development and debt repayment. As a result, we do not expect to pay any cash dividends for the foreseeable future. Furthermore, we may not pay any cash dividends on the common stock, or repurchase any shares of the common stock, without the written consent of our lender.

Item 6. Selected Financial Data

This information as of December 31, 2003 and 2002 and for the three years ended December 31, 2003, is derived in part from, and should be read in conjunction with, the our Consolidated Financial Statements, including the Notes thereto, included elsewhere in this Annual Report.

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

Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking statements, which reflect our current views about future events and financial results. We have made these statements in reliance on the safe harbor created by that Private Securities Litigation Reform Act of 1995. Forward-looking statements include our views on future financial results, financing sources, product development, capital requirements, market growth and the like, and are generally identified by phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans” and similar words. Forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors which could cause the actual results to differ materially from the forward-looking statement.

These uncertainties and other factors include, among other things:

Set forth below are additional significant uncertainties and other factors affecting forward-looking statements. The readers should understand that the uncertainties and other factors identified in this Annual Report are not a comprehensive list of all the uncertainties and other factors that may affect forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements or the list of uncertainties and other factors that could affect those statements.

Overview

IRIS International, Inc. was incorporated in California in 1979 and reincorporated in Delaware in 1987. Our company consists of three operating units. Our largest unit, Iris Diagnostics Division, designs, manufactures and markets in vitro diagnostics (IVD) systems, consumables and supplies for urinalysis. Our StatSpin subsidiary markets small centrifuges and other processing equipment and accessories for rapid specimen processing, and our Advanced Digital Imaging and Research LLC (ADIR) subsidiary assists in the advancement of proprietary imaging technology while conducting government-sponsored research and contract development in imaging and pattern recognition.

We have pioneered a number of important medical developments. In 1983, our Diagnostics Division pioneered the first urinalysis workstation integrating automation of urine sediment analysis (The Yellow IRIS). In 1986, StatSpin shipped the StatSpin1, the world fastest blood separator. This StatSpin product addressed the need for short turnaround time (STAT) on blood separation for diagnosis in critical care conditions.

2003 was a transition year for us because we launched our new iQ200 analyzer in August 2003. We incurred significant expenses relating to the product launch of the iQ200, manufacturing learning curve, international expansion and training relating to new product introduction. In addition, we experienced a significant senior management transition during 2003 resulting in approximately $1.2 million in costs arising from severance agreements, of which $800,000 occurred in the fourth quarter. Also during the fourth quarter, we achieved our highest quarterly revenues over $10.0 million. However we realized only a small profit for the quarter after experiencing the unusual expenses mentioned above.

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We generate revenues primarily from three sources: IVD instruments, IVD consumables and service and small laboratory device instruments and supplies. We released our newest IVD urine analyzer, the iQ200, in the third quarter of 2003. Although we continue to sell our legacy models (Model 500 and Model 939 Udx), we expect that sales of such products to diminish substantially in the future as they are expected to be replaced by the iQ200 and future upgrades.

Sales of IVD consumables supplies and services represent over 50% of our revenues and contribute