10KSB: Optional form for annual and transition reports of small business issuers [Section 13 or 15(d), not S-B Item 405]

FORM 10-KSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the fiscal year ended FEBRUARY 29, 2008
Commission File Number 0-12305

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

New York 13-3044880
-------- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)

24 Carpenter Road, Chester, NY 10918
------------------------------ -----
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (845) 469-2042

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

Name of each exchange on
Title of each class which registered
------------------- ----------------

Common stock, $.01 Par Value Over the Counter Bulletin Board

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
during the past 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if the disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B, 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-KSB or any
amendment to this Form 10-KSB. [X]

Based on the closing sales price of February 29, 2008, the aggregate
market value of the voting and nonvoting common equity held by non-affiliates of
the registrant was $2,693,399.

The number of issued outstanding of the registrant's common stock, $.01
par value was 34,829,286 at February 29, 2008, which includes 2,275,000 shares
of Treasury Stock.

Page 1 of 23


Repro-Med Systems, Inc.

Table of Contents

Page

PART I

Item 1. Description of Business 3
Item 2. Description of Property 11
ITEM 3. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11

PART II

ITEM 5. Market for the Registrant's Common Equity and Related
Shareholder Matters 11
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
ITEM 7. Financial Statements 15
ITEM 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures 16
Item 8A. Controls and Procedures 16

PART III

Item 9. Directors, Executive Officers, Promoters and Control
Persons: Compliance with Section 16(a) of the
Exchange Act 16
ITEM 10. Executive Compensation 18
ITEM 11. Security Ownership of Certain Beneficial Owners
and Management 18
ITEM 12. Certain Relationships and Related Transactions 20
ITEM 13. Accountants Fees and Services 21

PART IV

Item 14. Exhibits and Reports on Form 8-K 22

Signatures 23

Exhibit 31.1

Exhibit 31.2

Page 2 of 23


PART I

FORWARD-LOOKING STATEMENTS

THIS ANNUAL REPORT CONTAINS CERTAIN "FORWARD-LOOKING" STATEMENTS AS THAT TERM IS
DEFINED IN THE FEDERAL SECURITIES LAWS. GENERALLY THESE STATEMENTS RELATE TO
BUSINESS PLANS OR STRATEGIES, PROJECTED OR ANTICIPATED BENEFITS OR OTHER
CONSEQUENCES OF MANAGEMENTS PLANS OR STRATEGIES, PROJECTED OR ANTICIPATED
BENEFITS FROM ACQUISITIONS TO BE MADE BY US, OR PROJECTIONS INVOLVING
ANTICIPATED REVENUES, EARNINGS OR OTHER ASPECTS OF OUR OPERATING RESULTS. THE
EVENTS DESCRIBED IN FORWARD-LOOKING STATEMENTS CONTAINED IN THIS ANNUAL REPORT
MAY NOT OCCUR. THE WORDS "MAY," "WILL," "EXPECT," "BELIEVE," "ANTICIPATE,"
"PROJECT," "PLAN," "INTEND," "ESTIMATE," AND "CONTINUE," AND THEIR OPPOSITES AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. WE
CAUTION YOU THAT THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE OR
EVENTS AND ARE SUBJECT TO A NUMBER OF UNCERTAINTIES, RISKS AND OTHER INFLUENCES,
MANY OF WHICH ARE BEYOND OUR CONTROL, THAT MAY INFLUENCE THE ACCURACY OF THE
STATEMENTS AND THE PROJECTIONS UPON WHICH THE STATEMENTS ARE BASED. FACTORS THAT
MAY AFFECT OUR RESULTS INCLUDE, BUT ARE NOT LIMITED TO, THE RISKS AND
UNCERTAINTIES DISCUSSED IN ITEM 6 OF THIS ANNUAL REPORT UNDER "FACTORS THAT MAY
AFFECT FUTURE RESULTS AND FINANCIAL CONDITION".

ANY ONE OR MORE OF THESE UNCERTAINTIES, RISKS AND OTHER INFLUENCES COULD
MATERIALLY AFFECT OUR RESULTS OF OPERATIONS AND WHETHER FORWARD-LOOKING
STATEMENTS MADE BY US ULTIMATELY PROVE TO BE ACCURATE. OUR ACTUAL RESULTS,
PERFORMANCE AND ACHIEVEMENTS COULD DIFFER MATERIALLY FROM THOSE EXPRESSED OR
IMPLIED IN THESE FORWARD-LOOKING STATEMENTS. WE UNDERTAKE NO OBLIGATION TO
PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS, WHETHER FROM NEW
INFORMATION, FUTURE EVENTS OR OTHERWISE.

ITEM 1. DESCRIPTION OF BUSINESS

THE COMPANY

BUSINESS OF REGISTRANT

REPRO-MED Systems, Inc. ("REPRO-MED", or "RMS Medical Systems" or the
"Company"), was incorporated in the State of New York in March of 1980. The
Company designs, manufactures and markets proprietary medical devices primarily
for emergency medical applications and ambulatory infusion therapy. These
products are regulated by the FDA. The Company's development and marketing focus
are primarily concentrated on the RES-Q-VAC(R) and the FREEDOM60(R) products.

CORPORATE HISTORY

Repro-Med Systems, Inc. was incorporated under the laws of the State of New York
in March 1980. The corporate offices are located at 24 Carpenter Road, Chester,
New York 10918. The telephone number is 845-469-2042, fax is 845-469-5518 and
the Internet site is www.rmsmedicalproducts.com

PRODUCTS

FREEDOM60(R) SYRINGE INFUSION SYSTEM

The FREEDOM60 uses an innovative "engine" to create a constant pressure drive
system which we believe results in substantially greater safety, reliability,
and an overall higher quality infusion than other devices on the market -- all
at a lower cost. The basic drive mechanism used in the FREEDOM60 represents the
first of a line of products, which we intend to develop to broaden the product
applications and appeal.

FREEDOM60(R) uses rate-controlled tubing with standard slide clamp and luer-lock
connector on the patient end. Our patented luer disc connector insures
that only the Company's FREEDOM60(R) tubing sets will function with the pump.
Non-conforming tubing sets, without the patented disc connector, are ejected
from the pump to prevent the danger of an overdose or runaway pump from injuring
the patient. Repro-Med Systems' objective is to build a product franchise with
FREEDOM60(R) and the sale of patented disposable tubing sets.

Proprietary technology employed in the FREEDOM60 uses constant pressure to
administer drugs. FREEDOM60 avoids an important problem faced by electronic
pumps currently on the market which employ constant flow mechanisms that result
in potentially dangerous, high pressures placed on indwelling catheters or

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under the skin. In order to protect the patients, these pumps must contain an
overpressure sensor to shut the pump off when a potentially threatening pressure
is detected. Some of these electronic pumps will generate extremely high
pressures exceeding 70psi before the over pressure system will activate. Also
with these systems, the alarm can be falsely triggered, and the administration
halted until a health professional can verify that the infusion is in fact safe
and the pump may be reactivated. In either case, the patient is at risk from
damaging pressures or not receiving the medication required. .

Other unsafe conditions of conventional equipment include runaway
administrations; overdose due to programming errors or pump failure, and over
pressure resulting in burst blood vessels or failed internal access devices. The
expanded use of the FREEDOM60 demonstrates that the FREEDOM60 eliminates these
potential outcomes and insures a safe, constant, controlled infusion. Electronic
devices will increase infusion pressure while attempting to continue an infusion
at the programmed rate, while the FREEDOM60's design maintains a safe constant
pressure and thereby automatically reduces the flow rate accordingly if any
problems of administration occur.

A recent enhancement to the FREEDOM60 includes the Flow Monitor version or the
FREEDOM60-FM. The FREEDOM60-FM contains a microprocessor controlled occlusion
alarm which alerts the user of a blocked flow or, end of infusion. This product
is directed at nursing homes, hospitals, and pediatric ambulatory applications
where alarms are generally required for nursing acceptance.

The FREEDOM60(R) provides a high-quality delivery to the patient at costs
similar to a gravity drip system and is targeted for the home health care
industry, patient emergency transportation, and for any time a safe, consistent,
and low-cost infusion is required.

We have surmised and have recently confirmed anecdotally that the Freedom60
system because of its constant safe pressure design is the ideal technology to
infuse this medication regardless of cost. IgG is quite viscous, and the
Freedom60 will adjust automatically to patient tissue saturation, preventing
complications at the administration sites which include pain, swelling, redness
and possible tissue damage. Competitive electronic devices, which are also used
for this indication, generally deliver higher and quite possibly harmful
pressures, and will reach occlusion pressures, which will frequently cause the
electronic pumps to shut down prior to completing the drug delivery.

FREEDOM60 MARKETING APPLICATIONS

The primary market for the FREEDOM60 is the home care patient. For home care,
the FREEDOM60 is ideal because it is completely portable, lightweight and
easy-to-use. The mechanical pump acts on a 60cc syringe and is cost effective
and maintenance free. It requires no electric, no batteries and no cumbersome IV
pole. For the infusion professional, FREEDOM60 delivers precise infusion rates
and uniform flow profiles providing consistent transfer of medication. A Form
510k Premarket Notification for the design of the FREEDOM60 as a Class II device
was approved by the FDA in May 1994.

The latest application in home care for the Freedom60 is in the treatment of
Primary Immune Deficiency using a subcutaneous administration of immune globulin
better known as SCIG therapy. . This disease may affect some 500,000 (ref: IDF
Foundation as many as 1/500) people in the USA and is reportedly under
diagnosed. It is believed that the world-wide market may ultimately be larger
than currently estimated. Previously IgG was solely administered using a
conventional intra-venous system, however; the subcutaneous route of
administration has seen increased usage over the past year with the introduction
of an FDA approved IgG for this application. This method has provided patients
with vastly improved quality of life with much fewer unpleasant side effects
over the traditional intravenous route. The FREEDOM60(R) is generally an ideal
system for this administration since the patient is able to self-medicate at
home. The pump is easily configured for this application, and we believe the
FREEDOM60(R) is the best performing pump system available at any price, but
happens to be the lowest cost infusion system on the market. Due to its safe,
limited and controlled pressure mechanism, the Freedom60 adjusts automatically
to the patient's needs providing a reliable and comfortable administration.. We
continue to make an extensive effort to market our Freedom60 Syringe Infusion
System for SCIG therapy and have participated in several educational primers for
nurses as well as conducted web based training sessions. We are experiencing
interest in export markets and have also begun training a distributor in
Scandinavia to introduce the Freedom60 into those markets.

Additional applications for the FREEDOM60(R) include pain control,
chemotherapeutics and the infusion of specialized drugs such as the widely used
and somewhat difficult to administer vancomycin. We have found a following among
providers of the FREEDOM60(R) for use in treating thalissemia with the drug
desferal, and in Europe found it is being used for pain control, specifically
post-operative epidural pain administration and chemotherapy.

The home infusion therapy market is comprised of approximately 4,500 sites of
service, including local and national organizations, hospital-affiliated
organizations, and national home infusion organizations, and generates
approximately $4.5 Billion in revenue annually (Ref: www.nhianet.org). With
insurance reimbursement in a severe decline, there is a tremendous need for a
low-cost, effective alternative to electronic and expensive disposable IV
administration devices for the home care and nursing home market.The latest
application in home care for the Freedom60 is in the treatment of Primary Immune
Deficiency using a subcutaneous administration of immune globulin better known
as SCIG therapy. . This disease may affect some 500,000 (ref: IDF Foundation as
many as 1/500) people in the USA and is reportedly under diagnosed. It is
believed that the world-wide market may ultimately be larger than currently
estimated. Previously IgG was solely administered using a conventional
intra-venous system, however; the subcutaneous route of administration has seen
increased usage over the past year with the introduction of an FDA approved IgG
for this application. This method has provided patients with vastly improved
quality of life with much fewer unpleasant side effects over the traditional
intravenous route. The FREEDOM60(R) is generally an ideal system for this
administration since the patient is able to self-medicate at home. The pump is
easily configured for this application, and we believe the FREEDOM60(R) is the
best performing pump system available at any price, but happens to be the lowest
cost infusion system on the market. Due to its safe, limited and controlled
pressure mechanism, the Freedom60 adjusts automatically to the patient's needs
providing a reliable and comfortable administration.. We continue to make an
extensive effort to market our Freedom60 Syringe Infusion System for SCIG
therapy and have participated in several educational primers for nurses as well
as conducted web based training sessions. We are experiencing interest in export
markets and have also begun training a distributor in Scandinavia to introduce
the Freedom60 into those markets.


Page 4 of 23


Additional applications for the FREEDOM60(R) include pain control,
chemotherapeutics and the infusion of specialized drugs such as the widely used
and somewhat difficult to administer vancomycin. We have found a following among
providers of the FREEDOM60(R) for use in treating thalissemia with the drug
desferal, and in Europe found it is being used for pain control, specifically
post-operative epidural pain administration and chemotherapy.

The home infusion therapy market is comprised of approximately 4,500 sites of
service, including local and national organizations, hospital-affiliated
organizations, and national home infusion organizations, and generates
approximately 4,500 sites of service, including local and national
organizations, hospital-affiliated organizations, and national home infusion
organizations, and generates approximately $4.5 Billion in revenue annually
(Ref: www.nhianet.org). With insurance reimbursement in a severe decline, there
is a tremendous need for a low-cost, effective alternative to electronic and
expensive disposable IV administration devices for the home care and nursing
home market.


IMPORTANCE OF INSURANCE REIMBURSEMENT TO FREEDOM60 SALES

The ambulatory market has been rapidly changing due to reimbursement issues. The
denial of insurance reimbursement has drastically reduced the market share of
high-end competitors with electronic type delivery systems as well as high-cost
disposable non-electric devices, providing an opportunity for the FREEDOM60(R).
We challenged the previous Freedom60 reimbursement for Medicare by requested a
coding verification for the Freedom60 with the Centers for Medicare and Medicaid
services (CMS). The Freedom60 was reclassified by CMS on May 21, 2007 for use
under code E0779 which increases the reimbursement for the Freedom60 for all
billable syringe pump applications approved by Medicare. In June 2007 Medicare
issued a letter of clarification stating in part:

"The Freedom60 Syringe Infusion Pump is the only allowable pump to be billed
with the Subcutaneous Immune Globulin (SCIG). The code for this pump for dates
of service 1/1/00 - 5/16/07 is E0780. For dates of service on or after 5/17/07
the correct code is E0779 per SADMERC. The items being billed must be supported
by corresponding documentation. All other pumps or modifiers will result in a
denial".

At this time we believe we are the only Medicare approved device for SCIG.

ECONOMIC BENEFITS OF FREEDOM60(R) PUMP AND DISPOSABLE SALES

In the past we marketed the pump priced at a discount to promote sales of tubing
sets. We now market pumps at fair market value. Originally when the Freedom60
was introduced, we had envisioned the revenues being primarily derived from the
tubing set sales due to the market we were penetrating and the medical practices
of the time. In the current market we have shifted focus from the generic market
to a specialty market, and tubing set usage for all markets have been revised
due to cost considerations. We have adjusted to a new economic model by
re-pricing the pump and the tubing sets accordingly.

We have sold approximately 7,000 pumps since March 2000 and approximately 1,638
pumps during the past fiscal year. Most of our current sales are made directly
to health care providers, although we maintain distributors in both the domestic
and foreign markets. Although it is impossible to determine exactly how many
pumps are in operation at any given time, we estimate that, after allowing for
lost pumps and those no longer in use by the purchaser, there are approximately
4,200 FREEDOM60(R) pumps currently in operation. The FREEDOM60(R) pump is
designed for a minimum use of 4,000 times which at our list price is amortized
at a low $.13 per use. The tubing sets currently have an average price of $4.25.
We estimate that each pump uses an average of four to six tubing sets per month.
If the pump is operated up to 4 times per day, the total uses per month would be
48, and thus the pump life expectancy is anticipated to be over six and a half
years depending upon the type of application. Tubing sets can be used from one
application to many administrations lasting a few days.


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COMPETITION FOR THE FREEDOM60(R)

FREEDOM60(R) competes in the United States infusion pump market based on price,
service and product performance. Most of the competitors have significantly
greater resources for research and development, manufacturing and marketing, and
as a result may be better prepared to compete for market share even in areas in
which FREEDOM60(R) products may be superior. The industry is subject to
technological changes and there can be no assurance that we will be able to
maintain any existing technological lead long enough to establish our products
and to sustain profitability.

RES-Q-VAC PORTABLE MEDICAL SUCTION

The RES-Q-VAC(R) Emergency Airway Suction System is a lightweight, portable,
hand-operated suction device that removes fluids from a patient's airway by
attaching the RES-Q-VAC(R) pump to various proprietary sterile and non-sterile
single-use catheters sized for adult and pediatric suctioning. The one-hand
operation makes it extremely effective and the product is generally found in
emergency vehicles, hospitals and wherever portable aspiration is a necessity,
including backup support for powered suction systems. The disposable features of
the RES-Q-VAC(R) reduce the risk of contaminating the health professional from
HIV or SARS when suctioning a patient or during post treatment cleanup. All of
the parts that connect to the pump are disposable.

We recently introduced a new updated version called RES-Q-VAC ULTRA which comes
with our FSP filter, new pediatric connectors, new graduated canister, new adult
catheters, and new convenient carry pouch. It is also available with a patent
pending, fully malleable, portable LED white light source which is attached to
the top of the canister system and provides illumination for the medical
professional during night time or low light conditions.

A critical component and advantage of the RES-Q-VAC(R) is the Full Stop
Protection(R), (FSP(R)) a recently patented filtering system that prevents both
leakage and over-flow of the aspirated fluids, even at full capacity, and traps
all air and fluid borne pathogens and potentially infectious materials within
the sealable container. This protects healthcare providers from potential
exposure to disease and contamination.

On April 29, 2003, the Centers for Disease Control (CDC) issued additional
guidelines for the control of SARS (Sudden Acute Respiratory Syndrome), which
requires all suction systems to have filtration equivalent to a HEPA filter to
prevent the spread of this disease. At the current time, we believe that the
RES-Q-VAC(R) with Full Stop Protection(R) is the only portable device to comply
with the CDC directives.

With the new connectors added to our pediatric catheters, which allow them to
connect directly to the adult canisters with FSP(R), enable pediatric suctioning
with the benefit of the Full Stop Protection(R) device as well as with sterile
catheters. Many infants are born with contagious diseases and the new system
eliminates this concern among paramedics during an emergency delivery.

A critical advantage of our RES-Q-VAC(R) airway suction system is versatility.
With the addition of Full Stop Protection(R), we created specific custom
RES-Q-VAC(R) kits for various vertical markets:

Emergency Medicine - we make several special kits for emergency use, which
contain all the catheters necessary to treat adults as well as infants or
children. These first responder kits are generally non-sterile. We also have
special attachments available for the advanced paramedic to treat patients who
are intubated.

Respiratory - in-home care, long term care, situations requiring frequent
suctioning such as cystic fibrosis patients, patients with swallowing disorders,
elderly, patients on ventilators and with tracheostomies all benefit from the
portability, cost and performance of the RES-Q-VAC(R). In hospitals, the
RES-Q-VAC(R) provides emergency back up due to power loss or breakdown of the
wall suction system.

Hospital Use - for crash carts, the emergency room, patients in isolation,
moving patients throughout the hospital (e.g., from ICU to Radiology) and backup
for respiratory, RES-Q-VAC(R) is available sterile with Full Stop Protection(R)
for the ultimate in performance and to meet all the OSHA regulations and CDC
guidelines

Page 6 of 23


for use in treating patients in isolation, and in any location. Hospitals are
required under the EMTALA regulations to provide emergency treatments to
patients anywhere in the primary facility and up to 250 yards away. The
RES-Q-VAC insures full compliance with these regulations and helps minimize
unfavorable outcomes and potential lawsuits there from. We provide special
hospital kits, which are fully stocked to meet all hospital applications for
both adult and pediatric.

Nursing homes, hospice, sub-acute - we provide special configurations for dining
areas, portable suctioning for outside events and travel. Chronic suction can be
accommodated with RES-Q-VAC(R), which can be left by the bedside for rapid use
during critical times.

Dental applications - we offer a version of the RES-Q-VAC(R), called
DENTAL-EVAC(R) which addresses the needs of oral surgeons for emergency back up
suction during a procedure. DENTAL-EVAC(R) is supplied with the dental suction
attachments such as saliva ejector and high volume evacuator.

Military Applications -Due to its light weight, portability, and rapid
deployment, we believe that the RES-Q-VAC(R) is ideal for any military
situation. In addition, exposure to chemical weapons of mass destruction such as
Sarin is best treated by rapid, aggressive, and repeated suctioning. We believe
that the RES-Q-VAC(R)'s compact size, powerful pump, and full protection of the
user from any contamination, gives us a competitive edge in this market.

We are planning a direct sales effort into the hospital market and continue our
effort into nursing homes working with a national distributor and by direct
sales to penetrate this market. Due to power outages, hurricanes such Katrina
and other disasters; there is interest for the RES-Q-VAC for these markets. In
the hospital, the RES-Q-VAC is used on crash carts, emergency room, patients in
isolation, for tracheotomy patients and to meet new hospital regulations such as
EMTALA. Hospitals also are cognizant of infectious disease control and we
continue to make them aware of our Full Stop Protection(R) filter, which
protects the users from any contamination from overflow and traps all pathogens
inside the suction container. This feature is also a requirement of the
Occupational Safety and Health Administration under OSHA 29CFR 1910.1030 -
Occupational Exposure to Blood borne Pathogens. The RES-Q-VAC(R) is the only
hand-held non-electric suction system with sterile catheters for infants, large
catheters for adults, and meets the intent of the OSHA requirements with the
Full Stop Protection(R). The Company has received a letter from OSHA confirming
that the Full Stop Protection(R) falls under the engineering controls of the
Blood borne Pathogen regulation and therefore would be required by any employer
of medical personnel to protect their employees from potentially infectious
materials. The Centers for disease control have issued Guidelines for medical
personnel for the treatment of patients with SARS, which include the
recommendation to employ suction devices containing HEPA type filtration on the
output to prevent the spread of this disease. We believe RES-Q-VAC(R) is the
only hand-held portable suction system, which meets this requirement.

RES-Q-VAC DISTRIBUTION

RES-Q-VAC(R) is sold domestically and internationally by emergency medical
device distributors. These distributors generally sell to the end user and
advertise these products in relevant publications and in their catalogs. We have
begun marketing the new system with a national master distributor and we are in
the process of introducing the new offering to the international market with a
major distributor in Italy.

OSHA AND CDC REQUIREMENTS

The Full Stop Protection(R) meets the requirement of the Occupational Safety and
Health Administration as described below. The Company has received a letter from
OSHA confirming that the RES-Q-VAC(R) with the Full Stop Protection(R) falls
under the engineering controls of the Blood borne Pathogen regulation and that
the Products use would fulfill the regulatory requirements.

OSHA 29CFR 1910.1030 - Occupational Exposure to Blood borne Pathogens requires
that employers of "...emergency medical technicians, paramedics, and other
emergency medical service providers; fire fighters, law enforcement personnel,
and correctional officers... must consider and implement devices that are
appropriate [to contain blood borne pathogens], commercially available and
effective." These first responders risk exposure to serious disease, and the
employers may risk OSHA violations and lawsuits if they fail to

Page 7 of 23


consider protective measures such as Repro-Med's Full Stop Protection(R) for
RES-Q-VAC(R). The Company has received a letter from OSHA indicating the
RES-Q-VAC(R) meets the intent of this regulation.

COMPETITION FOR THE RES-Q-VAC(R)

We believe that the RES-Q-VAC(R) is currently the performance leader for manual,
portable suction instruments. In the emergency market, the primary competition
is the V-Vac from Laerdal. The V-Vac is more difficult to use, cannot suction
infants, and cannot be used while wearing heavy gloves such as in chemical
warfare or in the extreme cold. Laerdal had more resources than Repro-Med
Systems and had begun marketing the V-Vac before RES-Q-VAC(R) entered the
market. Another competitor is Ambu, with the Res-Cue brand pump, a product
similar to our design, made in China. We believe that the product is not as well
made or as versatile, and may not be purchased by the military segment of the
market due to lines of supply concerns. With additional capital, we believe we
will continue to maintain and build market share and gain a significant portion
of the electric suction pump market. We believe that the addition of Full Stop
Protection(R) substantially separates the RES-Q-VAC(R) from competitive units,
which tend to leak fluid when becoming full or could pass airborne pathogens
during use. There is a heightened concern from health care professionals
concerning exposure to disease and we believe the RES-Q-VAC(R) provides improved
protection for these users.

GYNECOLOGICAL INSTRUMENTS

We purchased the Gyneco product line in 1986. Products included the Masterson
Endometrial Biopsy Kit for in-office biopsy sampling procedures and the Thermal
Cautery System used for tubal ligation procedures.

Masterson Endometrial Biopsy Kit is a self-contained unit that offers a quick
and easy procedure for in-office tissue sampling. The powerful vacuum pump is
easily operated with one hand. The pump is supplied with sterile disposable
curettes and specimen containers presented in a kit.

The Thermal Cautery System is designed to provide a safe, reliable and effective
method of female sterilization. The unit is small, compact and portable. A
rechargeable battery supplies power. The unit uses disposable components that
include the cautery hook assembly, cannula and trocar stylette.

CONTRACT MANUFACTURING

Historically, we have used OEM profits to partially fund internal product
development that has resulted in RES-Q-VAC(R) and FREEDOM60(R). In the past OEM
sales have been as high as 70% of sales (1996). As the company transitioned from
OEM sales to our own higher margin proprietary sales, the OEM component has
decreased substantially. In 2008 and 2007, contract manufacturing declined in
sales from 9.90% in 2007 to 5.35% of sales, in year ended 2008. The Company has
transitioned from these contracts to building and selling its own proprietary
products due to the much-improved margins associated with directly marketed
devices.

We are also in various stages of development of other additional proprietary
medical devices. Thus, we have products currently on the market, new products in
development to be marketed and long range products to support and enhance future
growth. Research and Development efforts have been curtailed as we directed most
of our resources to marketing and sales of our existing products.

SALES AND DISTRIBUTION

Freedom60 systems are sold through both direct sales efforts concentrated on
large national accounts and a network of medical device distributors.
Gynecological instruments are sold from the corporate offices primarily through
repeat business. Distribution channels for the products are those generally
common to their respective markets. In recent years our emergency medical
products are sold through a wide network of domestic and international
distributors in 31 countries.

Over the past year, we have continued to upgrade our EMS RES-Q-VAC(R)
distribution channels by selecting key distributors to work with as master
distribution outlets. The domestic emergency medical market has softened
somewhat due to a decrease in Federal reimbursement to the states and cities for
firefighters, police and emergency services. We have concluded that we can have
more effective market penetration with major

Page 8 of 23


master distributors who are able to better support our products.

We already have master distributors in United Kingdom, Norway, Sweden, Denmark,
Iceland, Finland, Estonia, Latvia, and Lithuania. We believe that one main
distributor will be more predisposed to advertising, promotion, and building the
product franchise in each market. In return, we will be able work more closely
with the distributors and be able to hold them accountable for the sales in each
region.

Additional new markets we have recently sold include schools and hospital-based
respiratory centers. We are also planning mailings into those markets. In the
school market, we have been informed that any school, with a swimming pool is
normally required to have suction equipment available. In addition, many schools
are installing automatic electronic defibrillators (AED's) for which suction is
mandatory in more than 50% of uses for this device.

We continue to support both of our main product lines at both National and
International trade shows. In November, we exhibited at Medica in Dusseldorf,
Germany; the world's largest medical products trade show. In March 2008 we
exhibited at the EMS Today Conference & Exposition in Baltimore, NHIA show in
Phoenix, AZ, AAAAI in Philadelphia as well as attended a CSL Primer. Currently
we are scheduled to attend the October EMS show. We have also have reserved our
space for the Medica 2008 trade show scheduled for November 2008.

The table below presents the product mix for the last two fiscal years.

2008 2007
% OF SALES % OF SALES
---------- ----------
Infusion Therapy 55.33% 39.33%
Medical Suction 35.16% 44.99%
Gynecological Instruments 3.14% 5.06%
Contract Manufacturing 5.35% 9.90%
Other .08% .72%

MANUFACTURING AND EMPLOYEES

The Company's employees perform at the Company's facility electromechanical
assembly, calibration, pre- and post-assembly quality control inspection and
testing, and final packaging for all products. Products are assembled using
molded plastic parts acquired from several U.S. vendors and one supplier located
in Taipei, Taiwan. The availability of parts has not been a problem. The cost
and time required to fabricate molds to manufacture parts can slow the
development of new products and might temporarily limit supply if we determine
it is advisable to seek alternate sources of supply for existing products. Our
policy has been to have multiple vendors as suppliers, where practicable, that
also offer mold-building capabilities as a service.

As of February 29, 2008, we employed 22 employees, 14 were assigned to
manufacturing operations, 4 to sales and customer support, 1 to administrative
functions, 1 to quality assurance functions, 1 Vice President of Operations
(responsible for manufacturing, warehouse and procurement operations), and 1
Executive Officer. The Company is dependent on the services of Andrew Sealfon
who serves as President, head of Research and Development and is also
instrumental in sales, marketing and finance. The Company does not have
insurance on the life of Andrew Sealfon and may not be able to replace him if
the need arose.

REGULATIONS GOVERNING THE MANUFACTURING OPERATIONS

The Food, Drug and Cosmetic Act governs' the development and manufacturing of
all medical products. The Act requires us to register the facility, list
devices, file notice of intent to market new products, track the locations of
certain products and to report any incidents of death or serious injury relating
to the products with the FDA. We are subject to civil and criminal penalties
and/or recall seizure or injunctions if we fail to comply with regulations of
the FDA.

Page 9 of 23


Our last filing of Form 510(k) with the FDA was for the Restore (R), approved in
1998.

We are required to comply with federal, state and local environmental laws;
however, there is no significant effect of compliance on capital expenditures,
earnings or competitive position. We do not use significant amounts of hazardous
materials in the assembly of these products.

Periodically we are subject to inspections and audits by FDA inspectors. During
the year ended February 28, 2006, we were subject to a routine QSR review by the
FDA. The FDA inspection did not find any violations and no DD483 was issued. As
a result of FDA audits, the Company is always subject to further audits and
could be impacted by adverse findings.

PATENTS AND TRADEMARKS

We have filed and received U.S. protection for many of our products and in some
cases, where it was no longer deemed economically beneficial; we have allowed
certain patent protections to lapse. The RES-Q-VAC(R), an emergency medical
product, is susceptible in the international market to imitation. In 2002 a
competitor had introduced a competitive product to the RES-Q-VAC(R) into the
market. We responded with the introduction of new innovative features for the
RES-Q-VAC(R) that enhanced the product and placed well above the competition in
safety.

On June 10, 2003, we received a patent #6,575,946 for our new Full Stop
Protection(R). This addition to the RES-Q-VAC(R) system prevents any fluids from
exiting the system. It also serves to trap airborne and fluid pathogens. We
believe that the addition of the flow block design substantially separates the
RES-Q-VAC(R) from competitive units, which tend to leak fluid when becoming full
or could pass airborne pathogens during use. There is a heightened concern from
health care professionals concerning exposure to disease and the new
RES-Q-VAC(R) provides improved protection for these users.

OSHA 29CFR 1910.1030 - Occupational Exposure to Blood borne Pathogens requires
that employers of "...emergency medical technicians, paramedics, and other
emergency medical service providers; fire fighters, law enforcement personnel,
and correctional officers...must consider and implement devices that are
appropriate [to contain blood borne pathogens], commercially available and
effective." These first responders risk exposure to serious disease, and the
employers may risk OSHA violations and lawsuits if they fail to consider
protective measures such as Repro-Med's Full Stop Protection(R) for RES-Q-VAC(R)
The Company has received a letter from OSHA indicating the RES-Q-VAC(R) meets
the intent of this regulation.

On April 29, 2003, the Centers for Disease Control issued additional guidelines
for the control of SARS (Sudden Acute Respiratory Syndrome), which requires all
suction systems to have filtration equivalent to a HEPA filter to prevent the
spread of this disease. At the current time, we believe that the RES-Q-VAC(R)
with Full Stop Protection(R) is the only portable device to comply with the CDC
directives.

On August 9, 2005, a patent was issued for a new mechanical variable flow rate
controller. Used with our FREEDOM60(R) Syringe Infusion System, this device
enables the user to select from a number of flow rates while using just one set
of tubing, allowing flow rates to be changed during the course of a single
infusion to better meet the needs of the patient. The device may be applied to
other infusion systems as well. We have not yet determined a production or
marketing strategy for this product.

We also hold patent #5,336,189 for a "Combination IV Pump & Disposable Syringe"
which confers a unique syringe to IV pump interface design. This patent is for
the FREEDOM60(R) Infusion System, an infusion therapy product. The cost of
filing and maintaining applications has deterred pursuing international patents.

The patent position of small companies is highly uncertain and involves complex
legal and factual questions. Consequently, there can be no assurance that patent
applications relating to products or technology will result in patents being
granted or that, if issued, the patents will afford protection against
competitors with similar technology. Furthermore, some patent licenses held may
be terminated upon the occurrence of certain events or become non-exclusive
after a specified period. There can be no assurance that we will have the
financial resources necessary to enforce any patent rights we may hold.

Page 10 of 23


Our product names are registered trademarks. There can be no assurance that
patents or trademarks will provide competitive advantages for the products
covered or that they will not be challenged or circumvented by competitors.

In the third quarter of the 2005 fiscal year, it was brought to management's
attention that one of the Company's German distributors had commenced selling a
copy, manufactured in China, of our basic RES-Q-VAC(R), using the RES-Q-VAC(R)
name. We are pleased to announce that the distributor eventually agreed to
discontinue use of the RES-Q-VAC(R) name, destroy its existing inventory of the
copied pumps and to refrain from selling the copied pumps in the future.

To strengthen our position in the future, we applied for, and were granted,
trademark status for the RES-Q-VAC(R) name in Germany. An application to
register the name throughout the entire European Union has been filed and is
undergoing review.

We have filed a provisional patent application for our new LED RES-Q-VAC system
on April 23, 2007. We are also filing a provisional patent for a newly designed
needle set to be used with the Freedom60.

ITEM 2. DESCRIPTION OF PROPERTY

We currently rent a masonry and steel frame building erected on 3.27 acres of
land located at 24 Carpenter Road, Chester, New York 10918. This facility is our
only location and is used as our headquarters and manufacturing operations.
Currently we have a 20-year lease and are responsible for all repairs,
maintenance and upkeep of the space occupied. The terms of the lease call for
monthly lease payments of $10,000 per month for the first 10 years of the lease
term and increasing to $11,042 thereafter, we also contribute payments of 65% of
the building's annual property taxes, amounting to $63,304 for the year ended
February 29, 2008.

ITEM 3. LEGAL PROCEEDINGS

We are, from time to time, subject to claims and suits arising in the ordinary
course of business, including claims for damages for personal injuries, breach
of management contracts and employment related claims.

One of our sales employees who reigned in 2006 has undertaken a lawsuit which he
claims is for commissions earned. Based on the actual sales performance during
that time period, we believed this lawsuit was without merit. We agreed to
mediation to settle this matter. As a result of this mediation the company
agreed to settle with this former employee to avoid additional legal expenses.
This settlement is in the amount of $30,000 payable over 20 months and has been
recorded in our financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fiscal year
ended February 29, 2008.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS

We are authorized to issue 50,000,000 shares of Common Stock, $.01 par value. As
of February 29, 2008, 34,829,286 shares were issued and outstanding and there
were approximately 1,076 holders of record.

Our Common Stock is traded in the over-the-counter market and is quoted through
the National Daily Quotation Service. The following table sets forth the high
and low closing bid quotations for the Common Stock as reported by Commodity
Systems, Inc. for the periods indicated. These quotations do not include retail
mark-up, markdown or commission and may not represent actual transactions.

Page 11 of 23


HIGH LOW
------ ------
2008 QUARTER ENDED
February 29, 2008 $ 0.19 $ 0.07
November 30, 2007 $ 0.23 $ 0.09
August 31, 2007 $ 0.14 $ 0.05
May 31, 2007 $ 0.08 $ 0.04

2007 QUARTER ENDED
February 28, 2007 $ 0.18 $ 0.09
November 30, 2006 $ 0.25 $ 0.08
August 31, 2006 $ 0.15 $ 0.07
May 31, 2006 $ 0.23 $ 0.09

On February 2, 1993 we issued 10,000 shares of 8% Cumulative Convertible
Preferred Stock in a private placement for $100,000. We are obligated to pay
semi-annual dividend payments of $4,000 until conversion by shareholders or
redemption by us. The 10,000 shares of Cumulative Convertible Preferred Stock
are convertible to 238,095 shares of Repro-Med common stock at $0.40 per share.
The 10,000 shares of Cumulative Convertible Preferred Stock are convertible
based on the following formula: multiply the number of shares of Preferred Stock
to be converted by $10.00, divide the result by the conversion price of $0.20
per share (or by the conversion price as last adjusted and in effect at the date
any shares are surrendered for conversion). The Conversion Price shall increase
by $.02 for each year that the Preferred Stock is outstanding. The current
conversion price is $0.50

We have not declared or paid any cash dividends on our Common Stock and do not
anticipate that any dividends will be paid in the foreseeable future. During the
fiscal year ended February 29, 2008, dividends on the Convertible Preferred
Stock were accrued in the amount of $8,000 on the balance sheet.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

This Annual Report on Form 10-KSB contains certain "forward-looking" statements
(as such term is defined in the Private Securities Litigation Reform Act of
1995) and information relating to us that are based on the beliefs of the
management, as well as assumptions made by and information currently available.
Our actual results may vary materially from the forward-looking statements made
in this report due to important factors such as, recent operating losses,
uncertainties associated with future operating results, unpredictability related
to Food and Drug Administration regulations, introduction of competitive
products, limited liquidity, reimbursement related risks, government regulation
of the home health care industry, success of the research and development
effort, expanding the market of FREEDOM60(R), availability of sufficient capital
to continue operations and dependence on key personnel. When used in this
report, the words "estimate," "project," "believe," "anticipate," "intend,"
"expect" and similar expressions are intended to identify forward-looking
statements. Such statements reflect current views with respect to future events
based on currently available information and are subject to risks and
uncertainties that could cause actual results to differ materially from those
contemplated in such forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date hereof. These statements involve risks and uncertainties with respect
to the ability to raise capital to develop and market new products, acceptance
in the market place of new and existing products, ability to penetrate new
markets, our success in enforcing and obtaining patents, obtaining required
Government approvals and attracting and maintaining key personnel that could
cause the actual results to differ materially. Repro-Med does not undertake any
obligation to release publicly any revision to these forward-looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.

CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
short-term investments with an original maturity of three months or less to be
cash equivalents.

INVENTORY
Inventories consist of purchased parts and assembled units and are
stated at the lower of average cost or market value. Average cost is calculated
using a rolling average based upon new purchases and quantities.

USE OF ESTIMATES IN THE FINANCIAL STATEMENTS
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles ("GAAP") requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates. Important estimates include but are not limited to, asset lives,
valuation allowances, inventory and accruals.

ALLOWANCE FOR DOUBTFUL ACCOUNTS
In determining the allowance for doubtful accounts the Company analyzes the
aging of accounts receivable, historical bad debts, customer creditworthiness
and current economic trends.

REVENUE RECOGNITION
In accordance with Securities and Exchange Commission's (SEC's), Staff
Accounting Bulletin No. 104, sales of manufactured products are recorded when
shipment occurs and title passes to a customer, persuasive evidence of an
arrangement exists with the customer, the sales price is fixed and determinable
and the collectibility of the sales price is reasonably assured. The Company's
revenue stream is derived from the sale of an assembled product. Other service
revenues are recorded as the service is performed. Shipping and handling costs
are generally billed to customers and are included in sales. The Company does
not accept return of goods shipped unless it is a Company error. The Company
does not grant sales allowances other than an occasional 1% discount for
payments made within 30 days. The only credits provided to customers are for
defective merchandise and sales incentives are occasional advertising in
customer catalogues.

STOCK-BASED COMPENSATION
The Company accounts for employee stock based compensation and stock issued for
services using the fair value method. In accordance with SFAS No. 123R, the
measurement date of shares issued for services is the date when the
counterparty's performance is complete.

The Company accounts for stock issued for services using the fair value method.
In accordance with the Emerging Issues Task Force ("EIFT") 96-18, the
measurement date of shares issued for service is the date when the
counterparty's performance is complete.

RESULTS OF OPERATIONS

2008 vs. 2007

Our net operating profit ending February 29, 2008 is $193,509 as compared to
last year which had a loss of $22,136, an overall increase of $215,645. The Net
Loss for the year ending February 29, 2008 was $2,499 which represents an
increase of $252,222 as compared to last year's net loss of $254,721. Our
operating profit

Page 12 of 23


was reduced in part due to stock based compensation of $129,968, which included
a stock grant to a member of our board of directors for $35,000 who has
personally helped secure a loan to allow us to payoff previous financing from a
group promissory note holders as of February 21, 2008, as compared with last
years stock based compensation of $174,710. During the current year we
refinanced our promissory loan which included stock based compensation with a
conventional loan at a lower interest rate.

Our total sales increase by $613,099 or 35.3% for the year ended February 29,
2008 to $ 2,347,678 from $1,734,579 in 2007. This increase was led by surge in
our Freedom60 product line which increased year over year by 95.2% to $1,312,235
from $672,252. The increase is due to additional sales for use with immune
globulin, antibiotics, and to a lesser extent, a price increase which was put
into effect towards the last month of this year. We have passed along increases
in the cost of our raw materials as they have occurred, but there can be no
assurance that we may be able to continue to pass along additional future
increases. The Freedom60 is gaining more traction in the market as word of our
performance and costs are communicated throughout the industry along with the
clarification by Medicare naming the Freedom60 as the only reimbursable pump for
Subcutaneous Immune Globulin. . These increases are expected to continue into
fiscal year 2009.

Although we committed most of our resources on the Freedom60, our RES-Q-VAC(R)
sales also increased by 6.7% to $ 829,329 from $777,226 in part due to the
introduction of a new configuration called UTRA and improved sales
internationally. We intend to continue to introduce the RES-Q-VAC to the
hospital markets, and further our emergency medical sales with the new RES-Q-VAC
ULTRA products. We also have begun a new limited marketing initiative for
RES-Q-VAC in the nursing home market, dental sales, sales to schools and
prisons, and sales to the government and military.

We continue to focus our sales and marketing efforts mainly on our two core
product lines, the FREEDOM60(R) Syringe Infusion System and the RES Q VAC(R)
Medical Suction System. This includes mail marketing, telemarketing, trade
shows, and increased on site sales calls.

Combined sales of all of our non-core product lines declined by 16.7% due partly
to the infrequent ordering patterns of some OEM customers. We do not actively
seek OEM business but will accept these contracts when appropriate.

Cost of goods sold increased to $899,978 for year ended February 29, 2008 as
compared to $663,507 for the previous year. Gross profit margin for the year
ended February 29, 2008 was about the same: 61.7%, as compared with 61.8% for
the previous year. Selling, General & Administrative Expenses (SG&A) increased
by $136,645 year over year from $993,415 to $1,130,060 due to additional
marketing expenses associated with our increase in sales, and a legal settlement
of $30,000 to a former employee. Stock based compensation decreased this year to
$129,968 from $174,710 in the year ended 2007 as noted above.

Cash interest expense Increased by $8,852 to $70,188 in 2008 from $61,336 in
2007.

We continue to seek funds to increase marketing and sales of both key products
and to design a new improved RES-Q-VAC(R) suction device to expand the market
substantially, although there is no assurance that such funding can be obtained,
or obtained at terms acceptable to us, or that if funded, the markets would
develop as expected. We are also beginning to promote the RES-Q-VAC(R) in the
home care market, for which the RES-Q-VAC(R) is ideally suited due to its low
cost, portability and convenience. We have begun marketing a dental version
called DENTAL-EVAC(R) and have added one distributor. We have signed an
agreement with a company to market RES-Q-VAC(R) and certain other of our
products in the veterinary markets.

LIQUIDITY AND CAPITAL RESOURCES

Our operating profit for the year ended February 29,2008 was $193,509. Our Net
loss was $2,499 which was included non-cash expenses for stock-based
compensation of $160,306, employee stock options of $30,338 and depreciation and
amortization of $64,189. For the year ended February 29, 2008 Net Cash provided
from Operations was $117,614 as compared with using ( $85,591) for the prior
year. This change of $203,205 was due primarily to increased sales of $613,099.
At the end of fiscal year 2008, the net working capital was ($50,754) due to the

Page 13 of 23


reclassification to a current liability of the promissory notes which required
stock based compensation to a conventional loan of $400,000.

In January of 2008 we were notified by The Trade Adjustment Assistance Program
of the Trade Department that our application for a grant of $150,000 was
approved for use to assist us with marketing, ISO and regulatory affairs, and
new product development. The grant matches the company on a 50-50 basis thereby
reducing our costs for these new programs in half. The Trade Adjustment
Assistance Program is a United States Government program to help manufacturing
firms adjust to foreign business competition. The program is authorized by the
Trade Act of 1974 and is administered by the U. S. Department of Commerce. The
program operates through Trade Adjustment Assistance Centers located across the
United States. The New York State area is served by the New York State Trade
Adjustment Assistance Center (NYS TAAC). The NYS TAAC is affiliated with the
Research Foundation of the State University of New York at Binghamton. Minimal
funds were used in the previous year however we have initiated these programs
now and intend to complete them by the end of our next fiscal year.

On October 11, 2006, in order to satisfy a line of credit and add additional
liquidity to the company one of the directors advanced the company $325,000.
This note is included in the long-term debt of the company. Together with simple
interest of 6% annum with interest due on April 30, 2009. In addition Warrants
were issued to acquire 150,000 shares of restricted common stock exercisable at
$.10 per share, the director exorcised 600,000 stock options at $.06 per share,
the proceeds were used to pay down the loan. On February 21, 2008 these warrants
were exercised and the proceeds from this issuance were used to pay down the
advance.

In raising capital beginning in February 2004, the Company issued promissory
notes in the total amount of $432,000. These five-year promissory notes pay 2%
over prime plus four shares of common stock per year for every year the loan is
in place. The loans were fully satisfied by the end of February 2008 and
replaced with a straight loan secured with an interest rate set at prime on
February 21st, 2008 by a member of our board of directors.

Accounts Receivable, net of reserves, increased at February 29, 2008 to $297,206
as compared to $214,446 for the previous year as a result of our increased
sales. Domestic sales are made primarily on net 30-day payment terms. A variety
of terms continue to be employed for export sales including cash prepayments and
net 45 days to allow for increased delays due to transportation and
communications. As of February 29,2008, 88% of Accounts Receivable were current
or less than 30 days past due, 6% were at 30-60 days and 5% were over 61 days.

Prepaid expenses and other receivables Increased $34,082 from $10,310 to $44,392
as a result of advance payment for tradeshows that will be attended in March and
April of 2008 and advance payments of business and health insurance premiums

Expenditures for capital equipment in 2008 were $38,558 and patent costs were
$7,681 on filings for new products that initiated during the year.

Approximately ten years ago we agreed to rework approximately 13,000 units of a
product for an OEM customer order, which was to be completed in prior years. The
total additional material and labor cost to complete this rework approximates
$612,000 of which we have inventory for the same amount.

We currently rent a masonry and steel frame building erected on 3.27 acres of
land located at 24 Carpenter Road, Chester, New York 10918. This facility is our
only location and is used as our headquarters and manufacturing operations.
Currently we have a 20-year lease and are responsible for all repairs,
maintenance and upkeep of the space occupied. The terms of the lease call for
monthly lease payments of $10,000 per month for the first 10 years of the lease
term and increasing to $11,042 thereafter, we also contribute payments of 65% of
the building's annual property taxes, amounting to $63,304.19 for the year ended
February 29, 2008

We continue to seek funds to enhance our marketing efforts substantially and for
other corporate purposes, although there is no assurance that such funding can
be obtained, or obtained at terms acceptable to us. Substantial resources have
been directed into the marketing efforts during the past year which produced an
increase in new RES-Q-VAC(R) customers and new FREEDOM60(R) users. We are aware
of the delay between

Page 14 of 23


marketing and the resulting sales in our medical markets. Furthermore, new
customers tend to purchase smaller initial quantities, and since a major portion
of our income stream is derived from the use of disposable supplies, it may take
several months for the full impact of new customers to be reflected in our sales
performance.

We believe we are continuing to enhance a new customer base for our products. We
have experienced an increase in sales and cash flow during this past year. With
these increases and the capital we currently have, we will continue to meet or
exceed the company's financial goals. If the sales continue to increase at the
current rate, which we feel confident of but cannot assure, we believe we will
have sufficient resources to meet our financial obligations for the next twelve
months from our cash flow alone.

SUBSEQUENT EVENTS

None

ITEM 7. FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm F 1

Balance Sheets F 2

Statements of Operations F 4

Statements of Cash Flows F 5

Statement of Stockholders' (Deficit) F 6

Notes to Financial Statements F 7

Page 15 of 23


MEYLER & COMPANY, LLC
CERTIFIED PUBLIC ACCOUNTANTS
ONE ARIN PARK
1715 HIGHWAY 35
MIDDLETOWN, NJ 07748

Report of Independent Registered Public Accounting Firm

To the Board of Directors of
Repro-Med Systems, Inc.
Chester, NY

We have audited the accompanying balance sheets of Repro-Med Systems, Inc. as of
February 29, 2008 and February 28, 2007 and the related statements of
operations, stockholders deficit and cash flows for each of the years then
ended. Repro-Med Systems, Inc.'s management is responsible for these financial
statements. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Repro-Med Systems, Inc. as of
February 29, 2008 and February 28, 2007 and the results of its operations and
its cash flows for each of the years then ended, in conformity with accounting
principles generally accepted in the United States of America.

/s/ Meyler & Company, LLC

June 12, 2008
Middletown, NJ

F 1


REPRO-MED SYSTEMS, INC.
BALANCE SHEETS