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 28, 2003
-----------------

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
incorporation or organization) Identification No.)

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. [ ]

Based on the closing sales price of February 28, 2003, the aggregate
market value of the voting and nonvoting common equity held by non-affiliates of
the registrant was $636,870.

The number of issued outstanding of the registrant's common stock, $.01
par value was 23,504,000 at February 28, 2003 which includes 2,275,000 shares of
Treasury Stock.

Repro-Med Systems, Inc.

Table of Contents

PART I Page

Item 1. Business ..................................................3

Item 2. Description of Property ..................................10

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 .....................................17

Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures .....................33

PART III

Item 9. Directors, Executive Officers, Promoters and Control
Persons: Compliance With Section 16(a) of the
Exchange Act .............................................33

Item 10. Executive Compensation ...................................34

Item 11. Security Ownership of Certain Beneficial Owners
and Management ...........................................35

Item 12. Certain Relationships and Related Transactions ...........37

PART IV

Item 13. Exhibits and Reports on Form 8-K .........................38

SIGNATURES ...................................................................39

CERTIFICATIONS ...............................................................40

2
PART I

ITEM 1. BUSINESS

THE COMPANY

Repro-Med Systems, Inc. went public in 1982 (OTC - symbol REPR). We design and
manufacture medical devices directing resources to the global markets for
emergency medical products and infusion therapy. We maintain a presence in the
US markets for impotency treatments and gynecological instruments. These
products are regulated by the FDA.

Repro-Med Systems, Inc. was incorporated under the laws of the State of New
York, 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.repro-med.com

PRODUCTS

The primary growth strategy is to develop unique, proprietary medical devices.
These devices are intended to save money for the user and create a repetitive
demand for replacement of the disposable component - "razor - blade model". This
strategy led to our development of products for the ambulatory infusion systems
and emergency medical equipment markets. Historically, contract manufacturing
was a strong source of revenue, but the Company is transitioning away from this
market in order to concentrate on our own proprietary devices. Male infertility
and impotency treatments were the first markets entered in the early 1980's. Our
presence in this market has decreased due to a shift in focus towards the
RES-Q-VAC and FREEDOM60. The Company is seeking outside funding to introduce
additional products into this market. Gyneco, the gynecological instrument
subsidiary, was acquired in 1986 and sales continue primarily through repeat
business.

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

2003 2002
% of Sales % of sales
---------- ----------
Infusion Therapy 16% 12%
Emergency Medical 70% 63%
Contract Manufacturing 3% 16%
Gynecological Instruments 11% 9%
Male Impotency Treatments Less than 1% < 1%

We have also been developing other new proprietary medical devices, which would
be viewed as state-of-the-art and as fixed asset devices. These products include
a device for female incontinence and a device that can be used to detect certain
cancers non-invasively using special imaging techniques. Thus, we have products
currently on the market, new short-term products about to be marketed, and long
range products to support and enhance future growth. Research and Development
efforts for our new products have been temporarily suspended for some and
continue at a reduced rate for others. The Company will focus more efforts on
the Research and Development front once funds become available through increased
funds or outside financing.

3
FREEDOM60 SYRINGE INFUSION SYSTEM

The FREEDOM60 Syringe Infusion Pump was designed for ambulatory infusions.
Ambulatory infusion pumps are most prevalent in the home care market. We are
also considering using the FREEDOM60 for pain control applications and
chemotherapy. The home infusion therapy market is comprised of 4,500 sites of
service, including local and national organizations, hospital-affiliated
organizations, and national home infusion organizations with 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 FREEDOM60 provides a high-quality delivery to the patient at costs similar
to gravity and is targeted for the home health care industry, patient emergency
transportation, and for any time a low-cost infusion is required.

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

During 2001, we developed a new version of the pump called the FREEDOM60-FM
containing an electronic flow monitor system (occlusion and end of infusion
alarm) which has opened excellent marketing avenues in nursing homes, hospitals
and pediatric ambulatory applications where alarms are generally required for
nursing acceptance. Nurses also appreciate being able to visualize the drug
volume by reading the scale on the syringe.

We signed a group purchasing agreement in December 1999 with Child Health
Corporation of America (CHCA) for the FREEDOM60 Syringe Infusion System. CHCA is
a cooperative and business alliance of 38 children's hospitals and home care
facilities. The agreement called for CHCA to assist us to market the FREEDOM60
to its members and ended December 2002. Currently eight of the hospitals
continue to actively use the system, and we will continue to pursue other
CHCA-affiliated hospitals as independent customers.

During August 2001, we began a trial of the FREEDOM60 at one location of a major
national home healthcare agency. We received our first order, as a result of the
successful trial, in September 2001 and have developed them into our largest
FREEDOM60 customer. We have leveraged our relationship and currently provide the
FREEDOM60 to 5 additional centers. As a direct result of our sales efforts at
the Medica Trade Show in Dusseldorf, Germany, the Company authorized an Italian
distributor to obtain the CE Mark to market the FREEDOM60 in Europe. This
distributor has secured the CE mark for sales into Europe of FREEDOM60 and has
begun initial sales of the product into Italy, France, Spain, Germany and
Greece. We are working with this distributor to introduce new additions to the
FREEDOM60 product line.

Repro-Med Systems' objective is to build a product franchise with FREEDOM60 and
the sale of patented disposable tubing sets. FREEDOM60 uses rate-controlled
tubing with standard slide clamp and luer-lock connector. The PATENTED SYRINGE
DISC CONNECTOR insures that only FREEDOM60 tubing sets sold by us will function
within the pump. Non-conforming tubing sets, without the patented disc
connector, are ejected from the pump and prevent an overdose or runaway pump
from injuring the patient.

4

THE MARKET FOR PUMPS & DISPOSABLES

The ambulatory market has been rapidly changing due to reimbursement issues.
Insurance reimbursement has been drastically reduced providing opportunity for
FREEDOM60. The market share of high-end electronic type delivery systems is on
the decline as well as high-cost disposable non-electric devices. Market
pressures have forced patients to go on low-cost gravity systems or IV push
where the drug is pushed into the vein directly from a syringe. This is a
low-cost option but has been associated with complications and considered by
many to be a high-risk procedure. Thus, the overall trend has been towards
syringe pumps due to the low-cost of disposables. FREEDOM60-FM addresses the
largest market segments with the lowest cost alarm syringe pump system.

The chart below summarizes the market trends of devices.

METHOD OF MARKET
ADMINISTRATION TREND
-------------- -----

Ambulatory Pump Flat/Declining
Gravity Infusion Increasing
Pole Mounted Pump Declining

Elastomeric Declining
Syringe Increasing
Implant Increasing
IV Push Increasing

ECONOMIC BENEFITS OF FREEDOM60 DISPOSABLE SALES

At the moment we estimate that there are approximately 2,350 FREEDOM60 pumps
currently in use. We sold approximately 740 pumps during the past fiscal year.
The FREEDOM60 pump is designed for a minimum use of 4,000 cycles which at our
list price is amortized at a low $.05 per use. The tubing sets currently have a
list price of $3.30. From past experience, we have noted that each pump is used
an average of 12 times per month. If the pump is operated up to 4 times per day,
the total use per month would be 48, and thus the pump life expectancy is
anticipated to be over six and a half years. This monthly rate amounts to annual
usage of 144 sets producing typical gross revenues to the distributor of $475
per pump. Installed bases for various levels of pumps produce the following
sales:

Pumps In Annual Sales
Market of Disposables
------ --------------

5000 $2,376,000
10000 $4,752,000
50000 $23,760,000
100000 $47,520,000

We have a combination of direct sales and sales through distributors.
Distributors typically receive discounts from list price depending upon
servicing and volumes of up to 35%.

5

COMPETITION FOR THE FREEDOM60

FREEDOM60 competes in the United States infusion pump market based on price,
service and product performance. Some 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 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.

EMERGENCY MEDICAL PRODUCTS

RES-Q-VAC products provide a complete emergency suction system for neonates,
children and adults for use in any location, as it is non-electric. RES-Q-VAC
removes fluids from a patient's airway. RES-Q-VAC consists of a hand-held,
portable suction pump that can be connected to various sized sterile or
non-sterile catheters. The one-hand operation makes it extremely effective
particularly in emergencies. The disposable features of the RES-Q-VAC reduce the
risk of contaminating the technician, for example, from HIV when suctioning a
patient or during post treatment cleanup. All the parts that connect to the pump
are disposable. RES-Q-VAC was introduced in 1990 and is now sold in thirty-one
countries. The product is generally found in emergency vehicles, hospitals and
as backup support for powered suction systems.

The RES-Q-VAC is currently the market leader for manual, portable suction
instruments. 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 extreme cold. Laerdal had more
resources than Repro-Med Systems and had begun marketing the V-Vac before
RES-Q-VAC entered the market. The RES-Q-VAC, however, has proven to be
significantly superior and dominates the market to date. Another competitor is
Ambu, with the Res-Cue brand pump, a product similar to RES-Q-VAC, made in
China. Management believes 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, management believes it will continue
to maintain and build market share with an improved RES-Q-VAC (discussed below)
and gain a significant portion of the electric suction pump market with the
introduction of the RES-Q-VAC Plus system currently under development.

On June 10, 2003, we received notice that a patent approval was issued for our
new FULL STOP PROTECTION. This upgrade to the RES-Q-VAC system prevents any
fluids from exiting the system. It also serves to trap airborne and fluid
pathogens. We believe that the addition of the full stop design substantially
separates the RES-Q-VAC from competitive units, which tend to leak fluid when
becoming full or could pass air born pathogens during use. There is a heightened
concern from health care professionals concerning exposure to disease and the
new RES-Q-VAC provides substantially improved protection for these users.

OSHA 29CFR 1910.1030 - Occupational Exposure to Bloodborne 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 bloodborne pathogens], commercially

6

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 for
RES-Q-VAC. The Company has received a letter from OSHA indicating the RES-Q-VAC
meets the intent of this regulation.

Recently (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 with FULL STOP PROTECTION is the only portable device to comply with
the CDC directives.

We are exploring additional markets for RES-Q-VAC which will include a special
version for use in dental offices, and a system for home care use. The RES-Q-VAC
is ideal for home care, especially patients on ventilators, tracheotomy
patients, or patients with swallowing disorders. The low cost, portability and
the fact it does not require electric power make the RES-Q-VAC an excellent
back-up system for these patents.

RES-Q-VAC is sold domestically and internationally by emergency medical device
distributors. These distributors generally advertise these products in their
catalogs.

IMPOTENCY TREATMENTS

We market the RESTORE Kit for the treatment of impotency. RESTORE uses vacuum
therapy to naturally induce blood flow to enable an erection. The kit includes
Pro-Long constriction rings that make it possible to trap the blood and maintain
the erection.

The US market for impotency treatments is estimated at 30 million men. Pfizer
reports that Viagra will not work for 30%-40% of impotent men. Consequently, the
potential market for the RESTORE Kit in the US is approximately 10 million men.
We have been compelled by limited resources to rely heavily on the web site to
generate interest and sales for the RESTORE Kit.

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.

7

CONTRACT MANUFACTURING

Historically, we have used OEM profits to partially fund internal product
development that has resulted in RES-Q-VAC and FREEDOM60. OEM sales have been as
high as 70% of sales (1996). In 2003 and 2002, contract manufacturing for one
customer amounted to 3% and 16% of sales, respectively. In late 1998, one
customer substantially reduced marketing support for its product and
consequently requested postponement of shipments. We have been manufacturing a
portable, hand-operated suction pump for sale to the remaining active customer
but have been informed that the demand for this product has diminished. As a
result, 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.

SALES AND DISTRIBUTION

Distribution channels for the products are those generally common to their
respective markets. Emergency medical products are sold through a wide network
of domestic and international distributors in 31 overseas countries. Ambulatory
infusion 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. Male impotency treatment products are marketed primarily
through the web site and a limited number of distributors of personal care
items.

We had signed a group purchasing agreement that facilitates sales presentations
to approximately 38 allied members of the Child Health Corporation of America
which has expired in December 2002. Currently eight of the members are using our
products. We continue to pursue additional CHCA centers independently as we
believe that the FREEDOM60 advantages of cost reduction and performance are
benefits required to remain competitive.

During the past year, we signed agreements with other distribution groups for
various marketing efforts of our different products, but these proved not to be
fruitful and the Company has decided to take a more active role in the sales and
marketing process. We are still open to outside distributors but we have no
assurance that they will be able to produce and at what sales levels they will
be able to produce.

MANUFACTURING AND EMPLOYEES

Electromechanical assembly, calibration, pre- and post-assembly quality control
inspection and testing, and final packaging for all products are performed at
the facility by the employees. Products are assembled using molded plastic parts
acquired from one supplier located in Taipei, Taiwan and several U.S. vendors.
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.

In February 2003, we employed 19 employees, 14 were assigned to manufacturing
operations, two to sales and customer support, one to administrative functions,
one Vice President of Operations (responsible for manufacturing, warehouse and
procurement operations), and one Executive Officer (Andrew Sealfon).

8

The Company is dependent on the services of Andrew Sealfon who serves as
President and the head of Research and Development and is also instrumental in
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.

The most recent Form 510(k) filings with the FDA were for the resuscitator and
the vacuum erection device and constriction rings, both 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, 2003, we were subject to a routine QSR review by the
FDA. The FDA inspection did not find any significant 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, 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 into the
market. We responded with the introduction of new innovative features for the
RES-Q-VAC that enhances the product and places it steps above the competition in
safety.

On January 14, 2003, we received notice of allowability for a patent for our new
Full Stop Protection. This patent, #6,575,946, was issued on June 10, 2003. This
addition to the RES-Q-VAC 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 from competitive
units, which tend to leak fluid when becoming full or could pass air born
pathogens during use. There is a heightened concern from health care
professionals concerning exposure to disease and the new RES-Q-VAC provides
improved protection for these users.

OSHA 29CFR 1910.1030 - Occupational Exposure to Bloodborne 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 bloodborne pathogens], commercially available and

9

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 for RES-Q-VAC The
Company has received a letter from OSHA indicating the RES-Q-VAC meets the
intent of this regulation

Recently (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 with FULL STOP PROTECTION is the only portable device to comply with
the CDC directives.

The second most recent patent granted to us was #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 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.

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.

ITEM 2. DESCRIPTION OF PROPERTY

In February 1999, we executed a sale-leaseback for our masonry and steel frame
building erected on 3.27 acres of land located at 24 Carpenter Road, Chester,
New York 10918. The facility is the only location and is used for our
headquarters and manufacturing operations.

Under terms of the contract of sale, we have the option to re-purchase the
building, beginning on the second anniversary of the sale and ending on the
eighth anniversary. We are required to give 12 months prior notice of the intent
to re-purchase the building. The agreed upon amount for re-purchase is as
follows:

Year Four $2,205,000 Year Five $2,315,250
Year Six $2,431,013 Year Seven $2,552,563

The property is currently subject to a 20-year lease. We are responsible for
repairs, maintenance and upkeep of the space we occupy. The terms of the lease
call for monthly lease payments of $10,000 per month and 65% of the annual
property taxes that amounted to $40,614 for the year ended February 28, 2002.
Our monthly rent is $10,000 for the first 10 years of the lease and $11,042
thereafter.

10

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any material litigation, nor to the knowledge of the
officers and directors, is there any material litigation threatened against us.

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 28, 2003.

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 28, 2003, 23,504,000 shares were issued and outstanding and there
were approximately 1,155 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.

High Bid Low Bid
-------- -------
Year Ended February 28, 2002
----------------------------

1st Quarter $0.260 $0.150
2nd Quarter $0.230 $0.110
3rd Quarter $0.230 $0.110
4th Quarter $0.140 $0.070

Year Ended February 28, 2003
----------------------------

1st Quarter $0.140 $0.030
2nd Quarter $0.060 $0.040
3rd Quarter $0.040 $0.030
4th Quarter $0.040 $0.010

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 294,117 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 $0.40.

11

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 28, 2003, 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, market acceptance of FREEDOM60, 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.

RESULTS OF OPERATIONS

2003 VS. 2002

We have focused on two of our main products for the past three years, RES-Q-VAC
and FREEDOM60 and this year we decided to write down a significant portion of
our inventory associated with discontinued products. Thus the Net Loss of the
Year Ended February 29, 2003, including our inventory adjustment of $207,519, is
$268,190 as compared to the previous year loss of $386,075. Without the
inventory write off of $207,519, the loss is $60,671. Total sales also declined
for the year ended February 28, 2003 to $1,656,553 from $1,758,904 due to the
elimination of sales of the less profitable products and a decrease in OEM
sales.

Sales of our key products have again increased this year. Sales of the FREEDOM60
Syringe Infusion System increased by 34% over the prior year and

12

sales of our RES-Q-VAC Airway Suction System increased by 9% over the prior
year. These sales increases were offset by the elimination of low margin
products.

In FY2002, the company has added a new FULL STOP PROTECTION to the RES-Q-VAC,
which protects the users from any contamination from overflow and traps all
pathogens inside the suction container. This new feature is also a requirement
of the Occupational Safety and Health Administration under OSHA 29CFR 1910.1030
- - Occupational Exposure to Bloodborne Pathogens. The RES-Q-VAC 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 device. The Company has received a letter from OSHA
confirming that the Full Stop Protector falls under the engineering controls of
the Bloodborne 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 is the only
hand-held portable suction system which meets this requirement.

In August 2001, we received our first military order for the RES-Q-VAC from one
base location of the US Air Force. We received several small orders from other
bases during the past year for RES-Q-VAC under their existing AFMLO/VA contract.
The company anticipates additional orders will be placed during Fiscal year
2004.

Management is seeking funds to design a new improved RES-Q-VAC 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 planning to further
promote the RES-Q-VAC in the home care market, for which the RES-Q-VAC is
ideally suited due to its low cost, portability and convenience. We are also
jointly developing a dental version of RES-Q-VAC with a specialty distributor in
that market.

We have been marketing FREEDOM60 directly to national providers, other
distributors, and regional home care agencies. Sales of FREEDOM60 are expected
to continue to improve as new pump sales and restocking orders for disposables
are received. Furthermore, we are negotiating with a national distributor, which
may additionally improve sales potential for the line.

In September 2001, the Company began selling to a major national home care
agency and we continued to expand the use of the FREEDOM60 to its regional
centers across the country. Currently five centers of the agency are using the
FREEDOM60. We have also begun sales into Europe with an Italian master
distributor who arranged for CE approval of the FREEDOM60.

Gross profit margin for the year ended February 28, 2003 is 42% which includes
an inventory write down of $207,519. Without the inventory write down, the gross
profit is 55%. This shows improvement over the previous year's gross profit of
25% primarily due to certain reallocations of expenses and improvements in
production efficiencies. Selling, General & Administrative Expenses (SG&A)
increased $192,336 year over year from $635,530 to $827,866 primarily as a
result of these same reallocations.

13

Research and development stayed essentially constant decreasing slightly by $566
from $40,835 to $40,269.

LIQUIDITY AND CAPITAL RESOURCES

For the Year Ended February 28, 2003 Net Cash from operations was $18,322 as
compared with $(156,595)for the prior year, an improvement of $174,917 due to a
reduction in net losses which is a result of effective cost containment
activities and the increased sales of our higher margin core products.

At the end of fiscal year 2003, the net working capital decreased to $(72,677)
from $183,120 due primarily to adverse cash flow and an increase in payable
aging.

During June 2000, we negotiated a $200,000 line of credit with M&T Bank that is
guaranteed by the President and one of the directors. As of February 28, 2002,
$200,000 has been advanced on the line of credit. In accordance with the
agreement the line of credit was to be renewed or paid off by June 30, 2001. We
have received a verbal continuance from the bank through June 30, 2003.

We negotiated a settlement with a lender that was remitted on October 29, 1999.
As part of the agreement, we signed a promissory note for $66,000 that became
due through October 2002 only upon the sale of either of our two major product
lines. If neither of the two product lines was sold, the note terminated. The
note is no longer payable.

We maintained our operations during Fiscal Year 2003 by borrowing $15,000 from
the President. We are operating at neutral cash flow and are continuing to
increase sales for the FREEDOM60 and RES-Q-VAC, and decreasing material costs.
We continue to pursue capital investment through debt or equity. The Company is
working with outside distributors to increase market share in the European
markets for the RES-Q-VAC, and to introduce the FREEDOM60 into the European
market. We are in the process of validating new lower-cost and more efficient
vendors for our raw materials, which will assist us in improving and maintaining
our margins on our current products.

Accounts Receivable decreased slightly at February 28, 2002 to $184,103 as
compared to $195,777 for the previous year. 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 28, 2003, 62% of
Accounts Receivable were current, 28% were at 30-60 days and 10% were over 60
days.

Prepaid expenses and other receivables increased $3,402 from $8,068 to $11,470.

Capital expenditures in 2003 decreased $57,457 to $23,470 as compared to $80,927
in 2002 primarily due to increases in the purchase of new tooling and a new
efficient phone system acquired through outside leasing programs which occurred
during the previous year. Other assets increased $2,802.

In February 1999, we executed a sale-leaseback for our masonry and steel frame
building erected on 3.27 acres of land located at 24 Carpenter Road, Chester,
New York 10918. The facility is our only location and is used for our
headquarters and manufacturing operations.

14

Under terms of the contract of sale, we have the option to re-purchase the
building, beginning on the second anniversary of the sale and ending on the
eighth anniversary. We are required to give 12 months prior notice of the intent
to re-purchase the building. The agreed upon amount for re-purchase is as
follows:

Year Four $2,205,000 Year Five $2,315,250
Year Six $2,431,013 Year Seven $2,552,563

The property is currently subject to a 20-year lease. We are responsible for
repairs, maintenance and upkeep of the space occupied. The terms of the lease
call for monthly lease payments of $10,000 per month and 65% of the annual
property taxes that amounted to $42,600 for the year ended February 28, 2003.
Our monthly rent is $10,000 for the first 10 years of the lease and $11,042
thereafter.

SUBSEQUENT EVENTS

On March 13, 2003 we signed a contract with Joint Purchasing Corporation. JPC is
a non-profit, health services organization headquartered in New York that helps
healthcare providers strengthen their bottom line by assisting in the
implementation of cost control and resource management strategies. JPC has
approximately 3,500 members and is assisting us to promote our cost saving
products to their members.

In April, we signed agreements with an outside salesman to provide field
representation to our products, and to a medical consultant who is introducing
us to national distributors and buying groups.

On June 10, 2003 we were notified by the US Patent and Trademark Office that our
patent for the FULL STOP PROTECTION Device used in our RES-Q-VAC to prevent the
spread of disease, was granted and issued with the patent number of 6,575,946.

2002 VS. 2001

For the year ended February 28, 2002 we showed a loss of $386,075 as compared to
a loss for the previous year of $104,457. This decline was mainly a result of a
decrease in total net sales for the year ended February 28, 2002 due to a
reduction in sales for less profitable products.

Sales of our key products have significantly increased this year. Sales of the
FREEDOM60 Syringe Infusion System increased by 37% over the prior year and sales
of our RES-Q-VAC Airway Suction System increased by 13% over the prior year.
These sales increases were offset by the elimination of low margin products and
recognition of an OEM sale, which resulted in overall sales this year decreasing
16% to $1,758,904 for 2002 from $2,085,912 for 2001. Without the OEM sale
recognized during fiscal year 2001, net sales would have decreased by only 4%
overall as a result of the elimination of low margin products offset by
significant increases in our key products.

The company has recently added FULL STOP PROTECTION to the RES-Q-VAC, which
protects the users from any contamination from overflow and traps all pathogens
inside the suction container. This new feature is also a requirement of the
Occupational Safety and Health Administration under OSHA 29CFR 1910.1030 -
Occupational Exposure to Bloodborne Pathogens.

15

The RES-Q-VAC 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 device. The Company has recently
received a letter from OSHA confirming that the Full Stop Protector falls under
the engineering controls of the Bloodborne Pathogen regulation and therefore
would be required by any employer of medical personnel to protect their
employees from potentially infectious materials.

In August 2001, we received our first military order for the RES-Q-VAC from one
base location of the US Air Force. We received several small orders from other
bases during the last half of the year for RES-Q-VAC under their existing
AFMLO/VA contract. The company anticipates additional orders will be placed
during Fiscal year 2003.

Management is seeking funds to design a new improved RES-Q-VAC 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 planning to further
promote the RES-Q-VAC in the home care market, for which the RES-Q-VAC is
ideally suited due to its low cost, portability and convenience.

We have been marketing FREEDOM60 directly to national providers, other
distributors, and regional home care agencies. Sales of FREEDOM60 are expected
to continue to improve as new pump sales and restocking orders for disposables
are received. Furthermore, we are negotiating with a national distributor, which
would additionally improve sales potential for the line.

In September 2001, the Company began selling to a major national home care
agency that anticipates expanding the use of the FREEDOM60 to its regional
centers across the country. Currently three centers of the agency are using the
FREEDOM60 and four others are on trials. We anticipate starting trials in the
remaining centers within the next six to twelve months. We have also begun sales
into Europe with an Italian master distributor who arranged for CE approval of
the FREEDOM60.

Gross profit decreased to 25% of net sales for the year ended February 28, 2002
from 38% for the year ended February 28, 2001 primarily as a result of the
timing of the recognition of an OEM sale during the year ended February 28,
2001. When excluding this OEM sale for the year ended February 28, 2001, the
current gross profit percentage is indicative of our current core business.

Selling, General & Administrative Expenses (SG&A) decreased year over year 2%
primarily as a result of a reduction in administrative personnel.

Research and development increased 14% to $40,835 from $35,843 as a result of
the use of outside engineering personnel during the year and for final
developments on the FULL STOP PROTECTION device for the RES-Q-VAC.

Net loss increased 270% to $386,075 for the year ended February 28, 2002 from
$104,457 for the year ended February 28, 2001, primarily as a result of the
decrease in net sales for the year ended February 28, 2002.

For the year ending February 28, 2002, one customer's, Timm Medical, sales were
16% of the total sales. Management has been informed that Timm Medical has
sufficient inventory on hand to cover sales through September and that future
orders will be at a significantly reduced rate. As a result management has
decided to shift Company focus to its own proprietary products and markets.

16

ITEM 7. FINANCIAL STATEMENTS


Index to Financial Statements and Supplementary Data
----------------------------------------------------

Page
----

Report of Independent Certified Public Accountants ..................19


Financial Statements: Balance Sheet, February 28, 2003 .............20


Statements of Income, For the Years Ended
February 28, 2003 & February 28, 2002 .............................21


Statements of Changes in Stockholders' Equity,
For the Years Ended February 28, 2003 and February 28, 2002 .......22


Statements of Cash Flows, For the Years Ended
February 28, 2003 & February 28, 2002 .............................23


Notes to Financial Statements ..................................24 - 32


17



REPRO-MED SYSTEMS, INC.

FINANCIAL STATEMENTS

FOR THE YEARS ENDED FEBRUARY 28, 2003 AND 2002

____________________


MEYLER & COMPANY, LLC

CERTIFIED PUBLIC ACCOUNTANTS

ONE ARIN PARK

1715 HIGHWAY 35

MIDDLETOWN, NJ 07748

____________________




18
MEYLER & COMPANY, LLC

CERTIFIED PUBLIC ACCOUNTANTS

ONE ARIN PARK

1715 HIGHWAY 35

MIDDLETOWN, NJ 07748

INDEPENDENT AUDITOR'S REPORT

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

Chester, NY

We have audited the accompanying consolidated balance sheet of Repro-Med
Systems, Inc. as of February 28, 2003 and the related statements of operations,
stockholders equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The balance sheet as of February 28, 2002 and the related statements
of operations, stockholders' equity and cash flows for the year ended February
28, 2002 were audited by Radin, Glass & Co., LLP for which they expressed a
qualified opinion in their report dated April 15, 2002.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides 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 28, 2003, and the results of its operations and its cash flows for the
year then ended February 28, 2003, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has incurred recurring losses
from operations including net losses of $268,190 and $386,075 for the years
ended February 28, 2003 and 2002, respectively. These conditions raise
substantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters are described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

/s/ Meyler & Company, LLC

June 11, 2003
Middletown, NJ

19
REPRO-MED SYSTEMS, INC.
BALANCE SHEETS

ASSETS
February 28,
2003 2002
---- ----
CURRENT ASSETS
Cash ............................................ $ 16,738 $ 25,670
Accounts receivable ............................. 184,103 195,777
Inventory ...................................... 381,623 600,635
Prepaid expenses ................................ 11,470 8,068
----------- -----------
Total Current Assets ..................... 593,934 830,150

PROPERTY AND EQUIPMENT, NET ........................ 415,755 467,985
OTHER ASSETS
Patents, net of amortization of $63,073 and
$57,698 for 2003 and 2002, respectively ....... 35,285 37,854
Goodwill, net of amortization of $4,088 and
$3,728 for 2003 and 2002, respectively ........ 10,049 10,409
Investment in securities ........................ 801 801
Security deposits ............................... 54,802 52,000
----------- -----------
100,937 101,064
----------- -----------
$ 1,110,626 $ 1,399,199
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Note payable to bank ............................ $ 199,461 $ 200,000
Accounts payable ................................ 267,634 189,111
Accrued expenses ................................ 44,526 106,511
Notes payable to related party .................. 84,000 69,000
Current portion of capital lease obligations .... 26,492 21,646
Accrued preferred stock dividends ............... 8,000 4,000
Accrued payroll and related taxes .............. 14,017 34,281
Current portion of capital gain ................ 22,481 22,481
----------- -----------
Total Current Liabilities ................ 666,611 647,030

OTHER LIABILITIES
Capital lease obligations, less current portion . 45,614 55,098
Deferred capital gain ........................... 337,215 359,695
----------- -----------
Total Liabilities ........................ 1,049,440 1,061,823

STOCKHLDERS' EQUITY
Preferred stock, 8% cumulative, liquidation value
$100,000, $0.01 par value, 2,000,000 shares
authorized, 10,000 shares outstanding at
February 28, 2003 and 2002 .................... 100 100
Common stock, $0.01 par value, 50,000,000 shares
authorized, 23,504,000 issued at February 28,
2003 and 2002 ................................. 235,040 235,040
Additional paid-in capital ...................... 2,211,631 2,211,631
Accumulated deficit ............................. (2,243,585) (1,967,395)
----------- -----------
203,186 479,376
Less: Treasury stock, 2,275,000 shares
at cost at February 28, 2003 and 2002 .. (142,000) (142,000)
----------- -----------
Total Shareholders' Equity ............... 61,186 337,376
----------- -----------
$ 1,110,626 $ 1,399,199
=========== ===========
The accompanying notes are an integral part of these financial statements.

20
REPRO-MED SYSTEMS, INC.

STATEMENT OF OPERATIONS

For the Years Ended
February 28,
------------
2003 2002
---- ----

NET SALES ...................................... $ 1,656,553 $ 1,758,904

COSTS AND EXPENSES
Cost of goods sold .......................... 959,538 1,330,960
Selling, general and administrative ......... 827,866 635,530
Research and development .................... 40,269 40,835
Stock based compensation .................... - 41,000
Depreciation and amortization ............... 81,435 84,839
------------ ------------

Total Costs and Expenses ............. 1,909,108 2,133,164
------------ ------------

NET OPERATING LOSS ............................. (252,555) (374,260)

OTHER INCOME (EXPENSE)
Interest and other income ................... 11,648 9,009
Interest expense ............................ (26,483) (20,252)
------------ ------------

Total Other Expenses ................. (14,835) (11,243)
------------ ------------

NET LOSS BEFORE TAXES .......................... (267,390) (385,503)
STATE INCOME TAXES ............................. 800 572
------------ ------------

NET LOSS ....................................... $ (268,190) $ (386,075)
============ ============

NET LOSS PER COMMON SHARE
Basic and diluted ........................... $ (0.1) $ (0.02)
============ ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING ..... 23,504,000 23,504,000
============ ============

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

21