Annual report pursuant to Section 13 and 15(d)

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Feb. 28, 2014
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]  
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


NATURE OF OPERATIONS


REPRO-MED SYSTEMS, INC. (the "Company") designs, manufactures and markets proprietary medical devices primarily for the ambulatory infusion market and emergency medical applications. The FDA regulates these products. The Company is in one line of business.


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. Occasionally, the Company has cash held in excess of $250,000 at a single depository, which exceeds the FDIC insurance limits and is, therefore, uninsured.


At February 28, 2014, cash equivalents consisted of money market funds aggregated to $1,655,554.


CERTIFICATES OF DEPOSIT


The certificates of deposit are recorded at cost plus accrued interest. The certificates of deposit earn interest at a rate of 0.4% to 0.55% and mature in September 2014 and February 2015.


INVENTORY


Inventories of raw materials are stated at the lower of standard cost, which approximates average cost, or market value including allocable overhead. Work-in-process and finished goods are stated at the lower of standard cost or market value and include direct labor and allocable overhead.


PATENTS


Costs incurred in obtaining patents have been capitalized and are being amortized over seventeen years.


INCOME TAXES


Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences.


The Company believes that it has no uncertain tax positions requiring disclosure or adjustment. Generally, tax years starting with 2010 are subject to examination by income tax authorities.


PROPERTY, EQUIPMENT, AND DEPRECIATION


Property and equipment is stated at cost and is depreciated using the straight-line method over the estimated useful lives of the respective assets.


STOCK-BASED COMPENSATION


The Company accounts for stock issued for services using the fair value method. The measurement date of shares issued for service is the date when the counterparty's performance is complete.


NET INCOME PER COMMON SHARE


Basic earnings per share are computed on the weighted average of common shares outstanding during each year. Diluted earnings per share include only an increase in the weighted average shares by the common shares issuable upon exercise of employee and director stock options (Note 7).


                 

 

 

Fiscal Year Ended

 

 

 

February 28, 2014

 

 

February 28, 2013

 

 

 

 

 

 

 

 

Net income

 

$

703,429

 

 

$

725,763

 

 

 

 

 

 

 

 

 

 

Weighted Average Outstanding Shares:

 

 

 

 

 

 

 

 

Outstanding shares

 

 

36,661,667

 

 

 

36,011,448

 

Option shares includable

 

 

-

 

 

 

24,914

 

 

 

 

36,661,667

 

 

 

36,036,362

 

 

 

 

 

 

 

 

 

 

Net income per share

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

 

$

0.02

 

Diluted

 

$

0.02

 

 

$

0.02

 


USE OF ESTIMATES IN THE FINANCIAL STATEMENTS


The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the 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.


SUBSEQUENT EVENTS EVALUATION


The Company has evaluated subsequent events through May 29, 2014, the date on which the financial statements were issued.  There were no material subsequent events that required recognition or additional disclosure in these financial statements.


REVENUE RECOGNITION


Sales of manufactured products are recorded when shipment occurs. 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 generally are billed to customers and are included in sales. The Company does not accept return of goods shipped unless it is a Company error. The only credits provided to customers are for defective merchandise.


EMERGING ACCOUNTING STANDARDS


Management does not believe that any of the standards adopted by the Financial Accounting Standards Board but are not yet effective will have a material effect on the Company's financial reporting.


FAIR VALUE OF FINANCIAL INSTRUMENTS


The carrying amounts reported in the balance sheet for cash, trade receivables, accounts payable and accrued expenses approximate fair value based on the short-term maturity of these instruments.


ACCOUNTING FOR LONG-LIVED ASSETS


The Company reviews its long-lived assets for impairment at least annually or whenever the circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. As of February 28, 2014, the Company does not believe that any of its assets are impaired.