FORM 10-QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES ACT OF 1934 For the quarterly period ended May 31, 2000 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 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at May 31, 2000 ----- --------------------------- Common stock, $.01 par value 23,354,000 shares REPRO-MED SYSTEMS, INC. TABLE OF CONTENTS PART I PAGE ---- ITEM 1. Financial Statements Balance Sheets - May 31, 2000 and 3 February 29, 2000 Statements of Income - for the three-months ending May 31, 2000 and May 31, 1999 4 Statements of Cash Flow - May 31, 2000 and 1999 5 Notes to Financial Statements 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 6 PART II ITEM 1. Legal Proceedings 8 ITEM 2. Changes in Securities 8 ITEM 3. Defaults Upon Senior Securities 8 ITEM 4. Submission of Matters to a Vote of Security Holders 8 ITEM 5. Other Information 8 ITEM 6. Exhibits and Reports on Form 8-K 8 REPRO-MED SYSTEMS, INC BALANCE SHEET 5-31-00 2-29-00 ASSETS ------- ------- CURRENT ASSETS Cash & Cash Equivalents $136,117 $167,085 Accounts Receivable, net 240,653 227,871 Inventory 626,315 555,882 Prepaid Expenses & Other Receivables 56,522 45,517 Deposits 40,000 40,000 ------ ------ TOTAL CURRENT ASSETS 1,099,607 1,036,355 ========= ========= EQUIPMENT & OTHER ASSETS Equipment-net 469,114 483,806 Other Assets 53,153 54,412 ------ ------ TOTAL EQUIPMENT & OTHER ASSETS 522,267 538,218 ------- ------- TOTAL ASSETS $1,621,874 $1,574,573 ========== ========== LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable $142,662 $59,363 Accrued Expenses 187,496 184,936 Current Portion Capital Gain 22,481 22,481 Customer Deposits 175,090 245,230 ------- ------- Total Current Liabilities 527,729 512,010 Deferred Capital Gain 399,035 404,655 ------- ------- TOTAL LIABILITIES 926,764 916,665 ------- ------- STOCKHOLDERS' EQUITY Preferred Stock, 8% Cumulative $.01 Par Value Authorized 2,000,000 Issued & Outstanding 10,000 Shares 100 100 Common Stock, $.01 Par Value, Authorized 50,000,000 Shares, Issued & Outstanding 23,354,000 & 22,904,000 Respectively 233,540 229,040 Additional Paid-in Capital 2,054,131 2,031,631 Accumulated Deficit (1,450,661) (1,460,863) Treasury Stock at Cost (142,000) (142,000) -------- -------- TOTAL STOCKHOLDERS' EQUITY 695,110 657,908 ------- ------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $1,621,874 $1,574,573 ========== ========== REPRO-MED SYSTEMS, INC STATEMENT OF INCOME FOR THE THREE MONTHS ENDED May 31, 2000 May 31, 1999 ------------ ------------ SALES Net Sales of Products $556,614 $527,277 COST AND EXPENSES Cost of Goods Sold 292,454 303,447 Selling, General & Administrative Expenses 219,797 296,341 Research and Development 12,946 33,812 Depreciation and Amortization 21,415 22,976 ------ ------ TOTAL COST AND EXPENSES 546,612 656,576 ------- ------- INCOME (LOSS) FROM OPERATIONS 10,002 (129,300) Non-Operating Income (Expense) Interest (Expense) 0 (10,216) Interest & Other Income 200 3,169 --- ----- 200 (7,047) INCOME (LOSS) BEFORE MINORITY INTEREST SHARE OF OPERATIONS 10,202 (136,347) Minority Interest in Income of Subsidiary 0 (6,613) - ------ Income (Loss) Before Income Taxes 10,202 (142,960) Provision for Income Taxes 0 760 - --- NET INCOME (LOSS) AFTER TAXES 10,202 (143,720) ====== ======== EARNINGS (LOSS) PER COMMON SHARE Primary $0.00 ($0.01) Fully Diluted $0.00 ($0.01) REPRO-MED SYSTEMS, INC STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MAY 31, 2000 MAY 31, 1999 ------------ ------------ OPERATING ACTIVITIES INCOME (LOSS) FROM CONTINUED OPERATIONS $10,202 ($143,720) ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO CASH PROVIDED BY OPERATING ACTIVITIES Depreciation and Amortization 21,415 22,976 Income (Loss) of Minority Interests 0 6,613 Deferred Gross Profit - Building Lease (5,620) 0 ------- - 25,997 (114,131) Changes In Assets and Liabilities Accounts Receivable (12,782) (194,649) Inventory (70,433) 35,229 Prepaid Expenses and Other Receivables (11,005) 14,416 Accounts Payable 83,299 82,154 Accrued Expenses 2,560 66,405 Customers Deposits (70,140) 0 -------- - (78,501) 3,555 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (52,504) (110,576) INVESTING ACTIVITIES Short Term Investments 0 (373,340) Capital Expenditures (5,283) (7,695) Other Assets (181) 0 ----- - (5,464) (381,035) NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES FINANCING ACTIVITIES Issuance of Common Stock 27,000 0 Repayment of Term Loan 0 (22,825) Repayment Line of Credit 0 (66,758) - -------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 27,000 (89,583) NET (DECREASE) IN CASH AND CASH EQUIVALENTS (30,968) (581,194) Cash and Cash equivalents, beginning of period 167,085 683,321 ------- ------- Cash and Cash Equivalents, end of period $136,117 $102,126 ======== ======== SUPPLEMENTAL DISCLOSURES CASH PAYMENTS FOR Interest $0 $10,216 Income Taxes $801 $0 REPRO-MED SYSTEMS, INC. NOTES TO THE FINANCIAL STATEMENTS MANAGEMENT'S STATEMENT The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-KSB dated February 29, 2000. PART I ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-QSB contains certain "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and information relating to Repro-Med Systems, Inc. that are based on the beliefs of the management of Repro-Med Systems, Inc. as well as assumptions made by and information currently available to the management of Repro-Med Systems, Inc. The Company's 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 the current views of Repro-Med Systems, Inc. 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. 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. THREE MONTHS ENDED MAY 31, 2000 VS. 1999 Sales increased 6% from $527,277 (1999) to $556,614 (2000) for the quarter ended May 31. Sales continued to improve for the Res-Q-Vac while sales of the IV decreased quarter over quarter due to a one-time sale of product to a distributor in 1999, which did not repeat this year. The OEM sales improved in this quarter over last year while the Plus resuscitator decreased due to a tender order which did not re-occur this year. Cost of goods decreased 4% due to improved efficiencies in production and purchasing. The profit margin continued to improve this quarter with an increase from 42% in 1999 to 48% in 2000. Selling, general and administrative expense decreased 26% for the current three-month period versus 1999. Management initiated expense and payroll reductions in September 1999 that continue to produce savings compared to prior periods. Research and development expenses decreased 62% period to period reflecting payroll reductions made in the second quarter of fiscal 2000 and the reduction in the development of our new products due to limited available funds. There was no material change in depreciation and amortization expense during this period. Interest expense was reduced to $0 as the result of a full payoff of all bank indebtedness in October 1999. LIQUIDITY AND CAPITAL RESOURCES Our working capital increased from $524,345 as of February 29, 2000 to $571,878 as of May 31, 2000. As a subsequent event in June 2000 we negotiated a $200,000 line of credit with Premier Bank which will be guaranteed by the President and one of our directors. The line of credit is intended for materials purchases for new orders. We are currently operating at a neutral cash flow and have sufficient capital for our ongoing needs, based on the anticipated continued sales growth and maintaining careful control of expenses. We have demonstrated our ability to control costs and believe we will be able to offset any unanticipated decreases in revenues with additional reductions in overhead, materials, and labor. The funds available on May 31,2000 are expected to meet cash requirements as planned under current operating conditions for the next 12 months. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is neither a party to any material litigation, nor to the knowledge of the officers and directors of the Company, is there any material litigation threatened against the Company. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders of the Company during the quarter ended May 31, 2000. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K None SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized. REPRO-MED SYSTEMS, INC. /s/ Andrew I. Sealfon MAY 31, 2000 - --------------------- Andrew I. Sealfon, President, Treasurer, Chairman of the Board, Director, and Chief Executive Officer