UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB


(Mark one)
               X    Annual Report Pursuant to Section 13 or 15(d) of the
              ---   Securities Exchange Act of 1934
                    FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
                    Transition Report Pursuant to Section 13 or 15(d) of the
              ---   Securities Exchange Act of 1934

                         Commission File Number: 5-78407
                                                 -------
                                 RXBAZAAR, INC.
                 (Name of Small Business Issuer in its charter)

           Delaware                                              38-3506266
           --------                                              ----------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                 1385 Kemper Meadow Drive, Cincinnati, OH 45240
                 ----------------------------------------------
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (781) 449-4962
                                               --------------

      Securities to be registered under Section 12(b) of the Exchange Act:
                                      None

      Securities to be registered under Section 12(g) of the Exchange Act:
                     Common Stock, par value $.001 per share
                     ---------------------------------------
                                (Title of Class)

     Check whether the issuer (1) filed all reports required to be filed under
Section 13 or 15(d) of the 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
                                                                      ---   ---

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the 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].

     Revenues for the fiscal year ended December 31, 2002: $30,427,928

     The aggregate market value of the voting stock held by non-affiliates of
the Registrant computed by reference to the price at which the stock was sold,
or the average bid and ask prices of such stock as of February 28, 2003:
$7,016,660.

     The number of shares outstanding of Registrant's Common Stock, $ .001 par
value, outstanding on December 31, 2002: 6,160,280 shares.


================================================================================

                    Documents Incorporated by Reference: None
           Transitional Small Business Disclosure Format: Yes    No X
                                                             ---   ---


<PAGE>


                                      INDEX


                                                                        Page No.
                                                                        --------

Facing Page                                                                  1
Table of Contents                                                            2

PART I
Item 1.   Description of Business                                            3
Item 2.   Description of Properties                                         11
Item 3.   Legal Proceedings                                                 12
Item 4    Submission of Matters to a Vote of Security Holders               12

PART II
Item 5.   Market for Common Equity and Related Stockholder Matters          12
Item 6.   Management's Discussion and Analysis of Financial Condition
          or Plan of Operations                                             12
Item 7.   Financial Statements                                              18
Item 8.   Changes In and Disagreements with Accountants on Accounting
          and Financial Disclosure                                          19

PART III
Item 9.   Directors, Executive Officers, Promoters and Control Persons;
          Compliance with Section 16 (a) of the Exchange Act.               19
Item 10.  Executive Compensation                                            21
Item 11.  Security Ownership of Certain Beneficial Owners and Management
          and Related Stockholder Matters                                   26
Item 12.  Certain Relationships and Related Transactions                    28
Item 13.  Exhibits and Reports on Form 8-K                                  29
Item 14.  Controls and Procedures                                           33


SIGNATURES                                                                  34

CERTIFICATIONS                                                              35


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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

     RxBazaar, Inc. ("we" or the "Company") is a distributor of brand and
generic pharmaceutical and medical products, as well as other related products
aimed at our target market of independent pharmacies. We sell our products to
distributors, wholesalers, pharmacies and other customers and organizations
licensed to purchase pharmaceutical products. On February 23, 2001, we acquired
FPP Distribution, Inc. (formerly known as Superior Pharmaceutical Company). We
conduct business in all fifty U.S. states as well as Puerto Rico.

     We conduct our business not only through traditional distribution channels,
such as telemarketing through our call center, but also through the anonymous
on-line marketplace that we operate at our website, www.rxbazaar.com. We
developed and wrote the website internally, and completed development in April
2000. RxBazaar.com is aimed at creating an anonymous on-line marketplace for the
buying and selling of branded and generic pharmaceutical and medical products,
with the target buyers being independent pharmacies. We believe that we have
developed an innovative approach to this target market, based on the following
elements:

     o    We bring purchasing opportunities, both on- and off-line, closer to
          the local pharmacy. We enable independent pharmacies to access
          products at reduced costs that were previously unavailable to them.

     o    We enable drug manufacturers, distributors, wholesalers, pharmacists
          and others to buy and sell products on-line efficiently and on a
          confidential basis. We enable wholesalers to increase sales and manage
          inventory, expanding their channels of distribution beyond traditional
          boundaries, and we can also help our customers achieve improved
          margins by eliminating multiple intermediaries when we act as the
          single intermediary between, but not limited to, manufacturers, drug
          wholesalers and independent pharmacies.

     o    Because we allow multiple manufacturers, wholesalers and other
          qualified sellers to post products for sale on a confidential basis,
          we have the capacity to offer our customers a broad range of products.

     o    We sell inventory for our own account, which generally results in
          higher margins than we realize for our services as an intermediary.

     Our goal is to enable our target market of independent and small-chain
pharmacies access to the alternate source market for pharmaceutical products,
where such pharmacies may be able to obtain products at prices lower than those
available through traditional channels. We believe that until we introduced our
on-line marketplace, our target market of independent pharmacies had relatively
little access to discounts available to buyers in the alternate source market.
The independent pharmacies that make up our target market account for the
purchase of approximately $53 billion of pharmaceutical products annually.

     History

     During our first six months after formation, we focused our efforts on
hiring key personnel, establishing relationships with customers and vendors, and
developing our technological and operational infrastructure. We launched our
www.rxbazaar.com website, and commenced sales, in April 2000. Our initial
operations were funded through loans from officers and directors and private
placements of common stock. We also arranged for FPP Distribution, Inc., then
known as Superior Pharmaceutical Company, to act as our fulfillment center for
all of our sales. FPP Distribution was a wholly-owned subsidiary of Able
Laboratories, Inc. ("Able"). In October 2000, we agreed to acquire FPP
Distribution from Able. We raised the necessary funds to acquire FPP
Distribution by selling Series A Preferred Stock to investors in a private
placement. We purchased FPP Distribution on February 23, 2001 for $4,000,000 in
cash and the assumption of $2,250,000 in subordinated debt. At the same time, we
entered into a $12,500,000 line of credit, secured by all of our assets. On
completion of the FPP Distribution acquisition, we lacked sufficient working


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capital to operate our business. We continued to seek additional financing
throughout 2001. In November 2001, we reduced our work force by 18 employees and
reduced the salaries of other employees.

     Merger Transaction With SB Merger Corp.

     SB Merger Corp. was incorporated in Delaware on January 3, 2000. Other than
issuing shares to its stockholders, it did not engage in any operational
activities; rather, it was a "blank check" company the sole purpose of which was
to locate and consummate a merger or acquisition with a private entity. In May
2001, SB Merger completed an initial public offering of 125,000 shares of its
common stock at a price of $1.00 per share.

     SB Merger and its wholly-owned subsidiary entered into a merger agreement
with RxBazaar, Inc. on February 1, 2002, and completed the transaction on July
26, 2002. Because of our lack of sufficient working capital as of the date of
the merger agreement, the merger agreement required us to raise a minimum of $3
million in additional equity after January 1, 2002. This requirement was to
ensure that the surviving company would have a reasonable amount of working
capital after the merger. To meet this requirement, we sold $4,175,000 of Series
B Preferred Stock, for cash and in consideration of conversion of outstanding
notes payable and accrued expenses. In the merger, SB Merger issued or became
obligated to issue to the former holders of RxBazaar approximately:

     o    3,333,969 shares of Common Stock, 345,333 shares of Series A Preferred
          Stock and 2,087,500 shares of Series B Preferred Stock;

     o    obligated to issue up to 1,834,653 shares of Common Stock issuable
          upon exercise of outstanding options and warrants to purchase Common
          Stock; and

     o    obligated to issue up to 2,363,118 additional shares of Common Stock,
          if the merged company meets earnings targets in the first or second
          year after the merger as described in the merger agreement.

     In connection with the merger, SB Merger adopted the name "RxBazaar, Inc."
and all of the officers and directors of RxBazaar prior to the merger became
officers and directors of the newly-named RxBazaar, Inc.

     The business combination was a "reverse merger," so termed because
immediately after the merger, stockholders of the former RxBazaar held
approximately 93% of the outstanding shares of RxBazaar, Inc., formerly known as
SB Merger Corp. For that reason, except where specifically noted, the financial
and other information in this report is presented for the operations of the
former RxBazaar, Inc. since its inception in October 1999. Also, because the
merger was accounted for as an acquisition of SB Merger by RxBazaar and a
recapitalization of RxBazaar, our financial statements for periods ending after
the date of the merger consist of the historical financial statements of the
former RxBazaar, Inc.

THE DRUG DISTRIBUTION INDUSTRY TODAY -- SHORTCOMINGS OF TRADITIONAL CHANNELS OF
DISTRIBUTION AND RXBAZAAR'S SOLUTION

     Pharmaceutical Distribution in the U.S.

     We compete in a pharmaceutical distribution market of over $100 billion.
The sector is maintaining strong industry growth that directly correlates to the
rapidly expanding U.S. pharmaceutical market that recorded over $120 billion in
sales in 2000 and over $164 billion in 2001, and that is expected to exceed $188
billion in 2002. Underlying this growth is a crucial demographic: the average
age of people in the industrialized world is rising, resulting in increased drug
consumption. During the first quarter of 2001, total prescriptions written in
the U.S. rose 11%. Total prescriptions written for 2002 reached approximately
3.13 billion, an increase from the 3 billion written in 2001. Many manufacturers
of pharmaceuticals and related healthcare products utilize wholesale
distributors to deliver their products to the marketplace. We provide both
traditional and progressive distribution channels for these products.

     The United States is the world's largest pharmaceutical market. According
to the National Institute for Health Care Management Foundation, prescription
drug spending rose 40% from 1998 to 2000. The U.S. government has predicted that


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spending on prescription drugs will increase by 12% annually, on average, during
the coming decade.

     The Role of Independent Pharmacies

     According to a recent survey conducted by the National Community
Pharmacists Association, a trade group, independent pharmacies are in the midst
of an economic resurgence. In 2001 and 2002, independent pharmacies as a whole
experienced record years in sales. The number of independent pharmacies
increased by approximately 200, to nearly 25,000 nationwide. Independent
pharmacies posted a record 16.7% increase in sales for 2001, with $58 billion
industry-wide in total sales, an average of $2.3 million per store.
Approximately 83% of this revenue was attributable to the sale of prescription
drugs. While gross margins continued to decline as a percentage of total sales
in 2001, they increased by 13.3% in absolute dollars, to $535,052 per store, the
highest ever recorded. The National Community Pharmacists Association estimated
that in 2002 the independent pharmacy marketplace reached $60 billion, with $53
billion recorded in prescription sales and average prescription sales of $2.15
million per store.

     Multi-Tiered Pricing

     A distinctive feature of the drug distribution industry is that
manufacturers charge different prices to different purchasers. Over the past 25
years, the pharmaceutical distribution industry has been characterized by an
ever more complex set of pricing practices. These pricing practices are
primarily the result of the varying market power held by different purchasers
and because of government reimbursement programs. Drug manufacturers sell their
products to several classes of purchasers, including:

     o    federal health care agencies and entities;
     o    hospitals;
     o    nursing homes;
     o    drug store chains;
     o    health maintenance organizations;
     o    insurers and pharmacy benefit managers, companies that administer the
          prescription drug portion of a health benefit plan for insurers and
          managed care organizations; and
     o    wholesale distributors that sell to pharmacies and others.

     Because of this complex pricing system, a single drug product may be
available in the market at many different prices, depending on the category of
purchaser. The variables that affect the price for a particular class of
purchaser include:

     o    federal law entitling certain agencies and public entities to
          discounts;
     o    whether a purchaser or a group of purchasers can negotiate directly
          with the manufacturer;
     o    whether a purchaser can positively affect the manufacturer's revenue
          and market share.

     For example, certain federal agencies and governmental purchasers are
entitled to discounts as a matter of law. Also, drug manufacturers typically
offer lower prices to hospitals and health maintenance organizations, or to the
pharmacy benefit managers or group purchasing organizations acting on their
behalf, because those entities are able to negotiate directly with the
manufacturer and can increase the use of a manufacturer's product. Other
businesses, such as independent pharmacies, are not typically able to negotiate
significant discounts. Independent pharmacies do not negotiate directly with
manufacturers, and cannot control the drug prescribed by the physicians. Also,
the Medicaid reimbursement program, under which state Medicaid programs
reimburse beneficiaries for the cost of certain drugs, may act as an impediment
to manufacturers' offering discounts on certain drugs. Under the Medicaid
program, a manufacturer must offer a 15.1% discount in the form of a rebate to
the state Medicaid program, or must offer the Medicaid program the best price it
offers to other non-government purchasers. Therefore, manufacturers could be
reluctant to offer discounts on certain drugs to non-government purchasers such
as independent pharmacies.


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<PAGE>


     Another characteristic of the drug distribution business is that
manufacturers may enter directly into agreements with various customers at
different prices, and use a number of different distributors to fulfill orders
from the customers. To facilitate this process, the manufacturer may sell to the
distributor at a set wholesale price, and if the distributor then fills an order
from a customer that has negotiated a lower price from the manufacturer, the
distributor charges the manufacturer a credit, known in the industry as a
chargeback.

     The Alternate Source Market

     A purchaser that has obtained a drug product at a favorable price may,
instead of selling the product through to retail businesses or consumers, sell
the product back into the wholesale market. Then, another wholesaler or
distributor may buy the product and resell it to retail outlets. As a result, a
secondary, or alternate source, market for drug products has emerged. We believe
that the alternate source market could be a significant opportunity for our
business.

     In the alternate source market, certain pharmaceutical wholesalers and
distributors can acquire products at a discount and resell them to other
parties. We believe that independent pharmacies could benefit from improved
access to the alternate source market. We believe that until we introduced our
on-line marketplace, our target market of 25,000 independent pharmacies had
relatively little direct access to these alternate source products or the
associated discounts.

     Our Solution

     We believe that traditional channels for the distribution of drugs, medical
supplies and equipment create limitations that prevent distributors and
independent pharmacies from achieving maximum efficiency. A few of the obstacles
to efficiency caused by prevalent practices in the current drug distribution
market include:

     o    limited selection available to independent pharmacies;
     o    limited access to alternate source products; and
     o    lack of convenience.

     Most independent pharmacists are responsible for purchasing, stocking, and
selling all the items in their stores. Traditional business practices may limit
pharmacists' and other purchasers' abilities to identify and take advantage of
savings opportunities, because the pharmacists do not have an efficient way to
find out about all of the products available from various distributors,
including alternate sources. We believe that, by integrated traditional and
on-line distribution products and services, we can solve this problem and enable
independent pharmacies and others in the business to overcome these limitations.
Through our on-line marketplace at www.rxbazaar.com, we:

     o    provide pharmacists an opportunity to browse through various deals
          offered by multiple sellers of the same products, potentially offering
          the pharmacists a wider selection and a better price than that which
          might be available through traditional wholesale distribution
          channels.
     o    allow buyers to view directly the products offered by sellers.
     o    are available twenty-four hours a day, seven days a week, allowing
          pharmacists the convenience of purchasing during off-peak hours.

     In addition to the www.rxbazaar.com on-line marketplace, we use our
traditional distribution business capabilities both to fulfill transactions
carried out on-line and to engage in telemarketing through our call center. We
believe that our solution effectively addresses existing market limitations and
can create an integrated distribution business consisting of both traditional
distribution activities and an on-line marketplace, combining to offer buyers
and sellers convenient access, competitive prices and full distribution support
for a wide variety of both prescription and generic drugs, medical supplies and
equipment. Our on-line marketplace enables buyers and sellers to connect on a
confidential basis and eliminates many of the intermediaries that inflate
prices.

PRODUCTS AND SERVICES

     We offer the following products and services:


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     Traditional Distribution Services

     We acquired FPP Distribution, Inc., formerly known as Superior
Pharmaceutical Company, in February 2001. We conduct our traditional
pharmaceutical distributor business through FPP's established distribution
channels, including:

     o    direct sales, conducted by a staff of direct sales telemarketing
          employees who actively call and market to independent pharmacists,
          nursing homes and small regional chains; and
     o    corporate and government sales, marketing to group purchasing
          organizations, pharmacy chains and federal, state and local government
          agencies.

     Our traditional distribution services also play an integral part in
supporting our on-line marketplace. After an on-line buyer has selected a
product offered by a seller posting on the website, we purchase the product from
the seller, take delivery at our Cincinnati warehouse, and sell and ship it to
the buyer.

     On-Line Pharmaceutical Marketplace

     We created our pharmaceutical trading outlet at www.rxbazaar.com to build
on our traditional distribution business. Our goal is to bring market efficiency
to the local pharmacy and to link a variety of pharmaceutical buyers and sellers
in a confidential internet environment. Our on-line marketplace enables buyers
and sellers to post, on a confidential basis, products they wish to buy or sell.
Because the website is capable of reaching a large national audience in an
efficient manner, it enables sellers, such as manufacturers, wholesalers and
distributors, to offer their products at significantly reduced prices. In
addition, a seller can post for quick movement its short-dated, overstocked and
bulk products that, in the past have been difficult to sell. We purchase the
product from the seller at a discount and sell the products to the buyer.

     Our on-line marketplace enables participants to buy and sell in an open
exchange that requires no up-front fees, no software installation and no
consulting services. A seller selling products through the site avoids incurring
expenses such as those relating to sales forces, distribution, chargebacks and
rebates, and can reduce or eliminate expenses caused by an inability to quickly
sell overstocked merchandise and inventory that is near its expiration date. The
buyer reaps the benefits of these savings through reduced prices. The buyer may
also post items it would like to acquire.

     If a customer notifies us that it wants to buy a product posted for sale on
the website, we:

     o    buy the product from the poster at a discount from the listed price;
     o    take delivery of the product at our warehouse; and
     o    sell and ship the product to the customer at the listed price.

     We may also elect to fill the order with inventory already in stock, at the
listed price, if we have the item in stock. In addition, we may charge
wholesalers a monthly fee for posting products on the site.

     Our on-line marketplace is fully supported by a traditional
"brick-and-mortar" warehouse, a full staff of software engineers monitoring and
updating the site daily, and a telemarketing staff that is available 24 hours a
day by phone. Our operating controls are aimed at providing buyers and sellers
using our exchange with the assurance that they are dealing in merchandise that
has been handled properly with the assurance of complete product integrity.

     Logistics Services

We are also developing the capability to provide distribution logistics services
for drug manufacturers, to manage all aspects of back room infrastructure for
manufacturers, including:

     o    product storage,
     o    order fulfillment,
     o    invoicing,


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     o    shipping,
     o    chargeback and rebate control, and
     o    accounts receivable management.

     We are currently completing development of proprietary software to automate
these services, including the complex transactions associated with manufacturer
pricing strategies. We have thus far provided these services only to one company
on a limited basis. Distribution logistics services have not accounted for a
significant percentage of our revenues, and we are not currently providing these
services to any drug manufacturers. Whether we are able to address this business
opportunity in the future depends on several factors, including our ability to
obtain sufficient working capital.

     No customer accounted for more than 10% of our total revenues in 2001 or
2002.

     Our primary marketing activities include:

     o    Participation in key industry trade shows where we exhibit and give
          demonstrations to existing and potential posters and customers;

     o    Utilization of our staff of 55 telesales representatives through which
          we conduct over 5,000 calls per day to prospective and current
          customers;

     o    Periodic faxes listing specially priced products and occasional
          incentives are sent to encourage a potential customer to place its
          first order; and

     o    Our website - a powerful marketing tool that provides up to date
          information on our products and services.

STRATEGY

     Since launching our on-line marketplace, we have been positioning RxBazaar
to be a national exchange for on-line pharmaceutical trading. We believe that
the key to growth is to become a recognized facilitator that creates value and
convenience for both buyers and sellers. Our strategy is to offer an integrated
set of distribution services, combining traditional wholesale pharmaceutical
distribution services with a unique web-based exchange that facilitates and
manages pharmaceutical trading transactions.

     A key element of our strategy is to leverage our ability to cut through the
complexities of the pharmaceutical supply chain and pass savings that often are
not available to our customers. Specifically, we intend to generate savings by
reducing or eliminating the number of intermediaries and enabling independent
pharmacy customers to realize those savings. We are able to offer this to market
participants by providing an on-line marketplace where buyers and sellers can do
business efficiently and confidentially by selling to and buying from RxBazaar
as the single intermediary.

     In addition to serving as a conduit for buyers and sellers, we also intend
to use our on-line market to sell for our own account inventory that we obtain
at discounts through market intelligence and through our product acquisition
activities. We believe that these activities not only have the potential to
increase overall sales, but also can assist in drawing buyers and sellers to the
site by increasing the volume and product mix available. By selling products for
our own account, we can also generate significantly favorable gross margins
compared to our margins on carrying out transactions for others. However, we
currently lack the working capital necessary to carry out product acquisition to
the extent necessary to operate profitably.

     We intend to persuade leading wholesalers and distributors to become
regular posters on our on-line marketplace. By obtaining early participation
from key suppliers in the industry, we intend to become recognized as a useful
resource that buyers will return to regularly, offering both branded and generic
as well as alternate source merchandise at the lowest prices.


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     Another important element in our strategy is to develop and leverage
proprietary technology that is superior to that of our competitors. In April
2000, we began developing our proprietary call center telemarketing management
software. We completed the project in March 2001.

COMPETITION

     The drug distribution business is highly competitive. In addition, we
expect the on-line marketplace feature of our business to be highly competitive
because the barriers to entry are relatively low.

     We will have no control over how successful our competitors will be. In
addition, our on-line competitors can duplicate many of the products or services
and much of the content that we offer, with little difficulty.

     We compete for our customers' purchasing dollars with:

     o    national, full-line wholesalers, such as McKesson Corporation,
          Cardinal Health, Inc. and AmerisourceBergen Corp.;
     o    smaller regional wholesalers, such as H.D. Smith Wholesale Drug
          Company and D&K Health Care Resources, Inc., which sell full lines of
          drug products in various regions of the U.S.; and
     o    smaller, specialty wholesalers that provide nation-wide coverage for
          various product categories.

     Many of our competitors and potential competitors have operated for a
longer period of time than we have, have greater financial resources, have
established marketing relationships with leading manufacturers and advertisers
and have a secured presence in distribution channels. Some of these companies
may also commence or expand their presence on the internet. Finally, we are
aware of other entrepreneurial companies that are developing and marketing
on-line products and services that compete directly with those that we offer.
Also, we may face a significant competitive challenge from alliances entered
into between and among our competitors and major pharmacy benefit managers,
major HMOs or chain drugstores, as well as from larger competitors created
through industry consolidation. These partnerships or consolidated entities
could pose a significant competitive challenge to us and their existence could
impede us in or prevent us from establishing relationships with the member
pharmacy benefit managers, HMOs or chain drugstores.

     Our competitive strategy is not to displace larger, more established
full-line distributors, but to offer our independent pharmacy customers an
opportunity to supplement their regular purchasing activities by obtaining
particular products at significant discounts.

     We intend to compete on the following principal factors:

     o    acceptance of our business model as a confidential on-line marketplace
          using RxBazaar as the single intermediary;
     o    recognition of the RxBazaar brand;
     o    convenience, accessibility and ease of use for both sellers and
          buyers;
     o    the prices at which we can offer products to buyers;
     o    customer service; and
     o    reliability and speed of fulfillment for products ordered.

     We believe that we have the ability to address each of the factors on which
we intend to compete because of our combination of:

     o    an established traditional distribution business;
     o    our experience in purchasing;
     o    an innovative on-line exchange featuring confidential trading through
          a single intermediary; and
     o    substantial management expertise and industry experience.

     However, we can give no assurance that we will be able to successfully
compete. Intense competition in our industry could prevent us from achieving our
business objectives.


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GOVERNMENT REGULATION

     Our business is subject to extensive federal, state and local regulation,
including:

     o    laws and regulations relating to the purchase and sale of prescription
          and over-the-counter drugs;
     o    federal, state and local licensing and registration regulations;
     o    provisions of the Prescription Drug Marketing Act and the rules
          thereunder; and
     o    provisions of the Controlled Substances Act and U.S. Drug Enforcement
          Agency regulations, as well as related state and local laws and
          regulations relating to the purchase, storage and dispensing of
          controlled substances, prescription drugs and certain over-the-counter
          drugs.

     These laws and regulations impose substantial registration, security,
record-keeping, reporting and other requirements.

     We handle controlled substances, such as narcotic and habit-forming drugs,
which require special storage and handling. We therefore must meet licensing
requirements of the U.S. Drug Enforcement Administration. We are also required
to maintain a wholesale distributor's license as well as a license for
controlled substances for the state of Ohio, where our physical operations are
located. Additionally, as a generic drug distributor, we must obtain licenses as
necessary from each state to which we ship products.

     Our business is subject to a wide range of federal and state laws and
regulations, including the Federal Food, Drug and Cosmetic Act, the Controlled
Substances Act, the Prescription Drug Marketing Act and the rules under each of
those laws, and state laws and regulations applicable to the distribution of
pharmaceutical products and controlled substances.

     The Federal Food, Drug and Cosmetic Act generally regulates such matters as
the handling, packaging, storage, and labeling of drugs and cosmetics. The
Prescription Drug Marketing Act, an amendment to the Federal Food, Drug and
Cosmetic Act, establishes requirements applicable to the wholesale distribution
of prescription drugs, including the requirement that wholesale drug
distributors be licensed in accordance with federally established guidelines on
storage, handling, and records maintenance by each state in which they conduct
business. In addition, because some of the drugs that we handle are regulated
under the Controlled Substances Act (for example, those containing narcotics
such as codeine or certain stimulant or depressant medications), we are also
subject to the applicable provisions of that law, including specific labeling,
packaging and recordkeeping requirements and the obligation to register with the
federal government as a distributor of controlled substances. Finally, we are
required to maintain licenses and permits for the distribution of pharmaceutical
products and controlled substances under the laws of each state in which we
operate.

     On December 3, 1999, the Food and Drug Administration published final rules
implementing the Prescription Drug Marketing Act. The Food and Drug
Administration originally scheduled these final rules to become effective on
December 4, 2000 but has since stayed effectiveness of certain rules several
times, most recently on February 13, 2002, so that the stayed rules will not be
in effect until April 1, 2003. Under the rules that have been stayed, wholesale
drug distributors must enter into a written agreement with a drug manufacturer
in order for the wholesale drug distributor to be considered an authorized
distributor for the manufacturer's products. We have written agreements to
purchase products with over 40 manufacturers. Those wholesale drug distributors
who are not considered authorized distributors must provide their customers with
a statement identifying all prior sales of the drug starting with the original
sale by the manufacturer. If these rules become effective in their current form
on April 1, 2003, then one effect is that we may have to provide this
information to buyers on our website. However, the confidentiality between
sellers and buyers is a feature that we promote to attract sellers to use our
on-line marketplace. Sellers on our website may be less willing to use the
website if it means that they will have provide the prior sale information to
our buyers. Therefore, we could experience significant disruption in the supply
of products available on our on-line marketplace, which could have a material
adverse effect on our business. These rules may be further amended by the Food
and Drug Administration prior to final implementation, or Congress could enact
an amendment to the law that would alleviate this effect on us. We can give no
assurance that the rules as they are finally implemented will not materially and
adversely affect our business.


                                       10
<PAGE>


     State laws and regulations aimed at preventing abuses in the drug
distribution business could also affect our business, because increased
regulation could put additional burdens on legitimate wholesalers and retailers.
Recent regulations and enforcement actions, for example, have focused on
practices of businesses known as closed door pharmacies. A closed door pharmacy
is a pharmacy that dispenses drugs to patients of a nursing home or hospital,
but does not sell to the public. Closed door pharmacies are given discounts on
prescription drugs. One common fraudulent scheme involves operators who set up a
closed door pharmacy, and obtain drug products at the discounted prices
available to legitimate closed door pharmacies. Rather than supplying a nursing
home or other eligible entity, though, these operators resell their product into
the market at a significant mark-up. State laws and regulations are being
enacted to combat such practices. For example, the Nevada Board of Pharmacy has
voted to restrict pharmaceutical wholesalers from selling more than 10% of their
inventory to other wholesalers, and has imposed more stringent recordkeeping
requirements. Such a broad-based restriction, or other regulatory changes that
have the ancillary effect of limiting or constraining legitimate business
opportunities in the secondary market, could harm our business.

     We believe that we currently have all the regulatory approvals necessary to
conduct our business. However, we can give no assurance that we will be able to
maintain compliance with existing regulations or that laws or regulations
enacted in the future will not hinder or prevent us from conducting our
traditional and on-line business.

     We also require our customers and wholesalers to demonstrate that they meet
various licensing requirements. For example, we require any party that offers to
buy from or sell to us any product designated by the FDA as "prescription only"
to supply a copy of its current license from its local state board of pharmacy,
demonstrating that it meets the regulatory requirements for the sale or purchase
of pharmaceutical products. A party offering to buy or sell products regulated
under the Controlled Substances Act must send to us a copy of its current
Controlled Substance Registration Certificate issued by the U.S. DEA. We keep
copies of these licenses and certificates on file, and if a party's license or
certificate has expired, we will not buy from or sell to the party until we
receive a copy of the renewed licenses(s).

INTELLECTUAL PROPERTY

     Although the operation of traditional drug distribution businesses has not
historically been dependent on proprietary technology, we have developed
proprietary software for the management of our call center that we believe helps
us to increase the efficiency and effectiveness of our call center staff. We
have also developed proprietary software that automates certain business
functions, including the complex transactions associated with manufacturer
pricing strategies.

     We do not have any patents on our proprietary software and we depend on a
combination of copyright protection and trade secrets to maintain our
intellectual property.

EMPLOYEES

     As of December 31, 2002, we had 87 full-time employees, of whom 58 were
employed in sales, seven were employed in information technology and the rest
were employed in administrative and customer service positions.

     None of our employees are represented by labor organizations and we are not
aware of any activities seeking such organization. We consider our relations
with our employees to be good.

ITEM 2.  DESCRIPTION OF PROPERTIES

     We maintain our principal executive offices at 1385 Kemper Meadow Drive,
Cincinnati, Ohio, under a lease expiring in March 2015. The premises consist of
approximately 37,300 square feet of office and warehouse space. The rent is
$35,000 per month.

     We maintain our data center and call center at 1255 Kemper Meadow Drive,
Suite 150, Cincinnati, Ohio, under a lease expiring in May 2011. The premises
consist of approximately 17,300 square feet of office and administrative space.


                                       11
<PAGE>


The rent is $17,981 per month. We also maintain an administrative office at 200
Highland Avenue, Suite 301, Needham, MA under an oral tenant-at-will arrangement
with a related party. See Item 12.

     Our website address is www.rxbazaar.com.

     We believe that our present facilities are adequate to meet our current
needs. If new or additional space is required, we believe that adequate
facilities are available at competitive prices in the respective areas.

ITEM 3.  LEGAL PROCEEDINGS

     We are involved in certain legal proceedings from time to time incidental
to our normal business activities. While the outcome of any such proceedings
cannot be accurately predicted, we do not believe that the ultimate resolution
of any existing matters should have a material adverse effect on our financial
position or results of operations.

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

     None.

                                     PART II
                                     -------

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our common stock has been listed on the OTC Bulletin Board under the symbol
RXBZ since September 17, 2002. There is no active trading market for our common
stock at present and there has been no significant trading market to date. Until
September 17, 2002, no market quotations were entered for our common stock.
Between November 18 and December 31, 2002, the high and the low market
quotations were $.01 and $2.00, respectively. We cannot guarantee that an active
trading market will ever develop or if a market does develop, that it will
continue.

     On December 31, 2002, based upon information from Continental Stock
Transfer & Trust Company, our transfer agent, there were approximately 270
holders of record of the common stock. Since a portion of the shares of common
stock is held in street or nominee name, it is believed that there may be a
significant number of additional beneficial owners of the common stock.

DIVIDENDS

     We have never declared or paid cash dividends on our common stock.
Furthermore, we presently intend to retain all earnings, if any, for use in our
business operations and accordingly, the board of directors does not anticipate
declaring any cash dividends in the foreseeable future.

TRANSFER AGENT

     The transfer agent and registrar for our common stock is Continental Stock
Transfer & Trust Company, New York, New York.

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

OVERVIEW

     We distribute brand and generic pharmaceutical and medical products,
through both our on-line market and through traditional distribution activities
such as:


                                       12
<PAGE>


     o    direct sales, conducted by a staff of direct sales telemarketing
          employees who actively call and market to independent pharmacists,
          nursing homes and small regional chains; and

     o    corporate and government sales, marketing to group purchasing
          organizations, pharmacy chains and federal, state and local government
          agencies.

     During our first six months after formation, we focused our efforts on
hiring key personnel, establishing relationships with customers and vendors, and
developing our technological and operational infrastructure. We launched our
www.rxbazaar.com website, and commenced sales, in April 2000. Our initial
operations were funded through loans from officers and directors and private
placements of common stock. We also arranged for FPP Distribution, Inc., then
known as Superior Pharmaceutical Company, to act as our fulfillment center for
all of our sales. FPP Distribution was a wholly-owned subsidiary of Able
Laboratories, Inc. In October 2000, we agreed to acquire FPP Distribution from
Able. We raised the necessary funds to acquire FPP Distribution by selling
Series A Preferred Stock to investors in a private placement. We purchased FPP
Distribution on February 23, 2001 for $4,000,000 in cash and the assumption of
$2,250,000 in subordinated debt. At the same time, we entered into a $12,500,000
line of credit, secured by all of our assets. On completion of the FPP
Distribution acquisition, we lacked sufficient working capital to operate our
business. We continued to seek additional financing throughout 2001. In November
2001, we reduced our work force by 18 employees and reduced the salaries of
other employees.

     On February 1, 2002, RxB, Inc. ("RxB") (formerly known as RxBazaar, Inc.),
entered into an agreement to merge with a wholly-owned subsidiary of RxBazaar,
Inc. (formerly known as SB Merger Corp.). Because we lacked sufficient working
capital as of the date of the merger agreement, the merger agreement required us
to raise a minimum of $3 million in additional equity after January 1, 2002.
This requirement was to ensure that the company would have a reasonable amount
of working capital after the merger. To meet this requirement, we sold
$4,175,000 of Series B Preferred Stock, for cash and in consideration of
conversion of outstanding notes payable and accrued expenses.

     On July 26, 2002, RxB completed its merger with a wholly-owned subsidiary
of SB Merger Corp. In the merger, SB Merger Corp. issued approximately 3,333,969
shares of common stock, 345,333 shares of Series A Preferred Stock and 2,087,500
shares of Series B Preferred Stock to RxB's stockholders. The surviving parent
company, now known as RxBazaar, Inc., is also obligated to issue up to 1,834,653
shares of common stock upon exercise of outstanding options and warrants to
purchase common stock that it assumed in the merger and it may become obligated
to issue up to 2,363,118 additional shares of common stock, if the surviving
company meets earnings targets in the first or second year after the merger.

     Stockholders of RxB before the merger now own approximately 93% of the
outstanding shares of the company, or approximately 95% after giving effect to
the exercise of all outstanding options and warrants, or approximately 96% after
giving effect to the issuance of additional shares that may become issuable to
former RxB stockholders upon the achievement of certain earnings targets by the
merged company. After the merger, SB Merger changed its name to RxBazaar, Inc.
and RxBazaar, Inc. changed its name to RxB, Inc. On September 30, 2002, RxB was
merged into RxBazaar.

     The business combination was a "reverse merger," so termed because
immediately after the merger, stockholders of RxB held approximately 93% of the
outstanding shares of the surviving company. For that reason, the financial and
other information in this report is presented for the operations of RxB since
its inception in October 1999. Also, because the merger was accounted for as an
acquisition of SB Merger by RxB and a recapitalization of RxB, our financial
statements for periods ending after the date of the merger will consist of the
historical financial statements of the former RxBazaar, Inc.

CRITICAL ACCOUNTING POLICIES

     Our significant accounting policies are more fully described in Note 1 to
our consolidated financial statements included in this report. However, certain
of our accounting policies are particularly important to the portrayal of our
financial position and results of operations and require the application of
significant judgment by management; as a result, they are subject to an inherent
degree of uncertainty. In applying these policies, management makes estimates


                                       13
<PAGE>


and judgments that affect the reported amount of assets, liabilities, revenues
and expenses and related disclosures. Those estimates and judgments are based on
management's historical experience, the terms of existing agreements, our
observance of trends in the industry, information that we obtain from our
customers and outside sources, and on various other assumptions that management
believes to be reasonable and appropriate under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
might differ from these estimates under different assumptions or conditions. Our
critical accounting policies include:

     Inventories. Inventories are stated at the lower of average cost or market,
with cost being determined on the first-in, first-out method. Cost of
inventories held for distribution is based on the purchase price net of vendor
discounts and other allowances. We establish reserves, when necessary, for
slow-moving and obsolete inventories based on our historical experience and
management's assessment of current product demand. We evaluate the adequacy of
these reserves quarterly.

     Revenue recognition and accounts receivable. We recognize revenue on
product sales when persuasive evidence of an arrangement exists, the price is
fixed and final, delivery has occurred and there is a reasonable assurance of
collection of the sales proceeds. We obtain oral or written purchase
authorizations from our customers for a specified amount of product at a
specified price and consider delivery to have occurred at the time of shipment.
We recognize revenue upon shipment. We provide allowances for estimated
uncollectible accounts based on historical experience and current developments
with our customers.

     Information Technology Costs. Costs of developing internal-use software for
our website and call center are accounted for in accordance with Emerging Issues
Task Force Issue No. 00-2 and AICPA Statement of Position 98-1. We capitalize
costs only to the extent that they are realizable and amortize them over the
estimated life of the software. We did not capitalize any costs incurred in
connection with our development activities during 2002 and 2001.

     Impairment of Long-Lived Assets. We continually evaluate whether events and
circumstances have occurred that indicate that the remaining estimated useful
life of long-lived assets may require revision or that the remaining net book
value may not be recoverable. When factors indicate that an asset may be
impaired, we use various methods to estimate the asset's future cash flows
expected to result from the use of the asset and its eventual disposition. If
the sum of the expected future undiscounted cash flows is less than the carrying
amount of the asset, we will recognize an impairment loss in the amount of the
excess of the carrying amount over the estimated fair value of the asset. We
will charge any impairment amount to operations.

RESULTS OF OPERATIONS

     The selected financial data set forth below has been derived from our
financial statements. The information set forth below should be read in
connection with the financial statements and notes thereto, as well as other
information contained in this report which could have a material adverse effect
on our financial condition and results of operations.

<TABLE>
<CAPTION>
                                                                 Years Ended
                                                                 December 31,
                                                        -----------------------------
                                                            2002             2001
                                                        ------------     ------------
<S>                                                     <C>              <C>
STATEMENT OF OPERATIONS DATA:
Sales, net.........................................     $30,427,928      $17,244,283
Cost of sales......................................      27,200,976       14,479,743
                                                        ------------     ------------
Gross profit.......................................       3,226,952        2,764,540
Operating expenses.................................       7,423,111        8,584,401
                                                        ------------     ------------
Operating loss.....................................      (4,196,159)      (5,819,861)
Other income (expense), net........................        (408,489)        (717,432)
                                                        ------------     ------------
Net loss...........................................      (4,604,648)      (6,537,293)
Dividends on preferred stock.......................         407,928          257,682
                                                        ------------     ------------
Net loss applicable to common stock................     $(5,012,576)     $(6,794,975)
                                                        ============     ============
Net loss per share - basic.........................          $(1.21)          $(2.28)
                                                        ============     ============
Weighted average number of shares
  outstanding .....................................       4,133,568        2,984,890
                                                        ============     ============


                                       14
<PAGE>


<CAPTION>
                                                                 December 31,
                                                        -----------------------------
                                                            2002             2001
                                                        ------------     ------------
<S>                                                     <C>              <C>
BALANCE SHEET DATA:
Current assets.....................................     $ 8,338,432      $ 5,878,706
Total assets.......................................      10,456,509        8,714,793
Current liabilities................................       9,394,705        7,024,979
Long-term debt.....................................       2,250,000        2,250,000
Total liabilities..................................      11,644,705        9,274,979
Working capital (deficit)..........................      (1,056,273)      (1,146,273)
Stockholders' equity (deficit).....................      (1,188,196)        (560,186)
</TABLE>

     Events Affecting Revenues and Results of Operations

     Our revenues and results of operations have been significantly affected,
and are likely to continue to be affected, by a shortage of working capital. We
need working capital to buy inventory, since our business depends on having a
sufficient amount of enough different products to attract customers and generate
sales. Our sale of $4,175,000 of Series B Preferred Stock, in the second quarter
of 2002, significantly improved our working capital. With the additional working
capital generated by our sale of Series B Preferred Stock, we were able to
increase our inventory purchases and we were able to attract additional
potential sellers of products to post items for sale on our rxbazaar.com
website. As of April 1, 2002, we had 693 different products posted for sale on
our website, with a total listed sales value of $4.7 million. As of December 31,
2002, we had improved the breadth of product offerings posted on the website to
a total of approximately 8,000 different items with a total listed value of $400
million. Management believes that the increase in items posted for sale is an
indication of continued and growing interest in our online marketplace among
potential sellers, and makes the site more attractive to buyers. The increase in
items posted for sale, however, does not directly effect our financial condition
or results of operations. Unless we are able to attract additional buyers to our
website and increase sales, we will not be able to operate profitably.

     At December 31, 2002 our auditors expressed doubt about our ability to
continue as a going concern. Management plans to address this issue by raising
additional working capital through one or more offerings of our securities to
strengthen our financial condition and support our growth. If we are able to
generate sufficient working capital by selling our securities, then management
hopes to conduct operations on a profitable basis, and to generate additional
working capital for operations. However, we can give no assurance that we will
be able to raise the necessary capital to sustain our operations or ever operate
profitably.

     Fiscal Year ended December 31, 2002 compared to Fiscal Year ended
     December 31, 2001

     Net sales for the fiscal year ended December 31, 2002 were $30,427,928,
compared to $17,244,283 for the fiscal year ended December 31, 2001. The
$13,183,645 or 76.5% increase is due to our acquisition of FPP Distribution on
February 23, 2001 and our growing internet sales. The current period includes 12
months of sales from FPP Distribution compared to only ten months of sales from
FPP in the prior period. Our internet sales were $15,428,332 or 50.7% of net
sales for the fiscal year ended December 31, 2002 compared to $4,255,128 or
24.7% of net sales for the fiscal year ended December 31, 2001. Sales growth in
2002 was impeded by our lack of working capital, which resulted in an inability
to secure credit from vendors and an inability to adequately stock our warehouse
during the first four months of 2002. Our sales increased in the second half of
2002 as a result of our sale of Series B Preferred Stock and its corresponding
effect on both internet postings and a strengthening of our creditworthiness.

     Cost of sales for the fiscal year ended December 31, 2002 was $27,200,976
or 89.4% of net sales, compared to $14,479,743 or 84% of net sales for the 2001
fiscal year. The decrease in the gross profit margin is a result of the sale of
brand pharmaceuticals in the last nine months of fiscal 2002 which have a much
lower gross profit margin. The sale of brand pharmaceuticals has significantly


                                       15
<PAGE>


increased activity on our website and makes the site more attractive to buyers
and sellers. In addition to drawing buyers and sellers to our Internet site,
brand pharmaceuticals often support the sale of generic pharmaceuticals which
support higher margins. Our margins are affected by our ability to buy
pharmaceutical products at favorable prices and the mix of product sales between
brand and generic pharmaceuticals.

     Sales and marketing expenses for the 2002 fiscal year were $1,549,204 or
5.1% of sales, compared to $1,388,245 or 8.1% of sales for the 2001 fiscal year.
These expenses include the salaries and commissions of our telemarketing staff,
advertising and trade show expenses. Increased salaries and commissions of
$282,903 were offset by a $152,567 decrease in advertising and tradeshow
expenses.

     Information technology expenses were $784,787 for the 2002 fiscal year
compared to $1,202,886 for the 2001 fiscal year. These expenses include the
salaries of information technology staff and the costs of contract programmers.
The $418,099 decrease in expenses is primarily due to an $84,305 decrease in
costs for contract programmers and a decrease of $399,817 in salaries. We did
not use any contract programmers in the current period as development of major
systems were completed in fiscal 2001. Salaries decreased as a result of the
work force and salary reductions which took place in November 2001.

     General and administrative expenses for the 2002 fiscal year were
$5,089,120 compared to $5,993,270 for the 2001 fiscal year. The $904,150
decrease is primarily due to an $804,833 decrease in bad debt expense. In 2001
we recorded bad debt expense of $767,879 compared to net recoveries of $36,954
in 2002. Increases of $130,579 in consulting fees and $191,259 in legal fees
were offset by a decrease in salaries, benefits and payroll taxes of $335,407.

     Other expenses for the 2002 fiscal year were $408,489 compared to $717,432
for the 2001 fiscal year. Interest and financing expenses increased to $818,373
for the 2002 fiscal year compared to $745,903 for the 2001 fiscal year. The
$72,470 increase in interest expense is primarily due to interest and
amortization of debt discount on bridge notes amounting to $139,859 in the
current period, additional interest expense on the subordinated notes payable of
$25,313 and amortization of deferred financing costs also increased by $24,114
compared to the prior period. These increases were offset by decreased interest
on the asset-based line of credit and the debt which was converted to Series B
Preferred Stock. Miscellaneous income increased to $409,884 for the 2002 fiscal
year compared to $28,471 for the 2001 fiscal year. The increase in miscellaneous
income is primarily due to information technology consulting fees of $306,864
earned in the current period for services provided to Able Laboratories.

     We incurred a net loss for the 2002 fiscal year of $4,604,648 compared to a
net loss of $6,537,293 for the 2001 fiscal year. Net loss applicable to common
stock for the 2002 fiscal year was $5,012,576 or $1.21 per share compared to
$6,794,975 or $2.28 per share for the 2001 fiscal year.

LIQUIDITY AND CAPITAL RESOURCES

     Since inception, we have funded our working capital requirements primarily
through the sale of common and preferred stock and through borrowings against
our asset-based line of credit. At December 31, 2002, we had a working capital
deficit of $1,056,273, compared to a working capital deficit of $1,146,273 at
December 31, 2001. The $90,000 increase in working capital from December 31,
2001 to December 31, 2002 is primarily due to the net loss of $4,604,648 being
offset by amounts raised in private placements and noncash expenses. At December
31, 2002, we had a stockholders' deficit of $1,188,196 compared to a
stockholders' deficit of $560,186 at December 31, 2001. During the 2002 fiscal
year, we raised $4,175,000 through the sale of preferred stock, including the
conversion of $1,100,000 of debt and accrued expenses into preferred stock.
During fiscal 2001, we raised $7,046,262 through the sale of our equity
securities and paid $955,375 to redeem and retire shares of our preferred and
common stock.

     In September 2002, we issued 239,841 shares of Common Stock to Able
Laboratories in payment of $479,682 in accrued dividends on our Series A
Preferred Stock. We agreed to issue Able additional shares of Common Stock if
Able receives less than $479,682 in proceeds from the sale of these shares and
Able agreed to return any unsold shares after Able receives proceeds totaling
$479,682. As a result of the indeterminate number of shares to be issued, the
Company has recorded the issuance of the 239,841 shares at their par value of
$240 and has a remaining dividend payable of $479,442 as of September 30, 2002.


                                       16
<PAGE>


The dividend payable liability will be reduced and additional paid-in capital
will be increased based on proceeds from sales of dividend shares received by
Able. Able has waived its right to future dividends on the Series A Preferred
Stock. In addition, we issued 92,964 shares of Common Stock in payment of
$185,928 of accrued dividends on our Series B Preferred Stock on September 30,
2002. The Series B Preferred Stock was converted to Common Stock on September
30, 2002. As a result of Able's waiving its rights to future dividends on the
Series A Preferred Stock and the conversion of the Series B Preferred Stock into
Common Stock, the Company has no obligation to pay cash dividends on preferred
stock after September 30, 2002.

     A summary of our outstanding contractual obligations at December 31, 2002
is as follows:

<TABLE>
<CAPTION>
                                                 Payment Due by Period
                           ---------------------------------------------------------------
Contractual Obligations       Total         2003       2004-2005    2006-2007   After 2007
-----------------------    -----------   ----------   ----------   ----------   ----------
<S>                        <C>           <C>          <C>          <C>          <C>
Debt Obligations           $ 6,031,416   $3,781,416   $2,250,000   $        -   $        -
Operating Leases             6,531,140      645,844    1,364,740    1,040,556    3,480,000
                           -----------   ----------   ----------   ----------   ----------
         Total             $12,562,556   $4,427,260   $3,614,740   $1,040,556   $3,480,000
                           ===========   ==========   ==========   ==========   ==========
</TABLE>

     Based on our operating plans, management believes that as of March 31,
2003, our borrowing ability under our asset-based line of credit will be
sufficient to fund our working capital needs for the next four months. We are
currently seeking to raise additional capital through the private placement of
debt or equity securities to a limited group of qualified investors. We also
plan to continue to seek additional financing to pay off our subordinated notes
and improve our overall financial condition. However, we can give no assurance
that we will be able to obtain any such financing on satisfactory terms to the
Company. Our failure to obtain additional financing on satisfactory terms could
require us to curtail our operations and could have a potential adverse impact
on our results of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

     On June 30, 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, "Business Combinations," and No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 141 requires that the purchase method of accounting
be used for all business combinations initiated after June 30, 2001. With the
adoption of SFAS No. 142, effective January 1, 2002, goodwill is no longer
subject to amortization over its estimated useful life, but will be subject to
at least an annual assessment for impairment by applying a fair value based
test. Additionally, under SFAS No. 142, acquired intangible assets should be
separately recognized if the benefit of the intangible asset is obtained through
contractual or other legal rights, or if the intangible asset can be sold,
transferred, licensed, rented, or exchanged, regardless of intent to do so. The
adoption of these statements did not have a material impact on the consolidated
financial statements.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This statement establishes standards for accounting for
obligations associated with the retirement of tangible long-lived assets. This
statement is effective for fiscal years beginning after June 15, 2002. We
anticipate the adoption of this statement will not have a material effect on our
financial position and results of operations.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This statement addresses financial
accounting and reporting for the impairment and disposal of long-lived assets.
This statement is effective for fiscal years beginning after December 15, 2001.
The adoption of this statement did not have a material effect on our financial
position and results of operations.

     In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
SFAS No. 146 will be applied prospectively to any exit or disposal activities
initiated after December 31, 2002.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure, an Amendment of FASB Statement No.
123." This Statement provides alternative methods of transition for a voluntary


                                       17
<PAGE>


change to the fair value based method of accounting for stock-based employee
compensation. In addition, this Statement amends disclosure requirements to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The FASB has prescribed a tabular
format and location for the disclosures. We have adopted SFAS No. 148 and have
included the required disclosures in our consolidated financial statements for
the year ended December 31, 2002.

FORWARD LOOKING STATEMENTS

     The Company is including the following cautionary statement in this Annual
Report on Form 10-KSB to make applicable and take advantage of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 for any
forward-looking statements made by, or on behalf of, the Company.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, future events or performance and underlying assumptions and
other statements which are other than statements of historical facts. Certain
statements contained herein are forward-looking statements and accordingly
involve risks and uncertainties which could cause actual results or outcomes to
differ materially from those expressed in the forward-looking statements. The
Company's expectations, beliefs and projections are expressed in good faith and
are believed by the Company to have a reasonable basis, including without
limitation, management's examination of historical operating trends, data
contained in the Company's records and other data available from third parties,
but there can be no assurance that management's expectation, beliefs or
projections will result or be achieved or accomplished. In addition to other
factors and matters discussed elsewhere herein, reference is made to the section
"Risk Factors" beginning on page 7 to the Prospectus, dated September 30, 2002,
to the Company's Form SB-2 (No. 333-99403). The Company disclaims any obligation
to update any forward-looking statements to reflect events or circumstances
after the date hereof.

ITEM 7.  FINANCIAL STATEMENTS

                                                                           PAGE
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                                NUMBER
------------------------------------------                                ------

Independent Auditors' Report                                                F-1

Consolidated Balance Sheets as of December 31, 2002 and 2001                F-2

Consolidated Statements of Loss for the years ended
December 31, 2002 and 2001                                                  F-3

Consolidated  Statements of Stockholders' Equity (Deficit)
for years ended December 31, 2002 and 2001                                  F-4

Consolidated Statements of Cash Flows for the years ended
December 31, 2002 and 2001                                                  F-5

Notes to Consolidated Financial Statements                                  F-6


                                       18
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
RxBazaar, Inc.
Cincinnati, Ohio

We have audited the accompanying consolidated balance sheets of RxBazaar, Inc.
and subsidiary as of December 31, 2002 and 2001, and the related consolidated
statements of loss, changes in stockholders' equity (deficit) and cash flows for
the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits 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 audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of RxBazaar, Inc. and
subsidiary as of December 31, 2002 and 2001, and the consolidated results of
their operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has incurred losses from
operations resulting in a working capital deficiency and a stockholders' deficit
at December 31, 2002. These circumstances raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.


/s/ Wolf & Company, P.C.

Boston, Massachusetts
February 11, 2003


                                      F-1
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                           December 31,
                                                                  ----------------------------
                            ASSETS                                     2002            2001
                                                                  ------------     -----------
<S>                                                               <C>              <C>
Current assets:
  Cash and cash equivalents                                       $    480,228     $   176,840
  Accounts receivable - less allowance for doubtful accounts
    of $394,996 and $277,587                                         3,922,853       1,651,396
  Rebates receivable                                                    51,639          93,653
  Inventory                                                          3,776,323       3,894,494
  Prepaid expenses and other current assets                            107,389          62,323
                                                                  ------------     -----------
    Total current assets                                             8,338,432       5,878,706
                                                                  ------------     -----------

Property and equipment, at cost:
  Computer hardware and software                                       722,172         666,633
  Furniture, fixtures and equipment                                    280,850         261,363
  Leasehold improvements                                                28,713          28,713
                                                                  ------------     -----------
                                                                     1,031,735         956,709
  Less accumulated depreciation and amortization                      (458,632)       (248,320)
                                                                  ------------     -----------
    Net property and equipment                                         573,103         708,389
                                                                  ------------     -----------

Other assets:
  Deferred financing costs, net                                        185,148         329,832
  Customer lists, net of accumulated amortization of $777,700
    and $353,500                                                     1,343,283       1,767,483
  Deposits                                                              16,543          30,383
                                                                  ------------     -----------
    Total other assets                                               1,544,974       2,127,698
                                                                  ------------     -----------

                                                                  $ 10,456,509     $ 8,714,793
                                                                  ============     ===========

         LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
  Notes payable                                                   $  3,781,416     $ 3,081,373
  Accounts payable                                                   4,502,798       2,838,257
  Accrued expenses and other current liabilities                       631,049         847,667
  Preferred dividends payable                                          479,442         257,682
                                                                  ------------     -----------
    Total current liabilities                                        9,394,705       7,024,979
Subordinated notes payable                                           2,250,000       2,250,000
                                                                  ------------     -----------
    Total liabilities                                               11,644,705       9,274,979
                                                                  ------------     -----------

Stockholders' equity (deficit):
  Preferred stock, at liquidation value, $.001 par value,
    10,000,000 shares authorized:
    Series A, 345,333 shares issued                                  3,700,000       3,700,000
  Common stock, $.001 par value, 75,000,000 shares authorized,
    6,160,280 and 3,333,969 shares issued                                6,160           3,334
  Additional paid-in capital                                        10,222,966       5,886,529
  Accumulated deficit                                              (15,066,231)    (10,053,655)
  Unearned stock-based compensation                                    (51,091)        (96,394)
                                                                  ------------     -----------
    Total stockholders' equity (deficit)                            (1,188,196)       (560,186)
                                                                  ------------     -----------

                                                                  $ 10,456,509     $ 8,714,793
                                                                  ============     ===========


  See independent auditors' report and accompanying notes to consolidated financial statements.
</TABLE>


                                      F-2
<PAGE>

<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
                         CONSOLIDATED STATEMENTS OF LOSS

<TABLE>
<CAPTION>
                                                          Years Ended December 31,
                                                      ------------------------------
                                                           2002              2001
                                                      ------------      ------------
<S>                                                   <C>               <C>
Sales, net                                            $ 30,427,928      $ 17,244,283
                                                      ------------      ------------
Cost of sales                                           27,200,976        14,479,743
                                                      ------------      ------------
    Gross profit                                         3,226,952         2,764,540
                                                      ------------      ------------

Operating expenses:
  Sales and marketing                                    1,549,204         1,388,245
  Information technology                                   784,787         1,202,886
  General and administrative                             5,089,120         5,993,270
                                                      ------------      ------------
    Total operating expenses                             7,423,111         8,584,401
                                                      ------------      ------------

    Operating loss                                      (4,196,159)       (5,819,861)
                                                      ------------      ------------

Other income (expense):
  Interest and financing expense                          (818,373)         (745,903)
  Miscellaneous income (expense), net                      409,884            28,471
                                                      ------------      ------------
    Other income (expense), net                           (408,489)         (717,432)
                                                      ------------      ------------

    Net loss                                            (4,604,648)       (6,537,293)

Dividends on preferred stock                               407,928           257,682
                                                      ------------      ------------

    Net loss applicable to common stock               $ (5,012,576)     $ (6,794,975)
                                                      ============      ============

Net loss per share - basic                            $      (1.21)     $      (2.28)
                                                      ============      ============

Weighted average shares outstanding                      4,133,568         2,984,890
                                                      ============      ============


See independent auditors' report and accompanying notes to consolidated financial statements.
</TABLE>


                                      F-3
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                     YEARS ENDED DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                            Common Stock       Additional                  Unearned
                                             Preferred   -------------------    Paid-in     Accumulated   Stock-based
                                               Stock      Shares     Amount     Capital       Deficit     Compensation    Total
                                            -----------  ---------  --------  -----------  ------------   ------------ -----------
<S>                                         <C>          <C>        <C>       <C>          <C>             <C>         <C>
Balance, December 31, 2000                  $        --  2,667,817  $  2,668  $ 3,538,264  $ (3,258,680)   $(267,957)  $    14,295
Private placement of preferred stock          4,700,000         --        --     (331,932)           --           --     4,368,068
Private placements of common stock                   --    808,234       808    2,677,386            --           --     2,678,194
Purchase and retirement of preferred stock   (1,000,000)        --        --       50,000            --           --      (950,000)
Purchase and retirement of common stock              --   (150,500)     (150)      (5,225)           --           --        (5,375)
Amortization of unearned compensation                --         --        --           --            --       55,351        55,351
Forfeiture of unearned compensation                  --         --        --     (116,212)           --      116,212            --
Stock, options and warrants issued                   --      2,800         3       72,247            --           --        72,250
Stock options exercised                              --      5,618         5        2,001            --           --         2,006
Preferred dividends accrued                          --         --        --           --      (257,682)          --      (257,682)
Net loss                                             --         --        --           -     (6,537,293)          --    (6,537,293)
                                            -----------  ---------  --------  -----------  ------------    ---------   -----------
Balance, December 31, 2001                    3,700,000  3,333,969     3,334    5,886,529   (10,053,655)     (96,394)     (560,186)
Sale of preferred stock                       4,175,000         --        --     (160,500)           --           --     4,014,500
Conversion of preferred stock                (4,175,000) 2,087,500     2,087    4,172,913            --           --            --
Conversion of preferred dividends                    --    332,805       333      185,835            --           --       186,168
Common stock issued in merger                        --    406,006       406          (45)           --           --           361
Stock options and warrants issued                    --         --        --      146,250            --           --       146,250
Amortization of unearned compensation                --         --        --           --            --       37,287        37,287
Forfeiture of unearned compensation                  --         --        --       (8,016)           --        8,016            --
Preferred dividends accrued                          --         --        --           --      (407,928)          --      (407,928)
Net loss                                             --         --        --           --    (4,604,648)          --    (4,604,648)
                                            -----------  ---------  --------  -----------  ------------    ---------   -----------
Balance, December 31, 2002                  $ 3,700,000  6,160,280  $  6,160  $10,222,966  $(15,066,231)   $ (51,091)  $(1,188,196)
                                            ===========  =========  ========  ===========  ============    =========   ===========


                 See independent auditors' report and accompanying notes to consolidated financial statements.
</TABLE>


                                      F-4
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                    Years Ended December 31,
                                                               --------------------------------
                                                                     2002             2001
                                                               ---------------  ---------------
<S>                                                             <C>              <C>
Cash flows from operating activities:
  Net loss                                                      $ (4,604,648)    $ (6,537,293)
  Adjustments to reconcile net loss to net cash used for
    operating activities:
    Depreciation and amortization                                    897,853          693,727
    Amortization of unearned compensation                             37,287           55,351
    Stock, options and warrants issued for services                   82,500           17,000
    (Increase) decrease in operating assets:
       Accounts receivable                                        (2,271,457)       2,872,829
       Rebates receivable                                             42,014          143,769
       Inventory                                                     118,171        1,112,744
       Prepaid expenses and other current assets                     (45,066)         (13,536)
    Increase (decrease) in operating liabilities:
       Accounts payable                                            1,664,541       (3,638,462)
       Accrued expenses and other current liabilities               (166,618)         531,532
                                                               ---------------  ---------------
         Net cash used for operating activities                   (4,245,423)      (4,762,339)
                                                               ---------------  ---------------

Cash flows from investing activities:
    Purchase of property and equipment                               (75,026)        (148,321)
    Decrease (increase) in deposits                                   13,840          137,582
    Purchase of subsidiary                                                --       (4,002,880)
                                                               ---------------  ---------------
         Net cash used for investing activities                      (61,186)      (4,013,619)
                                                               ---------------  ---------------

Cash flows from financing activities:
    Increase in deferred financing costs                                  --         (365,402)
    Net change in line of credit                                   1,355,136        2,386,280
    Proceeds from notes payable and warrants                         375,000          575,000
    Payments on notes payable                                        (35,000)         (75,000)
    Proceeds from sale of stock                                    2,914,500        7,046,262
    Net proceeds from merger                                             361               --
    Proceeds from stock options exercised                                 --            2,006
    Purchase and retirement of stock                                      --         (955,375)
                                                               ---------------  ---------------
        Net cash provided by financing activities                  4,609,997        8,613,771
                                                               ---------------  ---------------

Net change in cash and cash equivalents                              303,388         (162,187)
Cash and cash equivalents at beginning of year                       176,840          339,027
                                                               ---------------  ---------------

Cash and cash equivalents at end of year                        $    480,228     $    176,840
                                                               ===============  ===============

Supplemental cash flow information:
    Interest paid                                               $    619,410     $    528,724
    Preferred dividends accrued                                      407,928          257,682
    Common stock issued for accrued dividends                        186,168               --
    Preferred stock issued for debt and accrued expenses           1,100,000               --
Additional cash flow information is included in Notes 4, 5 and 7.


  See independent auditors' report and accompanying notes to consolidated financial statements.
</TABLE>


                                      F-5
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     BUSINESS AND BASIS OF PRESENTATION

     RxBazaar, Inc. (the "Company" or "RxBazaar"), formerly known as SB Merger
     Corp., was incorporated in the State of Delaware on January 3, 2000. On
     July 26, 2002, the Company completed its merger with RxB, Inc. ("RxB") and
     the historical financial statements of RxB became the historical financial
     statements of the combined entity (see Note 3). RxB, formerly known as
     RxBazaar, Inc., was incorporated on October 25, 1999 in the State of
     Delaware. On September 30, 2002, RxB was merged into the Company. The
     Company distributes brand and generic pharmaceuticals and other medical
     supplies. On February 23, 2001, the Company acquired a wholly-owned
     subsidiary, FPP Distribution, Inc. ("FPP") which was formerly known as
     Superior Pharmaceutical Company. FPP distributes brand and generic
     pharmaceuticals. All significant intercompany balances and transactions
     have been eliminated in consolidation.

     REVERSE STOCK SPLIT AND MERGER RATIO

     On January 31, 2002 the Company's stockholders approved a 1-for-5 reverse
     stock split of the common shares. On July 26, 2002, in connection with the
     merger agreement with RxBazaar, RxB's stockholders approved a merger ratio
     in which 0.7 shares of RxBazaar common stock were issued for each share of
     RxB's common stock. All common stock information presented herein has been
     retroactively adjusted to reflect the reverse stock split and the 0.7-for-1
     merger ratio. (See Note 3.)

     USE OF ESTIMATES

     In preparing consolidated financial statements in conformity with
     accounting principles generally accepted in the United States of America,
     management is required to make estimates and assumptions that affect the
     reported amounts of assets and liabilities as of the balance sheet date and
     reported amounts of revenues and expenses during the reporting period. Such
     estimates relate primarily to the carrying values of accounts receivable
     and inventory, the estimated lives of property and equipment, the value of
     intangible assets, the valuation reserve on deferred taxes and the value of
     equity instruments issued. Actual results could differ from those
     estimates.

     CASH AND CASH EQUIVALENTS

     Cash equivalents include interest-bearing deposits with original maturities
     of three months or less.

     ACCOUNTS RECEIVABLE

     The Company has historically provided financial terms to customers in
     connection with sales of the Company's products. Financial terms, for
     credit-approved customers, are generally on a net 15-45 day basis.
     Management periodically reviews customer account activity in order to
     assess the adequacy of allowances for doubtful accounts. Factors considered
     include economic conditions and each customer's payment history and credit
     worthiness. Adjustments, if any, are made to allowance balances following
     the completion of these reviews to reflect management's best estimates of
     potential losses.

     INVENTORY

     Inventory consists primarily of finished goods held for distribution.
     Inventory is valued at the lower of average cost or market on a first-in
     first-out (FIFO) method. Cost of inventories held for distribution is based
     on the purchase price net of vendor discounts and other allowances.


                       See independent auditors' report.

                                      F-6
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost. Depreciation expense is provided
     over the estimated useful lives of the assets using the straight-line
     method. Leasehold improvements are amortized on the straight-line method
     over the shorter of the estimated useful life of the assets or the life of
     the related lease term.

     Depreciation and amortization for 2002 and 2001 was $210,312 and $219,314,
     respectively. Estimated useful lives are as follows:

          Computer hardware and software               2 - 5 years
          Furniture, fixtures and equipment            5 - 7 years
          Leasehold improvements                       5 - 10 years

     INFORMATION TECHNOLOGY COSTS

     Costs of developing internal-use software for the Company's website and
     call center are accounted for in accordance with Emerging Issues Task Force
     Issue No. 00-2 and AICPA Statement of Position 98-1. Costs are capitalized
     only to the extent that they are realizable and are amortized over the
     estimated life of the software. Costs incurred in connection with these
     development activities were not capitalized during 2002 and 2001.

     DEFERRED COSTS

     Deferred financing costs represent fees paid in connection with obtaining
     an asset-based line of credit and the assumption of the senior subordinated
     debt in connection with the acquisition of FPP (see Note 4). These costs
     are being amortized over the terms of the loans. Amortization expense for
     2002 and 2001 was $144,684 and $120,570, respectively.

     CUSTOMER LISTS

     A portion of the purchase price for FPP was allocated to customer lists
     (see Note 4). Customer lists are being amortized over an estimated life of
     five years. Amortization expense for 2002 and 2001 was $424,200 and
     $353,500, respectively. Amortization expense is expected to be $424,200 for
     2003, $424,200 for 2004, $424,200 for 2005 and $70,683 for 2006.

     IMPAIRMENT OF LONG-LIVED ASSETS

     We continually evaluate whether events and circumstances have occurred that
     indicate that the remaining estimated useful life of long-lived assets may
     require revision or that the remaining net book value may not be
     recoverable. When factors indicate that an asset may be impaired, we use
     various methods to estimate the future cash flows expected to result from
     the use of the asset and its eventual disposition. If the sum of the
     expected future undiscounted cash flows is less than the carrying amount of
     the asset, an impairment loss is recognized based on the excess of the
     carrying amount over the estimated fair value of the asset. Any impairment
     amount is charged to operations.

     REVENUE RECOGNITION

     Revenues from product sales are recognized in accordance with the
     Securities and Exchange Commission's Staff Accounting Bulletin No. 101.
     Under SAB 101, revenue is recognized when products are shipped, persuasive
     evidence of an arrangement exists, the selling price is fixed and
     collectibility is reasonably assured. Shipping and handling fees billed to
     customers are recognized in net sales. Shipping and handling costs are
     included in cost of sales.


                       See independent auditors' report.

                                      F-7
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     ADVERTISING COSTS

     Advertising costs are charged to expense when incurred. Advertising expense
     amounted to approximately $11,000 and $128,000 in 2002 and 2001,
     respectively.

     INCOME TAXES

     Deferred tax assets and liabilities are recorded for temporary differences
     between the financial statement and tax bases of assets and liabilities
     using the currently enacted income tax rates expected to be in effect when
     the taxes are actually paid or recovered. A deferred tax asset is also
     recorded for net operating loss, capital loss and tax credit carryforwards
     to the extent their realization is more likely than not. The deferred tax
     expense, if any, for the period represents the change in the deferred tax
     asset or liability from the beginning to the end of the period.

     STOCK-BASED COMPENSATION

     Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
     for Stock-Based Compensation," encourages all entities to adopt a fair
     value based method of accounting for employee stock compensation plans,
     whereby compensation cost is measured at the grant date based on the value
     of the award and is recognized over the service period, which is usually
     the vesting period. However, it also allows an entity to continue to
     measure compensation cost for those plans using the intrinsic value based
     method of accounting prescribed by Accounting Principles Board Opinion No.
     25, "Accounting for Stock Issued to Employees," whereby compensation cost
     is the excess, if any, of the quoted market price of the stock at the grant
     date (or other measurement date) over the amount an employee must pay to
     acquire the stock. Stock options issued under the Company's stock option
     plans generally have no intrinsic value at the grant date, and under
     Opinion No. 25 no compensation cost is recognized for them. The Company
     does not plan to adopt the fair value accounting model for stock-based
     employee compensation under SFAS No. 123.

     The Company applies Opinion No. 25 and related interpretations in
     accounting for stock options issued to employees and directors as more
     fully described in Notes 9 and 10. Had compensation cost for the Company's
     stock options issued to employees and directors been determined based on
     the fair value at the grant dates consistent with SFAS No. 123, the
     Company's net loss and net loss per share would have been adjusted to the
     pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                    Years Ended December 31,
                                                 -----------------------------
                                                      2002            2001
                                                 -------------   -------------
<S>                                              <C>             <C>
     Net loss - as reported                      $ (4,604,648)   $ (6,537,293)
     Add stock-based employee compensation
       under APB No. 25                                37,287          55,351
     Deduct stock-based employee compensation
       under SFAS No. 123                            (145,549)       (468,281)
                                                 ------------    ------------
     Pro forma net loss                          $ (4,712,910)   $ (6,950,223)
                                                 ============    ============
     Basic net loss per share - as reported      $      (1.21)   $      (2.28)
                                                 ============    ============
     Basic net loss per share - pro forma        $      (1.24)   $      (2.41)
                                                 ============    ============
</TABLE>


     COMPREHENSIVE INCOME

     Accounting principles generally require that recognized revenue, expenses,
     gains and losses be included in net income. Certain statements, however,
     require entities to report specific changes in assets and liabilities, such
     as unrealized gains and losses on available-for-sale securities, as a
     separate component of the equity section of the balance sheet. Such items,


                       See independent auditors' report.

                                      F-8
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     along with net income, are components of comprehensive income. There were
     no items of other comprehensive income during 2002 or 2001.

     NET LOSS PER SHARE

     Basic loss per share represents loss applicable to common stock divided by
     the weighted average number of common shares outstanding during the period.
     Diluted loss per share reflects additional common shares that would have
     been outstanding if potential dilutive common shares had been issued, as
     well as any adjustment to income that would result from the assumed
     conversion. Potential common shares that may be issued by the Company
     relate to outstanding stock options and warrants (determined using the
     treasury stock method), preferred stock and convertible debt. The assumed
     conversion of outstanding dilutive stock options, warrants and preferred
     stock would increase the shares outstanding but would not require an
     adjustment to net loss as a result of the conversion. For all periods
     presented, options, warrants, preferred stock and convertible debt, were
     anti-dilutive and excluded from the net loss per share computation.

     RECENT ACCOUNTING PRONOUNCEMENTS

     On June 30, 2001, the Financial Accounting Standards Board ("FASB") issued
     SFAS No. 141, "Business Combinations," and No. 142, "Goodwill and Other
     Intangible Assets." SFAS No. 141 requires that the purchase method of
     accounting be used for all business combinations initiated after June 30,
     2001. With the adoption of SFAS No. 142, effective January 1, 2002,
     goodwill is no longer subject to amortization over its estimated useful
     life, but will be subject to at least an annual assessment for impairment
     by applying a fair value based test. Additionally, under SFAS No. 142,
     acquired intangible assets should be separately recognized if the benefit
     of the intangible asset is obtained through contractual or other legal
     rights, or if the intangible asset can be sold, transferred, licensed,
     rented, or exchanged, regardless of intent to do so. The adoption of these
     statements did not have a material impact on the consolidated financial
     statements.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
     Retirement Obligations." This statement establishes standards for
     accounting for obligations associated with the retirement of tangible
     long-lived assets. This statement is effective for fiscal years beginning
     after June 15, 2002. We anticipate that the adoption of this statement will
     not have a material effect on our financial position and results of
     operations.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
     Impairment or Disposal of Long-Lived Assets." This statement addresses
     financial accounting and reporting for the impairment and disposal of
     long-lived assets. This statement is effective for fiscal years beginning
     after December 15, 2001. The adoption of this statement did not have a
     material impact on our financial position and results of operations.

     In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
     Associated with Exit or Disposal Activities." SFAS No. 146 requires
     companies to recognize costs associated with exit or disposal activities
     when they are incurred rather than at the date of a commitment to an exit
     or disposal plan. SFAS No. 146 will be applied prospectively to any exit or
     disposal activities initiated after December 31, 2002.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
     Compensation -- Transition and Disclosure, an Amendment of FASB Statement
     No. 123." This Statement provides alternative methods of transition for a
     voluntary change to the fair value based method of accounting for
     stock-based employee compensation. In addition, this Statement amends
     disclosure requirements to require prominent disclosures in both annual and
     interim financial statements about the method of accounting for stock-based
     employee compensation and the effect of the method used on reported
     results. The FASB has prescribed a tabular format and location for the
     disclosures. The Company has adopted SFAS No. 148 and has included the
     required disclosures in its consolidated financial statements for the year
     ended December 31, 2002.


                       See independent auditors' report.

                                      F-9
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.   NEED FOR ADDITIONAL CAPITAL

     The Company incurred losses accumulating $15,066,231 since its inception
     through December 31, 2002, and has a working capital deficiency of
     $1,056,273 and a stockholders' deficit of $1,188,196 at December 31, 2002.
     These conditions raise substantial doubt about the Company's ability to
     continue as a going concern. The Company's continued existence is dependent
     on its ability to achieve profitable operations or raise additional
     financing. Management plans to resolve the doubt by raising capital through
     a private offering and anticipates the proceeds from the offering will
     provide sufficient capital resources to sustain operations. Management also
     plans to increase sales and improve the gross profit margin while
     controlling costs. As a result, management believes that no adjustments or
     reclassifications of recorded assets and liabilities is necessary at this
     time.

3.   MERGER AGREEMENT

     In the July 26, 2002 merger with RxBazaar, Inc., formerly known as SB
     Merger Corp., RxB's stockholders received 3,333,969 shares of common stock,
     345,333 shares of Series A Preferred Stock and 2,087,500 shares of Series B
     Preferred Stock of the Company. The Company is also obligated to issue to
     RxB's stockholders up to 1,834,653 shares of common stock upon exercise of
     outstanding options and warrants to purchase common stock and may become
     obligated to issue up to 2,363,118 additional shares of common stock, if
     the Company meets earnings targets in the first or second year after the
     merger.

     Holders of RxB's common stock and Series A Preferred Stock may become
     eligible to receive additional consideration in the form of additional
     shares of common stock if the Company meets certain performance targets. If
     the Company's consolidated income before taxes is

     o    equal to or greater than $2,150,000 for the four fiscal quarters
          ending March 31, 2003, or
     o    equal to or greater than $3,225,000 for the four fiscal quarters
          ending March 31, 2004.

     then for each share of common stock and Series A Preferred Stock issued in
     the merger, another .4286 shares of our common stock will be issued as
     additional consideration. Target figures will be increased by $0.10 for
     every additional gross dollar of equity investment above $3,000,000 raised
     by RxBazaar after the date of the merger agreement, or the surviving
     corporation after the merger. Options and warrants to purchase RxB common
     stock are also eligible to receive additional consideration.

     Stockholders of the Company before the merger owned 406,006 shares of
     common stock or approximately 7% of the outstanding shares of the Company,
     or approximately 5% after giving effect to the exercise of all outstanding
     options and warrants, or approximately 4% after giving effect to the
     issuance of additional shares that may become issuable to former RxB
     stockholders upon the achievement of certain earnings targets.

     For accounting purposes, the transaction described above is considered, in
     substance, a capital transaction rather than a business combination. It is
     equivalent to the issuance of common stock by RxB for the net assets of
     RxBazaar, accompanied by a recapitalization. This accounting treatment is
     identical to that resulting from an acquisition, except that no goodwill or
     other intangible asset was recorded. The historical financial statements of
     RxB, Inc. are the historical financial statements of the combined entity.

4.   ACQUISITION OF FPP DISTRIBUTION, INC.

     On February 23, 2001, pursuant to an agreement with Able Laboratories, Inc.
     ("Able"), RxB acquired FPP. RxB made a cash payment of $4,000,000 to Able
     and also assumed Able's existing 13.5% senior subordinated debt in the
     amount of $2,250,000. Able remained liable for the subordinated debt as a
     guarantor. On June 14, 2002, Able purchased the senior subordinated debt
     eliminating Able's guaranty and making Able the holder of the debt. While
     FPP and Able are considered related parties (see Note 13), the purchase
     price and terms of the merger were determined in arms-length negotiations
     between the parties, based on a fairness opinion obtained from an
     independent appraiser.


                       See independent auditors' report.

                                      F-10
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     The acquisition has been accounted for as a purchase. The results of
     operations of FPP have been included in the Company's consolidated
     financial statements since the date of acquisition. The purchase price
     allocation was based on the estimated fair values at the date of
     acquisition. The Company acquired accounts receivable of $3,572,730,
     inventory of $4,790,316, property and equipment of $191,715 and other
     assets totaling $391,387 net of accounts payable and accrued expenses of
     $4,797,709. The excess of the purchase price over the net assets acquired
     plus costs incurred in connection with the merger aggregated $2,120,983.
     Accordingly, the Company allocated $2,120,983 of the purchase price to
     customer lists which are being amortized over five years.

     Unaudited pro forma consolidating operating results for the Company for the
     year ended December 31, 2001, assuming the acquisition of FPP had been made
     as of the beginning of 2001 are as follows:

<TABLE>
<S>                                                 <C>
          Sales, net                                $ 20,314,758
                                                    ============
          Net loss                                  $ (7,046,696)
                                                    ============
          Net loss per share - basic                $      (2.45)
                                                    ============
</TABLE>


5.   NOTES PAYABLE

     Notes payable consist of the following:

<TABLE>
<CAPTION>
                                                      December 31,
                                                 -----------------------
                                                   2002          2001
                                               -----------   -----------
<S>                                            <C>           <C>
     Notes payable, officers and directors     $    40,000   $   200,000
     Notes payable, computer equipment                  --       225,000
     Line-of-credit                              3,741,416     2,386,280
     Subordinated notes payable                  2,250,000     2,250,000
     Bridge notes payable                               --       270,093
                                               -----------   -----------
          Total                                  6,031,416     5,331,373

     Less current portion                        3,781,416     3,081,373
                                               -----------   -----------

          Long-term debt                       $ 2,250,000   $ 2,250,000
                                               ===========   ===========
</TABLE>

     NOTES PAYABLE, OFFICERS AND DIRECTORS

     In March 2000, the Company borrowed $250,000 from its officers and
     directors under 10% unsecured promissory notes. The notes are currently due
     on demand. Interest expense for 2002 and 2001 was $9,225 and $23,706,
     respectively. Accrued interest of $2,101 and $35,576 was included in
     accrued expenses and other current liabilities at December 31, 2002 and
     2001, respectively. In April and May 2002, $150,000 in notes were converted
     into Series B Preferred Stock.

     NOTES PAYABLE, COMPUTER EQUIPMENT

     On February 5, 2001, the Company entered into an equipment financing
     agreement with a corporation which employs a director of the Company as an
     officer. Under the agreement the Company received $250,000 and granted a
     security interest in certain computer equipment. During 2001, the Company
     paid $25,000 against the principal balance of this obligation. Interest
     expense for 2001 of $24,437 is included in accrued expenses and other
     current liabilities at December 31, 2001. On February 5, 2002, the Company
     paid $25,000 on this obligation and the lender agreed to release their
     claims to the computer equipment. The Company settled the balance due by
     issuing $200,000 of Series B Preferred Stock in April 2002 and payment of
     the interest in July 2002. Interest expense for 2002 was $1,262.


                       See independent auditors' report.

                                      F-11
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     LINE-OF-CREDIT

     On February 23, 2001, the Company and FPP entered into an asset-based
     line-of-credit agreement with a lender for $12,500,000 secured by a lien on
     substantially all assets. Borrowings under the line are based on eligible
     accounts receivable and inventory and have been classified as a current
     liability. The line bears interest at prime plus 1% (5.25% and 5.75% at
     December 31, 2002 and 2001) and matures on February 23, 2004. At December
     31, 2002 and 2001, the Company was in default of certain loan covenants.
     Interest expense for 2002 and 2001 was $192,674 and $268,079, respectively.

     SUBORDINATED NOTES PAYABLE

     On February 23, 2001, in connection with the acquisition of FPP, the
     Company assumed senior subordinated notes payable totaling $2,250,000 and
     bearing interest at 13.5% per annum payable monthly. The notes mature on
     June 17, 2004. The notes payable are secured by a second lien on
     substantially all assets, were guaranteed by Able Laboratories, Inc. and
     are subject to an inter-creditor agreement with the Company's asset-based
     lender. On June 14, 2002, Able purchased the debt. Able has the option to
     convert the debt into common stock of the Company at the current market
     value of the common stock. Able has agreed that it will not convert the
     notes if such conversion would result in Able owning more than 4.9% of the
     Company's common stock. The Company is current with its payments on these
     notes but is in default of certain loan covenants. The Company is
     prohibited from making any principal payments on the notes without the
     approval of the asset-based lender and Able has subordinated its rights
     with respect to defaults to the asset-based lender pursuant to the terms of
     the inter-creditor agreement. Accordingly, the Company has classified the
     balance due as non-current. Management intends to refinance this debt with
     long-term financing. Interest expense for 2002 and 2001 amounted to
     $303,750 and $278,437, respectively.

     BRIDGE NOTES PAYABLE

     In December 2001, the Company commenced an offering of units, each unit
     consisting of a $100,000 10% unsecured convertible promissory note and a
     warrant to purchase 14,000 shares of common stock at $0.71 per share. The
     purchase price per unit was $100,000. As of December 31, 2001, gross
     proceeds from this offering were $325,000. Proceeds of $55,250 were
     allocated to the warrants based on their estimated fair value and credited
     to additional paid-in capital. This amount was reflected as a discount
     against the notes payable and amortized to interest expense over the life
     of the notes. Interest expense and amortization expense for 2001 was $404
     and $343, respectively. In January 2002, the Company received an additional
     $375,000 in gross proceeds from this offering. Proceeds of $63,750 were
     allocated to the warrants and credited to additional paid-in capital.
     Interest expense and amortization expense for 2002 was $21,202 and
     $118,657, respectively. In April and May 2002, all $700,000 of these notes
     were converted into Series B Preferred Stock.

6.   COMMITMENTS

     LEASE AGREEMENTS

     The Company leases office and warehouse space under operating leases
     expiring April 2006 and March 2015. The leases require the Company to pay
     for utilities, repairs and maintenance. Rent expense for 2002 and 2001 was
     $628,583 and $649,072, respectively. Minimum future lease payments at
     December 31, 2002 were $645,844 for 2003, $658,072 for 2004, $706,668 for
     2005, $560,556 for 2006, $480,000 for 2007 and $3,480,000 thereafter.

     EMPLOYMENT AGREEMENTS

     The Company has employment agreements with certain of its officers that
     provide for minimum annual salaries, reimbursement of business related
     expenses and participation in other employee benefit programs. The
     agreements also include confidentiality, non-disclosure, severance,
     automatic renewal and non-competition provisions. Salary levels are subject
     to periodic review by the Board of Directors.


                       See independent auditors' report.

                                      F-12
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7.   PREFERRED STOCK

     SERIES A

     On February 15, 2001, the Company sold 3,133,334 shares of Series A
     Preferred Stock for gross proceeds of $4,700,000. The Company also issued
     five year warrants to purchase 38,383 shares of common stock at $14.29 per
     share to the investors. The Company valued the warrants at $47,000.
     Commissions and expenses in connection with the placement were $331,932.
     Approximately 7.14 shares of Series A Preferred Stock were convertible to
     one share of common stock and the Series A Preferred Stock had a stated
     dividend of 8%.

     Able entered into an agreement that gave the investors the right to
     exchange the Series A Preferred Stock for shares of Able preferred stock.
     On February 22, 2001, an investor exchanged $1,000,000 of Series A
     Preferred Stock for $1,000,000 of Able preferred stock. The 666,667 shares
     of Series A Preferred Stock used to effect the exchange were immediately
     redeemed and retired by RxB for $950,000. In March 2001, the investors
     exchanged the remaining $3,700,000 of Series A Preferred Stock for Able
     preferred stock. Consequently, Able became the holder of the Company's
     2,466,667 shares of Series A Preferred Stock after the exchange.

     On July 26, 2002, Able received 345,333 shares of RxBazaar, Inc. Series A
     Preferred Stock in the merger. (See Note 3). Each share of Series A
     Preferred Stock is convertible to one share of common stock and has a
     stated dividend of 8%. In September 2002, the Company issued 239,841 shares
     of common stock to Able in payment of $479,682 in accrued dividends. Able
     is entitled to receive additional shares of common stock, if Able receives
     less than $479,682 in proceeds on the sale of the 239,841 dividend shares.
     After Able receives $479,682 in proceeds from the sale of dividend shares,
     any unsold dividend shares will be returned to the Company. As a result of
     the indeterminate number of shares to be issued, the Company has recorded
     the issuance of the 239,841 shares at their par value of $240 and has a
     remaining dividend payable of $479,442 as of December 31, 2002. The
     dividend payable liability will be reduced and additional paid-in capital
     will be increased based on proceeds from sales of dividend shares received
     by Able. Able has waived its right to future dividends on the Series A
     Preferred Stock in exchange for the Company agreeing to register for resale
     the dividend shares, 238,000 shares of common stock held by Able and the
     common stock issuable on conversion of the Series A Preferred Stock. The
     registration statement for these shares was declared effective on September
     30, 2002. Able has also agreed that it will not convert any convertible
     securities, if such conversion would result in Able owning more than 4.9%
     of the issued and outstanding common stock of the Company.

     SERIES B

     In March 2002, the Company commenced an offering of its Series B Preferred
     Stock at $2.00 per share. The Company received gross proceeds of $4,175,000
     in 2002. Each share of Series B Preferred Stock is convertible to one share
     of common stock and has a stated dividend of 10%. The gross proceeds
     include conversion of $1,050,000 of notes payable and $50,000 of accrued
     expenses. Commissions and expenses in connection with the placement were
     approximately $160,500. On July 26, 2002, the holders of the Series B
     Preferred Stock received 2,087,500 shares of RxBazaar, Inc. Series B
     Preferred Stock in the merger. (See Note 3). On September 30, 2002, the
     Series B Preferred Stock was converted into 2,087,500 shares of common
     stock and the Company issued 92,964 shares of common stock in payment of
     $185,928 of accrued dividends on the Series B Preferred Stock. The
     2,180,464 shares of common stock were registered for resale on September
     30, 2002.

8.   COMMON STOCK

     The Company has a right of first refusal agreement with its founders, which
     gives the Company the right to reacquire any shares of common stock which
     the founder decides to sell. In addition, under restricted stock purchase
     agreements, if certain founders cease their employment with the Company
     then the Company has the right to reacquire the unvested shares, as defined
     in the stock purchase agreement, at the founder's original purchase price


                       See independent auditors' report.

                                      F-13
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     per share. As of December 31, 2002, there were 26,250 unvested shares of
     common stock.

     On February 23, 2001, the Company completed a private placement of 142,721
     units at approximately $10.71 per unit, each unit consisting of one share
     of common stock and a five year warrant to purchase one share of common
     stock at approximately $14.29 per share. The Company valued the warrants at
     $173,000. Gross proceeds of the offering were $1,529,000. Commissions and
     expenses in connection with the placement were $60,970.

     In March and May 2001, the Company exercised its option to repurchase and
     retire 150,500 shares of common stock issued to two founders who ceased
     working for the Company. The shares were repurchased at the original
     purchase price of approximately $.036 per share.

     On May 18, 2001, the Company received an additional $25,000 from an
     investor for the purchase of 2,333 units on the same terms as the February
     23, 2001 private placement of units.

     On June 5, 2001, the Board of Directors approved the sale of 280,000 shares
     of common stock to a corporation owned by four new directors. Gross
     proceeds were $500,000. Legal fees and expenses in connection with the sale
     were $35,000.

     On June 8, 2001, the Company received $100,000 for the sale of 28,000
     shares of common stock to an investor.

     In September to November 2001, the Company sold 355,180 units, each unit
     consisting of one share of common stock and a three year warrant to
     purchase one share of common stock at approximately $1.79 per share. The
     Company valued the warrants at $127,000. Gross proceeds of the offering
     were $634,250. Costs and expenses of the offering were $14,086.

9.   STOCK OPTION PLAN

     The Company has adopted two stockholder approved stock option plans and
     reserved 1,990,000 shares of common stock for issuance to employees,
     directors and consultants. Under the plans, the Board of Directors may
     grant stock options and restricted stock and determine the terms of the
     grant. No restricted stock was granted during 2002 or 2001. The following
     table summarizes the activity of options granted under the plans:

<TABLE>
<CAPTION>
                                                                Years Ended December 31,
                                                 ------------------------------------------------------
                                                            2002                        2001
                                                 --------------------------  --------------------------
                                                                Weighted                    Weighted
                                                                Average                     Average
                                                   Shares    Exercise Price    Shares    Exercise Price
                                                 ----------  --------------  ----------  --------------
<S>                                              <C>            <C>          <C>            <C>
     Outstanding at beginning of year              134,750      $ 10.99        138,880      $  9.29
     Granted                                       278,950         1.79         52,150        10.71
     Exercised                                        --            --          (5,618)        0.36
     Forfeited                                     (11,550)        3.23        (50,662)        7.24
                                                 ---------                   ---------
       Outstanding at end of year                  402,150      $  4.83        134,750      $ 10.99
                                                 =========                   =========

     Exercisable at end of year                    181,209      $  5.03         31,422      $  9.94
                                                 =========                   =========

     Reserved for future grants at end of year   1,582,232                     349,632
                                                 =========                   =========

     Weighted-average fair value of options
       granted during the year                                  $  0.26                     $  1.93
</TABLE>


                       See independent auditors' report.

                                      F-14
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes option-pricing model with the following weighted average
     assumptions used for grants:

<TABLE>
<CAPTION>
                                               Years Ended December 31,
                                               ------------------------
                                                2002             2001
                                               -------          -------
<S>                                            <C>              <C>
     Dividend yield                             0.0%             0.0%
     Risk-free interest rate                    4.0%             5.0%
     Expected volatility                        0.0%             0.0%
     Expected lives                            4 years          4 years
</TABLE>


<TABLE>
<CAPTION>
                                                        December 31, 2002
                                    -----------------------------------------------------------
                                          Options Outstanding             Options Exercisable
                                    --------------------------------    -----------------------
                                               Weighted     Weighted                   Weighted
                                                Average     Average                    Average
                                               Remaining    Exercise      Number       Exercise
     Exercise Price                 Number       Life        Price      Exercisable     Price
     --------------                 -------    ---------    --------    -----------    --------
<S>                                 <C>        <C>           <C>         <C>            <C>
     $0.36                           21,980    7.3 years     $ 0.36       13,738        $ 0.36
     $1.79                          271,950    9.1             1.79      115,500          1.79
     $7.14                            3,500    7.4             7.14        2,188          7.14
     $10.71                          20,720    8.2            10.71        7,783         10.71
     $14.29                          84,000    7.8            14.29       42,000         14.29
                                    -------                              -------

     Outstanding at end of year     402,150    8.7 years     $ 4.83      181,209        $ 5.03
                                    =======                              =======
</TABLE>

     In connection with 47,320 options granted at approximately $0.36 per share
     in 2000, the Company recorded unearned stock-based compensation of $321,100
     based on a fair market value of $7.14 per share at the time of the grants.
     The Company is amortizing the unearned stock-based compensation over the
     vesting period of the options. Amortization expense for 2002 and 2001 was
     $37,287 and $55,351, respectively. In addition, unearned compensation of
     $8,016 and $116,212 was forfeited on resignation by certain employees
     during 2002 and 2001, respectively.

     In connection with 115,500 options granted in 2002 to consultants for
     services rendered, the Company valued these options at $82,500 and charged
     this amount to expense.

10.  COMMON STOCK WARRANTS AND NON-PLAN OPTIONS

     On September 29, 2000, the Company granted warrants to purchase 168,000
     shares of common stock at approximately $17.86 per share to Able in
     consideration for services rendered. The warrants are exercisable through
     September 29, 2005. The warrants were valued at $300,000 and charged to
     expense in 2000.

     On October 23, 2000, the Company granted warrants to purchase 4,200 shares
     of common stock at approximately $14.29 per share as partial consideration
     for services rendered by an employment agency. The warrants are exercisable
     through October 23, 2005. The warrants were valued at $16,000 and charged
     to expense in 2000.

     On June 5, 2001, the Board of Directors granted non-plan stock options to
     purchase a total of 1,260,000 shares of common stock at approximately $1.79
     per share to four new directors. The options become exercisable on December
     31, 2001 and expire on June 5, 2008. The weighted average fair value of the
     options on the date of grant was approximately $.06 per share. On November
     30, 2001, options to purchase 910,000 shares were cancelled in connection


                       See independent auditors' report.

                                      F-15
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     with the resignation of two of these directors. On December 19, 2001, the
     Company issued a five year option to purchase 28,000 shares of common stock
     at approximately $1.79 per share to one of the former directors in
     connection with a mutual release. The Company valued the option at $12,000
     and charged it to expense.

     On January 9, 2002, the Board of Directors granted non-plan stock options
     to purchase 238,000 shares of common stock at approximately $1.79 per share
     to two directors. The options become exercisable over two years from the
     date of the grant and expire on January 9, 2009. The weighted average fair
     value of the options on the date of grant was approximately $0.14 per
     share.

11.  COMMON STOCK RESERVED

     The Company has reserved shares of common stock at December 31, 2002 as
     follows:

<TABLE>
<S>                                                     <C>
          Convertible preferred stock                     345,333
          Stock option plans                            1,984,382
          Warrants                                        808,817
          Non-plan options                                616,000
          Contingent merger shares                      2,363,118
                                                        ---------

          Total                                         6,117,650
                                                        =========
</TABLE>

     The Company may also be required to issue common stock on the conversion of
     its subordinated notes payable, if the holders elect to exercise their
     conversion rights (see Note 5) and may be required to issue additional
     common stock in satisfaction of its Series A Preferred Stock dividend
     agreement (see Note 7).

12.  MAJOR CUSTOMERS AND SUPPLIERS

     There were no major customers accounting for 10% or more in net sales for
     2002 or 2001. In 2002, four major suppliers accounted for 18%, 15%, 13% and
     10% of the Company's total purchases. During 2001, one major supplier
     (Able) accounted for 33% of the Company's total purchases.

13.  RELATED PARTY TRANSACTIONS

     FPP DISTRIBUTION, INC.

     During the first two months of 2001, the Company entered into certain
     transactions with FPP Distribution, Inc. ("FPP"), such as advances,
     expenses paid on behalf of and receipts collected for the affiliate. One of
     the founders and directors of the Company was an officer and director of
     Able Laboratories, Inc. ("Able"), and a former officer and director of the
     Company is an officer and director of Able. Able was the parent company of
     FPP until February 23, 2001 (see Note 4).

     During the first two months of 2001, the Company and FPP engaged in certain
     transactions for their mutual benefit that involved the use of each others'
     personnel and the use of FPP's facility. FPP acted as the fulfillment
     center for all sales made by the Company during the first two months of
     2001. No monetary value was assigned to the transactions involving the use
     of each others' personnel and the use of the distribution facility.

     In addition, RxB acted as an agent with respect to sales and purchases made
     on behalf of FPP in the amount of $276,542 during the first two months of
     2001. The Company records revenue in accordance with the Emerging Issues
     Task Force Issue No. 99-19, "Reporting Revenue Gross as a Principal Versus
     Net as an Agent." Accordingly, the Company has reduced its net sales and
     purchases by $276,542 in 2001.


                       See independent auditors' report.

                                      F-16
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     ABLE LABORATORIES, INC.

     During 2001, the Company reimbursed Able for office space and other
     services amounting to $34,013. (See Note 12.) During 2002, the Company
     recognized other income of $306,864 for information technology consulting
     services provided to Able.

     CONSULTING SERVICES

     The Chairman of the Board provides consulting services to the Company.
     Consulting expense for 2002 and 2001 amounted to $152,000 and 168,000,
     respectively. At December 31, 2002 and 2001, the Company had accounts
     payable to the Chairman, for services and expenses, amounting to $132,570
     and $167,670, respectively.

     A corporation owned by a stockholder of the Company also provides
     consulting services. Consulting expense for 2002 and 2001 amounted to
     $114,583 and $125,000, respectively. At December 31, 2001, the Company had
     accrued expenses of $52,083 to this corporation.

     An officer of the Company provides consulting services to the Company.
     Consulting fees for 2002 and 2001 were $68,247 and $55,000, respectively.
     At December 31, 2002 and 2001, the Company had accrued expenses of $96,247
     and $55,000, respectively, to this officer.

14.  INCOME TAXES

     There was no provision for income taxes for 2002 and 2001 due to the
     Company's net operating losses. The difference between the statutory
     Federal income tax rate of 34% and the Company's effective tax rate is
     primarily due to net operating losses incurred by the Company and the
     valuation reserve against the Company's deferred tax asset.

     The components of the net deferred tax asset at December 31, 2002 and 2001
     are as follows:

<TABLE>
<CAPTION>
                                                 2002           2001
                                             -----------    -----------
<S>                                          <C>            <C>
          Deferred tax asset:
            Federal                          $ 4,720,000    $ 3,202,000
            State                              1,180,000        809,000
                                             -----------    -----------
                                               5,900,000      4,011,000
          Valuation reserve                   (5,900,000)    (4,011,000)
                                             -----------    -----------

          Net deferred tax asset             $        --    $        --
                                             ===========    ===========
</TABLE>


     The following differences give rise to deferred income taxes at December
     31, 2002 and 2001.

<TABLE>
<CAPTION>
                                                 2002           2001
                                             -----------    -----------
<S>                                          <C>            <C>
          Net operating loss carryforward    $ 5,500,000    $ 4,005,000
          Other                                  400,000          6,000
                                             -----------    -----------
                                               5,900,000      4,011,000
          Valuation reserve                   (5,900,000)    (4,011,000)
                                             -----------    -----------

          Net deferred tax asset             $        --    $        --
                                             ===========    ===========
</TABLE>


                       See independent auditors' report.

                                      F-17
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     The increases in the valuation reserve are due to the Company's net
     operating losses.

     As of December 31, 2002, the Company has federal and state net operating
     loss carryforwards of approximately $13,000,000. Federal and state net
     operating loss carryforwards expire in varying amounts beginning in 2015
     and 2005, respectively.

     Use of net operating loss carryforwards is subject to annual limitations
     based on ownership changes in the Company's common stock as defined by the
     Internal Revenue Code.

15.  EMPLOYEE BENEFIT PLAN

     In February 2001, the Company adopted a Section 401(k) Profit Sharing Plan
     (the "401(k) Plan") for all employees. Employees who have attained the age
     of 21 may elect to reduce their current compensation, subject to certain
     limitations, and have that amount contributed to the 401(k) Plan. The
     Company matches 25% of employee contributions not to exceed 6% of employee
     compensation, subject to certain limitations. Employee contributions to the
     401(k) Plan are fully vested at all times and all Company contributions
     become vested over a period of five years. In 2002 and 2001, the Company
     made matching contributions of $12,046 and $16,091, respectively.

16.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     At December 31, 2002 and 2001, the Company's financial instruments consist
     of notes payable (see Note 5). The carrying value of the notes payable
     approximate their fair value as these instruments bear interest at market
     rates.


                       See independent auditors' report.

                                      F-18
<PAGE>


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

     None.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

DIRECTORS AND EXECUTIVE OFFICERS

     Our directors and executive officers as of January 31, 2003 were:

<TABLE>
<CAPTION>
     NAME                           AGE   POSITIONS HELD
     ----------------------------   ---   -------------------------------------------------
<S>                                 <C>   <C>
     C. Robert Cusick............   56    Chief Executive Officer and Chairman of the Board
     James W. Stahly.............   54    President and Chief Operating Officer
     Catherine M. Frost..........   42    Vice President, Corporate Development
     Richard S. O'Hara...........   42    Vice President, Business Development
     Vanett Marshall.............   45    Vice President, Sales and Purchasing
     Bruce Warwick...............   46    Secretary and Treasurer
     Anand Adya..................   34    Vice President, Chief Technology Officer
     Robert Cawthorn.............   67    Director(1)(2)
     Handel Evans................   67    Director(1)(2)
     Shikhar Ghosh...............   46    Director(1)(2)

     _______________
<FN>
     (1) Member of the Audit Committee
     (2) Member of the Compensation Committee
</FN>
</TABLE>

     The principal occupations and brief summary of the background of each
Director and executive officer of RxBazaar during the past five years is as
follows:

     C. Robert Cusick is a co-founder of RxBazaar and has served as the Chairman
of the Board of Directors and Chief Executive Officer since October 2000. Mr.
Cusick served as the Chairman of the Board of Able Laboratories, Inc., a generic
drug manufacturing and distributing company, from February 1999 to March 2002,
and was Able's Chief Executive Officer from February 1999 until October 2001. He
served as the Chief Executive Officer of International Murex Technology
Corporation, a worldwide manufacturer and distributor of diagnostic tests, from
November 1997 until June 1998, when Murex was acquired by Abbott Laboratories.
Prior to joining Murex, Mr. Cusick was Vice President of San Francisco 49ers,
Ltd. where he was responsible for commercial development and non-football
related players' activities. Mr. Cusick is a Certified Public Accountant with
over 30 years of diversified experience in finance, real estate, medical and
professional sports sectors.

     James W. Stahly has served as our President and Chief Operating Officer
since October 2000. From November 1994 until February 2000, he served as
president of North American Dental Group Operations in the U.S. for Henry
Schein, Inc., a wholesaler of healthcare products.

     Catherine M. Frost has served as a consultant to RxBazaar since 2000 and
has served as the Vice President of Corporate Development since March 2001. In
June 1998, she began consulting for Able Laboratories, Inc. and from June 2001
to May 2002 she served as Vice President of Investor Relations. Ms. Frost has
for over fifteen years provided management and corporate development consulting
for companies in a variety of industries. From October 1987 until June 1998, Ms.
Frost served as Vice President and Special Assistant to the Chief Executive
Officer and President at International Murex Technology Corporation. Ms. Frost
studied finance and public affairs at the University of Southern California and
computer science at California State University, Fullerton.


                                       19
<PAGE>


     Richard S. O'Hara, Jr., has served as our Vice President, Business
Development, since June 2001. He brings to the Company over 18 years experience
in healthcare sales and distribution, with the last 8 years focused on
pharmaceutical sales and distribution. At the beginning of his career, he spent
ten years at Becton-Dickinson, the premier sales organization in healthcare, in
a variety of positions including sales representative to Regional Sales Manager
with responsibilities that including hiring and training sales reps in the
lucrative New England and New York Region, and National Account Manager with
special emphasis on large drug store chains including Walgreens, Target, Kmart
and Rite-Aid. He subsequently held National Account Manager positions with Eon
Labs, Mova Laboratories and Rosemont Pharmaceuticals with varying
responsibilities that covered generic and branded pharmaceuticals and large
wholesalers, drug store chains and nursing home providers. Mr. O'Hara holds a
Bachelor's degree from Ohio Wesleyan University and an MBA from Northeastern
University.

     Vanett Marshall has served as our Vice President of Sales and Purchasing
since February 2001 and as Vice President of Purchasing and Merchandising of FPP
Distribution since May 1997. From July 1995 until May 1997, she served as
National Sales Manager of FPP Distribution. She has over seventeen years
experience in the generic pharmaceutical industry, including experience in
sales, management and procurement.

     Bruce Warwick has served as our Secretary and Controller since May 2000 and
as Treasurer since March 2001. Mr. Warwick is a Certified Public Accountant with
20 years of experience in public accounting and four years of financial
management in private industry. From 1988 until May 2000, Mr. Warwick was
employed at Wolf & Company, P.C., a large regional public accounting and
business consulting firm, most recently as a principal. Mr. Warwick is a
graduate of Bentley College with a Bachelor of Science in Accounting and a
Master of Science in Taxation. He is licensed as a Certified Public Accountant
in Massachusetts and is a member of the American Institute of Certified Public
Accountants and the Massachusetts Society of Certified Public Accountants.

     Anand Adya has served as our Vice-President of Information Technology and
Chief Technology Officer since March 2000. From January 1998 until January 2000,
Mr. Adya was a senior manager at Andersen Consulting, and from January 1996
until December 1997, he was a principal consultant at Price Waterhouse, LLP. Mr.
Adya was responsible for designing and developing CRM technology solutions, data
warehousing, sales force automation, and internet and client/server development
projects. Mr. Adya holds a Masters of Business Administration from Indian
Institute of Management Lucknow, India and a Bachelor of Science in Mechanical
Engineering from Walchand College of Engineering, Sangli India.

     Robert E. Cawthorn has served as a director since June 2001. From February
1997 until June 2001, he served as a managing director at DLJ Merchant Banking.
He retired as chief executive officer of Rhone-Poulenc Rorer Inc. in May 1995
and as chairman in May 1996, after nearly four decades in the pharmaceutical,
biotechnology and animal health industries. Mr. Cawthorn is a director of
Charles River Laboratories International, Inc. and Chairman of Actelion Ltd. Mr.
Cawthorn is a graduate of Cambridge University, England.

     Handel E. Evans has served as a director since June 2001. Since December
1999, Mr. Evans has served as the Chairman of Equity Growth Research Ltd., a
company providing financial services principally to health care companies in
Europe. Mr. Evans has 40 years' experience in the pharmaceutical industry and
was the founder and former Executive Chairman of Pharmaceutical Marketing
Services Inc. and Walsh International Inc., companies providing marketing
services to the pharmaceutical industry. Prior to 1988, Mr. Evans was a
co-founder and senior executive of IMS International Inc., the leading
information supplier to the industry. Mr. Evans is a director of Allergan Inc.,
Cambridge Laboratories, Inc., and previously of SmithKline Beecham.

     Shikhar Ghosh is a co-founder of RxBazaar and has served as a director
since January 2000. Since 1998 he has served as the Chief Executive Officer of
Verilytics, Inc. Mr. Ghosh was a founder of Open Market, Inc., where he served
as Chairman of the Board from December 1995 to December 2000, and as President
and Chief Executive Officer from December 1995 to December 2000. Mr. Ghosh is
also a director of Fairmarket, Inc., a publicly-traded company. Mr. Ghosh
graduated with a Master of Business Administration from Harvard Business School
and holds an undergraduate degree from the University of Bombay, India.


                                       20
<PAGE>


COMMITTEES OF THE BOARD OF DIRECTORS

     The board of directors currently has two standing committees: audit and
compensation. The Audit Committee is responsible for overseeing all of our
financial functions, including matters relating to the appointment and
activities of our auditors, audit plans and procedures, various accounting and
financial reporting issues and changes in accounting policies, and reviewing the
results and scope of the audit and other services provided by our independent
public accountants. The Audit Committee acts pursuant to a written charter. The
Compensation Committee is responsible for determining the compensation of our
executive officers and also administrates the stock option plans. Presently,
each of our outside directors serves as a member of the Audit Committee and the
Compensation Committee.

     The Board of Directors met five times in fiscal 2002. All of the Directors
attended at least 75% of the meetings.

     The Board of Directors has standing Audit and Compensation/Option
Committees.

     The Audit Committee reviews with the Company's independent public
accountants the scope and timing of the accountants' audit services and any
other services they are asked to perform, their report on the Company's
financial statements following completion of their audit and the Company's
policies and procedures with respect to internal accounting and financial
controls. In addition, the Audit Committee reviews the independence of the
independent public accountants and makes annual recommendations to the Board of
Directors for the appointment of independent public accountants for the ensuing
year. In November 2002, the Board of Directors and the Audit Committee approved
and adopted an amended Audit Committee Charter.

DIRECTORS' COMPENSATION

     We do not pay directors any cash compensation for their services as members
of the board of directors or any committee of the board, however, this issue of
director compensation is under consideration. We reimburse directors for
out-of-pocket expenses incurred in attending board and committee meetings.

     We have granted stock options to our non-employee directors in
consideration of their service on the board. On June 5, 2001, we granted each of
Handel Evans and Robert Cawthorn a stock option to purchase 175,000 shares of
common stock. These options have an exercise price of approximately $1.79 per
share, and became exercisable in full on December 31, 2001. In January 2002, we
granted each of Handel Evans and Robert Cawthorn a stock option to purchase
119,000 shares of common stock. These options have an exercise price of
approximately $1.79 per share. The options will become exercisable in equal
annual installments on the first and second anniversaries of the date of grant.

     The Compensation/Option Committee reviews and recommends to the Board of
Directors the compensation and benefits of all officers of the Company, reviews
general policy matters relating to compensation and benefits of employees of the
Company and administers the Company's Stock Option Plans.

COMPLIANCE WITH SECTION 16 (A)

     Based solely on its review of copies of Forms 3 and 4 received by it or
representations from certain reporting persons, the Company believes that,
during the fiscal year ended December 31, 2002, there was compliance with
Section 16 (a) filing requirements applicable to its officers, directors and 10%
stockholders.

ITEM 10. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

     The following table sets forth certain information concerning the
compensation for services rendered in all capacities for the fiscal years ended
December 31, 2002, 2001 and 2000 of our chief executive officer and the four


                                       21
<PAGE>


most highly compensated executive officers other than the chief executive
officer, who are referred to in this section as the "named executive officers."

     Other than as described in the table below, we did not pay any executive
officer any compensation, including incidental personal benefits, in excess of
10% of such executive officer's salary.

<TABLE>
<CAPTION>
                                                                                      LONG-TERM
                                                                                     COMPENSATION
                                                     ANNUAL COMPENSATION                AWARDS
                                             -------------------------------------   ------------
                                                                                      SECURITIES
                                   FISCAL                            OTHER ANNUAL     UNDERLYING
NAME AND PRINCIPAL POSITION         YEAR      SALARY      BONUS      COMPENSATION      OPTIONS
---------------------------        ------    --------    -------    --------------    -----------
<S>                                 <C>      <C>         <C>        <C>                 <C>
C. Robert Cusick                    2002     $     --         --    $152,000(1)(2)
  Chief Executive Officer           2001           --         --     168,000(1)(2)          --
  and Chairman of the Board         2000           --         --      96,000(1)(2)          --

James W. Stahly                     2002      181,731    $22,500       6,778(3)         42,000
  President and Chief               2001      175,000     37,500       3,889(3)             --
  Operating Officer                 2000       33,654         --          --            84,000

Anand Adya                          2002      148,010         --          --            28,000
  Vice President, Chief             2001      142,894         --          --                --
  Technology Officer                2000      108,750         --          --                --

Bruce Warwick                       2002      135,288         --          --            28,000
  Treasurer and Secretary           2001      136,634         --          --                --
                                    2000       88,308         --          --            21,000

Richard O'Hara                      2002      100,519     75,000          --            10,500
  Vice President,                   2001       48,228(4)      --          --                --
  Business Development
___________________
<FN>
(1)  Mr. Cusick's services as Chief Executive Officer and Chairman are currently
     provided pursuant to a consulting arrangement.
(2)  In 2000, we paid Mr. Cusick $48,000 and accrued an additional $48,000 in
     consulting fees. In 2001, we paid Mr. Cusick $56,000 and accrued an
     additional $112,000 in consulting fees. In 2002, we paid Mr. Cusick
     $152,000 in consulting fees plus $30,000 that had been accrued in prior
     years.
(3)  Consists of expenses related to an automobile provided for Mr. Stahly's
     use.
(4)  Mr. O'Hara became an executive officer in June 2001.
</FN>
</TABLE>

EMPLOYMENT AGREEMENTS

     James Stahly. On October 23, 2000, we entered into an employment agreement
with Mr. Stahly, with an initial term of four years subject to annual extensions
thereafter. Under this employment agreement, Mr. Stahly serves as our president
at an annual base salary of $175,000. In addition, Mr. Stahly may participate in
our employee fringe benefit plans or programs generally available to employees
of comparable status and position. Mr. Stahly is eligible to receive an annual
performance bonus targeted at $75,000 based upon certain objectives to be agreed
upon by the board of directors and Mr. Stahly. He was also granted options to
purchase 84,000 shares of common stock, which vest over four years. Mr. Stahly
is entitled to terminate his employment at any time upon at least 30 days'
written notice to us. In the event we terminate Mr. Stahly without cause, we
will offer him a six- month consulting agreement with a compensation package
comparable to the package he receives pursuant to his employment agreement and
the number of options equal to that which is to vest at the next scheduled
vesting date, will vest. Upon termination of Mr. Stahly's employment due to his
death or disability, options to purchase an additional 5,250 shares of common
stock will vest. Under his employment agreement, he is subject to restrictive


                                       22
<PAGE>


covenants, including confidentiality provisions. Also, during his employment and
for a period of 12 months after termination of employment, Mr. Stahly is subject
to a non-competition provision.

     Bruce Warwick. On May 15, 2000, we entered into an employment agreement
with Mr. Warwick in substantially the same form as that described for Mr.
Stahly. Mr. Warwick serves as the controller, treasurer and secretary at a base
annual salary of $140,000. He was also granted an option to purchase 21,000
shares of common stock, which vests over four years.

     Anand Adya. On April 3, 2000, RxBazaar entered into an employment agreement
with Anand Adya in substantially the same form as that described for Mr. Stahly.
Mr. Adya serves as the chief technology officer and vice president at an annual
base salary of $145,000.

OPTION GRANTS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

                                          Individual                                Potential Realized
                                            Grants                                   Value at Assumed
                                                                                   Annual Rates of Stock
                                                                                  Price Appreciation for
                                                                                        Option Term

          (a)                 (b)            (c)            (d)          (e)         (f)          (g)

          Name             Number of      % of Total     Exercise    Expiration     5% ($)      10% ($)
                           Securities      Options/      on Base        Date
                           Underlying        SARs         Price
                            Options/      Granted to      ($/Sh)
                              SARs       Employee(s)
                          Granted (#)   in Fiscal Year
--------------------------------------------------------------------------------------------------------
<S>                          <C>            <C>             <C>        <C>          <C>         <C>
C. Robert Cusick......         -              -              -            -           -            -

James W. Stahly.......       42,000         25.7%           $1.79      1/27/12      $55,860     $124,740

Anand Adya............       28,000         17.1%            1.79      1/27/12       37,240       83,160

Bruce Warwick.........       28,000         17.1%            1.79      1/27/12       37,240       83,160

Richard O'Hara........       10,500          6.4%            1.79      1/27/12       13,965       31,185
</TABLE>


OPTION EXERCISES AND FISCAL YEAR-END VALUES

     The following table sets forth certain information regarding exercisable
and unexercisable stock options held as of December 31, 2002 by each of the
named executive officers. The value of unexercised in-the-money options has been
calculated by determining the difference between the exercise price per share
payable upon exercise of such options and $2.00, the amount that the directors
have selected to use to represent the fair market value of one share of common
stock for the purpose of the table. No stock options were exercised by named
executive officers during 2002.


                                       23
<PAGE>


                          FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                    NUMBER OF SECURITIES              VALUE OF UNEXERCISED
                                   UNDERLYING UNEXERCISED             IN-THE-MONEY OPTIONS
                                OPTIONS AT FISCAL YEAR-END (#)        AT FISCAL YEAR-END ($)

NAME                            EXERCISABLE     UNEXERCISABLE     EXERCISABLE     UNEXERCISABLE
-----------------------------   ----------      -------------     -----------     -------------
<S>                                <C>              <C>             <C>               <C>
C. Robert Cusick.............          --               --               --               --
James W. Stahly..............      42,000           84,000               --           $8,820
Anand Adya...................          --           28,000               --            5,880
Bruce Warwick................      13,125           35,875          $21,525           18,795
Richard O'Hara...............          --           10,500               --            2,205
</TABLE>

STOCK OPTION PLANS

     Summary of the 2000 Stock Option/Restricted Stock Plan

     The following summary of the 2000 Stock Option/Restricted Stock Plan is
qualified in its entirety by reference to the 2000 plan.

     The 2000 plan authorizes: (i) the grant of options to purchase common stock
intended to qualify as incentive stock options, as defined in Section 422 of the
Internal Revenue Code, and (ii) the grant of non-statutory stock options. The
exercise price of incentive stock options granted under the 2000 plan must be at
least equal to the fair market value of the common stock on the date of grant.
The exercise price of incentive options granted to an optionee who owns stock
possessing more than 10% of the voting power of the outstanding capital stock
must equal at least 110% of the fair market value of the common stock on the
date of grant.

     The 2000 plan is administered by the Compensation Committee. The committee
selects the individuals to whom options are granted and determines the option
exercise price and other terms of each award, subject to the provisions of the
2000 plan. Incentive options may be granted under the 2000 plan to employees,
including officers and directors who are also employees, of RxBazaar or any of
our subsidiaries. All of our employees are eligible to participate in the 2000
plan. Non-statutory options may be granted under the 2000 plan to employees,
officers, individuals providing services to us and directors, whether or not
they are employees. Neither incentive options nor non-statutory options granted
under the 2000 plan may be repriced, whether by the reduction of their
respective exercise prices or by their cancellation and replacement.

     No options may extend for more than ten years from the date of grant (five
years in the case of an optionee who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of RxBazaar or any
subsidiary). The aggregate fair market value (determined at the time of grant)
of shares issuable pursuant to incentive options which first become exercisable
by an employee or officer in any calendar year may not exceed $100,000.

     Options are non-transferable except by will or by the laws of descent or
distribution and are exercisable, during the optionee's lifetime, only by the
optionee. Options generally may not be exercised after: (i) termination of the
optionee's employment by us for cause, (ii) thirty days after termination of the
optionee's employment by us without cause or by the optionee voluntarily, (iii)
ninety days following the optionee's retirement in good standing by reason of
age or disability under the then established rules of the company, and (iv) one
year following an optionee's death if the optionee's death occurs prior to
termination of the optionee's employment.

     Payment of the exercise price of the shares subject to the option may be
made with: (i) certified or bank check for an amount equal to the option price
for such shares, (ii) with the consent of the committee, delivery of such
documentation as the committee and the broker, if applicable, will require to
effect an exercise of the option and delivery to us of the sale or loan proceeds
required to pay the option price, (iii) with the consent of the committee, such


                                       24
<PAGE>


other consideration which is acceptable to the committee and has a fair market
value equal to the option price of such shares, or (iv) with the consent of the
committee, a combination of the foregoing.

     Summary of the 2002 Stock Incentive Plan

     The following summary of the 2002 Stock Incentive Plan is qualified in its
entirety by reference to the 2002 plan.

     The 2002 plan authorizes: (i) the grant of options to purchase common stock
intended to qualify as incentive stock options, as defined in Section 422 of the
Internal Revenue Code, (ii) the grant of non-statutory stock options; and (iii)
the grant of restricted stock awards entitling the recipient to acquire, for a
purchase price determined by the board, shares of Common Stock subject to such
restrictions and conditions as the board may determine at the time of grant,
including continued employment and/or achievement of pre-established performance
goals and objectives. The exercise price of incentive stock options granted
under the 2002 plan must be at least equal to the fair market value of the
common stock on the date of grant. The exercise price of incentive options
granted to an optionee who owns stock possessing more than 10% of the voting
power of the outstanding capital stock must equal at least 110% of the fair
market value of the common stock on the date of grant.

     The 2002 plan is administered by the Compensation Committee. The Committee
selects the individuals to whom options are granted and determines the option
exercise price and other terms of each award, subject to the provisions of the
2002 plan. Incentive options may be granted under the 2002 plan to employees,
including officers and directors who are also employees, of RxBazaar or any of
our subsidiaries. All of our employees are eligible to participate in the 2002
plan. Non-statutory options may be granted under the 2002 plan to employees,
officers, individuals providing services to the company and directors, whether
or not they are employees.

     No options may extend for more than ten years from the date of grant (five
years in the case of an optionee who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of RxBazaar or any
subsidiary). The aggregate fair market value (determined at the time of grant)
of shares issuable pursuant to incentive options which first become exercisable
by an employee or officer in any calendar year may not exceed $100,000.

     Options are non-transferable except by will or by the laws of descent or
distribution and are exercisable, during the optionee's lifetime, only by the
optionee. Options generally may not be exercised after: (i) termination of the
optionee's employment for cause, (ii) thirty days after termination of the
optionee's employment without cause or by the optionee voluntarily, and (iii)
one year following an optionee's death if the optionee's death occurs prior to
termination of the optionee's employment. Additionally, a non-statutory option
shall be subject to all of the foregoing provisions, and may also be exercised
so long as the optionee maintains a relationship with the company as a director,
consultant or adviser, unless the option agreement provides otherwise.

     Payment of the exercise price for the shares subject to an option under the
2002 plan may be made by delivery of cash or a check to the order of the company
in an amount equal to the exercise price of such option, or, to the extent
provided in the applicable option agreement, (i) by delivery to the company of
shares of common stock of the company already owned by the optionee for a period
of six months and having a fair market value equal in amount to the exercise
price of the options being exercised, (ii) a personal recourse note issued by
the optionee to the company in a principal amount equal to such aggregate
exercise price and with such other terms, including interest rate and maturity,
as the company may determine in its discretion, (iii) by any other means which
the board of directors determines are consistent with the purpose of the plan
and with applicable laws and regulations or (iv) by any combination of such
methods of payment. Restricted stock agreements may provide for the payment of
any purchase price in any manner approved by the board of directors at the time
it authorizes the grant.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The members of the Company's Compensation/Option Committee are Robert
Cawthorn, Handel Evans and Shikhar Ghosh, none of whom is an executive officer
or employee of the Company or its subsidiaries.


                                       25
<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         AND RELATED STOCKHOLDER MATTERS

(a) and (b) Security Ownership.

     The following table sets forth, as of January 31, 2003, certain information
regarding the beneficial ownership of the Common Stock by (i) each person who is
known by the Company to own beneficially more than five percent of the
outstanding Common Stock, (ii) each director and executive officer of the
Company, and (iii) all directors and executive officers as a group:

              OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

<TABLE>
<CAPTION>
                                                   SHARES BENEFICIALLY OWNED (1)
                                                   -----------------------------
NAME/ADDRESS OF BENEFICIAL OWNER*                     NUMBER           PERCENT
----------------------------------------------     ------------      -----------
<S>                                                <C>                 <C>
Able Laboratories, Inc. ......................     2,116,174(2)        27.14%(2)
  6 Hollywood Court
  South Plainfield, NJ  07080

Dhananjay G. Wadekar .........................       317,332(3)         5.14%
  c/o Able Laboratories, Inc.
  6 Hollywood Court
  South Plainfield, NJ  07080

C. Robert Cusick .............................       700,925(4)        11.34%

James Stahly .................................       151,084(5)         2.41%

Catherine M. Frost............................       118,857(6)         1.91%

Anand Adya....................................        95,157(7)         1.54%

Bruce Warwick ................................        34,528(8)           **

Robert Cawthorn ..............................       410,679(9)         6.41%

Handel Evans .................................       384,500(10)        6.00%

Shikhar Ghosh ................................       690,892(11)       11.22%

Vanett Marshall...............................         5,075(12)          **

Richard S. O'Hara.............................         2,625(13)          **

All directors and officers of RxBazaar
  as a group (ten persons)....................     2,594,322(14)       37.71%

_______________________
<FN>
*   Unless indicated, the address is c/o RxBazaar, Inc., 1385 Kemper Meadow
    Drive, Cincinnati, Ohio 45240.
**  Indicates less than 1%.

(1)  As of January 31, 2003, based on 6,160,280 shares of Common Stock issued
     and outstanding. Beneficial ownership is determined in accordance with the
     rules of the Securities and Exchange Commission and generally includes
     voting or investment power with respect to securities. Except as indicated,
     each person possesses sole voting and investment power with respect to all
     of the shares of Common Stock owned by such person, subject to community
     property laws where applicable. In computing the number of shares
     beneficially owned by a person and the percentage ownership of that person,
     shares of Common Stock subject to options and convertible securities, such
     as the Series A Preferred Stock, held by that person that are currently


                                       26
<PAGE>


     exercisable, or become exercisable within 60 days of January 31, 2003, are
     deemed outstanding. Such shares, however, are not deemed outstanding for
     the purpose of computing the percentage ownership of any other person. The
     information as to each person has been furnished by such person.
(2)  Includes (i) 345,333 shares underlying conversion of Series A Preferred
     Stock, (ii) 239,841 shares issued in payment of accrued dividends on the
     Series A Preferred Stock, (iii) 168,000 shares under exercisable warrants
     and (iv) 1,125,000 shares estimated to be issuable upon conversion of
     $2,250,000 of notes held by Able. Able has the right to convert the notes
     into shares of Common Stock at the then-current market value of the Common
     Stock. Able has entered into an agreement under which it may not convert or
     exercise any preferred stock or other right to obtain shares of Common
     Stock unless immediately after such exercise or conversion it held 4.9% or
     less of all issued and outstanding Common Stock.
(3)  Includes (i) 9,333 shares held by Mr. Wadekar's spouse, as to which he
     disclaims beneficial ownership, and (ii) 18,666 shares under exercisable
     warrants (including a warrant for 9,333 shares held by Mr. Wadekar's
     spouse).
(4)  Includes 18,667 shares under exercisable warrants.
(5)  Includes (i) 57,750 shares under exercisable options and (ii) 46,667 shares
     underlying exercisable warrants.
(6)  Includes 66,500 shares under exercisable options.
(7)  Includes (i) 7,000 shares under exercisable options and (ii) 4,157 shares
     underlying exercisable options held by Mr. Adya's spouse, as to which
     shares he disclaims beneficial ownership.
(8)  Includes 21,438 shares under exercisable options.
(9)  Includes 244,500 shares under exercisable options.
(10) Includes (i) 140,000 shares held by the Dragon Trust, which Evans is the
     beneficiary of, and (ii) 244,500 shares under exercisable options.
(11) Includes (i) 420,000 shares held jointly by Shikhar Ghosh and his spouse
     and (ii) 140,000 shares held by Shikhar Ghosh Irrevocable Trust.
(12) Includes 5,075 shares under exercisable options.
(13) Includes 2,625 shares under exercisable options.
(14) Includes 718,879 shares underlying exercisable options and warrants.
</FN>
</TABLE>

(c)  Changes in Control

     None

(d)  Securities authorized for issuance under equity compensation plans.

<TABLE>
<CAPTION>
                                              (a)                     (b)                                (c)
                                  Number of securities to be   Weighted average            Number of securities remaining
                                    issued upon exercise of     exercise price of           available for future issuance
                                     outstanding options,     outstanding options,         under equity compensation plans
         Plan category               warrants and rights      warrants and rights   (excluding securities reflected in column (a))
<S>                                       <C>                        <C>                             <C>
Equity compensation plans
  approved by security
  holders (1)                               402,150                  $4.83                           1,582,232
Equity compensation plans not
  approved by security
  holders (2)                               616,000                   1.79                              -0-
                                          ---------                                                  ---------
Total                                     1,018,150                  $2.99                           1,582,232
                                          =========                                                  =========

<FN>
(1)  Includes the 2000 Stock Option/Restricted Stock Plan and 2002 Stock Incentive Plan.

(2)  Includes grants by the Board of Directors of non-plan options to directors.
</FN>
</TABLE>


                                       27
<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATIONSHIPS WITH ABLE LABORATORIES

     Various relationships exist between us and Able Laboratories, Inc.
(formerly known as DynaGen, Inc.) As of December 31, 2002, Able beneficially
owned 477,841 shares, or approximately 7.8%, of our outstanding common stock,
and also owned all 345,333 outstanding shares of the Series A Preferred Stock,
convertible into 345,333 shares of common stock. Able acquired the Series A
Preferred Stock pursuant to an agreement it entered into with the former holders
of our Series A Preferred Stock on February 15, 2001. That agreement gave the
holders of our Series A Preferred Stock the right to exchange the shares of
Series A Preferred Stock for shares of Able's Series O Preferred Stock. In
February and March 2001, the holders of shares of our Series A Preferred Stock
exchanged such shares for shares of Able's Series O Preferred Stock. Able also
holds a warrant to purchase an additional 168,000 shares of RxBazaar's common
stock at a price of approximately $17.86 per share.

     Able is currently the only holder of our Series A Preferred Stock. The
Series A Preferred Stock paid a dividend to holders of such stock, provided,
however, that certain conditions must be satisfied, pursuant to our Financing
and Security Agreement with our senior lender. On September 10, 2002, we issued
239,841 shares of Common Stock to Able Laboratories in payment of $479,682 in
accrued dividends on our Series A Preferred Stock. We agreed to issue Able
additional shares of Common Stock if Able receives less than $479,682 in
proceeds from the sale of these shares and Able agreed to return any unsold
shares after Able receives proceeds totaling $479,682. Able has waived their
right to any future dividends.

     C. Robert Cusick, our chief executive officer and a director, was a
director of Able from February 1999 until March 2002 and, until October 2001,
was the chief executive officer of Able. Dhananjay G. Wadekar, a director of
RxBazaar until February 2002, is also the president, chief executive officer,
and a director of Able.

     On February 23, 2001, pursuant to an agreement between RxBazaar, Able and
FPP Distribution, Inc., a wholly-owned subsidiary of Able formerly known as
Superior Pharmaceutical Company, we acquired FPP Distribution from Able in a
cash merger. We paid Able $4,000,000, and assumed Able's existing 13.5% senior
subordinated debt in the amount of $2,250,000. Able remained liable as a
guarantor of the subordinated debt. On June 14, 2002, Able purchased the
subordinated debt. Able has the option to convert such debt, in whole or in
part, into shares of our common stock. Further, RxBazaar agreed to register for
resale any shares of its common stock issued upon conversion of the subordinated
debt. Able has entered into an agreement under which it may not convert or
exercise any preferred stock or other right to obtain shares of common stock
unless immediately after such exercise or conversion it held less than 4.9% of
all issued and outstanding common stock. The purchase price and terms of the
merger were determined in arms-length negotiations between the parties.

     RxBazaar and Able's former subsidiary FPP Distribution, Inc. assisted each
other in developing their businesses. Before we acquired FPP, FPP acted as our
fulfillment center for all sales made by us through our on-line marketplace.
Subsequent to our acquisition of FPP, Able continued to sell products to us
through FPP. In 2002 and 2001, we purchased approximately $951,000 and
$6,008,000, respectively, of products from Able. As of December 31, 2002, we had
accounts payable of approximately $554,000 to Able.

     We sublease an office, including utilities, in Needham, MA from Able on an
oral at-will no rent basis. During 2002, we recognized other income of $306,864
for information technology consulting services provided to Able.

TRANSACTIONS WITH DIRECTORS AND OFFICERS

     We were party to a Services Agreement dated February 5, 2001 with
Verilytics, Inc. for hosting services and the purchase of certain equipment.
Shikhar Ghosh, a stockholder and director, was a director and the chief
executive officer of Verilytics, Inc. The Services Agreement was terminated in
March 2001 by mutual agreement of the parties. In April 2002, we agreed to
settle the balance due under the original agreement by issuing $200,000 of
Series B Preferred Stock and paying the balance of $45,379 in cash on closing of
the Series B Preferred Stock placement.


                                       28
<PAGE>


     In February, 2001, C. Robert Cusick, Dhananjay G. Wadekar, Neeta Wadekar
(Dhananjay G. Wadekar's spouse), and James Stahly each purchased shares of our
common stock at approximately $10.71 per share.

     We are party to a Liquidation Assistance Agreement dated February 23, 2001
with C. Robert Cusick, James W. Stahly, FPP Distribution, and The CIT
Group/Business Credit, Inc., FPP Distribution's senior lender. If CIT declares
an event of default under the Financing and Security Agreement and thereafter
commences a liquidation process, each of Messrs. Cusick and Stahly agree to
assist in the liquidation so long as we continue to pay them their standard
compensation.

     On June 5, 2001, RxSupply Chain Partners, LLC, purchased 280,000 shares of
our common stock at a price of approximately $1.79 per share. Handel Evans and
Robert Cawthorn, directors of RxBazaar, are members of RxSupply Chain Partners.
Rx Supply Chain Partners later distributed these shares to Messrs. Evans and
Cawthorn for no additional consideration.

     On June 5, 2001, we granted non-plan stock options to purchase a total of
1,260,000 shares of Common Stock at approximately $1.79 per share to four new
directors. On November 30, 2001, options to purchase 910,000 shares of Common
Stock were cancelled in connection with the resignation of two of these
directors. We subsequently issued 28,000 options to one of the resigning
directors.

     On November 8, 2001, James Stahly purchased units at approximately $1.79
per unit for gross proceeds to us of $50,000. Each unit consisted of one share
of common stock and one warrant to purchase one share of common stock at
approximately $1.79 per share.

     On January 9, 2002, the board of directors authorized the grant of options
to purchase 119,000 shares of Common Stock to each of Handel Evans and Robert
Cawthorn at approximately $1.79 per share.

     On April 11, 2002, Robert Cawthorn, C. Robert Cusick, Shikhar Ghosh,
Catherine Frost and Bruce Warwick purchased an aggregate of 337,500 shares of
Series B Preferred Stock for cash and conversion of outstanding debt at $2.00
per share.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits, including those incorporated by reference.

Exhibit No.    Description
-----------    -----------

3.1            Amended and Restated Certificate of Incorporation, filed with the
               Delaware Secretary of State on April 11, 2002 (filed as Exhibit
               3.1 to Post-Effective Amendment No. 1 to Registration Statement
               on Form SB-2/A, File No. 333-39044 (the "2002 Form SB-2"), filed
               with the Securities and Exchange Commission on April 15, 2002,
               and incorporated herein by reference).

3.2            Certificate of Amendment of Certificate of Incorporation, filed
               with the Delaware Secretary of State on July 26, 2002 (filed as
               Exhibit 3.2 to Current Report on Form 8-K filed with the
               Securities and Exchange Commission on August 9, 2002 (the "August
               Form 8-K, and incorporated herein by reference).

3.3            Certificate of Designations, Preferences and Rights of Series A
               Convertible Preferred Stock (filed as Exhibit 3.3 to the August
               2002 Form 8-K filed, and incorporated herein by reference).

3.4            Certificate of Designations, Preferences and Rights of Series B
               Convertible Preferred Stock (filed as Exhibit 3.4 to the August
               2002 Form 8-K, and incorporated herein by reference).


                                       29
<PAGE>


3.5            Amended and Restated Bylaws (filed as Exhibit 3.2 to the 2002
               Form SB-2, and incorporated herein by reference).

10.1           Agreement and Plan of Merger among RxBazaar, RxBazaar.com
               Acquisition Corp., Superior Pharmaceutical Company and DynaGen,
               Inc. dated October 20, 2000 (filed as Exhibit 10.1 to the 2002
               Form SB-2, and incorporated herein by reference).

10.2           First Amended and Restated Secured Promissory Note issued by
               RxBazaar and issued to FINOVA Mezzanine Capital Inc. in the
               amount of $1,500,000 dated February 23, 2001 (filed as Exhibit
               10.2 to the 2002 Form SB-2, and incorporated herein by
               reference).

10.3           First Amended and Restated Secured Promissory Note issued by
               RxBazaar and issued to Argosy Investment Partners, L.P. in the
               amount of $750,000 dated February 23, 2001 (filed as Exhibit 10.3
               to the 2002 Form SB-2, and incorporated herein by reference).

10.4           Revolving Loan Promissory Note issued by Superior Pharmaceutical
               Company and issued to The CIT Group/Business Credit, Inc. the
               amount of $12,500,000 dated February 23, 2001 (filed as Exhibit
               10.4 to the 2002 Form SB-2, and incorporated herein by
               reference).

10.5           Form of 10% unsecured promissory note issued by RxBazaar on
               January 15, 2002 (filed as Exhibit 10.5 to the 2002 Form SB-2,
               and incorporated herein by reference).

10.6           Warrant to purchase 1,200,000 shares of common stock of RxBazaar
               at $2.50 per share issued to Able Laboratories, Inc. dated
               September 29, 2000 (filed as Exhibit 10.6 to the 2002 Form SB-2,
               and incorporated herein by reference).

10.7           Form of warrant to purchase shares of common stock of RxBazaar at
               $2.00 per share dated February 23, 2001 (filed as Exhibit 10.7 to
               the 2002 Form SB-2, and incorporated herein by reference).

10.8           Form of warrant to purchase shares of common stock of RxBazaar at
               $.25 per share issued November 8, 2001 (filed as Exhibit 10.8 to
               the 2002 Form SB-2, and incorporated herein by reference).

10.9           Form of warrant to purchase shares of common stock of RxBazaar at
               $.10 per share issued January 15, 2002 (filed as Exhibit 10.9 to
               the 2002 Form SB-2, and incorporated herein by reference).

10.12          Form of Right of First Refusal Agreement between RxBazaar and the
               parties listed thereto dated October 25, 1999 (filed as Exhibit
               10.12 to the 2002 Form SB-2, and incorporated herein by
               reference).

10.13          Form of Stock Purchase Agreement to purchase shares of common
               stock of RxBazaar at $1.00 per share (filed as Exhibit 10.13 to
               the 2002 Form SB-2, and incorporated herein by reference).

10.14          Form of Stock Purchase Agreement to purchase shares of common
               stock of RxBazaar at $2.00 per share (filed as Exhibit 10.14 to
               the 2002 Form SB-2, and incorporated herein by reference).


                                       30
<PAGE>


10.15          Securities Purchase Agreement between RxBazaar and Kenilworth LLC
               and The Endeavor Capital Investment Fund S.A. dated February 15,
               2002, to purchase 3,133,333 shares of Series A Convertible
               Preferred Stock of RxBazaar (filed as Exhibit 10.15 to the 2002
               Form SB-2, and incorporated herein by reference).

10.16          Form of Securities Purchase Agreement to purchase units at $1.50
               per unit, each unit consisting of one share of common stock and a
               warrant to purchase an additional share of common stock dated
               February 2001 (filed as Exhibit 10.16 to the 2002 Form SB-2, and
               incorporated herein by reference).

10.17          Form of Subscription Agreement between RxBazaar and the
               signatories thereto to purchase units, each unit consisting of
               one share of common stock and one common stock purchase warrant
               at $.25 per unit, dated November 8, 2001 (filed as Exhibit 10.17
               to the 2002 Form SB-2, and incorporated herein by reference).

10.18          Form of Subscription Agreement between RxBazaar and the
               signatories thereto to purchase units, each unit consisting of a
               10% $100,000 unsecured convertible promissory note and warrant to
               purchase an additional 100,000 shares of common stock dated
               January 15, 2002 (filed as Exhibit 10.18 to the 2002 Form SB-2,
               and incorporated herein by reference).

10.19          Subscription Agreement between RxBazaar and RxSupply Chain
               Partners, LLC dated June 13, 2001 to purchase 2,000,000 shares of
               Common Stock of RxBazaar (filed as Exhibit 10.19 to the 2002 Form
               SB-2, and incorporated herein by reference).

10.20          RxBazaar Series B Preferred Stock Subscription Agreement and
               Investment Letter dated February 2002 (filed as Exhibit 10.20 to
               the 2002 Form SB-2, and incorporated herein by reference).

10.21          Employment Agreement between RxBazaar and Anand Adya dated April
               3, 2000 (filed as Exhibit 10.21 to the 2002 Form SB-2, and
               incorporated herein by reference).

10.22          Employment Agreement between RxBazaar and Bruce Warwick dated May
               15, 2000 (filed as Exhibit 10.22 to the 2002 Form SB-2, and
               incorporated herein by reference).

10.23          Employment Agreement between RxBazaar and James Stahly dated
               October 23, 2000 (filed as Exhibit 10.23 to the 2002 Form SB-2,
               and incorporated herein by reference).

10.24          Form of Employee Non-Disclosure Agreement and Intellectual
               Property Assignment Agreement (filed as Exhibit 10.24 to the 2002
               Form SB-2, and incorporated herein by reference).

10.25          2000 Stock Option/Restricted Stock Plan (filed as Exhibit 10.25
               to the 2002 Form SB-2, and incorporated herein by reference).

10.26          2002 Stock Incentive Plan (filed as Exhibit 10.26 to the 2002
               Form SB-2, and incorporated herein by reference).

10.27          Commercial Lease Agreement between SPC Properties Limited and
               Superior Pharmaceutical Company (filed as Exhibit 10.27 to the
               2002 Form SB-2, and incorporated herein by reference).


                                       31
<PAGE>


10.28          Lease Agreement between Scott F. Orton, John H. Thigpen, III and
               RxBazaar dated April 25, 2001 (filed as Exhibit 10.28 to the 2002
               Form SB-2, and incorporated herein by reference).

10.29          Financing and Security Agreement among The CIT Group/Business
               Credit, Inc., Superior Pharmaceutical Company and RxBazaar dated
               February 23, 2001 (filed as Exhibit 10.29 to the 2002 Form SB-2,
               and incorporated herein by reference).

10.30          RxBazaar Guaranty pursuant to Financing and Security Agreement
               among The CIT Group/Business Credit, Inc., Superior
               Pharmaceutical company and RxBazaar dated February 23, 2001
               (filed as Exhibit 10.30 to the 2002 Form SB-2, and incorporated
               herein by reference).

10.31          Pledge Agreement between RxBazaar and The CIT Group/Business
               Credit, Inc. dated February 23, 2001 (filed as Exhibit 10.31 to
               the 2002 Form SB-2, and incorporated herein by reference).

10.32          Form of Liquidation Assistance Agreement among each of Wadekar,
               Stahly, Cusick, and Superior Pharmaceutical Company, RxBazaar,
               and The CIT Group/Business Credit, Inc. dated February 23, 2001
               (filed as Exhibit 10.32 to the 2002 Form SB-2, and incorporated
               herein by reference).

10.33          First Amended and Restated Loan Agreement between DynaGen, Inc.,
               RxBazaar, Superior Pharmaceutical Company, Argosy Investment
               Partners, L.P. and FINOVA Mezzanine Capital Inc. dated February
               23, 2001 (filed as Exhibit 10.33 to the 2002 Form SB-2, and
               incorporated herein by reference).

10.34          Security Agreement between RxBazaar and FINOVA Mezzanine Capital
               Inc. dated February 23, 2001 (filed as Exhibit 10.34 to the 2002
               Form SB-2, and incorporated herein by reference).

10.35          Pledge and Security Agreement between RxBazaar and FINOVA
               Mezzanine Capital Inc. dated February 23, 2001 (filed as Exhibit
               10.35 to the 2002 Form SB-2, and incorporated herein by
               reference).

10.36          Assignment and Assumption Agreement among DynaGen, Inc., Able
               Laboratories, Inc. and Superior Pharmaceutical Company dated
               February 23, 2001 (filed as Exhibit 10.36 to the 2002 Form SB-2,
               and incorporated herein by reference).

10.37          Guaranty and Pledge Agreement dated February 15, 2001 between
               DynaGen, Inc. RxBazaar, Kenilworth LLC, Infusion Capital
               Investment corp. and Ocean Marketing Corp. (filed as Exhibit
               10.37 to the 2002 Form SB-2, and incorporated herein by
               reference)

10.38          Agreement with Able Laboratories, Inc. dated September 9, 2002
               (filed as Exhibit 10.38 to the 2002 Form SB-2, and incorporated
               herein by reference).

21*            List of Company's subsidiaries.

99.1*          Certification by Registrant's Principal Executive Officer
               pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


                                       32
<PAGE>


99.2*          Certification by Registrant's Principal Financial Officer
               pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

___________
* Filed herewith

(b)  Reports on Form 8-K:

     None

ITEM 14. CONTROLS AND PROCEDURES

     The Company has disclosure controls and procedures (as defined in Rules
13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934) to ensure that
material information relating to the Company and its consolidated subsidiary is
recorded, processed, summarized and reported within the time periods specified
by the SEC's rules and forms, particularly during the period in which this
annual report has been prepared.

     The Company's principal executive officer and principal financial officer
have reviewed and evaluated the Company's disclosure controls and procedures
within 90 days prior to the filing date of this report. Based on such
evaluation, the Company's principal executive officer and principal financial
officer have concluded that the Company's disclosure controls and procedures are
effective at ensuring that material information is recorded, processed,
summarized and reported on a timely and accurate basis in the Company's filings
with the Securities and Exchange Commission. Since such evaluation there have
not been any significant changes in the Company's internal controls, or in other
factors that could significantly affect these controls.


                                       33
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the 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 on the 28th day of
March 2003.

RXBAZAAR, INC.

By:  /s/ C. Robert Cusick
     ------------------------------------
     C. Robert Cusick
     Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934 this report
has been signed by the following persons in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
SIGNATURE                                         TITLE                          DATE
---------                                         -----                          ----
<S>                                <C>                                      <C>
/s/ C. Robert Cusick               Chairman of the Board and Chief          March 28, 2003
------------------------------     Executive Officer
C. Robert Cusick                   (Principal Executive Officer)


/s/ Bruce C. Warwick               Treasurer                                March 28, 2003
------------------------------     (Principal Financial and Accounting
Bruce C. Warwick                   Officer)


/s/ Robert Cawthorn                Director                                 March 28, 2003
------------------------------
Robert Cawthorn


/s/ Handel Evans                   Director                                 March 28, 2003
------------------------------
Handel Evans


/s/ Shikhar Ghosh                  Director                                 March 28, 2003
------------------------------
Shikhar Ghosh
</TABLE>


                                       34
<PAGE>


                                  CERTIFICATION

I, C. Robert Cusick, Chairman and Chief Executive Officer, certify that:

     1.   I have reviewed this annual report on Form 10-KSB of RxBazaar, Inc.

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report.

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report.

     4.   The registrant's other certifying officer and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Securities Exchange Act Rules 13a-14 and 15d-14) for the
          registrant and have:

          a)   Designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is make known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;
          b)   Evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and
          c)   Presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date.

     5.   The registrant's other certifying officer and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors:

          a)   All significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls, and
          b)   Any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls.

     6.   The registrant's other certifying officer and I have indicated in this
          annual report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent evaluation
          including any corrective actions with regard to significant
          deficiencies and material weaknesses.


Date: March 28, 2003                           /s/ C. Robert Cusick
                                               --------------------------
                                               C. Robert Cusick
                                               Chairman and Chief
                                               Executive Officer


                                       35
<PAGE>


                                  CERTIFICATION

I, Bruce C. Warwick, Treasurer, certify that:

     1.   I have reviewed this annual report on Form 10-KSB of RxBazaar, Inc.

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report.

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report.

     4.   The registrant's other certifying officer and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Securities Exchange Act Rules 13a-14 and 15d-14) for the
          registrant and have:

          a)   Designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is make known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;
          b)   Evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date with 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and
          c)   Presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date.

     5.   The registrant's other certifying officer and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors:

          a)   All significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls, and
          b)   Any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls.

     6.   The registrant's other certifying officer and I have indicated in this
          annual report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent evaluation
          including any corrective actions with regard to significant
          deficiencies and material weaknesses.


Date: March 28, 2003                           /s/ Bruce C. Warwick
                                               --------------------------
                                               Bruce C. Warwick
                                               Treasurer


                                       36
<PAGE>


                                  EXHIBIT INDEX

EXHIBIT
-------

21        Subsidiaries of the Registrant

99.1      Certification by Registrant's Principal Executive Officer pursuant to
          Section 906 of the Sarbanes-Oxley Act of 2002.

99.2      Certification by Registrant's Principal Financial Officer pursuant to
          Section 906 of the Sarbanes-Oxley Act of 2002.


                                       37