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

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended:  March 31, 2004

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from ______________ to ______________

                         COMMISSION FILE NUMBER 5-78407
                           ---------------------------

                                 RXBAZAAR, INC.
             (Exact name of registrant as specified in its charter)

            DELAWARE                                         38-3506266
 (State or other jurisdiction of                           (IRS Employer
 incorporation or organization)                         Identification No.)

                            1385 Kemper Meadow Drive
                              Cincinnati, OH 45240
                    (Address of principal executive offices)
                                 (781) 449-4962
              (Registrant's telephone number, including area code)
                                 Not applicable
              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                             Yes    X                No
                                                 -------                -------

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

                                             Yes                     No    X
                                                 --------               -------

As of April 30, 2004, there were 6,166,530 outstanding shares of common stock,
$.001 par value per share.

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



<PAGE>



                                 RXBAZAAR, INC.

                                    FORM 10-Q
                                QUARTERLY REPORT

                                 MARCH 31, 2004

                                TABLE OF CONTENTS

                                                                          PAGE
                                                                         NUMBER

Facing Page.................................................................1
Table of Contents...........................................................2

PART I. FINANCIAL INFORMATION(*)............................................3


Item 1   Financial Statements...............................................3

         CONDENSED CONSOLIDATED BALANCE SHEETS..............................3
         CONDENSED CONSOLIDATED STATEMENTS OF LOSS..........................4
         CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
                EQUITY (DEFICIT)............................................5
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS....................6
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS...............7

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations.........................................11

Item 4.  Controls and Procedures...........................................14

part II. OTHER INFORMATION.................................................15

Item 1   Legal Proceedings.................................................15

Item 6.  Exhibits and Reports on Form 8-K..................................15

SIGNATURES.................................................................16



----------------
(*)      The financial information at December 31, 2003 has been derived from
         the audited financial statements at that date and should be read in
         conjunction therewith. All other financial statements are unaudited.


                                       2
<PAGE>


                         PART I. FINANCIAL INFORMATION

ITEM 1   FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                          RXBAZAAR, INC. AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                                     ASSETS
                                                                                    March 31,         December 31,
                                                                                      2004                2003
                                                                                  --------------     -------------
Current assets:
<S>                                                                               <C>                <C>
   Cash and cash equivalents                                                      $      158,946     $      25,231
   Accounts receivable - less allowance for doubtful accounts of $252,081 and
     $302,333                                                                          5,689,058         5,748,970
   Inventory                                                                           2,442,088         3,239,711
   Prepaid expenses and other current assets                                             104,508            92,052
                                                                                  --------------     -------------
         Total current assets                                                          8,394,600         9,105,964
                                                                                  --------------     -------------

Property and equipment, net                                                              358,768           398,129

Other assets:
   Deferred financing costs, net                                                          12,260            40,464
   Customer lists, net of accumulated amortization of $1,307,950 and
     $1,201,900                                                                          813,033           919,083
   Deposits                                                                               -                 16,543
                                                                                  --------------     -------------
         Total other assets                                                              825,293           976,090
                                                                                  --------------     -------------
                                                                                  $    9,578,661     $  10,480,183
                                                                                  ==============     =============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
   Notes payable                                                                  $   10,951,247     $  11,536,964
   Accounts payable                                                                    2,429,684         1,978,105
   Accrued expenses and other current liabilities                                        915,082           801,266
   Preferred dividends payable                                                           479,442           479,442
                                                                                  --------------     -------------
         Total current liabilities                                                    14,775,455        14,795,777
Long-term debt                                                                         1,384,186         1,381,591
                                                                                  --------------     -------------
         Total liabilities                                                            16,159,641        16,177,368
                                                                                  --------------     -------------

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, 6,166,530
     shares issued                                                                         6,167             6,167
   Additional paid-in capital                                                         10,389,475        10,389,475
   Accumulated deficit                                                               (20,672,141)      (19,779,024)
   Unearned stock-based compensation                                                      (4,481)          (13,803)
                                                                                  --------------     -------------
         Total stockholders' deficit                                                  (6,580,980)       (5,697,185)
                                                                                  --------------     -------------
                                                                                  $    9,578,661)    $ 10,480,183
                                                                                  --------------     -------------

</TABLE>


                 See accompanying notes to unaudited condensed consolidated
financial statements.



                                       3
<PAGE>


<TABLE>
<CAPTION>
                          RXBAZAAR, INC. AND SUBSIDIARY
                    CONDENSED CONSOLIDATED STATEMENTS OF LOSS
                                   (UNAUDITED)

                                                                   Three Months Ended
                                                                       March 31,
                                                           ---------------------------------
                                                                2004               2003
                                                           ---------------    --------------
<S>                                                        <C>                <C>
Sales, net                                                 $    18,291,776    $   12,614,328
Cost of sales                                                   16,945,686        11,875,559
                                                           ---------------    --------------
         Gross profit                                            1,346,090           738,769
                                                           ---------------    --------------

Operating expenses:
   Sales and marketing                                             497,920           421,883
   Information technology                                          174,280           145,991
   General and administrative                                    1,041,426         1,234,778
                                                           ---------------    --------------
         Total operating expenses                                1,713,626         1,802,652
                                                           ---------------    --------------

         Operating loss                                           (367,536)       (1,063,883)
                                                           ---------------    --------------

Other income (expense):
   Interest and financing expense                                 (573,611)         (168,299)
   Miscellaneous income (expense), net                              48,030            42,795
                                                           ---------------    --------------
         Other income (expense), net                              (525,581)         (125,504)
                                                           ---------------    --------------
         Net loss                                          $      (893,117)   $  (1,189,387)
                                                           ===============    ==============
Net loss per share - basic                                 $        (0.14)    $       (0.19)
                                                           ===============    ==============
Weighted average shares outstanding                              6,166,530         6,160,280
                                                           ===============    ==============
</TABLE>


                 See accompanying notes to unaudited condensed consolidated
financial statements.


                                       4
<PAGE>


<TABLE>
<CAPTION>
                                55 NY #588944 v1
                          RXBAZAAR, INC. AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
                         STOCKHOLDERS' EQUITY (DEFICIT)
                   THREE MONTHS ENDED MARCH 31, 2004 AND 2003
                                   (UNAUDITED)

                                                                           Common Stock
                                                  Preferred          ---------------------------         Additional
                                                    Stock            Shares            Amount         Paid-in Capital
                                               ---------------     -----------      ------------      ---------------

<S>                                            <C>                   <C>            <C>               <C>
Balance, December 31, 2002                     $     3,700,000       6,160,280      $      6,160      $   10,222,966
Amortization of unearned compensation                       --              --                --                  --
Net loss                                                    --              --                --                  --
                                               ---------------     -----------      ------------      --------------
Balance, March 31, 2003                        $     3,700,000       6,160,280      $      6,160      $   10,222,966
                                               ===============     ===========      ============      ==============

Balance, December 31, 2003                     $     3,700,000       6,166,530      $      6,167      $   10,389,475
Amortization of unearned compensation                       --              --                --                  --
Net loss                                                    --              --                --                  --
                                               ---------------     -----------      ------------      --------------
Balance, March 31, 2004                        $     3,700,000       6,166,530      $      6,167      $   10,389,475
                                               ===============     ===========      ============      ==============



                                                                     Unearned
                                                 Accumulated       Stock-based
                                                  Deficit          Compensation         Total
                                               ---------------     -----------      ------------

Balance, December 31, 2002                     $   (15,066,231)    $   (51,091)     $ (1,188,196)
Amortization of unearned compensation                       --           9,322             9,322
Net loss                                            (1,189,387)             --        (1,189,387)
                                               ---------------     -----------      ------------
Balance, March 31, 2003                        $   (16,255,618)    $   (41,769)     $ (2,368,261)
                                               ===============     ===========      ============


Balance, December 31, 2003                     $   (19,779,024)    $   (13,803)     $ (5,697,185)
Amortization of unearned compensation                       --           9,322             9,322
Net loss                                              (893,117)             --          (893,117)
                                               ---------------     -----------      ------------
Balance, March 31, 2004                        $   (20,672,141)    $    (4,481)     $ (6,580,980)
                                               ===============     ===========      ============
</TABLE>


                 See accompanying notes to unaudited condensed consolidated
financial statements.


                                       5
<PAGE>


<TABLE>
<CAPTION>
                          RXBAZAAR, INC. AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                                                         Three Months Ended
                                                                                              March 31,
                                                                                 ----------------------------------
                                                                                      2004                2003
                                                                                 --------------     ---------------
Cash flows from operating activities:
<S>                                                                              <C>                <C>
   Net loss                                                                      $     (893,117)    $    (1,189,387)
   Adjustments to reconcile net loss to net cash provided by (used for)
     operating activities:
     Depreciation and amortization                                                      184,645             197,312
     Amortization of unearned compensation                                                9,322               9,322
     Loss on abandoned leasehold improvements                                             5,681                  --
     (Increase) decrease in operating assets:
         Accounts receivable                                                             59,912             501,692
         Inventory                                                                      797,623             825,063
         Prepaid expenses and other current assets                                      (12,456)           (102,056)
     Increase (decrease) in operating liabilities:
         Accounts payable                                                               451,579              33,124
         Accrued expenses and other current liabilities                                 113,816             128,035
                                                                                 --------------     ---------------
                  Net cash provided by (used for) operating activities                  717,005             403,105
                                                                                 --------------     ---------------

Cash flows from investing activities:
   Purchase of property and equipment                                                   (14,116)             (1,821)
   Decrease in deposits                                                                  16,543                  --
                                                                                 --------------     ---------------
                  Net cash provided by (used for) investing activities                    2,427              (1,821)
                                                                                 --------------     ---------------

Cash flows from financing activities:
   Net change in line of credit                                                        (777,458)           (858,064)
   Net change in inventory financing agreement                                          191,741                  --
                                                                                 --------------     ---------------
                  Net cash provided by (used for) financing activities                 (585,717)           (858,064)
                                                                                 --------------     ---------------

Net change in cash and cash equivalents                                                 133,715            (456,780)
Cash and cash equivalents at beginning period                                            25,231             480,228
                                                                                 --------------     ---------------

Cash and cash equivalents at end of period                                       $      158,946     $        23,448
                                                                                 ==============     ===============
Supplemental cash flow information:
   Interest paid                                                                 $      546,147     $       105,829
</TABLE>


                 See accompanying notes to unaudited condensed consolidated
financial statements.


                                       6
<PAGE>


                          RXBAZAAR, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BUSINESS AND BASIS OF PRESENTATION

         RxBazaar, Inc. ("RxBazaar") and its wholly-owned subsidiary, FPP
         Distribution, Inc. ("FPP"), distribute brand and generic
         pharmaceuticals and other medical supplies. All significant
         intercompany balances and transactions have been eliminated in
         consolidation.

         The results of operations for the periods reported are not necessarily
         indicative of those that may be expected for a full year. In the
         opinion of management, all adjustments (consisting only of normal
         recurring adjustments) which are necessary for a fair statement of
         operating results for the interim periods presented have been made.

         The financial information included in this report has been prepared in
         conformance with the accounting policies reflected in the financial
         statements included in our Annual Report on Form 10-KSB for the year
         ended December 31, 2003 filed with the Securities and Exchange
         Commission.

         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.

         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, if any.

         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 our stock option plans generally have
         no intrinsic value at the grant date, and under Opinion No. 25 no
         compensation cost is recognized for them. We do not plan to adopt the
         fair value accounting model for stock-based employee compensation under
         SFAS No. 123.


                                       7
<PAGE>



         We apply Opinion No. 25 and related interpretations in accounting for
         stock options issued to employees and directors. Had compensation cost
         for our stock options issued to employees and directors been determined
         based on the fair value at the grant dates consistent with SFAS No.
         123, our net loss and net loss per share would have been adjusted to
         the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                   March 31,
                                                          ------------------------------
                                                             2004             2003
                                                          -------------    -------------
<S>                                                       <C>              <C>
         Net loss - as reported                           $    (893,117)   $  (1,189,387)
         Add stock-based employee compensation
           under APB No. 25                                       9,322            9,322
         Deduct stock-based employee
           compensation under SFAS No. 123                      (22,835)         (36,721)
                                                          -------------    -------------
         Pro forma net loss                               $    (906,630)   $  (1,216,786)
                                                          =============    =============
         Basic net loss per share - as reported           $      (0.14)    $      (0.19)
                                                          =============    =============
         Basic net loss per share - pro forma             $      (0.15)    $      (0.20)
                                                          =============    =============
</TABLE>


         NET LOSS PER SHARE

         Basic loss per share represents net loss 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 us 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.

2.       PROPERTY AND EQUIPMENT

         Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                 March 31,       December 31,
                                                    2004            2003
                                               -------------    -------------
<S>                                            <C>              <C>
         Computer hardware and software        $     748,767    $     746,438
         Furniture, fixtures and equipment           278,691          280,850
         Leasehold improvements                       35,732           35,170
                                               -------------    -------------
                                                   1,063,190        1,062,458
         Less accumulated depreciation
           and amortization                         (704,422)        (664,329)
                                               -------------    -------------
                                               $     358,768    $     398,129
                                               =============    =============

</TABLE>


                                       8
<PAGE>


3.       NOTES PAYABLE

         Notes payable consist of the following:

<TABLE>
<CAPTION>
                                                  March 31,      December 31,
                                                     2004           2003
                                               -------------    -------------

<S>                                            <C>              <C>
         Notes payable, officers and directors $      40,000    $      40,000
         Line-of-credit                            3,719,794        4,497,252
         Inventory financing agreement             4,941,453        4,749,712
         Subordinated notes payable                2,250,000        2,250,000
         Unsecured convertible notes               1,384,186        1,381,591
                                               -------------    -------------
                           Total                  12,335,433       12,918,555

         Less current portion                     10,951,247       11,536,964
                                               -------------    -------------

                           Long-term debt      $   1,384,186    $   1,381,591
                                               =============    =============
</TABLE>



         NOTES PAYABLE, OFFICERS AND DIRECTORS

         In March 2000, we borrowed from our officers and directors under 10%
         unsecured promissory notes. The notes are currently due on demand.

         LINE-OF-CREDIT

         On February 23, 2001, we 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 matured on February 23, 2004.

         On February 27, 2004, our asset-based lender agreed to extend the
         maturity of our line-of-credit to May 31, 2004. Under the terms of the
         extension the maximum loan has been decreased to $6,000,000 with
         borrowings against inventory capped at $1,750,000 and an interest rate
         of prime plus 4%. The lender charged us an accommodation fee of $25,000
         for the extension. We are current with our payments on the line but in
         default of certain loan covenants.

         INVENTORY FINANCING AGREEMENT

         On October 27, 2003, we entered into an agreement with Steel City
         Pharmaceuticals LLC, where they agreed to maintain at least $4,000,000
         in capital to be used by us for inventory purchases. We agreed to repay
         Steel City its purchase price for the inventory plus the greater of (i)
         30% of the gross profit on our resale of such inventory or (ii) a 20%
         annual percentage return for the period that their capital is used by
         us. Repayment to Steel City is due on the earlier of thirty days after
         sale of the inventory or forty-five days after payment by Steel City
         for the inventory. We also agreed to pay Steel City a commitment fee of
         $50,000 per month during the term of the agreement. Commitment fees are
         subject to adjustment to the extent that the aggregate sum paid by us
         under the agreement would exceed $1,200,000 on an annualized basis.
         Steel City retains legal title to the inventory until we resell it and
         has been granted a second lien on our accounts receivable subject to an
         inter-creditor agreement with our asset-based lender and Able. We
         record a liability for all inventory purchased by Steel City due to our
         unconditional obligation to purchase such inventory. The agreement is
         for a term ending on August 31, 2006, subject to earlier termination
         either by Steel City at any time or by us at any time after one year or
         earlier if Steel City rejects more than 20% of the purchase
         opportunities during the first six months of the agreement.



                                       9
<PAGE>


         The members of Steel City include C. Robert Cusick, the Chairman of the
         Board and a director of RxBazaar, and separate trusts established by
         two other directors of RxBazaar. Their aggregate capital contribution
         to Steel City was $1,000,000, plus Mr. Cusick is a co-guarantor of a
         $1,000,000 line of credit obtained by Steel City. Mr. Cusick has
         subsequently advanced additional funds to Steel City aggregating
         $400,000 as of March 31, 2004. The sole managing-member of Steel City
         is an equity investor who has been a debt investor in RxBazaar.

         As additional consideration for the agreement, we granted Steel City
         (i) warrants to purchase 150,000 shares of our common stock at $2.00
         per share exercisable for five years and (ii) options to purchase up to
         1,600,000 shares of our common stock at $2.50 per share expiring 60
         days after termination of the agreement. The warrants were distributed
         to the members of Steel City. The warrants and options were valued at
         $131,000 and charged to financing expense in 2003.

         At March 31, 2004, we were not in compliance with the repayment terms
         of the agreement.

         SUBORDINATED NOTES PAYABLE

         Our subordinated notes payable bear interest at 13.5% per annum payable
         monthly and mature on June 17, 2004. The notes payable are secured by a
         third lien on accounts receivable and a second lien on substantially
         all other assets, and are subject to an inter-creditor agreement with
         our asset-based lender and Steel City. On June 14, 2002, Able
         Laboratories, Inc. ("Able") purchased the debt. Able has the option to
         convert the debt into our common stock at the current market value of
         our 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 our
         common stock. We are not current with our interest payments on these
         notes and are in default of certain loan covenants. We are 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.

         UNSECURED CONVERTIBLE NOTES

         In April 2003, we commenced an offering of units at a purchase price
         per unit of $100,000. Each unit consists of a $100,000 10% unsecured
         convertible promissory note due the earlier of (i) April 2005 or (ii)
         90 days after we raise $6 million in a separate offering, and a warrant
         to purchase 10,000 shares of common stock at $2.75 per share
         exercisable through April 2008. The notes are convertible to common
         stock at $2.50 per share. We received $1,395,000 in gross proceeds,
         including $200,000 from two of our directors, and issued warrants to
         the investors to purchase 139,500 shares. Proceeds of $19,530 were
         allocated to the warrants based on their estimated fair value and
         credited to additional paid-in capital. This amount is reflected as a
         discount against the notes and will be amortized to interest expense
         over the life of the notes. We also issued warrants to purchase 11,950
         shares of common stock, on the same terms as the unit warrants, for
         placement services valued at $1,673 and paid legal fees and commissions
         of $95,600. We expensed these costs in 2003. At March 31, 2004, we were
         not in compliance with the interest payment terms of the notes.

4.       LEASE AGREEMENT

         On January 26, 2004, we vacated our data center and call center office
         space and do not intend to make any future payments because of alleged
         breaches by our landlord. We relocated all of our personnel and moved
         all of our property into our other facility. On February 10, 2004, we
         received a response from the landlord disputing the existence of a
         default and our ability to terminate the lease as a remedy. The
         landlord has listed the property for lease. On May 3, 2004, we received
         a complaint for breach of lease from the landlord. We intend to file an
         answer including multiple defenses and asserting counterclaims against
         the landlord. See Item 1 of Part II of this report. Minimum future
         lease payments at December 31, 2003 for the vacated data center and
         call center office space were $238,072 for 2004, $241,668 for 2005 and
         $80,556 for 2006.



                                       10
<PAGE>


5.       PREFERRED STOCK

         On July 26, 2002, the holder of the Series A Preferred Stock, Able,
         received 345,333 shares of RxBazaar, Inc. Series A Preferred Stock in
         the merger. Each share of Series A Preferred Stock is convertible to
         one share of common stock and had a stated dividend of 8%. In September
         2002, we 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 us. As a result of the
         indeterminate number of shares to be issued, we recorded the issuance
         of the 239,841 shares at their par value of $240 in September 2002 and
         have a remaining dividend payable of $479,442 as of March 31, 2004. 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 our 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. We filed a registration statement for these shares
         which was declared effective. 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 our issued and outstanding common stock.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS 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:

         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.

         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. 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.

         CRITICAL ACCOUNTING POLICIES

         Our significant accounting policies are more fully described in Note 1
to our condensed consolidated financial statements included in this Quarterly
Report and in Note 1 to our consolidated financial statements included in our
Annual Report on Form 10-KSB for the year ended December 31, 2003 filed with the
Securities and Exchange Commission. 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 our
management; as a result, they are subject to an inherent degree of uncertainty.
In applying these policies, our management makes estimates 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 we believe 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 may
differ from these estimates under different assumptions or conditions. Our
critical accounting policies including inventory valuation, revenue recognition


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<PAGE>


and accounts receivable allowances, software development costs and impairment of
long-lived assets are each discussed in more detail in our Annual Report on Form
10-KSB.

         RESULTS OF OPERATIONS

         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. As of March 31, 2004, we had approximately 3,400 different
products posted for sale on our website, with a total listed sales value of
approximately $150 million. Management believes that the number of items posted
for sale is an indication of continued interest in our online marketplace among
potential sellers, and makes the site more attractive to buyers. The number of
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, 2003 our auditors expressed doubt about our ability to
continue as a going concern. Management has been addressing this issue by
seeking arrangements to raise 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 operate profitably.

         Three Months Ended March 31, 2004 Compared to Three Months Ended
         March 31, 2003

         Net sales for the three months ended March 31, 2004 were $18,291,776
compared to $12,614,328 for the three months ended March 31, 2003. The
$5,677,448 or 45.0% increase is due to an improvement in our ability to acquire
inventory through our inventory financing agreement with Steel City
Pharmaceuticals, our growing internet sales and greater recognition in the
market place. Our internet sales were $9,320,089 or 51.0% of net sales for the
three months ended March 31, 2004 compared to $8,261,779 or 65.5% of net sales
for the three months ended March 31, 2003.

         Cost of sales for the three months ended March 31, 2004 was $16,945,686
or 92.6% of net sales, compared to $11,875,559 or 94.1% of net sales for the
three months ended March 31, 2003. The increase in the gross profit margin is a
result of our ability to acquire inventory through our inventory financing
agreement with Steel City Pharmaceuticals. In 2004, we were able to obtain more
favorable prices on brand and generic pharmaceutical purchases. In 2003, we sold
primarily brand pharmaceuticals which have lower gross margins than generic
pharmaceuticals. The brand sales have increased our customer base and attracted
buyers to our internet site. Our margins are affected by our ability to buy
pharmaceutical products at favorable prices and the mix of products between
brand and generic pharmaceuticals.

         Sales and marketing expenses for the three months ended March 31, 2004
were $497,920 or 2.7% of sales compared to $421,883 or 3.3% of sales for the
three months ended March 31, 2003. These expenses include the salaries and
commissions of our telemarketing staff, advertising and trade show expenses. The
$76,037 increase in expenses is primarily due to a $76,379 increase in
commissions and sales incentives resulting from our 45.0% increase in sales.

         Information technology expenses were $174,280 for the three months
ended March 31, 2004 compared to $145,991 for the three months ended March 31,
2003. These expenses include the salaries of information technology staff and
other technology costs. The $28,289 increase in expenses is primarily due to an
increase of $25,712 in salaries. In April 2004, three members of our information
technology staff, who had been providing consulting services to Able, resigned.



                                       12
<PAGE>


         General and administrative expenses for the three months ended March
31, 2004 were $1,041,426 compared to $1,234,778 for the three months ended March
31, 2003. The $193,352 decrease in expenses is primarily due to decreases of
$63,000 in consulting expenses, $40,762 in rent and $61,849 in salaries and
benefits. Consulting expenses decreased as our chief executive officer and
another officer who are paid as consultants have declined to accept compensation
for their services at this time. Rent expense decreased as a result of our
decision to vacate our data center and call center office space because of
alleged breaches by our landlord. Salaries and benefits decreased primarily as a
result of the resignation of our chief operating officer in January 2004.

         Other income (expense) for the three months ended March 31, 2004 was
$(525,581) compared to $(125,504) for the three months ended March 31, 2003.
Interest and financing expenses increased to $573,611 for the three months ended
March 31, 2004 compared to $168,299 for the three months ended March 31, 2003.
The $405,312 increase in interest expense is due to the interest expense and
financing costs for our new inventory financing agreement and unsecured
convertible debt and an increase in interest expense on our asset-based line of
credit. Miscellaneous income increased to $48,030 for the three months ended
March 31, 2004 compared to $42,795 for the three months ended March 31, 2003.
The increase in miscellaneous income is primarily due to information technology
consulting fees of $69,800 earned in the current period compared to fees of
$42,735 earned in the prior period. Miscellaneous expenses include $22,224 in
losses for abandoned leasehold improvements and writing off the security deposit
for our former data center and call center office space.

         We incurred a net loss for the three months ended March 31, 2004 of
$893,117 compared to a net loss of $1,189,387 for the three months ended March
31, 2003. Net loss per share for the three months ended March 31, 2004 was $0.14
compared to $0.19 per share for the three months ended March 31, 2003.

         LIQUIDITY AND CAPITAL RESOURCES

         Since inception, we have funded our working capital requirements
primarily through the sale of common and preferred stock, borrowings against our
asset-based line of credit, borrowings under the Steel City agreement and
borrowings from accredited investors. At March 31, 2004, we had a working
capital deficit of $6,380,855, compared to working capital deficits of
$5,689,813 and $1,056,273 at December 31, 2003 and 2002, respectively. The
$691,042 decrease in working capital from December 31, 2003 to March 31, 2004 is
primarily due to the net loss of $893,117 being partially offset by noncash
expenses. At March 31, 2004, we had a stockholders' deficit of $6,580,980
compared to a stockholders' deficit of $5,697,185 at December 31, 2003.

         On October 27, 2003, we entered into an agreement with Steel City
Pharmaceuticals LLC, where they agreed to maintain at least $4,000,000 in
capital to be used by us for inventory purchases. We entered into this agreement
as a result of our inability to obtain third-party financing on satisfactory
terms. We agreed to repay Steel City its purchase price for the inventory plus
the greater of (i) 30% of the gross profit on our resale of such inventory or
(ii) a 20% annual percentage return for the period that their capital is used by
us. Repayment to Steel City is due on the earlier of thirty days after sale of
the inventory or forty-five days after payment by Steel City for the inventory.
At March 31, 2004, we were not in compliance with the repayment terms of the
Steel City agreement. We also agreed to pay Steel City a commitment fee of
$50,000 per month during the term of the agreement. Commitment fees are subject
to adjustment to the extent that the aggregate sum paid by us under the
agreement would exceed $1,200,000 on an annualized basis. Steel City has been
granted a second lien on our accounts receivable subject to an inter-creditor
agreement with our asset-based lender and retains legal title to the inventory
until we resell it. We record a liability for all inventory purchased by Steel
City due to our unconditional obligation to purchase such inventory. The
agreement is for a term ending on August 31, 2006, subject to earlier
termination either by Steel City at any time or by us at any time after one year
or earlier if Steel City rejects more than 20% of the purchase opportunities
during the first six months of the agreement.

         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, we
recorded the issuance of the 239,841 shares at their par value of $240 in
September 2002 and have a remaining dividend payable of $479,442 as of March 31,
2004. The dividend payable liability will be reduced and additional paid-in
capital will be increased based on proceeds from sales of dividend shares


                                       13
<PAGE>


received by Able. Able has waived its right to future dividends on the Series A
Preferred Stock. We have no obligation to pay cash dividends on preferred stock.

         Based on our operating plans, management believes that as of April 30,
2004, our borrowing ability under our asset-based line of credit and the Steel
City agreement, will be sufficient to fund our working capital needs for the
next two months. Our asset-based lender notified us on November 6, 2003 that it
would not renew the credit agreement on February 24, 2004. On February 27, 2004,
our asset-based lender agreed to extend the credit agreement to May 31, 2004
subject to certain modifications. We are currently seeking to raise additional
capital through the placement of debt or equity securities. We also plan to
continue to seek additional financing to replace our asset-based lender, pay off
our subordinated notes and improve our overall financial condition. However, we
can give no assurance that we will be able to obtain such financing on
satisfactory terms, and if we are successful in obtaining financing it might be
highly dilutive to current stockholders. 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.

         FORWARD-LOOKING STATEMENTS

         We are including the following cautionary statement in this Quarterly
Report on Form 10-Q 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. Our
expectations, beliefs and projections are expressed in good faith and are
believed by us to have a reasonable basis, including without limitation,
management's examination of historical operating trends, data contained in our
records and other data available from third parties, but there can be no
assurance that management's expectations, 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 15 of our Annual Report on Form 10-KSB for the fiscal year ended December
31, 2003. We disclaim any obligation to update any forward-looking statements to
reflect events or circumstances after the date hereof.

ITEM 4.  CONTROLS AND PROCEDURES

         "Disclosure controls and procedures" are controls and other procedures
designed to ensure that we timely record, process, summarize and report in a
timely manner the information we must disclose in reports that we file with or
submit to the SEC under the Securities Exchange Act of 1934, as amended. These
include controls and procedures designed to ensure that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.

         As required under the Sarbanes-Oxley Act of 2002, our Chief Executive
Officer and Chief Financial Officer conducted a review of our disclosure
controls and procedures as of the end of the period covered by this report. They
concluded, as of the evaluation date, that our disclosure controls and
procedures are effective.

         During the three months ended March 31, 2004, there were no significant
changes in our internal controls over financial reporting that have
significantly affected, or are reasonably likely to affect, our internal
controls over financial reporting.


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<PAGE>


                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On May 3, 2004, we were served with a complaint filed by our former
landlord in the Court of Common Pleas, Hamilton County, Ohio, alleging failure
to pay rent and abandonment of the leased premises, seeking damages in excess of
$25,000. We had used the premises as a data center and a call center through
January 2004. We believe that we have substantial defenses to the complaint. For
more information, reference is made to Note 4 to the Notes to Condensed
Consolidated Financial Statements in this report.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

   Exhibits:

   31.1*      Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
              of 2002 (CEO)

   31.2*      Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
              of 2002 (Treasurer)

   32.1*      Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
              of 2002 (CEO)

   32.2*      Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
              of 2002 (Treasurer)

   *Filed herewith

   Reports on Form 8-K:

   Report for an event of February 13, 2004 to report in Item 9 a radio
   interview to be given on February 16, 2004 by C. Robert Cusick, our Chief
   Executive Officer.




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<PAGE>


                                   SIGNATURES

         Pursuant to the requirements 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.

                            RXBAZAAR, INC.
                            Registrant


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


                            By: /s/ Bruce C. Warwick
                                -------------------------------------------
                                Bruce C. Warwick
                                Treasurer
                                (Principal Financial and Accounting Officer)

Date:  May 14, 2004


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