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 June 30, 2003 or

[ ]  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 0-26108

                            NATUREWELL, INCORPORATED
                ----------------------------------------------
                [Name of small business issuer in its charter]

                 Delaware                                94-2901715
                ----------                               ----------
        (State or other jurisdiction                   (IRS Employer
      of incorporation or organization)              identification No.)

        7855 Ivanhoe Avenue, Suite 322, La Jolla, California 92037
        -----------------------------------------------------------
              (Address of principal executive office)      (Zip Code)

      Registrant's telephone number including area code:  (858) 454-6790
                                                          --------------

          Securities registered pursuant to Section 12(b) of the Act:
                                     None
                                --------------
                               (Title of Class)

          Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $0.01 Par Value
                          -----------------------------
                               (Title of Class)

     Check whether this issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 SB contained herein, 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-A or any
amendment to this Form 10-KSB.  [X]

     State the issuer's revenues for its most recent fiscal year: $685,449.

     State the aggregate market value of the voting stock held by non-
affiliates computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of a specified date within
the past 60 days. As of October 14, 2003 the aggregate market value was
$2,286,650.

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the last practicable date. As of October 14, 2003 the
Company had issued and outstanding 114,332,477 shares of $0.01 par value common
stock.

     Documents incorporated by reference and parts of Form 10-KSB into which
incorporated:  None.

     Transitional Small Business Disclosure Format (check one):
                          Yes     [ ]     No     [X]

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ITEM 1.   BUSINESS

Background of Company

NatureWell, Incorporated (the "Company") is a public company traded on the
Over-the-Counter Bulletin Board ("OTC-BB") under the symbol "NAWL."  The
Company is engaged primarily in the research and development of unique
proprietary healthcare products intended for a variety of conditions and has
completed development of a homeopathic OTC drug used for the treatment and
prevention of migraine headaches.  The migraine medication, MIGRASPRAY(R), was
formerly being marketed nationwide in retail drug stores. Currently the Company
is test marketing  MIGRASPRAY to healthcare professionals and direct to
consumers, which marks a turn in the Company's marketing plans away from a
conventional retail approach (see Note Q "Subsequent Events" in Notes to
Financial Statements).

The Company outsources its manufacturing and much of its distribution, call
center, customer service and product fulfillment activities to third party
vendors.  The Company has four employees at its corporate headquarters located
in La Jolla, California.

Business Strategy

The Company believes that a strong need exists for a safe and effective OTC
drug for the treatment of migraine headaches. Therefore, the Company is
currently primarily focused on the marketing, national distribution and sale of
MIGRASPRAY.  The Company's strategy is to position MIGRASPRAY as a
comprehensive first-line of defense for treating migraine headaches.   The
medication, a sublingual spray (sprayed under the tongue), can be used for
prevention of migraines, as well as for the treatment of migraine headache
attacks.  If a migraine attack still occurs while MIGRASPRAY is being used
preventatively, the medication may also be used to treat the acute attack. This
comprehensive approach can be highly effective in dramatically reducing or
eliminating migraines and represents a safe alternative to expensive
prescription medications. In addition to its use as a migraine reliever or
preventative MIGRASPRAY may also be used for other types of headaches and pain,
particularly headache pain and cramping associated with menstrual cycles.

The Company is currently testing its new marketing strategy of selling
MIGRASPRAY directly to consumers and healthcare professionals. The Company
plans to directly market MIGRASPRAY to the healthcare provider network using
in-house and outside sales representatives and distributors. The Company plans
to also continue selling MIGRASPRAY via the Internet and other direct to
consumer sales. It is anticipated that additional testing will be needed before
the Company can launch a full-scale effort for its new marketing strategy.

Inbound Telemarketing

The Company subcontracts its in-bound telemarketing function to third parties
that provide this service for a fee based on the number of telephone calls
answered, the duration of the calls, and/or sales generated. The inbound
telemarketers electronically transmit orders to an order fulfillment center
where the product is then packaged and shipped to the customer. At the time of
purchase, the inbound telemarketers will often promote, cross sell and upsell
complementary and/or additional products or services, including continuity
programs for the product.

Order Fulfillment

Currently the Company's order fulfillment process is performed through third
party warehouses and fulfillment centers. Order fulfillment activities include
receiving merchandise from manufacturers, inspecting merchandise for damages or
defects, storing product for later delivery, packaging, and shipping of product
and processing of customer returns. Each direct response customer is charged a
shipping and handling fee in addition to the cost of the product. The Company
is evaluating the possibility of handling its fulfillment of direct to
healthcare provider sales in-house.

Product Development

The Company's Senior Vice President of Research and Development actively
researches new products and reviews and develops new product concepts and ideas
from a variety of sources.

During the evaluation phase of product development, the Company analyzes the
suitability of a product for mass distribution, as well as the anticipated
perceived value of the product to consumers; determines whether an adequate and
timely supply of the product can be obtained; and further analyzes whether the
estimated profitability of the product satisfies the Company's needs.  The
Company will continue to review products and product concepts on an ongoing
basis to select those that it believes will be successful in one or more
markets.

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Product Overview

  *  MIGRASPRAY(R) provides fast relief from migraines and other types of
     headaches without side effects.  This homeopathic herbal preparation is a
     convenient, economical, and fast acting sublingual spray.

  *  ALLERSPRAY(R) provides fast relief for allergy symptoms without
     drowsiness, dry mouth, or other side effects.  This homeopathic
     combination has all natural ingredients provided in a convenient,
     economical, fast-acting sublingual spray. (Currently on hold)

  *  Living Water Eye Lotion(tm) - discontinued.

  *  NatureWell(tm) Contact Lenses - discontinued.

Nutraceutical Products

The Company develops, manufactures, and markets, unique proprietary
nutraceutical products, chief among which is MIGRASPRAY.

MIGRASPRAY

MIGRASPRAY is a clinically tested, over-the-counter, patented, homeopathic drug
for the fast relief and prevention of the symptoms of migraine headaches and is
currently sold in approximately 14,000 retail outlets throughout the United
States.

MIGRASPRAY is sprayed under the tongue (sublingual administration), which
promotes enhanced bioavailability and rapid metabolization by directly entering
the bloodstream through the mucous membrane, avoiding degradation from exposure
to the gastrointestinal tract and liver.  This fast acting delivery system
allows MIGRASPRAY to provide rapid relief from migraine pain and other
associated symptoms.

MIGRASPRAY contains the active ingredients feverfew (its primary ingredient),
polyporus, goldenseal and dandelion. Feverfew has been used for centuries for
the treatment of a variety of ailments including headaches, rheumatic aches,
abdominal pain and menstrual cramps. Studies have shown that feverfew acts as a
natural anti-inflammatory controlling the inflammation that results in cerebral
blood vessel dilation, believed to cause or contribute to the symptoms of
migraine headaches. The active ingredients in feverfew are sesquiterpene
lactones, the primary component being Parthenolide, a phyto-chemical.  When
taken daily for prevention, MIGRASPRAY has also been shown to be effective in
reducing the frequency of migraine headaches.  A physician/spokesman for the
Company with clinics in New York and Dallas has been conducting a test with his
patients by having them use MIGRASPRAY every day for prevention.  The incidence
of migraine headaches in the physician's initial test group has been reduced by
approximately ninety percent (90%) over a period of more than five (5) months.

The Company is not aware of any other treatment that is as efficacious in
preventing migraine headaches or any other migraine prevention treatment
currently being marketed nationally throughout the U.S.

     *    Contains:    10 ml.
     *    Indication:  For relief of headaches.
     *    Directions:  Administer 10 full sprays under the tongue and hold for
                       at least thirty seconds before swallowing. Dose can be
                       repeated one time after 5 minutes if required.  Use as
                       needed or directed by physician.
     *    Active
          Ingredients: A proprietary homeopathic blend: feverfew (Tanacetum
                       Parthenium, leaves and flowers), Goldenseal (Hydrastis
                       rhizoma, root, Dandelion (Taraxicum denleonis, root),
                       Polyporus Officinalis (Polyporus umbelleatus,
                       Sclerotium)(all 3x).
     *    Inactive
          Ingredients: Distilled water, glycerin, ascorbic acid, potassium
                       Sorbate (as preservative), disodium EDTA.

Migraine Market

It is estimated that one in five women and one in ten men in the United States
suffer from migraine headaches.  In aggregate, nearly 32 million Americans or
12% of the U.S. population suffers from migraine headaches.  Of those
sufferers, 57% rely totally on non-prescription remedies, the same percentage
as nearly 10 years ago.

An estimated 150 million workdays or an equivalent of 1,200 million work hours
are lost each year to head pain.  Such lost productivity and employee
absenteeism results in an estimated $13 billion in losses to employers each
year.

A family of drugs known as "triptans," which constrict the cerebral blood
vessels, dominate the prescription market for migraine remedies at costs
reaching as high as $50 per dose. Triptans are sometimes contraindicated for
patients with poor cardiac health and/or high blood pressure and patients are
generally restricted in the amount of these drugs that may be used within a 30-
day period due to potentially serious side effects.

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The Company's Other Products

The Company has developed other products using its MICROMIST(tm) technology.
All of these products are natural, and fall within the category of homeopathic
drugs or dietary supplements and, thus, avoid the lengthy and expensive FDA
approval processes.   Sublingual (under the tongue) administration, is a method
of delivering substances into the body in a manner that promotes direct
absorption through the highly vascularized mucous membrane under the tongue,
rather than through the digestive tract, thereby bypassing exposure to the
liver and gastric system.  Sublingual administration of the Company's specially
prepared MICROMIST sprays is a fast acting and efficacious delivery method,
promoting enhanced bioavailability and rapid metabolization.  Many of the
MICROMIST formulations are symptomatically efficacious in a manner of minutes.

Though many sublingual substances are absorbed by diffusion (the sublingual
area soaking up the substance), not all substances are permeable and accessible
to the mucous membrane, which often functions as a barrier.  However using the
Company's MICROMIST technology, the sublingual mucous membrane can become an
ideal site for rapid absorption.

The Company has completed development of ALLERSPRAY, designed for the fast
relief of allergy symptoms, without drowsiness, dry-mouth or other side
effects.  Other products under development using the MICROMIST technology
include an anti-inflammatory treatment for the symptoms of arthritis, a natural
tranquilizer and a daily treatment for the symptoms of Parkinson's disease.

The Company has patents pending covering some of its MICROMIST products and
intends to file patent applications for additional products in the future.  The
Company intends to file patent applications, where appropriate, to protect
technology, inventions and improvements that are considered important to the
development of its business.

ALLERSPRAY (Currently on Hold)

ALLERSPRAY is a homeopathic solution of various herbs and amino acids. Several
of the herbs and amino acids used in ALLERSPRAY, such as Dandelion and
Histidine, have a long history of use for relieving the symptoms associated
with allergies.

ALLERSPRAY is designed to be sprayed under the tongue before being swallowed.
This sublingual method of administration promotes rapid absorption.  A twice-
daily use is ordinarily sufficient for the relief of symptoms.
     *    Contains:    20 ml.
     *    Indication:  For relief of allergy symptoms.
     *    Directions:  Administer 3 full sprays under tongue and hold for
                       at least thirty seconds before swallowing.
                       Use twice daily as needed.
     *    Contents:    A homeopathic solution of distilled water, vegetable
                       glycerin, proprietary herbal blend (4x):  Eyebright,
                       Dandelion, Ginger, Matico, Coptis, Proprietary Amino
                       Acid Blend:  Histidine, Pure Form 20 Blend, Aspartic
                       Acid, Serine, Proline, Arginine and Potassium Sorbate.

Competition

The Company competes directly with many other companies, which generate revenue
from direct marketing, wholesale/retail distribution, and electronic commerce
activities. The Company also competes with a large number of consumer health
product companies and retailers, which have substantially greater financial,
marketing and other resources than the Company. Additionally, companies may
attempt to imitate or "knockoff" the Company's products and may be able to take
advantage of the product category awareness and product development, which the
Company has created. The Company will seek to protect itself from "knockoffs"
through the establishment and enforcement of its intellectual property and
patent rights.

Regulatory Compliance

Various aspects of the Company's business are subject to regulation and ongoing
review by a variety of federal, state, local and foreign government agencies,
including, but not limited to the Federal Trade Commission ("FTC"), the United
States Post Office, the Consumer Product Safety Commission ("CPSC"), the
Federal Communications Commission, ("FCC"), the Food and Drug Administration
("FDA"), various States' Attorneys General and other state, local consumer
protection and health agencies. The statutes, rules and regulations applicable
to the Company's operations, and to various product marketed by it, are
numerous, complex and subject to change.

If any significant actions were brought against the Company or any of its
subsidiaries in connection with a breach of such laws or regulations,
including, but not limited to the imposition of fines or other penalties, or
against one of the entities through which the Company obtains a significant
portion of its media, the Company could be materially and adversely affected.
There can be no assurance that changes in the laws and regulations of any
territory which forms a significant portion of the Company's market will not
adversely affect the Company's business or results of operations.

The Company will collect and remit sales tax in states where it has a physical
presence. Certain states in which the Company's only activity is direct
marketing may attempt to require direct marketers, such as the Company, to
collect and remit sales tax on sales to customers residing in such states. A
1995 United States Supreme Court decision held that Congress could legislate
such a change. Thus far, Congress has taken no action to that effect. The
Company will be prepared to collect sales taxes for other states if laws are
passed requiring such collection. The Company does not believe that a change in
the laws requiring the collecting of sales taxes will have a material adverse
effect on the Company's financial condition or results of operations.

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Trademarks and Patents

Proprietary protection for the Company's products, processes, and know-how is
important to the Company's business.  Thus, the Company plans to aggressively
prosecute and defend its proprietary technology.  The Company is the owner of
certain patent(s) for its products and has certain patent applications pending
before the United States Patent and Trademark Office and intends to file
additional patent applications, where appropriate, to protect technology,
inventions and improvements that are considered important to the development of
its business. The Company also relies upon trade secrets, know-how, continuing
technological innovation, and licensing opportunities to develop and maintain
it's competitive position.

Patent positions of healthcare product firms, including the Company's are
generally uncertain and involve complex legal and factual questions.
Consequently, even though the Company may prosecute its patent applications
with the United States and foreign patent offices, the Company does not know
whether any applications will result in the issuance of patents or whether any
issued patents will provide significant proprietary protection or will be
circumvented or invalidated.  Since patent applications in the United States
are maintained in secrecy until patents are issued, and publication of
discoveries in the scientific or patent literature tend to lag behind actual
discoveries, the Company cannot be certain that it was the original creator of
inventions which may be covered by patent applications or that it was the first
to file patent applications for such inventions.

There can be no assurance that a court of competent jurisdiction, if issued,
would hold patents, valid.  Moreover, to determine priority of invention, the
Company may have to participate in interference proceedings declared by the
United States Patent and Trademark Office or opposition proceedings before an
equivalent foreign agency, which could result in substantial cost to the
Company.

There can be no assurance that the patent applications, if any, will result in
patents being issued or that if issued, the patents will afford protection
against competitors with similar technology; nor can there be any assurance
that others will not obtain patents that the Company would need to license or
circumvent.

The Company will also rely upon unpatented trade secrets, and there can be no
assurance that others will not independently develop substantially equivalent
proprietary information and techniques or otherwise gain access to the
Company's trade secrets or disclose such technology, or that the Company can
meaningfully protect its right to unpatented trade secrets.

The Company has a registered patent as well as certain patents pending covering
its MIGRASPRAY product, and intends to file patent applications for additional
products in the future. There can be no assurance that these patents will be
granted or, if granted, upheld by a court of competent jurisdiction.

Human Resources

The Company has four employees and utilizes the services of consultants, or
independent contractors, engaged in research and development, customer service
and general administration when needed.  None of the Company's employees are
covered by a collective bargaining agreement, and the Company has experienced
no work stoppages.  The Company believes that it maintains positive relations
with its personnel.

ITEM 2.   PROPERTY

The Company's corporate offices are located at 7855 Ivanhoe Avenue, Suite 322,
La Jolla, California 92037.  The offices are approximately 2,000 square feet
and leased through March 31, 2004 at approximately $5,214 per month. Currently
the Company is in default on its lease and pays rent on a month to month basis
at $2,000 per month pursuant to a short term arrangement with its landlord. The
difference between the reduced rate of rent and the contracted rate of rent
continues to accrue.

ITEM 3.   LEGAL PROCEEDINGS

As discussed elsewhere in this Form 10-KSB, the Company is subject to
regulation by a number of federal, state, and foreign agencies and is involved
in various legal matters arising in the normal course of its business.

Currently the Company does not carry product liability insurance. Pending the
outcome of the Company's restructuring efforts, and tests of its new marketing
strategy, insurance coverage will be evaluated in amounts that management
believes is adequate to cover the risks it faces in the industry in which it
competes. There can be no assurance, however, that the Company can afford such
insurance coverage or that such insurance coverage will be adequate to cover
all losses, which the Company may incur in future periods or that coverage will
be available for all of the types of claims the Company faces or may face.

In the opinion of management, the Company's liability, if any, arising from
regulatory and legal proceedings related to these matters, and others in which
it is involved, could have a material adverse effect on the Company's financial
position, results of operations or cash flows.

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On November 5, 2002, Danka Industries initiated a lawsuit against the Company
in the United States District Court for the Southern District of California
claiming breach of contract with respect to a sublease entered into between the
Company and Danka for a facility that the Company never occupied. According to
Danka's complaint, the Company breached the sublease with Danka and owes
damages to Danka in an amount to be proven at trial. In response to the
complaint, the Company filed a number of defenses and counterclaims against
Danka including a claim that the Company had been fraudulently induced to enter
into the sublease. On January 23, 2003, the District Court issued an order
dismissing all of the Company's defenses and counterclaims with prejudice
except for its fraudulent inducement claim, which was dismissed without
prejudice with leave to amend. The Company filed its first amended counter-
complaint claiming intentional misrepresentation, negligent misrepresentation
and demanded rescission of the sub-lease.

The Company and Danka have entered into settlement discussions and a tentative
agreement has been reached wherein Danka would receive a subordinated note
issued by the Company in the amount of #325,000. The proposed note contains the
same terms and conditions as the notes being offered to creditors of the
Company (see also Note Q, "Restructuring"). The Company had made an estimate of
the likely costs attributable to the Danka lawsuit of $300,000, which was
reflected in a litigation reserve in previous financial statements. At June 30,
2003 the Company had increased its litigation reserve (for all litigation) by
$150,000.

On August 13, 2002 Mitchell Health Technologies (the Company's former master
broker) filed an action against the Company in the United States District
Court, Western District of Wisconsin. The lawsuit alleges breach of contract by
the Company and the failure to register transfer of restricted common stock
that Mr. Mitchell and Mr. James Higgins (a Mitchell employee) claim they own,
and for which the Company disputes that it has received full consideration from
Mssrs. Mitchell and Higgins for the shares.  The Company counter sued Mitchell
and Higgins claiming, among other things, breach of contract and breach of
fiduciary duty. The matter is scheduled for trial on November 3, 2003. It is
unclear to the Company the exact amount of damages that Mitchell and Higgins
seek. Under the Mitchell and Higgins' claim that the Company failed to register
transfer shares allegedly owned by Mitchell and Higgins the Company believes
that the parties are seeking the difference between the value of the stock at
the time it was allegedly qualified for legend removal and the value at the
conclusion of the trial. Under this theory damages sought could range from
between $60,000 and $300,000. There can no assurance that the Company's estimate
of the damages being sought is reliable or accurate. Under Mitchell's claim for
breach of contract, it is the Company's understanding that Mitchell is
proceeding under a theory that it is entitled to damages in an amount equal to
10.5% (Mitchell's commission rate when he acted as the Company's master broker)
of projected sales assuming that the Company had spent a minimum for advertising
and marketing of $1 million over a period of time that is unclear to the
Company, pursuant to oral contracts (that the Company allegedly entered into
with Mitchell Health) requiring it do so. The Company assumes that  Mitchell is
seeking an amount in damages equal to 10.5% of projected sales for a period of
time that extends to November 2005 (the termination date of the contract that
Mitchell alleges governs the parties relationship). The Company has no reliable
way to estimate an amount of damages under the Mitchell theory.

On May 23, 2003 Stephen C. Roberts ("Roberts"),a former director and officer
for the Company, filed suit to enforce a settlement agreement previously
reached between himself and the Company regarding a disputed consulting
contract. The action was filed in Minnesota District Court, County of Hennepin,
Fourth Judicial District, case # 03-8716, seeking $24,000 plus attorney's fees.
The Company has cross complained in the suit alleging breach of contract,
tortious interference with the Mitchell contract (see below) and promissory
fraud and has requested that the court allow it to add Gelstat Corporation as a
third party defendant. The Company seeks damages in an amount to be determined
at trial and injunctive relief. Gelstat is a publicly traded company engaged in
the development of an over the counter migraine relief product. Roberts and
Mitchell act as CEO and President, respectively, of Gelstat

On August 13, 2003 Mr. Kenneth Yonika, the Company's former CFO consultant filed
a claim for payment of wages due in the amount of $215,000. The Company disputes
the validity of Mr. Yonika's claim and will vigorously defend itself against
such claim. Currently the Company and Mr. Yonika are in settlement discussions.

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

None.

PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of June 30, 2003, there were over 600 holders of record of the Common Stock.
The Company has not paid cash dividends on its capital stock since inception
and does not have any plans to do so in the future. The Company currently
intends to retain earnings, if any, for use in its business.

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Market Information

The Company's Common Stock is traded on the Over-the-Counter Bulletin Board
("OTC-BB") under the symbol "NAWL."  The following table sets forth the high
and low closing prices per share for the Company's Common Stock for the prior
three years:
<TABLE>
<CAPTION>
                                                           HIGH     LOW
                                                          ------   ------
<S>                                                       <C>      <C>
Fiscal Year 2001:
First Quarter ...........................................  0.14     0.10
Second Quarter...........................................  0.16     0.075
Third Quarter ...........................................  0.94     0.14
Fourth Quarter...........................................  0.73     0.17

Fiscal Year 2002:
First Quarter ...........................................  0.21     0.075
Second Quarter...........................................  0.15     0.055
Third Quarter ...........................................  0.087    0.045
Fourth Quarter...........................................  0.30     0.085

Fiscal Year 2003:
First Quarter ...........................................  0.10     0.03
Second Quarter...........................................  0.06     0.02
Third Quarter............................................  0.05     0.02
Fourth Quarter...........................................  0.05     0.02

</TABLE>

Recent Sales of Securities

During the year ending June 30, 2003 the Company made the following issuances
and sales of securities in reliance upon the exemption provided by Section 4(2)
of the Securities Act of 1933, as amended, Rule 506 of Regulation D hereunder.

During the month of July 2002, the Company issued the following restricted
shares of common stock;(i) 1,232,998 shares for cash proceeds of $33,665, (ii)
4,250,000 shares in exchange for Secured Promissory Notes from officers,
directors and employees totaling $85,000, (iii) 2,250,000 shares as payment for
services of $151,150, (iv) 242,857 shares as payment of officer bonuses in the
amount of $6,000, and (v) 90,000 shares as payment of employee bonuses in the
amount of $900.

During the month of September 2002, the Company issued the following restricted
shares of common stock; (i) 388,176 shares as payment of $27,172 for shares of
NMI pursuant to an offer to purchase made to all NMI shareholders, (ii)
3,410,000 shares as payment of $68,455 of services, and (iii) 166,667 shares as
payment of $2,545 loan payable.

During the month of October 2002, the Company issued 307,286 restricted shares
of common stock as payment of $10,000 of services and 12,750,000 restricted
shares of common stock to the Company's Chief Executive Officer that was part of
a equity/debt issuance to the officer representing partial payment of monies
owed to the officer for salary and monies loaned to the Company (the 12,750,000
shares were issued along with a senior note for $382,500 as payment of $510,000
of the amounts due to officer).

During the month of November 2002, the Company entered into a settlement
agreement with a major shareholder whereby 2,320,433 shares previously
purchased by the shareholder were cancelled and 4,571,429 new restricted shares
were issued along with a promissory note for $200,000 in return for cash
proceeds to the Company of $100,000. The Company recorded issuance costs of
$122,510 in connection with the transaction.

During the month of December 2002, the Company issued 1,078,200 restricted
shares of common stock as payment of $24,855 of services.

During the month of January 2003, the Company issued 2,970,370 restricted
shares of common stock for cash proceeds of $41,000.

During the month of April 2003, the Company issued 500,000 restricted shares of
common stock as payment of $5,000 of officer bonus and 50,000 restrcited shares
of common stock as payment of $900 of services.

Subsequent to year-end the Company issued 1,423,272 shares of restricted common
stock as payment of $15,223 of services.

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

The Company has begun test marketing its MIGRASPRAY product directly to
healthcare providers through telemarketing and tradeshows and also markets
MIGRASPRAY via the Internet. The Company manages all phases of direct and other
marketing for its MIGRASPRAY product in the United States, which includes
product selection and development, manufacturing by third parties, acquisition
of media and adverstising, production and broadcast of programming, order
processing and fulfillment, and customer service. The Company's ability to
execute a business and marketing plan are dependent upon a successful
completion of its restructuring effort (see Note Q) and the raising of needed
working capital.

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RISK FACTORS

Certain statements under the headings "Risk Factors," "Management's Discussion
and Analysis of Financial Condition and Results of Operations," "Business," and
elsewhere in this Report constitute "forward-looking statements" within the
meaning of the rules and regulations promulgated by the Securities and Exchange
Commission.

THIS REPORT ON FORM 10-KSB CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES.  THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY
FROM THE RESULTS DISCUSSED IN SUCH FORWARD-LOOKING STATEMENTS.

This report contains a number of forward-looking statements, which reflect the
Company's current views with respect to future events and financial
performance.  Such forward-looking statements are based on management's beliefs
and assumptions regarding information that is currently available, and are made
pursuant to the "safe harbor" provisions of the federal securities laws.  These
forward-looking statements are subject to certain risks and uncertainties.  The
Company's actual performance and results could differ materially from those
expressed in the forward-looking statements due to risks and uncertainties that
could materially impact the Company in an adverse fashion and are only
predictions of future results, and there can be no assurance that the Company's
actual results will not materially differ from those anticipated in these
forward-looking statements. In this report, the words "anticipates",
"believes", "expects", "intends", "plans", "may", "future", and similar
expressions identify forward-looking statements. Readers are cautioned to
consider the risk factors described below and not to place undue reliance on
the forward-looking statements contained herein, which speak only as of the
date hereof. The Company has no obligation to publicly update or revise any of
the forward-looking statements to reflect events or circumstances that may
arise after the date hereof.

As described above, the forward-looking statements contained in this report
involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Company, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. These risks, uncertainties and other factors include, but are not
limited to the following: the Company's lack of operating history and the
uncertainty of profitability; the Company's ability to obtain capital, which is
critical to its future existence, and if able to obtain capital it can do so on
terms that are advantageous or desirable to current shareholders and/or
stakeholders of the Company, the Company's ability to successfully advertise or
market its products to a degree necessary for it to drive product sales to a
level necessary to reach profitability, the Company's ability to develop and
introduce new products; the uncertainty of market acceptance of the Company's
products and their market penetration; the uncertainties related to the
Company's product development programs; the Company's future reliance on
collaborative partners and licenses; the Company's future sales, marketing and
distribution experience and dependence on distributors; the risks associated
with obtaining governmental approval of the Company's products; the highly
competitive industry in which the Company operates and the rapid pace of
technological change within that industry; the uncertainty of patented and
proprietary information protection and the Company's reliance on such patented
and proprietary information; changes in or failure to comply with governmental
regulation; the Company's dependence on key employees; and general economic and
business conditions and other factors referenced in this report. Accordingly,
any investment in the Company's common stock hereby involves a high degree of
risk. In addition to the other information contained in this Form 10-KSB, the
Company's business should be considered carefully before purchasing any of the
securities of the Company. In addition to other information contained in this
report, prospective investors should carefully consider the following factors
before purchasing securities of the Company. Prospective investors are
cautioned that the statements in this Section that are not descriptions of
historical facts may be forward-looking statements that are subject to risks
and uncertainties. Actual results could differ materially from those currently
anticipated due to a number of factors, including those identified in "Risk
Factors," "Business," and elsewhere in this report.

Possible Volatility of Stock Price and Absence of Public Market Liquidity

The market price of the Company's common stock has been, and is likely to
continue to be, volatile.  Factors such as announcements of shipments to new
retail outlets or new products by the Company or its competitors, changes in
pricing policies by the Company or its competitors, quarterly fluctuations in
the Company's operating results, announcements relating to strategic
relationships, government regulatory actions, general conditions in the market
for healthcare products, overall market conditions and other factors may have a
significant impact on the market price of the common stock.  In addition, in
recent years the stock market in general, and the shares of healthcare product
companies have experienced extreme price fluctuations.  This volatility has had
a substantial effect on the market prices of securities issued by many
companies for reasons unrelated to the operating performance of the specific
companies.  These broad market fluctuations may adversely affect the market
price of the Company's common stock.  In addition, the public float of the
Company's common stock is small in comparison to total shares outstanding on a
fully diluted basis, resulting in a very thin public market for the trading of
the Company's shares.  Trading volume on any single day seldom exceeds one
hundred thousand shares, while some days have a volume of only a few thousand
shares.  Limited trading volume entails a high degree of volatility in the
stock price.  In the 52-week period from July 1, 2001 to June 30, 2002, the
closing price for the shares of the Company's stock on the OTC Bulletin Board
ranged from $0.08 to $0.61.  This situation of limited liquidity and volatile
stock price will most likely continue for the near future.

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Limited Operating History.

The Company has a limited operating history upon which an investor can evaluate
its potential for future success.  Although the Company commenced sales of
MIGRASPRAY on a national level during the month of September 2001, to date, the
company has limited historical financial data upon which an investor can make
an evaluation of its performance. Accordingly, the Company has limited
historical financial information upon which an investor can base an evaluation
of its performance or make a decision regarding an investment in shares of its
common stock. The Company has generated an accumulated deficit of approximately
$23.6 million through June 30, 2003. The Company's operations to date have
progressed from research and development activities to the marketing and sale
of MIGRASPRAY. Most, if not all, of the Company's other products are in
developmental stage. Sales of MIGRASPRAY or future products the Company may
introduce may fail to achieve significant levels of market acceptance. The
Company's business will be subject to all the problems, expenses, delays, and
risks inherent in the establishment of a new business enterprise, including but
not limited to the following:

  *  limited capital;
  *  delays in product development;
  *  possible cost overruns due to price increases in raw product;
  *  unforeseen difficulties in the Company's manufacturing processes;
  *  risks associated with obtaining governmental approval or failing to comply
     with governmental regulation with respect to the Company's business;
  *  uncertain market acceptance; and
  *  the absence of an operating history.

Therefore, the Company may never achieve or maintain profitable operations and
the Company may encounter unforeseen difficulties that may deplete its capital
resources more rapidly than anticipated.

Failure to Manage Growth.

The Company plans to experience significant growth from the sale of its
products. Such growth, if  realized, could place a significant strain on the
Company's management, financial, operating and technical resources. Failure to
manage growth effectively could have a material adverse effect on the Company's
financial condition or results of operations. Additionally, although the
Company presently has no plans to acquire any "companies or assets of a
material amount," should the Company decide to adopt acquisition plans as part
of a future growth strategy, no assurance can be given that the Company can
effectively integrate such acquired operations or assets with its own
operations. The Company may also seek to finance any such future acquisition by
debt financing or issuance of equity securities and there can be no assurance
that any such financing will be available at acceptable terms or at all.

Extensive Government Regulation.

The manufacturing, processing, formulating, packaging, labeling and advertising
of the Company's products are subject to regulation by one or more federal
agencies, including the United States Food and Drug Administration, the Federal
Trade Commission and the Consumer Product Safety Commission. The Company's
activities are also regulated by various state and local governmental agencies
in the states where the Company distributes its products and in which the
Company's products are sold. Although the Company believes that it is in
compliance with all existing regulations the Company remains subject to the
risk that, in one or more of its present or future markets, its products or
marketing systems could be found not to be in compliance with applicable laws
or regulations.

In addition, the Company is unable to predict whether it will be able to comply
with any new legislation or regulations or amendments to legislation and
regulations that may be enacted in the future. New laws or regulations could
require the reformulation of certain products to meet new standards, the recall
or discontinuance of certain products not capable of reformulation, additional
record keeping, expanded documentation of the properties of certain products,
expanded or different labeling, and/or scientific substantiation. Failure by
the Company to comply timely with all laws and regulations applicable to its
products could have a material adverse effect on its business, operations, and
financial condition.

Product Liabilities.

The Company, like other retailers, distributors and manufacturers of products
that are ingested, faces the inherent risk of exposure to product liability
claims in the event that the use of its products results or is believed to
result in injury. The Company currently does not carry product liability
insurance. Pending the outcome of the Company's restructuring efforts, and
testing of its new marketing strategy, insurance coverage will be evaluated in
amounts that management believes is adequate to cover the risks it faces in the
industry in which it competes. There can be no assurance, however, that the
Company can afford such insurance coverage or that such insurance coverage will
be adequate to cover all losses, which the Company may incur in future periods
or that coverage will be available for all of the types of claims the Company
faces or may face.

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<PAGE>

Competition in the Industry.

The business of designing, marketing, and selling nutraceutical and diagnostic
items and other products like those offered by the Company is highly
competitive. Numerous manufacturers, distributors, and retailers compete
actively for customers. Many of the Company's competitors are substantially
larger than the Company and have greater financial resources. The market is
highly sensitive to the introduction of new products that may rapidly capture a
significant share of the market. As a result, the Company's ability to remain
competitive depends in part upon the successful introduction of new products.
To a lesser degree, the Company is subject to significant competition from
other organizations for the services of distributors. The Company's ability to
remain competitive depends, in significant part, on the success of the
Company's product distributors.

Concentrated Customer Base and Single Market Segment

Currently the Company's customer base is extremely concentrated. Nine customers
accounted for more than 76% of gross revenues for the year ending June 30,
2003. If such concentration was to continue and the Company was to lose a major
customer it could result in a material decline in the Company's revenues.
Additionally, the Company operates solely in one industry segment: the
marketing and support of its homeopathic OTC drug used for the treatment and
prevention of migraine headaches. The Company has no operations or assets
located outside of the United States. The Company's sales are primarily
concentrated with the MigraSpray product (although some sales of MigraDaily had
occurred during the year), creating a risk of concentration associated with the
sale of a single product and limited customer base. The loss of this single
product market could cause severe damage to the Company's financial future.

Market Acceptance of Future Products.

A substantial part of the Company's future growth strategy may depend upon the
development of new products. However, there can be no assurance that such new
products will be developed timely and within budget or if developed will meet
with market acceptance, and if such products do meet with market acceptance,
that they can be sold profitably. Any new products developed by the Company
likely will face competition from numerous larger manufacturers whose resources
are substantially greater than those of the Company and whose market presence
may make it difficult or uneconomic for the Company to introduce new products
against such competition.

Dependence on Key Personnel.

The Company is dependent on the efforts and abilities of certain of its senior
management. Much of the Company's key management have accepted securities
issued by the Company in lieu of cash compensation for their services as an
accommodation to the Company. The interruption of the services of such key
management (especially in light of their willingness to accept  forms of
compensation other than cash) could have a material adverse effect on the
Company's operations, profits and future development, if suitable replacements
are not promptly obtained. In addition, the Company's success depends, in part,
upon its ability to attract and retain other talented personnel. There can be
no assurance that the Company will be able to continue to attract and retain
such personnel necessary for the development of the business of the Company.

Intellectual Property Protection.

The Company's patents and trademarks are valuable assets, which are very
important to the marketing and national distribution of its products. The
Company has received a patent for its migraine spray formulation and has filed
patent applications for various other products and intends to file patent
applications in the future, where appropriate, to protect technology inventions
and improvements that are considered important to the development of its
business. The Company also relies upon trade secrets, know how, continuing
technological innovation and licensing opportunities to develop and maintain
its competitive position.

Consequently, even though the Company may prosecute its patent applications
with the United States and foreign patent offices, the Company does not know
whether any applications will result in the issuance of patents or whether any
issued patents will provide significant proprietary protection or will be
circumvented or invalidated. Since patent applications in the United States are
maintained in secrecy until patents are issued, and publication of discoveries
in the scientific or patent literature tend to lag behind actual discoveries,
the Company cannot be certain that it was the original creator of inventions
which may be covered by patent application or that it was the first to file
patent applications for such inventions.

There can be no assurance that a court of competent jurisdiction would hold the
Company's patents valid. Moreover, to determine priority of invention, the
Company may have to participate in interference proceedings declared by the
United States Patent and Trademark Office ("PTO") or opposition proceedings
before an equivalent foreign agency, which could result in substantial cost to
the Company. There can be no assurance that the patent applications will result
in patents being used or issued or that if issued, the patents will afford
protection against competitors with similar technologies; nor can there be any
assurance that others will not obtain patents that the Company would need to
license or circumvent. The Company will also rely up on unpatented trade
secrets, and there can be no assurance that others will not independently
develop substantially equivalent proprietary information and techniques or
otherwise gain access to the Company's rights in the unpatented trade secrets.

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<PAGE>

Inventory

The Company realized a write-down of inventory in year 2002 of $113,846. The
inventory write-down in 2002 was primarily related to the discontinuation of
the Company's product line MigraDaily. Cost of goods sold for the year 2002
includes the inventory write-down.

The Company has inventory that carries expiration dates ranging from June of
2003 to October of 2003.  Due to slow product movement many of the Company's
national and regional chain customers possess inventory that have expired
dates. The Company will likely be asked by such customers to replace or accept
returns of such inventory. The Company generally is not required to accept such
product returns, but such requests are examined on a case-by-case basis. At
this time the Company anticipates that it will not accommodate such requests
except under certain limited circumstances whereby a customer will accept
replacement inventory. Prior to the Company's plans to change its marketing
direction away from conventional retail it would likely have accommodated such
product return requests. The Company in the future intends to either omit the
labeling of an expiration date (under the Food and Drug Act homeopathic drugs
are not required to have an expiration date) or extend the labeling of an
expiration date from the current practice of two years.

Capital Requirements.

The continued development and national distribution of the Company's products
will require a substantial commitment of funds. The Company believes that the
completion of sufficient capital raising efforts is substantially affected by
the success of its restructuring efforts (see Note Q of notes to financial
statements). If the Company is unable to accomplish a satisfactory
restructuring it is likely that the Company would be forced to file bankruptcy
and/or be liquidated or have its assets foreclosed upon. Assuming a
satisfactory restructuring the Company believes that the completion of
sufficient capital raising efforts(as discussed in "Expected Capital
Requirements"), together with cash generated from operations, will be
sufficient to fund the operations of the Company for at least the next year;
however, there can be no assurance that the Company will be able to complete
these efforts or produce the expected revenues. To the extent that the proceeds
from the capital raising efforts and cash flow from operations fall short or
are insufficient to fund the Company's activities, the Company will be required
to raise additional capital through equity and/or debt financing. If such
capital raising efforts are unsuccessful the Company would likely be forced to
file bankruptcy and/or be liquidated or have its assets foreclosed upon. The
Company's actual capital requirements will depend on many factors, including,
but not limited to, the cost and timing of product development and launch
activities, the success of research and development efforts, the cost and
timing of expansion of its sales and marketing activities, the progress of the
Company's national distribution efforts and the commercialization efforts of
the Company's competitors, the costs involved in acquiring, prosecuting,
maintaining, enforcing and defending intellectual property rights, developments
related to regulatory issues, and other factors.

The Company estimates that it will require substantial capital in order to
finance a full effort of its new direct marketing strategy. The Company plans
to issue additional equity and/or debt to finance such needs. Equity financing
may be dilutive to shareholders and debt financing, if available, may involve
significant restrictive covenants. The Company's failure or inability to raise
capital when needed could have a material adverse effect on the Company's
business, financial condition, and results of operations and it would be likely
that the Company would either have to file for bankruptcy and/or face
liquidation or foreclosure of its assets. There can be no assurance that such
financing will be available on terms satisfactory to the Company, if at all.

Rule 144 Stock Sales

As of June 30, 2002, the Company had approximately 72,414,790 shares of the
Company's outstanding common stock as "restricted securities" which may be sold
only in compliance with Rule 144 adopted under the Securities Act of 1933, as
amended or other applicable exemptions from registration.  Rule 144 provides
that a person holding restricted securities for a period of one year may
thereafter sell in brokerage transactions, an amount not exceeding in any three
month period the greater of either (i) 1% of the Company's outstanding common
stock, or (ii) the average weekly trading volume during a period of four
calendar weeks immediately preceding any sale.  Persons who are not affiliated
with the Company and who have held their restricted securities for at least two
years are not subject to the volume limitation.  Potential or actual sales of
the Company's common stock by present shareholders under Rule 144 may have a
depressive effect on the price of the Company's stock.

PLAN OF OPERATIONS

EXPECTED CAPITAL REQUIREMENTS

Over the next twelve months the Company will need to raise additional capital
for its business operations.  The Company is currently conducting a private
placement (the "Private Placement") offering of senior secured convertible
notes.  The offering is for a maximum of $2,000,000 with no minimum offering
requirements ("Maximum Offering Amount"), and is being offered and sold only to
Accredited Investors (as defined under Rule 501(a) of the Securities Act of
1933, as amended) and a certain limited amount of unaccredited investors. The
Securities are being offered without registration under the Securities Act of
1933, as amended, and are being offered and sold in reliance upon exemption
from registration afforded by Section 4(2) of the Securities Act, Rule 506 of
Regulation D, hereunder.

The Company believes that the amount of funding contemplated by the Private
Placement is sufficient at this time provided (i) funding for the Maximum
Offering Amount is achieved following a successful completion of a
restructuring within the time frame currently planned, and (ii) certain minimum
sales projections can be reached. There can be no assurance that the Company
will timely complete either its restructuring or its Private Placement , that
such minimum sales levels can be achieved, or that if both goals are reached
cash flows will be sufficient to fund the Company's ongoing capital and
operating needs. If the Company is unable to complete a successful restructuring
and its Private Placement offering, the Company will be severely limited in its
ability to execute its contemplated business plan and would likely be forced to
file bankruptcy and/or be subject to liquidation or foreclosure of its assets.
The Company may attempt to retain the assistance of a financial institution in
its capital raising efforts.

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EXPECTED RESEARCH AND DEVELOPMENT ACTIVITIES

The Company plans to continue its ongoing research and development activities.
The Company has completed its initial research and development activities with
respect to MIGRASPRAY and ALLERSPRAY to the extent that such products are
either being marketed currently or are ready for marketing. The Company through
the efforts of Dr. Brucker, Senior Vice President, Research and Development, is
involved in ongoing research, and investigations are under way for the
development of novel products to eliminate, prevent or reduce the symptoms
associated with several conditions, including, but not limited to, arthritis,
general pain and Parkinson's disease.  The Company plans to conduct clinical
trials and market analyses for such new products and to continue clinical
testing and analyzing certain existing products. The Company has filed and is
filing for additional patent protection on several products it is either
currently developing or has developed, including a rapid reliever of pain due
to arthritis (approximately twenty one million Americans suffer from
arthritis). As the average age of the population increases and the attendant
number of people suffering from arthritis symptoms increase, the search for,
and marketing of products for treatment of such symptoms are growing at a rapid
rate.

FINANCIAL RESOURCES

At June 30, 2003 and 2002, the Company had current assets of $576,029 and
$885,458 including cash of $655 and $43,254, respectively. At June 30, 2003,
current assets included inventory valued at $564,354 and prepaid expenses of
$2,184. Total assets were $655,790 and $993,661, respectively.

Gross sales for the years ended June 30, 2003 and 2002 were $685,449 and
$1,501,296, respectively.    Costs and expenses for the years ended June 30,
2003 and 2002 were $2,379,400 and $3,926,461 resulting in a loss from
operations of $1,905,552 and $3,269,067, respectively.

EXPECTED PURCHASES OR SALES OF PLANT AND SIGNIFICANT EQUIPMENT

The Company does not expect to purchase and/or sell any significant equipment
during the next twelve months. However this does not preclude the Company from
doing so if it is deemed necessary for the growth and success of the Company.
The Company continues to use a third-party fulfillment center located in
Ontario, California for the distribution, warehousing and handling of its
product.

EXPECTED CHANGES IN NUMBER OF EMPLOYEES

The Company may add employees over the next twelve months if it is successful
in its restructuring and capital raising efforts. If any anticipated employee
positions are to be filled they will likely be at the sales and marketing staff
level.  The Company has downsized its staff from eight employees in the prior
year to four.

RESULTS OF OPERATIONS

As discussed above, the Company did not engage in any significant business
prior to April 17, 1995.  During April 1995, the Company acquired Unified
Technologies, Inc., a development stage business.  Since that time, the Company
has been developing various healthcare products and now intends to distribute
its products through direct marketing to healthcare providers.

FISCAL YEARS ENDED JUNE 30, 2003 AND 2002

On a consolidated basis, the Company had gross sales totaling $685,449 for the
year ended June 30, 2003, compared with $1,501,296 in gross sales for the same
period ending June 30, 2002. This represented an decrease of $815,847 in gross
sales from the year before.  The sales decrease is primarily attributable to
slow product movement due to lack of financing necessary to provide advertising
support for the Company's product. The Company also experienced sales discounts
totaling $172,917 on its products and product returns of $38,684 for the year
ending June 30, 2003.  Sales Discounts are attributable to discounts that
include sales incentives and other promotional costs such as coupons, volume
based discounts, slotting fees and off invoice discounts. Product returns are
primarily attributable to returns that the Company accepted in order to
facilitate customer relations with its retail customers.

The Company experienced a net loss of $2,045,661 for the twelve-month period
ended June 30, 2003, compared with a net loss of $3,467,129 for the same period
ended June 30, 2002. This represents an decrease of $1,421,468 or 41% from the
prior year.  A substantial portion of the decrease in net loss is attributable
to the decreased marketing and advertising costs and lower general and
administrative expenses.

The Company's gross profit margin for the year ended June 30, 2002 was 52.1%,
or $246,756. Gross profit margin for the year ended June 30, 2002 was 30.9%.
The increase in gross profit margin is attributable to decreased discounts and
returns. The Company's cost of products sold for the years ended June 30, 2003
and 2002 was $227,092 and $454,041, respectively. The Company expects product
cost as a percentage of gross sales to decrease as the Company increases its
sales through the use of direct and other marketing.

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<PAGE>

Consulting fees totaled $148,725 for the year ended June 30, 2003, compared
with $189,863 for the same period ending June 30, 2002. This represented a
decrease of $41,138 or 21.7% from the prior year. Selling and administrative
expenses incurred by the Company, was $1,702,214 for the year ended June 30,
2003, compared with $2,291,913 for the same period ended June 30, 2002.  This
represented a decrease of $589,699 or 25.7% from the prior year. The decrease
is due primarily to reduced salaries and workforce.

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its operations primarily through the sale of common
stock, preferred stock, warrants, and revenue from sales.  Assuming a
successful completion of an acceptable restructuring the Company anticipates
that the proceeds from future private placements of equity and/or debt
securities together with revenues from product sales should be sufficient to
finance its operations for the next twelve months. However, there can be no
assurance that the Company will successfully complete a satisfactory
restructuring plan or its Private Placement, or that their will be sufficient
sales or that any combination thereof will be sufficient to meet its capital
needs, which, if not met, would likely result in the Company having to
discontinue operations and/or either file bankruptcy or face liquidation or
foreclosure of its assets. See "Plan of Operation - Financial Resources." The
Company had as of June 30, 2003 $655 in cash. The report of the Company's
independent auditors on the financial statements for the year ended June 30,
2003, includes an explanatory paragraph relating to the uncertainty of the
Company's ability to continue as a going concern due to recurring losses and
the risks associated with raising capital through issuance of equity and/or
debt securities.

NEW ACCOUNTING STANDARDS

In June 2002, the Financial Accounting Standards Board issued SFAS No. 146. The
standard 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.  The Company does not expect the adoption of this
standard to have a significant impact on its financial statements.

In April 2002, the Financial Accounting Standards Board issued SFAS No. 145,
Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No.
13, and Technical Corrections ("SFAS 145"). Among other things, SFAS 145
eliminates the requirement that gains and losses from the extinguishments of
debt be classified as extraordinary items. SFAS 145 is effective for fiscal
years beginning after May 15, 2002, with early adoption permitted. The Company
does not expect the adoption of this standard to have a significant impact on
its financial statements.

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144.
The Statement addresses financial accounting and reporting for the impairment
or disposal of long-lived assets. This Statement supersedes FASB Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, and the accounting and reporting provisions of APB
Opinion No. 30, Reporting the Results of Operations-Reporting the Effects of
Disposal of a Segment of a statement # 143 Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions, for the disposal of a
segment of a business (as previously defined in that Opinion). This Statement
also amends ARB No. 51, Consolidated Financial Statements, to eliminate the
exception to consolidation for a subsidiary for which control is likely to be
temporary. The Company does not expect the adoption of this standard to have a
significant impact on its financial statements.

In June 2001, the Financial Accounting Standards Board issued SFAS No. 143. The
Statement addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. This Statement applies to all entities. It applies to
legal obligations associated with the retirement of long-lived assets that
result from the acquisition, construction, development and (or) the normal
operation of a long-lived asset, except for certain obligations of lessees. As
used in this Statement, a legal obligation is an obligation that a party is
required to settle as a result of an existing or enacted law, statute,
ordinance, or written or oral contract or by legal construction of a contract
under the doctrine of promissory estoppels. This Statement amends FASB
Statement No. 19, Financial Accounting and Reporting by Oil and Gas Producing
Companies. The Company does not expect the adoption of this standard to have a
significant impact on its financial statements.

In June 2001, the Financial Accounting Standards Board issued SFAS No. 142. The
Statement addresses financial accounting and reporting for acquired goodwill
and other intangible assets and supersedes APB Opinion No. 17, Intangible
Assets. It addresses how intangible assets that are acquired individually or
with a group of other assets (but not those acquired in a business combination)
should be accounted for in financial statements upon their acquisition. This
Statement also addresses how goodwill and other intangible assets should be
accounted for after they have been initially recognized in the financial
statements. The Company does not expect the adoption of this standard to have a
significant impact on its financial statements.

In June 2001, the Financial Accounting Standards Board issued SFAS No. 141. The
Statement addresses financial accounting and reporting for business
combinations and supersedes APB Opinion No. 16, Business Combinations, and FASB
Statement No. 38, Accounting for Preacquisition Contingencies of Purchased
Enterprises. All business combinations in the scope of this Statement are to be
accounted for using one method, the purchase method.  The Company does not
expect the adoption of this standard to have a significant impact on its
financial statements.  The Company does not expect the adoption of this
standard to have a significant impact on its financial statements.

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INFLATION

Inflation affects the cost of raw materials, goods, and services used by the
Company. In recent years, inflation has been modest. The competitive
environment in the over the counter drug market somewhat limits the ability of
the Company to recover higher costs resulting from inflation by raising prices
to its customers. Overall, product prices have generally been stable, and the
Company seeks to mitigate the adverse effects of inflation primarily through
improved productivity and cost containment programs. The Company does not
believe that inflation has had a material impact on its results of operations
for the periods presented.

ITEM 7.   FINANCIAL STATEMENTS

                         INDEX TO FINANCIAL STATEMENTS


REPORT OF INDEPENDENT ACCOUNTANT                                  15

FINANCIAL STATEMENTS:

     Consolidated Balance Sheets as of June 30, 2003 and 2002     16

     Consolidated Statements of Operations for the years ended
     June 30, 2003 and 2002.                                      17

     Consolidated Statements of Changes in Stockholders' Equity
     (Deficit) for the years ended June 30, 2003 and 2002.        18

     Consolidated Statements of Cash Flows for the years ended
     June 30, 2003 and 2002.                                      19

     Notes to Consolidated Financial Statements                   20


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A
C
I
ARMANDO C. IBARRA
Certified Public Accountant
A Professional Corporation


Armando C. Ibarra, C.P.A.                           Armando Ibarra, Jr., C.P.A.

Members of the California Society of Certified Public Accountants
and the American Institute of Certified Public Accountants


INDEPENDENT AUDITORS' REPORT

The Board of Directors of
NatureWell, Inc.

We have audited the accompanying consolidated balance sheets of NatureWell,
Inc. as of June 30, 2003 and 2002 and the related consolidated statements of
operations, shareholders' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of NatureWell, Inc.
and subsidiaries as of June 30, 2003 and  2002, and the 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.



__________________________
ARMANDO C. IBARRA, CPA-APC

San Diego, California
October 15, 2003

                                    - 15 -
-------------------------------------------------------------------------------
<PAGE>


                   NATUREWELL, INCORPORATED AND SUBSIDIARIES

<TABLE>

                          CONSOLIDATED BALANCE SHEETS



<CAPTION>
                                               06/30/03          06/30/02
                                             -----------       -----------
                                                                (Restated)

<S>                                          <C>               <C>
                   ASSETS

CURRENT ASSETS:
Cash                                         $       655       $    43,254
Accounts receivable, net                           8,836            10,587
Inventory                                        564,354           710,501
Prepaid expenses                                   2,184           121,116
Other current assets                                -                 -
                                             -----------       -----------
     TOTAL CURRENT ASSETS                        576,029           885,458

Property and equipment, net                       27,543            35,505
OTHER ASSETS:
Notes receivable - officer                        48,447            45,927
Other assets                                       3,771            16,771
                                             -----------       -----------
     TOTAL OTHER ASSETS                           52,218            62,698
                                             -----------       -----------
TOTAL ASSETS                                 $   655,790       $   983,661
                                             ===========       ===========

   LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
Accounts payable                             $   735,238       $   744,703
Accrued expenses                                 220,914           293,325
Accrued litigation costs                         506,893           453,361
Loans payable                                    253,736           145,000
Current portion of long-term debt                192,441
Due to/(from) officers                         1,291,561           990,382
                                             -----------       -----------
     TOTAL CURRENT LIABILITIES                 3,200,783         2,626,771
                                             -----------       -----------
LONG-TERM LIABILITIES:
Notes-payable                                    952,135          275,000
Convertible debentures (includes
 accrued interest of 172,406 and
 $123,773 for June 30, 2002 and
2003 respectivley)                               743,406          694,773
Minority interest                                   -                -
                                             -----------       -----------
     TOTAL LONG-TERM LIABILITIES               1,695,541          969,773
                                             -----------       -----------
TOTAL LIABILITIES                              4,896,324        3,596,544

STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $0.01 par value
15,000,000 shares authorized
  (Series A; 1,105 authorized,
   none and 258 for 2003 and 2002
   issued & outstanding, respectively)              -                   3
  (Series B; 50 and none issued &
   outstanding for 2003 and 2002)                      1              -
Common stock, $0.01 par value
  (150,000,000 shares authorized,
  112,909,205 and 80,871,655 shares
  issued & outstanding, respectively)          1,129,094           808,716
Additional paid-in capital                    18,851,983        18,640,825
Less Notes Receivable Officers                  (652,061)         (538,537)
Accumulated deficit                          (23,569,551)      (21,523,890)
                                             -----------       -----------
     Total stockholders' equity  (deficit)    (4,240,534)       (2,612,883)
                                             -----------       -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)               $   655,790       $   983,661
                                             ===========       ===========


<FN>
    See Accountants' report and notes to consolidated financial statements.
</TABLE>

                                    - 16 -
-------------------------------------------------------------------------------
<PAGE>


                   NATUREWELL, INCORPORATED AND SUBSIDIARIES

<TABLE>
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                  FOR THE YEARS ENDED JUNE 30, 2003 AND 2002

<CAPTION>

                                         June 30,      June 30,

                                           2003          2002

                                        -----------   -----------
                                                       (Restated)

<S>                                     <C>           <C>

REVENUES:
Gross sales                             $   685,449   $ 1,501,296
Discounts                                  (172,917)     (694,919)
Returns                                     (38,684)     (148,983)

                                        -----------   -----------
NET SALES                                   473,848       657,394

COSTS AND EXPENSES:
Cost of goods sold (including
Write-down of inventory of none
  and $113,876 respectively)                227,092       454,041
Write-down of scientific technology	                          -
General and administrative                1,702,214     2,291,913
Marketing and advertising                   284,657       971,585
Consulting services                         148,725       189,863
Depreciation and amortization                 7,962         9,303
Research and development                      8,750         9,756

                                        -----------   -----------
TOTAL COSTS & EXPENSES                    2,379,400     3,926,461
                                        -----------   -----------
LOSS FROM OPERATIONS                     (1,905,552)   (3,269,067)

OTHER INCOME (EXPENSE)
Other expense                               (18,364)      (67,623)
Other income                                 30,909        34,200
Interest income                              31,019        19,450
Interest expense                           (148,301)     (141,035)
Loss on write-down of goodwill
  related to purchase of NMI shares         (31,372)      (16,000)
Loss on disposal
  of assets                                    -          (23,054)
Minority interest income                       -             -
                                        -----------   -----------
TOTAL OTHER INCOME (EXPENSE)               (136,109)     (194,062)
                                        -----------   -----------
NET LOSS BEFORE INCOME TAXES             (2,041,661)   (3,463,129)

PROVISION FOR INCOME TAXES                    4,000         4,000
                                        -----------   -----------
NET LOSS AFTER INCOME TAXES             $(2,045,661)  $(3,467,129)
                                        ===========   ===========

BASIC AND FULLY DILUTED
LOSS PER SHARE                          $    (0.02)   $    (0.06)
                                        -----------   -----------

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING               105,384,766    57,258,757
                                        ===========   ===========


<FN>
    See Accountants' report and notes to consolidated financial statements.
</TABLE>

                                    - 17 -
-------------------------------------------------------------------------------
<PAGE>


                   NATUREWELL, INCORPORATED AND SUBSIDIARIES

<TABLE>
     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                  FOR THE YEARS ENDED JUNE 30, 2003 AND 2002

<CAPTION>

                                                                             Unearned
                                                                           Compensation/
                                                 Common      Additional      Officers
                                   Common        Stock        Paid-in          Notes       Preferred     Accumulated
                                   Stock         Amount       Capital       Receivable       Stock         Deficit        Total
                                -----------   -----------   -----------    -----------    -----------   ------------   -----------

                             <C>           <C>           <C>            <C>            <C>           <C>            <C>
Balance, June 30, 2001           49,101,044       491,010    16,625,492       (615,000)             3    (18,056,761)   (1,555,253)
  (restated)
Issuances of preferred stock           -             -          353,997           -                 3           -          354,000
Issuances of preferred stock
  for services                         -             -          101,997           -                 3           -          102,000
Issuances of preferred stock
  for notes payable                    -             -           79,998           -                 2           -           80,000
Conversion of preferred stock
  to common stock                 5,120,994        51,210       (51,198)          -               (11)
Cancellation of compensation
  plan of employment                   -         (120,000)     (495,000)       615,000           -              -             -
Purchase pursuant to note
  receivable - officers           6,750,000       167,500       353,125           -              -              -          520,625
Conversion of notes payable       1,351,562        13,516       153,010           -              -              -          166,526
Issuances of stock for
  services                        5,261,298        72,613       425,323           -              -              -          497,936
Issuances of stock for cash      13,019,257       130,193     1,099,413           -              -              -        1,229,606
Conversion of common
  stock warrants                    252,500         2,525        47,825           -              -              -           50,350
Employee stock compensation          15,000           150         1,350           -              -              -            1,500
Conversion stock options               -             -             -              -              -              -             -
Syndication costs                      -             -          (54,507)          -              -              -          (54,507)
Less notes Receivable Officers         -             -             -          (538,537)          -              -         (538,537)
Net loss, June 30, 2002                -             -             -              -              -        (3,467,129)   (3,467,129)
                                -----------   -----------   -----------    -----------    -----------   ------------   -----------
Balance, June 30, 2002           80,871,655   $   808,716   $18,640,825    $  (538,537)   $      -      $(21,523,890)  $(2,612,883)


Issuance of Preferred stock            -             -           49,999           -                 1           -           50,000
Shares issued to officer         13,492,857       134,929         3,571           -              -              -          138,500

Purchase pursuant to note
  receivable - officers           4,250,000        42,500        42,500           -              -              -           85,000
Conversion of Notes Payable         166,666         1,667           878           -              -              -            2,545
Share Issuance of stock for
  Services                        7,135,487        71,355       203,717           -              -              -          275,072
Issuance of stock for NMI           448,176         4,482        26,891           -              -              -           31,372
Issuances of stock for cash       6,454,364        64,544        10,121           -              -              -           74,665
Employee stock compensation          90,000           900          -              -              -              -           11,900
Syndication costs                      -             -         (126,500)          -              -              -         (126,500)
Less notes Receivable Officers         -             -             -          (113,524)          -              -         (113,524)
Net loss, June 30, 2003                -             -             -              -              -        (2,045,661)   (2,045,661)
                                -----------   -----------   -----------    -----------    -----------   ------------   -----------
Balance, June 30, 2003          112,909,205   $ 1,129,094   $18,851,983    $  (652,061)   $      -      $(23,569,551)  $(4,240,534)

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


<FN>
    See Accountants' report and notes to consolidated financial statements.
</TABLE>

                                    - 18 -
-------------------------------------------------------------------------------
<PAGE>


                   NATUREWELL, INCORPORATED AND SUBSIDIARIES

<TABLE>

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002

<CAPTION>
                                               June 30,      June 30,
                                                 2003          2002
                                              -----------   -----------
                                                             (restated)
<S>                                           <C>           <C>


CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                      $(2,045,661)  $(3,467,129)
Adjustments to reconcile net loss to net
  cash used in operating activities:
    Depreciation and amortization                   7,962         9,303
    Accrued interest income                       (31,109)      (19,450)
    Accrued interest expense                      148,301        46,195
    Issuance of stock for services                275,972       601,436
    Officers shares issued for compensation       188,500
    Loss on property and equipment                               23,054
    Write-down of goodwill related
    to purchase of NMI shares                      31,372        16,000

    Stock issued for interest and fees                          102,386
    Changes in assets and liabilities:
    (Increase)/decrease in accounts receivable      1,751        (5,105)
    (Increase)/decrease in inventories            146,147      (684,692)
    (Increase)/decrease in Scientific Tech           -             -
    (Increase)/decrease in prepaid expenses       118,932        13,647
    (Increase)/decrease in other assets            13,000        37,452
     Increase/(decrease) in accr. litigation       53,532       203,361
     Increase/(decrease) in due to officers       301,179       781,181
     Increase/(decrease) in accounts payable
      and accrued expenses                        197,306       492,792
                                              -----------   -----------
NET CASH USED IN OPERATING ACTIVITIES            (592,816)   (1,849,569)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and
equipment                                            -          (53,547)
                                              -----------   -----------
NET CASH (USED) BY INVESTING ACTIVITIES              -          (53,547)
                                              -----------   -----------
SUBTOTAL CARRIED FORWARD                         (592,816)   (1,903,116)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock             74,665     1,229,606
Syndication costs                                (126,520)      (54,507)
Proceeds from issuance of preferred stock,
  (net)                                              -          354,000
Proceeds from exercise of warrants and options       -           50,350
Purchase of note receivable - officer                -          (45,000)
Payment on loans payable                          (55,428)      (26,000)
Proceeds from loans payable                       275,000          -
Notes issued for due to/from officers             382,500          -
Long term notes payable                              -          275,000
                                              -----------   -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES         550,217       875,899
                                              -----------   -----------
NET INCREASE (DECREASE) IN CASH                   (42,599)     (119,667)

CASH AT BEGINNING OF PERIOD                        43,254       162,921
                                              -----------   -----------
CASH AT END OF PERIOD                         $       655   $    43,254
                                              ===========   ===========


SUPPLEMENTAL DISCLOSURES:

Cash Paid for:
  Interest                                    $      -      $     1,020
                                              ===========   ===========
  Income taxes                                $      -      $      -
                                              ===========   ===========

Non-cash activities:
  Stock issued for notes and payables         $     2,545   $   166,526
  Stock issued for services
    and syndication costs                     $   590,972   $   601,436
  Stock issued for notes receivable           $    85,000       520,625
  Preferred stock issued for services              50,000       102,000
  Preferred Stock issued for notes payable    $      -           80,000


<FN>
    See Accountants' report and notes to consolidated financial statements.
</TABLE>

                                    - 19 -
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<PAGE>


                   NATUREWELL, INCORPORATED AND SUBSIDIARIES


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





A.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION AND BASIS OF CONSOLIDATION:

NatureWell, Inc., a California corporation ("NWI-CA") was originally
incorporated on April 26, 1983 (through an earlier predecessor corporation). In
August 1998, NWI-CA acquired the assets and technology of Amtech Scientific,
Inc. ("ATS") of which the assets were contributed to a newly formed subsidiary
of NWI-CA, DiagnosTech, Inc, a California corporation ("DTI"). In September
2001, NWI-CA formed a wholly owned subsidiary in Delaware, NatureWell,
Incorporated.  This wholly owned subsidiary was established for the sole
purpose of reincorporating NWI-CA in Delaware.  In October  2001, NWI-CA
obtained approval from a vote of a majority of its shareholders to
reincorporate in Delaware.  On October 25, 2001, the merger of NWI-CA into
NatureWell, Incorporated, a Delaware corporation ("NatureWell", "NWI" or the
"Company") was consummated.  NWI-CA has been "merged-out" and dissolved as a
result of the reincorporation.  The Company has two wholly owned subsidiaries,
Unified Technologies, Inc., a California corporation ("UTI") and Chemical
Dependency Healthcare of California, Inc., a California corporation ("CDHC").
The Company as of June 30, 2003 also holds a 55 percent (55%) ownership
interest in DTI and a 73 percent (73%) ownership interest in Nasal Mist, Inc.,
a California corporation ("NMI") (See Footnote O).

PRINCIPLES OF CONSOLIDATION:

The consolidated financial statements include the accounts of the Company and
its subsidiaries and present them as one economic entity.  Aggregate minority
interest in losses have been recorded by the Company (aggregating $353,856 at
June 30, 2002) to reduce the minority interest in DTI to zero. The Company will
record 100% of income related to the minority interest, if any, until the
amount of the previously reported losses of the minority interests in
shareholders' equity (deficit) in DTI by the Company have been recovered. All
significant intercompany transactions and balances have been eliminated in
consolidation as of June 30, 2002 and 2001.

BASIS OF ACCOUNTING:

The Company's policy is to use the accrual method of accounting to prepare and
present financial statements, which conforms to generally accepted accounting
principles ("GAAP').

REVENUE RECOGNITION AND TRADE SPENDING

The Company recognizes revenue when the following conditions are met, (i) a
customer has either paid or made arrangements to pay for the product, (ii)
delivery to the customer has been made, (iii) the sale has been made at a fixed
price or at a price that is determinable, (iv) collectibility is reasonably
assured, (v) title and risk of loss has passed from the Company to the
customer, and (vi) the buyer either does not possess any right to return the
product and/or there no longer exists any substantial risk of return.

In the case of consigned product ("consigned product" having the broadest
meaning as articulated in SAB-101) the Company's policy is that it does not
recognize revenue, if any, until (i) title and risk of loss has passed from the
Company to the buyer, (ii) the product has been paid for, and (iii) there no
longer exists any substantial risk of return.

Notwithstanding the foregoing, the Company may in its discretion voluntarily
decide to accept requests for product returns from its customers.

Revenue arrangements with the Company's customers may include sales incentives
and other promotional costs such as coupons, volume based discounts, slotting
fees and off invoice discounts. These costs are typically referred to
collectively as "trade spending" pursuant to EITF 00-14, EITF 00-25 and EITF
01-09. These costs are recorded at the later of when revenue is recognized or
when the sales incentive is offered and are classified as a reduction of
revenue under the heading "discounts".

                                    - 20 -
-------------------------------------------------------------------------------
<PAGE>


INVENTORY:

Inventory consists of healthcare and nutraceutical products.  Inventory is
valued at the lower of (i) cost or (ii) market based on conservatism.  Cost is
determined under the first-in, first-out (FIFO) method.

The Company has inventory that carries expiration dates ranging from June of
2003 to October of 2003. Customers carrying product carried in retail stores
with a short duration of time until expiration may be request that the Company
accept a return of such product. The Company generally is not required to
accept such product returns, but such requests are examined on a case-by-case
basis. At this time the Company anticipates that it will not accommodate such
requests except under certain limited circumstances whereby a customer will
accept replacement inventory. Prior to the Company's plans to change its
marketing direction away from conventional retail it would likely have
accommodated such product return requests. The Company in the future intends to
either omit the labeling of an expiration date (Under the FDA Homeopathic Drugs
are not required to have an expiration date) or extend the labeling of an
expiration date from the current practice of two years.

MARKETING AND ADVERTISING COSTS

Marketing and advertising costs for the years ending June 30, 2003 and 2002 of
$284,657 and $971,585, respectively, were charged to operations when incurred.

PROPERTY AND EQUIPMENT:

Property and equipment is recorded at cost.  Maintenance, repairs, and minor
renewals are expensed as incurred.  When property and equipment are retired or
otherwise disposed, the related cost and accumulated depreciation are
eliminated and any gain or loss on disposition is reflected in current
operations.  Depreciation is accounted for on the straight-line method over the
estimated useful lives of the assets, which ranges generally from three to five
years.  Property and equipment is shown net of accumulated depreciation of
$7,962 and $4,357 for the years ended June 30, 2003 and 2002, respectively.

INCOME TAXES:

Income taxes are provided for the tax effects of transactions reported in the
financial statements and consists of taxes currently due plus deferred taxes
related primarily to differences between the basis of various assets for
financial and income tax reporting.  The deferred tax asset represents the
future tax return consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are recovered or settled.
Deferred taxes are recognized for net-operating losses that are available to
offset future taxable income and tax credits available to offset future income
taxes.  A valuation allowance is provided against the deferred tax asset, where
realization is uncertain.

USE OF ESTIMATES:

The preparation of the Company's financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
financial statement date and the reported amounts of revenue and expenses
during the reporting period.  Actual results could differ from those estimates
made by management.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRONOUNCEMENTS:

During 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible
Assets.  This Statement addresses financial accounting and reporting for
acquired goodwill and other intangible assets and supersedes APB Opinion No.
17, Intangible Assets.  It addresses how intangible assets that are acquired
individually or with a group of other assets (but not those acquired in a
business combination) should be accounted for in financial statements upon
their acquisition.  This Statement also addresses how goodwill and other
intangible assets should be accounted for after they have been initially
recognized in the financial statements.  Among other provisions, SFAS No. 142
discontinues the amortization of goodwill and instead requires that goodwill be
evaluated periodically for impairment.  Goodwill determined to be impaired is
charged to operations in the period of impairment.  The Company does not
believe the adoption of SFAS No. 142 will have a material effect on the
financial position or results of operations of the Company.
In August 2001, the FASB issued SFAS 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This Statement addresses financial accounting
and reporting for the impairment of long-lived assets and for long-lived assets
to be disposed of. The FASB issued SFAS No. 144 to address significant
implementation issues related to SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and to develop a
single accounting model to account for long-lived assets to be disposed of.
SFAS No. 144 also amends ARB No. 51, Consolidated Financial Statements, to
eliminate the exception to consolidate a subsidiary for which control is likely
to be temporary. The Company does not believe the adoption of SFAS No. 144 will
have a material effect on the financial position or results of operations of
the Company.

                                    - 21 -
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<PAGE>


In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. This
Statement rescinds SFAS No. 4, 44, and 64. This statements also amends SFAS No.
13, "Accounting for Leases", to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effect that are similar to sale-
leaseback transactions. The Company does not believe the adoption of SFAS No.
145 will have a material effect on the financial position or results of
operations of the Company.

In June 2002, the Financial Accounting Standards Board issued SFAS No. 146. The
standard 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.  The adoption of SFAS 146 did not have a material effect
on the Companies consolidated financial statements.

In October 2002, the Financial Accounting Standards Board issued SFAS No. 147,
"Acquisitions of Certain Financial Institutions - an amendment of FASB
Statements No. 72 and 144 and FASB interpretation No. 9".  SFAS 147 removes
acquisitions of financial institutions from the scope of both Statement 72 and
interpretation 9 and requires that those transactions be accounted for in
accordance with FASB Statements No. 141, Business Combinations, and No. 142
Goodwill and Other Intangible Assets.  Thus, the requirement in paragraph 5 of
Statement 72 to recognize (and subsequently amortize) any excess of the fair
value of liabilities assumed over the fair value of tangible and identifiable
intangible assets acquired as an unidentifiable intangible asset no longer
applies to acquisitions within the scope of this Statement.  In addition, this
Statement amends FASB Statement No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, to include in its scope long-term customer-
relationship intangible assets of financial institutions such as depositor and
borrower relationship intangible assets and credit cardholder intangible
assets.  Consequently, those intangible assets are subject to the same
undiscounted cash flow recoverability test and impairment loss recognition and
measurement provisions that Statement 144 requires for other long-lived assets
that are held and used.  SFAS 147 is effective October 1, 2002.  The adoption
of SFAS 147 did not have a material effect on the Companies consolidated
financial statements.

In December 2002, the Financial Accounting Standards Board issued SFAS No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure" (SFAS
148).  SFAS 148 amends SFAS No. 123 "Accounting for Stock-Based compensation"
(SFAS 123), to provide alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based employee
compensation.  In addition, SFAS  148 amends the disclosure requirements of
SFAS 123 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.  SFAS 148 is effective
for fiscal years beginning after December 15, 2002.  The interim disclosure
provisions are effective for financial reports containing financial statements
for interim periods beginning after December 15, 2002.  The Company is
currently evaluating the effect that the adoption of SFAS 148 will have on its
results of operations and financial condition.

B.  ACQUISITIONS:

All acquisitions by the Company, since inception, have been accounted for under
the pooling-of-interests method used in a business combination according to
GAAP. (Note A).

Under the pooling-of-interests method, UTI's results of operations have been
included in the consolidated results of operations since inception (December 3,
1993) and the assets and liabilities of the separate companies have been
combined and recorded at their historical cost.

                                    - 22 -
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<PAGE>


C.  NOTES RECEIVABLE FROM OFFICERS

Notes Receivable for Acquisition of Common Stock:

The following table details stock issuances to officers, directors and
employees of the Company in exchange for notes receivable.  The notes accrue
interest at the rate indicated in the table below.

                                                     Interest   Accrued
Officer            Issue Date   # of Shares   Note Amount     Rate    Interest
-------            ----------   ----------    -----------   -------   ---------
Donald Brucker      04-02-01     5,000,000     $100,000      4.94%    $ 11,084
Timothy J. Connor   04-02-01     5,000,000     $100,000      4.94%      11,084
James R. Arabia     10-19-01     6,750,000     $320,625      4.59%      20,469
Jason J. Belice      7-18-02     1,750,000      $35,000      4.60%       1,535
Alan Udin            7-18-02     1,000,000      $20,000      4.60%         950
Timothy R. Scott     7-18-02       750,000      $15,000      4.60%         657
David A. Gotz        7-18-02       750,000      $15,000      4.60%         657
-------------------------------------------------------------------------------
                                21,000,000     $605,625               $ 46,436
                                ===============================================

The notes listed above all mature on April 15, 2005. All seven notes are
collateralized by amounts due from the Company to the Makers of the notes for
unpaid salaries, bonuses and benefits, consulting fees, cash advances to the
Company and unreimbursed business expenses, which amounts owed to each
individual exceeds amounts due from that individual under the notes. The
amounts due are included in due to officers at June 30, 2003.

The receivable of $652,061 which includes related interest of $46,436, is
reflected as a contra equity in the financial statements.

Interest income related to the notes receivable was $28,524 for the year ended
June 30, 2003.

Note Receivable From Officer

A loan for $45,000 was made to the Company's Sr. Vice President, General
Counsel and Secretary on February 15, 2002 upon his joining the Company.  The
note is unsecured and accrues interest at 5.6% per annum and is due on February
15, 2005.  The balance of the note including accrued interest is $48,447.

                                    - 23 -
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D.  FORMATION OF SUBSIDIARIES:

DIAGNOSTECH, INC.:

In September 1998, the Company incorporated DiagnosTech, Inc. (DTI).  DTI was
formed to develop and market clinical diagnostic products using immunology and
molecular biologic technologies purchased from Amtech Scientific, Inc. (ATS) a
company formerly owned and founded by a former officer of the Company.  The
Antisera inventory then valued at $1,550,000 was transferred to DTI from the
Company in exchange for a promissory note of $500,000, 5,000,000 shares of DTI,
and a royalty agreement whereby the Company would receive 50% of the gross
profits made from the sale of Antisera inventory.  Additionally, the Company
capitalized DTI with 6,082,500 shares of its own common stock.  DTI, in turn,
used these shares and 1,500,000 shares of DTI to acquire inventory, equipment,
and scientific technology from ATS, which in total was valued at $1,072,313.
This transaction was accounted for as an asset purchase according to GAAP.  DTI
received approximately $1,000,000 through a private placement of equity and an
additional $571,000 in convertible debt.

Currently DTI has no substantive business operations and is seeking potential
candidates to either acquire the Company's interest in DTI or license its TB
diagnostic test.

NASAL MIST, INC.

During August 1997, the Company formed Nasal Mist, Inc. (NMI), a subsidiary
organized for the production and marketing of herbal nasal sprays.  NMI
received approximately $300,000 through a private placement. Pursuant to the
private placement, the Company granted NMI a license and rights to receive from
the Company and its successors-in-interest, an amount equal to 10% of the net
sales, less commissions and discounts of nasal sprays sold. NMI is not actively
engaged in any business operations.

In July of 2002 the Company offered to purchase all outstanding shares of NMI
for three shares of the Company's stock for each share of NMI. The Company
acquired 149,392 shares of NMI as a result of the offer and at the conclusion
of the transaction had increased its ownership of NMI from 72.61% to 91.9%. The
Company accounted for the acquisition of the NMI stock as the acquisition of
additional interest in subsidiary resulting in an increase in goodwill for the
amount of the fair market value of the shares issued to acquire the NMI stock
($31,372) and then simultaneously wrote-off such goodwill as the Company values
the NMI shares at zero.

The Company intends to acquire the balance of the NMI shares through a merger
at the same exchange rate of Company's shares for NMI shares. The transaction
will be accounted for under the same method as described herein. The Company
plans to complete such merger as soon as practicable.

E.  INVENTORY:

Inventory as of June 30, 2003 and 2002 is comprised of the following:

                                         2003                2002
                                     ------------        ------------
Healthcare products                       405,067             557,445
Contact lenses                               -                    832
Raw materials                             161,857             152,224
                                     ------------        ------------
                                     $    566,924        $    710,501
                                     ============        ============

In 2002 the Company made the decision to indefinitely discontinue its
MigraDaily product due to various market factors. The MigraDaily inventory was
written down by approximately $114,000 to reflect this decision.

                                    - 24 -
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F.  BASIC AND FULLY DILUTED LOSS PER COMMON SHARE:

Effective November 30, 1998, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 128, Earnings per Share ("SFAS 128") which
replaced the presentation of "primary" and "fully-diluted" earnings (loss) per
common share required under previously promulgated accounting standards with
the presentation of "basic" and "diluted" earnings (loss) per common share.

Basic earnings (loss) per common share is calculated by dividing net income or
loss by the weighted average number of common shares outstanding during the
period. The calculation of diluted earnings (loss) per common share is similar
to that of basic earnings (loss) per common share, except that the numerator
and denominator are adjusted to reflect the decrease in earnings per share or
the increase in loss per share that could occur if securities or other
contracts to issue common stock, such as stock options and convertible notes,
were exercised or converted into common stock.

The Company was required to compute primary and diluted loss per share amounts
for 2002 and 2001 pursuant to SFAS 128. Since the Company and its subsidiaries
had losses applicable to common stock, the assumed effects of the exercise of
outstanding warrants and stock options were anti-dilutive and, accordingly,
dilutive per share amounts have not been presented in the accompanying
consolidated statements of operations.

The per share computations reflect the effect of a 10 for 1 reverse stock split
that occurred on April 14, 1995 and a 2 for 1 stock exchange between the
Company and UTI on April 17, 1995.  The Company has restated common stock to
reflect the reverse stock split as a result of the merger.

G.  WARRANTS, OPTIONS AND STOCK BASED COMPENSATION:

Warrants and options outstanding as of June 30, 2003 and 2002 consists of
250,000 and 250,000, non-redeemable warrants and options to purchase shares of
common stock of the Company, which are exercisable into 1 share of common stock
at $0.05 per share.  Warrants were issued in connection with certain
transactions and performance of services and expire five years from the date of
issuance and the expiration date has been extended to October 1, 2007.  The
options were issued for certain transactions and performance of services and
expire at various times from three to eight years.  Warrants in the amount of
252,500 were exercised during the year ended June 30, 2002.  Options in the
amount of 10,700 were issued during the year ended June 30, 2002. Expired
options and warrants consisted of 100,000 warrants and 9,000 options during the
year ended June 30, 2002.

Although the Company does not have a formal stock compensation plan, it may
sometimes issue shares of restricted stock to employees or directors in lieu of
cash compensation or as settlement for cash compensation owed to an employee or
director for which there did not exist a pre-agreement with the employee or
director to accept stock for services. Additionally, the Company may issue
shares to non-employees for services rendered. Shares issued to non-employees,
employees and directors in return for services are valued under the fair value
method in accordance with SFAS 123.

Total compensation cost recognized in income for stock-based employee
compensation was $189,400 (including officers) and $1,500 for the years ending
June 30, 2003 and June 30, 2002 respectively. Of the $189,400 for June 30,
2003, $188,500 is for payment to officer for services. Total cost recognized in
income for shares issued to non-employees for services rendered was $277,617
and $601,436 for the years ending June 30, 2003 and June 30, 2002 respectively.

H.  PREFERRED STOCK:

The Company has outstanding 50 shares, $1,000 liquidation preference, of Series
B Convertible Preferred Stock. Pursuant to the terms of the Series B
Convertible Preferred stock, owned by Mr. James R. Arabia, Chairman, President,
And Chief Executive Officer for the Company, Mr. Arabia is allowed to cast a
vote, on all matters that the Company's shareholders are permitted to vote
upon, equal to .7% of all outstanding securities that are eligible to vote at
the time of such shareholder action for each share of Series B Convertible
Preferred that he owns. The shares convert into 1,250,000 shares of the
Company's common stock. The shares are non-transferable without the consent of
the board of directors. The Company has the right to either repurchase (all or
none) or force conversion of the Series B Preferred (Mr. Arabia has the right
to either accept payment or convert the Series B Preferred upon receiving
notice from the Company of its intent to repurchase) within twelve (12) months
of the issuance of the Series B Convertible Preferred (October 10, 2002) if (i)
all debt, including all accrued salary and bonuses, plus interest, that the
Company owes to Mr. Arabia has been paid as of the date of repurchase or forced
conversion (this includes the repurchase of any securities issued to Mr. Arabia
in lieu of payments under his current, former or any future employment
agreement), and (ii) any payment of severance due to Mr. Arabia pursuant to his
employment contract is paid concurrent with either the repurchase or forced
conversion of the Series B Preferred if the repurchase/conversion is being done
as part of an acquisition, recapitalization, restructuring, or any other event
involving the Company that results in Mr. Arabia's termination. The Company's
right to repurchase the Series B Convertible Preferred expired at October 10,
2003.

During the year ended June 30, 2001 the Company authorized 500,000 shares of
Series C Convertible Preferred Stock, of which 1,105 were issued. The Series C
preferred carried a liquidation preference of $1,000 per share and each share,
at the Company's option, was convertible into varying amounts of common stock
at any time within two years from the date of issuance. Subsequent to the
Company's reincorporation as a Delaware corporation, the Series C preferred was
converted into 1,105 shares of Series A preferred issued by the Delaware
corporation carrying the same rights and preferences as the Series C Preferred
of the predecessor California corporation. Immediately following the
reincorporation, the Company exercised its right to convert the new Series A
preferred shares into common stock and retired the Series C Convertible
Preferred Stock designation. In the aggregate, the Series C Preferred shares
were converted into 5,120,994 shares of common stock.

                                    - 25 -
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I.  LOANS PAYABLE:

Loans payable as of June 30, 2003 and 2002 consist of the following:

                                              2003               2002
                                          ------------       ------------
     Loans payable to shareholders
     unsecured, with annual interest
     varying from 8 to 15%                   $ 223,735       $       -

     Loan payable to unrelated party,
     secured by inventory and accounts
     receivable, with annual interest
     of 8%.                                       -                60,000

     Loans payable to unrelated parties,
     unsecured, with annual interest
     varying from 8 to 18%.                       -                50,000

     Loans payable to various unrelated
     parties, unsecured, with one-time
     interest charge of 100%                    30,000             35,000


     Current Portion of Long Term Notes
     Payable (includes $191,250 due to
     officer):                                 192,441

                                          ------------       ------------
                                          $    446,176       $    289,911
                                          ============       ============

Loans payable consist of loans either for cash or repayment of trade payables.
All of the loans payable are in payment default and the Company is attempting
to restructure the payment terms for the loans. (SEE ALSO Notes O and Q)

J.  LEASES:

The Company leases its corporate office facilities under an operating lease
that expires on March 31, 2004.  The Company's base rent under the lease is
$5,214 per month.  Office rent and incidental expense was $59,778 and $47,098
for the years ending June 30, 2003 and 2002, respectively. Currently the
Company is in default on its lease and pays rent on a month to month basis at
$2,000 per month pursuant to a short term arrangement with its landlord. The
difference between the reduced rate of rent and the contracted rate of rent
continues to accrue. There can be no assurance that the Company's landlord will
continue to accept such an arrangement. Future minimum lease payments as of
June 30, 2002 is:

                                                        Operating
     Year Ending June 30,                                 Lease
     --------------------                             ------------
             2003                                     $     46,926
                                                      ------------
     Total minimum lease payments                     $     46,926
                                                      ============

K.  CONVERTIBLE DEBENTURES:

During 1999, the Company's subsidiary DTI conducted a convertible debt offering
for a maximum amount of  $4,000,000.  A total of $571,000 was received from the
offering. Each debenture is convertible into common stock of DTI at $1.25 a
share.  As of June 30, 2002 no debentures have been converted.  The debentures
accrue interest at 7 percent per year compounded semi-annually and mature on
June 30, 2004.  As of June 30, 2002 accrued interest on the convertible
debentures is $172,406.

The Debentures appear as an obligation on the Company's consolidated balance
sheet as required under the rules of consolidation stated in paragraph 3 of ARB
51. Notwithstanding such requirement, the debentures are solely the obligation
of DTI and are payable only from operations of DTI. The Company has no
responsibility to pay either the principal or interest on the debentures and is
neither an obligor nor guarantor of the Debentures.

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L.  NOTES PAYABLE:

Notes payable as of June 30, 2003 and 2002 consist of the following:

                                                2002               2002
                                            ------------       ------------
     Notes payable to shareholders
     unsecured, with annual interest
     varying from 8% to 10%                 $    369,185       $    275,000

     Account Payable converted to Notes,
     secured by inventory and accounts
     receivable, with annual interest
     of 8%.                                      204,398               -

     Senior Secured Note 10%                                        392,023
     (due to officer)                            220,418

     Loans Payable                               211,017               -

                                            ------------       ------------
                                            $    952,135       $    667,023
                                            ============       ============

All the notes payable listed are in payment default and include accrued
interest due thereon. The Company is currently negotiating with the holders of
the notes payable to accept the terms of the Company's proposed restructuring
(SEE ALSO Note Q). At October 14, 2003 approximately noteholders representing
approximately $553,000 had accepted the terms of the restructuring and the
Company believes it has reached an agreement in principle with all but $112,000
of the remaining noteholders to accept the restructuring.

During the year ended June 30, 2002 the Company conducted a Private Placement,
which included the sale of equity/debt units. Pursuant to the stated terms of
the offering, if an investor purchased a note for $100,000 face value such
investor would also have the right to purchase shares of restricted common
stock for $.01 per share in an amount equal to; $50,000 divided by the closing
share price as of the closing date of the transaction (for example, $50,000
divided by $.10 per share = 500,000 shares X $.01 =$5,000). The Notes accrue
interest at 10 percent per year compounded semi-annually until December 1,
2002, have a cash interest payment due on June 1, 2003 and mature on June 1,
2004.

M.  RELATED PARTY TRANSACTIONS

The Company's Chief Executive Officer is its largest single creditor and senior
lender. As of January 28, 2002 the board of directors entered into a security
agreement that granted to the Executive a first priority lien against virtually
all of the Company's assets, including its bank accounts, which security
agreement was amended and restated on September 2, 2003 in order to facilitate
the Company's restructuring efforts. Under the restated agreement (as well as
under the original agreement) as security for the repayment and performance of
each and all of its debts, obligations and liabilities to the Executive now
existing or hereafter created, incurred, assumed or guaranteed the Company
reaffirmed its previous grant of a first priority security interest in all of
its assets, which lien was perfected on July 16, 2002.

At October 14, 2003 the Company owed the Executive approximately $1,490,000,
including the amount due on a senior note of approximately $431,000, which
includes interest accrued thereon. At October 5, 2003 the senior note went into
payment default.

Under the terms of the agreement between the Executive and the Company it is
required that the Executive and the board of directors conduct good faith arms
length negotiations to attempt to convert any monies owed to the Executive into
instruments of indebtedness (or equity at the Executive's sole and absolute
discretion), whcih instruments would define the terms of repayment for monies
owed to the Executive for which an instrument of indebtedness does not already
exist ("Due to Balance"). If the Executive and the Company cannot reach
agreement on terms then the Executive is entitled to receive repayment of all
Due to Balances over 36 equal monthly installments along with interest of 10%.
At October 14, 2003 the Company has a Due to Balance owed to Executive of
approximately $1,060,000, before netting approximately $359,000 owed to the
Company by the Executive for a promissory note issued for the purchase of
6,750,000 shares of the Company's stock (see Note C, note issued by James R.
Arabia). The Company and Executive are actively negotiating the conversion of
the Due to Balance into longer term instruments. There can be no assurance that
the Company and Executive will be able to reach agreed upon terms.

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N.  COMMITMENTS AND CONTINGENCIES

Senior Debt

The Company has secured the repayment of all monies that it owes, or shall owe,
to its Chief Executive Officer by granting to him a first priority lien on
virtually all of the Company's assets, including its bank accounts. The
Executive's first lien was perfected by the filing of a Form UCC1 on July 16,
2002. Under agreements with the Executive, all monies owed to him by the
Company, however incurred, are secured by the first priority lien. At June 30,
2002 the Company owed to the Executive a total of $1,408,000 which is secured
by the first lien. The amount owed is before netting the amount owed to the
Company pursuant to a note the Executive issued to the Company for the
acquisition of 6,750,000 shares of its common stock totaling $341,094,
including interest due thereon (see Note C. note issued by James R. Arabia). Of
the amount owed to the Executive, approximately $421,000 is in the form of a
Senior Note, including interest thereon, that went into default as of October
5, 2003 for non-payment. The Company and the Executive are negotiating new
payment terms for the senior note and to date the Executive has not issued a
notice of default or acceleration of payment.

As part of its restructuring efforts (see Note Q), on September 2, 2003 the
Executive and the Company entered into an intercreditor agreement whereby the
Executive agreed to permit the Company to grant additional first priority liens
on its assets to investors investing new capital into the Company and to grant
second liens on the same assets to creditors that agree to the terms of the
Company's restructuring. Pursuant to the intercreditor agreement and related
documents, all first lien holders shall be pari passu with one another and
senior in the payment and performance of all obligations under the senior debt
and all second lien holders shall be junior in right of payment to the senior
lenders and senior in right of payment to unsecured creditors.

Unsecured Creditors of the Company

The Company is delinquent in the payment of monies owed to virtually all of its
unsecured creditors, including its trade creditors. The Company is also in
default on its loans and notes payable for non-payment. As a result of the
delinquencies and defaults the Company may be subject to collection actions
including, but not limited to, litigation, foreclosure and/or seizure of assets
and bank accounts. As a result, the Company is generally unable to receive
customary
payment terms for any of the goods and services that it requires to operate and
is on a cash pay basis with its vendors. The Company has been negotiating with
its trade and other creditors in an attempt to restructure the Company's debt.
If the Company is unsuccessful in getting its creditors to agree to long term
repayment arrangements it is likely that the Company would need to file for
bankruptcy and/or would be subject to liquidation or foreclosure (see Note Q).

Employment Agreements

In August of 2002 the Company entered into a three-year employment contract
with its Chief Executive Officer and in October of 2002 a three-year employment
contract with its Senior Vice President of R&D and a three-year consulting
contract with its former Chief Executive Officer. The agreements call for
annual compensation of $350,000, $175,000 and $100,000 respectively and a
guaranteed annual bonus of $180,000 for the Chief Executive Officer and annual
discretionary bonuses for the Senior Vice President and the consultant. Under
each of the agreements, for each day that either the executives or the
consultant remains employed with the Company the contract is extended by one
day so that a constant three-year employment or consulting period shall be in
effect. If the Company terminates either the executives or the consultant
without cause, or if they terminate their employment or consultancy for good
reason, the Company is obligated to make a lump sum payment of severance equal
to three times the total of the executive or consultant's annual base
salary/fee plus the average annual bonus paid to the executive or consultant
during the immediately preceding two full fiscal years of employment or
consultancy.

The Company has not made any cash payments under any of the agreements to date.
As part of its restructuring efforts (see Note Q) the Company is in
negotiations with the three executives concerning the agreements and
modifications thereto.

Litigation and Legal Proceedings

On May 23, 2003 Stephen C. Roberts ("Roberts"),a former director and officer
for the Company, filed suit to enforce a settlement agreement previously
reached between himself and the Company regarding a disputed consulting
contract. The action was filed in Minnesota District Court, County of Hennepin,
Fourth Judicial District, case # 03-8716, seeking $24,000 plus attorney's fees.
The Company has cross complained in the suit alleging breach of contract,
tortuous interference with the Mitchell contract (see below) and promissory
fraud and has requested that the court allow it to add Gelstat Corporation as a
third party defendant. The Company seeks damages in an amount to be determined
at trial and injunctive relief. Gelstat is a publicly traded company engaged in
the development of an over the counter migraine relief product. Roberts and
Mitchell act as CEO and President, respectively, of Gelstat.

On November 5, 2002, Danka Industries initiated a lawsuit against the Company
in the United States District Court for the Southern District of California
claiming breach of contract with respect to a sublease entered into between the
Company and Danka for a facility that the Company never occupied. According to
Danka's complaint, the Company breached the sublease with Danka and owes
damages to Danka in an amount to be proven at trial. In response to the
complaint, the Company filed a number of defenses and counterclaims against
Danka including a claim that the Company had been fraudulently induced to enter
into the sublease. On January 23, 2003, the District Court issued an order
dismissing all of the Company's defenses and counterclaims with prejudice
except for its fraudulent inducement claim, which was dismissed without
prejudice with leave to amend. The Company filed its first amended counter-
complaint claiming intentional misrepresentation, negligent misrepresentation
and demanded rescission of the sub-lease.

                                    - 28 -
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The Company and Danka have entered into settlement discussions and a tentative
agreement has been reached wherein Danka would receive a subordinated note
issued by the Company in the amount of #325,000. The proposed note contains the
same terms and conditions as the notes being offered to creditors of the
Company (see also Note Q, "Restructuring"). The Company had made an estimate of
the likely costs attributable to the Danka lawsuit of $300,000, which was
reflected in a litigation reserve in previous financial statements. At June 30,
2003 the Company had increased its litigation reserve (for all litigation) by
$150,000.

On August 13, 2002 Mitchell Health Technologies (the Company's former master
broker) filed an action against the Company in the United States District
Court, Western District of Wisconsin. The lawsuit alleges breach of contract by
the Company and the failure to register transfer of restricted common stock
that Mr. Mitchell and Mr. James Higgins (a Mitchell employee) claim they own,
and for which the Company disputes that it has received full consideration from
Mssrs. Mitchell and Higgins for the shares.  The Company counter sued Mitchell
and Higgins claiming, among other things, breach of contract and breach of
fiduciary duty. The matter is scheduled for trial on November 3, 2003. It is
unclear to the Company the exact amount of damages that Mitchell and Higgins
seek. Under Mitchell and Higgins' claim that the Company failed to register
transfer shares allegedly owned by Mitchell and Higgins the Company believes
that the parties are seeking the difference between the value of the stock at
the time it was allegedly qualified for legend removal and the value at the
conclusion of the trial. Under the theory, damages sought could range from
between $60,000 and $300,000. There can no assurance that the Company's
estimate of the damages being sought is reliable or accurate. Under Mitchell's
claim for breach of contract, it is the Company's understanding that Mitchell
is proceeding under a theory that it is entitled to damages in an amount equal
to 10% (Mitchell's commission rate when he acted as the Company's master
broker) of projected sales assuming that the Company had spent a minimum for
advertising and marketing of $1 million over a period of time that is unclear
to the Company, pursuant to oral contracts (that the Company allegedly entered
into with Mitchell Health) requiring it do so. The Company assumes that
Mitchell is seeking an amount in damages equal to 10% of projected sales for a
period of time that extends to November 2005 (the termination date of the
contract that Mitchell alleges governs the parties relationship). The Company
has no reliable way to estimate an amount of damages under the Mitchell theory.

On August 13, 2003 Mr. Kenneth Yonika, the Company's former CFO consultant filed
a claim for payment of wages due in the amount of $215,000. The Company disputes
the validity of Mr. Yonika's claim and will vigorously defend itself against
such claim. Currently the Company and Mr. Yonika are in settlement discussions.

O.  INCOME TAXES:

Provision for income taxes for the years ended June 30, 2002 and 2001 consists
solely of the minimum California franchise tax due for the Company and each of
its subsidiaries.

Provision for income taxes is summarized as follows:

                                          June 30, 2003       June 30, 2002
                                          ------------        ------------
     Current income taxes                 $      4,000        $      4,000
     Deferred income taxes                ------------        ------------
     Provision for income taxes           $      4,000        $      4,000
                                          ============        ============

The Company's total deferred tax asset as of June 30, 2002 is as follows:

     Net operating loss carry-forward     $  5,905,386
     Valuation allowance                    (5,905,386)
                                          ------------
     Net deferred tax asset               $       -
                                          ============

As of June 30, 2002, the Company had net operating loss carry-forwards totaling
approximately $16,113,215 for federal and $8,055,456 for state, before any
limitations.  The carry-forwards expire through 2022 for federal and 2007 for
state.

The realization of any future income tax benefits from the utilization of net
operating losses may be severely limited.  Federal and state tax laws contain
complicated change of control provisions (generally when a more than 50 percent
ownership change occurs within a three-year period), which, if triggered, could
limit or eliminate the use of the Company's net operating loss carry-forwards.

P.  MAJOR CUSTOMER AND SEGMENT INFORMATION

The Company operates solely in one industry segment: the marketing and support
of its homeopathic OTC drug used for the treatment and prevention of migraine
headaches. Nine customers accounted for approximately 76% of gross revenues for
the year ending June 30, 2003. The Company has no operations or assets located
outside of the United States. The Company's sales are primarily concentrated
with the MigraSpray product (although some sales of MigraDaily had occurred
during the year), creating a risk of concentration associated with the sale of
a single product and limited customer base. The loss of this single product
market could cause severe damage to the Company's financial future.

              Gross Revenues from Top 9 Major Customers

                       A     15%     $102,195
                       B     11%     $ 74,880
                       C     10%     $ 69,952
                       D      9%     $ 64,649
                       E      8%     $ 52,416
                       F      8%     $ 51,480
                       G      7%     $ 50,830
                       H      5%     $ 35,299
                       I      3%     $ 19,106

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Q.  SUBSEQUENT EVENTS

Restructuring

The Company has begun discussions with most of its trade and other creditors
for the purpose of attempting to restructure the Company's debt. Under the
proposed terms of the restructuring the Company is asking that creditors accept
a subordinated note, secured by a second lien on the Company's assets, and one
share of restricted common stock for each one dollar owed to the creditor as
payment in full of all monies owed to the creditor. Creditors that accept the
subordinated note are junior in right of payment to the senior debt and senior
in right of payment to the unsecured creditors. The subordinated notes accrue
interest at 8% until April 2006 and are thereafter fully amortized in equal
monthly installments over 24 months. To be eligible for the restructuring a
creditor must agree to enter into an intercreditor agreement, and associated
documentation, that defines the rights and priorities between the Company and
its senior and subordinated lenders.

Under the restructuring the Company intends that its senior creditor class
shall consist primarily of the Company's Chief Executive Officer, investors of
new capital into the Company and certain essential professionals that have or
are providing services to the Company in return for the issuance of senior
debt. All senior creditors are pari passu with one another.

At October 14, 2003 creditors totaling approximately $612,000 had accepted the
terms of the restructuring.

The terms of the restructuring proposal described herein are subject to change
and/or cancellation at any time by the Company in its sole and absolute
discretion. There can be no guarantee that the Company will be successful with
its restructuring under the terms described herein or any other terms.

If the Company is unable to complete a suitable restructuring it would be
unable to execute its business plan and new marketing strategy and it is likely
that it would either have to file for bankruptcy and/or face liquidation or
foreclosure.

New Marketing Strategy

On July 30, 2003 the Company announced its decision to distribute and market
its migraine relief product, MigraSpray, exclusively to healthcare
professionals and direct to consumers. The decision marked a turn in
NatureWell's marketing plans away from a conventional retail approach.
MigraSpray will no longer be made available in retail outlets and will only be
available either through participating healthcare providers, the Internet or by
calling the Company's toll free number to purchase directly.

Q.  GOING CONCERN:

To date the Company has had limited sales due to the early stage of its efforts
to transition into the marketing and distribution of its products. Prior to the
first quarter of fiscal year ending June 30, 2002, the Company was primarily
engaged in research and development activities. Consequently, the Company has
incurred recurring losses from operations. These factors, as well as the risks
associated with raising capital through the issuance of equity and/or debt
securities creates uncertainty as to the Company's ability to continue as a
going concern.

The Company's plans to address its going concern issues, include:

*  Increasing sales of its products through national distribution
   channels and through direct marketing to consumers;
*  Raising capital through the sale of debt and/or equity securities;
   and,
*  Settling outstanding debts and accounts payable, when available,
   through the issuance of debt and/or equity securities.

There can be no assurance that the Company will be successful in its efforts to
increase sales, issue debt and/or equity securities for cash or as payment for
outstanding obligations.

Capital raising efforts may be influenced by factors outside of the control of
the Company, including, but not limited to, capital market conditions. During
the year ended June 30, 2002 the Company raised cash and retired outstanding
obligations through the issuance of equity and debt/equity securities totaling
$1,224,250 in the aggregate.

The Company is in various stages of development on a number of products and is
actively attempting to market its migraine relief product nationally. As a
result of capital constraints the national marketing of its migraine relief
product has been very limited, and the Company has experienced slow sales to
date. The Company believes its ability to build upon the current sales levels
is enhanced by (i) the efficacy of its migraine product, MIGRASPRAY, as
demonstrated by recent clinical trial results, (ii) the addition of new
management, (iii) the continued outsourcing of its manufacturing, distribution
and marketing functions, and (iv) continued growth of it's distribution
platform.

                                    - 30 -
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<PAGE>


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

The following table sets forth certain information such as the name, age, and
current position(s) of each director and executive officer of the Company.

        Name                Age               Position
----------------------      ---      -----------------------------------
James R. Arabia              47      Chairman, President, and
                                       Chief Executive Officer

Donald Brucker, O.D.         70      Director, and Senior Vice President
                                       of Research and Development

Robert T. Malasek            35      Secretary, Treasurer, and
                                       Chief Financial Officer

Timothy R. Scott, PhD.       50      Director

John W. Huemoeller           48      Director


JAMES R. ARABIA

Mr. Arabia assumed the role of Chairman of the Board of Directors in January
2002, and became President and Chief Executive Officer of the Company during
September 2001. From February 1997 through June 2000, Mr. Arabia served as
Chairman, Chief Executive Officer and President of ICH Corporation, an American
Stock Exchange listed company.  During Mr. Arabia's tenure, ICH grew from a
non-operational company to becoming the parent company of various subsidiaries
that owned and operated 265 fast food and family dining restaurants, generating
approximately $245 million in revenues and employing approximately 7,800
people.  From 1982 through 1997, Mr. Arabia provided financial advisory and
investment banking services to a variety of private clients.

DONALD BRUCKER, O.D.

Dr. Brucker a founder of the Company, currently serves as director and
Executive Vice President of Research and Development.  From inception until
September 2001, Dr. Brucker served as Chairman of the Board of Directors. From
inception until October 2000 Dr. Brucker served as Chief Executive Officer.
From October 2000 through July 2001 Dr Brucker served as Co-Chief Executive
with Mr. Timothy Connor.  Dr. Brucker has over 40 years of experience in the
medical industry. He was founder and Chief Executive Officer of Continuous
Curve Contact Lenses, Inc. (at one time the second largest manufacturer of
contact lens products).  During Dr. Brucker's tenure, Continuous Curve
conducted an initial public offering and was later sold to Revlon for more than
$100,000,000.  Subsequent to the sale to Revlon, Dr. Brucker served as
President of Revlon Vision Care, subsidiary. From 1981 to 1982, Dr. Brucker
served as Chief Executive Officer of Dura Pharmaceuticals (fka Immunotech
Pharmaceuticals).  From 1982 to 1989 Dr. Brucker provided consulting services
to a number of healthcare and medical device companies in the Southern
California region.  Dr. Brucker has been instrumental in obtaining one of the
first HIV diagnostic FDA approvals in the United States.  Dr. Brucker graduated
from the University of California, Berkeley.

TIMOTHY R. SCOTT, PHD

Dr. Scott has served on the Board of Directors since September 2001.  From
April 1998 to June 2000, Dr. Scott served as a member of the Board of Directors
of ICH Corporation, and as a member of ICH's compensation committee.  Dr. Scott
also serves as President and Senior Pastor of a 1,200-member church located in
San Diego, California and hosts a radio talk show called "Dr. Scott Live."  Dr.
Scott received his Ph.D. in theology from Christian University in 1981, and
served as a professor of philosophy and religion at Pacific International
College from 1981 to 1985.

JOHN W. HUEMOELLER

Mr. Huemoeller is the CEO and founder of Humware, a company engaged in the
development and sale of promotional software. Prior to forming Humware in 1996
Mr. Huemoeller spent approximately 14 years in the securities industry as a
registered representative and registered principal

                                    - 31 -
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<PAGE>


ROBERT T. MALASEK

Mr. Malasek joined NatureWell, Inc., in September of 2001 as Controller and was
promoted to Chief Financial Officer in October 2002.  Prior to September 2001
he rendered accounting consulting services to a variety of clients, including a
number of public companies. From September 1987 until August 1999 Mr. Malasek
was employed with Starwood Hotel & Resorts Worldwide, Inc. in a number of
positions within the accounting department and became Assistant Controller in
1998 until his departure in 1999. Mr. Malasek received his Bachelor of Science
in Accountancy from San Diego State University in 1998.

All members of the Board of Directors are elected to serve until their
respective successors for the Class (as defined below) have been elected and
qualified or until their earlier death, resignation or removal in the manner
specified in the Company's by-laws. The Board of Directors is divided into
three classes, with the term of office of the first class to expire at the
first annual meeting of stockholders following such classification ("Class 1
Directors") and the term of office of the second class to expire at the second
annual meeting following such classification ("Class 2 Directors") and the term
of office of the third class to expire at the third annual meeting following
such classification ("Class 3 Directors"). The three classes of directors shall
be as nearly equal in number as possible. At each annual meeting of
stockholders following such initial classification, directors elected to
succeed those directors whose terms expire shall be elected for a term of
office to expire at the third succeeding annual meeting of stockholders after
their election. Both Mr. Huemoeller and Dr. Scott are Class 1 Directors, Mr.
Arabia is a Class 2 Director, and Dr. Brucker is a Class 3 Director.

ITEM 10.  EXECUTIVE COMPENSATION

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the most recent three fiscal years, the cash
compensation paid by the Company, as well as all other compensation paid or
accrued for those years to the Chief Executive Officer and the Company's other
executive officers as of June 30, 2003.
<TABLE>
                          SUMMARY COMPENSATION TABLE
<CAPTION>
                                    Annual Compensation                     Long-term Compensation
                      ------------------------------------------------  -------------------------------
Name and              Fiscal                                              Stock               Founders
Principal Position     Year     Salary        Bonus         Other         Awards    Warrants  Stock DTI
-------------------   ------  -----------  -----------  --------------  ----------  --------  ---------
<S>                   <C>     <C>          <C>          <C>             <C>         <C>       <C>
James R. Arabia        2002   $350,000(1)  $180,000(1)  $ 12,000(1)        -            -          -
Chief Executive        2001    168,750(1)   162,000(1)    31,500(1)(2)     -            -          -
Officer                2000       -            -            -              -            -          -

Donald Brucker         2002   $175,000(3)      -            -              -            -          -
Sr. VP of R&D          2001    175,000(3)      -            -              -            -          -
(Former position)      2000     54,000         -            -              -            -          -

Robert T. Malasek      2002   $ 50,000(4)      -            -           $ 6,000(4)      -          -
Chief Financial Officer

Ken J. Yonika, CPA     2002       -            -          50,000(8)     $60,000(8)      -          -
Former Chief           2001       -            -        $128,600(5)        -            -          -
Financial Officer      2000       -            -        $ 30,000(5)     $40,000(6)      -          -


Jason J. Belice, Esq.  2002   $ 74,941(7)      -            -              -            -          -
General Counsel and    2001   $ 70,909(7)      -        $  4,457(7)        -            -          -
VP of Business Affairs 2000       -            -            -              -            -          -
(former position)

----------------
<FN>
(1)  Includes approximately $245,000 that was paid in the form of common stock
     ($127,500), preferred stock ($50,000) and a portion of a senior note, face
     value of $382,500 ($67,500). The balance of salary, bonus and benefits
     listed above have been accured.

(2)  Includes $22,500 of accrued consulting fees (pursuant to Mr. Arabia's
     consulting fee agreement during the first quarter of fiscal year 2001)
     and $9,000 of accrued auto allowance expense.

(3)  Accrued, not paid in cash(see "Employment Contracts").

(4)  Includes $50,000 in paid salaries and $6,000 in common stock
     (600,000 shares).

(5)  Includes $100,000 in common stock (417,000 shares) issued for services,
     $25,000 of accrued salary expense pursuant to Mr. Yonika's employment,
     and $3,600 of accrued auto allowance.

(6)  The Company issued 2,000,000 restricted shares of common stock to
</TABLE>
The following table represents the options granted to the Named Executive
Officers in the last fiscal year and the value of such options.

                                    - 32 -
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<PAGE>
<TABLE>

OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
                                                                   Individual
                            Realized                                 Grants
                             Assumed                               % if Total                Potential
                              Rates                   Number of     Options                   Value of
                            of Stock                  Securities   Granted to    Exercise      Annual
                          Appreciation                Underlying   Employees        or          Price
                              for         Options     in Fiscal       Base      Expiration     Option
                           Term 10%($)   Granted(#)      Year      Price($/SH)     Date          5%($)
                          ------------   ----------   ----------   ----------   ----------   ----------
<S>                       <C>            <C>          <C>          <C>          <C>          <C>
James R. Arabia      (1)  $     -        $    -          0.0%      $    -          N/A       $    -
Robert T. Malasek    (1)  $     -        $    -          0.0%      $    -          N/A       $    -
Donald Brucker O.D.  (1)  $     -        $    -          0.0%      $    -          N/A       $    -

--------------

<FN>
(1)  There were no option grants during the year ending June 30, 2002
     or subsequent to year-end. The Company does not have an established
     option plan available to its employees.
</TABLE>
Option Holdings

The following table represents certain information with respect to options held
by the Named Executive Officers.
<TABLE>
FISCAL YEAR-END OPTION VALUES

                                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>
James R. Arabia      (1)         -               -               -               -
Robert T. Malasek    (1)         -               -               -               -
Donald Brucker O.D.  (1)         -               -               -               -

--------------
<FN>
(1)  There were no options being held by any Named Executive Officer.
</TABLE>

                                    - 33 -
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<PAGE>


COMPENSATION OF DIRECTORS

All director fees have been accrued and no director has received to date cash
compensation for his services as a director. All directors are entitled to be
reimbursed for travel and other expenses incurred while attending meetings of
the Board of Directors.

                         FISCAL
                          YEAR                                      $ VALUE OF
      NAME (1)           ISSUED    Director fees    # OF SHARES        GRANT
---------------------    ------    -------------    ------------    -----------
Timothy R. Scott, PhD     2003      $ 15,000(2)           -               -
                          2002      $ 11,250(2)           -               -

John W. Huemoeller        2003      $  1,250(2)           -               -
                          2002          -                 -               -


(1)  Directors who are also executives of the Company are not listed in
      the above table. They do not receive compensation as directors.
      Refer to the Summary Compensation Table for information concerning
      their compensation.

(2)  Accrued director fees (not paid in cash, accruing at 8% interest).


EMPLOYMENT CONTRACTS

James R. Arabia, Chairman, President, and Chief Executive Officer

Mr. Arabia entered into a three-year "evergreen" employment contract beginning
August 1, 2002 with base compensation of $350,000 annually and a guaranteed
annual bonus of $180,000 per year for three years, (thereafter at the
discretion of the Board of Directors) beginning with the first bonus payment on
August 1, 2002 for the previous year of employment/consulting along with other
benefits including an auto allowance, medical benefits and paid vacation (Mr.
Arabia has not taken any vacation time while working for the Company). Under
the agreement, for each day that the executive remains employed with the
Company the contract is extended by one day so that a constant three-year
employment period shall be in effect. If the Company terminates the executive
without cause, or if the executive terminates his employment for good reason,
the Company is obligated to make a lump sum payment of severance equal to three
times the total of the executive's annual base salary plus the average annual
bonus paid to the executive during the immediately preceding two full fiscal
years of employment. Mr. Arabia has not received any payments in cash pursuant
to the terms of the employment agreement (see also Note N "Employment
Agreement").

Donald Brucker, Senior Vice President of R&D

Dr. Brucker entered into a three-year "evergreen" employment contract beginning
October 1, 2002 with base compensation of $175,000 annually and an annual
discretionary bonus to be determined by the Chief Executive Officer, along with
other benefits including an auto allowance, medical benefits and paid vacation
(Dr. Brucker has not taken any vacation time while working for the Company).
Under the agreement, for each day that the executive remains employed with the
Company the contract is extended by one day so that a constant three-year
employment period shall be in effect. If the Company terminates the executive
without cause, or if the executive terminates his employment for good reason,
the Company is obligated to make a lump sum payment of severance equal to three
times the total of the executive's annual base salary plus the average annual
bonus paid to the executive during the immediately preceding two full fiscal
years of employment. Dr. Brucker has not received any payments in cash pursuant
to the terms of the employment agreement (see also Note N).

Timothy J. Connor, consultant (former Chief Executive Officer [and director])

Mr. Connor entered into a three-year "evergreen" consulting contract beginning
October 1, 2002 with base consulting fee of $100,000 annually and an annual
discretionary bonus to be determined by the Chief Executive Officer, along with
other benefits including an auto allowance and medical benefits. Under the
agreement, for each day that the consultant remains a consultant for the
Company the contract is extended by one day so that a constant three-year
consultancy period shall be in effect. If the Company terminates the consultant
without cause, or if the consultant terminates his consultancy for good reason,
the Company is obligated to make a lump sum payment of severance equal to three
times the total of the consultants annual base consulting fee plus the average
annual bonus paid to the consultant during the immediately preceding two full
fiscal years of consultancy. Mr. Connor has not received any payments in cash
pursuant to the terms of the employment agreement (see also Note N).

                                    - 34 -
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<PAGE>


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

PRINCIPAL STOCKHOLDERS

The following table sets forth information with respect to the beneficial
ownership of Common Stock, as of June 30, 2003 (assuming the exercise of
options, issuance of stock grants, the issuance of convertible debt or
preferred stock with underlying common stock conversion rights, and warrants
that are exercisable within 60 days of the date hereof) by:

(i) each person known to the Company to beneficially own more than 5 percent of
the outstanding shares of Common Stock, (ii) each of the Company's directors,
(iii) each of the Company's executive officers named in the Summary
Compensation Table above, and (iv) all directors and officers of the Company as
a group.  Unless otherwise indicated below, the persons and entities named in
the table have sole voting and sole investment power with respect to all the
shares beneficially owned, subject to community property laws, where
applicable.  Percentage ownership assumes all warrants and options of listed
person exercised and all other warrant and options unexercised. Total shares
issued and outstanding for calculation of percentage ownership are 112,909,205.

         Name and Address                 Amount     Percent
     ------------------------          ----------    -------
     James R. Arabia (1)(2)
     c/o NatureWell, Inc.
     7855 Ivanhoe, Suite 322
     La Jolla, CA 92037                12,690,096     11.2%

     The Blankfort Trust
     c/o NatureWell, Inc.
     7855 Ivanhoe, Suite 322
     La Jolla, CA 92037                 8,000,000     7.1%

     Donald Brucker, O.D. (3)
     c/o NatureWell, Inc.
     7855 Ivanhoe, Suite 322
     La Jolla, CA 92037                 8,133,760     7.2%

     Timothy R. Scott, PhD (4)
     c/o NatureWell, Inc.
     7855 Ivanhoe, Suite 322
     La Jolla, CA 92037                   750,000     0.7%

     Timothy J. Connor (5)
     c/o NatureWell, Inc.
     7855 Ivanhoe, Suite 322
     La Jolla, CA 92037                 4,500,000     4.0%

     Robert T. Malasek
     c/o NatureWell, Inc.
     7855 Ivanhoe, Suite 322
     La Jolla, CA 92037                 1,300,000     1.2%

All directors and executive
officers as a group
(four individuals)                     22,873,856    20.3%
                                       ==========   =======

(1)  Does not include 3,500,000 shares that Mr. Arabia sold/transferred to a
limited partnership which he controls (Financial Acquisition Partners, LP) as
the president of the General Partner. Mr. Arabia claims sole investment and
voting power with regard to the 3,500,000 shares. Includes 1,250,000 shares
that 50 shares of Series B Convertible Preferred owned by Mr. Arabia converts
into.

(2)  Includes 6,750,000 restricted shares of common stock purchased by Mr.
Arabia from the Company for $320,625 using a Secured Promissory Note, 50 shares
of Series B Convertible Preferred Stock purchased by Mr. Arabia for $50,000 of
services rendered, which converts into 1,250,000 restricted shares of common
stock,(see Item 12. "PREFERRED STOCK"), Does not include 709,904 shares and
1,850,000 shares transferred to Dr. Brucker and Alan Udin (a former employee of
the Company) as repayment of monies loaned by those individuals to Mr. Arabia,
and does not include 2,000,000 shares sold in a private transaction to The
Blankfort Trust.

(3)  Includes 8,133,760 shares owned by A.K. Trust, for which Dr. Brucker
claims beneficial interest. Dr. Brucker along with his wife are co-trustees of
the AK Trust. Includes 5,000,000 shares prucahsed from the Company using a
secured promissory note in the amount of $100,000, and also includes 709,904
shares transferred to AK Trust by James R. Arabia as repyment of monies loaned
to Mr. Arabia.

(4)  Includes 750,000 restricted shares of common stock purchased by Dr. Scott
from the Company for $15,000 using a Secured Promissory Note.

(5)  Does not include 120,000 shares owned by Mr. Connor's mother-in-law for
which he disclaim beneficial ownership. Does not include 1,300,000 shares
transferred by Mr. Connor in a private transaction.

                                    - 35 -
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<PAGE>


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On July 6, 2001, the Company repaid a portion of its outstanding obligation and
loan amount from Mr. Timothy Connor, then Chief Executive Officer, in the
amount of $11,000. During the proceeding two months Mr. Connor received
approximately $33,000 in cash payments towards his outstanding obligation and
loan amount to the Company. The outstanding obligation and loan amount was zero
after these payments to Mr. Connor.

On September 13, 2001, the Company received $40,000 in the form of a short-term
loan from Mr. Timothy Connor then a member of the Board of Directors. The
Company then received another $20,000 in funds from Mr. Connor prior to
September 30th. During the month of September and October the Company repaid
Mr. Connor $17,000 in cash and retired certain payables due to the Company from
Mr. Connor. Mr. Connor as of year-end does not have an obligation owed to him
by the Company for these short-term loans.

On October 19, 2001 James R. Arabia, Chairman, President, and Chief Executive
Officer, for the Company, purchased 6,750,00 restricted shares of common stock
for $320,625 using a Secured Promissory Note.

On October 19, 2001, Alan S. Udin, Vice President of Operations for the
Company, purchased 250,000 shares of restricted common stock from the Company
for $25,000 pursuant to the Private Placement.

On November 13, 2001, the Company issued 327,500 restricted shares of common
stock to an affiliate of Mr. Kenneth Yonika, former Chief Financial Officer of
the Company. The shares were issued pursuant to an account payable with a value
of $35,000.

On December 12, 2001, Mr. Kenneth Yonika, former Chief Financial Officer of the
Company, purchased 417,000 restricted shares of common stock for $100,000
pursuant to the Private Placement.

On January 17, 2002, Mr. Kenneth Yonika, former Chief Financial Officer of the
Company, purchased 411,184 restricted shares of common stock for $62,500
pursuant to the Private Placement.

On February 11, 2002, Mr. Kenneth Yonika, former Chief Financial Officer of the
Company, purchased 283,753 restricted shares of common stock for $37,500
pursuant to the Private Placement.

On June 11, 2002, Dr. Don Brucker, Senior Vice President of R&D, purchased
1,063,830 restricted shares of common stock for $50,000 pursuant to the Private
Placement.

On July 3, 2002, Dr. Don Brucker, Senior Vice President of R&D, purchased
121,951 restricted shares of common stock for $5,000 of services rendered.

On October 5,2002, James R. Arabia, Chairman, President, and Chief Executive
Officer, for the Company, purchased 12,750,000 shares of restricted common
stock and a senior secured note ($382,500 face value) in exchange for $510,000
that was owed to him for a combination of monies loaned to the Company and
services rendered.

On October 10, 2002, James R. Arabia, Chairman, President, and Chief Executive
Officer, for the Company, purchased 50 shares of Series B Convertible Preferred
Stock, $1,000 liquidation preference, for $50,000 of services rendered (see
"PREFERRED STOCK" below for description).

On April 4, 2003, Robert T. Malasek, Chief Financial Officer, Treasure and
Secretary for the Company received 500,000 shares of the Company's common stock
as payment of a $5,000 bonus.

In the Company's 10KSB for the year ended June 30, 2001 it was disclosed that
1,200,000 shares of common stock were to be issued to Mr. Russ Mitchell for
past services performed pursuant to an exclusive marketing agreement that was
still being negotiated at the time of the disclosure.  However, pursuant to the
final terms of the agreement, Mr. Mitchell would have had the opportunity to
purchase the 1,200,000 shares using a promissory note as payment. Mr. Mitchell
never exercised his rights pursuant to the negotiated agreement and, in the
opinion of the Company, such right has become null and void as a result of
Mitchell Health Technologies termination. It was also disclosed that an
additional 300,000 shares were to have been issued to Mr. James Higgins,
Executive Vice President of Mitchell health Technologies, under the same terms
as the Mitchell shares. The right to purchase the 300,000 shares has also been
rendered null and void.

The Company during July 2002 issued 1,050,000 unrestricted shares of common
stock and 350,000 restricted shares of common stock to Mr. Steve Roberts, a
former officer and director of the Company, as full and final settlement of its
litigation with Mr. Roberts. In addition, Mr. Roberts received other payments
pursuant to the release and settlement that were partially directed to his
legal counsel, Mr. William Skolnik. Both parties have sealed the complete
details of the release and settlement agreement.

                                    - 36 -
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<PAGE>


PREFERRED STOCK

The Company has outstanding 50 shares, $1,000 liquidation preference, of Series
B Convertible Preferred Stock. Pursuant to the terms of the Series B
Convertible Preferred stock, owned by Mr. James R. Arabia, Chairman, President,
And Chief Executive Officer for the Company, Mr. Arabia is allowed to cast a
vote, on all matters that the Company's shareholders are permitted to vote
upon, equal to .7% of all outstanding securities that are eligible to vote at
the time of such shareholder action for each share of Series B Convertible
Preferred that he owns. The shares convert into 1,250,000 shares of the
Company's common stock. The shares are non-transferable without the consent of
the board of directors. The Company has the right to either repurchase (all or
none) or force conversion of the Series B Preferred (Mr. Arabia has the right
to either accept payment or convert the Series B Preferred upon receiving
notice from the Company of its intent to repurchase) within twelve (12) months
of the issuance of the Series B Convertible Preferred (October 10, 2002) if (i)
all debt, including all accrued salary and bonuses, plus interest, that the
Company owes to Mr. Arabia has been paid as of the date of repurchase or forced
conversion (this includes the repurchase of any securities issued to Mr. Arabia
in lieu of payments under his current, former or any future employment
agreement), and (ii) any payment of severance due to Mr. Arabia pursuant to his
employment contract is paid concurrent with either the repurchase or forced
conversion of the Series B Preferred if the repurchase/conversion is being done
as part of an acquisition, recapitalization, restructuring, or any other event
involving the Company that results in Mr. Arabia's termination. The Company's
right to repurchase the Series B Convertible Preferred expired at October 10,
2003.

During the year ended June 30, 2001 the Company authorized 500,000 shares of
Series C Convertible Preferred Stock, of which 1,105 were issued. The Series C
Preferred carried a liquidation preference of $1,000 per share and each share,
at the Company's option, was convertible into varying amounts of common stock
at any time within two years from the date of issuance. Subsequent to the
Company's reincorporation to a Delaware corporation, the Series C Preferred was
converted into 1,105 shares of Series A Preferred issued by the Delaware
corporation carrying the same rights and preferences as the Series C Preferred
of the predecessor California corporation. Immediately following the
reincorporation, the Company exercised its right to convert the new Series A
Preferred shares into common stock and retired the Series A Convertible
Preferred Stock designation. In the aggregate, the Series A Preferred shares
were converted into 4,797,845 shares of common stock.

ITEM 13(a).  EXHIBITS REQUIRED BY ITEM 601 OF REGULATION SB

     (a)  The following documents are filed as part of this report:

          1.   Financial Statements, as set forth on the attached index to
               Financial Statements.

          2.   Exhibits, as set forth on the attached Exhibit Index.


ITEM 13(b).  REPORTS ON FORM 8-K

The Company filed a Form 8-K on July 27, 2001 announcing the termination of the
prior accounting firm and the appointment of new independent auditors of the
Company. The Company has also filed amended Form 8-K/A on March 13, 2002 and
July 29, 2002 addressing corrections and response to items required by the Form
and Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Date:  October 15, 2003                     NATUREWELL, INCORPORATED

                                       By:  /S/ Robert Malasek
                                            ------------------
                                            Robert T. Malasek
                                            Chief Financial Officer

          In accordance with the Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the date indicated.

                                    Title                       Date

/S/ James Arabia
-------------------
James R. Arabia             Chief Executive Officer        October 15, 2003
                            and Chairman of the Board


/S/ Robert Malasek
-------------------
Robert T. Malasek           Treasurer, and Chief            October 15, 2003
                            Financial Officer


                                    - 37 -
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<PAGE>


EXHIBIT INDEX
   EXHIBIT
   NUMBER                                  DESCRIPTION
------------    ---------------------------------------------------------------

  2.1***        NatureWell, Inc. Consent Solicitation/Information Statement

  3.1****       Registrant's Articles of Incorporation (under its former
                name, Women's Healthcare Centers of America, Inc.).

  3.2****       Certificate of Amendment of the Articles of Incorporation of
                Women's Healthcare Centers of America, Inc.

  3.3****       Certificate of Amendment of the Articles of Incorporation of
                Chemical Dependency Healthcare, Inc.

  3.4****       Registrant's Bylaws.

  3.5****       Specimen Stock Certificate.

  3.6*****      Certificate of Amendment of Articles of Incorporation,
                dated June 26, 1996

  3.7*******    Certificate of Amendment of Articles of Incorporation,
                dated May 16, 2000

  4.1******     1996 Incentive Stock Bonus and Option.

  4.3*******    2000 Incentive Stock Bonus and Option Plan

  4.4*******    Form of Stock Option Agreement

 10.4***        Morgan & Sampson, Inc. Distribution Service Agreement

 10.5***        Sub-Lease Agreement - 7855 Ivanhoe Lease Agreement

 10.6**         Employment Agreement for James R. Arabia.

 10.7**         Employment Agreement for Donald Brucker.

 10.8**         Consulting Agreement for Timothy J. Connor.

 10.9*          Senior Note dated October 5, 2002 in the amount of
                $382,500 between NatureWell, Incorporated ("Debtor")
                and James R. Arabia ("Holder").

 10.10*         Security Agreement for Senior Note dated October 5, 2002
                in the amount of $382,500 between NatureWell, Incorporated
                ("Debtor") and James R. Arabia ("Holder").

 10.11**        Stock Issuance Agreement for James R. Arabia with Exhibit A
                ("Stock Purchase Agreement"), Exhibit B ("Promissory
                Note") and Exhibit C ("Security Agreement").

 10.12**        Stock Issuance Agreement for Donald Brucker with Exhibit A
                ("Stock Purchase Agreement"), Exhibit B ("Promissory Note")
                and Exhibit C ("Security Agreement").

 10.13**        Stock Issuance Agreement for Timothy J. Connor with Exhibit A
                "Stock Purchase Agreement"), Exhibit B ("Promissory Note")
                and Exhibit C ("Security Agreement").

 10.14**        Stock Issuance Agreement for Timothy R. Scott with Exhibit A
                ("Promissory Note") and Exhibit B ("Security Agreement").

 10.15**        Stock Issuance Agreement for David A. Gotz with Exhibit A
                ("Promissory Note") and Exhibit B ("Security Agreement").

 10.16**        Stock Issuance Agreement for Jason J. Belice with Exhibit A
                ("Stock Purchase Agreement"), Exhibit B ("Promissory Note")
                and Exhibit C ("Security Agreement").

 10.17**        Stock Issuance Agreement for Alan S. Udin with Exhibit A
                ("Stock Purchase Agreement"), Exhibit B ("Promissory Note")
                and Exhibit C ("Security Agreement").

 10.18          Amended and Restated Security Agreement dated September 2, 2003
                with Exhibit A (January 28, 2002 Security Agreement), Exhibit B
                (October 5, 2002 Security Agreement)

 10.19          Intercreditor agreement dated September 2, 2003 with Exhibit A
                (asset description).

 21.1***        Subsidiaries of the Company

 99.1**         Certification Pursuant to section 906 of the Sarbanes-Oxley
                Act of 2002

 99.2           Certification Pursuant to section 906 of the Sarbanes-Oxley
                Act of 2002 for June 30, 2003.

------------------------
*       Incorporated by reference to the applicable exhibit to the Company's
        Form 10-KSB-A filed on October 15, 2003.

**      Incorporated by reference to the applicable exhibit to the Company's
        Form 10-KSB filed on October 15, 2002.

***     Incorporated by reference to the applicable exhibit to the Company's
        Form 10-KSB filed on October 15, 2001.

****    Incorporated by reference to the applicable exhibit to the Company's
        Registration Statement Form SB-2 filed on May 18, 1995, as amended
        Through October 12, 1995.

*****   Incorporated by reference to the applicable exhibit to the Company's
        Form DEF-14 filed on June 26, 1996.

******  Incorporated by reference to the applicable exhibit to the Company's
        Registration Statement Form S-8 filed on October 27, 1996.

******* Incorporated by reference to the applicable exhibit to the Company's
        Form DEF-14 filed on May 16, 2000.