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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10KSB
            [ X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES AND EXCHANGE ACT OF 1934
                    FOR THE FISCAL YEAR ENDED MARCH 31, 2002

                                       or

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

                          Commission File No. 333-92849

                                GO2PHARMACY, INC.
                                -----------------
              (Exact name of small business issuer in its charter)
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<CAPTION>



    State of Florida                                             59-2600232
 -------------------------                                       ----------
<S>                                                    <C>
(State of or other jurisdiction                        (IRS Employer Identification No.)
of incorporation or organization)


6950 Bryan Dairy Road, Largo, Florida                               33777
--------------------------------------                              -----
(Address of Principal Executive Officers)                         (Zip Code)

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                    Issuer's telephone number: (727) 544-8866

   Securities registered pursuant to Section 12(b) of the Exchange Act: None.
                                                                        ----
      Securities registered pursuant to Section 12(g) of the Exchange Act:

                              Common Capital Stock
                              --------------------
                                (Title of Class)

          Indicate by check mark whether the issuer (1) filed all reports
required to be filed by Sections 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 [ ]

          Indicate by check mark if there is no disclosure of delinquent filers
in response to Item 405 of Regulation S-B is not contained in this form,
and no disclosure will be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]

         Issuer's revenues for its most recent fiscal year were $8,983,444.

         The aggregate market value of the voting stock held by non-affiliates
of the Registrant as of June 20, 2002 was $2,497,068. Number of shares
outstanding of the Issuer's common stock at $.01 par value as of June 20, 2002
was 7,025,000 (exclusive of Treasury Shares).

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Documents Incorporated by Reference:

Reference is made in Part III of this Report to the Company's Registration
Statement, filing Number 333-92849, filed with the SEC on December 14, 1999,
which is hereby incorporated by reference, and amendments No. 1 - 5 thereto as
filed dated May 11, 2000, June 28, 2000, July 25, 2000, September 18, 2000, and
October 19, 2000, respectively.
                                                               X
Transitional Small Business Disclosure Format: Yes____    No  ----






































                                       -2-

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                              CAUTIONARY STATEMENTS

         Certain oral statements made by management from time to time and
certain statements contained in press releases and periodic reports issued by
Go2Pharmacy, Inc. (the "Company"), as well as those contained herein, that are
not historical facts are "forward-looking statements" within the meaning of
Section 21E of the Securities and Exchange Act of 1934 and, because such
statements involve risks and uncertainties, actual results may differ materially
from those expressed or implied by such forward-looking statements.
Forward-looking statements, including those in Management's Discussion and
Analysis, are statements regarding the intent, belief or current expectations,
estimates or projections of the Company, its Directors or its Officers about the
Company and the industry in which it operates, and are based on assumptions made
by management. Forward looking statements include without limitation statements
regarding: (a) the Company's growth and business expansion, including future
acquisitions; (b) the Company's financing plans; (c) trends affecting the
Company's financial condition or results of operations; (d) the Company's
ability to continue to control costs and to meet its liquidity and other
financing needs; (e) the declaration and payment of dividends; (f) the Company's
use of proceeds from their initial public offering, and (g) the Company's
ability to respond to changes in customer demand and regulations. Although the
Company believes that its expectations are based on reasonable assumptions, it
can give no assurance that the anticipated results will occur. When issued in
this report, the words "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "estimates," and similar expressions are generally intended to identify
forward-looking statements.

         Important factors that could cause the actual results to differ
materially from those in the forward-looking statements include, among other
items, (i) changes in the regulatory and general economic environment related to
the health care and nutraceutical industry; (ii) conditions in the capital
markets, including the interest rate environment and the availability of
capital; (iii) changes in the competitive marketplace that could affect the
Company's revenue and/or cost and expenses, such as increased competition, lack
of qualified marketing, management or other personnel, and increased labor and
inventory costs; (iv) changes in technology or customer requirements, which
could render the Company's technologies noncompetitive or obsolete; (v) new
product introductions, product sales mix and the geographic mix of sales and
(vi) its customers' willingness to accept its Internet platform in the future.
Further information relating to factors that could cause actual results to
differ from those anticipated is included but not limited to information under
the headings "Business," and "Management's Discussion and Analysis of Financial
Conditions and Results of Operations" in this Form 10-KSB as of and for the year
ended March 31, 2002. The Company disclaims any intention or obligation to
update or revise forward-looking statements, whether as a result of new
information, future events or otherwise.

                                     PART I
                                     ------

ITEM 1.  DESCRIPTION OF BUSINESS

History

         We were incorporated as Energy Factors, Inc., a Florida
corporation, in 1985. In August

                                       -3-

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1998 we changed our name to Innovative Health Products, Inc., in February 2000
we changed our name to Go2Pharmacy.com, Inc., and in September 2000 we changed
our name to Go2Pharmacy, Inc., in anticipation of our merger with the Delaware
corporation Go2Pharmacy.com, Inc. Our merger with Go2Pharmacy.com, Inc. was
effected simultaneously with the successful completion of our initial public
offering during November 2000. We continue to conduct nutritional and herbal
supplement product line manufacturing business under the name Innovative Health
Products, Inc.

Business Overview

         At Go2Pharmacy, Inc., we manufacture, package and ship high-quality
private label dietary supplements, over-the-counter drugs, and health and beauty
care products for companies worldwide under two of our Florida-incorporated
companies, Innovative Health Products, Inc. and Belcher Pharmaceuticals, Inc.
Belcher Pharmaceuticals is our FDA-registered, over-the-counter manufacturing
company. Currently, we do not manufacture or distribute generic or other
prescription drugs. We do develop and manufacture our own branded dietary
supplements and health and beauty care products for distribution through various
outlets. We also distribute our own high protein zero and low carbohydrate foods
product line, "Lean Protein". Go2PBM Services, Inc, a Florida corporation, is
our pharmacy benefit management company.

         Our manufacturing customers include mass marketing companies, network
marketing, distributors and direct sales companies. We manufacture, package and
ship these products from our two facilities located in Largo, Florida. In
addition to our private label business, we develop, manufacture and distribute
our own branded dietary supplements and health and beauty care products. Some of
our branded products include "Nutrisure" meal replacement powder, "Physician's
Pharmaceuticals" dietary supplement product line, and "Arth-Aid" roll-on and
cream for arthritis. We distribute these products to retail consumers, marketing
companies, wholesalers and retailers, including independent pharmacies, regional
and national chain drug stores, direct mail companies, mass merchandisers, deep
discounters and brokers. We are currently forming strategic alliances with
health maintenance organizations, insurance companies, retail chains, and other
health related associations to attract new customers.

         In April 2000, we formed a wholly-owned distribution subsidiary named
Breakthrough Engineered Nutrition, Inc., a Florida corporation, for the purpose
of marketing and distributing our own branded product line, "Lean Protein."
Products introduced under this product line include, "Lean Protein Chips," which
we believe was the world's first zero carbohydrate, high protein snack chip,
"Lean Protein Bites" which we believe is a "one-of-a-kind" high protein, low
carbohydrate, sweet and crunchy snack food that currently is offered in three
flavors. We have an established and growing network of over 40 distributors
strategically located across the United States and Canada. Our product is sold
in national as well as local grocery chains, convenience stores, health food
stores and gyms.

         In March 2001, we incorporated our pharmacy benefit management
company, Go2PBM Services, Inc., a Florida corporation. Go2PBM Services
administers drug benefits for health maintenance organizations, insurance
company plans, preferred provider organizations, self-insured corporate
health plans and Taft-Hartley self-insured labor unions. As a pharmacy
benefit


                                             -4-

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manager, the company oversees all member benefits in low risk plans, while
taking an exclusively administrative role in higher risk plans. Our
administrative services include claim processing, network management and
customer service.

         Business Strategy

         We are continuing to build a multi-faceted company able to maximize our
efficiencies and capitalize on our synergies through vertical operations. To
manage our operations, we have assembled and maintained a management team with
experience in manufacturing, marketing, sales and technology to assist in
leading us to our sales, profit and overall business goals. Our vertical
operations consist of manufacturing and distribution, sales and marketing,
in-house formulation laboratory and other chemical analysis services, customer
service and public relations. We will be able to support our own needs as well
as those of our customers, from order processing, manufacturing through end-user
distribution. We have streamlined our two manufacturing facilities in order to
continue growing our manufacturing segment.

         We are continuing to develop our sales and marketing strategies to
build our recognition among national grocery and drug chains, long-term care
facilities and other health product consumer organizations, while building brand
awareness of our proprietary products as well as our private label capabilities.
We have developed several proprietary products that are currently being sold
nationally to our target markets. We believe that we have created a solid
platform to continue to achieve our goals.

         For Lean Protein, our branded product line that we distribute, we plan
on further developing and expanding this line into other flavors and forms of
our unique high protein low carbohydrate foods in addition to high protein, low
carbohydrate cereal products. We have begun marketing our product line using
telemarketing efforts as well as utilizing brokers to increase the awareness and
availability of our offerings and capabilities .

         By merging with the Delaware corporation Go2Pharmacy.com, Inc. in
November 2000, we have entered into an agreement to provide our pharmacy benefit
management services to a New York State health maintenance organization. We have
entered into a contract with CarePlus, to provide pharmacy benefit management
services to its members, through our wholly-owned subsidiary, Go2PBM Services,
Inc. In addition, the agreement will make us the organization's exclusive
private label over-the-counter supplier of products, including hand sanitizers,
pediatric vitamin drops, and children's chewable vitamins.

         We intend to provide over-the-counter drugs, durable medical equipment,
medical supplies and health and beauty care products directly to nursing homes,
assisted living facilities, and personal care residences across the country. We
plan to develop these outlets to become a premier provider of nutritional,
over-the-counter and other related products for institutional and long-term care
facilities seeking high quality competitively-priced products .

         Through the development of our private label, branded, and
over-the-counter manufacturing, distribution and pharmacy benefit management
efforts, we intend to provide wholesale and institutional customers with an
efficient source for their nutritional, over-the-counter and other pharmacy
product needs. By vertically integrating our core business operations,

                                  -5-

<PAGE>

we believe we have, and will continue, to achieve increased brand recognition
and exposure, ancillary product and service revenues, and will be able to
provide competitively priced products, quick turn around on our manufactured and
distributed products in addition to overall superior customer service.

         Private Label Products-Manufacturing

          Sales of our manufactured private label products accounted for
approximately 83% of our total revenues for the year ended March 31, 2001 and
72% for the year ended March 31, 2002. We currently manufacture products for
over 400 private label customers in 47 states in the United States and ship to
several countries internationally. Our private label business has a widely
distributed revenue base. For the year ended March 31, 2001, we had sales of 5%
or more of total revenues to two of our private label customers, each of which
accounted for 16.4% and 9.9% of total revenues. The customer which accounted for
16.4% is an affiliate of the Company. For the year ended March 31, 2002, we had
sales of 5% or more of total revenues to three of our private label customers,
each of which accounted for 22.8%, 16.6% and 7.4% of total revenues none of
which were sales to affiliated customers. For the year ended March 31, 2001 and
2002, we did not have sales of 5% or more of total revenues to any company that
is a party to an exclusive manufacturing agreement with us.

         Branded Products-Manufacturing

          To date, sales of our branded products have not accounted for a
significant portion of our revenues. We intend to employ additional marketing
efforts on the sale of our branded products, which we believe will yield higher
profit margins than our private label products. In addition to the branded
products listed below, we also have approximately 12 other branded products, and
intend to develop additional branded products. Some of our branded products
include:

     o   "Nutrisure (TM)" - a meal replacement powder mix with nutritious
         proteins, medium chain triglycerides and antioxidants that conforms
         with diabetic diet requirements;

     o   "Physicians' Pharmaceuticals  (TM)" - a proprietary line of dietary
         supplements which           includes vitamins, minerals and herbal
         supplements; and
     o   "Arth-Aid (TM)" - an arthritis cream in an easy-to-use roll-on form
         designed to relieve arthritic pain, and is formulated with capsaicin
         and functional botanicals.

            Manufacturing

         Our primary manufacturing facility is located in 33,222 square feet
of leased space in Largo, Florida. We use this location for our executive
offices and for the manufacturing, packaging and warehousing of products,
laboratory services, research and development, marketing and final
distribution. . Our manufacturing facilities at this site utilize high-speed
encapsulating, tableting, packaging and other production line equipment.
The facility is large enough to handle bulk orders, but versatile enough to
provide quick response to customer needs. This site also houses our graphic
arts department, which assists us and our customers' print layout and
graphic needs.

         Our second manufacturing facility is located in 10,000 square
feet of leased space in

                                       -6-

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Largo, Florida. This facility is registered with the United States Food and Drug
Administration and is used for the manufacture, packaging and distribution of
over-the-counter products for our customers.

         Currently, we can manufacture approximately 270 million tablets and
capsules and four million bottles annually. Our manufacturing facilities
normally operate two shifts per day, five days per week. Certain packaging lines
or capsule and tablet production lines run longer as demand warrants. We operate
flexible manufacturing lines that can shift output efficiently among various
pieces of equipment depending upon factors such as batch size, tablets or
capsule count, and labeling requirements. We strive to fulfill and ship all
orders within 30-60 days. While we believe we can double our sales volume
without expanding our current facilities, we will expand our manufacturing
capacities upon receiving Food and Drug Administration registration for
production of generic and other over-the-counter drugs. An increase in
production would require additional space and personnel for warehousing and
shipping operations, but would not necessarily require substantial capital
investment.

Pharmacy Benefit Management

         Sales generated from our pharmacy benefit management subsidiary
accounted for approximately 3.9% of our total revenues for the year ended March
31, 2001 and accounted for 21.3% of revenues for the year ended March 31, 2002.
100% of the Company's pharmacy benefit management revenues are derived from an
affiliate of the Company.

Branded Products-Distribution

         Sales of our distributed product line, Lean Protein, accounted for
approximately 13% of our total revenues for the year ended March 31, 2001 and
accounted for approximately 7% of revenues for the year ended March 31, 2002. We
currently distribute our products under our product line, "Lean Protein" to over
40 distributors in 20 states in the United States and Canada. Our distribution
product line has a widely distributed revenue base whereas for the year ended
March 31, 2001 and 2002, no one customer accounted for more than 5% of total
revenues.

Research and Development

         Our research and development department develops new concepts and
formulations for our customers' private label products as well as our own
branded products. Dr. Sekharam, our President, provides guidance and direction
for our research and development team in product development. Our lab chemists
perform product development, product improvement, process development through to
the last-minute fine-tuning of products and processes while our technical staff
prepares cost estimates and samples based on those formulations. Prior to the
final manufacture of our products, this team also prepares documentation of
operational procedures performed and documentation of pilot testing programs.
Finally, our research and development regulatory staff personnel prepare product
information documenting label requirements. Historically, our expenditures for
research and development have not been material, relative to our overall
operating expenses.

         Our research and development laboratory is equipped with modern
laboratory test equipment, including high pressure liquid chromatography, atomic
absorption spectroscopy, as well as instruments to test different parameters
like pH, viscosity, moisture, gradient sizing, ash, melting point, refractive
index, tablet hardness and disintegration. We also have a full-fledged micro lab
to test samples for microbiological loads including yeast, bacteria and fungi.
The laboratory has stability chambers to test both the long-term and the
accelerated shelf life of products. We believe that our laboratory facilities
are in compliance with all applicable environmental regulations.

         Our product development team works closely with customers to
identify their own strengths as well as understand their needs

                                      -7-

<PAGE>

to create products with value adding features. As our development response time
is critical to capitalizing on consumer trends and preferences, we focus on
meeting end-user needs as quickly as possible. For example, our touch-free
arthritis relief roll-on was specially designed for customers reporting finger
irritation due to the ointment's active ingredients. We believe that this type
of flexibility and attention to customer needs results in more valuable and
marketable products.

Marketing and Sales

         Our marketing and promotion strategy is targeted toward stimulating
demand for our products and increasing brand awareness. We currently employ a
traditional in-house sales force that markets our branded and private label
products directly to wholesale and institutional customers. We also utilize
product promotions and print media to reach new customers in targeted markets.
We intend to increase these efforts significantly in the areas of direct sales,
telesales, and traditional and online advertising.

         We have increased direct sales marketing efforts by hiring an
additional sales representative to contact nursing homes, assisted living
facilities and personal care residences to market our institutional-compatible
products. Similarly, we plan to hire additional marketing representatives to
contact prospective customers needing our private-label manufacturing services,
self-insured employers, health maintenance organizations, and other health
benefit provider associations to market our manufacturing capabilities and
pharmacy benefit management services in addition to pursuing contractual
arrangements with pharmacies. We also intend to expand our sales force to
initiate direct and regular contact with our customer's key personnel, to inform
them of new product developments and industry trends, aid them in the design of
store displays and create merchandising programs that promote our manufacturing
capabilities and our branded products.

         We intend to increase telesales by hiring an in-house telesales group
to prospect for customers for our branded products that we distribute. We have
increased our advertising efforts by implementing online sales and marketing
techniques to increase brand awareness and direct traffic to our web sites,
www.leanprotein.com and www.ihp-inc.com. This includes purchasing banner
advertising on search engine web sites and Internet directories, as well as
direct links from health related web sites. We feel that these efforts are and
will continue to compliment our existing and future strategic agreements and
traditional advertising efforts.

         We also increase the flexibility of our product offerings by extending
various credit terms to our customers, subject to our credit approval process.
In most cases, where credit terms are granted, we require a prepayment of 50% of
the amount of the sales order, with the balance due within 30 days of shipment.
Some of our customers whose sales are to regional and/or national chain stores
receive payments from their customers on extended payment terms. In such cases,
we grant extended payment terms, when requested, by a long-standing significant
customer.

         Our manufacturing revenues are generated by fulfilling sales orders
received from our customers within an average turn-around time ranging from
30-60 days. Consequently, we experience a backlog for future revenues at all
times. As of March 31, 2001 and 2002, we had approximately $864,000 and
$1,179,000, respectively, in backlog sales orders.



                                       -8-

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Additional Business Goals

         In addition to continuing the efforts described above, we intend to
increase sales by building a pharmacy benefit management business that services
at least 200,000 members through the addition of new plans. We currently have
29,923 members in our current Plan and have added an additional Plan called
Family Health Plan. We plan to increase sales by concentrating our marketing
efforts of certain of our branded products to specific market segments. We also
intend to increase sales by expanding our branded and private label offerings of
over-the-counter products. We plan to target trade associations that service
long-term health care facilities, as well as private and public assisted living
facilities and nursing home chains, to form alliances and partnerships to build
our business to business customer base. We also plan to offer discount and
rebate programs to these organizations based on the volume of sales. We have an
agreement with The Greater New York Health Care Facilities Association to
provide our products to its members. This Association is a provider association
servicing over 100 long-term care facilities throughout the New York
metropolitan area. Through these facilities, the Association represents
approximately 30,000 nursing home beds, which comprises approximately 35% of the
nursing home beds in the state of New York.

         We intend to target health maintenance organizations, insurance
companies and corporate health unions to provide pharmacy benefit management
services to their members. Simultaneous with the merger in November 2000, We
entered into a five year agreement to provide pharmacy benefit management
services to Care Plus Health Plan, a Medicaid health maintenance organization
located in New York. Pursuant to the agreement, we are administering pharmacy
benefit management services to approximately 60% of CarePlus' membership. We
intend to develop a nationwide network of local and regional pharmacy chains
that will service our pharmacy benefit management members' non-maintenance
prescription needs. We intend to expand our market pharmacy benefit management
services to self-insured employers, health maintenance organizations, and other
large service organizations.

         We currently manufacture several of our own branded products, some
of which are currently being sold to nursing homes. We plan to market these
products through major business to business Internet sites and by advertising in
trade journals and through traditional media. The sale of these products is
expected to offer significant brand awareness within the long-term care facility
industry. We intend to increase marketing of our branded products to
institutional markets, health food stores, mass market retailers, and directly
to consumers. We plan to increase our sales force to achieve market penetration
into targeted geographical areas. Some of the sales personnel we expect to hire
will devote a substantial portion of their time enhancing relationships with our
customers' key personnel, informing them of new product developments and
industry trends, and aiding them in designing store displays and merchandising
programs for our branded products. We also intend to employ additional financial
resources to implement media kits and increase our newsprint advertising, our
national print media, and our direct mail marketing efforts. As a manufacturer,
we have the facilities, equipment, manufacturing capacity, skilled work force
and industry experience to control product processing and minimize product cost
from order inception to distribution of finished products to our customers.

         By utilizing our manufacturing capabilities, we intend to build
institutional relationships through high quality and low cost custom product
lines. We are continuously seeking ways to expand our manufacturing customer
base. We intend to increase our market penetration of private label
manufacturing customers increasing our outside sales and telesales efforts, by
reducing manufacturing time with additional fully-automated

                                       -9-

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high-speed manufacturing equipment, by delivering high quality products and by
providing research and development support to improve our product offerings. We
will also continue to develop strategic alliances with new manufacturing
customers. We intend to increase our ongoing development and marketing of new
products in order to capitalize on and create market opportunities in new market
segments. We feel that we can differentiate ourselves from our competitors by
providing customers with more value-added products. Consequently, we intend to
produce and market additional, as well as enhance currently existing products
and dietary supplements that integrate a variety of compounds to achieve greater
bio-availability, effectiveness and product convenience. We differentiate
ourselves from other dietary supplement manufacturers by providing faster and
more appropriate responses to our customers. Our development response time for
proprietary and private label products is critical to capitalize on consumer
trends and preferences. We intend to utilize these trends and preferences to
expand our customer base and provide consumers with the most timely and well
adapted products for their needs.

     We believe that the health care, pharmaceutical and dietary supplement
industries are fragmented and currently offer attractive acquisition
opportunities. We intend to pursue acquisition opportunities that will broaden
our product lines, provide efficiencies in manufacturing through economies of
scale, broaden our customer base, complement our existing businesses and further
our overall strategic business goals.

                                  -10-

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Employees

     As of March 31, 2002, we had 67 employees. Of these employees, four were
engaged in marketing and sales, 49 were devoted to production, laboratory and
distribution and nine were responsible for management and administration. None
of our employees are covered by a collective bargaining agreement. We believe we
have good relations with our employees. In each case, the employees are
permitted to participate in employee benefit plans of the Company that may be in
effect from time to time, to the extent eligible, and each employee may be
entitled to receive an annual bonus as determined at the sole discretion of the
Company's Board of Directors based on the Board's evaluation of the employee's
performance and the financial performance of the Company.

Principal Suppliers

         We obtain all of the raw materials for the manufacture of our products
from third party suppliers primarily located within the United States. We do not
have contracts with any of our suppliers to provide adequate materials required
for our product manufacturing.

Competition

         The manufacturing, wholesale, retail and distribution industries in
which we operate are

                                      -11-


<PAGE>

highly competitive. Numerous companies, many of which have greater size,
financial, personnel, distribution and other resources than us, compete with us
in our development, manufacture, distribution, wholesaling and retailing
businesses. The Nutrition Business Journal estimates that there are 1,050
manufacturers and branded marketers of dietary supplements in the United States
with at least $500,000 in annual sales. The Nutrition Business Journal's 1997
database includes 16 companies with over $100 million in revenues, which
represents 55% of the dietary supplement market. Our branded products face
substantial competition from broad line manufacturers, large private label
manufacturers, and more recently from large pharmaceutical companies. Increased
competition from companies with greater financial, manufacturing, distribution
and marketing capabilities than our own could have a materially adverse affect
on our operations. We compete on the basis of product quality, cost and customer
service. Our branded products' success depends primarily on our increasing brand
recognition across multiple distribution channels, our ability to quickly
develop, advertise, market and promote new and existing products with high
quality and value, and our efficient distribution of these products. Our
competitors include:

        o     chain drug stores, such as CVS and Walgreen's;

        o     prescription benefit managers, such as Express Scripts;

        o     warehouse clubs, such as BJ's and Costco;

        o     mail order pharmacies;

        o     major department stores, such as Macy's and Nordstrom; and

        o     health and beauty salons and spas


        o     online pharmacy specialists, such as planetrx.com, drugstore.com,
              VitaminShoppe.com, and MotherNature.com;

        o     Internet portals with shopping services, such as Yahoo!,
              Excite, and America Online;

              Many of these competitors currently offer online ordering of their
products. In addition, many of these online and traditional competitors have
longer operating histories, greater brand recognition, and substantially greater
economic, marketing and other resources than we do. These resources may provide
some of these competitors with greater opportunities to form joint ventures and
favorable vendor agreements as this market develops. In addition, traditional
pharmacies can provide customers with the ability to see and feel products, and
may be able to address immediate customer product needs in ways that we cannot.

Trademarks and Intellectual Property

              We utilize the federally registered trademarks Lean Protein(TM),
Nutrisure(TM), Physician Pharmaceutical(TM)

                                      -12-


<PAGE>

and Arth-Aid (TM). The Company, as assisted by our president, Dr. Kotha
Sekharam, also filed for three additional patents for products already in the
market with `patent pending' status. We also utilize the registered domain names
leanprotein.com, ihp-inc.com, ihp_inc.com. We believe that protecting our
trademarks and registered domain names is crucial to our business strategy of
building strong brand name recognition and that such trademarks have significant
value in the marketing of our products. Our policy is to pursue registrations of
all the trademarks associated with our key products. We rely on common law
trademark rights to protect our unregistered trademarks. Common law trademark
rights generally are limited to the geographic area in which the trademark is
actually used, while a United States federal registration of a trademark enables
the registrant to stop the unauthorized use of the trademark by any third party
anywhere in the United States. Furthermore, the protection available, if any, in
foreign jurisdictions may not be as extensive as the protection available to us
in the United States. Although we seek to ensure that we do not infringe upon
the intellectual property rights of others, there can be no assurance that third
parties will not assert intellectual property infringement claims against us.
Any infringement claims by third parties against us may have a materially
adverse affect on our business, financial condition, results of operations and
cash flows.

Government Regulation

         The manufacture, packaging, labeling, advertising, promotion,
distribution and sale of our manufactured products is subject to regulation by
numerous governmental agencies, particularly the United States Food and Drug
Administration, which regulates our products under the Federal Food, Drug and
Cosmetic Act, and the United States Federal Trade Commission, which regulates
the advertising of our products under the Federal Trade Commission Act. Our
products are also subject to regulation by, among other regulatory agencies, the
Consumer Product Safety Commission, the United States Department of Agriculture,
the United States Department of Environmental Regulation and the Occupational
Safety and Health



Administration. The manufacture, labeling and advertising of our products is
also regulated by the Occupational Safety and Health Administration through
various state and local agencies as well as foreign countries to which we
distribute our products.

         Dietary supplements, health and beauty care products, over-the-counter
drugs, and consumer products business is subject to significant government
regulation. These products are regulated by the Food and Drug Administration,
Federal Trade Commission, Consumer Product Safety Commission, as well as other
state and federal regulatory entities. Our online pharmacy business is also
subject to significant federal and state regulatory and licensing requirements.
These regulations will likely increase, as the Internet pharmacy industry
expands and the use of the Internet expands. While we use our best efforts to
adhere to the regulatory and licensing requirements, as well as any other
requirements affecting our products, compliance with these often requires
subjective legislative interpretation. Consequently, we cannot assure that our
compliance efforts will be deemed sufficient by regulatory agencies and
commissions enforcing these requirements. Nonetheless, we employ a compliance
person to assist in these efforts.

                                      -13-

<PAGE>

Violation of these regulations may result in civil and criminal penalties, which
could materially and adversely affect our operations.

         Recent events have suggested that the regulatory requirements governing
our industry may expand in the near future. For example, the United States House
of Representatives' Committee on Commerce, United States General Accounting
Office, and a federal interagency task force have all recently reviewed various
aspects of the online pharmacy industry. These inquiries have dealt
predominantly with laws governing pharmacy operations, prescription submission,
patient confidentiality, and licensing requirements. In addition, the Clinton
Administration proposed legislation extending federal enforcement powers and
establishing new licensing guidelines to ensure online pharmacy compliance with
state and federal laws. While we believe that we comply with existing federal
and state pharmacy licensing requirements, ratification of these changes will
likely increase our reporting and monitoring requirements.

         Our manufacture of dietary supplements is subject to significant
labeling regulation. Labeling claims are governed by the Food and Drug
Administration, the Federal Food, Drug and Cosmetic Act, and the recent Dietary
Supplement Health and Education Act of 1994. Our manufacture of over-the-counter
drugs must comply with all Food and Drug Administration guidelines and Food and
Drug Administration enforced Good Manufacturing Practices regulations for those
products as set forth in official monographs of the United States Pharmacoepia
and other applicable laws enforced by the Food and Drug Administration. These
include manufacturing and product information, such as claims in a product's
labeling, package inserts, and accompanying literature. The Dietary Supplement
Health and Education Act of 1994 guidelines permit certain dietary supplement
labeling claims without prior authorization by the Food and Drug Administration,
provided that the manufacturer has substantiation for the claims and complies
with certain notification and disclaimer requirements. The legislation gives
dietary supplement manufacturers more freedom to market their products, while
providing consumers adequate information for informed decisions on the use of
supplements.

         Under the Dietary Supplement Health and Education Act of 1994 and
previous food labeling laws, supplement manufacturers may use three types of
labeling claims, with the approval of the Food and Drug Administration. These
claims include nutrient-content claims, disease claims, and nutrition-support
claims, which include "structure-function claims." Nutrient-content claims
describe the level of a nutrient in a food or dietary supplement. For example, a
supplement containing at least 200 mg of calcium per serving could carry the
claim "high in calcium." Disease claims show a link between a substance and a
disease or health-related condition. The Food and Drug Administration authorizes
disease claims based on a direct review of scientific evidence or documentation
of established diet-to-health links from highly regarded scientific bodies, such
as the National Academy of Sciences. For example, it is permissible to advertise
a link between calcium and a lower risk of osteoporosis, if the supplement
contains sufficient amounts of calcium. Nutrition-support claims describe a link
between a nutrient and deficiency diseases that may result from diets lacking
the nutrient. For example, the label of a Vitamin C supplement could state that
Vitamin C prevents scurvy. When these types of claims are used, the label must
mention the prevalence of the nutrient-deficiency disease in the United States.
Finally, structure-function claims refer to the supplement's effect on the
body's structure or function, including its overall effect on a person's
well-being. For example, a structure-function claim could state "antioxidants
maintain cell integrity." Structure-function claims must be

                                      -14-

<PAGE>

accompanied by the disclaimer "This statement has not been evaluated by the Food
and Drug Administration." This product is not intended to diagnose, treat, cure,
or prevent any disease. Manufacturers who plan to use a structure-function claim
on a particular product must inform the Food and Drug Administration of the use
of the claim no later than 30 days after the product is first marketed. The Food
and Drug Administration may then advise the manufacturer to change or delete the
claim. Claims made for our dietary supplement products may include statements of
nutritional support and health and nutrient content. The Food and Drug
Administration's interpretation of what constitutes an acceptable statement of
nutritional support may change in the future thereby requiring that we revise
our labels. The Food and Drug Administration recently issued a proposed rule on
what constitutes permitted structure/function claims as distinguished from
prohibited disease claims. Although we believe our product claims comply with
the law, depending on the content of the final regulation, we may need to revise
our labels.

         The Food and Drug Administration issued final dietary supplement
labeling regulations in 1997 that required a new format for dietary supplement
product labels by March 23, 1999. All companies in the dietary supplement
industry were required to comply with these labeling regulations. The Food and
Drug Administration has also announced that it is considering promulgating new
Good Manufacturing Practices regulations, specific to dietary supplements. Such
regulations, if promulgated, may be significantly more rigorous than currently
applicable regulations and contain quality assurance requirements similar to
Good Manufacturing Practices regulations for drug products. Therefore, we may be
required to expend additional capital resources on upgrading manufacturing
processes and/or equipment in the future in order to comply with the law. Our
failure to comply with applicable Food and Drug Administration regulatory
requirements could result in, among other things, injunctions, product
withdrawals, recalls, product seizures, fines, and criminal prosecutions.

         Our advertising of dietary supplement products is also subject to
regulation by the Federal Trade Commission under the Federal Trade Commission
Act, in addition to state and local regulation. The Federal Trade Commission Act
prohibits unfair methods of competition and unfair or deceptive acts or
practices in or affecting commerce. The Federal Trade Commission Act also
provides that the dissemination or the causing to be disseminated of any false
advertisement pertaining to drugs or foods, which would include dietary
supplements, is an unfair or deceptive act or practice. Under the Federal Trade
Commission's Substantiation Doctrine, an advertiser is required to have a
"reasonable basis" for all objective product claims before the claims are made.
Failure to adequately substantiate claims may be considered either deceptive or
unfair practices. Pursuant to this Federal Trade Commission requirement we are
required to have adequate substantiation for all material advertising claims
made for our products.

         In recent years the Federal Trade Commission has initiated numerous
investigations of dietary supplement and weight loss products and companies. The
Federal Trade Commission is reexamining its regulation of advertising for
dietary supplements and has announced that it will issue a guidance document to
assist supplement marketers in understanding and complying with the
substantiation requirement. Upon release of this guidance document we will be
required to evaluate our compliance with the guideline and may be required to
change our advertising and promotional practices. We may be the subject of
investigation in the future. The Federal Trade Commission may impose limitations
on our advertising of products. Any such limitations could materially adversely
affect our ability to successfully market our products. The Federal Trade

                                      -15-

<PAGE>

Commission has a variety of processes and remedies available to it for
enforcement, both administratively and judicially, including compulsory
processes, cease and desist orders, and injunctions. Federal Trade Commission
enforcement can result in orders requiring, among other things, limits on
advertising, corrective advertising, consumer redress, divestiture of assets,
rescission of contracts and such other relief as may be deemed necessary. A
violation of such orders could have a material adverse affect on our business,
financial condition and results of operations.

         Governmental regulations in foreign countries where our plans to
commence or expand sales may prevent or delay entry into the market or prevent
or delay the introduction, or require the reformulation, of certain of our
products. Compliance with such foreign governmental regulations is generally the
responsibility of our distributors for those countries. These distributors are
independent contractors over whom we have limited control.

         We manufacture certain products pursuant to contracts with customers
who distribute the products under their own or other trademarks. Such private
label customers are subject to government regulations in connection with their
purchase, marketing, distribution and sale of such products. We are subject to
government regulations in connection with our manufacturing,

 packaging and labeling of such products. Our private label customers are
independent companies and their labeling, marketing and distribution of their
products is beyond our control. The failure of these customers to comply with
applicable laws or regulations could have a materially adverse effect on our
business, financial condition, results of operations and cash flows.

         We may be subject to additional laws or regulations by the Food and
Drug Administration or other federal, state or foreign regulatory authorities,
the repeal of laws or regulations which we consider favorable, such as the
Dietary Supplement Health and Education Act of 1994, or more stringent
interpretations of current laws or regulations, from time to time in the future.
We are unable to predict the nature of such future laws, regulations,
interpretations or applications, nor can we predict what effect additional
governmental regulations or administrative orders, when and if promulgated,
would have on our business in the future. The Food and Drug Administration or
other governmental regulatory bodies could, however, require the reformulation
of certain products to meet new standards, the recall or discontinuance of
certain products not able to be reformulated, imposition of additional record
keeping requirements, expanded documentation of the properties of certain
products, expanded or different labeling and scientific substantiation. Any or
all of such requirements could have a materially adverse affect on our business,
financial condition, results of operations and cash flows.

Risk Factors

Our Securities May be Delisted from the Nasdaq Stock Market: On February 22,
2002, we received notification from the Nasdaq Listing Qualifications Department
that our common stock closed below the minimum $1 per share requirement for
continued inclusion under Marketplace Rule 4310(c)(4). Therefore, in accordance
with Marketplace Rule 4310(c)(8)(D), we have been provided 180 calendar days, or
until August 21, 2002 to regain compliance. If, at any time prior to August 21,
2002, the bid price of the our common stock closes at $1.00 per share or more
for a minimum of 10 consecutive trading days, we will be provided written
notification that compliance has been met. If compliance with this rule is not
met by August 21, 2002, Nasdaq will assess whether we have met the initial
listing criteria for trading on the Nasdaq SmallCap Market and will determine at
that time whether we will be granted another 180 day grace period. Otherwise,
our securities will be delisted. In such event, our common stock would trade on
the OTC Bulletin Board, which provides less liquidity and prominence for the
trading of our common stock.

New or Amended Government Regulation Could Adversely Impact Our Business and
Operations: We may be subject to additional laws or regulations by the Food and
Drug Administration or other federal, state or foreign regulatory authorities,
the repeal of laws or regulations which we consider favorable, such as the
Dietary Supplement Health and Education Act of 1994, or more stringent
interpretations of current laws or regulations, from time to time in the future.
We are unable to predict the nature of such future laws, regulations,
interpretations or applications, nor can we predict what effect additional
governmental regulations or administrative orders, when and if promulgated,
would have on our business in the future. We also can not predict what effect
these regulations, and the related publicity from promulgation of such
regulations, could have on consumer perceptions related to the nutraceutical
market in which we operate. The Company, and its customers, depend on positive
publicity as it relates to the efficacy and overall health benefits derived from
certain products we manufacture for others. This could have a materially adverse
affect on our business, financial condition, results of operations and cash
flows.

     The Food and Drug Administration or other governmental regulatory bodies
could require the reformulation of certain products to meet new standards, the
recall or discontinuance of certain products not able to be reformulated,
imposition of additional record keeping requirements, expanded documentation of
the properties of certain products, expanded or different labeling and
scientific substantiation. Any or all of such requirements could have a
materially adverse affect on our business, financial condition, results of
operations and cash flows.

Our Insurance Coverage May not be Sufficient to Cover All Risk Exposure: The
Company has maintained its insurance coverages for its directors and officers,
general liability insurance, and product liability insurance at levels deemed
adequate by the Company's Board of Directors. The Company can not guarantee that
these same levels of insurance, at premiums acceptable to the Company, will be
available in the future. Since our business is susceptible to product liability
claims, a reduction in coverage, a loss of one or more of these insurance
policies, or a loss in excess of such policies will adversely affect our ability
to continue our business as currently conducted.

We Can Not Predict the Effects of Terrorism on the Economy or on our Company:
The terrorist attacks on September 11, 2001, exacerbated an already fragile
economic situation and have added to a growing level of uncertainty and caution
in the marketplace. The adverse impacts to our business may include, but are not
limited to, a delay in placing or a decrease in the size of orders, a
lengthening of sales cycles and increased credit risks. We can give no estimate
of how long these effects may last. The occurrence of any future terrorist
activity will further exacerbate these effects.

The Unavailability of Additional Funds When Needed Could Adversely Impact Our
Business and Operations: Management believes that cash expected to be generated
from operations, current cash reserves, and existing financial arrangements will
be sufficient for the Company to meet its capital expenditures and working
capital needs for its operations as presently conducted. In addition, the
Company would require more significant capital to expand operation or complete
cash based acquisitions. If cash flows from operations, current cash reserves
and available credit facilities are not sufficient, it will be necessary for the
Company to seek additional financing. There can be no assurance that such
financing would be available in amounts and on terms acceptable to the Company.

ITEM 2.                  DESCRIPTION OF PROPERTY

         Our primary manufacturing facility is located in 33,222 square feet of
leased space in Largo, Florida. We use this location as our corporate offices,
for Breakthrough Engineered Nutrition's administrative and sales office and for
Innovative Health Products' manufacturing, research, development, packaging and
warehousing of our products. We lease this facility from an affiliate, Dynamic
Health Products, Inc, pursuant to a ten year triple-net lease that expires on
September 30, 2009, at a monthly rental of $16,000, subject to annual
inflationary adjustments.

         Our second manufacturing facility is located in 10,000 square feet
of leased space in

                                      -16-




<PAGE>

Largo, Florida. Belcher Pharmaceuticals uses this facility for the manufacture
and packaging of over-the-counter products. This facility is registered with the
United States Food and Drug Administration. We lease this facility from an
unrelated third party pursuant to a five year lease at a monthly rental of
approximately $5,300 subject to annual inflationary adjustments.

ITEM 3.   LEGAL PROCEEDINGS

         From time to time we are subject to litigation incidental to our
business including possible product liability claims. Such claims, if
successful, could exceed applicable insurance coverage. We are not currently a
party to any legal proceedings that we consider to be material.

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

None.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

Market For Securities

         The Company's $.01 par value common stock, is listed on the Nasdaq
SmallCap Market under the symbol "GORX" and on the Boston Stock Exchange under
the symbol "GORX". The Company began its initial trading November 14, 2000; its
high and low sales prices since that time, by quarter-ended date, are as
follows:

                                  High                  Low
                                  -----                 ----

         December 31, 2000        $7.875                $1.813

         March 31, 2001           $4.375                $0.875

         June 20, 2001            $3.10                 $0.92

         September 30, 2001       $2.22                 $0.66

         December 31, 2001        $2.90                 $0.77

         March 31, 2002           $1.11                 $0.45

         As of May 23, 2002, there were 232 stockholders of record according to
our stock transfer agent, Registrar and Transfer Company, Inc. located in
Cranford, New Jersey.

Dividend Policy

         As of March 31, 2001 and 2002, we have paid $225,000 and $150,000,
respectively, in

                                      -17-




<PAGE>

preferred dividends as related to the 10%, $1.5 million face value preferred
stock representing 150,000 shares of our series A preferred stock. The Company
will pay a quarterly dividend payment of $37,500 to the preferred stockholders
until the stock is redeemed. Within the quarter ended March 31, 2002, the
Company achieved positive net income, as defined by the series A preferred stock
designation, for the months of February and March 2002. The Company and the
holder of the series A preferred stock have agreed to modified redemption
provisions, as a result of which the Company will redeem an aggregate of 17,500
shares of series A preferred stock for the months of February and March 2002 in
exchange for $175,000. We have not paid any cash dividends on our common stock
and we currently intend to retain any future earnings to fund the development
and growth of our business. Any future determination to pay dividends on our
common stock will depend upon our results of operations, financial condition and
capital requirements, applicable restrictions under any credit facilities or
other contractual arrangements and such other factors deemed relevant by the
Company's Board of Directors.

Recent Sale of Unregistered Securities

         None.

Use of Proceeds

         The use of proceeds from the effective date of the offering,
November 7, 2000, through the fiscal year ended March 31, 2002 is presented
as follows:

         Manufacturing equipment and facilities:               $     811,893
         Debt retirement:                                      $   1,386,843
         Business expansion:                                   $   1,856,434
         Working capital and general corporate purposes:       $   1,845,240

         Manufacturing equipment includes amounts allocated for the purchase and
installation of manufacturing equipment for high speed tablet and capsule
manufacturing, automated bottle filling and labeling line and other automated
equipment to meet the higher standards of manufacturing; and interior
construction and leasehold improvements to our two manufacturing facilities.

         Debt retirement includes amounts to be expended to repay our
indebtedness outstanding, the settlement of the Company's amounts due to
affiliates and the payment of preferred dividends.

         Business expansion includes amounts to be expended for the hiring of
additional personnel including office, accounting, production, warehouse and
management; the surveying and related production of custom packaging of our
pharmacy products for our entrance into the institutional and long-term
health care and health management business segments; the pursuit of
strategic alliances, partnerships and key contractual relationships
particularly in the long-term health care and health management
business segments; in addition to the procurement of inventories
supporting our business expansion.

         Amounts to be expended for working capital and general corporate
purposes may include cash payments required for a pharmacy acquisition and cash
required for accounts receivable financing and other corporate expenses in
support of our business expansion.

                                      -18-

<PAGE>

         We routinely evaluate potential acquisitions of businesses and or
product lines that would compliment or expand our business or further our
strategic goals. We may use a portion of the net proceeds of this offering for
one or more such transactions; however, we currently have no commitments or
agreements with respect to such transactions. We do not currently intend to make
any acquisitions of businesses or purchase products from any persons or entities
affiliated with us. There are no current plans, proposals, arrangements or
understandings to make any acquisitions.

         We reserve the right to reallocate proceeds to different uses, upon
the discretion of our executive officers and directors. Pending use, we
intend to invest the net proceeds of this offering in interest bearing bank
accounts, short-term interest bearing investment grade securities or
similar quality investments. Based upon our current operating plan, we
anticipate that cash flow from operations, together with the net proceeds
of this offering, will be sufficient to satisfy our working capital
requirements for at least 12 months.

ITEM 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The statements contained in this Report that are not historical are
forward-looking statements, including statements regarding the Company's
expectations, intentions, beliefs or strategies regarding the future. Forward-
looking statements include the Company's statements regarding liquidity,
anticipated cash needs and availability and anticipated expense levels. All
forward-looking statements included in this Report are based on information
available to the

Company on the date hereof, and the Company assumes no obligation to update any
such forward-looking statement. It is important to note that the Company's
actual results could differ materially from those in such forward-looking
statements. Additionally, the following discussion and analysis should be read
in conjunction with the Financial Statements and notes thereto appearing
elsewhere in this Report. The discussion is based upon such financial statements
which have been prepared in accordance with U.S. Generally Accepted Accounting
Principles.

SELECTED QUARTERLY DATA

<TABLE>
<CAPTION>


                               Quarter ended:
                               June 30, 2000       Sept. 30, 2000       Dec. 31, 2000    Mar. 31, 2001
                               -----------------------------------------------------------------------

<S>                            <C>               <C>                   <C>           <C>
Net Sales                        $1,535,838        $1,342,198            $995,179        $1,669,557

Gross Profit                       $641,580          $484,559            $227,887          $504,273

Marketing Expense                        $0                $0         $23,625,000                $0

SGA                                $553,350          $609,412            $622,042          $771,623

Net income/(loss)
available to common
shareholders                        $23,809          ($70,150)       ($24,084,919)        ($191,868)

Basic and fully
diluted earnings (loss)
per share                             $0.01            ($0.02)             ($4.46)           ($0.03)

Basic and fully
diluted weighted average
number of common shares
outstanding                      3,000,000          3,000,000           5,400,272         7,025,000

</TABLE>


<TABLE>
<CAPTION>


SELECTED QUARTERLY  DATA


                               Quarter ended:
                               June 30, 2001    Sept. 30, 2001    Dec. 31, 2001       Mar. 31, 2002
                               -----------------------------------------------------------------------

<S>                              <C>               <C>                 <C>             <C>
Net Sales                        $1,788,962        $1,700,097          $1,748,764      $3,745,621

Gross Profit                       $360,033          $369,997            $409,748        $844,728

Marketing Expense                        $0                $0                  $0              $0

SGA                                $725,092          $758,698            $815,628        $877,661

Net income/(loss)
available to common
shareholders                      ($403,394)        ($445,509)          ($475,461)        $49,881

Basic and fully
diluted earnings (loss)
per share                            ($0.06)           ($0.06)             ($0.07)          $0.01

Basic and fully
diluted weighted average
number of common shares
outstanding                       7,025,000         7,025,000           7,025,000       7,025,000
</TABLE>


         Management's Discussion and Analysis of Financial Condition and
                  Results of Operations

         We derive our revenues from developing, manufacturing and wholesaling a
wide variety of non-prescription dietary supplements, and health and beauty care
products. We also derive revenues from the distribution of our branded product
line, Lean Protein. In addition, we derive revenues from the services provided
in connection with pharmacy benefit management. Revenues are billed and
recognized as product is produced and shipped, net of discounts, allowances,
returns and credits. Service revenues are billed and recognized once the service
has been provided. We have not experienced any material loss of revenues and do
not anticipate any significant losses in the future

         Cost of goods sold is comprised of direct manufacturing and
manufacturing and distribution material product costs, contracted service fees,
direct personnel compensation and other statutory benefits and indirect costs
relating to labor to support product manufacture, distribution and the
warehousing of production and other manufacturing overhead. Research and
development expenses that benefit our customers are charged against cost of
goods sold as incurred. Selling, general and administrative costs include
management and general office salaries, advertising and promotional expenses,
sales and marketing and other indirect operating costs.

                                      -19-

<PAGE>


       Interest and other income (expense) consists primarily of interest
expense associated with borrowings to finance capital equipment expenditures and
other working capital needs as partially offset by interest income earned on our
funds held at banks.

       We have no income tax provision for the periods presented due to net
operating losses. These net operating losses may be carried forward for up to 20
years. Due to our merger with the Delaware corporation Go2Pharmacy.com, Inc. and
the change in our ownership structure on November 7, 2000, the utilization of
net operating losses may be limited by Internal Revenue Code Section 382.

       Upon consummation of the merger of the Florida corporation, Go2Pharmacy,
Inc. and the Delaware corporation, Go2Pharmacy,com, Inc. on November 7, 2000,
the Company charged $23,625,000 to marketing expense representing the issuance
of 3,000,000 common shares of the Company's $ .01 par value common stock at the
initial public offering price of $7.875. This was considered a nonrecurring
marketing expense and was included in the operations of the Company for the year
ended March 31, 2001.

Results of Operations

         The following table sets forth selected statements of operations data
as a percentage of revenues for the periods indicated.


                                                    YEAR ENDED MARCH 31,
                                          2001                         2002
                                       ----------------------------------------

Revenues                                 100.0 %                         100.0 %

Cost of goods sold                        66.5                            77.9 %
                                       -------                        --------
Gross profit                              33.5 %                          22.1 %

Marketing expense                        426.2 %                             - %

Selling, general and
       Administrative expenses            46.0 %                          35.4 %

Other income (expense), net                4.2 %                            .1 %

Income (loss) before income             (437.0)%                         (12.5)%
       Taxes and preferred dividends

Income taxes                                 -                               -
                                       -------                        --------
Net income (loss)                       (437.0)%                         (12.5)%
                                       =======                        ========




    Fiscal Year Ended March 31, 2002, Compared to Fiscal Year Ended
March 31, 2001

    Revenues. Total revenues increased $3,440,672, or 62.1%, to $8,983,444 for
the fiscal year ended March 31, 2002, as compared to $5,542,772 for the fiscal
year ended March 31, 2001. Distribution revenues decreased $62,337 or 8.8% to
$645,496 for the fiscal year ended March 31, 2002, as compared to $707,833 for
the fiscal year ended March 31, 2001. The decrease primarily results from the
absence of distribution inventory for two months out of the current fiscal year
due to the relocation of manufacturing sites. Manufacturing revenues increased
$1,804,270, or 39.1%, to $6,423,355 for the fiscal year ended March 31, 2002, as
compared to $4,619,085 for the corresponding period. The increase was primarily
due to the decrease in manufacturing for certain affiliated companies as fully
offset by an increase caused by additions to our customers base. These additions
to the customer base directly results from the planned plant improvements
undertaken during the fiscal year ended March 31, 2001 to comply with more
stringent Good Manufacturing Practices (GMPs) in addition to other planned
facility improvements.

                                      -20-

<PAGE>

         Pharmacy benefit management revenues increased $1,698,738 to $1,914,592
for the fiscal year ended March 31, 2002, as compared to $215,854 for the fiscal
year ended March 31, 2001. The increase results from the absence of a full
fiscal year's revenues in the corresponding period, as the Go2PBM Services
commenced operations and recorded it first sales during February 2001 versus the
current fiscal year's operations includes twelve months of revenues.

         Gross Profit. Total gross profit increased approximately $121,309 or
6.5%, to approximately $1,979,608 for the fiscal year ended March 31, 2002, as
compared to approximately $1,858,299 for the fiscal year ended March 31, 2001.
Total gross margins decreased from 33.5% for the fiscal year ended March 31,
2001, to 22.0% for the fiscal year ended March 31, 2002. Distribution gross
profit decreased $19,708 to $275,807 for the fiscal year ended March 31, 2002,
as compared to $295,515 for the fiscal year ended March 31, 2001. Distribution
gross margin increased from 41.8% for the fiscal year ended March 31, 2001 to
42.7% for the fiscal year ended March 31, 2002. The increases are primarily
attributable to the additional products added to the existing product line that
have a higher margin. Manufacturing gross profit decreased $131,208, or 8.6%,
to approximately $1,387,659 for the fiscal year ended March 31, 2002, as
compared to approximately $1,518,867 in the corresponding period in 2001. For
the fiscal year ended March 31, 2002, manufacturing gross margin decreased to
21.6%, from 32.8% in the corresponding period in 2001. The decrease is
primarily attributable to a change in our sales portfolio that, although has
higher sales unit volume, yields a lower gross margin. Pharmacy Benefit
Management gross profit increased $272,224 to $316,141 for the fiscal year ended
March 31, 2002, as compared to $43,917 for the fiscal year ended March 31, 2001.
Pharmacy benefit management gross margin was 20.3% for the fiscal year ended
March 31, 2001 as compared to 16.5% for the fiscal year ended March 31, 2002.
The increase in the gross profit, with a decline in gross margin, was due a full
year's operations as compared to two months of operations in the corresponding
period.

         Marketing Expense. Marketing expenses decreased $23,625,000 for the
fiscal year ended March 31, 2002 as compared to the corresponding period. The
entire marketing expense in the prior year was due to a nonrecurring charge
taken during November 2000 due to the issuance of 3,000,000 shares of common
stock to Mr. Zappala and other shareholders of Go2Delaware, as related to the
merger of Go2Pharmacy.com, Inc., a Delaware corporation ("Go2Delaware") and
Go2Pharmacy,

                                    -21-

<PAGE>

Inc., a Florida corporation. Other than the $250,000 capital contribution due
from Mr. Zappala, the individual, Go2Delaware had no assets with any assignable
value thus creating no goodwill. Based on this fact, the 3,000,000 common shares
issued at the $7.875 initial public offering price yielded the $23,625,000 which
was accounted for as a marketing expense.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses consist primarily of advertising and promotional
expenses; personnel costs related to general management functions, finance,
accounting and information systems, payroll expenses and sales commissions;
professional fees related to legal, audit and tax matters; and depreciation and
amortization expense. Selling, general and administrative expenses increased
$621,296, or 24.3%, to $3,177,723 for the fiscal year ended March 31, 2002, as
compared to $2,556,427 in the corresponding period. The increase is primarily
attributable to additional advertising and promotional expenses associated with
our distribution segment, rents, as well as payroll expenses and costs
associated with fringe benefits to support our distribution, manufacturing and
pharmacy benefit management growth. As a percentage of sales, selling, general
and administrative expenses decreased to 35.4% for the fiscal year ended March
31, 2002 from 46.04% in the corresponding period in 2001.

     Interest Income (Expense), Net. Interest expense, net of interest income,
decreased $89,299 to $49,230 for the fiscal year ended March 31, 2002, from
$138,529 for the fiscal year ended March 31, 2001. The decrease in net interest
expense is primarily attributable to lower interest expense due to decreased
balances outstanding due to continued principal payments as applied to
outstanding obligations in addition to increased interest income earned on the
initial public offering funds.

     Income Taxes. At March 31, 2001 and 2002, the Company had neither amounts
recorded for a current or a deferred income tax liability, nor any income tax
expense recorded for the fiscal year ended March 31, 2001 or 2002, due to
available operating loss carryforwards.

     Management believes that there was no material effect on operations or the
financial condition of the Company as a result of inflation as of and for the
year ended March 31, 2002. Management also believes that its business is not
seasonal, however significant promotional activities can have a direct impact on
sales volume in any given quarter.

              Financial Condition, Liquidity and Capital Resources

     The Company has financed its operations through available borrowings under
its credit line facilities, loans from within the Company, cash provided from
operations and cash provided from the proceeds received from the initial public
offering effective November 7, 2000. The Company had working capital of
approximately $2,529,146 at March 31, 2002, inclusive of current portion of
long-term obligations and credit facilities, as compared to a working capital of
approximately $4,640,987 at March 31, 2001. The decline in working capital is
based upon the financing of customers' accounts receivable and inventory in
addition to the redemption of preferred stock in addition to investments in
plant facility leasehold improvements.

     Net cash used in operating activities was $1,689,316 for the fiscal year
ended March 31, 2002, as compared to net cash used in operating activities of
$651,609 for the fiscal year ended

                                      -22-

<PAGE>

March 31, 2001. Cash used was primarily attributable to an increase in inventory
of $375,276 , an increase in accounts receivable of $1,038,924, and an increase
in due to/from affiliates of $337,292, a decrease in accrued expenses of $81,404
all of which is partially offset by depreciation and amortization of $445,561 ,
loss on the sale of equipment of $41,673, an increase in prepaid and other
current assets of $233,316, a decrease in other assets of $10,075 and an
increase in accounts payable of $571,361.

         Net cash used in investing activities was $860,914, representing
$895,646 purchases of plant equipment and two plant locations' leasehold
modifications as partially offset by proceeds from the sale of equipment of
$27,000 and $7,732 resulting from the collection of payments related to notes
receivable.

         Net cash used in financing activities was approximately $337,717,
primarily attributable payments on long-term obligations of approximately
$341,818, payments made on related party obligations of $28,074, payments of
preferred stock dividends of $150,000 as partially offset by proceeds from
issuance of long-term obligations of $182,175.

         In March 2001, the Company established an annually renewable line of
credit in the amount of approximately $650,000 and is collateralized by a
$650,000 restricted certificate of deposit. The facility imposes certain
financial and reporting covenants. The agreement requires certain cash balances
be maintained and prevents the Company from disposing of assets or incurring
additional debt unless the transactions are within the normal course of
business. As of March 31, 2001 and 2002, borrowings on the credit facility
accrue interest at 6.76% and 4.25%, respectively. As of March 31, 2002, the
balance owed under this facility was approximately $648,000.

On March 29, 2002, Breakthrough Engineered Nutrition, Inc. established a
$100,000 annually renewable line of credit with a bank. Borrowings on the credit
facility accrue at 6.25%. This line of credit is cross-collateralized with the
Company's $650,000 restricted certificate of deposit and with Breakthrough's
inventory and accounts receivable. As of March 31, 2002, $100,000 remained
available under this line.

         Management believes that cash expected to be generated from operations,
current cash reserves, and existing financial arrangements will be sufficient
for the Company to meet its capital expenditures and working capital needs for
its operations as presently conducted. The Company's future liquidity and cash
requirements will depend on a wide range of factors, including the level of
business in existing operations, expansion of facilities, expected results
from recent procedural changes surrounding the acceptance of manufacturing
sales orders, and possible acquisitions. In particular, we have added
additional manufacturing lines and have purchased additional fully automated
manufacturing equipment to meet our present and future growth. Our plans may
require the leasing of additional facilities and/or the leasing or purchase
of additional equipment in the future to accommodate further expansion of our
manufacturing, warehousing and related storage needs. If cash flows from
operations, current cash reserves and available credit facilities are not
sufficient, it will be necessary for the Company to seek additional financing.
There can be no assurance that such financing would be available in amounts
and on terms acceptable to the Company.

ITEM 7.       FINANCIAL STATEMENTS

         All financial information required by this Item is attached hereto
beginning on Page F-1.

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

         None.

                                    PART III

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

         Our executive officers, directors and key employees and their ages and
their respective
                                             -23-

<PAGE>

positions as of March 31, 2002 were as follows:


<TABLE>
<CAPTION>



    NAME                           AGE                       POSITION

<S>                                 <C>            <C>
Jugal K. Taneja                     58             Chairman of the Board and Director

Mihir K. Taneja                     27             Chief Executive Officer, Secretary and  Director

Kotha S. Sekharam, Ph.D             50             President and Director

Carol Dore-Falcone                  37             Vice President and Chief Financial Officer

Bartholomew J. Lawson               53             Director

Joseph Zappala                      67             Director

George L. Stuart, Jr.               56             Director

Dr. David Dalton                    53             Director
</TABLE>



     MIHIR K. TANEJA has served as our Chief Executive Officer, Secretary and a
Director since November 1999. Prior to this he served as our Vice President of
Marketing since June 1998. He also served as Dynamic's Vice President of
Marketing from July 1996 to November 1999. Prior to joining Dynamic, Mr. Taneja
served as a market and financial analyst for Bancapital Corporation from 1994 to
1996. Mr. Taneja holds Bachelor of Arts degrees in finance and marketing from
the University of Miami. Mr. Taneja is the son of Jugal K. Taneja, the Company's
Chairman of the Board.

     DR. KOTHA S. SEKHARAM currently serves as our President and a Director.
Prior to this, Dr. Sekharam was a founder and director of Nu-Wave Health
Products, Inc., a developer and manufacturer of over-the-counter analgesic
roll-ons and creams, dietary supplements and health and beauty care products.
Dynamic acquired 80% of Nu-Wave in September 1995 and the additional 20% of
Nu-Wave in July 1997. Dr. Sekharam served as President of Nu-Wave from June 1996
through March 1998 and Vice President of Nu-Wave from September 1995 until June
1996. From 1992 until September 1995, he served as Director of Research and
Development of Energy Factors, Inc., our predecessor. He has served as President
of Dynamic since June 1996 and served as our President since June 1998.
Presently, he continues to serve as our President and as President of Dynamic.
Dr. Sekharam holds a Ph.D. in food sciences from Central Food Technological
Research Institute, Mysore, India, a United Nations university center and has
been employed in the food and health industry since 1982.

     CAROL DORE-FALCONE has served as our Vice President and Chief Financial
Officer since August 1999. She has also served as Vice President and Chief
Financial Officer of Dynamic since August 1999 until November 7, 2000. Prior to
joining us, Ms. Dore-Falcone was employed

                                      -24-

<PAGE>


as an audit manager with Deloitte & Touche, Certified Public Accountants, where
she had served in various capacities since January 1990. Ms. Dore-Falcone is a
certified public accountant and holds an M.B.A. from the University of Tampa.

     JUGAL K. TANEJA has served as our Chairman of the Board since June 1998.
Until June 1998, he also served as Chief Executive Officer for Dynamic. From
November 1991 until December 1998, he also served as the Chairman of the Board
and Chief Executive Officer of NuMed Home Health Care, Inc., a provider of home
health care services and contract staffing of health care employees. From June
1993 until March 1998, he was also the Chief Executive Officer of National
Diagnostics, Inc., a provider of medical diagnostic services. NuMed Home Health
Care, Inc and National Diagnostics, Inc., are publicly traded companies. Since
April 1996, Mr. Taneja is also a Director of DrugMax, Inc., a public company
operating as an online business to business wholesaler and retailer of
pharmaceuticals, over-the-counter drugs, health and beauty care products and
private label dietary supplements. Mr. Taneja is also a director of Eonnet
Media,Inc., a public company. Although he devotes substantial time to our
operations and business, Mr. Taneja does not devote his full time to our
business. Mr. Taneja is the father of Mihir K. Taneja, our chief executive
officer.

     JOSEPH ZAPPALA has served as a Director since December 1, 2000. Since
January 1995, Mr. Zappala has served as Chairman and a member of the board of
managers of CarePlus, LLC, a growing Medicaid and Child Health Plus health
maintenance organization. Mr. Zappala was appointed by United States President
George Bush and served as the United States Ambassador to Spain from 1989 to
1992. Mr. Zappala has been a Florida-based business executive for over 35 years
with experience in various industries, including healthcare, banking, real
estate and manufacturing.

     BARTHOLOMEW J. LAWSON has served as a Director since December 1, 2000.
Since June 1997, Mr. Lawson has served as President and Executive Director of
the Greater New York Health Care Facilities Association, a not-for-profit trade
association, representing over 150 skilled nursing and long-term care
facilities, as well as ancillary health care providers, and managed care
organizations. Since June 1997, Mr. Lawson has also served as Chairman of the
Board of the Local 144-Greater New York Nursing Home Industry Welfare, Pension,
Skill and Productivity Funds, which represents over $500 million of employee
benefit revenues, which has an annual operating budget of $55 million. Since
January 1995, Mr. Lawson served as a member of the board of managers of
CarePlus, LLC, a growing Medicaid and Child Health Plus health maintenance
organization. Mr. Lawson is considered one of the foremost experts on long-term
care in the United States. His knowledge of health care economics has led to
consulting engagements with city, county, state, and federal legislators, health
care delivery systems and executives. During 1994 and 1995, Mr. Lawson chaired
the health transition teams for both New York State Governor Pataki and New York
City Mayor Giuliani. In August 1998, Mr. Lawson was appointed by the Minority
Leader of the New York State Assembly to the New York State Managed Care
Advisory Committee.

     DR. DAVID DALTON has served as a Director since December 1, 2000. Dr.
Dalton is a founder of and has, since October 1996, been President and Chief
Executive Officer of Health Resources, Inc., a pharmacy benefit management
company. Prior to that, Dr. Dalton held several executive positions with Rite
Aid Corporation, including Executive Vice President from 1971 to

                                      -25-

<PAGE>

1989. In 1989, Dr. Dalton's management team completed a leveraged buyout of
People Drug Stores, Inc. (Western Division), where he served as Senior Vice
President, Pharmacy Operations, until October 1998. From 1990 until 1996, he
served as President and chief executive officer for Medical Services Agency,
Inc., known as MEDNET. Dr. Dalton has served on the Boards of Directors of Blue
Shield of Pennsylvania from 1980 to 1996, National Association of Chain Drug
Stores from 1989 to 1992, National Council of Prescription Drug Programs from
1985 to 1995, and the National Health Association from 1985 to present. He is a
visiting professor at several Schools of Pharmacy throughout the United States,
receiving both national and local honors inclusive of recognition by several
United States Presidents and the United States Senate. Dr. Dalton holds a B.S.
degree in Pharmacy from West Virginia University and a D.Ph., Maryland
registration.

     GEORGE L. STUART, JR. has served as a Director since March 2000. Mr. Stuart
is the President of George Stuart & Associates, a management consulting firm. In
addition, Mr. Stuart was the Chief Executive Officer of DoctorSurf.com, Inc.
from December 1, 1999 to July 2000. From July 1997 to December 1999, Mr. Stuart
was Vice President and a Director of Leapfrog Smart Products, Inc., a
high-technology smart card development company in Orlando, Florida. From January
1995 to July 1997, Mr. Stuart was a partner in Stuart/Cloud Enterprises, Ltd. A
government relations business development and organizational consulting firm in
Tallahassee, Florida. Mr. Stuart was a Florida State Senator from 1978 through
1990. From January 1991 to January 1995, Mr. Stuart served as the Secretary and
Chief Executive Officer of the State of Florida's Department of Business and
Professional Regulation. Mr. Stuart holds a B.A. degree in Economics from the
University of Florida and an M.B.A. from Harvard University's Graduate School of
Business.

Compensation of Directors

     We reimburse each of our directors for reasonable expenses incurred in
attending meetings of our Board of Directors. Each non-employee director
receives compensation in the form a fee of $500 for each meeting attended by
such director, but not less than $2,000 per year if they attend at least three
meetings during the year. For board meetings held telephonically, each quarter
that such telephonic meetings are held, each participating non-employee director
will be compensated $1,000 per quarter. This $1,000 compensation fee will be
waived should the Company have a net loss available to common shareholders for
that quarter. Non-employee directors who serve on board committees will be paid
a fee of $100 for each committee meeting attended by such director.
Additionally, all directors are eligible to receive stock options under the
Company's 1999 Stock Option Plan, and directors who are also employees of the
Company, or a subsidiary of the Company, are eligible to receive Incentive Stock
Options when and as approved by the Board of Directors. During April 2001, the
Company established a policy providing that all directors will receive 25,000
stock options per fiscal year if they attend at least two meetings in such
fiscal year. Additionally, each member of a committee of the Board of Directors
shall receive 5,000 additional stock options per fiscal year, each chairperson
of a committee shall receive an additional 2,500 stock options per fiscal year
and the Chairman of the Board shall receive 10,000 stock options per fiscal
year. The options granted under this policy to directors are exercisable in
accordance with a three-year vesting schedule from date of grant, provided that
should any director resign prior to the end of the relevant term of office, the
options granted for during such fiscal term shall be immediately canceled.
During the fiscal year ended March 31, 2002, 310,000 options in aggregate were
granted to the directors.

Committees of the Board of Directors

     The Board of Directors have formed the following committees with each of
its respective members listed: audit committee consists of Bartholomew Lawson
and George Stuart, Jr., the executive committee consists of Jugal K. Taneja and
Joseph Zappala and the compensation committee consists of Dr. David Dalton,
George Stuart, Jr. and Joseph Zappala.

                                      -26-

<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance

     Based solely upon a review of Forms 3, 4 and 5, and amendments thereto,
furnished to the Company during fiscal year 2002, the Company is not aware of
any director, officer or beneficial owner of more than ten percent of the
Company's Common Stock that failed to file reports required by Section 16(a) of
the Securities Exchange Act of 1934 on a timely basis during fiscal year 2002.

ITEM 10.      EXECUTIVE COMPENSATION

     The following table sets forth certain summary information with respect to
the compensation paid to the Company's Chief Executive Officer, President and
Chief Financial Officer for services rendered in all capacities to the Company
for the fiscal periods ended March 31, 2000, 2001 and 2002. Other than as listed
below, the Company had no executive officers whose total annual salary and bonus
exceeded $100,000 for that fiscal year:

<TABLE>
<CAPTION>


                                               SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------------------------------------------
                        Annual Compensation                                      Long-Term Compensation
                        -------------------                                      ----------------------
                                                                              Awards                 Payouts
--------------------------------------------------------------------------------------------------------------------
     Name and         Year    Salary ($)   Bonus ($)  Other Annual   Restricted   Securities   LTIP          All
    Principal                     (1)                 Compensation   Stock Award  Underlying   Payouts      Other
     Position                                             ($)                     Options /    ($)     Compensation
                                                                                   SARs (#)                  ($)
                                                                                      (2)
--------------------------------------------------------------------------------------------------------------------
<S>                   <C>       <C>         <C>         <C>           <C>           <C>         <C>         <C>
Mihir K. Taneja,      2002      151,196        -            -             -            -           -          -
Chief
Executive
Officer             ------------------------------------------------------------------------------------------------
                      2001      110,757        -            -             -         50,000         -          -
                    ------------------------------------------------------------------------------------------------
                      2000       60,000        -            -             -            -           -          -
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
Kotha S.              2002      91,805         -            -             -            -           -          -
Sekharam,
Ph.D.,
President           ------------------------------------------------------------------------------------------------
                      2001      98,984         -            -             -         50,000         -          -
                    ------------------------------------------------------------------------------------------------
                      2000      90,000         -            -             -            -           -          -
--------------------------------------------------------------------------------------------------------------------
Carol Dore-           2002      112,228        -            -             -            -           -          -
Falcone,
Vice
President and
Chief
Finanical           ------------------------------------------------------------------------------------------------
Officer               2001      108,591        -            -             -         50,000         -          -
                    ------------------------------------------------------------------------------------------------
                      2000      90,000         -            -             -            -           -          -
--------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      -27-

<PAGE>

----------
   (1) April 1, 1999 through August 30, 2000, these salaries were paid directly
       by our then parent company, Dynamic Health Products, the salary expense
       was allocated to us and we reimbursed Dynamic through the payment of
       monthly management fees.

   (2) On December 1, 2000, each of the officers were granted 50,000 common
       stock options by action of the Board of Directors. The options vest
       prorata over a three year period beginning December 1, 2001. The exercise
       price of the options is $2.00 as based on the closing price of the
       Company's stock on the NASDAQ SmallCap Market on November 30, 2000.

Employment Arrangements

            The Company has entered into three-year employment agreements
commencing June 2000 with Mihir K. Taneja, Chief Executive Officer, Kotha S.
Sekharam, President, and Carol Dore-Falcone, Vice President and Chief Financial
Officer, at annual salaries of $150,000, $90,000 and $110,000, plus benefits,
respectively. Effective February 1, 2001, the Company entered into an annually
renewable consulting agreement with the Chairman of the Board, Jugal K. Taneja,
pursuant to which he is paid an annual fee of $100,000.

            Officers and employees are permitted to participate in our benefits
and employee benefit plans that may be in effect from time to time, to the
extent eligible, and each employee is entitled to receive an annual bonus as
determined in the sole discretion of our Board of Directors based on the Board's
evaluation of the officer's or employee's performance as well as the Company's
financial performance.

Employee and Non-Employee Stock Option Plans

         1999 Employee Stock Option Plan

         On September 30, 1999, our Board of Directors and our sole stockholder
at that time adopted our 1999 Stock Option Plan. The 1999 plan will enable us to
attract and retain top-quality employees, officers, directors and consultants
and to provide such employees, officers, directors and consultants with an
incentive to enhance stockholder return. The 1999 plan will allow the grant of
options to purchase a maximum aggregate of 700,000 shares of common stock to our
officers, directors, or other key employees and consultants.

         The Board of Directors or a committee of the Board may administer the
1999 plan, and has complete discretion to select the optionees and terms and
conditions of each option, subject to the provisions of the 1999 plan. Options
granted under the 1999 plan may be "incentive stock options" as defined in
Section 411 of the Internal Revenue Code of 1986 or so-called nonqualified
options.

         The exercise price of incentive stock options may not be less than 100%
of the fair market value of the common stock as of the date of grant (110% of
the fair market value if the

                                  -28-

<PAGE>

grant is to an employee who owns more than 10% of the total combined voting
power of all classes of capital stock of the company). The Internal Revenue Code
currently limits to $100,000 the aggregate value of common stock that may be
acquired in any one year pursuant to incentive stock options under the 1999 plan
or any other option plan adopted by a company.

         Nonqualified options may be granted under the 1999 plan at an exercise
price of not less than 100% of the fair market value of the common stock on the
date of grant. Nonqualified options also may be granted without regard to any
restriction on the amount of common stock that may be acquired pursuant to such
options in any one year.

         Subject to the limitations contained in the 1999 plan, options become
exercisable at such times and in such installments (but not less than 20% per
year) as the Committee shall provide in the terms of each individual stock
option agreement. The Committee must also provide in the terms of each stock
option agreement when the option expires and becomes unexercisable, and may also
provide the option expires immediately upon termination of employment for any
reason. No option held by directors, executive officers or other persons subject
to Section 16 of the Securities Exchange Act of 1934 may be exercised during the
first six months after such option is granted.

         Unless otherwise provided in the applicable stock option agreement,
upon termination of employment of an optionee, all options that were then
exercisable would terminate three months (twelve months in the case of
termination by reason of death or disability) following termination of
employment. Any options which were not fully vested and exercisable on the date
of such termination would immediately be cancelled concurrently with the
termination of employment.

         Options granted under the 1999 plan may not be exercised more than ten
years after the grant (five years after the grant if the grant is an incentive
stock option to an employee who owns more than 10% of the total combined voting
power of all classes of capital stock of the company). Options granted under the
1999 plan are not transferable and may be exercised only by the respective
grantees during their lifetime or by their heirs, executors or administrators in
the event of death. Under the 1999 plan, shares subject to cancelled or
terminated options are reserved for subsequently granted options. The number of
options outstanding and the exercise price thereof are subject to adjustment in
the case of certain transactions such as mergers, recapitalizations, stock
splits or stock dividends. The 1999 plan is effective for ten years, unless
sooner terminated or suspended.

         On December 1, 2000, the board of directors approved the granting of
250,000 options to be allocated amongst the Company's employees of record as of
that date. The exercise price of the options is $2.00 as based on the closing
price of the Company's stock on the NASDAQ SmallCap Market on November 30, 2000.
Each of the employees of record were to receive the options based on their years
of service and their salary.

The following represents the employees' common stock options outstanding as of
March 31, 2002:

                                      -29-

<PAGE>


<TABLE>
<CAPTION>

        <S>                                                                <C>
         Option balance outstanding, March 31, 2001...................     243,000

         Granted......................................................           0
         Exercised....................................................           0
         Forfeited....................................................     (15,500)
                                                                          --------
         Option balance outstanding, March 31, 2002...................     227,500
                                                                          ========
</TABLE>

As of March 31, 2002, of the 227,500 options outstanding, 75,833 options were
vested with 151,667 options being nonvested.

Forfeited options represent options granted to one or more employees of record
whose employment is terminated, voluntarily or involuntarily, and based on their
termination date, such options were considered nonvested.

         On December 1, 2000, the board of directors approved the granting a
total of 200,000 options, or 50,000 options each, to be allocated to each of
the Company's officers of record as of that date. The exercise price of the
options granted on December 1, 2000 was $2.00 per share based on the closing
price on the NASDAQ on November 30, 2000. Each of the officers' of record were
to receive the options based on their years of service and their salary.
The following represents the officers' common stock options outstanding as
of March 31 ,2002:

<TABLE>
<CAPTION>


         <S>                                                                 <C>
         Option balance outstanding, March 31, 2001.......................    150,000
         Granted..........................................................          0
         Exercised........................................................          0
         Forfeited........................................................          0
                                                                              -------
         Option balance outstanding, March 31, 2002                           150,000
                                                                              =======

</TABLE>

As of March 31, 2002, of the 150,000 options outstanding, 50,000 of those
options were vested with 100,000 options being nonvested.

Forfeited options represent options granted to one or more officers of record
whose employment is terminated, voluntarily or involuntarily, and based on their
termination date, such options were considered nonvested.

         1999 Non-Employee Stock Option Plan

         On September 30, 1999, our Board of Directors and sole stockholder
adopted our 1999 non-employee stock option plan. The 1999 non-employee plan
enables us to attract and retain top-quality directors and consultants and to
provide such directors and consultants with an incentive to enhance stockholder
return. The 1999 non-employee plan allows the grant of options to purchase a
maximum aggregate of 100,000 shares of common stock to non-employee directors.

         The Board of Directors or a committee of the Board may administer the
1999 non-employee plan, and has complete discretion to select the optionees and
terms and conditions of each option, subject to the provisions of the 1999
non-employee plan. Options granted under the 1999 non-employee plan will not be
"incentive stock options" as defined in Section 411 of the Internal Revenue Code
of 1986, they will be so-called nonqualified options.

                                      -30-

<PAGE>

         Nonqualified options may be granted under the 1999 non-employee plan at
an exercise price of not less than 100% of the fair market value of the common
stock on the date of grant. Nonqualified options also may be granted without
regard to any restriction on the amount of common stock that may be acquired
pursuant to such options in any one year.

         Subject to the limitations contained in the 1999 non-employee plan,
options become exercisable at such times and in such installments as the
Committee shall provide in the terms of each individual stock option agreement.
The Committee must also provide in the terms of each stock option agreement when
the option expires and becomes unexercisable, and may also provide the option
expires immediately upon termination of services for us or for any other reason.
No option held by persons subject to Section 16 of the Securities Exchange Act
of 1934 may be exercised during the first six months after such option is
granted.

     Unless otherwise provided in the applicable stock option agreement, upon
termination of engagement of an optionee, all options that were then exercisable
would terminate three months (twelve months in the case of termination by reason
of death or disability) following termination of services. Any options which
were not fully vested and exercisable on the date of such termination would
immediately be cancelled concurrently with the termination.

         Options granted under the 1999 non-employee plan may not be exercised
more than ten years after the grant. Options granted under the 1999 non-employee
plan are not transferable and may be exercised only by the respective grantees
during their lifetime or by their heirs, executors or administrators in the
event of death. Under the 1999 non-employee plan, shares subject to cancelled or
terminated options are reserved for subsequently granted options. The number of
options outstanding and the exercise price thereof are subject to adjustment in
the case of certain transactions such as mergers, recapitalizations, stock
splits or stock dividends. The 1999 non-employee plan is effective for ten
years, unless sooner terminated or suspended. We will not grant any options
under the 1999 non-employee plan until the plan is appropriately registered
pursuant to Florida Statutes or an exemption therefrom is available.

     On December 1, 2000, the Chairman of the Board approved the granting of a
total of 16,000, or 4,000 options to each non-employee director, options to be
allocated to each of the Company's nonemployee directors of record as of that
date. The exercise price of the options is $2.00 as based on the closing price
of the Company's stock on the NASDAQ SmallCap Market on November 30, 2000. This
plan was amended during September 2001. Options issued during the year ended
March 31, 2002 were issued under the amendment to the plan and exercisable at
$1.00 for those directors who beneficially own less than 10% of the Company and
at $1.10 for those directors who beneficially own more than 10% of the Company
based on the closing-price of the company's stock on the date granted. The
following represents the nonemployee common stock options outstanding as of
March 31, 2002:

As of March 31, 2002, of the 326,000 options outstanding, 5,333 of those options
were vested with 320,667 options being nonvested.

<TABLE>
<CAPTION>


        <S>                                                                  <C>
         Option balance outstanding, March 31, 2001....................       16,000
         Granted.......................................................      310,000
         Exercised.....................................................            0
         Forfeited.....................................................            0
                                                                             --------
         Balance outstanding, March 31, 2002                                 326,000
                                                                             ========
</TABLE>

                                    -31-

<PAGE>

ITEM 11.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of March 31, 2002, certain
information concerning beneficial ownership of shares of Common Stock with
respect to (i) each person known to the Company to own 5% or more of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii) the
executive officers of the Company, and (iv) all directors and officers of the
Company as a group:

                                                AMOUNT AND
                                                NATURE OF         APPROXIMATE
                    NAME AND ADDRESS OF         BENEFICIAL          PERCENT
TITLE OF CLASS      BENEFICIAL OWNER (1)        OWNERSHIP (2)     OF CLASS (%)
--------------      --------------------         ------------------------------

Common              Jugal K. Taneja                1,530,612         21.8%

Common              Mihir K. Taneja                  307,420          4.4

Common              Kotha S. Sekharam, PhD           124,241          1.8

Common              Carol Dore-Falcone                15,000          -

Common              Joseph Zappala                 1,822,500         25.9

Common              Bartholomew Lawson               250,000          3.6

Common              Dr. David Dalton                  37,500           .5

Common              George Stuart, Jr.                   -              -

Common              Carnegie Capital                 529,579          7.5

Common              Daniel Kinsey                    367,500          5.2

Common              All officers and directors     4,087,273         58.2
                      As a group

(1)  Except as noted above, the address for the above identified officers and
     directors of the Company is c/o Go2Pharmacy, Inc., 6950 Bryan Dairy Road,
     Largo, Florida 33777.

(2)  Beneficial ownership is determined in accordance with the rules of the
     Commission and generally includes voting or investment power with respect
     to the shares shown. Except where indicated by footnote and subject to
     community property laws where applicable,

                                  -32-

<PAGE>

          the persons named in the table have sole voting and investment power
with respect to all shares of voting securities shown as beneficially owned by
them. Percentages are based upon the assumption that each shareholder has
exercised all of the currently exercisable options he or she owns which are
currently exercisable or exercisable within 60 days and that no other
shareholder has exercised any options he or she owns.

(3)       The following factors have been taken into consideration in
          calculating the amount and nature of beneficial ownership in
          Go2Pharmacy:

               o    Dr. Kotha Sekharam's beneficially owned shares include
                    approximately 15,770 shares beneficially owned by Madhavi
                    Sekharam, Dr. Sekharam's wife, as to which Dr. Sekharam
                    exercises no investment or voting power and disclaims
                    beneficial ownership.

               o    Jugal K. Taneja's beneficially owned shares include
                    approximately 332,651 shares beneficially owned by his wife
                    Manju Taneja. Mr. Taneja exercises no investment or voting
                    power over any of the shares owned by his wife, and
                    disclaims beneficial ownership of those shares.

               o    Jugal K. Taneja's beneficially owned shares also include
                    529,579 shares beneficially owned by Carnegie Capital, Ltd.,
                    340,016 shares beneficially owned by Bryan Capital Limited
                    Partnership and approximately 55,323 shares beneficially
                    owned by First Delhi Trust. Mr. Taneja is the general
                    partner of both Carnegie Capital, Ltd. and First Delhi
                    Trust, and holds sole voting and investment power over these
                    shares. Bryan Capital Limited Partnership is indirectly
                    owned by Dynamic Health Products, Inc., an affiliate, and
                    who Jugal K. Taneja is the Chairman and CEO.

               o    Joseph Zappala's beneficially owned shares include 485,000
                    shares beneficially owned by Mr. Zappala's wife and minor
                    children.

ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

            The Company has entered into transactions and business relationships
with certain of our officers, directors and principal stockholders or their
affiliates. We believe that all of the transactions were on terms no less
favorable than we could have obtained from independent third parties. We did not
have any "disinterested" directors at the time such transactions were approved.
Any future transactions between us and our officers, directors or affiliates
will be subject to approval by a majority of disinterested and independent
directors or stockholders in accordance with Florida law and will be on terms no
less favorable to us then could be obtained from independent third parties. Such
directors will be given access to independent legal counsel at our expense. We
do currently, and will continue in the future, to maintain at least two
"disinterested" directors.

                                  -33-

<PAGE>

Revenues: For the fiscal years ended March 31, 2001 and 2002, manufacturing
revenues of approximately $794,757 and $291,579, respectively, were recorded
from sales by the Company to subsidiaries of Dynamic Health Products, an
affiliate of the Company, and of which Jugal K. Taneja, the Chairman of the
Board of the Company, is a principal shareholder. For the fiscal years ended
March 31, 2001 and 2002, revenues of $65,240, and $5,122, respectively, were
recorded from sales by the Company to DrugMax, Inc., an affiliate of the
Company, and of which Jugal K. Taneja, the Chairman of the Board of the Company,
is a principal shareholder. For the fiscal years ended March 31, 2001 and 2002,
revenues of $64,251 and $47,956, respectively, were recorded from sales by the
Company to VerticalHealthInc., an affiliate of the Company, and of which Jugal
K. Taneja, the Chairman of the Board of the Company, is a principal shareholder.

For the fiscal years ended March 31, 2001 and 2002, pharmacy benefit managment
revenues of approximately $215,894 and $1,914,593, respectively, were recorded
from sales by the Company to CarePlus Health Plan, an affiliate of the Company's
board members Mssrs. Lawson and Zappala. Our wholly-owned subsidiary,
Go2PBMServices, Inc., derives 100% of its revenues from this contract.

Trade Accounts Receivable/ Trade Accounts Payable - Amounts due to affiliates
and amounts due from affiliates represent balances owed by or amounts owed to
the Company for sales occurring in the normal course of business. Amounts due to
and amounts due from these affiliates are in the nature of trade payables or
receivables and fluctuate based on sales volume and payments received.

As of March 31, 2001 and 2002, for the manufacturing segment, $149 and $73,895
was due from subsidiaries of Dynamic Health Products. $59,328 and $57,700,
respectively, was due to DrugMax., $0 and $28,982 was due from
VerticalHealth,Inc., and $0 and $59,380 was due from Careplus Health.

As of March 31, 2001 and 2002, for the distribution segment, $13,813 and $21,534
was due to DrugMax.

As of March 31, 2001 and 2002, for the pharmacy benefit management segment,
$106,838 and $265,292 was due from CarePlus Health.

Lease / Debt Obligations - For each of the years ended March 31, 2001 and 2002,
rent expense of $192,000 was paid to Dynamic Health Products, Inc. The Company
and Dynamic are parties to a ten-year, triplenet operating lease that expires in
the year 2009. Monthly rents are $16,000 per month.

In September 1999, the Company issued 150,000 shares of redeemable series A
preferred stock to Dynamic Health Care Products, Inc. in satisfaction of
$1,500,000 of outstanding liabilities. The shares of preferred stock were
subsequently transferred to JB Capital Corp., a company affiliated with our
Chairman, Jugal K. Taneja. Holders of redeemable series A preferred stock vote
together with the holders of common stock with respect to all matters as to
which such shareholders vote, with each share of redeemable series A preferred
stock entitled to one vote. In the event of liquidation, dissolution or
winding-up of our operations, holders of redeemable series A preferred stock
will be paid an amount equal to $10.00 per share of redeemable series A
preferred stock before any payment is made with respect to our common stock. The
redeemable series A preferred stock pays dividends at the rate of 10% per annum,
which is cumulative from the date of issuance and payable quarterly commencing
March 31, 2001. For the years ended March 31, 2001 and 2002, $225,000 and
$150,000 of accrued preferred dividends were paid to JB Capital Corp. As of
March 31, 2002, the holders of the preferred stock have the right to redeem
approximately 17,500 shares based upon the redemption formula utilizing positive
net income attained February and March 2002. Positive net income is defined as
net income/(loss) as adjusted for depreciation, amortization and other non-cash
charges. The Company has agreed with the holders of the preferred stock to a
sliding scale redemption plan based on monthly positive net income. The monthly
redemption schedule is as follows:


Monthly positive net income as (defined):                    Payment due
----------------------------------------                     -----------

  $-0- - $24,999                                             $     -0-
  $25,000 - $124,999                                         $  25,000
  $125,000 - $224,999                                        $  50,000
  $225,000 - $324,999                                        $  75,000
  $325,000 - $424,999                                        $ 100,000

An additional $25,000 will be paid to the holders of the preferred stock for
each additional $100,000 of cash basis net income, as defined, above $424,999
until such time that all preferred stock is redeemed.

In June 2000, Go2 established a $100,000 revolving line of credit with Carnegie
Capital, LTD, an affiliate of Jugal K. Taneja, Chairman of the Board of the
Company, to provide a source of funding for cash requirements directly related
to Go2's Registration Statement. The note bore

                                      -34-

<PAGE>

interest at 10% per annum. Principal and interest on the note was due and
payable in full upon the successful completion of an initial public offering of
Go2's common stock. The Company's public offering was completed during November
2000 and in accordance with this revolving line of credit agreement, the
outstanding balance, that was included in obligations to related parties as of
March 31,2000, was paid in full in the amount of $65,000.

In June 2000, Go2 established a $100,000 revolving line of credit with Joseph
Zappala, a Director of DrugMax, Inc., an affiliate of the Company and the
President of Go2Pharmacy.com, Inc., a Delaware corporation, to provide a source
of funding for cash requirements directly related to Go2's registration
statement. The note bore interest at 10% per annum. Principal and interest on
the note was due and payable in full upon the successful completion of an
initial public offering of Go2's common stock. The Company's public offering was
completed during November 2000 and in accordance with this revolving line of
credit agreement, the outstanding balance that was due as included in
obligations to related parties as of March 31, 2000 was $65,000. In accordance
with the merger agreement (the "Agreement") between Go2Pharmacy, Inc. (a Florida
corporation) and Go2Pharmacy.com, Inc. (a Delaware corporation) simultaneous
with the merger, Joseph Zappala and the other Go2Delaware shareholders were to
receive 3,000,000 shares of the Company's common stock with his capital
contribution of $250,000 cash. Mr. Zappala, the individual, personally incurred
$125,000 in expenses directly related to the initial public offering in addition
to the $65,000 mentioned directly above for a total amount due to Mr. Zappala of
$190,000. The $190,000 was offset against the $250,000 due as a part of the
Agreement with the net amount, $60,000, being established as an account
receivable due from Mr. Zappala. Prior to December 31, 2000, Mr. Zappala paid
the Company the $60,000 in full.

In May 2000, 21st Century Healthcare Fund, LLC, an affiliate of the Chairman of
the Board of the Company, loaned the Company $10,000 for the purpose of
assisting the Company with its working capital needs. This loan was to be repaid
within 60 days and subsequently was repaid in July 2000.

In December 1999, the Company established a $500,000 line of credit facility
with a bank, secured and guaranteed by Dynamic Health Products, the Company's
parent at that time. The line of credit was paid during November 2000.

In February 1999, the Company established a $2,000,000 credit facility to
provide additional working capital to support our continued growth. The note
with respect to a portion of this debt was secured by all of our assets, all of
Dynamic's assets, our parent at the time, and by personal guarantee from our
Chairman of the Board. This credit facility was replaced during March 2001 with
an annually-renewable $650,000 credit facility in addition to a $550,000
five-year term loan. The credit facility and term loan is not personally
guaranteed by the Company's Chairman.

In June 1998, the Company assumed a $25,000 note payable to the parent's Vice
Chairman of Business Development, associated with the June 12, 1998 Energy
Factors acquisition. The note bore interest at 10.8% per annum. Interest due
totaled $2,937 and $4,786 as of March 31, 2000 and 2001, respectively. The note
was to be repaid in 24 equal monthly payments beginning September 1, 1999. The
parties had agreed to suspend payments on the note until the consummation of an
initial public offering of common stock of the Company. Beginning July 2000, the
Company began making scheduled principal payments of approximately $2,000 per
month with the last and final payment occurring during June 2001. As of March
31, 2001 and

                                      -35-

<PAGE>

2002, the principal balance due was $6,000 and $0, respectively.

Other Transactions - The $23,625,000 marketing expense presented in the
statement of operations for the fiscal year ended March 31, 2001 is a
nonrecurring charge as a consequence of the issuance of 3,000,000 shares of
common stock to Mr. Zappala, and the other shareholders of Go2Delaware, as
related to the merger of Go2Pharmacy.com, Inc., a Delaware corporation
("Go2Delaware") and Go2Pharmacy, Inc, a Florida corporation. Other than the
$250,000 capital contribution from Mr. Zappala, Go2Delaware had no assets with
any assignable value thus creating no goodwill. Based on this fact, the
3,000,000 common shares issued at the $7.875 initial public offering price
yielding the $23,625,000 was accounted for as a marketing expense during
November 2000.

     Effective with the close of our offering on November 7, 2000, we acquired
all of the issued and outstanding stock of Go2Pharmacy.com, Inc., the Delaware
corporation, for a total of 3,000,000 shares of our common stock. Of such
3,000,000 shares, 1,375,000 shares were issued to Joseph Zappala, 500,000 shares
were issued to The Zappala Family LLC (Mr. Zappala is not a beneficiary of the
LLC but exercises voting rights over the shares of common stock which it will
own), and 260,000 shares were issued to Post Equities LLC (in which Mr.
Zappala's wife owns approximately 71% of the equity interests).

     In exchange for the 3,000,000 shares of our stock, we acquired all of the
outstanding shares of Go2Pharmacy.com, Inc.'s capital stock and will assume all
of its assets, including $250,000 in cash and liabilities. These assets
principally consist of the URLs "Go2Pharmacy.com" and "Go2Pharmacy.net," and its
agreements with CarePlus, a New York based health maintenance organization, and
The Greater New York Health Care Facilities Association. In addition, we entered
into a consulting agreement between Go2Pharmacy, Inc. and Joseph Zappala, dated
as of June 27, 2000.

     During December 2000, Dynamic distributed their 3,000,000 of Go2Pharmacy's
common stock to Dynamic's shareholders and option holders of record via a
prorata distribution method.

     In November 1999, we entered into exclusive manufacturing agreements with
DrugMax, Inc. and JavaSports.com, Inc. whereby we agreed to manufacture all
products which DrugMax and JavaSports.com require and which we are capable of
manufacturing. We believe that the prices we charge this company are competitive
and at no less favorable terms than those with non-affiliated third parties.
Jugal K. Taneja, our Chairman, is a director of DrugMax, Inc. and Chairman of
Java Sports.com.


                                      -36-

<PAGE>

ITEM 13.  EXHIBITS, LIST AND REPORTS ON FORM 8-K

         The Company has not filed any reports on Form 8-K during the last
quarter of the period covered by this report.

Exhibits

         The following Exhibits are filed as part of this Report:

Exhibit
Number   Description
------   -----------

2.1      Agreement and Plan of Reorganization dated June 12, 1998, effective
         June 15, 1998, by    and among Nu-Wave Health Products, Inc.,
         Nu-Wave Acquisition, Inc., Energy Factors, Inc., U.S. Diversified
         Technologies, Inc., Paul Santostasi, Chris Starkey, and Marvin
         Deutsch. **

3.1      Articles of Incorporation of Energy Factors, Inc., filed
         September 3, 1985.**

3.2      By-Laws of Energy Factors, Inc.**

3.3      Articles of Incorporation of Nu-Wave Acquisition, Inc.,
         dated June 11, 1998 and filed June 12, 1998. **

3.4      Articles of Amendment to Articles Innovative changing name.**

3.5      Agreement with holder of Series A preferred stock dated as of March
         25, 2002.

4.1      Specimen Stock Certificate of the Company **

4.2      Form of Underwriters' Warrant **

4.3      Form of Consulting Agreement with Underwriter **

10.1     Promissory note in favor of Nu-Wave Health Products, Inc. from Energy
         Factors, Inc., dated May 13, 1998.**


                                      -37-

<PAGE>

10.2     Form of 1999 Stock Option Plan **

10.3     Innovative Health Products, Inc. 1999 Stock Option Plan.**

10.4     Form of Employment Agreement with Kotha S. Sekharam, Ph.D. **

10.5     Form of Employment Agreement with Mihir K. Taneja  **

10.6     Form of Employment Agreement with Carol Dore-Falcone **

10.7     Lease of Company's facility at 6950 Bryan Dairy Road, Largo,
         Florida 33777 **

10.8     Acquisition Agreement between Go2Pharmacy.com, Inc. (Florida)  and
         Go2Pharmacy.com, Inc. (Delaware)  **

10.9     Agreement between Go2Pharmacy.com, Inc. (Delaware)  and
         CarePlus dated as of March 23, 2000.**

10.10    Agreement between Go2Pharmacy.com, Inc. (Delaware)  and
         the Greater New York Health Care Association dated
         June 27, 2000.  **

10.11    Consulting Agreement between Go2Pharmacy.com, Inc.and
         Joseph Zappala  **

10.12    Promissory Note between Go2Pharmacy, Inc. and First Community Bank of
         America dated March 8, 2001 in the amount of  $551,512 **

10.13    Revolving Line of Credit Promissory Note between Go2Pharmacy, Inc. and
         First Community Bank of  America dated March 8, 2001 in the amount
         of $650,000

10.14    Consulting Agreement with Jugal K. Taneja dated February 2001.**

10.15    Sublease and Consent

10.16    Revolving line of Credit Promissory Note between Breakthrough
         Engineered Nutrition, Inc. and First Community Bank of America dated
         March 29, 2002 in the amount of $100,000

21.1     Go2Pharmacy, Inc. - List of Subsidiaries. **

                      ** Previously filed

                                      -38-

<PAGE>

                                   SIGNATURES

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

                                              GO2PHARMACY, INC.

         Dated: June 28, 2002                 /s/ Mihir K. Taneja
                                              --------------------------------
                                              Mihir K. Taneja,
                                              Chief Executive Officer,
                                              Secretary and Director

                                              /s/ Kotha S. Sekharam, Ph.D.
                                              ----------------------------
                                              Kotha S. Sekharam
                                              President and Director

                                              /s/ Carol Dore-Falcone
                                              --------------------------------
                                              Carol Dore-Falcone
                                              Vice President and Chief
                                              Financial Officer

         Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant in the capacities as on June 28, 2002.

                                               /s/ Jugal K. Taneja
                                               -------------------------------
                                               Jugal K. Taneja
                                               Chairman of the Board of
                                               Directors

                                               /s/ Bartholomew Lawson
                                               -------------------------------
                                               Bartholomew Lawson
                                               Director

                                               /s/ Joseph Zappala
                                               -------------------------------
                                               Joseph Zappala
                                               Director

                                               /s/ George L. Stuart, Jr.
                                               -------------------------------
                                               George L. Stuart, Jr.
                                               Director

                                               /s/  Dr. David Dalton
                                               -------------------------------
                                               Dr. David Dalton
                                               Director

                                                        -39-

<PAGE>




                                GO2PHARMACY, INC.
                                AND SUBSIDIARIES
                              FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2002

<PAGE>


                                    CONTENTS
                                    --------


INDEPENDENT AUDITORS' REPORT                                              F-1

FINANCIAL STATEMENTS
     CONSOLIDATED BALANCE SHEETS                                          F-2

     CONSOLIDATED STATEMENTS OF OPERATIONS                                F-4

     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                      F-5

     CONSOLIDATED STATEMENTS OF CASH FLOWS                            F-6 - F-7

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                      F-8 - F-25


<PAGE>


                    REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

                    Board of Directors
                    Go2Pharmacy, Inc. and Subsidiaries

                    We have audited the accompanying consolidated balance sheets
                    of Go2Pharmacy, Inc. and subsidiaries as of March 31, 2001
                    and 2002 and the related consolidated statements of
                    operations, stockholders' equity, and cash flows for the
                    years then ended. These consolidated financial statements
                    are the responsibility of the Company's management. Our
                    responsibility is to express an opinion on these
                    consolidated financial statements based on our audit.

                    We conducted our audits in accordance with auditing
                    standards generally accepted in the United States of
                    America. Those standards require that we plan and perform
                    the audit to obtain reasonable assurance about whether the
                    consolidated 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 consolidated
                    financial statement presentation. We believe that our audits
                    provide a reasonable basis for our opinion.

                    In our opinion, the consolidated financial statements
                    referred to above present fairly, in all material respects,
                    the consolidated financial position of Go2Pharmacy, Inc. and
                    subsidiaries as of March 31, 2001 and 2002 and the
                    consolidated results of operations and cash flows for the
                    years then ended in conformity with U.S. generally accepted
                    accounting principles.


                                         /S/   BRIMMER, BUREK & KEELAN LLP

                                               BRIMMER, BUREK & KEELAN LLP

                                               Certified Public Accountants

                    Tampa, Florida
                    May 24, 2002


                                      F-1

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS


<TABLE>
<CAPTION>


                                                                        MARCH 31,                MARCH 31,
                                                                          2001                     2002
                                                                     ---------------         --------------


<S>                                                                <C>                      <C>
Current assets:
  Cash and cash equivalents                                          $  3,280,585            $   392,638
  Certificate of deposit, restricted                                      650,000                679,205
  Accounts receivable, net                                                691,337              1,730,261
  Inventories, net                                                      1,799,737              2,121,406
  Prepaid expenses and other current assets                               478,803                176,812
  Due from affiliates                                                     107,602                427,588
                                                                     ---------------         --------------

    Total current assets                                                7,008,064              5,527,910



Property, leaseholds and equipment, net                                 1,053,052              1,612,156




Intangible assets, net                                                  1,206,255                957,932




Other assets, net                                                         160,340                127,905
                                                                     ---------------         --------------



    Total assets                                                     $  9,427,711            $ 8,225,903
                                                                     ===============         ==============
</TABLE>


                                      F-2

<PAGE>


                      LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>



                                                                        MARCH 31,              MARCH 31,
                                                                          2001                   2002
                                                                    ---------------        ---------------

<S>                                                                  <C>                 <C>
Current liabilities:
  Accounts payable                                                     $ 870,811            $ 1,432,917
  Current portion of long-term obligations                               388,941                254,234
  Credit lines payable                                                   647,789                647,789
  Accrued expenses                                                       361,753                258,349
  Obligations to related parties                                          23,230                  1,151
  Obligations to affiliates                                               74,553                404,324
                                                                    ---------------        ---------------

     Total current liabilities                                         2,367,077              2,998,764

Long-term obligations, less current portion                              624,419                381,152
                                                                    ---------------        ---------------

     Total liabilities                                                 2,991,496              3,379,916

Redeemable preferred stock, no par value, 150,000
  shares authorized, 150,000 and 117,500 respectively,
  issued and outstanding, at face value                                1,500,000              1,175,000


Commitments and contingencies                                                -                      -


Shareholders' equity:
  Preferred stock, no par value, 5,850,000 shares
     authorized, no shares issued and outstanding                            -                      -
  Common stock, $.01 par value; 24,000,000 shares
     authorized; 7,025,000 shares issued and outstanding                  70,250                 70,250
  Additional paid-in capital                                          29,944,240             29,953,495
  Retained earnings (deficit)                                        (25,078,275)           (26,352,758)
                                                                    ---------------        ---------------

        Total shareholder's equity                                     4,936,215              3,670,987
                                                                    ---------------        ---------------

              Total liabilities and shareholders' equity             $ 9,427,711            $ 8,225,903
                                                                    ===============        ===============

</TABLE>



See accompanying notes to consolidated financial statements.


                                       F-3

<PAGE>
<TABLE>
                       GO2PHARMACY, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                           YEAR ENDED MARCH 31,
                                                      -------------------------------
                                                          2001                2002
                                                     ------------         -----------
<S>                                                       <C>                   <C>
Revenue
 PBM                                                 $    215,854         $ 1,914,592
 Distribution                                             707,833             636,965
 Manufacturing                                          4,619,085           6,431,887
                                                     ------------         -----------
  Total revenue                                         5,542,772           8,983,444

Cost of goods sold
 PBM                                                      171,937           1,598,451
 Distribution                                             412,318             368,511
 Manufacturing                                          3,100,218           5,031,976
                                                     ------------         -----------
  Total cost of goods sold                              3,684,473           6,998,938

Gross profit
 PBM                                                       43,917             316,141
 Distribution                                             295,515             268,454
 Manufacturing                                          1,518,867           1,399,911
                                                     ------------         -----------
  Total gross profit                                    1,858,299           1,984,506

Marketing expense                                      23,625,000                   -

Selling, general and administrative expenses            2,556,427           3,182,620
                                                     ------------         -----------

Operating income (loss) before other income (expense) (24,323,128)         (1,198,114)

Other income (expense):
 Interest income (expense), net                          (138,529)            (50,414)
 Other income (expense), net                              235,194             124,045
                                                     ------------         -----------

  Total other income (expense)                             96,665              73,631
                                                     ------------         -----------
Loss before income taxes                              (24,226,463)         (1,124,483)

Income taxes                                                    -                   -
                                                     ------------         -----------
Net loss                                              (24,226,463)         (1,124,483)

Preferred stock dividends                                 225,000             150,000

Net loss available to common shareholders            $(24,451,463)        $(1,274,483)
                                                     ============         ===========
Basic and diluted loss per share                     $      (5.42)        $     (0.18)
                                                     ============         ===========
Basic and diluted weighted average number
 of common shares outstanding                           4,507,328           7,025,000
                                                     ============         ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-4

<PAGE>
<TABLE>
<CAPTION>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                       STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
                                 MARCH 31, 2002

                                                                                  Additional                          Total
                                    Preferred  Stock         Common Stock          Paid in        Retained         Shareholders'
                                  Shares        Dollars     Shares      Dollars    Capital         Deficit        Equity (deficit)
                             -------------   ------------  ----------  --------- ------------  --------------   ------------------
<S>                              <C>               <C>         <C>       <C>         <C>             <C>               <C>

Balances at March 31, 2000            -        $    -       3,000,000  $ 30,000  $         -   $   (626,812)      $       (596,812)

Sale of common stock                  -             -       1,000,000    10,000    6,645,705              -              6,655,705

Stock issued to merge
 Go2 Delaware                         -             -       3,000,000    30,000   23,595,000              -             23,625,000

Capital contribution                  -             -            -           -        60,000              -                 60,000

Stock issued for services             -             -       25,000          250         (250)             -                     -

IPO expenses                          -             -            -           -      (356,215)             -               (356,215)

Preferred Stock dividends             -             -            -           -             -       (225,000)              (225,000)

Net loss                              -             -            -           -             -    (24,226,463)           (24,226,463)
                             -------------   ------------  ----------  --------- ------------  --------------   ------------------
Balances at March 31, 2001            -        $    -       7,025,000  $ 70,250  $29,944,240   $(25,078,275)      $      4,936,215

Payment of IPO expenses               -             -            -           -         9,255              -                  9,255

Preferred Stock dividends             -             -            -           -             -       (150,000)              (150,000)

Net loss                              -             -            -           -             -     (1,124,483)            (1,124,483)
                             -------------   ------------  ----------  --------- ------------  --------------   ------------------
Balances at March 31, 2002            -        $     -      7,025,000  $ 70,250  $29,953,495   $(26,352,758)      $      3,670,987
                             =============   ============  ==========  ========= ============  ==============   ==================
</TABLE>

 See accompanying notes to consolidated financial statements.


                                      F-5

<PAGE>

              GO2PHARMACY, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>


                                                              MARCH 31,          MARCH 31,
                                                                2001               2002
                                                              ---------          ---------
<S>                                                         <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                                    $(24,226,463)       $(1,124,483)
 Adjustments to reconcile net loss to net cash used by
   operating activities:
 (Gain) loss on disposal of equipment                             (26,690)             41,673
 Depreciation and amortization                                    322,592             445,561
 Accrued interest income                                                -             (33,923)
 Stock issued for marketing expense                            23,625,000                   -
 Changes in operating assets and liabilities:
 Accounts receivable                                             (232,088)         (1,038,924)
 Inventory                                                       (311,634)           (375,276)
 Prepaid expenses and other current assets                       (118,039)            233,316
 Other assets                                                     (28,875)             10,075
 Accounts payable                                                   9,935             571,361
 Accrued expenses                                                 203,647             (81,404)
 Due from affiliates, net                                         131,006            (337,292)
                                                             ------------        ------------
 Net cash used by operating activities                           (651,609)         (1,689,316)

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of property, leaseholds and equipment             $   (647,605)       $  (895,646)
 Purchases of intangible assets                                  (221,789)                 -
 Collections on  notes receivable                                 252,035              7,732
 Investment in restricted certificate of deposit                 (650,000)                 -
 Proceeds from disposal of equipment                              113,000             27,000
                                                             ------------        ------------
 Net cash used by investing activities                         (1,154,359)          (860,914)

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of common stock                      $  6,655,705        $         -
 Net change in credit lines payable                              (701,495)                 -
 Proceeds from issuance of long-term obligations                  378,869            182,175
 Payments of long-term obligations                               (333,722)          (341,818)
 Decrease in amount due to Dynamic                               (667,174)
 Proceeds from issuance of related party obligations              148,182                  -
 Payment of related party obligations                            (124,953)           (28,074)
 Payment of preferred stock dividends                            (225,000)          (150,000)
 Proceeds from capital contributions                               60,000                  -
 Payments of preregistration expenses                            (103,859)                 -
                                                             ------------        ------------
 Net cash provided (used) by financing activities               5,086,553           (337,717)
                                                             ------------        -----------
Net increase (decrease) in cash                                 3,280,585         (2,887,947)
Cash at beginning of period                                             -          3,280,585
                                                             ------------        -----------
Cash at end of period                                        $  3,280,585        $   392,638
                                                             ============        ===========
</TABLE>


                                       F-6

<PAGE>

              GO2PHARMACY, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                              MARCH 31,          MARCH 31,
                                                                2001               2002
                                                              ---------          ---------
<S>                                                          <C>                <C>
SUPPLEMENTAL INFORMATION:
 Cash paid for interest                                      $    218,880        $   161,730
                                                             ============        ===========
 Cash paid for taxes                                         $          -        $         -
                                                             ============        ===========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of 3,000,000 shares of common stock to complete the
merger of Go2Pharmacy.com                                    $ 23,625,000        $         -
                                                             ============        ===========
Initial public offering registration expenses paid from
proceeds of initial offering                                 $    356,215        $         -
                                                             ============        ===========
Issuance of 25,000 shares of common stock for professional
services in connection with the initial public offering      $    196,875        $         -
                                                             ============        ===========
</TABLE>



          See accompanying notes to consolidated financial statements.


                                      F-7

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2001 and 2002


NOTE 1 - BACKGROUND INFORMATION

We were incorporated in 1985 as Energy Factors, Inc., a Florida corporation. In
August 1998 we changed our name to Innovative Health Products, Inc., and in
February 2000 we changed our name to Go2Pharmacy, Inc., in anticipation of our
merger with the Delaware corporation Go2Pharmacy.com, Inc. Currently,
Go2Pharmacy ("Go2") continues to do manufacturing business under the name
Innovative Health Products, Inc. as it represents our manufacturing arm of the
Company. Prior to November 7, 2000 Go2Pharmacy, Inc., the Florida corporation
was a wholly-owned subsidiary of Dynamic Health Products, Inc. ("Dynamic").

On November 7, 2000, the Securities and Exchange Commission declared Go2's
registration of 1,000,000 shares of the common stock to be effective. The
registration was affected through the filing of Registration Statement No.
333-92849 on Form SB-2 with the Securities and Exchange Commission. The
Company's initial public offering, pursuant to this registration, was
successfully completed on November 14, 2000. In conjunction with this offering,
1,000,000 shares of common stock, $.01 par value, were sold to the public for
net proceeds of $6,655,705. Simultaneously with and conditioned upon the
offering, Go2 merged with Go2Pharmacy.com, Inc., a Delaware corporation, in
exchange for 3,000,000 shares of its common stock. Other than the $250,000 gross
cash capital contribution, Go2Delaware had no assets with any assignable value
thus creating no goodwill. In addition, given there was no historical revenues,
no amounts attributable to Go2Delaware have been or will be included, or
disclosed in the notes thereto, in these consolidated financial statements as of
and for the years ended March 31, 2001 and 2002. The statement of operations for
the year ended March 31, 2001 and 2002 includes all the operations from April 1,
2000 for Go2Pharmacy, the Florida corporation, and the operations of
Go2Pharmacy.com, Inc.from November 7, 2000 when it merged.

In April 2000, Breakthrough Engineered Nutrition, Inc. ("Breakthrough"), a
Florida corporation, was formed as a wholly-owned subsidiary of Go2Pharmacy,
Inc. to market and distribute its own zero and low carbohydrate product line,
Lean Protein, to wholesalers and retail stores using a network of distributors
throughout the United States and Canada.

In February 2001, we formed a wholly-owned subsidiary, Belcher Pharmaceuticals,
Inc. ("Belcher"), in order to manufacture and distribute private label over the
counter products.

In March 2001, we formed a wholly-owned subsidiary, Go2PBM Services, Inc.,
("PBM") for the purpose of providing pharmacy benefit management services. PBM
administers drug benefits for health maintenance organizations, insurance
company plans, preferred provider organizations, self-insured corporate health
plans and Taft-Hartley self-insured labor unions. As a pharmacy benefit manager,
we manage all member benefits in low risk plans, while taking an exclusively
administrative role in higher risk plans. Our administrative services include
claim processing, network management and customer service. We have entered into
an agreement to provide our pharmacy benefit management services to a New York
State Health Maintenance Organization. Through the development of our
manufacturing and pharmacy benefit management efforts, we intend to provide
health plans and institutional customers with an efficient source for their
pharmacy product needs.


                                      F-8

<PAGE>

                       GO2PHRMACY, INC. AND SUBSIDIARIES
                  NOTESS TO CONSOLIDATED FINANCIAL STATEMENTS
                            MARCH 31, 2001 AND 2002


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a.  Principles of Consolidation

The consolidated financial statements as of and for the year ended March 31,
2001 and 2002 include the corporate and manufacturing accounts of Go2Pharmacy,
Inc. (the "Company"), ("Go2"), which is continuing to do manufacturing business
as Innovative Health Products, Inc. ("Innovative"), and its wholly-owned Florida
subsidiaries, Breakthrough, Belcher and PBM. Significant intercompany balances
and transactions have been eliminated in consolidation.

b.  Industry Segment

In accordance with the provisions of Statement of Financial Accounting Standards
No. 131, (SFAS 131), Disclosures about Segments of an Enterprise and Related
Information, a company is required to disclose selected financial and other
related information about its operating segments. Operating segments are
components of an enterprise about which separate financial information is
available and is utilized by the chief operating decision maker related to the
allocation of resources and in the resulting assessment of the segment's overall
performance. As of and for the year ended March 31, 2001 and 2002, the Company
had three industry segments: manufacturing, distribution and pharmacy benefit
management. The $9,427,711 of total assets as of March 31, 2001 were comprised
of $3,924,600 attributable to corporate, $4,725,460 attributable to
manufacturing, $670,813 attributable to distribution and $106,838 attributable
to pharmacy benefit management. The $8,226,859 of total assets as of March 31,
2002 were comprised of $844,469 attributable to corporate, $6,453,863
attributable to manufacturing, $632,858 attributable to distribution and
$295,669 attributable to pharmacy benefit management.

c.  Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.

d.  Restricted Cash

Restricted cash is comprised of a one-year certificate of deposit that is
collateralizing lines of credit with a Bank.

e.  Inventories

Inventories are stated at lower of cost or market. Cost is determined using the
first-in, first-out method.


                                      F-9

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            MARCH 31, 2001 AND 2002


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

f.  Property, Leasehold Improvements and Equipment

Depreciation is provided for using the straight-line method, in amounts
sufficient to relate the cost of depreciable assets to operations over their
estimated service lives (asset categories range from three to seven years).
Leasehold improvements are amortized using the straight-line method over the
lives of the respective leases or the service lives of the improvements,
whichever is shorter. Leased equipment under capital leases is amortized using
the straight-line method over the lives of the respective leases or over the
service lives of the assets, whichever is shorter, for those leases that
substantially transfer ownership. Accelerated depreciation methods are used for
tax purposes.

g.  Intangible Assets

Intangible assets consist primarily of goodwill and intellectual property. The
excess of cost over the net assets acquired (goodwill) is amortized over 20
years, using the straight-line method. Intellectual property is amortized over
five years.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations", and SFAS
No. 142, "Goodwill and Other Intangible Assets" ("FAS 141" and "FAS 142"). FAS
141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. FAS 141 also specifies the criteria
by which intangible assets acquired in a purchase method business combination be
recognized and reported separately from goodwill. FAS 142 will require that
goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead be tested for impairment at least annually. FAS 142 will
also require the intangible assets with definite useful lives be amortized over
their respective estimated useful lives, and reviewed for impairment in
accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of".

We are required to adopt the provisions of FAS 141 effective July 1, 2001 and
FAS 142 effective April 1, 2002. We have not yet assessed the impact the new
standards will have on future financial statements. For the year ended March 31,
2002, amortization expense associated with goodwill was $45,086. The unamortized
balance of goodwill at March 31, 2002 was $728,896.

h.  Impairment of Assets

In accordance with the provisions of Statement of Financial Accounting Standards
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the
Company's policy is to evaluate whether there has been a permanent impairment in
the value of long-lived assets, certain identifiable intangibles and goodwill
when certain events have taken place that indicate the remaining unamortized
balance may not be recoverable. When factors indicate that the intangible assets
should be evaluated for possible impairment, the Company uses an estimate of
related undiscounted cash flows. Factors considered in the valuation include
current operating results, trends and anticipated undiscounted future cash
flows. There have been no impairment losses recorded for the fiscal years 2001
and 2002.


                                      F-10

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATMENTS
                            MARCH 31, 2001 AND 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

i.  Income Taxes

The Company utilizes the guidance provided by Statement of Financial Accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes. Under the liability
method specified by SFAS 109, deferred tax assets and liabilities are determined
based on the difference between the financial statement and tax basis of assets
and liabilities as measured by the enacted tax rates which will be in effect
when these differences reverse. Deferred tax expense is the result of changes in
deferred tax assets and liabilities. Until November 7, 2000, the Company was a
subsidiary of Dynamic's consolidated group tax return; accordingly, the deferred
taxes as described in Note 12, reflect that portion of the consolidated group
attributable to the Company.

j.  Earning (Loss) Per Common Share

Earnings (loss) per share are computed using the basic and diluted calculations
on the face of the statement of operations. Basic earnings (loss) per share are
calculated by dividing net income (loss) available to common stockholders by the
weighted average number of shares of common stock outstanding for the period.
Diluted earnings (loss) per share is calculated by dividing net income (loss) by
the weighted average number of shares of common stock outstanding for the
period, adjusted for the dilutive effect of common stock equivalents, using the
treasury stock method. There were no potentially dilutive instruments
outstanding for all periods presented.

k.  Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at March 31, 2001 and 2002, as well as the
reported amounts of revenues and expenses for the fiscal years ended March 31,
2001 and 2002. The actual outcome of the estimates could differ from the
estimates made in the preparation of the financial statements.

l.  Concentration of Credit Risk

Concentrations of credit risk with respect to trade accounts receivable are
limited due to the distribution of sales over a large customer base as of March
31, 2001 and 2002. For the years ended March 31, 2001, two customers accounted
for 16.4%, and 9.9% of revenues, respectively, while for the year ended March
31, 2002, four customers accounted for 22.8%, 21.3%, 16.6% and 7.4% of revenues,
respectively, in relation to total consolidated revenues. The Company has no
concentration of customers within specific geographic areas outside the United
States that would give rise to significant geographic credit risk.

At March 31, 2002 the Company maintained cash balances in excess of federally
insured limits of approximately $1,127,000.


                                      F-11

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            MARCH 31, 2001 AND 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

m.  Revenue Recognition

In accordance with SAB 101, Revenue Recognition, revenues are recognized by the
Company when the merchandise is shipped to the customer.

n.  Advertising Costs

The Company charges advertising costs to expense as incurred. Advertising
expense was $105,550, and $116,702 for the years ended March 31, 2001 and 2002,
respectively.

o.  Fair Value of Financial Instruments

The Company, in estimating its fair value disclosures for financial instruments,
uses the following methods and assumptions:

Cash, Accounts Receivable, Accounts Payable and Accrued Expenses: The carrying
amounts reported in the balance sheet for cash, accounts receivable, accounts
payable and accrued expenses approximate their fair value due to their
relatively short maturity.

Long-term Obligations: The fair value of the Company's fixed-rate long-term
obligations is estimated using discounted cash flow analyses, based on the
Company's current incremental borrowing rates for similar types of borrowing
arrangements. At March 31, 2001 and 2002, the fair value of the Company's
long-term obligations approximated its carrying value.

Credit Lines Payable: The carrying amount of the Company's credit lines payable
approximates fair market value since the interest rate on these instruments
corresponds to market interest rates.

p.  Reclassifications

Certain reclassifications have been made to the financial statements as of and
for the fiscal year ended March 31, 2001 to conform to the presentation as of
and for the year ended March 31, 2002.

                                      F-12

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            MARCH 31, 2001 AND 2002

NOTE 3 - ACCOUNTS RECEIVABLE, NET

Accounts receivable, net, consist of the following:

<TABLE>
<CAPTION>


                                                                                                     March 31,
                                                                                     --------------------------------------
                                                                                         2001                        2002
                                                                                     ------------              ------------
        <S>                                                                         <C>                       <C>
         Trade accounts receivable                                                   $   773,353               $ 1,879,175
         Less allowance for uncollectible accounts                                       (82,016)                 (148,914)
                                                                                     ------------              ------------

                                                                                     $   691,337               $ 1,730,261
                                                                                     ============              ============
</TABLE>


As of March 31, 2001, the total accounts receivable balance of $773,353 includes
$683,560 related to the Company's manufacturing segment, $89,793 related to the
Company's distribution segment. As of March 31, 2002, the total accounts
receivable balance of $1,879,175 includes $1,673,657 related to the Company's
manufacturing segment and $205,518 related to the Company's distribution
segment.

NOTE 4 - INVENTORIES, NET

Inventories, net, consist of the following:

<TABLE>
<CAPTION>


                                                                                                     March 31,
                                                                                     --------------------------------------
                                                                                         2001                        2002
                                                                                     ------------               -----------
       <S>                                                                           <C>                       <C>
         Raw materials                                                                $ 1,654,074               $ 1,850,331
         Work in process                                                                   57,107                   185,518
         Finished goods                                                                   103,556                   171,211
                                                                                      -----------               -----------
                                                                                        1,814,737                 2,207,060
         Less Reserve for obsolescence                                                    (15,000)                  (85,654)
                                                                                      -----------               -----------
                                                                                      $ 1,799,737               $ 2,121,406
                                                                                      ===========               ===========
</TABLE>


NOTE 5 - PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

<TABLE>
<CAPTION>


                                                                                                     March 31,
                                                                                      -------------------------------------
                                                                                         2001                     2002
                                                                                      -----------               -----------

        <S>                                                                         <C>                         <C>
         Prepaid and other current assets                                            $    126,386               $   176,812
         Deposits - machinery and equipment                                               352,417                     -
                                                                                     ------------               -----------

                                                                                     $    478,803               $   176,812
                                                                                     ============               ===========
</TABLE>

                                      F-13

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            MARCH 31, 2001 AND 2002

NOTE 6 - PROPERTY, LEASEHOLD IMPROVEMENTS AND EQUIPMENT, NET

Property, leasehold improvements and equipment, net, consists of the following:

<TABLE>
<CAPTION>


                                                                                                     March 31,
                                                                                      -------------------------------------
                                                                                           2001                     2002
                                                                                      -----------               -----------

        <S>                                                                           <C>                       <C>
         Machinery and equipment                                                      $ 1,069,751               $ 1,645,741
         Furniture, fixtures and equipment                                                274,070                   299,321
         Leasehold improvements                                                           259,448                   433,839
                                                                                      -----------               -----------
                                                                                        1,603,269                 2,378,901
         Less accumulated depreciation and amortization                                  (550,217)                 (766,745)
                                                                                      -----------               -----------

                                                                                      $ 1,053,052               $ 1,612,156
                                                                                      ===========               ===========
</TABLE>


Depreciation and leasehold amortization expense totaled $231,642 and $336,142
for the years ended March 31, 2001 and 2002, respectively.

The Company leases one of our two manufacturing facilities from Dynamic, a
related party, (See note 11), for $16,000 per month, subject to annual
inflationary adjustments, for a period of ten years. For each of the years ended
March 31, 2001 and 2002, rents paid to Dynamic were $192,000.

NOTE 7 - INTANGIBLE ASSETS, NET

Intangible assets, net, consist of the following:

<TABLE>
<CAPTION>


                                                                                                     March 31,
                                                                                      -------------------------------------
                                                                                         2001                      2002
                                                                                      -----------               -----------
<S>                                                                                   <C>                     <C>
         Loan and lease costs                                                         $     5,564               $     1,675
         Intellectual property                                                            435,000                   295,696
         Goodwill                                                                         901,727                   901,727
                                                                                      -----------               -----------
                                                                                        1,342,291                 1,199,098
         Less accumulated amortization                                                   (136,036)                ( 241,166)
                                                                                      -----------               -----------

                                                                                      $ 1,206,255               $   957,932
                                                                                      ===========               ===========
</TABLE>


As of March 31, 2002, goodwill and the loan and lease costs represented an
intangible asset attributable to the manufacturing segment with the intellectual
property balance attributable to the distribution segment.

During February 2001, the Company purchased intellectual property surrounding a
patentable manufacturing process and ingredient listing related to our product
line, Lean Protein. The total purchase price was $435,000; the Company paid
$217,500 in cash with the balance financed by the seller over three years from
the date of sale.

                                      F-14

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            MARCH 31, 2001 AND 2002

NOTE 7 - INTANGIBLE ASSETS, NET (continued)

During the March 2002 fiscal year, the Company learned the seller violated
various provisions of the purchase agreement. Article six of the purchase
agreement requires the seller to indemnify the Company for any losses incurred
because of such violations. Pursuant to the provisions of the contract the
Company has chosen to offset its losses against the installment note. The note
and related accrued interest totalling approximately $212,000 was offset against
inventory losses of approximately $72,000 and the balance was recorded as a
reduction in the purchase price of the intellectual property.

Amortization expense totaled $90,950 and $109,419 for the years ended March 31,
2001 and 2002, respectively

NOTE 8 - OTHER ASSETS, NET

Other assets, net, consist of the following:

<TABLE>
<CAPTION>

                                                                                                     March 31,
                                                                                      -------------------------------------
                                                                                         2001                     2002
                                                                                      -----------                ----------

<S>                                                                                  <C>                           <C>
         Deposits                                                                     $    60,957                $   71,799
         Investment in joint venture                                                       19,346                         -
         Notes and other noncurrent receivables                                            80,037                    77,024
                                                                                      -----------                ----------
         Less allowance for uncollectable accounts                                    $   160,340                $  148,823
                                                                                                -                   (20,918)
                                                                                      -----------                ----------
                                                                                      $   160,340                $  127,905
                                                                                      ===========                ==========
</TABLE>


Notes receivable consist of two trade receivables that have been converted to
notes, from nonaffiliated third parties.

The first note is for a term of five years, commencing in October 1997, in the
principal amount of approximately $71,300, with interest at 9% per annum,
payable in monthly installments of principal and interest in the amount of
$1,480. There is no prepayment penalty under this note. At March 31, 2001 and
2002, the principal and unpaid accrued interest balance on this note was
approximately $29,071 and $21,891, respectively.

The second note is for a term of two years, commencing in May 1999, in the
principal amount of approximately $49,400, with interest at 12% per annum,
payable in monthly installments of principal and interest in the amount of
$2,500. There is no prepayment penalty under this note. As of March 31, 2001 and
2002, the principal balance and unpaid accrued interest was approximately
$50,966 and $55,133, respectively. This note is in default with judgment in
favor of the Company with interest continuing to accrue. In accordance with the
judgment, payment terms are in the process of being renegotiated.

An allowance for uncollectible notes of $20,918 has been established to offset
possible losses on these notes.

                                      F-15

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATENENTS
                            MARCH 31, 2001 AND 2002

NOTE 9 - CREDIT LINES PAYABLE

In March 2001, the Company established an annually renewable line of credit and
a five-year term loan with a bank. (See Note 10 as related to the term loan.)
This line of credit replaced the credit facility entered into during February
1999. The credit available to the Company under this line was approximately
$650,000 and is collateralized by a $650,000 restricted certificate of deposit.
The facility imposes certain financial and reporting covenants. The agreement
requires certain cash balances be maintained. The agreement also prevents the
Company from disposing of assets or incurring additional debt unless the
transactions are within the normal course of business. As of March 31, 2001 and
2002, borrowings on the credit facility accrue interest at 6.76% and 4.25%,
respectively. As of March 31, 2002, the balance owed under this facility was
approximately $648,000.

On March 29, 2002, Breakthrough Engineered Nutrition, Inc. established a
$100,000 annually renewable line of credit with a bank. Borrowings on the credit
facility accrue at 6.25%. This line of credit is cross-collateralized with the
Company's $650,000 restricted certificate of deposit and with Breakthrough's
inventory and accounts receivable. As of March 31, 2002, $100,000 remained
available under this line.

The credit lines payable are included with current liabilities instead of
long-term liabilities, as management believes that this presentation better
reflects the utility of the current assets as the source of repayment for the
credit lines payable.

NOTE 10 - LONG-TERM OBLIGATIONS

Long-term obligations consist of the following:

<TABLE>
<CAPTION>


                                                                                                     March 31,
                                                                                     --------------------------------------
                                                                                           2001                     2002
                                                                                     ------------               -----------
<S>                                                                                  <C>                      <C>
Capital lease obligation for equipment, due in
monthly principal and interest payments of
approximately $7,499 through 2004                                                     $   176,892               $    97,098

Note payable collateralized by certain equipment,
due in monthly principal payments of $9,191
plus interest through 2006, interest at 8.5% and 5.25% at
March 31, 2001 and 2002 respectively.                                                     551,689                   500,142

Note payable due in monthly principal and
interest payments of $10,000 through
2004, interest imputed at 11.2% (See note 7)                                              195,500                        -

Other                                                                                      89,279                    38,146
                                                                                     ------------               -----------
                                                                                        1,013,360                   635,386
Less current maturities                                                                  (388,941)                 (254,234)
                                                                                     ------------               -----------
                                                                                     $    624,419               $   381,152
                                                                                     ============               ===========
</TABLE>

                                      F-16

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            MARCH 31, 2001 AND 2002

NOTE 10 - LONG-TERM OBLIGATIONS (continued)

Of the $1,013,360 of total debt outstanding as of March 31, 2001, $195,500
relates to the distribution segment with the balance of $817,860 attributable to
the manufacturing segment. Of the $635,386 of total debt outstanding as of March
31, 2002, $38,146 relates to corporate, and the balance of $597,240 is
attributable to the manufacturing segment.

At March 31, 2002, aggregate maturities of long-term obligations are as follows:

<TABLE>
<CAPTION>


      Year ending March 31,
      <S>                                                                <C>
              2003                                                         $ 254,234
              2004                                                           158,768
              2005                                                           113,193
              2006                                                           109,191
              2007                                                                 -
              Thereafter                                                           -
                                                                           ---------

                                                                           $ 635,386
                                                                           =========
</TABLE>

NOTE 11 - RELATED PARTY TRANSACTIONS

Revenues: For the fiscal years ended March 31, 2001 and 2002, manufacturing
revenues of approximately $794,757 and $291,579, respectively, were recorded
from sales by the Company to subsidiaries of Dynamic Health Products, an
affiliate of the Company, and of which Jugal K. Taneja, the Chairman of the
Board of the Company, is a principal shareholder. For the fiscal years ended
March 31, 2001 and 2002, revenues of $65,240, and $5,122, respectively, were
recorded from sales by the Company to DrugMax, Inc., an affiliate of the
Company, and of which Jugal K. Taneja, the Chairman of the Board of the Company,
is a principal shareholder. For the fiscal years ended March 31, 2001 and 2002,
revenues of $64,251 and $47,956, respectively, were recorded from sales by the
Company to Verticalhealth, Inc.("Vertical"), an affiliate of the Company, and of
which Jugal K. Taneja, the Chairman of the Board of the Company, is a principal
shareholder.

For the fiscal years ended March 31, 2001 and 2002, distribution revenues of $0
and $8,531, respectively, were recorded from sales by the Company to Vertical,
an affiliate of the Company, and of which Jugal K. Taneja, the Chairman of the
Board of the Company, is a principal shareholder

For the fiscal years ended March 31, 2001 and 2002, pharmacy benefit managment
revenues of $215,894 and $1,914,592, respectively, were recorded from sales by
the Company to CarePlus Health Plan, an affiliate of the Company's board members
Mssrs. Lawson and Zappala. Our wholly-owned subsidiary, PBM, derives 100% of its
revenues from this contract.

                                      F-17

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            MARCH 31, 2001 AND 2002

NOTE 11 - RELATED PARTY TRANSACTIONS (continued)

Trade Accounts Receivable/ Trade Accounts Payable - Amounts due to affiliates
and amounts due from affiliates represent balances owed by or amounts owed to
the Company for sales occurring in the normal course of business. Amounts due to
and amounts due from these affiliates are in the nature of trade payables or
receivables and fluctuate based on sales volume and payments received.

As of March 31, 2001 and 2002, for the manufacturing segment, $149 was due to
and $73,895 was due from subsidiaries of Dynamic. $59,328 and $57,700,
respectively, was due to DrugMax, Inc., $0 and $28,982 was due from Vertical,
and $0 and $59,380 was due from CarePlus Health Plan.

As of March 31, 2001 and 2002, for the distribution segment, $13,813 and $21,534
was due to DrugMax, Inc.

As of March 31, 2001 and 2002, for the pharmacy benefit management segment,
$106,838 and $265,292 was due from CarePlus Health Plan.

Lease / Debt Obligations - For each of the years ended March 31, 2001 and 2002,
rent expense of $192,000 were paid to Dynamic. The Company and Dynamic are
parties to a ten-year, triple-net operating lease that expires in the year 2009.
Monthly rents are $16,000 per month.

For the years ended March 31, 2001 and 2002, $225,000 and $150,000 of accrued
preferred dividends were paid to JB Capital Corp., the holders of the preferred
stock, an affiliate of the Chairman. During March 2001, Dynamic distributed
their 3,000,000 shares of Go2Pharmacy's common stock to Dynamic's shareholders
and option holders of record.

In June 2000, the Company established a $100,000 revolving line of credit with
Carnegie Capital, LTD, an affiliate of Jugal K. Taneja, Chairman of the Board of
the Company, to provide a source of funding for cash requirements directly
related to the Company's Registration Statement. The note bore interest at 10%
per annum. Principal and interest on the note was due and payable in full upon
the successful completion of an initial public offering of the Company's common
stock. The Company's public offering was completed during November 2000 and in
accordance with this revolving line of credit agreement, the outstanding
balance, that was included in obligations to related parties, was paid in full
in the amount of $65,000.

In June 2000, the Company established a $100,000 revolving line of credit with
Joseph Zappala, presently a member of the Company's Board of Directors, and the
President of Go2Pharmacy.com, Inc., a Delaware corporation, to provide a source
of funding for cash requirements directly related to the Company's registration
statement. The note bore interest at 10% per annum. Principal and interest on
the note was due and payable in full upon the successful completion of an
initial public offering of the Company's common stock. The Company's public
offering was completed during November 2000 and in accordance with this
revolving line of credit agreement, the outstanding balance that was due as
included in obligations to related parties was $65,000. In accordance with the
merger agreement (the "Agreement") between Go2Pharmacy, Inc. (a Florida
corporation) and Go2Pharmacy.com, Inc. (a

                                      F-18

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            MARCH 31, 2001 AND 2002

NOTE 11 - RELATED PARTY TRANSACTIONS (continued)

Delaware corporation) simultaneous with the merger, Joseph Zappala and the other
Go2Delaware shareholders were to receive 3,000,000 shares of the Company's
common stock with his capital contribution of $250,000 cash. Mr. Zappala, the
individual, personally incurred $125,000 in expenses directly related to the
initial public offering in addition to the $65,000 mentioned directly above for
a total amount due to Mr. Zappala of $190,000. The $190,000 was offset against
the $250,000 due as a part of the Agreement with the net amount, $60,000, being
established as an account receivable due from Mr. Zappala. Prior to December 31,
2000, Mr. Zappala paid the Company the $60,000 in full.

In May 2000, 21st Century Healthcare Fund, LLC, an affiliate of the Chairman of
the Board of the Company, loaned the Company $10,000 for the purpose of
assisting the Company with its working capital needs. This loan was repaid in
July 2000.

In December 1999, the Company established a $500,000 line of credit facility
with a bank, secured and guaranteed by the Company's parent, Dynamic. The line
of credit was paid during November 2000.

In June 1998, the Company assumed a $25,000 note payable to Dynamic's Vice
Chairman of Business Development, associated with the June 12, 1998 Energy
Factors acquisition. The note bore interest at 10.8% per annum. Interest due
totaled $2,937 and $4,786 as of March 31, 2000 and 2001. The note was to be
repaid in 24 equal monthly payments beginning September 1, 1999. The parties had
agreed to suspend payments on the note until the consummation of an initial
public offering of common stock of the Company. Beginning July 2000, the Company
began making scheduled principal payments of approximately $2,000 per month with
the last and final payment occurring during June 2001. As of March 31, 2001 and
2002, the principal balance due was $6,000 and $0, respectively.

Other Transactions - The $23,625,000 marketing expense presented in the
statement of operations for the fiscal year ended March 31, 2001 is a
nonrecurring charge as a consequence of the issuance of 3,000,000 shares of
common stock to Mr. Zappala, and the other shareholders of Go2Delaware, as
related to the merger of Go2Pharmacy.com, Inc., a Delaware corporation
("Go2Delaware") and Go2Pharmacy, Inc, a Florida corporation. Other than the
$250,000 capital contribution from Mr. Zappala, Go2Delaware had no assets with
any assignable value thus creating no goodwill. Based on this fact, the
3,000,000 common shares issued at the $7.875 initial public offering price
yielding the $23,625,000 was accounted for as a marketing expense during
November 2000.

Non-Compete Agreement

As part of the acquisition of Energy Factors, the Company entered into a
non-competition agreement with Chris Starkey (a former stockholder of the parent
of Energy Factors) for a period of three years beginning June 12, 1998. The
non-compete covers the geographic area of Florida and expired in June 2001.

                                      F-19

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2002

NOTE 11 - RELATED PARTY TRANSACTIONS (continued)

Joint Venture

The Company entered into a joint venture with a non-affiliated third party as of
March 1, 1999 whereby the Company owns 51% of the joint venture and the
non-affiliated third party owns 49%. The agreement calls for a contribution of
$45,000 of inventory by the Company and a contribution of $15,000 cash by the
non-affiliated third party. The joint venture will split profits 75% to the
Company and 25% to the non-affiliated third party until all loans by the parties
are repaid and then the profits are to be split 50/50. The joint venture was
dissolved as of March 31, 2002. As of March 31, 2001 and 2002, the investment in
the joint venture, of $19,346 and $0, respectively, is presented within other
assets as detailed in Note 8.

NOTE 12 - INCOME TAXES

The Company's taxable income was included in a consolidated income tax return
with Dynamic, our previous parent company, until the effective date of our
initial public offering on November 7, 2000. The following is presented as if
the Company was reported on a stand-alone basis.

Income taxes for the years ended March 31, 2001 and 2002 differ from the amounts
computed by applying the effective income tax rates to income before income
taxes as a result of the following:

<TABLE>
<CAPTION>


                                                                                                     March 31,
                                                                                     --------------------------------------
                                                                                         2001                       2002
                                                                                     ------------                ----------
<S>                                                                                  <C>                        <C>
Computed tax expense (benefit) at the statutory rate                                 $ (6,031,000)               $ (191,172)

Increase (decrease) in taxes resulting from:
Effect of permanent differences:

  Marketing expense                                                                     5,898,800                         -
  Goodwill and other permanent differences                                                 12,200                    34,871
  Effect of temporary differences:
  Accruals and allowances                                                                       -                    29,555
  Depreciation                                                                                  -                   (19,957)
  Net operating loss                                                                            -                   (95,047)

Change in valuation allowance                                                             120,000                   241,750
                                                                                     ------------                ----------

Income tax expense                                                                   $          -                $        -
                                                                                     ============                ==========


</TABLE>




NOTE 12 - INCOME TAXES (continued)

Temporary differences that give rise to deferred tax assets and liabilities are
as follows:


                                      F-20

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2002


<TABLE>
<CAPTION>


                                                                                                     March 31,
                                                                                    ---------------------------------------
                                                                                           2001                     2002
                                                                                    -------------               -----------
<S>                                                                                 <C>                       <C>
Deferred tax assets:
  Bad debts                                                                             $  37,600               $    33,414
  Inventories                                                                               3,750                    16,852
  Accrued vacation                                                                          7,800                     8,127
  Deposits                                                                                 40,000                    21,538
  Amortization                                                                                 -                      8,943
  Net operating loss carryforwards                                                             -                    302,623
Less: valuation allowance                                                                 (89,150)                 (330,900)
                                                                                        ---------               -----------

                                                                                        $       -               $    60,597
                                                                                        =========               ===========

Deferred tax liabilities:
  Fixed asset basis differences                                                         $       -               $   (60,597)
                                                                                        =========               ===========
</TABLE>



At March 31, 2002, the Company has a tax net operating loss carryforward of
approximately $1,560,000 to offset future taxable income. The tax net operating
loss carryforwards begin to expire in 2021.

NOTE 13 - REDEEMABLE PREFERRED STOCK

The Company is authorized, to issue up to 6,000,000 shares of preferred stock in
one or more series, and to establish the number of shares, the designations,
powers, preferences, rights, qualifications, limitations or restrictions of any
such series without any further vote or action by the stockholders. The Board of
Directors may authorize and issue preferred stock with voting or conversion
rights that could adversely affect the voting power or other rights of the
holders of common stock.

In September 1999, the Company issued 150,000 shares of redeemable series A
preferred stock to Dynamic in satisfaction of $1,500,000 of outstanding
liabilities. Holders of redeemable series A preferred stock will vote together
with the holders of common stock with respect to all matters as to which such
shareholders vote, with each share of redeemable series A preferred stock
entitled to one vote. In the event of liquidation, dissolution or winding-up of
our operations, holders of redeemable series A preferred stock will be paid an
amount equal to $10.00 per share of redeemable series A preferred stock before
any payment is made with respect to our common stock. As of March 31, 2001 and
2002, this liquidation preference was $1,500,000 and $1,175,000, respectively.
The redeemable series A preferred stock pays dividends at the rate of 10% per
annum, which is cumulative from the date of issuance and payable quarterly
commencing March 31, 2001. For the years ended March 31, 2001 and 2002, the
Company paid dividends of $225,000 and $150,000, respectively, as described in
Note 11.

As of March 31, 2002, the holders of the preferred stock have the right to
redeem approximately 17,500 shares based upon the redemption formula utilizing
positive net income attained February and March 2002. Positive net income is
defined as net income/(loss) as adjusted for depreciation, amortization and


                                      F-21

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2002


other non-cash charges. The Company has negotiated with the holders of the
preferred stock a sliding scale redemption plan based on monthly positive net
income, as defined, with payments to be made on a quarterly basis. The
redemption schedule is as follows:

<TABLE>
<CAPTION>


Monthly positive net income (as defined):                                                                      Payment due
----------------------------------------                                                                       -----------
       <S>     <C>                                                                                             <C>
         $-0- - $24,999                                                                                          $     -0-
         $25,000  - $124,999                                                                                     $  25,000
         $125,000 - $224,999                                                                                     $  50,000
         $225,000 - $324,999                                                                                     $  75,000
         $325,000 - $424,999                                                                                     $ 100,000
</TABLE>

An additional $25,000 will be paid to the holders of the preferred stock for
each additional $100,000 of cash basis net income, as defined, above $424,999
until such time that all preferred stock is redeemed.

As of March 31, 2002, $ 325,000, or 32,500 preferred shares, was included in due
to affiliates based on income earned during February, March, April and May 2002.

NOTE 14 - SHAREHOLDERS' EQUITY

Common Stock

As of March 31, 2001, the number of shares of $.01 par value Common Stock
outstanding was 7,025,000. Subject to preferences that might be applicable to
any Preferred Stock, the holders of the Common Stock are entitled to receive
dividends when, as, and if declared from time to time by the Board of Directors
out of funds legally available therefor. In the event of liquidation,
dissolution, or winding up of the Company, holders of the Common Stock are
entitled to share ratably in all assets remaining after payment of liabilities
subject to prior distribution rights of any Preferred Stock then outstanding.
The Common Stock has no preemptive or conversion rights and is not subject to
call or assessment by the Company. There are no redemption or sinking fund
provisions applicable to the Common Stock.

Stock Option Plan

On September 30, 1999, the Company adopted a Stock Option Plan, which provides
for the grant to employees of incentive or non-qualified options to purchase up
to 700,000 shares of Common Stock. The


                                      F-22

<PAGE>

                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2002


exercise price represents the estimated fair value of the Company's Common Stock
at the time of the grant or the proposed public offering price, as approved by
the Board of Directors. All outstanding options vest upon the change in control
of the Company. Options granted under the Plan expire not later than ten years
after the date granted or sooner in the event of death, disability, retirement,
or termination of employment. As of March 31, 2001, 393,000 non-vested common
stock options were outstanding. The options were granted on December 1, 2000
(the "grant date") and have an exercise price of $2.00 as determined by the
November 30, 2000 closing price on NASDAQ. The options vest over a three-year
vesting schedule with the first year's vesting period ending on December 1,
2001. No options were granted during the year ended March 31, 2002 and 15,500
options were forfeited.

As of March 31, 2002, 377,500 options were outstanding with 125,833 options
vested and 251,667 options nonvested.

The Non-Employee Plan

The Non-Employee Plan provides for the grant of nonqualified stock options to
purchase up to 100,000 shares of Common Stock to members of the Board of
Directors who are not employees of the Company. Each non-employee director will
be granted options to purchase 4,000 shares of Common Stock for each full
remaining year of the director's term at the offering price. Thereafter, on the
date on which a new non-employee director is first elected or appointed, he will
automatically be granted options to purchase 4,000 shares of Common Stock for
each year of his initial term. Each non-employee director will be granted
options to purchase 4,000 shares of Common Stock for each year of any subsequent
term to which he is elected. All options become exercisable ratably over the
director's term and have an exercise price equal to the fair market value of the
Common Stock on the date of grant. As of March 31, 2001, 16,000 non-vested
common stock options were outstanding. The options were granted on December 1,
2000 (the "grant date") and have an exercise price of $2.00 as determined by the
November 30, 2000 closing price on NASDAQ. The options vest over a three-year
vesting schedule with the first year's vesting period ending on December 1,
2001.

During September 2001, the plan was amended to increase the number of options
covered by the plan to 500,000. During the year ended March 31, 2002, 310,000
shares were granted at the closing price on the date of grant of $1.00. As of
March 31, 2002 326,000 options were outstanding, of which 5,333 options were
vested.

NOTE 15 - COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company has operating leases for facilities and certain machinery and
equipment that expire at various dates through 2009. Certain leases provide an
option to extend the lease term. Certain leases provide for payment by the
Company of any increases in property taxes, insurance, and common area
maintenance over a base amount and others provide for payment of all property
taxes and insurance by the Company.

Future minimum lease payments, by year and in aggregate under non-cancelable
operating leases, consist of the following at March 31, 2002:

                                      F-23

<PAGE>


                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2002

NOTE 15 - COMMITMENTS AND CONTINGENCIES (continued)

Year ending March 31,
        2003                                               $    325,355
        2004                                                    316,730
        2005                                                    240,547
        2006                                                    192,000
        2007                                                    192,000
        Thereafter                                              480,000
                                                            -----------
                                                            $ 1,746,632
                                                            ===========

The Company leases one of their facilities from Dynamic (See related party
footnote 11) for a ten-year term at approximately $192,000 annually. The lease
provides for an annual cost-of-living increase. Management considers these lease
terms to be comparable to those of unrelated third parties. The future minimum
lease payments as of March 31, 2002 include this commitment.

Total rent expense for the years ended March 31, 2001 and 2002, was $208,538 and
$280,538, respectively.

Litigation

The Company is, from time to time, involved in litigation relating to claims
arising out of its operations in the ordinary course of business. The Company
believes that none of the claims that were outstanding as of March 31, 2002
should have a material adverse impact on its financial condition or results of
operations.

Employment Agreements

Simultaneously with the public offering, the Company entered into three year
employment agreements with the Chief Executive Officer, President and Chief
Financial Officer at annual salaries of $150,000, $90,000 and $110,000 plus
benefits, respectively.

Directors' Compensation

The Company pays directors fees of $500 each per meeting and not less than
$2,000 per year. In addition, each non-employee director receives options to
purchase 4,000 shares of common stock for each year remaining of the director's
term.

Common Stock

In December 2001, a special subcommittee of the board, comprised of Messrs.
Dalton, Lawson and Stuart, was formed for the purpose of determining whether all
objectives and business plans negotiated at the time of the merger had been met.
The merger was affected simultaneously with the successful completion


                                      F-24

<PAGE>


                       GO2PHARMACY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2002

of the Company's IPO in November 2000. On February 15, 2002, the special
subcommittee submitted their report to the board of directors; the Committee
Report was adopted by the board for management's implementation. Their report,
among other things, recommended that the board more closely review the business
operations of the Company for the period from, March 2002 through June 2002,
inclusive, such that at the end of June 2002, the board would evaluate the
success of the plan's implementation. Should it be decided by the board that
segments of the Company's operations are not viable, the board will recommend
possible remedies.

Stock Price

On February 22, 2002, we received notification from the NASDAQ Listing
Qualifications Department that our common stock has closed below the minimum $1
per share requirement for continued inclusion under Marketplace Rule 4310(c)(4).
Therefore, in accordance with Marketplace Rule 4310(c)(8)(D), we have been
provided 180 calendar days, or until August 21, 2002 to regain compliance. If,
at any time prior to August 21, 2002, the bid price of the Company's common
stock closes at $1.00 per share or more for a minimum of 10 consecutive trading
days, the Company will be provided written notification that compliance has been
met. If compliance with this rule is not met by August 21, 2002, NASDAQ will
assess whether the Company has met the initial listing criteria for trading on
the NASDAQ SmallCap Market and will determine at that time whether the Company
will be granted another 180 day grace period. Otherwise, NASDAQ will provide the
Company written notification that its securities will be delisted. This could
have a materially adverse affect on our business, financial condition, results
of operations and cash flows.


                                      F-25