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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended September 30, 2003



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



For the transition period from  to



Commission file number 0-23031



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DYNAMIC HEALTH PRODUCTS, INC.

(Exact name of small business issuer as specified in its charter)



|Florida                                                        |  | 34-1711778                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|12399 Belcher Road South, Suite 160, Largo, Florida |  | 33773     
|--------------------------------------------------- |  | ----------
|(Address of principal executive offices)            |  | (Zip Code)



Issuers
telephone number (727) 324-6667



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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ̈No



The number of shares outstanding of the Issuers common stock at $.01 par value as of November 5, 2003 was 12,331,500.



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PART I - FINANCIAL INFORMATION



|Item 1. |  | CONSOLIDATED FINANCIAL STATEMENTS.
|------- |  | ----------------------------------



DYNAMIC HEALTH PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



|                                                                                                                               |  | September 30,2003 |            |   | March 31,2003 |  
|------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ---------- | - | ------------- | -
|                                                                                                                               |  | (Unaudited)       |            |   | (Restated)    |  
|ASSETS                                                                                                                         |  |                   |            |   |               |  
|Current assets:                                                                                                                |  |                   |            |   |               |  
|Cash and cash equivalents                                                                                                      |  | $                 | 35,575     |   |               | $
|Certificate of deposit                                                                                                         |  |                   |           |   |               |  
|Marketable equity securities, net                                                                                              |  |                   | 935,953    |   |               |  
|Accounts receivable, net                                                                                                       |  |                   | 123,257    |   |               |  
|Inventories                                                                                                                    |  |                   | 50,447     |   |               |  
|Prepaid expenses                                                                                                               |  |                   | 76,185     |   |               |  
|Other current assets                                                                                                           |  |                   | 7,662      |   |               |  
|Due from affiliates                                                                                                            |  |                   | 9,971      |   |               |  
|Note receivable from affiliate                                                                                                 |  |                   | 38,954     |   |               |  
|                                                                                                                               |  |                   |            |   |               |  
|Total current assets                                                                                                           |  |                   | 1,278,004  |   |               |  
|                                                                                                                               |  |                  
|Property, plant and equipment, net                                                                                             |  |                   | 1,333,142  |   |               |  
|                                                                                                                               |  |                  
|Intangible assets, net                                                                                                         |  |                   | 26,722     |   |               |  
|Investments in unconsolidated affiliates                                                                                       |  |                   | 359,225    |   |               |  
|Dividends receivable from affiliate                                                                                            |  |                   | 53,937     |   |               |  
|Other assets                                                                                                                   |  |                   | 8,125      |   |               |  
|                                                                                                                               |  |                   |            |   |               |  
|Total assets                                                                                                                   |  | $                 | 3,059,155  |   |               | $
|                                                                                                                               |  |                   |            |   |               |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                           |  |                   |            |   |               |  
|Current liabilities:                                                                                                           |  |                   |            |   |               |  
|Accounts payable                                                                                                               |  | $                 | 165,138    |   |               | $
|Other payables                                                                                                                 |  |                   | 86,334     |   |               |  
|Current portion of long-term obligations                                                                                       |  |                   | 60,872     |   |               |  
|Accrued expenses                                                                                                               |  |                   | 53,244     |   |               |  
|Accrued income taxes                                                                                                           |  |                   |           |   |               |  
|Due to related party                                                                                                           |  |                   | 47,819     |   |               |  
|Obligations to affiliates                                                                                                      |  |                   | 114,595    |   |               |  
|                                                                                                                               |  |                   |            |   |               |  
|Total current liabilities                                                                                                      |  |                   | 528,002    |   |               |  
|                                                                                                                               |  |                  
|Deferred income taxes                                                                                                          |  |                   | 336,943    |   |               |  
|Long-term obligations, less current portion                                                                                    |  |                   | 826,866    |   |               |  
|                                                                                                                               |  |                   |            |   |               |  
|Total liabilities                                                                                                              |  |                   | 1,691,811  |   |               |  
|                                                                                                                               |  |                   |            |   |               |  
|Commitments and contingencies                                                                                                  |  |                   |            |   |               |  
|                                                                                                                               |  |                  
|Shareholders equity:                                                                                                          |  |                   |            |   |               |  
|Series A Convertible Preferred stock, $.01 par value; 400,000 shares authorized; no shares issued or outstanding               |  |                   |           |   |               |  
|Series B 6% Cumulative Convertible Preferred stock, $.01 par value; 800,000 shares authorized; no shares issued or
outstanding |  |                   |           |   |               |  
|Common stock, $.01 par value; 20,000,000 shares authorized; 12,331,500 shares issued and outstanding                           |  |                   | 123,315    |   |               |  
|Additional paid-in capital                                                                                                     |  |                   | 2,445,655  |   |               |  
|Retained earnings (deficit)                                                                                                    |  |                   | (1,800,636 | ) |               |  
|Accumulated other comprehensive income:                                                                                        |  |                   |            |   |               |  
|Unrealized gains (losses) on marketable equity securities                                                                      |  |                   | 599,010    |   |               |  
|                                                                                                                               |  |                   |            |   |               |  
|Total shareholders equity                                                                                                     |  |                   | 1,367,344  |   |               |  
|                                                                                                                               |  |                   |            |   |               |  
|Total liabilities and shareholders equity                                                                                     |  | $                 | 3,059,155  |   |               | $
|                                                                                                                               |  |                   |            |   |               |  



See accompanying notes
to condensed consolidated financial statements.



- 2 -



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DYNAMIC HEALTH PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                             |  | Three Months EndedSeptember 30, |            |   | Six Months EndedSeptember 30, |  
|------------------------------------------------------------ |  | ------------------------------- | ---------- | - | ----------------------------- | -
|                                                             |  | 2003                            |            |   | 2002                          |  
|                                                             |  | (Unaudited)                     |            |   | (Restated)                    |  
|Revenues:                                                    |  |                                 |            |   |                               |  
|Distribution                                                 |  | $                               | 317,384    |   |                               | $
|Prescription services                                        |  |                                 | 22,185     |   |                               |  
|                                                             |  |                                 |            |   |                               |  
|Total revenues                                               |  |                                 | 339,569    |   |                               |  
|                                                             |  |                                 |            |   |                               |  
|Cost of goods sold:                                          |  |                                 |            |   |                               |  
|Distribution                                                 |  |                                 | 121,287    |   |                               |  
|Prescription services                                        |  |                                 | 14,373     |   |                               |  
|                                                             |  |                                 |            |   |                               |  
|Total cost of goods sold                                     |  |                                 | 135,660    |   |                               |  
|                                                             |  |                                 |            |   |                               |  
|Gross profit:                                                |  |                                 |            |   |                               |  
|Distribution                                                 |  |                                 | 196,097    |   |                               |  
|Prescription services                                        |  |                                 | 7,812      |   |                               |  
|                                                             |  |                                 |            |   |                               |  
|Total gross profit                                           |  |                                 | 203,909    |   |                               |  
|                                                             |  |                                 |            |   |                               |  
|Operating expenses:                                          |  |                                 |            |   |                               |  
|Selling, general and administrative expenses                 |  |                                 | 244,449    |   |                               |  
|Amortization expense                                         |  |                                 | 406        |   |                               |  
|Depreciation expense                                         |  |                                 | 22,093     |   |                               |  
|                                                             |  |                                 |            |   |                               |  
|Total operating expenses                                     |  |                                 | 266,948    |   |                               |  
|                                                             |  |                                 |            |   |                               |  
|Operating loss before other income and expense               |  |                                 | (63,039    | ) |                               |  
|                                                             |  |                                 |            |  
|Other income (expense):                                      |  |                                 |            |   |                               |  
|Interest income                                              |  |                                 | 768        |   |                               |  
|Other income and expenses, net                               |  |                                 | 64,877     |   |                               |  
|Losses on marketable equity securities, net                  |  |                                 |           |   |                               |  
|Equity in income (loss) of affiliated companies              |  |                                 | (2,930     | ) |                               |  
|Interest expense                                             |  |                                 | (15,188    | ) |                               |  
|                                                             |  |                                 |            |   |                               |  
|Total other income (expense)                                 |  |                                 | 47,527     |   |                               |  
|                                                             |  |                                 |            |   |                               |  
|Loss before income taxes                                     |  |                                 | (15,512    | ) |                               |  
|Income tax expense (benefit)                                 |  |                                 | (5,082     | ) |                               |  
|                                                             |  |                                 |            |   |                               |  
|Net loss                                                     |  |                                 | (10,430    | ) |                               |  
|Preferred stock dividends                                    |  |                                 |           |   |                               |  
|                                                             |  |                                 |            |   |                               |  
|Net loss available to common shareholders                    |  | $                               | (10,430    | ) |                               | $
|                                                             |  |                                 |            |   |                               |  
|Basic loss per share                                         |  | $                               |           |   |                               | $
|                                                             |  |                                 |            |   |                               |  
|Basic weighted average number of common shares outstanding   |  |                                 | 12,331,500 |   |                               |  
|                                                             |  |                                 |            |   |                               |  
|Diluted loss per share                                       |  | $                               |           |   |                               | $
|                                                             |  |                                 |            |   |                               |  
|Diluted weighted average number of common shares outstanding |  |                                 | 12,331,500 |   |                               |  
|                                                             |  |                                 |            |   |                               |  



See accompanying notes
to condensed consolidated financial statements.



- 3 -



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DYNAMIC HEALTH PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY



|                                                                                   |  |                         |  |                         |   |              |   |                          |   |                           |  |            |                                      |   |         |                          |   |           | AccumulatedOtherComprehensiveIncome |   |            |   | 
|---------------------------------------------------------------------------------- |  | ----------------------- |  | ----------------------- | - | ------------ | - | ------------------------ | - | ------------------------- |  | ---------- | ------------------------------------ | - | ------- | ------------------------ | - | --------- | ----------------------------------- | - | ---------- | - | 
|                                                                                   |  | Series APreferred Stock |  | Series BPreferred Stock |   | Common Stock |   | AdditionalPaid-inCapital |   | RetainedEarnings(Deficit) |  |            | UnrealizedGains(Losses) onSecurities |   |         | TotalShareholdersEquity |  
|                                                                                   |  | Shares                  |  | Dollars                 |   | Shares       |   | Dollars                  |   | Shares                    |  | Dollars    |                                      |   |         |                         
|Balances at March 31, 2003 (Restated)                                              |  |                        |  | $                       |  |              |  |                          | $ |                          |  | 12,331,500 |                                      | $ | 123,315 |                          | $ | 2,445,655 |                                     | $ | (1,690,048 | ) | 
|COMPREHENSIVE INCOME (LOSS)                                                        |  |                         |  |                         |   |              |   |                          |   |                           |  |            |                                      |   |         |                          |   |           |                                     |   |            |   | 
|Net loss                                                                           |  |                        |  |                         |  |              |  |                          |   |                          |  |           |                                      |   |        |                          |   |          |                                     |   | (110,588   | ) | 
|Unrealized gains (losses) on marketable equity securities (net of tax of $373,988) |  |                        |  |                         |  |              |  |                          |   |                          |  |           |                                      |   |        |                          |   |          |                                     |   |           |   | 
|                                                                                   |  |                         |  |                         |   |              |   |                          |   |                           |  |            |                                      |   |         |                          |   |           |                                     |   |            |   | 
|Comprehensive income (loss)                                                        |  |                         |  |                         |   |              |   |                          |   |                           |  |            |                                      |   |         |                          |   |           |                                     |   |            |   | 
|                                                                                   |  |                         |  |                         |   |              |   |                          |   |                           |  |            |                                      |   |         |                          |   |           |                                     |   |            |   | 
|Balances at September 30, 2003 (Unaudited)                                         |  |                        |  | $                       |  |              |  |                          | $ |                          |  | 12,331,500 |                                      | $ | 123,315 |                          | $ | 2,445,655 |                                     | $ | (1,800,636 | ) | 
|                                                                                   |  |                         |  |                         |   |              |   |                          |   |                           |  |            |                                      |   |         |                          |   |           |                                     |   |            |   | 



See accompanying notes
to condensed consolidated financial statements.



- 4 -



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DYNAMIC HEALTH PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



|                                                                                        |  | Six Months EndedSeptember 30, |         
|--------------------------------------------------------------------------------------- |  | ----------------------------- | --------
|                                                                                        |  | 2003                          |         
|Cash flows from operating activities:                                                   |  |                               |         
|Net loss                                                                                |  | $                             | (110,588
|Adjustments to reconcile net loss to net cash used in operating activities:             |  |                               |         
|Depreciation and amortization                                                           |  |                               | 44,875  
|Equity in (income) loss of affiliated companies                                         |  |                               | 5,177   
|Losses on sales of marketable equity securities, net of effect of deferred income taxes |  |                               | 65,389  
|Changes in operating assets and liabilities:                                            |  |                               |         
|Accounts receivable                                                                     |  |                               | (72,102 
|Inventories                                                                             |  |                               | (24,785 
|Due to/from affiliates, net                                                             |  |                               | 75,741  
|Prepaid expenses                                                                        |  |                               | (37,441 
|Other current assets                                                                    |  |                               | 67      
|Dividends receivable from affiliate                                                     |  |                               | (53,937 
|Other assets                                                                            |  |                               | 3,915   
|Accounts payable                                                                        |  |                               | 16,068  
|Other payables                                                                          |  |                               | 370     
|Accrued expenses                                                                        |  |                               | 10,828  
|Accrued income taxes                                                                    |  |                               | (5,746  
|Deferred income taxes                                                                   |  |                               |        
|                                                                                        |  |                               |         
|Net cash used in operating activities                                                   |  |                               | (82,169 
|                                                                                        |  |                               |         
|Cash flows from investing activities:                                                   |  |                               |         
|Purchases of property and equipment                                                     |  |                               | (2,995  
|Purchase of certificate of deposit                                                      |  |                               |        
|Redemption of certificate of deposit                                                    |  |                               | 45,917  
|Purchase of investment                                                                  |  |                               | (6,500  
|Proceeds from sale of marketable equity securities                                      |  |                               | 4,781   
|Proceeds from related party receivables                                                 |  |                               |        
|Increase in intangible assets                                                           |  |                               | (2,856  
|                                                                                        |  |                               |         
|Net cash provided by investing activities                                               |  |                               | 38,347  
|                                                                                        |  |                               |         
|Cash flows from financing activities:                                                   |  |                               |         
|Proceeds from issuance of long-term obligations                                         |  |                               | 38,206  
|Payments of long-term obligations                                                       |  |                               | (30,542 
|Proceeds from issuance of related party obligations                                     |  |                               | 47,819  
|                                                                                        |  |                               |         
|Net cash provided by financing activities                                               |  |                               | 55,483  
|                                                                                        |  |                               |         
|Net increase (decrease) in cash                                                         |  |                               | 11,661  
|Cash and cash equivalents at beginning of period                                        |  |                               | 23,914  
|                                                                                        |  |                               |         
|Cash and cash equivalents at end of period                                              |  | $                             | 35,575  
|                                                                                        |  |                               |         



See accompanying notes
to condensed consolidated financial statements.



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DYNAMIC HEALTH PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - (Continued)



|                                                                                          |  | Six Months EndedSeptember 30,
|----------------------------------------------------------------------------------------- |  | -----------------------------
|                                                                                          |  | 2003                         
|Supplemental disclosure of cash flow information:                                         |  |                              
|Cash paid during the period for interest                                                  |  | $                            
|                                                                                          |  |                              
|Cash paid during the period for income taxes                                              |  | $                            
|                                                                                          |  |                              
|Supplemental schedule of non-cash investing activities:                                   |  |                              
|Exchange of notes receivable from affiliate to investment in preferred stock of affiliate |  | $                            
|                                                                                          |  |                              
|Supplemental schedule of non-cash financing activities:                                   |  |                              
|Conversion of Series B 6% Cumulative Convertible Preferred stock into common stock        |  | $                            
|                                                                                          |  |                              
|Accrual of preferred stock dividends                                                      |  | $                            
|                                                                                          |  |                              
|Issuance of common stock in payment of accrued preferred share dividends                  |  | $                            
|                                                                                          |  |                              



See accompanying notes
to condensed consolidated financial statements.



- 6 -



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DYNAMIC HEALTH PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED

SEPTEMBER 30, 2003 AND 2002 (UNAUDITED)



NOTE A-BASIS OF PRESENTATION



The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with U.S. Generally Accepted Accounting Principles for interim financial information and with the instruction to Form 10-QSB and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by U.S. Generally Accepted Accounting Principles for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three and six months ended September 30, 2003 and 2002 are not necessarily indicative of the results that may be expected for the year ending March 31, 2004. For further information, refer to the
consolidated financial statements and footnotes included in the Companys Form 10-KSB for the year ended March 31, 2003.



Restatements



Certain reclassifications have been made to the financial statements as of and for the three and six months ended September 30, 2002, and as of March 31,
2003, to conform to the presentation as of and for the three and six months ended September 30, 2003. Unless otherwise noted, all information presented has been adjusted to retroactively reflect the four-for-one forward split of the Companys
common stock in August 2003 (see Note D).



NOTE B-PRINCIPLES OF
CONSOLIDATION



The condensed consolidated financial
statements as of and for the three and six months ended September 30, 2003 and 2002 include the accounts of Dynamic Health Products, Inc. and its principally wholly-owned subsidiaries (collectively the Company), Pharma Labs Rx, Inc.,
Dynamic Life Products, Inc., Herbal Health Products, Inc., Online Meds Rx, Inc. and its subsidiary Dynamic Life Asia, LLC, and Dynamic Financials Corporation and its subsidiary Bryan Capital Limited Partnership. Significant intercompany balances and
transactions have been eliminated in consolidation.



NOTE C-INVESTMENTS IN
UNCONSOLIDATED AFFILIATES



Investments in companies in
which the Company has a 20% to 50% interest are accounted for using the equity method. Accordingly, the investments are carried at cost, adjusted for the Companys proportionate share of their undistributed earnings and losses.



Investment in net assets of an affiliated company, Vertical Health Solutions,
Inc. (Vertical), was accounted for under the equity method until December 31, 2002, at which time the Companys percentage of ownership in Vertical was reduced from approximately 21.0% to approximately 19.5%. At September 30, 2003,
the Company owned approximately 19.2% of Vertical. As of September 30, 2003 and 2002, the investment amounted to $357,902 and $405,108, respectively. For the three and six months ended September 30, 2002, $30,178 and $34,238, respectively, were
recorded as the Companys share of Verticals loss.



- 7 -



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The consolidated results of operations of Vertical for the three and six months ended September 30, 2002
are summarized below:



|                                        |  | Three MonthsEndedSeptember 30, 2002 |          |   | Six MonthsEndedSeptember 30, 2002 |  
|--------------------------------------- |  | ----------------------------------- | -------- | - | --------------------------------- | -
|                                        |  | (Unaudited)                         |          |   | (Unaudited)                       |  
|Condensed Income Statement Information: |  |                                     |          |   |                                   |  
|Net sales                               |  | $                                   | 488,005  |   |                                   | $
|Gross profit                            |  |                                     | 182,548  |   |                                   |  
|Net loss                                |  |                                     | (144,072 | ) |                                   |  



Investment in net
assets of an affiliated company, Tribeca Beverage Company (Tribeca), was accounted for under the equity method until March 31, 2003, at which time it was determined by management that the investment was worthless. As of September 30,
2002, the investment amounted to $170,636. For the three and six months ended September 30, 2002, $5,318 and $10,227, respectively, were recorded as the Companys share of Tribecas loss. At September 30, 2003 and 2002, the Company owned
30% and 20%, respectively, of Tribeca.



The results of
operations for Tribeca for the three and six months ended September 30, 2002 are summarized below:



|                                        |  | Three MonthsEndedSeptember 30, 2002 |         |   | Six MonthsEndedSeptember 30, 2002 |  
|--------------------------------------- |  | ----------------------------------- | ------- | - | --------------------------------- | -
|                                        |  | (Unaudited)                         |         |   | (Unaudited)                       |  
|Condensed Income Statement Information: |  |                                     |         |   |                                   |  
|Net sales                               |  | $                                   | 15,908  |   |                                   | $
|Gross profit                            |  |                                     | 7,202   |   |                                   |  
|Net loss                                |  |                                     | (26,589 | ) |                                   |  



Investment in net
assets of an affiliated company, DrugMax, Inc. (DrugMax), was accounted for under the equity method until November 22, 2002, at which time the Company distributed all of its shares of common stock of DrugMax to its shareholders. For the
three and six months ended September 30, 2002, $3,339,051 and $3,494,265, respectively, were recorded as the Companys share of DrugMaxs loss. At September 30, 2003 and 2002, the Company owned zero and approximately 27% of DrugMax,
respectively.



The consolidated results of operations of
DrugMax for the three and six months ended September 30, 2002 are summarized below:



|                                        |  | Three MonthsEndedSeptember 30, 2002 |             |   | Six MonthsEndedSeptember 30, 2002 |  
|--------------------------------------- |  | ----------------------------------- | ----------- | - | --------------------------------- | -
|                                        |  | (Unaudited)                         |             |   | (Unaudited)                       |  
|Condensed Income Statement Information: |  |                                     |             |   |                                   |  
|Net sales                               |  | $                                   | 73,736,121  |   |                                   | $
|Gross profit                            |  |                                     | 2,279,786   |   |                                   |  
|Net income (loss)                       |  |                                     | (12,298,531 | ) |                                   |  



- 8 -



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On April 30, 2003, the Company entered into a joint venture agreement with a company to form a Florida
limited liability company, Generilean Health Systems, LLC (Generilean), to market various products. Under the terms of the agreement, the Company has a 50% ownership and shares profits and losses equally. The Company is required to
contribute half of the costs incurred in the initial marketing of the products. The Company accounts for the investment under the equity method of accounting. As of September 30, 2003, the investment on the records of the Company and the operations
of the joint venture were not material.



NOTE DSHAREHOLDERS
EQUITY



Stock Split



On July 29, 2003, the Board of Directors of the Company approved a forward
split of its outstanding shares of common stock on a four-for-one basis effective August 12, 2003, such that for each share of Company common stock held as of August 1, 2003, each shareholder was entitled to receive three additional shares of
Company common stock.



Effective August 1, 2003, upon the
filing by the Company of Articles of Amendment to its Articles of Incorporation on July 30, 2003, the four-for-one forward stock split was effected, with a record date of August 1, 2003. The payment date for the additional shares of Company common
stock was August 12, 2003. After the forward split the Company had 12,331,500 shares of common stock issued and outstanding.



The accompanying unaudited condensed consolidated financial statements have been retroactively restated, as of March 31, 2003, and as of and for the three
and six months ended September 30, 2002, to reflect the four-for-one stock split.



Comprehensive Income



The Company
utilizes the guidance provided by Statement of Financial Accounting Standards No. 130 (SFAS 130), Reporting Comprehensive Income, which became effective for the Company for the fiscal year ended March 31, 1999. SFAS 130 establishes
standards for reporting and display of comprehensive income within the general purpose financial statements and requires reclassification of applicable financial statement components for any prior period comparative financial statement components.
The Company implemented SFAS 130 as of and for the three months ended June 30, 2000 based on comprehensive income transactions being present. The Company has elected to present the comprehensive income items within the shareholders equity
section of the balance sheet in addition to presenting a condensed consolidated statement of changes in shareholders equity statement. The following presents comprehensive income as of September 30, 2003:



|                                                                        |  | Before-TaxAmount |            |   | Tax (Expense)Benefit |   | Net-of-TaxAmount | 
|----------------------------------------------------------------------- |  | ---------------- | ---------- | - | -------------------- | - | ---------------- | 
|Unrealized losses (gains) on marketable equity securities held for sale |  | $                | (1,038,854 | ) |                      | $ | 373,988          | 
|                                                                        |  |                  |            |   |                      |   |                  | 
|Other comprehensive income                                              |  | $                | (1,038,854 | ) |                      | $ | 373,988          | 
|                                                                        |  |                  |            |   |                      |   |                  | 



- 9 -



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NOTE E-SEGMENT INFORMATION



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 three and six months ended
September 30, 2003, the Company had two industry segments: Distribution and Prescription Services. For the three and six months ended September 30, 2002, the Company had one industry segment, Distribution. In addition to being presented separately,
intersegment financial data is included in the gross segment amounts disclosed below in order to present accurate segment information, whereas on the condensed consolidated balance sheets and statements of operations, all intercompany transactions
have been eliminated in consolidation.



Presented below is
condensed segment information as of and for the three and six months ended September 30, 2003:



|                         |  | Three MonthsEndedSeptember 30, 2003 |         |   | Six MonthsEndedSeptember 30, 2003 |  
|------------------------ |  | ----------------------------------- | ------- | - | --------------------------------- | -
|                         |  | (Unaudited)                         |         |   | (Unaudited)                       |  
|Revenues:                |  |                                     |         |   |                                   |  
|Distribution             |  | $                                   | 317,384 |   |                                   | $
|Prescription services    |  |                                     | 22,185  |   |                                   |  
|Intersegment sales       |  |                                     |        |   |                                   |  
|Gross profit:            |  |                                     |         |   |                                   |  
|Distribution             |  |                                     | 196,097 |   |                                   |  
|Prescription services    |  |                                     | 7,812   |   |                                   |  
|Operating income (loss): |  |                                     |         |   |                                   |  
|Distribution             |  |                                     | 58,765  |   |                                   |  
|Prescription services    |  |                                     | (5,243  | ) |                                   |  



|                      |  | As ofSeptember 30, 2003
|--------------------- |  | -----------------------
|                      |  | (Unaudited)            
|Assets:               |  |                        
|Distribution          |  | $                      
|Prescription services |  |                        
|Corporate             |  |                        



NOTE F-INCOME TAXES



The Company utilizes the guidance provided by Statement of Financial
Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes. Under SFAS 109, the Company uses the asset and liability method which recognizes the amount of current and deferred taxes payable or refundable based on transactions
recorded as of and for the periods



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presented in the consolidated financial statements as determined by the enacted tax laws and tax rates. The Company has a current and deferred tax liability
recorded as of September 30, 2003 of zero and $336,943, respectively. The deferred tax liability is primarily a result of the differences arising between book and tax basis of unrealized gains and losses, net, on marketable equity securities.



NOTE G-RELATED PARTY TRANSACTIONS



On October 1, 1999, the Company entered into a triple-net lease agreement
with Innovative Companies, Inc. (Innovative), an affiliate of the Company, whereby Innovative agreed to lease the Companys land and 33,222 square foot building in Largo, Florida for a term of ten years. The initial rental under the
lease was approximately $192,000 annually. The lease provides for an annual cost-of-living increase. This facility serves as Innovatives corporate headquarters and also serves as part of Innovatives offices, manufacturing, warehousing
and shipping operations. Jugal K. Taneja, a principal shareholder and Chairman of the Board of the Company, is also a principal shareholder, and Chairman of the Board of Innovative.



On March 22, 2002, the Company entered into a Sublease and Consent agreement with Innovative Health Products, Inc., a
wholly-owned subsidiary of Innovative, whereby the Company agreed to sublease approximately 5,200 square feet of office and warehouse space for its executive offices and its operations in Largo, Florida. This facility serves as the Companys
corporate headquarters and is also used for offices, warehousing and shipping operations. The facility was sublet for a term of approximately one year, ending on March 31, 2003. The sublease contains an option to continue the sublease subsequent to
March 31, 2003, on a month-to-month basis through January 10, 2004, unless terminated earlier. This option to continue has been exercised. The rental under the sublease is $33,384 annually.



Amounts due from and to affiliates represent balances owed to or from the
Company for sales or purchases occurring in the normal course of business. Amounts due from and to these affiliates are in the nature of trade payables or receivables and fluctuate based on sales and purchasing volume and payments received. The
Company believes that material affiliated transactions and loans, and business relationships entered into by the Company or its subsidiaries with certain of its officers, directors and principal shareholders or their affiliates were on terms no less
favorable than the Company could have obtained from independent third parties. Any future transactions between the Company and its officers, directors or affiliates will be subject to approval by a majority of disinterested directors or shareholders
in accordance with Florida law.



For the three and six months
ended September 30, 2003, purchases of products from subsidiaries of Innovative were $114,754 and $165,703, respectively, and for the three and six months ended September 30, 2002, purchases of products from subsidiaries of Innovative were $46,371
and $94,122, respectively. For the three and six months ended September 30, 2003, sales of products to a subsidiary of Innovative were $500 and $500, respectively, and for the three and six months ended September 30, 2002, sales of products to a
subsidiary of Innovative were zero and $3,394, respectively. As of September 30, 2003 and March 31, 2003, $206 and zero, respectively, were due from Innovative and are in included in amounts due from affiliates, and $101,215 and $29,140,
respectively, were due to subsidiaries of Innovative and are included in obligations to affiliates.



Research and development is primarily contracted through Innovative, and product nutritional information, as well as product label requirements, are
prepared by Innovatives



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regulatory staff personnel. Research and development costs have been immaterial to the operations of the Company, and are charged to expense as incurred.



For the three and six months ended September 30, 2002, sales
of products to a subsidiary of DrugMax were zero and $5,760, respectively. There were no sales of products to DrugMax or its subsidiaries during the three or six months ended September 30, 2003, and there were no purchases of products from DrugMax
or its subsidiaries during the three and six months ended September 30, 2003 and 2002. Jugal K. Taneja, a principal shareholder and Chairman of the Board of the Company, is also a principal shareholder, Chairman of the Board and Chief Executive
Officer of DrugMax. William L. LaGamba, the Chief Operating Officer and President of DrugMax, is also a principal shareholder of the Company.



For the three and six months ended September 30, 2003, sales of products to Generilean, an affiliate of the Company, were $410 and $410, respectively.
Generilean was formed in April 2003. As of September 30, 2003, $437 was due from Generilean and is included in amounts due from affiliates.



For the three and six months ended September 30, 2003, the Company charged Vertical, an affiliate of the Company, consulting fees of $1,763 and $2,975,
respectively, for accounting and administrative services. The Company did not provide consulting services for Vertical during the three and six months ended September 30, 2002. The charge is on an hourly basis for services rendered. As of September
30, 2003 and March 31, 2003, $8,122 and $6,063, respectively, were due from Vertical and are included in amounts due from affiliates. For the three and six months ended September 30, 2003, the Company recorded $10,835 and $53,937, respectively, of
income from Vertical for preferred stock dividends. As of September 30, 2003 and March 31, 2003, $53,937 and zero, respectively, were due from Vertical for these dividends and are included in dividends receivable from affiliate.



For the three and six months ended September 30, 2003, purchases of products
from T & L, Inc. (T&L), an affiliate of Mandeep K. Taneja, Chief Executive Officer and President of the Company, were $5,772 and $23,113, respectively. For the three and six months ended September 30, 2002, there were no
purchases of products from T&L. In addition, there were no purchases of products from T & L for the three and six months ended September 30, 2003 and 2002. For the three and six months ended September 30, 2003, the Company charged T & L
fees of $1,126 and $1,126, respectively, for prescription services provided. As of September 30, 2003 and March 31, 2003, $2,073 and zero, respectively, were due to T & L and are included in obligations to affiliates.



For the three and six months ended September 30, 2003, sales of products to
OTB Products, Inc. (OTB), an affiliate of the Company, were $410 and $410, respectively. For the three and six months ended September 30, 2002, there were no sales of products to OTB. There were no purchases of products from OTB for the
three and six months ended September 30, 2003 and 2002. For the three and six months ended September 30, 2003, the Company charged OTB fees of $2,500 and $2,500, respectively, for prescription services provided and $1,206 and $1,206, respectively,
for consulting services provided. As of September 30, 2003, $1,206 was due from OTB and is included in amounts due from affiliates, and $7,460 was due to OTB and is included in obligations to affiliates. OTB is a 50% partner in Generilean, a Florida
limited liability company in which the Company is a 50% partner.



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NOTE H-SUBSEQUENT EVENT



Effective October 1, 2003, the Company sold 250,000 shares of Series A Preferred Stock of Vertical Health Solutions, Inc. for $250,000. Also effective
October 1, 2003, the Companys remaining 179,846 shares of Series A Preferred Stock of Vertical were converted into 179,846 shares of common stock of Vertical, and the Company received payment of $53,936 of dividends receivable from Vertical in
the form of 53,936 shares of common stock of Vertical.



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|Item 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|------- |  | --------------------------------------------------------------------------------------



The following management discussion and analysis should be read in conjunction with the Condensed Consolidated Financial
Statements and Notes thereto presented elsewhere in this Form 10-QSB. The discussion is based upon such condensed consolidated financial statements that have been prepared in accordance with U.S. Generally Accepted Accounting Principles.



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 statements. 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 Condensed Consolidated Financial Statements and notes thereto appearing elsewhere in this Report. The discussion is based upon such condensed consolidated financial statements, which have been prepared in accordance with U.S. Generally Accepted
Accounting Principles.



Overview



The Company derives its revenues from developing, wholesaling and
distributing a wide variety of non-prescription dietary supplements, and health and beauty care products. We also derive revenues from services provided in connection with prescription services.



Revenues are billed and recognized as product is shipped, net of discounts,
allowances, returns and credits. The Company has a no return policy. However, with certain large customers, industry practice mandates the acceptance of certain returns, which have thus far been immaterial to the Company.



Cost of goods sold is comprised of direct product costs, contracted service
fees, direct personnel compensation and other statutory benefits and indirect costs relating to labor to support the warehousing of product and other warehousing overhead. Research and development expenses are charged against cost of goods sold as
incurred and are not material to the Companys operations. Selling, general and administrative costs include management and general office salaries, advertising and promotional expenses, sales and marketing and other indirect operating costs.
Interest and other income (expense) consist primarily of interest income associated with notes receivable, and interest expense associated with borrowings to finance capital and other working capital needs.



Results of Operations



Three And Six Months Ended September 30, 2003 Compared To Three And Six Months Ended September 30, 2002



Revenues. The Company generated total revenues of $339,569 and
$611,774, respectively, for the three and six months ended September 30, 2003, an increase of $94,988 or 38.8% and $191,372 or 45.5%, compared to $244,581 and $420,402, respectively, for the three



- 14 -



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and six months ended September 30, 2002. Distribution revenues increased $72,803 or 29.8% and $92,112 or 21.9%, to $317,384 and $512,514, respectively, for
the three and six months ended September 30, 2003, compared to $244,581 and $420,402, respectively, for the three and six months ended September 30, 2002. The increase was primarily attributable to increased revenues from existing customers, with
the introduction of new products, as well as increased revenues as a result of expansion of the Companys customer base. The Company commenced its prescription services operations in March 2003. Prescription services revenues were $22,185 and
$99,260, respectively, for the three and six months ended September 30, 2003.



Gross profit. The Company achieved total gross profit of $203,909 and $341,195, respectively, for the three and six months ended September 30, 2003, an increase of $55,124 or 37.0% and $87,274 or 34.4%,
compared to $148,785 and $253,921, respectively, for the three and six months ended September 30, 2002. Total gross margins, as a percentage of revenues, increased to 60.0% for the three months ended September 30, 2003 from 60.8% for the three
months ended September 30, 2002 and decreased from 60.4% for the six months ended September 30, 2002 to 55.8% for the six months ended September 30, 2003. Distribution gross profit increased $47,312 or 31.8% and $56,694 or 22.3%, to $196,097 and
$310,615, respectively, for the three and six months ended September 30, 2003, compared to $148,785 and $253,921, respectively, for the three and six months ended September 30, 2002. The increase was primarily attributable to a change in the
Companys mix of sales, due to increased sales of products that yield a higher gross margin, as well as an increase in the Companys customer base and increased sales to existing customers. Prescription services gross profit was $7,812 and
$30,580, respectively, for the three and six months ended September 30, 2003. There was no prescription services gross profit for the three and six months ended September 30, 2002 since the Company did not commence its prescription services
operations until March 2003.



Operating expenses. The
Company incurred operating expenses of $266,948 and $515,250, respectively, for the three and six months ended September 30, 2003, compared to $249,235 and $518,675, respectively, for the three and six months ended September 30, 2002. For the three
months ended September 30, 2003, these expenses include various administrative, sales, marketing and other direct operating expenses of $244,449, and depreciation and amortization expenses of $22,499, compared to $225,267 of various administrative,
sales, marketing and other direct operating expenses, and depreciation and amortization expenses of $23,968 for the three months ended September 30, 2002. For the six months ended September 30, 2003, these expenses include various administrative,
sales, marketing and other direct operating expenses of $470,375, and depreciation and amortization expenses of $44,875, compared to $471,364 of various administrative, sales and marketing and other direct operating expenses, and depreciation and
amortization expenses of $47,311 for the six months ended September 30, 2002. Operating expenses, excluding amortization and depreciation expense decreased to 72.0% and 76.9% of revenues, respectively, for the three and six months ended September
30, 2003, from 92.1% and 112.1% of revenues, respectively, for the three and six months ended September 30, 2002. The decrease in operating expenses as a percentage of revenues was primarily attributable to the increase in revenues, whereas there
were no material variances in the actual dollar amount of these expenses during the respective periods.



Interest income. Interest income was $768 and $1,535, respectively, for the three and six months ended September 30, 2003, compared to $23,520 and
$57,680, respectively, for the three and six months ended September 30, 2002. The decrease in interest income was a result of a decrease in notes receivable, and a decrease in cash and cash equivalents.



- 15 -



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Interest expense. Interest expense was $15,188 and $31,882, respectively, for the three and six
months ended September 30, 2003, compared to $16,035 and $34,043, respectively, for the three and six months ended September 30, 2002. The decrease in interest expense was primarily a result of a decrease in the Companys outstanding
obligations, as well as favorable interest rate changes.



Income taxes. As of September 30, 2003, the Company had no accrued income tax liability and a deferred income tax liability of $336,943. The deferred income tax liability was primarily associated with unrealized gains on marketable
equity securities. During the three and six months ended September 30, 2003, the Company recorded an income tax benefit of $5,082 and $42,127, respectively, of which $37,045 was associated with the reversal of unrealized losses on marketable equity
securities.



Net loss per share.Net loss per share was
zero and $0.01, respectively, for the three and six months ended September 30, 2003, compared to net loss per share of $0.17 and $0.19, respectively, and for the three and six months ended September 30, 2002. For the three months ended September 30,
2003, the decrease in net loss per share was primarily a result of a decrease in the Companys operating loss before other income and expense of $37,411, a decrease in equity in loss of affiliated companies of $3,371,617, an increase in other
income and expenses, net, of $12,659 and a decrease in losses on marketable equity securities, net, of $21,570, partially offset by a decrease in income tax benefit of $1,323,318. For the six months ended September 30, 2003, the decrease in net loss
per share was primarily a result of a decrease in the Companys operating loss before other income and expense of $90,699, a decrease in equity in loss of affiliated companies of $3,533,553 and an increase in other income and expenses, net, of
$59,955, partially offset by an increase in losses on marketable equity securities, net, of $80,864 and a decrease in income tax benefit of $1,286,273.



Inflation; Seasonality.Management believes that there was no material effect on operations or the financial condition of the Company as a result
of inflation for the three and six months ended September 30, 2003 and 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 the usage of available cash
reserves. The Company had working capital of $750,002 at September 30, 2003 and a working capital deficit of $124,052 at March 31, 2003.



Net cash used in operating activities was $82,169 for the six months ended September 30, 2003, as compared to net cash used in operating activities of
$405,758 for the six months ended September 30, 2002. The usage of cash was primarily attributable to an increase in accounts receivable of $72,102, an increase in inventories of $24,785, an increase in prepaid expenses of $37,441, an increase in
dividends receivable from affiliate of $53,937 and a decrease in accrued income taxes of $5,746, partially offset by an increase in amounts due to/from affiliates, net, of $75,741, a decrease in other current assets of $67, a decrease in other
assets of $3,915, an increase in accounts payable of $16,068, an increase in other payables of $370 and an increase in accrued expenses of $10,828.



Net cash provided by investing activities was $38,347, representing the redemption of a certificate of deposit of $45,917 and proceeds from the sale of
marketable equity securities of



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$4,781, partially offset by the purchase of property and equipment of $2,995, the purchase of an investment of $6,500 and an increase in intangible assets of
$2,856.



Net cash provided by financing activities was $55,483,
representing proceeds from the issuance of long-term obligations of $38,206 and proceeds from the issuance of related party obligations of $47,819, partially offset by payments of long-term obligations of $30,542.



At September 30, 2003, the Company had $35,575 in cash and cash equivalents,
as compared to $276,932 at September 30, 2002.



Management
believes that cash expected to be generated from operations and current cash reserves will be sufficient for the Company to meet its capital expenditures and working capital needs, for its operations as presently conducted, with the Companys
recent introduction of new products. 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 and possible acquisitions. In
particular, if cash flows from operations are not sufficient, it will be necessary for the Company to seek additional financing. While there can be no assurance that such financing would be available in amounts and on terms acceptable to the
Company, management believes that such financing would likely be available on acceptable terms.



Effective October 1, 2003, the Company sold 250,000 shares of Series A Preferred Stock of Vertical Health Solutions, Inc. for $250,000. Also effective
October 1, 2003, the Companys remaining 179,846 shares of Series A Preferred Stock of Vertical were converted into 179,846 shares of common stock of Vertical, and the Company received payment of $53,936 of dividends receivable from Vertical in
the form of 53,936 shares of common stock of Vertical.



|Item 3. |  | CONTROLS AND PROCEDURES.
|------- |  | ------------------------



Within the 90 days prior to the date of filing of this quarterly report on Form 10-QSB, the Companys management carried out an evaluation, under the
supervision and with the participation of the Companys Disclosure Committee, including the Companys Chief Executive Officer and its Chief Financial Officer, of the effectiveness of the design and operation of the Companys
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14). Based upon that evaluation, the Companys Chief Executive Officer and Chief Financial Officer have concluded that the Companys disclosure controls
and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Companys
management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure and are effective to ensure that such information is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms. There were no significant changes in the Companys internal controls or in other factors that could significantly affect those controls subsequent to the date of
their evaluation.



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PART II - OTHER INFORMATION



|Item 1. |  | LEGAL PROCEEDINGS.
|------- |  | ------------------



The Company is involved in litigation in Florida from Gerald Schmoling, a former President of a subsidiary of the Company. However, in the past year the
plaintiff has not taken any action with respect to this matter. Management believes that such claim is frivolous and the litigation is being defended.



The Company is involved in litigation in New Jersey over a claim for commissions. Management believes that such claim is without merit and is defending it
aggressively.



The Company is involved in litigation in Georgia
from Hi-Tech Pharmaceuticals, Inc. (Hi-Tech) over claims regarding intellectual property matters. Plaintiff seeks unspecified monetary damages as well as non-monetary relief. Management of the Company does not believe that it has any
material exposure with regard to the allegations of the claims. The Company is vigorously defending this action. In addition, the Company has instituted counterclaims against Hi-Tech and Jared Wheat, the President of Hi-Tech. We are seeking relief
for libel, slander and tortious interference in amounts in excess of $75,000, exclusive of interest and costs.



From time to time the Company is subject to litigation incidental to its business including possible product liability claims. Such claims, if successful,
could exceed applicable insurance coverage. The Company is not currently a party to any legal proceedings which it believes will have a material adverse affect on its results of operations.



|Item 2. |  | CHANGES IN SECURITIES AND USE OF PROCEEDS.
|------- |  | ------------------------------------------



On July 30, 2003, the Company filed Articles of Amendment to its Articles of Incorporation to effectuate a four-for-one forward split of its outstanding
shares of common stock, with a record date of August 1, 2003, such that for each share of Company common stock held as of August 1, 2003, each shareholder was entitled to receive three additional shares of Company common stock. The payment date for
the additional shares of Company common stock was August 12, 2003. After the forward split the Company had 12,331,500 shares of common stock issued and outstanding.



|Item 3. |  | DEFAULTS UPON SENIOR SECURITIES.
|------- |  | --------------------------------



Not applicable.



|Item 4. |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
|------- |  | ----------------------------------------------------



There were no matters submitted to a vote of security holders during the six months ended September 30, 2003.



|Item 5. |  | OTHER INFORMATION.
|------- |  | ------------------



None.



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|Item 6. |  | EXHIBITS AND REPORTS ON FORM 8-K.
|------- |  | ---------------------------------



|(a) | Exhibits.
|--- | ---------



The following exhibits are filed with this report:



|     | 
|---- | 
|3.1  | 
|     | 
|31.1 | 
|     | 
|31.2 | 
|     | 
|32.1 | 
|     | 
|32.2 | 

---

| | (1) | Incorporated by reference to the Companys Quarterly Report on Form 10-QSB/A for the quarter ended June 30, 2003, file number 0-23031, filed in Washington, D.C.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Reports on Form 8-K.
|--- | --------------------



During the three month period ending September 30, 2003, the Company filed no reports on Form 8-K.



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SIGNATURES



In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                       |  |  |  | Dynamic Health Products, Inc.
|---------------------- |  |  |  | -----------------------------
|                       |  |  | 
|Date: November 6, 2003 |  |  |  | By:                          
|                       |  |  |  |                              
|                       |  |  |  |                              
|                       |  |  | 
|Date: November 6, 2003 |  |  |  | By:                          
|                       |  |  |  |                              



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