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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-QSB

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

For the quarter ended September 30,
2002

OR

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

Commission File Number
001-16185

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INNOVATIVE COMPANIES, INC.(Exact name of small business issuer as specified in its
charter)

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| | STATE OF FLORIDA(State or other jurisdiction ofincorporation or organization) |  | 59-2600232(IRS EmployerIdentification No.) | 
| | ----------------------------------------------------------------------------- |  | ------------------------------------------ | 

| | 6950 Bryan Dairy Road, Largo, Florida(Address of principal executive offices) |  | 33777(Zip Code) | 
| | ----------------------------------------------------------------------------- |  | --------------- | 

Issuers telephone number, including area code: (727) 544-8866

GO 2 PHARMACY, INC.(Former name, if changed since last report)

Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. x Yes o No

The number of shares outstanding of the Issuers common stock at $.01 par value as of November 12, 2002 was 7,025,000.

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PART I  FINANCIAL INFORMATION

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

INNOVATIVE COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS

|                                          |  | March 31,2002 |           | September 30,2002 |  
|----------------------------------------- |  | ------------- | --------- | ----------------- | -
|                                          |  |               |           |                   |  
|                                          |  | (Audited)     |           | (Unaudited)       |  
|                                          |  |               |           |                   |  
|ASSETS                                    |  |               |           |                   |  
|                                          |  |               |           |                   |  
|Current assets:                           |  |               |           |                   |  
|Cash and cash equivalents                 |  | $             | 392,638   |                   | $
|Certificate of deposit, restricted        |  |               | 679,205   |                   |  
|Accounts receivable, net                  |  |               | 1,730,261 |                   |  
|Accounts receivable, other                |  |               |          |                   |  
|Inventories, net                          |  |               | 2,121,406 |                   |  
|Prepaid expenses and other current assets |  |               | 176,812   |                   |  
|Due from affiliates                       |  |               | 427,588   |                   |  
|                                          |  |               |           |                   |  
|Total current assets                      |  | $             | 5,527,910 |                   | $
|                                          |  |               |           |                   |  
|Property, leaseholds and equipment, net   |  |               | 1,612,156 |                   |  
|                                          |  |               |           |                   |  
|Intangible assets, net                    |  |               | 957,932   |                   |  
|                                          |  |               |           |                   |  
|Other assets                              |  |               | 127,905   |                   |  
|                                          |  |               |           |                   |  
|                                          |  |               |           |                   |  
|Total assets                              |  | $             | 8,225,903 |                   | $
|                                          |  |               |           |                   |  



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|LIABILITIES AND SHAREHOLDERS EQUITY                                                                            |  |   |             |   |   |             |  
|--------------------------------------------------------------------------------------------------------------- |  | - | ----------- | - | - | ----------- | -
|                                                                                                                |  |   |             |   |   |             |  
|Current liabilities:                                                                                            |  |   |             |   |   |             |  
|Accounts payable                                                                                                |  | $ | 1,432,917   |   | $ | 1,192,279   |  
|Credit lines payable                                                                                            |  |   | 647,789     |   |   | 647,789     |  
|Current portion of long-term obligations                                                                        |  |   | 254,234     |   |   | 213,746     |  
|Accrued expenses                                                                                                |  |   | 258,349     |   |   | 300,762     |  
|Obligations to related parties                                                                                  |  |   | 1,151       |   |   | 1,017       |  
|Obligations to affiliates                                                                                       |  |   | 404,324     |   |   | 227,969     |  
|                                                                                                                |  |   |             |   |  
|Total current liabilities                                                                                       |  | $ | 2,998,764   |   | $ | 2,583,562   |  
|                                                                                                                |  |   |             |   |   |             |  
|Long-term obligations, less current portion                                                                     |  |   | 381,152     |   |   | 302,695     |  
|                                                                                                                |  |   |             |   |  
|Total liabilities                                                                                               |  | $ | 3,379,916   |   | $ | 2,886,257   |  
|                                                                                                                |  |   |             |   |  
|                                                                                                                |  |   |             |   |   |             |  
|Redeemable series A preferred stock, no par value, $10 face value                                               |  |   |             |   |   |             |  
|150,000 shares authorized; 117,500 and 97,500 shares issued and outstanding,        at face value, respectively |  | $ | 1,175,000   |   | $ | 975,000     |  
|                                                                                                                |  |   |             |   |   |             |  
|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                                                                                      |  |   | 29,953,495  |   |   | 29,953,495  |  
|Retained earnings (deficit)                                                                                     |  |   | (26,352,758 | ) |   | (25,702,200 | )
|                                                                                                                |  |   |             |   |   |             |  
|                                                                                                                |  |   |             |   |  
|Total shareholders equity                                                                                      |  | $ | 3,670,987   |   | $ | 4,321,545   |  
|                                                                                                                |  |   |             |   |  
|Total liabilities and shareholders equity                                                                      |  | $ | 8,225,903   |   | $ | 8,182,802   |  
|                                                                                                                |  |   |             |   |  

See accompanying notes to condensed consolidated financial statements.





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INNOVATIVE COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

|                                                                            |  | Three Months EndedSeptember 30, |           | Six Months EndedSeptember 30, |  
|--------------------------------------------------------------------------- |  | ------------------------------- | --------- | ----------------------------- | -
|                                                                            |  |                                 |           |                               |  
|                                                                            |  | 2001                            |           | 2002                          |  
|                                                                            |  |                                 |           |                               |  
|Revenues:                                                                   |  |                                 |           |                               |  
|                                                                            |  |                                 |           |                               |  
|PBM                                                                         |  | $                               | 338,296   |                               | $
|Distribution                                                                |  |                                 | 3,973     |                               |  
|Manufacturing                                                               |  |                                 | 1,501,865 |                               |  
|                                                                            |  |                                 |           |                               |  
|                                                                            |  |                                 |           |                               |  
|Total revenues                                                              |  | $                               | 1,844,134 |                               | $
|                                                                            |  |                                 |           |                               |  
|                                                                            |  |                                 |           |                               |  
|Cost of goods sold:                                                         |  |                                 |           |                               |  
|                                                                            |  |                                 |           |                               |  
|PBM                                                                         |  |                                 | 263,513   |                               |  
|Distribution                                                                |  |                                 | 50,009    |                               |  
|Manufacturing                                                               |  |                                 | 1,022,122 |                               |  
|                                                                            |  |                                 |           |                               |  
|                                                                            |  |                                 |           |                               |  
|Total cost of goods sold                                                    |  | $                               | 1,335,644 |                               | $
|                                                                            |  |                                 |           |                               |  
|                                                                            |  |                                 |           |                               |  
|Gross profit:                                                               |  |                                 |           |                               |  
|PBM                                                                         |  |                                 | 74,783    |                               |  
|Distribution                                                                |  |                                 | (46,036   | )                             |  
|Manufacturing                                                               |  |                                 | 479,743   |                               |  
|                                                                            |  |                                 |           |                               |  
|                                                                            |  |                                 |           |                               |  
|Total gross profit                                                          |  | $                               | 508,490   |                               | $
|                                                                            |  |                                 |           |                               |  
|                                                                            |  |                                 |           |                               |  
|Selling, general and administrative expenses                                |  |                                 | 758,698   |                               |  
|                                                                            |  |                                 |           |                               |  
|                                                                            |  |                                 |           |                               |  
|Operating income (loss) before Other income (expense)                       |  | $                               | (250,208  | )                             | $
|                                                                            |  |                                 |           |                               |  
|Other income (expense), net:                                                |  |                                 |           |                               |  
|                                                                            |  |                                 |           |                               |  
|Other income (expense), net                                                 |  |                                 |          |                               |  
|Interest expense, net                                                       |  |                                 | (14,800   | )                             |  
|                                                                            |  |                                 |           |                               |  
|                                                                            |  |                                 |           |                               |  
|Total other income (expense), net                                           |  | $                               | (14,800   | )                             | $
|                                                                            |  |                                 |           |                               |  
|Income (loss) before income taxes                                           |  | $                               | (265,008  | )                             | $
|                                                                            |  |                                 |           |                               |  
|Income taxes                                                                |  |                                 |          |                               |  
|                                                                            |  |                                 |           |                               |  
|                                                                            |  |                                 |           |                               |  
|Net income (loss)                                                           |  | $                               | (265,008  | )                             | $
|                                                                            |  |                                 |           |                               |  
|Preferred stock dividends                                                   |  |                                 | 37,500    |                               |  
|                                                                            |  |                                 |           |                               |  
|Net income (loss) available to common shareholders                          |  | $                               | (302,508  | )                             | $
|                                                                            |  |                                 |           |                               |  
|                                                                            |  |                                 |           |                               |  
|Basic and diluted income (loss) per share                                   |  | $                               | (.04      | )                             | $
|                                                                            |  |                                 |           |                               |  
|                                                                            |  |                                 |           |                               |  
|Basic and diluted weighted average number of common      shares outstanding |  |                                 | 7,025,000 |                               |  
|                                                                            |  |                                 |           |                               |  

See accompanying notes to condensed consolidated financial statements.





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INNOVATIVE COMPANIES, INC. AND SUBSIDIARIESSTATEMENTS OF CASH FLOWS

|                                                                                  |  | Six Months Ended September 30, |           
|--------------------------------------------------------------------------------- |  | ------------------------------ | ----------
|                                                                                  |  |                                |           
|                                                                                  |  | 2001                           |           
|                                                                                  |  |                                |           
|                                                                                  |  | (Unaudited)                    |           
|Cash flows from operating activities:                                             |  |                                |           
|Net income (loss)                                                                 |  | $                              | (630,903  
|Adjustments to reconcile net income (loss) to net cash from operating activities: |  |                                |           
|Depreciation and leasehold amortization                                           |  |                                | 226,607   
|Changes in operating assets and liabilities:                                      |  |                                |           
|Accounts receivable, trade, net                                                   |  |                                | (372,678  
|Accounts receivable, other                                                        |  |                                |          
|Inventory, net                                                                    |  |                                | (137,029  
|Prepaid expenses and other current assets                                         |  |                                | 401,115   
|Other assets, net                                                                 |  |                                | 3,495     
|Accounts payable                                                                  |  |                                | 348,001   
|Accrued expenses                                                                  |  |                                | (114,711  
|Due from/to affiliates, net                                                       |  |                                | (7,134    
|                                                                                  |  |                                |           
|Net cash provided by (used in) operating activities                               |  | $                              | (283,237  
|                                                                                  |  |                                |           
|Cash flows from investing activities:                                             |  |                                |           
|Insured disposal of leasehold improvements                                        |  | $                              |          
|Purchases of property, leaseholds and equipment                                   |  |                                | (822,569  
|Collection on notes receivable                                                    |  |                                | 8,878     
|                                                                                  |  |                                |           
|                                                                                  |  |                                |           
|Net cash provided by (used in) investing activities                               |  | $                              | (813,691  
|                                                                                  |  |                                |           
|Cash flows from financing activities:                                             |  |                                |           
|                                                                                  |  |                                |           
|Net change in credit lines payable                                                |  | $                              |          
|Payments of long-term obligations                                                 |  |                                | (158,697  
|Payments of related party obligations                                             |  |                                | (21,960   
|Payment of preferred stock dividends                                              |  |                                | (75,000   
|Payments for preferred stock redeemed                                             |  |                                |          
|                                                                                  |  |                                |           
|Net cash provided by (used in) financing activities                               |  | $                              | (255,657  
|                                                                                  |  |                                |           
|Net increase (decrease) in cash                                                   |  | $                              | (1,352,585
|Cash at beginning of period                                                       |  |                                | 3,280,585 
|                                                                                  |  |                                |           
|Cash at end of period                                                             |  | $                              | 1,928,000 
|                                                                                  |  |                                |           

See accompanying notes to condensed consolidated financial statements.





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INNOVATIVE COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -CONTINUED
(UNAUDITED)

|                                                  |  | Six Months EndedSeptember 30,2001 |        | Six Months EndedSeptember 30,2002 |  
|------------------------------------------------- |  | --------------------------------- | ------ | --------------------------------- | -
|                                                  |  |                                   |        |                                   |  
|                                                  |  |                                   |        |                                   |  
|Supplemental disclosure of cash flow information: |  |                                   |        |                                   |  
|Cash paid during the period for interest          |  | $                                 | 67,673 |                                   | $
|                                                  |  |                                   |        |                                   |  
|Cash paid during the period for income taxes      |  | $                                 |       |                                   | $
|                                                  |  |                                   |        |                                   |  

See accompanying notes to condensed consolidated financial statements.





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INNOVATIVE COMPANIES, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2001 AND 2002

NOTE 1-BASIS OF PRESENTATION

The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with 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 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 month periods ended September 30, 2001 and 2002 are not necessarily indicative of the results that may be expected for the
year ending March 31, 2003. For further information, refer to the consolidated financial statements and footnotes included in the Companys Form-10KSB as of and for the years ended March 31, 2001 and 2002 as filed June 28, 2002. Effective
September 6, 2002, the Company changed its name from Go2Pharmacy, Inc. to Innovative Companies, Inc.

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a.       Principles of Consolidation

The condensed consolidated
financial statements as of March 31, and September 30, 2002 and for the three and six months ended September 30, 2001 and 2002 include the accounts of Innovative Companies, Inc. (the Company), (Innovative), which is
continuing to doing manufacturing business as Innovative Health Products, Inc. (Innovative), and its Florida wholly-owned subsidiaries Breakthrough Engineered Nutrition, Inc. (Breakthrough), Belcher Pharmaceuticals, Inc.,
(Belcher) and Go2PBM Services, Inc. (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 March 31, 2002 and for the
three and six months ended September 30, 2002, the Company had three industry segments: manufacturing, distribution and pharmacy benefit management. The $8,225,903 of total assets as of March 31, 2002 were comprised of $844,469 attributable to
corporate, $6,452,907 attributable to manufacturing, $632,858 attributable to distribution and $295,669 attributable to pharmacy benefit management. The $8,182,802 of total assets as of September 30, 2002 were comprised of $704,594 attributable to
corporate, $6,138,803 attributable to manufacturing, $853,478 attributable to distribution and $485,927 attributable to pharmacy benefit management.



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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.       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.



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NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

We are required to adopt the provisions of FAS 141 effective
July 1, 2001 and FAS 142 effective April 1, 2002. For the year ended March 31, 2002 and for the three and six months ended September 30, 2002, amortization expense associated with goodwill was $45,086, $0 and $0. The unamortized balance of goodwill
at March 31, and September 30, 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. In accordance with the implementation of FAS
144, a Company is to select an initial valuation and assessment date to perform a valuation to determine whether there is a risk of asset impairment. The Company has selected its annual valuation date for assessment of long-lived assets, certain
identifiable intangibles and goodwill impairment as January 1, 2003 for each of its operating units, for the fiscal year ending March 31, 2003 and then for each fiscal year thereafter. There have been no impairment losses recorded for the fiscal
year ended March 31,2002 or for the six months ended September 30, 2002.

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.

j.       Earning (Loss)PerCommon 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 any of the periods presented.



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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, and September 30, 2002, as well as the reported amounts of revenues and expenses for the three and six months ended September 30, 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 and Sales 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, and September 30, 2002. As related to consolidated sales revenues for the three months ended September 30, 2001, two
customers accounted for 21.1% and 18.3%; the customer that had 18.3% of revenues is a related party. As related to consolidated sales revenues for the three months ended September 30, 2002, three customers accounted for 26.2%, 21.8% and 6.5%; the
customer that had 21.8% of revenues is a related party.

For the six months ended September 30, 2001, two customers accounted for 19.7% and 14.0%; the customer that had 19.7% of revenues is a related party. For
the six months ended September 30, 2002, two customers accounted for 37.8% and 18.3%. The customer that had 18.3% of revenues is a related party.

The Company has no concentration of customers within specific
geographic areas outside the United States that would give rise to significant geographic credit risk.

m.       RevenueRecognition

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

n.       AdvertisingCosts

The Company charges advertising costs to expense as
incurred. For the three months ended September 30, 2001 and 2002, advertising expense was $41,843 and $24,359, respectively. Advertising expense was $83,223 and $33,375 for the six months ended September 30, 2001 and 2002, respectively.

o.       Fair Value ofFinancialInstruments

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.



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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, and September 30, 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 for the three and six
months ended September 30, 2001 to conform to the presentation for the three and six months ended September 30, 2002.

NOTE 3-INSURANCE ACCOUNTS RECEIVABLE

On August
27, 2002, a commercial building where one of our manufacturing facilities is located, was involved in a fire. Although this fire was not in our leased space, nor was the fire caused by the Company or any of its related parties, our facility was
exposed to and incurred smoke and water damage. The company that had the fire is not a related party. Innovative has adequate insurance coverage that covers replacement cost of the facilities contents which includes inventory and leasehold
improvements, in addition to business interruption insurance which covers lost profits based on certain coverage formulas and policy limits. As of September 30, 2002 through the date of this filing (November 14, 2002) the final financial assessment
has not been made by our insurance company. The Company has a $5,000 deductible for each policy, or $10,000 in total for both policies, that the Company believes it will also be able to recoup these deductibles since the claim has been assessed by
our insurance company as subrogatable against the other non-related company who is at fault.

As of September 30, 2002, included within accounts receivable-other, the Company has recorded amounts due from the
Companys insurance company that are quantifiable and measurable at this time, in the amount of $473,000 comprised of amounts due and approved for leasehold improvement and inventory replacement cost. The Company has written off the net book
value of leasehold improvements of approximately $97,000 in addition to inventory with a FIFO carrying cost of approximately $169,000. The replacement cost coverage of both the leasehold improvements and the inventory coverage exceeds the net book
value written off. Of the $473,000 included in the accounts receivable, other, for the three and six months ended September 30, 2002, amounts recorded in other income/(expense), net, included approximately $207,000. Subsequent to September 30, 2002,
the Company has received insurance installment proceeds of approximately $221,000.

NOTE 4-SHAREHOLDERS EQUITY

Employee Stock Option Plan

During the three months ended September 30, 2002, the Board of Directors approved the granting of a total of 250,000 stock options to the employees of the Company at an exercise price of $.85, which was the closing price of
the stock on the date of grant. The stock options vest under a three year vesting schedule with the first year of vesting being attained one year from the date of grant.



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The following represents the employees common stock options outstanding as of September 30, 2002:

|Option balance outstanding, March 31, 2002     |  |  | 227,500 | 
|---------------------------------------------- |  |  | ------- | 
|Granted                                        |  |  | 250,000 | 
|Exercised                                      |  |  | 0       | 
|Forfeited                                      |  |  | 0       | 
|                                               |  |  |         | 
|                                               |  |  |        
|Option balance outstanding, September 30, 2002 |  |  | 477,500 | 
|                                               |  |  |        

As of September 30, 2002, of the 477,500 employees common stock options outstanding, 75,833 of those options were vested with 401,667 options being nonvested.

NOTE 5-RELATED PARTY TRANSACTIONS

Revenues: For the three months ended September 30, 2001 and 2002, manufacturing revenues of approximately $67,973 and $38,797, 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 three months ended September 30,
2001 and 2002, manufacturing revenues of $0, and $3,175, 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 three months ended September 30, 2001 and 2002, manufacturing revenues of $15,627 and $5,181, respectively, were recorded from sales by the Company to VerticalHealth 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 three months ended September 30, 2001 and 2002, distribution revenues of approximately $0 and $1,968 were recorded from sales
by the Company to VerticalHealth 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 three months ended September 30,
2001 and 2002, pharmacy benefit management revenues of approximately $338,296 and $710,213 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.

For the six months ended September 30, 2001 and 2002, manufacturing revenues of approximately $124,291 and
$100,011, 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 six
months ended September 30, 2001 and 2002, manufacturing revenues of $2,504, and $3,175, 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 six months ended September 30, 2001 and 2002, manufacturing revenues of $34,175 and $13,330, respectively, were recorded from sales by the Company to VerticalHealth Inc., an affiliate of the Company,
and of which Jugal K. Taneja, the Chairman of the Board of the Company, is a principal shareholder.



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For the six months ended September 30, 2001 and 2002, distribution revenues of approximately $0 and $1,968 were recorded from sales by the Company to VerticalHealth
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 six months ended September 30, 2001 and 2002, pharmacy benefit
management revenues of approximately $715,150 and $1,405,762, 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 from affiliates and amounts due to affiliates represent balances owed to or
amounts owed by 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, and September 30, 2002, for the manufacturing segment, $73,895 and $16,818 was due from subsidiaries of Dynamic Health Products. $57,700 and $57,700, respectively, was due to DrugMax.,
$28,982 and $37,390 was due from VerticalHealth,Inc., and $59,380 and $59,380 was due from Careplus Health.

As of March 31, and September 30, 2002, for the distribution segment, $21,534 and $21,534 was due to
DrugMax.

As of March 31, and September 30, 2002, for the pharmacy benefit management segment, $265,292 and $245,595 was due from CarePlus Health.

Preferred Stock
Transactions: In September 1999, the Company issued 150,000 shares of redeemable series A preferred stock to Dynamic Health 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. 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 which
commenced March 31, 2001. For the three months ended September 30, 2001 and 2002, $37,500 and $29,613 of accrued preferred dividends were paid to JB Capital Corp. For the six months ended September 30, 2001 and 2002, $75,000 and $67,113 of accrued
preferred dividends were paid to JB Capital Corp.

As of September 30, 2002, the holders of the preferred stock have redeemed 40,000 shares, or $400,000. As recorded within due to affiliates, as of September 30,
2002, the balance due was $148,000, of which $125,000, or an additional 12,500 shares, are available for redemption based on the Company attaining certain positive net income as defined by the preferred stock redemption agreement.

NOTE 6  SUBSEQUENT EVENTS

On October 31, 2002, the Company was approved for an approximate $320,00 increase in our line of credit (the line) with a Bank. This
increase in the line allows for a one million dollar total line of credit at an interest rate of prime plus .9%. In addition, the $679,000 certificate of deposit collateralizing our current line will be reduced to a $300,000 certificate of deposit.
The closing on this line will occur in November.



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

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 that have been prepared in accordance with U.S. Generally Accepted Accounting Principles.

General

We manufacture, package and ship high-quality private label dietary supplements, over-the-counter drugs, and health
and beauty care products for companies worldwide from our two manufacturing locations. Through our wholly-owned subsidiary, Breakthrough Engineered Nutrition, Inc. (Breakthrough), we market the Companys product lines, Lean
Protein and Thermo Fuel ZXE. Through our wholly-owned subsidiary, Go2PBM Services, Inc., we administer pharmacy benefit management services to health plans for unions, insurance companies, and other self-insured companies.

Results of Operations

Overview

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 lines, Lean Protein and Thermo
Fuel ZXE. 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 and the warehousing of production and other manufacturing overhead as well as for prescription and claim-related costs attributable to providing
pharmacy benefit management services. Research and development expenses are charged against cost of goods sold as incurred. Selling, general and administrative costs include management and general office salaries, insurance, advertising and
promotional expenses, sales and marketing and other indirect operating costs.



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Interest expense, net 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.

On August 27, 2002, a
commercial building where one of our manufacturing facilities is located, was involved in a fire. Although this fire was not in our leased space, nor was the fire caused by the Company or any of its related parties, our facility was exposed to and
incurred smoke and water damage. The company that had the fire is not a related party. Innovative has adequate insurance coverage that covers replacement cost of the facilities contents which includes inventory and leasehold improvements, in
addition to business interruption insurance which covers lost profits based on certain coverage formulas and policy limits. As of September 30, 2002 through the date of this filing (November 14, 2002) the final financial assessment has not been made
by our insurance company. The Company has a $5,000 deductible for each policy, or $10,000 in total for both policies, that the Company believes will also be able to recoup these deductibles since the claim has been assessed by our insurance company
as subrogatable against the other non-related company who is at fault.

As of September 30, 2002, included within accounts receivable-other, the Company has
recorded amounts due from the Companys insurance company that are quantifiable and measurable at this time, in the amount of $473,000 comprised of amounts due and approved for leasehold improvement and inventory replacement cost. The Company
has written off the net book value of leasehold improvements of approximately $97,000 in addition to inventory with a FIFO carrying cost of approximately $169,000. The replacement cost coverage of both the leasehold improvements and the inventory
coverage exceeds the net book value written off. Directly related to the $473,000 included in the accounts receivable,other, for the three and six months ended September 30, 2002, amounts recorded in other income/(expense), net, included
approximately $207,000. Subsequent to the quarter ended September 30, 2002, the Company has received insurance installment proceeds of approximately $221,000.

Three Months Ended September 30, 2002 Compared To
Three Months Ended September 30, 2001

Revenues.Total revenues increased approximately $1,409,000, or 76.4%, to approximately
$3,253,000 for the three months ended September 30, 2002, as compared to approximately $1,844,000 for the three months ended September 30, 2001. Pharmacy benefit management revenues increased approximately $372,000, or 109.9%, to approximately
$710,000 for the three months ended September 30, 2002, as compared to $338,000 for the three months ended September 30, 2001. Pharmacy benefit management revenues increased for the three months ended September 30, 2002 solely due to the increase of
participating plan members in the current period as compared to the three-month corresponding period in 2001. Distribution revenues increased approximately $395,000 to approximately $399,000 for the three months ended September 30, 2002, as compared
to $4,000 for the three months ended September 30, 2001. Distribution revenues increased due to the introduction of our new product line in the current quarter, Thermo Fuel ZXE in addition to the absence of sales of our Lean Protein Bites product
line in the corresponding quarter in 2001. The Lean Protein Bites product line was introduced during October 2001. Manufacturing revenues increased approximately $643,000, or 42.8%, to approximately $2,145,000 for the three months ended September
30, 2002, as compared to approximately $1,502,000 for the corresponding period. Increases in manufacturing segment revenues was primarily caused by the increases in customer base and related volume of recurring and new customer orders.



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Gross profit.Total gross profit increased approximately $476,000, or 93.6%, to
approximately $984,000 for the three months ended September 30, 2002, as compared to approximately $508,000 for the three months ended September 30, 2001. Total gross margins increased from 27.6% for the three months ended September 30, 2001, to
30.3% for the three months ended September 30, 2002. Pharmacy benefit management gross profits increased approximately $25,000, or 34.4%, to approximately $100,000 for the three months ended September 30, 2002, as compared to $75,000 for the three
months ended September 30, 2001. Pharmacy benefit management gross margin decreased to 14.2% for the three months ended September 30, 2002 as compared to 22.1% for the three months ended September 30, 2001. Although gross profits increased as caused
by higher sales volumes, margins decreased as higher net claims dollars were incurred and paid per member as compared to the corresponding three-month period. Distribution gross profit increased approximately $166,000, to approximately $118,000 for
the three months ended September 30, 2002, as compared to $(46,000) for the three months ended September 30, 2001. Distribution gross margin increased to 30.0% for the three months ended September 30, 2002. Gross profits increased as caused by
higher sales volumes based on the addition of the new product lines as compared to the prior three month period that included obsolete inventory write-offs of approximately $44,000 in addition to the interruption of manufacturing of our product line
due to manufacturing location changes. Manufacturing gross profit increased approximately $285,000, or 59.2%, to approximately $765,000 for the three months ended September 30, 2002, as compared to approximately $480,000 in the corresponding
three-month period in 2001. For the three months ended September 30, 2002, manufacturing gross margin increased to 35.6%, from 31.9% in the corresponding three-month period in 2001. The increases in profits and margins are primarily attributable to
a current change in our contract manufacturing sales portfolio that is yielding a higher gross margin in addition to increases as caused by increased sales volume.

Selling, general and administrative expenses.Selling, general and administrative expenses consist primarily of insurance expenses, 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
leasehold amortization expense. Selling, general and administrative expenses increased approximately $115,000, or 15.2%, to approximately $874,000 for the three months ended September 30, 2002, as compared to approximately $759,000 in the
corresponding period. The increase is primarily attributable to rising insurance expenses in addition to increases in 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 26.9% for the three months ended September 30,
2002 from 41.1% in the corresponding three-month period in 2001.

Interest income (expense), net.Interest expense, net of interest
income, increased approximately $2,000 to approximately $(17,000) for the three months ended September 30, 2002, from approximately $(15,000) for the three months ended September 30, 2001. The increase in net interest expense is primarily
attributable to the decline in interest income earned based on both declining interest rates in addition to a decline in available interest-bearing funds that partially offsets interest expense incurred on outstanding obligations.

Income taxes.At September 30, 2002, the Company had neither amounts recorded for a current or a deferred income tax liability, nor any income
tax expense recorded for the three months ended September 30, 2002, due to available operating loss carryforwards.



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Six Months Ended September 30, 2002 Compared To Six Months Ended September 30, 2001

Revenues.Total revenues increased approximately $4,032,000, or 111.0%, to approximately $7,664,000 for the six months ended September 30, 2002,
as compared to approximately $3,632,000 for the six months ended September 30, 2001. Pharmacy benefit management revenues increased approximately $691,000, or 96.6%, to approximately $1,406,000 for the six months ended September 30, 2002, as
compared to $715,000 for the six months ended September 30, 2001. Pharmacy benefit management revenues increased for the six months ended September 30, 2002 solely due to the increase of participating plan members in the current period as compared
to the six-month corresponding period in 2001. Distribution revenues increased approximately $664,000 to approximately $743,000 for the six months ended September 30, 2002, as compared to $79,000 for the six months ended September 30, 2001.
Distribution revenues increased due to the introduction of our new product line in September 2002, Thermo Fuel ZXE, in addition to the absence of sales of our Lean Protein Bites product line in the corresponding period in 2001. The Lean Protein
Bites product line was introduced during October 2001. Manufacturing revenues increased approximately $2,678,000, or 94.4%, to approximately $5,516,000 for the six months ended September 30, 2002, as compared to approximately $2,838,000 for the
corresponding period. Increases in manufacturing segment revenues was primarily caused by the increases in customer base and related volume of recurring and new customer orders.

Gross profit.Total gross profit increased approximately $1,379,000, or 158.9%, to approximately $2,246,000 for the six months ended September
30, 2002, as compared to approximately $867,000 for the six months ended September 30, 2001. Total gross margins increased from 23.9% for the six months ended September 30, 2001, to 29.3% for the six months ended September 30, 2002. Pharmacy benefit
management gross profits increased approximately $58,000, or 41.3%, to approximately $197,000 for the six months ended September 30, 2002, as compared to $139,000 for the six months ended September 30, 2001. Pharmacy benefit management gross margin
decreased to 14.0% for the six months ended September 30, 2002 as compared to 19.5% for the six months ended September 30, 2001. Although gross profits increased as caused by higher sales volumes, margins decreased as higher net claims dollars were
incurred and paid per member as compared to the corresponding six- month period. Distribution gross profit increased approximately $279,000 to approximately $268,000 for the six months ended September 30, 2002, as compared to approximately $(11,000)
for the six months ended September 30, 2001. Distribution gross margin increased to 36.0% for the six months ended September 30, 2002. Gross profits increased as caused by higher sales volumes based on the addition of the new product lines as
compared to the prior six month period that included obsolete inventory write-offs of approximately $44,000 in addition to the interruption of manufacturing due to manufacturing location changes. Manufacturing gross profit increased approximately
$1,042,000, or 140.8%, to approximately $1,782,000 for the six months ended September 30, 2002, as compared to approximately $740,000 in the corresponding six-month period in 2001. For the six months ended September 30, 2002, manufacturing gross
margin increased to 32.3%, from 26.1% in the corresponding six-month period in 2001. The increases in profits and margins are primarily attributable to a current change in our contract manufacturing sales portfolio that is yielding a higher gross
margin in addition to increases as caused by increased sales volume.

Selling, general and administrative expenses.Selling,
general and administrative expenses consist primarily of insurance expenses, 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 leasehold amortization expense. Selling, general and administrative expenses increased approximately $228,000,



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or 15.3%, to approximately $1,711,000 for the six months ended September 30, 2002, as compared to approximately $1,484,000 in the corresponding period. The increase is
primarily attributable to rising insurance expenses in addition to increases in 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 22.3% for the six months ended September 30, 2002 from 40.9% in the corresponding six-month
period in 2001.

Interest income (expense), net.Interest expense, net of interest income, increased approximately $16,000 to
approximately $(37,000) for the six months ended September 30, 2002, from approximately $(21,000) for the six months ended September 30, 2001. The increase in net interest expense is primarily attributable to the decline in interest income earned
based on both declining interest rates in addition to a decline in available interest-bearing funds that partially offsets interest expense incurred on outstanding obligations.

Income taxes.At September 30, 2002, the Company had neither amounts recorded for a current or a deferred income tax liability, nor any income
tax expense recorded for the six months ended September 30, 2002, due to available operating loss carryforwards.

Financial Condition, Liquidity and Capital Resources

The Company has financed its operations through available borrowings under its credit line facilities, cash provided from operations and cash provided from the proceeds
received from our initial public offering consummated in November 2000. The Company had working capital of approximately $3,096,000 at September 30, 2002, inclusive of current portion of long-term obligations and credit facilities, as compared to
working capital of approximately $2,529,000 at March 31, 2002. The increase in working capital is primarily attributable to collection on accounts receivable, the increased turns on inventories and the continued payments on current obligations
outstanding. All of which is in line with the Companys business plans.

Net cash provided by operating activities was approximately $329,000 for the six
months ended September 30, 2002, as compared to net cash used in operating activities of approximately $(283,000) for the six months ended September 30, 2001. Cash provided is primarily attributable to net income of $718,000 as adjusted by
depreciation of approximately $188,000, a decrease in trade accounts receivable of approximately $217,000 based on customer remittances received on customer accounts outstanding, a decrease in inventory of approximately $400 as caused by the netting
of two offsetting amounts comprised of write-off of the carrying value of the inventory destroyed in the fire on August 27, 2002 of approximately $170,000 as offset by inventory purchases of $170,000, accrued expenses increased approximately $42,000
all of which is partially offset by an approximate $473,000 increase in accounts receivable, other which represents that measurable and estimatable amounts due from our insurance company due to losses sustained in the August 27, 2002 fire, decreases
in accounts payable of approximately $241,000 based on net payments made by the Company on vendor and supplier accounts outstanding, an approximate $108,000 increase in due from affiliates, net based on the normal sales consummated with our
affiliates, in addition to an approximate $15,000 decrease in prepaid assets based on normal amortization of prepaid account balances that are charged to the statement of operations.



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Net cash provided by investing activities of approximately $5,000 results from the insured disposal of the net
carrying value of leasehold improvements damaged in the August 27, 2002 fire of approximately $92,000 as partially offset by $87,000 of purchases of equipment used in manufacturing and corporate activities.

Net cash used in financing activities was approximately $(386,000) for the six months ended September 30, 2002, as compared to net cash used in financing activities of
approximately $(256,000) for the six months ended September 30, 2001. Net cash used during the six months ended September 30, 2002 represented payments on long-term obligations of approximately $119,000, payments related to the redemption of 20,000
shares of $10 face value preferred stock of $200,000 in addition to preferred dividend payments of approximately $67,000. The decline in the preferred stock dividends paid in the current period as compared to the prior period is solely due to the
decline in the number of preferred shares outstanding. The redemption of the preferred stock and the payment of the preferred stock dividends is a related party activity.

Subsequent to September 30, 2002, the Company was approved for an approximate $320,000 increase in our line of credit (the line) with a Bank. This increase in
the line allows for a one million dollar total line of credit at an interest rate of prime plus .9%. In addition, the $679,000 certificate of deposit that was collateralizing our current line as of September 30, 2002 will be reduced to a $300,000
certificate of deposit upon closing of the line. The closing on this line will occur sometime in November 2002.

Subsequent to September 30, 2002, the Company
received insurance proceeds of approximately $221,000 as directly related to the claims outstanding, that are currently recorded in accounts receivable, other as of September 30, 2002, resulting from the August 27, 2002 fire. The final amount of the
insurance proceeds due and payable to the Company has not yet been finalized by the Company or by the Companys insurance company.

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, if cash flows from operations 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 will be available in amounts and on terms acceptable to the Company.

|Item 3. | Controls and Procedures
|------- | -----------------------

Based on their most recent review, which was completed within 90 days prior to
the filing of this report, the Companys principal executive officer and principal 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



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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.

Part II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS.

From time to time the Company is subject to
litigation incidental to its business. Such claims, if successful, could exceed applicable insurance coverage. The Company is not currently a party to any material legal proceedings.

Item 2. CHANGES IN
SECURITIES AND USE OF PROCEEDS.

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

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

Not applicable.

Item 5. OTHER INFORMATION.

Not applicable.

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

(a)Exhibits.

99.1 Certificate Pursuant to 18 U.S.C. Section 1350

99.2 Certificate Pursuant to 18 U.S.C. Section
1350

(b)Reports on Form 8-K.

The Company did not file any reports on Form 8-K during the applicable period.



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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.

|                        |  | Innovative Companies, Inc.
|----------------------- |  | --------------------------
|Date: November 14, 2002 |  | By:                       
|                        |  |                           
|                        |  |                           

|                        |  |    
|----------------------- |  | ---
|Date: November 14, 2002 |  | By:
|                        |  |    
|                        |  |    





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CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICERPURSUANT TO SECTION 302 OF THESARBANES-OXLEY ACT OF
2002

I, Mihir K. Taneja, certify that:

1.       I have reviewed this quarterly report on Form 10-QSB of Innovative Companies, Inc.;

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

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

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

| | a)       designed such disclosure controls and procedures to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b)       evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90
days prior to the filing date of this quarterly report (the Evaluation Date); and
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c)       presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.       The
registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent
function):

| | a)       all significant deficiencies in the design or operation of internal controls which could adversely affect the
registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b)       any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrants internal controls; and
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|       |                   | 
|------ | ----------------- | 
|Dated: | November 14, 2002 | 
|       |                   | 
|       |                   | 





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CERTIFICATION OF PRINCIPAL FINANCIAL OFFICERPURSUANT TO SECTION 302 OF THESARBANES-OXLEY ACT OF
2002

I, Carol Dore-Falcone, certify that:

1.       I have
reviewed this quarterly report on Form 10-QSB of Innovative Companies, Inc.;

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

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

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

| | a)       designed such disclosure controls and procedures to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b)       evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90
days prior to the filing date of this quarterly report (the Evaluation Date); and
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c)       presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.       The
registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent
function):

| | a)       all significant deficiencies in the design or operation of internal controls which could adversely affect the
registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b)       any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrants internal controls; and
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|                        |  |    
|----------------------- |  | ---
|Dated:November 14, 2002 |  | By:
|                        |  |    
|                        |  |