UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549


                                   FORM 10-QSB



             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934



For the fiscal quarter ended:               June 30, 2004
Commission file number:                     333-36666



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


         FLORIDA                                   65-0810941
         (State or other jurisdiction of           (I.R.S. Employer
         incorporation or organization)            Identification No.)



                             350 JIM MORAN BOULEVARD
                         DEERFIELD BEACH, FLORIDA 33442
                    (Address of principal executive offices)
                                   (Zip code)

                                 (954) 312-1660
              (Registrant's telephone number, including area code)


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

                                 Yes  X    No
                                     ---      ---

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of August 16, 2004: 165,493,175 shares of common stock, $.005
par value per share.

<PAGE>
                        IBX GROUP, INC. AND SUBSIDIARIES
                                   FORM 10-QSB
                      QUARTERLY PERIOD ENDED JUNE 30, 2004
                                      INDEX

                                                                            Page
                                                                            ----
PART I - FINANCIAL INFORMATION

      Item 1 - Consolidated Financial Statements

      Consolidated Balance Sheet (Unaudited)
        June 30, 2004..........................................................3

      Consolidated Statements of Operations (Unaudited)
        For the Three and Six Months Ended June 30, 2004 and 2003..............4

      Consolidated Statements of Cash Flows (Unaudited)
        For the Six Months Ended June 30, 2004 and 2003........................5

      Notes to Consolidated Financial Statements (Unaudited)................6-17

      Item 2 - Management's Discussion and Analysis of Financial
               Condition and Results of Operations.........................18-24

      Item 3 - Control and Procedures.........................................25


PART II - OTHER INFORMATION

      Item 1 - Legal Proceedings..............................................25

      Item 2 - Changes in Securities and Use of Proceeds......................25

      Item 3 - Default upon Senior Securities.................................26

      Item 4 - Submission of Matters to a Vote of Security Holders............26

      Item 5 - Other Information..............................................27

      Item 6 - Exhibits and Reports on Form 8-K...............................27

      Signatures..............................................................28

                                       -2-
<PAGE>
<TABLE>
                                        IBX GROUP, INC. AND SUBSIDIARIES
                                           CONSOLIDATED BALANCE SHEET
                                                 JUNE 30, 2004
                                                  (UNAUDITED)
<CAPTION>
                                                     ASSETS
<S>                                                                                                <C>
Current assets:
   Cash ....................................................................................       $     9,823
   Restricted cash .........................................................................           450,535
   Accounts receivable, net of allowance for doubtful accounts of $258,612 .................           143,165
   Other current assets ....................................................................            60,561
                                                                                                   -----------

     Total current assets ..................................................................           664,084
                                                                                                   -----------

Property and equipment, net ................................................................           238,179
                                                                                                   -----------
Other assets:
   Deferred consulting expense .............................................................           302,355
   Other ...................................................................................            39,104
                                                                                                   -----------

     Total other assets ....................................................................           341,459
                                                                                                   -----------

     Total assets ..........................................................................       $ 1,243,722
                                                                                                   ===========

                                     LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Note payable, current maturities ........................................................       $   784,622
   Checks outstanding in excess of bank balances ...........................................           260,172
   Accounts payable ........................................................................           853,095
   Accrued expenses ........................................................................           265,849
   Payroll taxes payable ...................................................................         1,880,993
   Due to related parties ..................................................................           120,878
                                                                                                   -----------

     Total current liabilities .............................................................         4,165,609
                                                                                                   -----------
Long-term debt:
   Convertible debentures payable. Net .....................................................           506,750
                                                                                                   -----------
Commitments and contingencies

Stockholders' deficit:
   Preferred Stock ($0.005 par value; 5,000,000 authorized shares;
     none issued and outstanding) ..........................................................                 -
   Class A Non-voting Convertible Preferred Stock ($0.005 par value;
     300,000 authorized shares; 33,000 shares issued and outstanding) ......................               165
   Series B Convertible Preferred Stock ($0.005 par value;
     1,000,000 authorized shares; 8,700 shares issued and outstanding) .....................                44
   Common stock ($0.005 par value; 500,000,000 authorized shares;
     120,437,877 shares issued and outstanding) ............................................           602,190
   Common stock issuable (382,053 shares) ..................................................             1,910
   Additional paid-in capital ..............................................................         6,811,779
   Accumulated deficit .....................................................................        (9,869,011)
   Less: Stock subscription receivable .....................................................           (90,000)
   Less: Deferred compensation and consulting ..............................................          (885,714)
                                                                                                   -----------

     Total stockholders' deficit ...........................................................        (3,428,637)
                                                                                                   -----------

     Total liabilities and stockholders' deficit ...........................................       $ 1,243,722
                                                                                                   ===========

                          See accompanying notes to consolidated financial statements.

                                                      -3-
</TABLE>
<PAGE>
<TABLE>
                                        IBX GROUP, INC. AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                                  (Unaudited)
<CAPTION>

                                                     For the Three Months Ended     For the Six Months Ended
                                                              June 30,                      June 30,
                                                    ----------------------------   ---------------------------
                                                         2004           2003           2004           2003
                                                    -------------   ------------   ------------   ------------
<S>                                                 <C>             <C>            <C>            <C>
REVENUES .........................................  $      78,372   $    979,672   $    404,871   $  2,205,483
                                                    -------------   ------------   ------------   ------------


OPERATING EXPENSES:
    Salaries and payroll taxes ...................        411,799        576,783      1,018,227      1,020,094
    Depreciation and amortization ................         33,775         43,774         71,943         77,321
    Consulting fees ..............................         73,909              -         85,892              -
    Professional fees ............................         96,752         46,479        182,333        140,534
    Rent .........................................         80,439         81,141        183,917        187,950
    Bad debt expense .............................          3,735              -        223,735              -
    Other selling, general and administrative ....        919,490        503,465      1,302,459        998,465
                                                    -------------   ------------   ------------   ------------

        Total Operating Expenses .................      1,619,899      1,251,642      3,068,506      2,424,364
                                                    -------------   ------------   ------------   ------------

LOSS FROM OPERATIONS .............................     (1,541,527)      (271,970)    (2,663,635)      (218,881)
                                                    -------------   ------------   ------------   ------------

OTHER INCOME (EXPENSES):
    Interest expense .............................       (181,657)       (27,137)      (791,435)       (45,842)
                                                    -------------   ------------   ------------   ------------

        Total Other Income (Expenses) ............       (181,657)       (27,137)      (791,435)       (45,842)
                                                    -------------   ------------   ------------   ------------

NET LOSS .........................................  $  (1,723,184)  $   (299,107)  $ (3,455,070)  $   (264,723)
                                                    =============   ============   ============   ============

LOSS PER SHARE:
      Net Loss Per Common Share - Basic ..........  $       (0.02)  $       0.00   $      (0.03)  $       0.00
                                                    =============   ============   ============   ============
      Net Loss Per Common Share - Diluted ........  $       (0.02)  $       0.00   $      (0.03)  $       0.00
                                                    =============   ============   ============   ============

      Weighted Common Shares Outstanding - Basic .    105,698,209     46,646,743     99,379,467     45,762,903
                                                    =============   ============   ============   ============
      Weighted Common Shares Outstanding - Diluted    105,698,209     46,646,743     99,379,467     45,762,903
                                                    =============   ============   ============   ============

                          See accompanying note to consolidated financial statements.

                                                      -4-
</TABLE>
<PAGE>
<TABLE>
                                        IBX GROUP, INC. AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (Unaudited)

<CAPTION>
                                                                                      For the Six Months
                                                                                        Ended June 30,
                                                                                  ----------------------------
                                                                                      2004             2003
                                                                                  -----------      -----------
<S>                                                                               <C>              <C>
Cash flows from operating activities:
  Net loss ..................................................................     $(3,455,070)     $  (264,723)
  Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation and amortization ............................................          71,943           77,321
   Stock-based compensation .................................................         595,693          193,383
   Interest expense on notes payable ........................................          43,262                -
   Amortization of debt discount ............................................          19,515                -
   Beneficial interest on debentures payable ................................         574,708                -
   Allowance for doubtful accounts ..........................................         207,354                -
   Bad debt recovery ........................................................               -          (10,503)
   (Increase) decrease in:
    Accounts receivable .....................................................         191,173         (481,209)
    Deferred consulting expense .............................................          70,207                -
    Other current assets ....................................................          38,015           (4,696)
    Other ...................................................................         (11,953)          (3,126)

   Increase (decrease) in:
    Accounts payable ........................................................         421,824          184,669
    Accrued expenses ........................................................          17,494           15,055
    Payroll taxes payable ...................................................         342,384          204,702
    Customer deposits .......................................................               -         (185,925)
    Deferred revenue ........................................................         (14,467)        (154,199)
                                                                                  -----------      -----------

Net cash used in operating activities .......................................        (887,918)        (429,251)
                                                                                  -----------      -----------

Cash flows from investing activities:
  Net Cash from acquisitions ................................................               -            3,108
  Increase in restricted cash ...............................................         (12,444)               -
  Purchase of property and equipment ........................................         (18,020)        (115,306)
                                                                                  -----------      -----------

Net cash used in investing activities .......................................         (30,464)        (112,198)
                                                                                  -----------      -----------

Cash flows from financing activities:
  Proceeds from exercise of stock warrants ..................................          60,975          826,900
  Proceeds from sale of common stock ........................................         119,000                -
  Proceeds from sale of preferred stock .....................................         100,000                -
  Checks outstanding in excess of bank balances .............................         217,848          (18,596)
  Payments on loans .........................................................         (75,688)        (235,036)
  Proceeds from loans .......................................................         162,523                -
  Proceeds from debentures payable ..........................................         200,000                -
  Proceeds from (payments on) advances from related parties .................         121,414             (454)
                                                                                  -----------      -----------

Net cash provided by financing activities ...................................         906,072          572,814
                                                                                  -----------      -----------

Net (decrease) increase in cash .............................................         (12,310)          31,365

Cash at beginning of year ...................................................          22,133           23,304
                                                                                  -----------      -----------

Cash at end of period .......................................................     $     9,823      $    54,669
                                                                                  ===========      ===========
                                                                                           continued
                          See accompanying notes to consolidated financial statements.

                                                      -5A-
</TABLE>
<PAGE>
<TABLE>
                                        IBX GROUP, INC. AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (Unaudited)
                                                  (continued)
<CAPTION>
                                                                                      For the Six Months
                                                                                        Ended June 30,
                                                                                  ----------------------------
                                                                                      2004             2003
                                                                                  -----------      -----------
<S>                                                                               <C>              <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:
  Interest ..................................................................     $         -      $         -
                                                                                  ===========      ===========
  Income Taxes ..............................................................     $         -      $         -
                                                                                  ===========      ===========

NON-CASH INVESTING AND FINANCING ACTIVITIES:

  Accrued expenses reclassified to debt .....................................     $   232,602      $         -
                                                                                  ===========      ===========
  Preferred shares issued for debt ..........................................     $    25,000      $         -
                                                                                  ===========      ===========
  Common stock issued for debt ..............................................     $    20,000      $         -
                                                                                  ===========      ===========
  Loans payable paid directly by realted parties ............................     $    75,410      $         -
                                                                                  ===========      ===========
  Debentures payable granted for deferred consulting ........................     $   372,562      $         -
                                                                                  ===========      ===========

                          See accompanying notes to consolidated financial statements.

                                                      -5B-
</TABLE>
<PAGE>
                        IBX GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2004
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES

IBX Group, Inc. (the "Company") was organized under the laws of the state of
Florida in July 1997 as Vidkid Distribution, Inc. ("Vidkid"). On September 25,
2001 (the "acquisition date"), the Company acquired all of the outstanding
capital stock of PriMed Technologies, Inc., a Florida corporation ("PriMed").
PriMed was organized under the laws of the State of Florida on February 4, 1999
as a limited liability company and reorganized as a corporation on January 1,
2000. PriMed was acquired in a stock-for-stock transaction in which PriMed's
shareholders received approximately 81% of the outstanding common stock of
Vidkid on a fully diluted basis. Under the Agreement, Vidkid issued 11,550,000
shares of its common stock in exchange for each and every share of common stock
of PriMed and Vidkid's name was changed to IBX Group, Inc.

The Company is engaged in providing administrative services (accounting, billing
and collection, claims processing, information management), network support and
maintenance to clients predominantly in the healthcare sector. In addition, the
Company has developed proprietary software and applications with interactive
web-enabled multimedia capabilities with which the Company will develop new
markets and lines of business. In September 2002, the Company acquired Florida
Health Source, LLC and entered the business of providing physical therapy
services to referred patients.

All of the shares and assets of the Company's primary operating subsidiary have
been pledged to secure a loan obligation to a creditor. Two of the Company's
primary officers have also pledged the shares of the Company owned by them. The
parties entered into an amended settlement agreement effective November 7, 2002
whereby the creditor agreed to dismiss his action against the Company. Pursuant
to the terms of the Agreement, the Company is obligated to make certain monthly
payments. Mr. Dudziak, the creditor, pursuant to the settlement agreement, has a
lien and perfected security interest on all of the assets of IBX Technologies,
Inc., which is IBX's primary operating subsidiary and on shares of IBX common
stock owned by Evan Brovenick and David Blechman. As of June 30, 2004,
approximately $32,000 was outstanding on the loan. Failure to comply with the
terms and conditions of the loan documents could result in a default and the
transfer of these assets and shares to the lender.

The consolidated statements include the accounts of IBX Group, Inc. and its
wholly owned subsidiaries. All significant inter-company balances and
transactions have been eliminated.

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC"). The accompanying consolidated
financial statements for the interim periods are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the consolidated
financial position and consolidated operating results for the periods presented.
These consolidated financial statements should be read in conjunction with the
consolidated financial statements of IBX Group, Inc. for the year ended December
31, 2003 and 2002 and notes thereto contained in the Report on Form 10-KSB for
the year ended December 31, 2003 as filed with the SEC . The results of
operations for the six months ended June 30, 2004 are not necessarily indicative
of the results for the full fiscal year ending December 31, 2004.

                                       -6-
<PAGE>
                        IBX GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  June 30, 2004
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF NEW ACCOUNTING POLICIES
         (CONTINUED)

The Company follows the guidance of the Securities and Exchange Commision's
Staff Accounting Bulletin 104 for revenue recognition. In general, the Company
records revenue when persuasive evidence of an arrangement exists, services have
been rendered or product delivery has occurred, the sales price to the customer
is fixed or determinable, and collectability is reasonably assured. The
following policies reflect specific criteria for the various revenues streams of
the Company:

Revenue derived from billing and collections and administrative services is
recognized at the completion of the service performed. For billing and
collection services, the Company receives a commission from the customer based
on a percentage of amounts actually collected. Revenues are recognized as a net
amount equal to the percentage commission once the customer's receivable had
been received.

Software application revenue (from licensing) is recognized in accordance with
the terms of the specific agreements.

Maintenance and support revenues are recognized over the term of the related
agreements.

The Company's FHS subsidiaries primarily act as a referral network for physical
therapy patients who are referred by insurance carriers. The Company qualifies
for the use of the Gross Method under EITF 99-19, "Recording Revenues Gross as a
Principal versus Net as an Agent". Revenues from providing medical staffing
application services will be recognized as services are provided.

Revenues from providing medical staffing application services will be recognized
as services are provided.

Customer prepayments from outsourced legal compliance services are deferred and
recognized as earned over the service period.

Basic earnings (loss) per share is computed by dividing net loss by weighted
average number of shares of common stock outstanding during each period. Diluted
loss per share is computed by dividing net loss by the weighted average number
of shares of common stock, common stock equivalents and potentially dilutive
securities outstanding during each period. Diluted loss per common share is not
presented because it is anti-dilutive. At June 30, 2004, there were options and
warrants to purchase 31,330,000 shares of common stock, which could potentially
dilute future earnings per share.

Certain intangible assets, if any, are considered to have an indefinite life
pursuant to SFAS 142 and accordingly are not amortized until their useful life
is determined to be no longer indefinite. The Company evaluates the remaining
useful life of intangible assets that are not being amortized each reporting
period to determine whether events and circumstances continue to support an
indefinite useful life. If an intangible asset that is not being amortized is
subsequently determined to have a finite useful life, the asset is tested for
impairment in accordance with SFAS144. That intangible asset shall then be
amortized prospectively over its estimated remaining useful life and accounted
for in the same manner as other intangible assets that are subject to
amortization. At December 31, 2003, substantially all of the intangible assets
were impaired and charged to operations. Amortizable intangibles are also
evaluated periodically for impairment. The amortization expense in the six month
periods ended June 30, 2004 was $985 compared to $0, respectively, for the same
periods in 2003.

                                       -7-
<PAGE>
                        IBX GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  June 30, 2004
                                   (UNAUDITED)

NOTE 2 - LOAN PAYABLE

The Company's borrowings consisted of the following at June 30, 2004:

Loan payable to an individual, payable in various installments. The
loan payable includes accrued interest and is collateralized by all
of the assets of one of the Company's subsidiaries and outstanding
common shares of the Company held by certain guarantors. See (a)
below. ............................................................   $  32,196

Loan payable to an individual, payable on March 12, 2005. The loan
payable includes accrued interest at 8% per annum, is
collateralized by all of the assets of the Company, and in
convertible into common shares. See (b) below. ....................     154,000

Note payable to an individual, payable on demand. The note payable
is non-interest bearing, but interest is imputed at a rate of 10%
per annum and is unsecured. .......................................     135,926

Line of credit agreement with a financial institution. The Company
can borrow up to $450,000. Interest is payable on the outstanding
principal balance at the financial institution's prime rate (4.25%
at June 30, 2004) computed on the basis of a 360-day year. The loan
is collateralized by restricted cash and is payable on demand. See
(c) below. ........................................................     450,000

Loan payable to an individual, payable on demand. The loan payable
bears interest at 18% per annum and is unsecured. .................      12,500
                                                                      ---------
                                                                        784,622

Less: Current portion of loans payable ............................    (784,622)
                                                                      ---------
Total .............................................................   $       -
                                                                      =========

(a)      On October 8, 2002, the Company made a payment and renegotiated a note
         payable with an individual. Accordingly, the principal amount of such
         note was reduced to $692,497 as of October 28, 2002. The lender
         retroactively restated the per annum interest rate prior to October 8,
         2002 from 25% to 15%. Furthermore, so long as the Company does not
         breach this agreement, effective October 8, 2002, the annual rate of
         interest was further reduced to 12.5% per annum. However, if the
         Company defaults on this agreement the loan will contingently revert to
         its previous outstanding balance on the date of this agreement with
         interest at 25% per annum. Certain shareholders of the Company's have
         pledged their shares of the Company owned by them and also personally
         guaranteed the note. As on the date of this report, the Company has not
         met its obligations under this revised agreement. Failure to comply
         with the terms and conditions of the loan documents could result in a
         default and the transfer of these assets and shares to the lender,
         however, as of June 30, 2004, this individual has not provided the
         Company with a notice of default.

                                       -8-
<PAGE>
                        IBX GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  June 30, 2004
                                   (UNAUDITED)

NOTE 2 - LOAN PAYABLE (CONTINUED)

(b)      On March 14, 2004, the Company signed a promissory note with a
         shareholder for $174,000, which converted to note payable amounts due
         to this shareholder of approximately $69,000 and additional borrowing
         of $105,000. The note provides for 8% interest, a maturity date of
         March 12, 2005 and a security interest in all of the Company's assets.
         The Company is required to provide the holder with 90 days' notice of
         any prepayment, although there is no prepayment penalty. The note is
         convertible to common stock. The conversion price is the lowest of
         $.035, 70% of the closing bid price on the date of conversion or 70% of
         the offering price any offering by the Company until March 2005. The
         Company agreed to include the shares issuable upon the exercise of this
         note in a registration statement. Additionally, the note contained a
         requirement that the funds of the loan were to be used to pay down
         certain loans and trade payables and that the Company was to supply
         written verification to the satisfaction of the note holder by March
         31, 2004. Since the Company failed to supply this verification, the
         Company is obligated to issue twice as many shares as would have been
         issuable when and if the holder converts. In connection with this
         penalty provision, the Company recorded a penalty expense of $248,571,
         which has been included in interest expense for the six months ended
         June 30, 2004. Pursuant to EITF Issue No. 98-5 "Accounting for
         Convertible Securities with Beneficial Conversion Features or
         Contingently Adjustable Conversion Ratios" and EITF Issue No. 00-27
         "Application of Issue No. 98-5 to Certain Convertible Instruments", the
         convertible note contains an imbedded beneficial conversion feature
         since the fair market value of the common stock exceeds the most
         beneficial exercise price on the debenture Issuance Date. This
         beneficial conversion value was computed by the Company as $174,000.
         Since the conversion feature is exercisable immediately, the $174,000
         was recognized as interest expense during the six months ended June 30,
         2004. On May 13, 2004, $20,000 of principal balance was converted into
         10,000,000 shares of common stock (See Note 6).

(c)      The Company maintains restricted cash in a brokerage account that is
         collateral for this line of credit and shown as restricted cash on the
         accompanying consolidated balance sheet.

NOTE 3 - DEBENTURES PAYABLE

On February 19, 2004, the Company entered into a Securities Purchase Agreement
to issue and sell 7.5% convertible debentures, in the aggregate amount of
$200,000, convertible into shares of common stock of the Company. As of June 30,
2004, $200,000 in convertible debentures were issued Investors. The holders of
this debt have the right to convert all or any amount of this debenture into
fully paid and non-assessable shares of common stock at the conversion price
with the limitation that any debenture holder may not convert any amount of the
debentures if after conversion that debenture holder would beneficially hold
more than 4.99% of the total outstanding common stock of the Company. The
conversion price generally is the lesser of (i) 65% of the average of the three
lowest closing bid prices of the common stock during the five trading days
immediately prior to the conversion date or (ii) $.08. Interest is payable at
the conversion date, in cash or in shares of common stock, at the option of the
Company. The convertible debentures mature three years from the debenture
issuance date. For the six months ended June 30, 2004, the Company recorded an
imbedded beneficial conversion amount of $107,693 as interest expense since the
debentures were immediately convertible.

                                       -9-
<PAGE>
                        IBX GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  June 30, 2004
                                   (UNAUDITED)

NOTE 3 - DEBENTURES PAYABLE (CONTINUED)

In connection with these convertible debentures issued, warrants to purchase
500,000 common shares were issued to the holders at an exercise price per share
of $0.05. The warrants are exercisable immediately and expire on March 15, 2007.
These warrants were treated as a discount on the convertible debenture and in
2004 were valued at $18,068 under SFAS No.123 using the Black-Scholes
option-pricing model to be amortized over the debenture term. Amortization
expense for the six months ended June 30, 2004 was $7,132 and is included in
interest expense. In May 2004, the investor converted $50,000 of debentures
payable into 3,379,953 shares of common stock (see Note 6).

On March 29, 2004, the Company entered into Securities Purchase Agreements to
issue and sell 7.5% convertible debentures, in the aggregate amount of $400,000,
convertible into shares of common stock of the Company. As of June 30, 2004, the
$400,000 in convertible debentures was issued to consultants for services
rendered and to be rendered in the future. The holders of this debt have the
right to convert all or any amount of this debenture into fully paid and
non-assessable shares of common stock at the conversion price with the
limitation that any debenture holder may not convert any amount of the
debentures if after conversion that debenture holder would beneficially hold
more than 4.99% of the total outstanding common stock of the Company. The
conversion price generally is the lesser of (i) 90% of the average of the three
lowest closing bid prices of the common stock during the five trading days
immediately prior to the conversion date or (ii) $.08. Interest is payable at
the conversion date, in cash or in shares of common stock, at the option of the
Company. The Company recorded an imbedded beneficial conversion amount of
$44,444 as interest expense on March 29, 2004 since the debentures were
immediately convertible. The convertible debenture liability is as follows at
June 30, 2004:

Convertible debenture payable ........................  $ 550,000

Less: unamortized discount on debenture ..............    (43,250)
                                                        ---------

Convertible debenture, net ...........................  $ 506,750
                                                        =========

NOTE 4 - RELATED PARTY TRANSACTIONS

Certain officers/shareholders of the Company from time to time advanced funds to
the Company for operations. These amounts are non-interest bearing,
non-collateralized, and are payable on demand. These advances are subordinated
to the loan payable (see Note 2). At June 30, 2004, amounts owed to officers
amounted to $120,878.

NOTE 5 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board has recently issued several new
accounting pronouncements:

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity." This statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. This
statement is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective for the first interim period beginning
after June 15, 2003, with certain exceptions. The adoption of SFAS No. 150 did
not have a significant impact on our consolidated financial position or results
of operations.

                                      -10-
<PAGE>
                        IBX GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  June 30, 2004
                                   (UNAUDITED)

NOTE 6 - STOCKHOLDERS' DEFICIT

Preferred Stock

In August 2002, the Company designated 300,000 shares of its authorized
preferred stock as Class A Non-Voting Convertible Preferred Stock ("Class A
Preferred"). Each share of Class A Preferred is convertible into 100 shares of
common stock. A holder of Class A Preferred may not convert shares if such
conversion would result in such holder owning in excess of 4.9% of the Company's
common stock. At such time, 80,000 shares of Class A Preferred were issued in
exchange for 8,000,000 shares of common stock held by one entity. Through June
30, 2004, the Class A preferred shareholder converted 47,000 Class A preferred
shares into 4,700,000 shares of common stock.

On February 17, 2004, the Company's board of directors adopted an article of
amendment for 1,000,000 shares of the 5,000,000 shares of preferred stock
designating it as Series B 8% Convertible Preferred Stock or Series B preferred
stock. The holder of shares of the Series B preferred stock will be entitled to
all dividends declared by the board of directors at a rate of $80.00 per share
per annum. Dividends are not cumulative and will not accrue. The holder will be
entitled to convert each share of Series B preferred stock for 2,000 shares of
common stock, subject to adjustment upon the occurrence of certain limited
events as specified in the articles of amendment. Each share will be entitled to
a liquidation preference of $1,000.00 per share plus any declared but unpaid
dividend. The Series B preferred stock will have voting rights as if converted
into common stock and will vote as a class with the common stock on all matters.
Certain protective provisions apply that limits the Company's authority to a)
issue new classes of capital stock senior to the series B preferred, and b) sell
or merge the Company.

During February 2004, the Company had a private placement to five accredited
investors in which the Company issued an aggregate of 1,000 shares of Series B
Preferred Stock convertible into 2,000,000 shares of common stock, warrants
entitling the holders to purchase up to 1,000,000 shares of our common stock at
an exercise price of $0.10 per share expiring on December 31, 2005 for proceeds
of $100,000. Additionally, the Company issued 250 shares of Series B Preferred
Stock convertible into 500,000 shares of common stock, warrants entitling the
holders to purchase up to 250,000 shares of our common stock at an exercise
price of $0.10 per share expiring on December 31, 2005 in exchange for debt
amounting to $25,000.

During May 2004, the Company issued to its chief executive officer 7,500 shares
of Series B Preferred Stock convertible into 15,000,000 shares of common stock.
The preferred shares were valued at the quoted trading price of the underlying
15,000,000 shares of common stock of $375,000 or $.025 per common share and
charged to operations included in other selling, general and administrative.

Common Stock

In January 2004, the Company issued 2,380,000 shares of common stock for net
proceeds of $119,000 or $0.05 per share.

                                      -11-
<PAGE>
                        IBX GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  June 30, 2004
                                   (UNAUDITED)

NOTE 6 - STOCKHOLDERS' DEFICIT (CONTINUED)

In February 2004, in connection with a securities purchase agreement (see note
3), the Company issued 500,000 shares of common stock. The shares were value at
the quoted trading price on the date of the securities purchase agreement of
$35,500. The $35,500 was treated as a discount on the convertible debenture and
is being amortized into interest expense over the debenture term. In May 2004,
the Company issued an additional 500,000 shares of common stock. The shares were
value at the quoted trading price on the date of the securities purchase
agreement of $10,500. The $10,500 was treated as a discount on the convertible
debenture and is being amortized into interest expense over the debenture term.
For the six months ended June 30, 2004, amortization of the discount on the
convertible debentures amounted to $13,686.

During the six months ended June 30, 2004, the Class A preferred shareholder
converted 24,000 Class A preferred shares into 2,400,000 shares of common stock.

During the six months ended June 30, 2004, the Company cancelled 22,000 shares
of common stock previously issued.

In May and June 2004, in connection with the conversion of debentures and loans
payable, the Company issued 13,379,953 shares of common stock for debt of
$70,000. As of June 30, 2004, 379,953 of these common shares had not been issued
and are included in common stock issuable on the accompanying balance sheet.

In June 2004, in connection with the exercise of stock warrants, the Company
issued 10,950,000 shares of common stock to consultants for net proceeds of
$60,975.

On June 30, 2004, the shareholders approved an increase in the authorized common
shares to 500,000,000, which had been previously approved by the Board of
Directors.

Common stock warrants and options

In connection with the March 2004 issuance of 1,250 shares of Series B
convertible preferred stock, the Company granted 1,250,000 common stock warrants
to purchase 1,250,000 shares of the Company's common stock at $.10 per share.
The warrants expire in December 31, 2005.

On March 29, 2004, in connection with a consulting contract, the Company granted
an aggregate of 40,000,000 warrants to purchase shares of the Company's common
stock at an exercise price of $0.10 per share. The fair value of this warrant
grant was estimated at $0.023 per warrant on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions dividend yield of -0- percent; expected volatility of 85 percent;
risk-free interest rate of 4.50 percent and an expected holding periods of 3.00
years. In connection with these warrants, the Company recorded compensation
expense of $186,715 for the six months ended June 30, 2004 and deferred
compensation of $727,204, which will be amortized over the service period. The
warrants expire on March 29, 2007.

                                      -12-
<PAGE>
                        IBX GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  June 30, 2004
                                   (UNAUDITED)

NOTE 6 - STOCKHOLDERS' DEFICIT (CONTINUED)

Common stock warrants and options (continued)

On May 28, 2004, certain warrant holders sold, for nominal consideration,
warrants for 8,000,000 shares of common stock to a consultant for services
rendered and to be rendered in the future on behalf of the Company. For
accounting purposes, this transaction is treated as a contribution of the
warrants by the selling warrant holder to the Company and a new grant of
warrants to the consultant resulting in a consulting expense. The options had
exercise prices of $.005 per share and expire on November 28, 2004. The fair
value of each option grant was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions dividend yield of -0- percent; expected volatility of 105%;
risk-free interest rate of 4.50 percent and an expected holding periods of six
months. In connection with the sale of these options, the Company recorded
non-cash compensation of $19,461 and deferred compensation of $97,306. In June
2004, the consultant exercised these warrants for 1,950,000 common shares for
net proceeds of $975.

On May 14, 2004, certain consultants to the Company assigned their warrants to a
third party, whereby the third party has the right to purchase warrants from the
consultants. The Company agreed to reduce the exercise price of the warrants
purchased by the third party in exchange for the exercise of such warrants. The
exercise price of these warrants has been set to a percentage of market, not to
exceed 70% of the bid price of the Company's common stock. As of June 30, 2004,
the third party exercised 9,000,000 warrants at an exercise price of $0.00667
for net proceeds of $60,000. There is no financial accounting effect of these
transactions other than offsetting the fee paid against paid in capital as an
offering cost.

In connection with convertible debentures issued, warrants to purchase 500,000
common shares were issued to the holders at an exercise price per share of
$0.05. The warrants are exercisable immediately and expire on March 15, 2007.
These warrants were treated as a discount on the convertible debenture and in
2004 were valued at $18,068 under SFAS No.123 using the Black-Scholes
option-pricing model to be amortized over the debenture term. Amortization
expense for the six months ended June 30, 2004 was $7,132 and is included in
interest expense (see Note 3).

A summary of outstanding options and warrants at June 30, 2004 are as follows:
<TABLE>
<CAPTION>
                                  Shares Underlying        Range of          Remaining         Average
                                 Options and warrants   Exercise Prices   Contractual Life  Exercise Price
                                 --------------------  -----------------  ----------------  --------------
<S>                                  <C>               <C>                   <C>               <C>
Outstanding at December 31, 2003         530,000       $0.10   - $0.50       2.75 years        $0.28
Granted .........................     41,750,000       $0.0005 - $0.10       1.5  years         0.10
Exercised .......................    (10,950,000)      $.0005  - $.00667         -              0.0056
Cancelled .......................              -               -                 -               -
                                     -----------       -----------------     ----------        -------
Outstanding at June 30, 2004 ....     31,330,000       $0.05   - $0.50       1.6 years         $0.10
                                     ===========       =================     ==========        =======
</TABLE>

Weighted average fair value of warrants and options
granted for the six months ended June 30, 2004 ............   $.10
                                                              ====

                                      -13-
<PAGE>
                        IBX GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  June 30, 2004
                                   (UNAUDITED)

NOTE 6 - STOCKHOLDERS' DEFICIT (CONTINUED)

Common stock warrants and options (continued)

The following table summarizes information about employee stock options and
consultant warrants outstanding at June 30, 2004:

                                                         Options and Warrants
          Options and Warrants Outstanding                    Exercisable
 --------------------------------------------------    -------------------------
                              Weighted
                               Average     Weighted                     Weighted
 Range of       Number        Remaining     Average        Number        Average
 Exercise   Outstanding at   Contractual   Exercise    Exercisable at   Exercise
   Price    June 30, 2004        Life        Price     June 30, 2004     Price
 --------   --------------   -----------   --------    --------------   --------
$     0.50       250,000     2.50 Years    $  0.50          250,000     $  0.50
 0.05-0.10    25,030,000     2.55 Years       0.10       25,030,000        0.10
    0.0005     6,050,000     0.41 years     0.0005        6,050,000      0.0005
              ----------                   -------       ----------      ------
              31,330,000                   $ 0.083       31,330,000     $ 0.083
              ==========                   =======       ==========      ======

NOTE 7 - ACQUISITION

Effective February 20, 2004 the Company closed on the acquisition of all the
membership units of South Florida Therapy I, LLC ("SFT") a company operating in
the physical and respiratory therapy business. As part of the agreement, the
Company will administer collections for all accounts receivable through February
20, 2004 on behalf of the sellers and receive a 10% fee of amounts collected. In
addition, the Company will administer and collect future receivables on behalf
of its wholly owned subsidiary for a 10% fee which would eliminate in
consolidation. The purchase price was $1.00 plus 5% of future gross revenues
collected of SFT through February 20, 2006. In addition, if the Company does not
fund and maintain the SFT business through February 20, 2006, a termination
payment of $50,000 will be due to the sellers. The Company accounted for this
acquisition using the purchase method of accounting, however, as there were no
tangible assets or liabilities, and a nominal $1.00 purchase price, there was no
accounting entry at the acquisition date.

In accordance with SFAS 141 "Business Combinations" the contingent consideration
of 5% of future revenues collected will be recorded as a component of the
purchase price as such amounts are determined in the future.

                                      -14-
<PAGE>
                        IBX GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  June 30, 2004
                                   (UNAUDITED)

NOTE 8 - SEGMENT INFORMATION

For the six months ended June 30, 2004, the Company operated in two reportable
business segments - (1) healthcare transaction management and technology
services and (2) physical therapy and rehabilitation services. The healthcare
transaction management and technology services segment provides the healthcare
industry with a combination of administrative services and technology
development, including but not limited to physicians practice management,
billing and collections, network services, transcription services, staffing
solutions, and software application development. The physical therapy and
rehabilitation services segment operates multi-disciplinary clinics offering
physical therapy, occupational medicine, pain management, chiropractic care and
wellness services. The Company's reportable segments are strategic business
units that offer different products, which compliment each other. They are
managed separately based on the fundamental differences in their operations.
Information with respect to these reportable business segments for the six
months ended June 30, 2004 and 2003 is as follows.

                                            FOR THE SIX       FOR THE SIX
                                            MONTHS ENDED      MONTHS ENDED
                                            JUNE 30, 2004     JUNE 30, 2003

                          NET REVENUES:
                 Healthcare Transaction
              Management and Technology      $   318,311       $ 1,815,310
    Physical Therapy and Rehabilitation           86,560           390,173
                                             -----------       -----------

               Consolidated Net Revenue          404,871         2,205,483
                                             -----------       -----------

                    OPERATING EXPENSES:
                 Healthcare Transaction
              Management and Technology        2,595,891         1,813,009
    Physical Therapy and Rehabilitation          400,672           534,034
                                             -----------       -----------

         DEPRECIATION AND AMORTIZATION:
                 Healthcare Transaction
              Management and Technology           64,816            73,433
    Physical Therapy and Rehabilitation            7,127             3,888
                                             -----------       -----------

                      INTEREST EXPENSE:
                 Healthcare Transaction
              Management and Technology          791,435            45,842
    Physical Therapy and Rehabilitation                -                 -
                                             -----------       -----------

                              NET LOSS:
                 Healthcare Transaction
              Management and Technology      $(3,133,831)      $  (116,974)
    Physical Therapy and Rehabilitation
                                                (321,239)         (147,749)
                                             -----------       -----------

                               NET LOSS      $(3,455,070)      $  (264,723)
                                             ===========       ===========

TOTAL ASSETS AT JUNE 30, 2004 AND 2003:
                 Healthcare Transaction
              Management and Technology      $ 1,147,024       $ 1,309,027
    Physical Therapy and Rehabilitation           96,698           397,226
                                             -----------       -----------

               Consolidated Asset Total      $ 1,243,722       $ 1,706,253
                                             ===========       ===========

                                      -15-
<PAGE>
                        IBX GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  June 30, 2004
                                   (UNAUDITED)

NOTE 9 - GOING CONCERN

As reflected in the accompanying consolidated financial statements, the Company
has a working capital deficiency of $3,501,525 at June 30, 2004, and has an
accumulated deficit and stockholders' deficit of $9,869,011 and $3,428,637,
respectively, and has cash used in operations of $887,918 for the six months
ended June 30, 2004. The ability of the Company to continue as a going concern
is dependent on achieving profitable operations, its ability to generate
positive cash flows from operations, and the obtaining additional equity and/or
debt financing to pay off outstanding debt obligations and unpaid payroll taxes.
There can be no assurance that the Company's efforts will be successful. The
consolidated financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern. No estimate
has been made should management's plan be unsuccessful (see Note 10).

NOTE 10 - SUBSEQUENT EVENTS

Subsequent to June 30, 2004, in connection with the conversion of debentures and
loans payable, the Company issued 18,577,482 shares of common stock for debt of
$109,000. As of the date of this report, 677,482 of these common shares remain
issuable.

Subsequent to June 2004, in connection with the exercise of stock warrants, the
Company issued 21,545,798 shares of common stock to consultants for a
subscription receivable of $3,025 and net proceeds of $137,500.

In July 2004, Series B preferred shareholder converted 1,000 Series B preferred
shares into 2,000,000 shares of common stock.

On July 6, 2004, the Company issued 3,609,500 shares of common stock to its
chief executive officer as compensation. Such shares were valued at their market
value on the date of issuance at $0.0235 per share. The Company recorded
compensation expense of $84,823 related to these services.

On August 18, 2004, the Company entered into a Securities Purchase Agreement,
whereby the Company shall issue and sell up to $400,000 of secured convertible
debentures, which shall be convertible into shares of the Company's common
stock. The debenture holder is entitled, at its option, to convert the
debentures into shares of the Company's common stock at a per share price equal
to the lesser of (a) an amount equal to 120% of the closing bid price of the
common stock as quoted by Bloomberg L.P., or (b) an amount equal to 80% of the
lowest closing bid price of the Company's common stock for the five trading days
immediately preceding the conversion date. The Company, at its option, has the
right to redeem the outstanding convertible debentures at a redemption price of
120% of the amount redeemed plus accrued interest. In the event the Company
exercises a redemption, the debenture holder will receive a warrant to purchase
50,000 shares of the Company's common stock for every $100,000 redeemed, pro
rata. The warrants have an exercise price of 120% of the closing bid price of
the Company's commons tock and expire two years from the closing date. In August
2004, the Company issued $200,000 of debentures under this agreement for net
proceeds of approximately $165,000.

                                      -16-
<PAGE>
                        IBX GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  June 30, 2004
                                   (UNAUDITED)

NOTE 10 - SUBSEQUENT EVENTS (CONTINUED)

So long as these convertible debentures are outstanding, the Company shall not,
without prior written consent of the debenture holders, issue or sell shares of
common stock or preferred stock (i) without consideration or for a consideration
per share less than the Bid Price of the common stock determined immediately
prior to its issuance, (ii) any warrant, option, right, contract, call, or other
security instrument granting the holder thereof, the right to acquire common
stock without consideration or for a consideration per share less than the Bid
Price of the common stock determined immediately prior to its issuance, (iii)
enter into any security instrument granting the holder a security interest in
any and all assets of the Company, or (iv) file any registration statement on
Form S-8.

On August 18, 2004, the Company entered into a standby Equity Distribution
Agreement (the "Standby Equity Agreement"), whereby the Company shall issue and
sell to investors up to $15,000,000 of the Company's common stock at a purchase
price equal to 98% of the volume weighted average price of the Company's common
stock as quoted by Bloomberg, L.P. five consecutive trading days after the
Advance notice date. The advances under the Standby Equity Agreement may
commence after the effective date of a registration statement.

The Company is required to prepare and file, prior to September 18, 2004, with
the SEC a registration statement on Form SB-2 under the 1933 Act for the
registration of common shares to be issued upon conversion of the convertible
debentures issued pursuant to the Securities Purchase Agreement and the
Investors' shares. The Company must use its best efforts (i) to have the
registration statement declared effective by the SEC no later than 90 days from
August 18, 2004. In the event the registration statement is not filed by
September 18, 2004 or is not declared effective by the SEC on or before the
Scheduled effective date, as defined, the Company will pay as liquidating
damages to the holder, at the holder's option, either a cash amount or shares of
the Company's common stock, equal to two percent (2%) of the liquidating value
of the convertible debentures outstanding as liquidating damages each 30 day
period.

                                      -17-
<PAGE>

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

The following discussion should be read in conjunction with iBX's audited
financial statements and notes thereto included herein. In connection with, and
because it desires to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, iBX cautions readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on the behalf of iBX, whether
or not in future filings with the Securities and Exchange Commission. Forward
looking statements are statements not based on historical information and which
relate to future operations, strategies, financial results or other
developments. Forward looking statements are necessarily based upon estimates
and assumptions that are inherently subject to significant business, economic
and competitive uncertainties and contingencies, many of which are beyond iBX's
control and many of which, with respect to future business decisions, are
subject to change. These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward looking statements made by, or on behalf of, iBX. iBX disclaims
any obligation to update forward looking statements.

ORGANIZATION

iBX Group, Inc. was organized under the laws of the State of Florida in July
1997 as Vidkid Distribution, Inc. to own, distribute and produce children's
intellectual properties. to own, distribute and produce children's intellectual
properties In February 2001, we were spun-off from our parent company
emailthatpays.com, Inc. On September 25, 2001, Vidkid acquired all of the
outstanding capital stock of Primed Technologies, Inc., a Delaware corporation
in a stock-for stock exchange. Primed was organized under the laws of the State
of Florida on February 4, 1999 as a limited liability company and reorganized as
a corporation in the State of Delaware on January 1, 2000. Primed's
shareholders, Evan Brovenick and David Blechman, received 11,550,000 shares or
approximately 81% of the outstanding common stock of Vidkid on a fully diluted
basis. Vidkid's name was changed to iBX Group, Inc.

We are engaged in providing administrative services such as accounting, billing
and collection, claims We develop and deploy innovative, cost-effective methods
for integrating financial, administrative and information services for the
healthcare industry. IBX Group, Inc. develops and deploys innovative,
cost-effective methods for integrating financial, administrative and information
services for the healthcare industry. During the last two years, we
significantly expended our capabilities. Our business initially focused on
healthcare transaction services, primarily assisting providers with billing and
collection of receivables. We have since added expertise in regulatory
compliance, transcription services, staffing and technology solutions. We have
devoted significant resources towards developing various strategic partners and
opportunities to better address the needs of the healthcare marketplace. These
investments in our product development and infrastructure resulted in
significant expenditures and we are now starting to recognize new revenue from
these initiatives.

iBX operates under four divisions:

      o  IBX TECHNOLOGIES, which enables healthcare organizations to maximize
         their accounts receivables;

      o  FLORIDA HEALTHSOURCE, a network of physical therapy and wellness
         centers;

      o  IBX TRANSCRIPTION SERVICES, which offers physicians quick turn-around
         and Web-accessible progress reports;

      o  NURSESSTAT, which deploys leading-edge staffing administration
         technology to healthcare facilities and provides cost-effective
         temporary staffing solutions.

                                      -18-
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (CONTINUED)

An aggregate of 11,550,000 shares of iBX held by Evan Brovenick and David
Blechman, our principal officers, and the assets of the Company are subject to a
creditor's lien. Failure to comply with the terms and conditions of the related
loan documents could result in a default and the forfeiture of these shares
and/or assets to the lender.

CURRENT DEVELOPMENTS

iBX Diagnostics, Inc., a joint venture between Medical Capital Group, LLC and
iBX Technologies, Inc. has a contract as a premiere distributor of the
in2it(TM), in-office, blood-testing device created by Provalis Diagnostics. The
machine has received final approval from the FDA. This approval allows the
aggressive sales and distribution plans to take effect immediately. iBX
Diagnostics will market an administrative component to the users of the product
and add additional diagnostic equipment to its distribution network.

As a result of an extensive internal cost review, we plan on selling or closing
any under performing subsidiaries or segments. In an effort to reduce labor
expenses and overhead throughout the company, we will commit our selves to the
most current and potentially profitable segments of the healthcare industry.

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO SIX MONTHS ENDED JUNE 30, 2003

REVENUES

For financial reporting purposes, iBX operated in two reportable business
segments: healthcare transaction management and technology services; and
physical therapy and rehabilitation services.

Revenues are generated from our administrative services (accounting, billing and
collection, claims processing, information management, transcription and legal
services) and from our business of providing physical therapy services to
referred patients. Revenues for the six months ended June 30, 2004 were $404,871
as compared to revenues for the six months ended June 30, 2003 of $2,205,483, a
decrease of $1,800,612 or 81.6%. Revenues from our health transaction management
and technology segment decreased to $318,311 for the six months ended June 30,
2004 as compared to $1,815,310 for the six months ended June 30, 2003, a
decrease of $1,496,999. The decrease was attributable to the following:

                                      -19-
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (CONTINUED)

      o  a decrease in collections on behalf of customers under the Company's
         service contracts. Our collection rate has decreased as we wind up
         certain portfolios. With the addition of new portfolios, we expect our
         revenue to increase in the third and fourth quarters of 2004.
         Additionally, in June 2003, Hilco modified their service agreement with
         us. The modification of this agreement had an adverse effect on our
         revenues.

      o  We are currently experiencing cash flow problems and, accordingly, have
         decreased our marketing and advertising budget.

In July 2004, in connection with a reconciliation of patient accounts and
collections for one of our customers, we calculated that based on our collection
efforts, we believe that we are owed in excess of $1,000,000 in commission
income. Although persuasive evidence of an arrangement exists, services have
been rendered and the sales price to the customer is fixed or determinable,
collectability is not reasonably assured. Accordingly, we have not recorded
revenue related to these collections. We are in negotiations with this customer
and expect to collect these funds in the near future; however, is collections is
not assured.

Revenues from our physical therapy and rehabilitation services segment decreased
to $86,560 for the six months ended June 30, 2004 as compared to $390,173 for
the six months ended June 30, 2003, a decrease of $303,613. The decrease was
attributable to a decrease the abandonment of our Jacksonville, Florida office,
the closing of our Jacksonville clinic, and a lack operating capital to properly
operate our other facilities.

For the six months ended June 30, 2004, revenues by segment consisted of the
following.

                                                             2004        2003
                                                             ----        ----
Health transaction management and technology segment ...   $318,311   $1,815,310
Physical therapy and rehabilitation services segment ...     86,560      390,173
                                                           --------   ----------

Total revenues .........................................   $404,871   $2,205,483
                                                           ========   ==========

OPERATING EXPENSES

The Company's operating results for the quarter were materially impacted by
costs associated with several acquisitions that were consummated during 2003,
including Florida HealthSource, IBX Transcription, NurseStat and MediCompliant,
while the core business also recorded a loss due to expenses in closing the
Jacksonville facility, marketing expenses, and non-cash charges due to the sale
of debenture instruments and issuance of $400,000 of promissory notes for
services and related 40,000,000 warrants for services, and non-cash penalties
incurred related to our loans payable. The Company expects that these new
businesses will have substantially increased revenues and lower expenses in the
latter part of 2004.

                                      -20-
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS (CONTINUED)

SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO SIX MONTHS ENDED JUNE 30, 2003
(CONTINUED)

Salaries and payroll taxes were $1,018,227 for the six months ended June 30,
2004 as compared to $1,020,094 for the six months ended June 30, 2003. Salaries,
which consist of salaried and hourly employees, include staff used for our
administrative services, our technical development staff, marketing staff and
office personnel, and clinic staff. Overall, for the six months ended June 30,
2004, salary and payroll expenses decreased by $1,867. The decrease is
attributable to an increase in staff related to our physical therapy and
rehabilitation segment and increased staff related to our acquisitions during
the 2003 period offset by a decrease in staff in the second quarter of fiscal
2004 due to the reduction of staff in order to cut our operating expenses. We
expect that this expense will be lower in the third and fourth quarters of 2004.

Depreciation and amortization expense for the six months ended June 30, 2004 was
$71,943 as compared to $77,321 for the six months ended June 30, 2003. We
regularly review the carrying value of our assets and a loss is recognized when
the unamortized costs are deemed unrecoverable based on the estimated cash flows
to be generated from the applicable assets.

Consulting expense was $85,892 for the six months ended June 30, 2004 as
compared to $0 for the six months ended June 30, 2003. During the six months
ended June 30, 2004, we recorded non-cash consulting expense related to
debenture agreements of $84,447.

Professional fees were $182,333 for the six months ended June 30, 2004 as
compared to $140,534 for the six months ended June 30, 2003, an increase of
$41,799 or 29.7%. We experienced an increase in professional fees related to our
SEC filings and the filing of our registration statement on Form SB-2.

Rent expense was $183,917 for the six months ended June 30, 2004 as compared to
$187,950 for the six months ended June 30, 2003, a decrease of $4,033.
Currently, we offset our rent expense by subleasing office space to certain
entities on a month-to-month basis. In July 2004, we relocated our offices to a
smaller space in order to cut our rent expense.

For the six months ended June 30, 2004, we recorded bad debt expense of $223,735
related to receivables for which collections may be doubtful.

Other selling, general and administrative expenses, which include advertising,
insurance, contract labor, stock-based compensation expense, travel and
entertainment, telephone, and other expenses, were $1,302,459 for the six months
ended June 30, 2004 as compared to $998,465 for the six months ended June 30,
2003. In May 2004, we issued to our chief executive officer 7,500 shares of
Series B Preferred Stock convertible into 15,000,000 shares of common stock. The
preferred shares were value at the quoted trading price of the underlying
15,000,000 shares of common stock of $375,000 or $.025 per common share and
charged to operations. This increase was offset by a decrease in outside
services and other expenses due to cost cutting measures.

                                      -21-
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (CONTINUED)

Interest expense was $791,435 for the six months ended June 30, 2004 as compared
to $45,842 for the six months ended June 30, 2003. The increase was attributable
to charges recorded due to the beneficial conversion of our notes payable and
debentures payable and a default penalty on a promissory note of $309,654 and
$248,571, respectively. Additionally, in 2004, we defaulted on our installment
agreement with the U.S. Internal Revenue Service (IRS) relating to unpaid
payroll taxes. In connection with this default, interest and penalty expense
related to the unpaid payroll taxes was recorded in the amount of $116,000.

As a result of these factors, we reported a net loss of $(3,455,070) or $(.03)
per share for the six months ended June 30, 2004 as compared to net loss of
$(264,723) or ($.00) per share for the six months ended June 30, 2003.

LIQUIDITY AND CAPITAL RESOURCES

During the first part of 2004, our overall performance continued to be hampered
due to continuing inadequacy of funding to meet our needs to, among other
things, ramp up sales and deploy our services. In 2003, we received
approximately $3,088,428 in proceeds from the exercise of our warrants. During
the six months ended June 30, 2004, we received proceeds of $200,000 from the
sale of convertible debentures, of $119,000 from the sale of common stock,
proceeds of $100,000 from the sale of series B preferred stock, and net proceeds
of $60,975 from the exercise of warrants. We are currently experiencing a cash
shortage, which has effected our operations. Our ability to continue as a going
concern is dependent upon our ability to attain a satisfactory level of
profitability, have access to suitable financing, satisfy our contractual
obligations with creditors on a timely basis and develop further revenue
sources.

At June 30, 2004, we had a stockholders' deficit of $3,428,637. We have an
accumulated deficit from losses of $9,869,011. Our operations during 2004 have
been funded from loans from third parties amounting to $362,523 and from the
sale of stock of $219,000. These funds were used for working capital and capital
expenditures.

We entered into an installment agreement with the U.S. Internal Revenue Service
in October 2002 relating to unpaid payroll taxes through June 2002, which
requires us to pay $12,000 per month for 84 months. We have incurred additional
payroll tax liabilities subsequent to June 30, 2002 which have been accrued on
the accompanying balance sheet. We are currently in default on this agreement.
Additionally, we have accrued penalties and interest on payroll tax liabilities
incurred subsequent to June 30, 2002. At June 30, 2004, accrued payroll taxes
and penalties aggregated $1,880,993.

We have no other material commitments for capital expenditures. Other than cash
generated from our operations, exercise of warrants, loans and advances from
shareholders, we have no external sources of liquidity.

We may not have sufficient cash flow from operations to sufficiently meet all of
our cash requirements for the next 12 months. Our future operations and growth
is dependent on our ability to raise capital for expansion, and to seek
additional revenue sources.

                                      -22-
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (CONTINUED)

Net cash used in operations during the six months ended June 30, 2004 was
$(887,918) as compared net cash used in operations of $(429,251) for the six
months ended June 30, 2003. The increase in cash used was primarily a result of
net losses for the six months ended June 30, 2004 of $3,455,070, offset by
non-cash items such as stock-based compensation of $595,693, beneficial interest
and penalties recorded on debentures and loans payable of $574,708, and an
increase in our allowance for doubtful accounts of $207,354, as well as
increases in accounts receivable, increases in accounts payable, and the
increase in payroll taxes payable and related interest.

Net cash used in investing activities during the six months ended June 30, 2004
was $30,464 relating to the purchase of property and equipment of $18,020 and an
increase in restricted cash of $12,444 compared to net cash used in investing
activities of $112,198 for the six months ended June 30, 2003 relating to the
purchase of property and equipment.

Net cash provided by financing activities for the six months ended June 30, 2004
was $906,072 as compared to net cash provided by financing activities of
$572,814 for the six months ended June 30, 2003. During the six months ended
June 30, 2004, we received proceeds from the sale of common stock of $119,000,
proceeds from the sale of series B preferred stock of $100,000, proceeds from
increased loan borrowings of $362,523, proceed from advances from related
parties of $121,414, proceeds from the exercise of warrants of $60,975, and an
increase in checks outstanding in excess of bank balances of $217,848, offset by
loan repayments of $75,688. During the six months ended June 30, 2003, we
received proceeds from the exercise of warrants of $826,900 offset by a decrease
in checks outstanding in excess of bank balances of $18,596 and loan repayment
of 235,036.

During 2004, we entered into a line of credit agreement with a financial
institution pursuant to which we can borrow up to $450,000. Interest is payable
on the outstanding principal balance at a annual rate of prime. The loan is
payable on demand and at June 30, 2004 $450,000 was outstanding. The line is
secured cash deposits at a financial; institution, which is reflected as
restricted cash.

We believe that our working capital will improve as our profitability improves
and as we pay off certain debt settlements. Nevertheless, we can provide no
assurance as to our future profitability or access to capital markets, or
successful re-negotiation of existing debt.

We may not have sufficient cash flow from operations to sufficiently meet all of
our cash requirements for the next 12 months. Our ability to continue as a going
concern is dependent upon our ability to attain a satisfactory level of
profitability, have access to suitable financing, satisfy our contractual
obligations with creditors on a timely basis and develop further revenue
sources. In August 2004, we commenced negotiations with creditors to convert
debt into equity. As of September 21, 2004, no agreements have been reached.

In February 2004, we issued two convertible notes in the aggregate amount of
$374,000. We also sold $100,000 of units consisting of shares of convertible
preferred stock and warrants.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

The following tables summarize our contractual obligations and commercial
commitments as of June 30, 2004:

  Significant Capital               Within                             After
  Obligations            Total      1 Year    2-3 Years   4-5 Years   5 Years
  -------------------   --------   --------   ---------   ---------   -------

  Capital Leases        $      -   $      -    $      -    $      -   $     -
  Operating Leases      $927,000   $357,000    $436,000    $134,000   $     -

                                      -23-
<PAGE>

CRITICAL ACCOUNTING POLICIES

We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.

REVENUE RECOGNITION

The Company follows the guidance of the Securities and Exchange Commision's
Staff Accounting Bulletin 104 for revenue recognition. In general, the Company
records revenue when persuasive evidence of an arrangement exists, services have
been rendered or product delivery has occurred, the sales price to the customer
is fixed or determinable, and collectability is reasonably assured. The
following policies reflect specific criteria for the various revenues streams of
the Company:

Revenue derived from billing and collections and administrative services is
recognized at the completion of the service performed. For billing and
collection services, the Company receives a commission from the customer based
on a percentage of amounts actually collected. Revenues are recognized as a net
amount equal to the percentage commission once the customer's receivable had
been received. Software application revenue (from licensing) is recognized in
accordance with the terms of the specific agreements.

Maintenance and support revenues are recognized over the term of the related
agreements.

The Company's FHS subsidiaries primarily act as a referral network for physical
therapy patients who are referred by insurance carriers. Revenue from providing
physical therapy services was recognized upon completion of the patient services
and was recorded net of amounts due to service providers for the fiscal year
ended December 31, 2002. In 2003, the Company re-evaluated this revenue
recognition policy of the FHS subsidiary and determined that it qualifies for
the use of the Gross Method under EITF 99-19, "Recording Revenues Gross as a
Principal versus Net as an Agent". The cumulative effect of the change in
accounting principal was not material.

Revenues from providing medical staffing application services will be recognized
as services are provided.

Customer prepayments from outsourced legal compliance services are deferred and
recognized as earned over the service period.

We account for stock transactions in accordance with APB Opinion No. 25,
"Accounting for Stock Issued to Employees." In accordance with Statement of
Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based
Compensation," we adopted the pro forma disclosure requirements of SFAS 123.

                                      -24-
<PAGE>

ITEM 3.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our chief
executive officer and chief financial officer, conducted an evaluation of our
"disclosure controls and procedures" (as defined in the Securities Exchange Act
of 1934 (the "Exchange Act") Rules 13a-14I) within 90 days of the filing date of
this Quarterly Report on Form 10-QSB (the "Evaluation Date"). Based on their
evaluation, our chief executive officer and chief financial officer have
concluded that as of the Evaluation Date, our disclosure controls and procedures
are effective to ensure that all material information required to be filed in
this Quarterly Report on Form 10-QSB has been made known to them in a timely
fashion.

Changes in Internal Controls

There have been no significant changes (including corrective actions with regard
to significant deficiencies or material weaknesses) in our internal controls or
in other factors that could significantly affect these controls subsequent to
the Evaluation Date set forth above.


                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         None

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

         In May 2004, iBX entered into a consulting agreement with Knightsbridge
Capital pursuant to which it issued to Knightsbridge shares equal to 9.9% of the
outstanding common stock. The agreement provides that Knightsbridge will be
issued additional shares to maintain its 9.9% ownership position for 180 days.
As a result of various issuances, as of September 17, 2004, Knightsbridge owned
17,780,000 shares. Knightsbridge also is entitled to a monthly retainer and a
success fee upon consummation of specified financing and mergers transactions.

         In August 2004, iBX issued Cornell Capital Partners a Secured
Convertible Debenture is convertible at the holder's option any time up to
maturity at a conversion price equal to the lower of (i) 120% of the closing bid
price of the common stock as of the date of issuance, or (ii) 80% of the average
of the lowest daily volume weighted average price of our common stock for the
five trading days immediately preceding the conversion date. At maturity, the
remaining unpaid principal and accrued interest under the debenture shall be, at
our option, either paid or converted into shares of common stock at a conversion
price equal to the lower of (i) 120% of the closing bid price of the common
stock as of the date of issuance or (ii) 80% of the lowest closing bid price of
the common stock for the lowest trading days of the five trading days
immediately preceding the conversion date. The Secured Convertible Debenture is
secured by all of IBX's assets. The Secured Convertible Debentures accrues
interest at a rate of 5% per year and has a 3-year term. In the event the
Secured Convertible Debenture is redeemed, then IBX will issue to Cornell
Capital Partners a warrant to purchase 50,000 shares for every $100,000 redeemed
at an exercise price of 120% of the closing bid price as of August 18,, 2004.
Cornell Capital Partners purchased the Secured Convertible Debenture from IBX on
August 18, 2004. IBX is required to register 200,000,000 shares of common stock
underlying the Secured Convertible Debenture. IBX received $200,000 from the
issuance of the Secured Convertible Debenture on August 18, 2004 and will
receive $200,000 from the issuance of a second Secured Convertible Debenture
when we file a registration statement with the SEC.

                                      -25-
<PAGE>

Item 3.  Defaults Upon Senior Securities

         An outstanding note in the original principal amount of $174,000 issued
to the Tucker Family Spendthrift Trust provides for 8% interest, a maturity date
of March 12, 2005 and a security interest in all of iBX's assets. iBX is
required to provide the holder with 90 days' notice of any prepayment, although
there is no prepayment penalty. The note is convertible to common stock. The
conversion price is the lowest of $.035, 70% of the closing bid price on the
date of conversion or 70% of the offering price any offering by iBX until March
2005. iBX agreed to include the shares issuable upon the exercise of this note
in a registration statement. In April 2004, the holder of the note indicated
that the note was in default due to the failure to file this registration
statement on a timely basis. As a result, the holder has claimed that the
conversion price of the note is $.002 per share, which would entitle it to
convert the remaining principal amount of the note into approximately 75,000,000
shares of common stock.

Item 4.  Submission of Matters to Vote of Security Holders

         The annual meeting of shareholders was held on June 30, 2004. Following
are the results:

1.       Election of Directors

         A.       For each individual nominee:

                  Evan Brovenick        For:                   62,889,629
                                        Withhold Authority:             0
                                        Abstain:                  759,475

                  Alvin Brovenick       For:                   62,782,679
                                        Withhold Authority:             0
                                        Abstain:                  866,425

                  David Blechman        For:                    62,782679
                                        Withhold Authority:             0
                                        Abstain:                  733,475

                  Mitchell Hershey      For:                   62,877,579
                                        Withhold Authority:             0
                                        Abstain:                  771,525

2.       Ratification and Approval of Amendment to the Company's Articles of
         Incorporation to increase the authorized common stock to 500,000,000
         shares.

                                        For:                   59,530,017
                                        Against:                3,272,187
                                        Abstain:                  846,900

3.       Ratification and Approval of 2003 Stock Incentive Plan.

                                        For:                   59,415,370
                                        Against:                3,274,499
                                        Abstain:                  959,235

                                      -26-
<PAGE>

Item 5.  Other Information

         As a result of the precipitous drop in the share price, iBX lowered the
exercise price of its outstanding warrants to raise funds to continue
operations. As a result, approximately 32,495,798 warrants have been exercised,
with net proceeds of $198,475 from May 2004 through September 17, 2004.

         iBX terminated its previously announced agreement with CorpFin, an
investment banking firm.

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits

          3.5   Articles of Amendment to Articles of Incorporation
         31.1   Certification by Chief Executive Officer Pursuant to Section 302
         31.2   Certification by Chief Financial Officer Pursuant to Section 302
         32.1   Certification by Chief Executive Officer Pursuant to Section 906
         32.2   Certification by Chief Financial Officer Pursuant to Section 906


         (b) Reports on Form 8-K

         None

                                      -27-
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                        IBX GROUP, INC.


Dated:   September 22, 2004             By: /s/ Evan Brovenick
                                            ----------------------------------
                                            Evan Brovenick,
                                            Chief Executive Officer, President
                                            and Director


Dated:   September 22, 2004             By: /s/ Alvin Brovenick
                                            -------------------
                                            Alvin Brovenick
                                            Treasurer
                                      -28-