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

                                   FORM 10-QSB

              |X| QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 26, 2004

                 |_| TRANSITION REPORT UNDER SECTION 13 OR 15(D)
                           OF THE EXCHANGE ACT OF 1934

            FOR THE TRANSITION PERIOD FROM _________TO______________

                         COMMISSION FILE NUMBER 02-27569

                            HEALTH EXPRESS USA, INC.
                      (EXACT NAME OF SMALL BUSINESS ISSUER)

            FLORIDA                                    65-0847995
            -------                                    ----------
  (State or Other Jurisdiction           (I.R.S. Employer Identification Number)
of Incorporation or Organization)

1761 WEST HILLSBORO BLVD., SUITE 203, DEERFIELD BEACH                  33442
-----------------------------------------------------                  -----
      (Address of Principal Executive Offices)                       (Zip Code)

      Issuer's telephone number, including area code           (954) 570-5900
                                                               --------------

      Check whether the issuer (1) filed all reports required to be filed by

      Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

                               Yes |X|   No |_|

      Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as to the latest practicable date:

             Class                      Outstanding shares at November 4, 2004
             -----                      --------------------------------------

          COMMON STOCK                                37,775,554
          ------------                                ----------


                                       1
<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                    HEALTH EXPRESS USA, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 26, 2004
                               ------------------
                                   (UNAUDITED)

                                     ASSETS
                                     ------

CURRENT ASSETS
  Cash                                                             $     80,758
  Employee receivable                                                     1,659
  Franchise fee receivable                                                4,463
  Other receivable                                                          192
  Prepaids                                                                6,359
  Assets of discontinued operations                                     101,230
                                                                   ------------
TOTAL CURRENT ASSETS                                                    194,661
                                                                   ------------

OTHER ASSETS
  Debt issue costs, net                                                  21,126
  Deposits                                                                6,228
                                                                   ------------
TOTAL OTHER CURRENT ASSETS                                               27,354
                                                                   ------------

EQUIPMENT, NET                                                            6,252
                                                                   ------------

TOTAL ASSETS                                                       $    228,267
                                                                   ============

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                    ----------------------------------------

CURRENT LIABILITIES
  Accounts payable                                                 $      5,336
  Accrued payroll and related taxes                                     208,588
  Notes payable                                                         316,161
  Accrued interest payable                                               39,985
  Notes payable - related party                                         209,750
  Accrued interest payable - related party                               18,116
  Liabilities of discontinued operations                                 33,871
                                                                   ------------
TOTAL CURRENT LIABILITIES                                               831,807
                                                                   ------------

LONG TERM LIABILITIES
  Convertible debentures                                                135,000
                                                                   ------------
TOTAL LONG TERM LIABILITIES                                             135,000
                                                                   ------------

TOTAL LIABILITIES                                                       966,807
                                                                   ------------

STOCKHOLDERS' DEFICIENCY
  Preferred stock, Series A, $0.01 par value, 10,000,000
      shares authorized, none issued and outstanding                         --
  Common stock, $0.001 par value, 50,000,000 shares authorized
      23,775,554 shares issued and 13,980,555 shares outstanding         13,981
  Common stock issuable $0.001 par value, 4,631,516 shares                4,632
  Additional paid in capital                                          9,949,820
  Accumulated deficit                                               (10,679,473)
                                                                   ------------
                                                                       (711,040)
  Less:  Deferred Consulting (500,000 common shares)                    (27,500)
                                                                   ------------
TOTAL STOCKHOLDERS' DEFICIENCY                                         (738,540)
                                                                   ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                     $    228,267
                                                                   ============


          See accompanying notes to consolidated financial statements

                                       1
<PAGE>

                    HEALTH EXPRESS USA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED  THREE MONTHS ENDED   NINE MONTHS ENDED    NINE MONTHS ENDED
                                                    SEPTEMBER 26, 2004  SEPTEMBER 28, 2003   SEPTEMBER 26, 2004   SEPTEMBER 28, 2003
                                                   -------------------  ------------------   ------------------   ------------------
<S>                                                <C>                  <C>                  <C>                  <C>
REVENUE
Franchise fee revenue                                          70,000                   --              70,000                   --
Royalty revenue                                                 4,463                   --               4,463                   --
                                                   ------------------   ------------------   -----------------    -----------------
                                                               74,463                   --              74,463                   --
                                                   ------------------   ------------------   -----------------    -----------------

OPERATING EXPENSES
Compensation                                                  109,463              155,276             430,861              377,642
Depreciation                                                      299                  126                 758                  378
Debt issue cost expense                                        21,510                   --              59,495                   --
General and Administrative                                     85,689              205,009             213,486              524,574
                                                   ------------------   ------------------   -----------------    -----------------
TOTAL OPERATING EXPENSES                                      216,961              360,411             704,600              902,594
                                                   ------------------   ------------------   -----------------    -----------------

LOSS FROM OPERATIONS                                         (142,498)            (360,411)           (630,137)            (902,594)
                                                   ------------------   ------------------   -----------------    -----------------

OTHER INCOME (EXPENSE)
Interest income                                                    18                    9                  47                   18
Interest expense                                              (15,096)             (21,411)            (42,762)            (172,770)
                                                   ------------------   ------------------   -----------------    -----------------
TOTAL OTHER INCOME (EXPENSE)                                  (15,078)             (21,402)            (42,715)            (172,752)
                                                   ------------------   ------------------   -----------------    -----------------

NET LOSS FROM CONTINUING OPERATIONS                $         (157,576)  $         (381,813)  $        (672,852)   $      (1,075,346)
                                                   ==================   ==================   =================    =================

DISCONTINUED OPERATIONS
  Loss from operations of discontinued component
  (including loss on disposal of $0)                          (47,621)             (68,838)            (85,596)            (189,770)
                                                   ------------------   ------------------   -----------------    -----------------
LOSS ON DISCONTINUED OPERATIONS                               (47,621)             (68,838)            (85,596)            (189,770)
                                                   ------------------   ------------------   -----------------    -----------------

NET LOSS                                           $         (205,197)  $         (450,651)  $        (758,448)   $      (1,265,116)
                                                   ==================   ==================   =================    =================

NET LOSS PER SHARE - BASIC AND DILUTED

Loss from continuing operations                    $           (0.009)  $           (0.035)  $          (0.045)   $          (0.100)
Loss from discontinued operations                  $           (0.003)  $           (0.006)  $          (0.006)   $          (0.018)
                                                   ------------------   ------------------   -----------------    -----------------

NET LOSS PER SHARE - BASIC AND DILUTED             $           (0.012)  $           (0.041)  $          (0.051)   $          (0.118)
                                                   ==================   ==================   =================    =================

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
        DURING THE YEAR - BASIC AND DILUTED                16,965,581           11,055,681          14,863,638           10,738,732
                                                   ==================   ==================   =================    =================
</TABLE>


          See accompanying notes to consolidated financial statements

                                       2
<PAGE>

                    HEALTH EXPRESS USA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                    NINE MONTHS ENDED    NINE MONTHS ENDED
                                                                                    SEPTEMBER 26, 2004   SEPTEMBER 28, 2003
                                                                                    ------------------   ------------------
<S>                                                                                     <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                                $  (758,448)        $(1,265,116)
Adjustments to reconcile net loss to net cash used in
       operating activities:
Depreciation                                                                                    758                 378
Recognition of beneficial conversion feature on convertible debentures                           --              77,500
Amortization of debt issue costs                                                             59,495                  --
Stock issued for compensation and interest                                                       --                  --
Stock issued for services                                                                    56,731             183,275
Issuance of warrants and stock options for services                                          53,840              30,695
Changes in operating assets and liabilities:
(Increase) decrease in:
  Employee receivable                                                                        (1,659)                 --
  Franchise fee receivable                                                                   (4,463)                 --
  Prepaid and other assets                                                                    3,664             (75,681)
  Assets from discontinued operations                                                        12,270              96,567
Increase (decrease) in:
  Accounts payable                                                                          (79,849)             12,006
  Accrued liabilities                                                                        50,839             157,827
  Deferred revenue                                                                          (70,000)             30,000
  Liabilities from discontinued operations                                                  (51,600)             30,800
                                                                                        -----------         -----------
NET CASH USED IN OPERATING ACTIVITIES                                                      (728,422)           (721,749)
                                                                                        -----------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of equipment                                                                      (4,219)               (162)
                                                                                        -----------         -----------
NET CASH USED IN INVESTING ACTIVITIES                                                        (4,219)               (162)
                                                                                        -----------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from notes, net of debt issue costs                                              760,538             410,000
  Proceeds from notes - related parties                                                          --             143,090
  Loans repaid to related parties                                                                               (50,000)
  Proceeds from issuance of common stock                                                         --             250,000
                                                                                        -----------         -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                                   760,538             753,090
                                                                                        -----------         -----------

Net Increase in Cash                                                                    $    27,897         $    31,179

Cash at Beginning of Period                                                                  52,861              (1,031)
                                                                                        -----------         -----------

CASH AT END OF PERIOD                                                                   $    80,758         $    30,148
                                                                                        ===========         ===========

Supplemental Disclosure of Cash Flow Information
------------------------------------------------
Cash Paid for:
      Interest                                                                          $        --         $    82,755
                                                                                        ===========         ===========
      Taxes                                                                             $        --         $        --
                                                                                        ===========         ===========
      Debt issue costs from issuance of convertible debenture                           $    80,622         $        --
                                                                                        ===========         ===========
      Stock issued to settle debenture                                                  $    25,000         $        --
                                                                                        ===========         ===========
      Stock issued under equity line of credit to pay down convertible debenture        $   625,000         $        --
                                                                                        ===========         ===========
      Deferred consulting (500,000 shares)                                              $    27,500         $        --
                                                                                        ===========         ===========
</TABLE>


          See accompanying notes to consolidated financial statements

                                       3
<PAGE>

                    HEALTH EXPRESS USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 26, 2004
                               ------------------
                                   (Unaudited)

NOTE 1   BASIS OF PRESENTATION

The accompanying  unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America and the rules and  regulations  of the United States  Securities  and
Exchange Commission for interim consolidated financial information. Accordingly,
they  do  not  include  all  the  information  and  footnotes  necessary  for  a
comprehensive  presentation  of consolidated  financial  position and results of
operations.

It is management's opinion,  however, that all material adjustments  (consisting
of normal recurring  adjustments)  have been made which are necessary for a fair
consolidated  financial  statement  presentation.  The  results  for the interim
period are not  necessarily  indicative  of the results to be  expected  for the
year.

For further information,  refer to the audited consolidated financial statements
and  footnotes of the Company for the year ending  December 28, 2003 included in
the Company's Form 10-KSB.

NOTE 2 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Health Express USA, Inc. (the "Company") was  incorporated in Florida on July 2,
1998 to develop, construct and operate health and gourmet fast food restaurants.
On April 10, 2000, the Company began operations in Fort  Lauderdale,  Florida of
its first  restaurant  under the trade name "Healthy  Bites Grill".  The Company
operated the restaurant through a wholly-owned subsidiary,  Healthy Bites Grill,
Inc.,  incorporated in Florida on January 26, 1999. The restaurant equipment and
supplies were sold on September 23, 2002.  The lease between the Company and the
landlord,  which expired on January 31, 2004, was assigned to the Buyer, but the
Company remained as a personal guarantor until January 31, 2004. The restaurant,
which  offered  eat-in,  take-out and  drive-thru  service was a proven  testing
ground in  determining,  among other  factors,  consumer menu item  preferences,
market demographics,  kitchen equipment  requirements,  food pricing guidelines,
and sales and labor targets for  profitable  operations.  Healthy Bites Grill is
currently an active corporation but has not conducted business since the sale of
the assets on September 23, 2002.

On May 7, 2001 the Company  entered into a five-year  lease,  with two five-year
options, for a second restaurant located in Boca Raton,  Florida. The restaurant
began   operations  on  June  24,  2002  and  operates  through  a  wholly-owned
subsidiary, Healthy Bites Grill of Boca, Inc., incorporated in Florida on May 7,
2001.

In June 2004, the Company committed to selling its restaurant  operations due to
lack of  profitability  (see Notes 2(C), 3 and 4). ). There is no guarantee that
the Company will be able to sell the  restaurant  at an  acceptable  price,  and
therefore may continue to operate the Boca Raton restaurant until the end of the
lease in May 2006, or longer.

(B) FRANCHISE OPERATIONS

The Company conducts  franchise  operations  through a wholly owned  subsidiary,
Health Express  Franchise  Company,  incorporated in Florida on May 7, 2001. The
initial  franchise  fee to purchase a franchise is $30,000 and is payable to the
Company upon signing the franchise  agreement.  Under the terms of the franchise
agreement  with the  franchisee,  the initial  franchise fee is fully earned and
non-refundable  unless the Company  doesn't  accept the  franchisee  at its home
office  within  30  days  of the  signed  agreement  (see  Note 2  (C)).  If the
franchisee  fails  to find an  approved  site  within  6  months  of the  signed
agreement,  the Company can elect to terminate the agreement while retaining the
initial  franchise  fee. An  advertising  fee of $5,000 is due upon  signing the
franchise agreement to fund the grand opening advertising.  This advertising fee
will be refunded if any portion of the initial  franchise  fee is refunded.  The
Company will provide initial  training and materials for up to 3 trainees for no
additional  cost.  Continuing fees from  franchised  restaurants are recorded as
revenue when earned.

On  February  20,  2003,  the  Company  sold its first  franchise  to one of the
Company's then directors.  This director resigned in August 2004. The franchisee
opened a location  located in South  Florida at the end of the third  quarter of
2004. The terms of this franchise  agreement are based on the standard franchise
agreement with no special consideration. (See Note 8)


                                       4
<PAGE>

On October 1, 2003,  the Company  sold its second  franchise  to the same former
director of the Company.  The  franchisee  opened a location in South Florida in
the third quarter of 2004.  The terms of this  franchise  agreement are based on
the standard franchise agreement with no special consideration. (See Note 8)

(C) REVENUE RECOGNITION

(I)   RESTAURANT

Revenue from restaurant  sales is recognized at the time of the transaction with
the  customer,  and since all sales are  typically  for cash or by credit cards,
there are  generally  no trade  receivables.  Revenues are shown net of customer
discounts or allowances taken at the time of the sale. All revenues for 2004 and
2003 relating to the Company owned restaurant have been presented as a component
of discontinued operations.

(II)  FRANCHISE FEES

The Company has adopted the criteria of SFAS No. 45,  "Accounting  for Franchise
Fee Revenue."  Initial  franchise fees are recognized when all material services
have been  substantially  performed by the Company and the restaurant has opened
for business.  Franchise  royalties,  which are based on a percentage of monthly
sales,  are recognized as income on the accrual  basis.  Costs  associated  with
franchise  operations are recognized on the accrual basis. A former  director of
the  Company  owns  both  franchises.  As  a  franchisee,  this  individual  has
transactions  from  time  to time  with  the  Company,  including  payments  for
franchise fees, during the normal course of business.

During the three and nine months ended  September  26, 2004,  respectively,  the
Company recognized $74,463 in franchise related revenues.  Of the total, $70,000
was for prior receipt of initial franchise fees in 2003,  including  advertising
that was  initially  classified  as  deferred  revenues.  The  remaining  $4,463
represents  7%  (includes  3%  for  monthly  advertising  contribution)  of  the
aggregate gross sales generated by the franchisees  through  September 26, 2004.
All amounts are  required  to be  remitted  to the  franchisor  in the form of a
royalty  within ten days from the close of the prior  month.  At  September  26,
2004, the entire $4,463 remains collectable.

See Notes 3 and 4 regarding discontinued operations.

(D) PRINCIPLES OF CONSOLIDATION

The  consolidated  financial  statements  include the accounts of Health Express
USA, Inc. and its wholly owned subsidiaries  (collectively,  the "Company"). All
significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.

(E) NET LOSS PER SHARE

SFAS No. 128,  "Earnings Per Share,"  requires  companies  with complex  capital
structures  or common  stock  equivalents  to  present  both  basic and  diluted
earnings  per share  ("EPS") on the face of the income  statement.  Basic EPS is
calculated as the income or loss available to common stockholders divided by the
weighted average number of common shares outstanding during the period.  Diluted
EPS is calculated using the "if converted"  method for common share  equivalents
such as convertible  securities and options and warrants. The accompanying basic
and diluted  EPS  computations  are the same as the  inclusion  of common  stock
equivalents  in the diluted  computation  would be  anti-dilutive.  Common stock
equivalents,  if converted,  would have increased  common shares  outstanding at
September  26,  2004 and  September  28,  2003 by  approximately  9,923,237  and
6,694,521, respectively.

In connection with the issuance of a $250,000  promissory note (see Note 6), the
Company issued 5,000,000 shares of common stock into escrow.  The shares will be
released as the Company  draws down on its equity line of credit and repays this
promissory  note.  The  5,000,000  shares  are not  considered  outstanding  for
purposes of computing earnings (loss) per share.

(F) STOCK BASED COMPENSATION

The Company  follows the fair value method under the  provisions of Statement of
Financial  Accounting  Standards  ("SFAS") No. 123,  Accounting for  Stock-Based
Compensation,  in accounting  for  stock-based  transactions  with employees and
non-employees.


                                       5
<PAGE>

In December  2002,  SFAS No. 148,  "Accounting  for  Stock-Based  Compensation -
Transition and Disclosure," was issued. This pronouncement  amends SFAS No. 123,
"Accounting for Stock-Based  Compensation,"  and provides  guidance to companies
that wish to voluntarily change to the fair value based method of accounting for
stock-based  employee  compensation,  among  other  provisions.  The Company has
historically  accounted  for,  and will  continue to account  for,  its employee
stock-based  compensation  under the fair value based method  provisions of SFAS
No. 123, and  therefore  the issuance of SFAS No. 148 did not have any impact on
the Company's financial position, results of operations or cash flows.

The following  summarizes the Company's  employee stock option  activity for the
nine months ended September 26, 2004:

<TABLE>
<CAPTION>
                                                                                                                      WEIGHTED
                                                                                                    OPTIONS        EXERCISE PRICE
                                                                                                    -------        --------------
      <S>                                                                                          <C>                   <C>
      Options outstanding at December 28, 2003                                                     3,699,166             $0.39

      Options granted during the nine months ended September 26, 2004                                500,000             $0.55

      Exercised, expired or forfeited during the nine months ended September 26, 2004                     --                --
                                                                                                   ---------             -----

      Options outstanding at September 26, 2004                                                    4,199,166             $0.39
                                                                                                   =========             =====
</TABLE>

At September 26, 2004, all of the outstanding common stock options are currently
exercisable.  Of this  total,  142,366  options  are  exercisable  at $1.31 each
through  August 31, 2007,  and 3,556,800 at $0.35 each through June 14, 2009. On
May 28, 2004, 500,000 common stock options were granted. 100,000 are exercisable
at $0.55 through May 28, 2006 and 400,000 are  exercisable  at $0.55 through May
28, 2009 (see Notes 7(C) and 8).

(G) INVENTORY

The company  accounts for inventory on a first in, first out basis  (FIFO).  The
inventory consists of resalable items.

(H) LONG-LIVED ASSETS

The Company reviews long-lived assets and certain identifiable assets related to
those assets for impairment  whenever  circumstances  and situations change such
that there is an indication that the carrying amounts may not be recoverable. If
the undiscounted  future cash flows of the long-lived assets are less than their
carrying  amounts,  their  carrying  amounts  is  reduced  to fair  value and an
impairment loss is recognized. There were no impairment charges during the three
and nine months ended September 26, 2004.

(I) RECENT ACCOUNTING PRONOUNCEMENTS

Statement  No. 144  "Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets"  supercedes   Statement  No.  121  "Accounting  for  the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of" ("SFAS  121").
Though it retains the basic  requirements  of SFAS 121 regarding when and how to
measure  an  impairment  loss,  SFAS  144  provides  additional   implementation
guidance.  SFAS 144 excludes  goodwill and intangibles not being amortized among
other exclusions.  SFAS 144 also supercedes the provisions of APB 30, "Reporting
the Results of  Operations,"  pertaining to  discontinued  operations.  Separate
reporting of a discontinued  operation is still  required,  but SFAS 144 expands
the  presentation  to include a component of an entity,  rather than  strictly a
business  segment as  defined in SFAS 131,  "Disclosures  about  Segments  of an
Enterprise  and  Related  Information."  SFAS 144 also  eliminates  the  current
exemption  to  consolidation  when  control  over a  subsidiary  is likely to be
temporary.  This  statement is effective  for all fiscal years  beginning  after
December  15,  2001.  The  adoption  of SFAS 144 had a  material  effect  on the
Company's  financial  position,  results of operations  and liquidity due to the
Company  reporting  discontinued  operations for the three and nine months ended
September  26, 2004 and the related  prior period  comparison  for the three and
nine months ended September 28, 2003.

NOTE 3  GOING CONCERN

As reflected in the accompanying consolidated financial statements,  the Company
has a net loss of $758,448 and net cash used in  operations  of $728,422 for the
nine  months  ended  September  26,  2004 and a working  capital  deficiency  of
$637,146,  accumulated deficit of $10,679,473 and a stockholders'  deficiency of
$738,540 at September 26, 2004.


                                       6
<PAGE>

The  Company  has  incurred  cumulative  losses  since  inception,   has  funded
operations  primarily through  related-party loans and investor capital, has yet
to generate  sufficient  revenues  from its  operating  activities  to cover its
expenses and has taken formal action to discontinue  its  restaurant  operations
(See Note 4).  Management  recognizes that the Company must generate  additional
resources  to enable it to  continue  operations.  Currently,  the Company is in
default  on a  February  20,  2004,  $500,000  promissory  note  (see  note  6).
Management is planning to obtain additional capital principally through the sale
of equity securities.  The realization of assets and satisfaction of liabilities
in the  normal  course of  business  is  dependent  upon the  Company  obtaining
additional  equity  capital  and  ultimately  obtaining  profitable  operations.
However, no assurances can be given that the Company will be successful in these
activities.  Should any of these events not occur, the accompanying consolidated
financial  statements  will be  materially  affected.  In  connection  with  the
discontinued operations of the restaurant,  the Company plans to become solely a
franchisor  of its concept.  The  franchises  are intended to be sold to parties
other than those that are related. The consolidated  financial statements do not
include  any  adjustments  that might be  necessary  if the Company is unable to
continue as a going concern.

NOTE 4  DISCONTINUED OPERATIONS

In June 2004, the Company  committed to selling its restaurant  operations.  The
Company has  determined  that the decision to sell this component is due to lack
of profitability.  There is no guarantee that the Company will be able to locate
a buyer willing to pay an acceptable  price for the restaurant  operations,  and
therefore the Company may continue to operate the Boca Raton restaurant  through
the  end of the  lease  in May  2006,  or  longer.  Pursuant  to SFAS  144,  the
long-lived  assets  relating to the Company's  restaurant  operations  are being
classified  as held for sale and will be  reported as  discontinued  operations.
Since the restaurant is still being operated, the Company has determined that no
impairment  charges for these related  assets is necessary at September 26, 2004
since the fair value of these assets  exceeds the carrying  cost. All assets and
liabilities  identified  as part of the disposal  group have been  classified as
current since the related  benefits and obligations for these items are expected
to be realized and settled within one year.

The following is a summary of the assets and  liabilities  of the disposal group
at September 26, 2004:

      Assets to be disposed of:
      -------------------------------------------------------
      Cash                                                        $ 11,673
      Accounts Receivable                                         $    879
      Inventory                                                   $  7,395
      Prepaids                                                    $  3,489
      Property and Equipment, net                                 $ 36,345
      Deposits                                                    $ 41,449
                                                                  --------
      Total Assets to be disposed of                              $101,230
                                                                  ========

      Liabilities to be disposed of:
      -------------------------------------------------------
      Accounts Payable                                            $ 11,696
      Accrued Liabilities                                         $  9,515
      Loan Payable - Related Party                                $ 12,660
                                                                  --------
      Total Liabilities to be disposed of                         $ 33,871
                                                                  ========

NOTE 5  CONVERTIBLE DEBENTURES

On January 17, 2003,  the Company sold  $250,000 of  convertible  debentures  to
Cornell Capital Partners, L.P. ("Cornell").  These debentures accrue interest at
a rate of 5% per  year and  mature  three  years  from the  issuance  date.  The
debentures  are  convertible  into the  Company's  common  stock at the holders'
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 closing date or (ii)
80% of the average  closing bid price of the common  stock for the three  lowest
trading days of the five trading days immediately preceding the conversion date.
At maturity, the Company has the option to either pay the holder the outstanding
principal  balance and accrued interest or to convert the debentures into shares
of common stock at a conversion  price similar to the terms described  above. In
accordance with applicable accounting standards for such issuances,  the Company
recorded an interest  charge of $62,500 at issuance to account for the  imbedded
beneficial  conversion  feature.  In addition,  the Company recorded these other
charges at issuance:  $37,500 in professional fees, $20,000 in commissions,  and
(as  described  below)  $75,000  for the Equity  Line of Credit  commitment  fee
(recorded as interest expense); these amounts were withheld from the proceeds of
the  debenture  at closing.  The Company has the right to redeem the  debentures
upon thirty days notice for 120% of the amount  redeemed.  Upon such redemption,
the holder shall  receive  warrants  equal to 10,000  shares of common stock for
each $100,000  redeemed with an exercise  price equal to 120% of the closing bid
price of the common stock on the closing date.


                                       7
<PAGE>

In August 2003,  $50,000 of the above  debenture  was  acquired and  effectively
redeemed by Charles D. Blewise ("Blewise") for $60,000 on behalf of the Company.
This amount was charged to  compensation  in 2003.  The  debenture  has the same
features  as the  debenture  to  Cornell  except  that  when  the  debenture  is
converted,  the shares  will be  restricted  shares.  The  Company  recorded  an
interest  charge of $15,000 at issuance to account for the  imbedded  beneficial
conversion feature in the new $60,000 debenture.  In fiscal year 2003,  $100,000
of the  debenture  was converted  into 283,804  shares of the  Company's  common
stock. During the nine months ended September 26, 2004, $25,000 of the debenture
was converted into 168,918 shares of the Company's common stock. As of September
26,  2004,  $135,000 in  convertible  debentures  were  outstanding  ($75,000 to
Cornell and $60,000 to Blewise).  The outstanding  related  accrued  interest at
September 26, 2004 was $16,741 (see Notes 6, 7 and 9).

NOTE 6  NOTES PAYABLE

On December 9, 2003, the Company  executed a promissory note with Cornell in the
face amount of $100,000.  During the nine months ended  September 26, 2004,  the
promissory  note was repaid in full  through  an escrow  agent  holding  404,581
shares of common  stock  under the terms of the Equity  Line of Credit (see Note
7(A)).

On January 12, 2004, the Company  executed a promissory note with Cornell in the
face amount of $100,000.  During the nine months ended  September 26, 2004,  the
promissory  note was repaid in full  through  an escrow  agent  holding  556,214
shares of common  stock  under the terms of the Equity  Line of Credit (see Note
7(A)).

On February 20, 2004, the Company executed a promissory note with Cornell in the
face amount of $500,000.  The note reflected an interest rate of 12%. There were
debt  issue  costs  related  to this  promissory  note of  $50,746,  which  were
capitalized as a debt issue cost asset on the balance sheet. The debt issue cost
is being  amortized over the life of the debt which had a 171 day term. The note
is  currently  in default.  The default  rate of interest is 24%,  however,  the
lender has waived this  provision  and  retained an interest  rate of 12% on the
outstanding  principal balance.  The debt issue costs were fully amortized as of
September 26, 2004.  Debt issue cost expense for the three and nine months ended
September 26, 2004 were $12,761 and $50,746, respectively. The remaining balance
at September  26, 2004 was  $75,000.  $425,000 of the  promissory  note has been
repaid  through an escrow agent  holding with  4,461,795  shares of common stock
under the terms of the Equity Line of Credit.  The  outstanding  related accrued
interest at September 26, 2004 was $19,874 (see Notes 7 and 9).

On August 18, 2004, the Company  executed a promissory  note with Cornell in the
face amount of $250,000.  The note reflected an interest rate of 12%. There were
debt  issue  costs  related  to this  promissory  note of  $29,875,  which  were
capitalized as a debt issue cost asset on the balance sheet. The debt issue cost
is being  amortized  over the life of the debt  which has a 140 day  term.  Debt
issue cost expense for the three and nine months ended  September  26, 2004 were
$8,749 and $8,749, respectively. At September 26, 2004, the remaining portion of
the  capitalized  debt issue cost asset was  $21,126.  The  outstanding  related
accrued  interest  at  September  26, 2004 was $3,370 (see Notes 7 and 9). As of
September 26, 2004, the outstanding balance was $241,161.

In summary, total accrued interest at September 26, 2004 is as follows:

Note payable - February 20, 2004            $19,874

Note payable - August 18, 2004              $ 3,370

Convertible debentures                      $16,741
                                            -------

         Total Accrued Interest             $39,985
                                            =======

In connection  with the issuance of the $250,000  promissory  note,  the Company
recognized $12,500 in a related debt discount for a 5% fee paid back to Cornell.
The debt  discount is being  amortized to interest  expense over the life of the
debt. The remaining  balance of the debt discount is netted against the original
$250,000 as a contra liability.


                                       8
<PAGE>

At September 26, 2004, the Company had the following  activity  relating to this
$250,000 promissory note:

         Note Payable                                              $250,000
         Less: Debt discount, net of $3,661 debt
            discount amortization                                 ($  8,839)
                                                                   --------
                                                                   $241,161
                                                                   ========

The following is a summary of outstanding Notes Payable at September 26, 2004:

         Note Payable - February 20, 2004                          $ 75,000
         Note payable - August 18, 2004                            $241,161
                                                                   --------
         Total Notes Payable                                       $316,161
                                                                   ========

NOTE 7  STOCKHOLDERS' DEFICIENCY

(A) EQUITY LINE OF CREDIT

On March 13, 2003, the Company  entered into an Equity Line of Credit  Agreement
("Agreement") with Cornell. Under this agreement, the Company may issue and sell
to Cornell common stock for a total purchase price of up to $5,000,000.  Subject
to certain  conditions,  the Company is entitled to draw down on the Equity Line
of Credit now that the common stock to be issued under the Equity Line of Credit
is registered with the Securities and Exchange  Commission and the  registration
statement was declared  effective on July 24, 2003 and for two years thereafter.
The purchase price for the shares is equal to 95% of the market price,  which is
defined as the lowest  closing  bid price of the  common  stock  during the five
trading days following the notice date. The amount of each advance is subject to
an  aggregate  maximum  advance  amount of $100,000,  with no advance  occurring
within seven  trading  days of a prior  advance.  In  addition,  in each advance
notice the Company  shall  establish  a minimum  acceptable  price,  whereby the
amount requested in the advance notice shall  automatically  decrease by 20% for
each day of the five succeeding trading days that the closing bid price is below
the minimum  acceptable  price.  Cornell  received a one-time  commitment fee of
$90,000,  of which  $75,000 was  withheld  from the January  2003 closing of the
convertible debenture, and the balance was paid from the proceeds of the initial
advance under the Equity Line of Credit.  Cornell is entitled to retain a fee of
5% of each  advance.  In addition,  the Company  entered into a placement  agent
agreement with TN Capital Equities, Ltd., a registered  broker-dealer.  Pursuant
to the placement agent  agreement,  the Company paid a one-time  placement agent
fee of 9,524 shares of common stock equal to approximately  $10,000 based on the
Company's stock price on January 24, 2003.

The Company had  utilized  all of the shares  previously  registered  for resale
under the Equity Line of Credit, and therefore filed an additional  registration
statement on July 15, 2004 relating to 14,738,635  additional shares to possibly
be issued  under the Equity Line of Credit and other  shares.  The  registration
statement was declared  effective by the Securities  and Exchange  Commission on
July 30, 2004.

During the nine months ended September 26, 2004, the Company drew $650,000 under
the Equity  Line of Credit  and issued  5,592,311  shares of common  stock.  The
advances were used to repay promissory notes (see Note 9).

(B) COMMON STOCK ISSUED FOR SERVICES

During the nine months ended  September 26, 2004,  the Company  granted  633,499
common shares for services valued at an aggregate amount of $56,731 based on the
quoted trading price on each grant date (see Note 8).

(C) COMMON STOCK OPTIONS ISSUED FOR SERVICES

On May 28,  2004,  the  Company  granted  500,000  common  stock  options to two
separate  employees for services valued at an aggregate  amount of $53,840 based
on management's  estimate  pursuant to fair value  accounting under SFAS No. 123
and the Black-Scholes Model (see Notes 2(F) and 8).


                                       9
<PAGE>

NOTE 8 RELATED PARTY TRANSACTIONS

During the nine months ended  September  26, 2004,  the Company  issued  112,000
shares of common stock to employees  having a fair value of $23,196 based on the
quoted trading price on each grant date (see Note 7(B)).

On May 28, 2004,  500,000  common stock  options  having a fair value of $53,840
were granted and are exercisable at $0.55 (see Notes 2(F) and 7(C)).

During 2003,  the Company sold 2 franchises  to a then  director.  That director
resigned in August 2004. (See Note 1(B)).

NOTE 9  SUBSEQUENT EVENTS

During the period from September 27, 2004 through  November 4, 2004, the Company
has not drawn any advances under the Equity Line of Credit.  The draw downs from
the escrow account have been  suspended  until November 19, 2004. At November 4,
2004, the $500,000 promissory note had a remaining principal balance of $75,000.
The promissory  note bears interest at a default rate of 24%,  however,  the 12%
interest has been waived so the note will  continue to bear interest at 12%. The
$250,000 promissory note had a remaining principal balance of $241,161.

November 2, 2004,  the Company  executed a  promissory  note with Cornell in the
face amount of $150,000. The note reflected an interest rate of 12%.


                                       10
<PAGE>

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

INTRODUCTION - FORWARD LOOKING STATEMENTS

      In connection  with the safe harbor  provisions of the Private  Securities
Litigation  Reform Act of 1995 (the "Reform Act"),  Health Express USA, Inc. and
its subsidiaries,  (collectively,  the "Company") is hereby providing cautionary
statements  identifying  important factors that could cause the Company's actual
results to differ materially from those projected in forward-looking  statements
made  herein.  Any  statements  that  express,  or  involve  discussions  as to,
expectations,  beliefs,  plans,  objectives,  assumptions  of  future  events or
performance are not statements of historical  facts and may be  forward-looking.
These forward-looking statements are based largely on the Company's expectations
and are  subject  to a number  of risks  and  uncertainties,  including  but not
limited to, economic,  competitive,  regulatory,  growth  strategies,  available
financing and other factors discussed  elsewhere in this report and in documents
filed by the Company with the Securities and Exchange Commission  ("SEC").  Many
of these factors are beyond the Company's  control.  Actual results could differ
materially from the forward-looking statements made. In light of these risks and
uncertainties,  there can be no assurance  that the results  anticipated  in the
forward-looking information contained in this report will, in fact, occur.

      Any  forward-looking  statement  speaks  only as of the date on which such
statement  is made,  and the  Company  undertakes  no  obligation  to update any
forward-looking statement or statements to reflect events or circumstances after
the date on  which  such  statement  is made or to  reflect  the  occurrence  of
unanticipated  events.  New  factors  emerge  from  time to  time  and it is not
possible for  management to predict all of such  factors,  nor can it assess the
impact of each such factor on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.

DISCONTINUED OPERATIONS

      During the second quarter of 2004, the Company committed to a plan to sell
its interests in the Boca Raton  restaurant  and have  classified the Boca Raton
restaurant's  operations as  discontinued  operations  according to Statement of
Financial  Accounting Standards ("SFAS") No. 144. There is no guarantee that the
Company will be able to locate a buyer  willing to pay an  acceptable  price for
the restaurant operations, and therefore the Company may continue to operate the
Boca Raton restaurant  through the end of the lease in May 2006, or longer.  The
result of the application of SFAS No. 144 is to reclassify a significant portion
of the Company's operations, assets and liabilities into discontinued operations
for the current period and related prior year comparable periods. The Company no
longer shows  revenues or costs from the operation of the Boca Raton  restaurant
in continuing operations.

FINANCIAL CONDITION

      As of September 26, 2004,  we had cash of $80,758 and current  liabilities
of $831,807.  We do not have sufficient cash or other assets to meet our current
liabilities. In order to meet those obligations, we will need to raise cash from
the sale of securities or from borrowings.  Our independent  auditors have added
an explanatory  paragraph to their audit opinions  issued in connection with the
years 2003 and 2002  consolidated  financial  statements,  which states that our
ability to  continue  as a going  concern  depends  upon our  ability to resolve
liquidity  problems,  principally  by obtaining  capital,  commencing  sales and
generating  sufficient  revenues  to become  profitable.  Our  ability to obtain
additional  funding will  determine our ability to continue as a going  concern.
Our consolidated  financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

RESULTS OF OPERATIONS

      Health  Express USA, Inc. was  incorporated  in Florida on July 2, 1998 to
develop,  construct  and operate  healthy  gourmet  fast food  restaurants.  The
flagship Fort Lauderdale  restaurant began operations on April 10, 2000, and its
operations  were  discontinued  in September  2002.  For the nine months  ending
September  26, 2004,  Healthy Bites Grill of Boca,  Inc.,  the  subsidiary  that
operates the Boca Raton  restaurant,  reported revenues of $487,796 (netted into
loss from discontinued  operations in the accompanying financial statements) and
a net loss of  $86,792.  The total  consolidated  net loss of  $205,197  for the
quarter ending September 26, 2004 includes losses from restaurant operations and
general and  administrative  expenses,  plus income from  franchise  operations.
During June 2004, the Company committed to selling the restaurant  operations as
it is changing its focus from an owner operator to solely that of a franchisor.


                                       11
<PAGE>

<TABLE>
<CAPTION>
                                                                  NINE MONTHS ENDING
                                                            SEPTEMBER 26,  SEPTEMBER 28,
                                                                2004           2003
                                                            -------------  -------------
      <S>                                                   <C>            <C>
      Income (loss) from Restaurant Operations, Healthy
      Bites Grill of Boca, Inc.                             ($   85,596)   ($  189,770)
      Income (loss) from Health Express Franchise Company        71,652         (3,135)
      Income (loss) attributed to Health Express USA,
      Inc                                                      (744,504)    (1,072,211)
                                                            -----------    -----------

      Consolidated loss                                     $   758,448    $ 1,265,116
                                                            ===========    ===========
</TABLE>

FOR THE THREE AND NINE MONTHS PERIODS ENDED SEPTEMBER 26, 2004,  COMPARED TO THE
THREE AND NINE MONTHS PERIODS ENDED SEPTEMBER 28, 2003

      RESULTS ON A CONSOLIDATED BASIS

      REVENUES AND COST OF COMPANY RESTAURANT SALES

      As a result of  classifying  the  restaurant  operations as a component of
discontinued   operations,   the  Company  reported  no  restaurant  revenue  or
restaurant  cost of sales for the three or nine months  periods ended  September
26, 2004 or  September  28,  2003.  The Boca Raton  restaurant's  revenues  were
recorded  as  discontinued  operations  for the  three  and  nine  months  ended
September  26, 2004 and  September  28,  2003,  respectively.  There was minimal
franchise-related  revenue  of  $70,000  recognized  during  the  quarter  ended
September 26, 2004 due to the third quarter  openings and none for September 28,
2003, respectively.

      OPERATING EXPENSES

      Health  Express  had  operating  expenses,  which  included  compensation,
depreciation,  amortization  of debt issue costs and general and  administrative
expenses,  totaling  $704,600 for nine month period  ended  September  26, 2004,
which consisted  mainly of $430,861 in compensation  and $213,486 in general and
administrative  expenses,  compared with operating  expenses of $902,594 for the
nine months ended  September  28, 2003,  which  consisted  mainly of $377,642 in
compensation and $524,574 in general and administrative  expenses. The operating
expenses  for the three month  period  ended  September  26,  2004 was  $216,961
compared to $360,411 for the three months ended September 28, 2003. The decrease
of $197,994  for the nine month  comparable  periods and  $143,450 for the three
month comparable periods in 2004 and 2003,  respectively,  was due to a decrease
in general and administrative  expenses,  offset by an increase in compensation,
depreciation and amortization of debt issue costs.

      DISCONTINUED OPERATIONS

      The Company's  discontinued  operations  result from the Company's plan to
sell its Boca  Raton  restaurant  operations.  There  is no  guarantee  that the
Company will be able to locate a buyer  willing to pay an  acceptable  price for
the restaurant operations, and therefore the Company may continue to operate the
Boca Raton restaurant  through the end of the lease in May 2006, or longer.  For
the nine months ended September 26, 2004, the Company had a loss on discontinued
operations of $85,596, compared to $189,770 for the year earlier period. For the
three months ended September 26, 2004, the Company had a loss form  discontinued
operations of $47,621,  compared to $68,838 for the year earlier  period.  There
has not been any disposal of assets relating to the  discontinued  operations to
date.

      NET LOSS

      Health  Express had a net loss for the nine month period  ended  September
26,  2004 of $758,448  or $0.05 per share.  In the same period for 2003,  Health
Express has a net loss of $1,265,116  or $0.12 per share.  The Company had a net
loss for the three month  period ended  September  26, 2004 of $205,197 or $0.01
per  share.  In the same  period  for  2003,  Health  Express  had a net loss of
$450,651 or $0.04 per share.  The decrease in net loss of $245,454 for the three
month comparable  periods and $506,668 for the nine month comparable  periods in
2004 and 2003, respectively, was attributable mainly to decreases in general and
administrative expenses and interest expense.


                                       12
<PAGE>

      RESULTS ON A SEPARATED BASIS

      HEALTH EXPRESS USA, INC. - THE NINE MONTH PERIOD ENDED  SEPTEMBER 26, 2004
      AS COMPARED TO NINE MONTH PERIOD ENDED SEPTEMBER 28, 2003

      The loss for the nine month period  ending  September 26, 2004 of $744,504
includes  compensation  of $430,861 and  amortization  of debt issue  charges of
$59,495,  relating to the promissory  notes issued,  with the balance  including
various general and administrative expenses.

      The loss for the nine month period ending September 28, 2003 of $1,072,211
includes  interest on the  $250,000  convertible  debentures  of  $145,969,  and
commissions  expense of $20,000 and professional  fees of $37,500 related to the
Equity Line of Credit.  An additional  $14,538 was recorded in professional fees
for the 250,000 shares issued to Capital Research Group, Inc. for management and
public relations  consulting.  The Company recorded a charge for the issuance of
100,000 warrants to Hawk Associates,  Inc. in the amount of $30,695. The Company
also recorded $15,000 in interest for the beneficial  conversion  feature of the
Blewise debenture.

      HEALTHY BITES GRILL OF BOCA, INC.

      On May 7,  2001,  the  Company  entered  into a lease  for a  pre-existing
freestanding  fast-food  restaurant  in Boca  Raton,  Florida.  The  building is
approximately  3,900 square feet and is  centrally  located near a major mall, a
business district and residential neighborhoods of upscale homes, townhouses and
apartments. The shopping mall, in very close proximity, is a popular destination
for  shoppers  in Boca  Raton,  Florida,  a city  well  known  for its  affluent
communities.  This  restaurant  began  operations  on June 24,  2002  through  a
wholly-owned   subsidiary,   Healthy  Bites  Grill  of  Boca,  Inc.,  a  Florida
corporation organized on May 7, 2001.

      The lease for this  location is for a five-year  period with two five-year
options,  with  initial  monthly  rental  payments  of $8,333  plus  common area
maintenance  of  approximately  $1,900 and real  estate  taxes of  approximately
$1,400.  During  the third  quarter  of 2003,  the total  amount of the  monthly
payments has been  reduced,  as the common area  maintenance  payments have been
removed due to a re-negotiation of the lease.

      During the 2nd quarter of 2004, the Company decided to attempt to sell the
Boca Raton  restaurant,  and  therefore,  all of its  revenues  and expenses are
included  in  discontinued  operations  for the  three  and  nine  months  ended
September 26, 2004 and 2003,  respectively.  The Company is currently  operating
the restaurant until an acceptable  buyer can be located.  There is no guarantee
that the Company will be able to locate an  acceptable  buyer  willing to pay an
acceptable  price for the restaurant  operations,  and therefore the Company may
continue  to operate the Boca Raton  restaurant  through the end of the lease in
May 2006, or longer.

      HEALTH EXPRESS FRANCHISE COMPANY

      On July 10, 2001,  Health Express entered into an agreement with Francorp,
Inc., a franchise  consulting  group,  to develop and implement a  comprehensive
franchise program. Under the Franchise Development Agreement,  Francorp was paid
in 2001  $60,000 in cash,  37,400  shares of our common  stock,  and warrants to
purchase 38,000 shares of our common stock. This program provides  assistance in
various phases including:

      o     Strategic planning and program structure

      o     Franchise documentation

      o     Franchise operations manuals

      o     Franchise marketing plan

      o     Franchise sales consulting

      o     One year consulting services


                                       13
<PAGE>

      The initial  expenditure  to Francorp  was expensed and paid in the fiscal
year 2001 to enable Health  Express to complete all the  necessary  documents to
enable  them to move  forward as a  franchise  operation.  Expenses in 2002 were
minimal  because of the upfront fees paid to Francorp to cover the completion of
this project.  Because  Health  Express did not begin selling  franchises  until
October 2002, Health Express did not incur any marketing and advertising expense
for that year.  Health Express does expect to incur  operational,  marketing and
advertising expenses going forward as the necessary funds become available.

      The current  marketing  program provides the opportunity for an interested
party to visit  Health  Express'  website,  submit  an  inquiry,  and then  upon
pre-qualification,  to receive more specific and detailed  information  based on
their state of residence and level of  qualification.  Health  Express  believes
that  prior  industry  experience  is not  required,  but is  desirable,  as the
technical  skills  required  to learn  the  business  can be taught  during  the
training period. However, all franchise candidates must possess certain personal
qualities  such as:  service  and people  oriented,  positive  can-do  attitude,
results  driven  action-oriented,  higher  than  average  attention  to  detail,
assertive, with strong communication and planning skills.

      On February 20, 2003,  Health  Express sold its first  franchise to one of
the then Health Express'  directors.  This individual  resigned as a director in
August 2004. The franchisee opened a location in South Florida at the end of the
third  quarter of 2004.  The  Franchise  Agreement was entered into February 14,
2003 between Healthy  Express  Franchise  Company and The Junie Corp.  Under the
Franchise Agreement,  The Junie Corp. has the right to operate one Healthy Bites
Grill restaurant, was obligated to pay an initial franchise fee of $30,000 and a
grand-opening advertising fee of $5,000 at the time of signing of the agreement,
and is  obligated  to pay  continuing  fees  comprised of a royalty fee of 4% of
gross revenue of the restaurant  and an advertising  fee of 3% of gross revenues
of the restaurant.  On September 30, 2003, the second  franchise was sold to the
same former director of Health Express. The Franchise Agreement was entered into
September  30, 2003 between  Healthy  Express  Franchise  Company and The Myrick
Corporation with the same terms as the first franchise.  That restaurant  opened
at the beginning of the third quarter of 2004.

      During the three and nine months ended  September 26, 2004,  respectively,
the Company  recognized  $74,463 in franchise  related  revenues.  Of the total,
$70,000  was for prior  receipt  of  initial  deferred  franchise  fees in 2003,
including  advertising that was initially  classified as deferred revenues.  The
remaining   $4,463   represents   7%  (includes   3%  for  monthly   advertising
contribution) of the aggregate gross sales generated by the franchisees  through
September 26, 2004. All amounts are required to be remitted to the franchisor in
the form of a royalty  within  ten days from the  close of the prior  month.  At
September 26, 2004, the entire $4,463 remains collectable.

LIQUIDITY AND CAPITAL RESOURCES

      As of November 4, 2004 the Company has  approximately  $23,039 in cash and
cash equivalents. This amount of available cash is not sufficient to satisfy the
Company's need for working capital for the short term.

      Management  realizes  that  Health  Express  must  ultimately  be  able to
generate sufficient cash flows from the profitable  operation of the business to
allow it to  successfully  sustain  itself  independent  of outside  capital and
loans.

      Cash used in  operating  activities  during the nine months  period  ended
September 26, 2004 was $728,422, compared to $721,749 for the same period a year
earlier.  The cash  used in  operating  activities  was  mainly a result  of the
Company's net loss.

      Cash used in investing  activities  was $4,219 for the nine months  period
ended  September 26, 2004,  compared to $162 in for the same period in 2003. The
increase in cash used in investing  activities was attributable to the fact that
the Company  purchased  $4,219 of property or  equipment  during the nine months
ended September 26, 2004 compared with $162 during the same period in 2003.

      Cash  provided by  financing  activities  was $760,538 for the nine months
period ended  September  26,  2004,  compared to $753,090 in the same period for
2003.  The cash  provided in the 2004 period was from the net proceeds  from the
issuance of promissory  notes. The cash provided in the 2003 period was from the
proceeds of notes and the issuance of common stock.

      The restaurant operations have incurred losses since inception. Management
believes that it will require  approximately  $180,000 in additional  capital to
fund  restaurants  operations  for the Boca  Restaurant  for the next 12 months.
Health  Express had $80,758 in cash and cash  equivalents  as of  September  26,
2004.


                                       14
<PAGE>

      On January 17, 2003, the Company sold $250,000 of  convertible  debentures
to Cornell Capital Partners, L.P. ("Cornell").  These debentures accrue interest
at a rate of 5% per year and mature  three  years from the  issuance  date.  The
debentures  are  convertible  into the  Company's  common  stock at the holders'
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 closing date or (ii)
80% of the average  closing bid price of the common  stock for the three  lowest
trading days of the five trading days immediately preceding the conversion date.
At maturity, the Company has the option to either pay the holder the outstanding
principal  balance and accrued interest or to convert the debentures into shares
of common stock at a conversion  price similar to the terms described  above. In
accordance with applicable accounting standards for such issuances,  the Company
recorded an interest  charge of $62,500 at issuance to account for the  imbedded
beneficial  conversion  feature.  In addition,  the Company recorded these other
charges at issuance: $37,500 in professional fees, $20,000 in commissions,  and,
(as  described  below),  $75,000  for the Equity Line of Credit  commitment  fee
(recorded as interest expense). These amounts were withheld from the proceeds of
the  debenture  at closing.  The Company has the right to redeem the  debentures
upon thirty days notice for 120% of the amount  redeemed.  Upon such redemption,
the holder shall  receive  warrants  equal to 10,000  shares of common stock for
each $100,000  redeemed with an exercise  price equal to 120% of the closing bid
price of the common  stock on the closing  date.  $50,000 of the  debenture  was
acquired and effectively redeemed by Charles D. Blewise for $60,000 on behalf of
the Company,  and $100,000 of the debenture was converted into 283,804 shares of
the  Company's  common  stock in fiscal year 2003.  During the nine months ended
September 26, 2004,  $25,000 of the debenture was converted  into 168,918 shares
of the Company's  common  stock.  As of September 26, 2004 and November 4, 2004,
$135,000 in convertible  debentures  remains  outstanding,  of which $75,000 are
held by Cornell and $60,00 are held by Mr. Blewise.

      On March 13,  2003,  the  Company  entered  into an Equity  Line of Credit
Agreement with Cornell. Under this agreement,  the Company may issue and sell to
Cornell common stock for a total purchase price of up to $5,000,000.  Subject to
certain  conditions,  the Company is entitled to draw down on the Equity Line of
Credit now that the common stock to be issued under the Equity Line of Credit is
registered  with the  Securities and Exchange  Commission  and the  registration
statement was declared  effective on July 24, 2003 and for two years thereafter.
The purchase price for the shares is equal to 95% of the market price,  which is
defined as the lowest  closing  bid price of the  common  stock  during the five
trading days following the notice date. The amount of each advance is subject to
an  aggregate  maximum  advance  amount of $100,000,  with no advance  occurring
within seven  trading  days of a prior  advance.  In  addition,  in each advance
notice the Company  shall  establish  a minimum  acceptable  price,  whereby the
amount requested in the advance notice shall  automatically  decrease by 20% for
each day of the five succeeding trading days that the closing bid price is below
the minimum  acceptable  price.  Cornell  received a one-time  commitment fee of
$90,000,  of which  $75,000 was  withheld  from the January  2003 closing of the
convertible debenture, and the balance was paid from the proceeds of the initial
advance under the Equity Line of Credit.  Cornell is entitled to retain a fee of
5% of each  advance.  In addition,  the Company  entered into a placement  agent
agreement with TN Capital Equities, Ltd., a registered  broker-dealer.  Pursuant
to the placement agent agreement, Health Express paid a one-time placement agent
fee of 9,524 shares of common stock equal to approximately  $10,000 based on the
Company's  stock price on January 24, 2003.  The Company had utilized all of the
shares  previously  registered  for resale under the Equity Line of Credit,  and
therefore filed an additional  registration  statement July 15, 2004 relating to
14,738,635  additional  shares to  possibly  be issued  under the Equity Line of
Credit and other shares.  The registration  statement was declared  effective by
the Securities and Exchange Commission on July 30, 2004.

      During the nine months  ended  September  26, 2004,  the Company  received
$650,000 under the Equity Line of Credit and issued  5,592,311  shares of common
stock. The advances were used to pay promissory  notes.  From September 26, 2004
through  November  4, 2004,  the Company  has not drawn any  advances  under the
Equity  Line of  Credit.  The draw  downs  from the  escrow  account  have  been
suspended until November 19, 2004.

      On December 9, 2003, the Company  executed a promissory  note with Cornell
in the face amount of $100,000. During the nine months ended September 26, 2004,
the promissory  note was repaid in full through an escrow agent holding  404,581
shares of common stock under the terms of the Equity Line of Credit.

      On January 12, 2004, the Company  executed a promissory  note with Cornell
in the face amount of $100,000. During the nine months ended September 26, 2004,
the promissory  note was repaid in full through an escrow agent holding  556,214
shares of common stock under the terms of the Equity Line of Credit.

      On February 20, 2004, the Company  executed a promissory note with Cornell
in the face  amount of  $500,000.  There were debt issue  costs  related to this
promissory note of $50,746,  which were classified as a debt issue cost asset on
the balance  sheet.  $10,980 of  amortization  of debt issue costs was  recorded
during the first quarter.  The note has a 171-day term. The note is currently in
default.  The default  rate of interest is 24%,  however,  the lender has waived
this provision and retained an interest rate of 12% on the outstanding principal
balance.  At  September  26,  2004,  the  promissory  note  balance was $75,000.
$425,000 of the promissory  note has been repaid through an escrow agent holding
4,461,795 shares of common stock under the terms of the Equity Line of Credit.


                                       15
<PAGE>

      On August 18, 2004, the Company executed a promissory note with Cornell in
the face amount of $250,000.  The note  reflected an interest rate of 12%. There
were debt issue costs  related to this  promissory  note of $29,875,  which were
capitalized as a debt issue cost asset on the balance sheet. The debt issue cost
is being  amortized  over the life of the debt  which has a 140 day  term.  Debt
issue cost expense for the three and nine months ended  September  26, 2004 were
$8,749 and $8,749, respectively. At September 26, 2004, the remaining portion of
the  capitalized  debt issue cost asset was  $21,126.  The  outstanding  related
accrued interest at September 26, 2004 was $3,370. As of September 26, 2004, the
outstanding balance was $241,161.

      November 2, 2004, the Company  executed a promissory  note with Cornell in
the face amount of $150,000. The note reflected an interest rate of 12%.

      The Company's  directors also may provide  additional  funds by exercising
their  options.  The Company  may also seek  alternative  sources of  financing,
including more conventional sources such as bank loans and credit lines or loans
from the  Company's  officers.  However,  no  assurances  can be given  that the
Company will be able to meet its short term and long-term needs through the sale
of securities or otherwise.

      From  time  to  time  the  Company  may  evaluate  potential  acquisitions
involving  complementary  businesses,  content,  products or  technologies.  The
Company  has no  present  agreements  or  understanding  with  respect  to  such
acquisition.  The  Company's  future  capital  requirements  will depend on many
factors,  including growth of the Company's restaurant business,  the success of
its  franchising  operations,  economic  conditions and other factors  including
results of future operations.

ITEM 3. CONTROLS AND PROCEDURES

(A)   EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

      As of the end of the period  covered by this report,  the Company  carried
out an  evaluation,  under the  supervision  and with the  participation  of the
Company's  Principal  Executive  Officer and Principal  Financial Officer of the
effectiveness of the design and operation of the Company's  disclosure  controls
and procedures. The Company's disclosure controls and procedures are designed to
provide a reasonable  level of assurance of achieving the  Company's  disclosure
control  objectives.  The Company's  Principal  Executive  Officer and Principal
Accounting  Officer have  concluded that the Company's  disclosure  controls and
procedures are, in fact,  effective at this reasonable assurance level as of the
period covered.  The Company's  prior auditors  advised the Company that, in the
auditor's view, the Company's controls over (1) non-accounting  documents to the
extent this information is communicated to the Chief Financial Officer,  and (2)
the internal  accounting  controls  regarding  segregation of duties,  each have
material weakness. The former accountants for Health Express do not believe that
these  items  constitute  reportable  events  as  described  in Item  304(a)  of
Regulation S-K. The Company believes that its overall internal  controls are, in
fact, effective, and the Company strives to continue to make improvements in its
internal controls.

(B)   CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

      In  connection  with the  evaluation of the  Company's  internal  controls
during the  Company's  nine months  ended  September  26,  2004,  the  Company's
Principal Executive Officer and Principal Financial Officer have determined that
there are no changes to the Company's internal controls over financial reporting
that has materially affected,  or is reasonably likely to materially effect, the
Company's internal controls over financial reporting.


                                       16
<PAGE>

                                     PART II
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      None.

ITEM 2. CHANGES IN SECURITIES

      During the  three-month  period ended  September 26, 2004, the Company did
not issue any unregistered securities.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

      None.

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

      None.

ITEM 5. OTHER INFORMATION

      On August 3, 2004, Susan Greenfield  resigned as a director of the Company
for personal reasons.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      (A) EXHIBITS:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT NO.       DESCRIPTION                                        LOCATION
------------------------------------------------------------------------------------------------------------------------------------
<S>               <C>                                                <C>
2.1               Articles of Incorporation, as amended              Incorporated by reference to Exhibit 2 to Form
                                                                     10-SB filed on October 6, 1999

3.1               By-laws                                            Incorporated by reference to Exhibit 3(a) to Form
                                                                     10-SB filed on October 6, 1999

3.2               Articles of Incorporation of Healthy Bites Grill   Incorporated by reference to Exhibit 3(b) to Form
                  of Boca, Inc.                                      10-QSB filed on August 13,2001

3.3               Articles of Incorporation for Health Express       Incorporated by reference to Exhibit 3(b) to Form
                  Franchise Company                                  10-QSB filed on August 13, 2001

4.1               Warrants for 38,000 shares issued to Francorp,     Incorporated by reference to Exhibit 4 to Form 10-QSB
                  Inc.                                               filed on August 13, 2001

4.2               Warrants for 2,000,000 shares issued to Rider      Incorporated by reference to Exhibit 4 to Form 10-
                  Insurance Company                                  QSB filed on August 13, 2001

10.1              Lease between Health Express USA, Inc. and Saul    Incorporated by reference to Exhibit 10(a) to Form
                  Strachman                                          10-SB filed on October 6, 1999

10.2              Lease - Healthy Bites Grill of Boca, Inc.          Incorporated by reference to Exhibit 10 to
                                                                     Form 10-QSB filed on May 14, 2001
</TABLE>


                                       17
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT NO.       DESCRIPTION                                        LOCATION
------------------------------------------------------------------------------------------------------------------------------------
<S>               <C>                                                <C>
10.3              Employment agreement of Bruno Sartori              Incorporated by reference to Exhibit 10 to Form
                                                                     10-QSB on November 14, 2000 and incorporated
                                                                     herein by such reference.

10.4              Employment Agreement of Douglas Baker              Incorporated by reference to Exhibit 10.4 to Form
                                                                     10-KSB filed on March 26, 2003

10.5              Employment Agreement of Marco D'Alonzo             Incorporated by reference to Exhibit 10.5 to Form
                                                                     10-KSB filed on March 26, 2003

10.6              Employment Agreement of Raymond Nevin              Incorporated by reference to Exhibit 10.6 to Form
                                                                     10-KSB filed on March 26, 2003

10.7              Franchise Development Agreement with Francorp,     Incorporated by reference to Exhibit 10(c) to Form
                  Inc.                                               10-QSB filed on August 13, 2001

10.9              Franchise agreement between Health Express and     Incorporated by reference to Exhibit 10.9 to Form
                  The Junie Corp.                                    10-KSB filed on March 26, 2003

10.10             Lease between Crown Diversified Industries and     Incorporated by reference to Exhibit 10 to Form
                  Health Express, Inc. dated May 2, 2002             10-QSB filed on May 15, 2002

10.11             Standard Asset Purchase Contract and Receipt       Incorporated by reference to Exhibit 99.2 to Form 8-K
                                                                     filed on October 9, 2002

10.12             Fourth Addendum to Standard Asset Purchase         Incorporated by reference to Exhibit 99.3 to Form 8-K
                                                                     filed on October 9, 2002

10.13             Addendum to Fourth Addendum to Standard Asset      Incorporated by reference to Exhibit 99.4 to Form 8-K
                  Purchase Contract and Receipt dated                filed on October 9, 2002
                  September 23, 2002

10.14             Agreement between Health Express, Inc. and         Incorporated by reference to Exhibit 99.5 to Form 8-K
                  Roll-A-Round Real Roast Beef, Inc. dated           filed on October 9, 2002
                  September 23, 2002

10.15             Lease Amendment and Assignment Agreement           Incorporated by reference to Exhibit 99.5 to Form
                  dated September 18, 2002                           8-K filed on October 9, 2002

10.16             Addendum to Lease Amendment and Assignment         Incorporated by reference to Exhibit 99.7 to Form 8K
                  Agreement dated September 23, 2002                 filed on October 9, 2002

10.17             Escrow Agreement dated September 23, 2002          Incorporated by reference to Exhibit 99.8 to Form 8K
                                                                     filed on October 9, 2002

10.19             Equity Line of Credit Agreement dated March 13,    Incorporated by reference to Exhibit 10.19 to
                  2003 between Health Express and Cornell Capital    Amendment No. 1 to Form 10-KSB filed on April 24, 2003
                  Partners, LP
</TABLE>


                                       18
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT NO.       DESCRIPTION                                        LOCATION
------------------------------------------------------------------------------------------------------------------------------------
<S>               <C>                                                <C>
10.20             Registration Rights Agreement dated March 13,      Incorporated by reference to Exhibit 10.20 to
                  2003 between Health Express and Cornell Capital    Form 10-KSB filed on March 26, 2003
                  Partners,

10.21             Escrow Agreement dated March 13, 2003 among        Incorporated by reference to Exhibit 10.20
                  the Registrant, Cornell Capital Partners, LP,      to Form 10-KSB filed on March 26, 2003
                  Butler

10.22             Securities Purchase Agreement dated January 17,    Incorporated by reference to Exhibit 10.20 to
                  2003 among Health Express and the Buyers           Form 10-KSB filed on March 26, 2003

10.23             Escrow Agreement dated January 17, 2003 among      Incorporated by reference to Exhibit 10.20 to Form
                  Health Express, the Buyers and Butler Gonzalez,    10-KSB filed on March 26, 2003
                  LP

10.24             Debenture Agreement dated January 17, 2003         Incorporated by reference to Exhibit 10.20
                  between Health Express and Cornell                 to Form 10-KSB filed on March 26, 2003
                  Capital Partners LP

10.25             Investors Registration Rights Agreement dated      Incorporated by reference to Exhibit 10.20
                  March 13, 2003 between Health Express and the      to Form 10-KSB filed on March 26, 2003
                  Investors

10.26             Placement Agent Agreement dated March 13, 2003     Incorporated by reference to Exhibit 10.20 to Form
                  among Health Express NT Capital Equities, Ltd.     10-KSB filed on March 26, 2003
                  and Cornell Partners LP

10.27             Lease Modification - Health Bites Grill of Boca,   Incorporated by reference to Exhibit 10.27 to Form
                  Inc.                                               10-KSB filed on March 29, 2004

10.28             Franchise Agreement between Health Express and     Incorporated by reference to Exhibit 10.28 to Form
                  Myrick Corporation                                 10-KSB filed on March 29, 2004

14.1              Code of Ethics                                     Incorporated by reference to Exhibit 14.1 to Form
                                                                     10-KSB filed on March 29, 2004

31.1              Certification by Chief Executive Officer           Provided herewith
                  pursuant to 15 U.S.C. Section 7241, as adopted
                  pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002
</TABLE>


                                       19
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT NO.       DESCRIPTION                                        LOCATION
------------------------------------------------------------------------------------------------------------------------------------
<S>               <C>                                                <C>
31.2              Certification by Chief Financial Officer           Provided herewith
                  pursuant to 15 U.S.C. Section 7241, as adopted
                  pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002

32.1              Certification by Chief Executive Officer and       Provided herewith
                  Chief Financial Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906
                  of the Sarbanes-Oxley Act of 2002
</TABLE>

      (B) REPORTS ON FORM 8-K:

      None.


                                       20
<PAGE>

                                   SIGNATURES

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

Date: November 8, 2004                 HEALTH EXPRESS USA, INC.


                                       By:  /s/ Douglas Baker
                                            ------------------------------------
                                            Douglas Baker,
                                            Chief Executive Officer and Director


Date: November 8, 2004                 By:  /s/ Patricia Durante
                                            ------------------------------------
                                            Patricia Durante,
                                            Chief Financial Officer
                                            Principal Accounting Officer


                                       21