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

                                    FORM 10-Q

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

                For the quarterly period ended December 31, 2005

                                       OR

             [ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE
                              EXCHANGE ACT OF 1934

            From the transition period from __________ to ___________

                        Commission file number 000-30074


                                APO HEALTH, INC.
             (Exact name of registrant as specified in its charter)

                     Nevada                                   86-0871787
     (State or other jurisdiction of                        (IRS Employer
     incorporation or organization)                    Identification Number)

                 3590 Oceanside Road, Oceanside, New York 11575
                    (Address of principal executive offices)

                                 (800) 365-2839
                           (Issuer's Telephone Number)

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

     Indicate by check mark whether the registrant is a large accelerated filer,
or an  accelerated  filer.  See  definition  of  "accelerated  filer  and  large
accelerated  filer"  in Rule  12b-2 of the  Exchange  Act.  (Check  one):  Large
accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Exchange Act. Yes [ ] No [X]

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common  stock,  as of the latest  practicable  date. As of February 15, 2006,
43,587,712 shares of Common Stock of the issuer were issued and outstanding.


<PAGE>



                                APO HEALTH, INC.
                                    FORM 10-Q
                         QUARTER ENDED DECEMBER 31, 2005


                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                 Page
<S>                                                                                               <C>
         PART I - Financial Information

         Item 1            Financial Statements.

                           Consolidated Balance Sheet as of
                           December 31, 2005 and September 30, 2005.                               2

                           Consolidated Statement of Operations for the three
                           months ended December 31, 2005 and 2004.                                3

                           Consolidated Statement of Cash Flows for the
                           three months ended December 31, 2005 and 2004.                          4

                           Notes to Consolidated Financial Statements.                           5 - 11

         Item 2            Management's Discussion and Analysis of Financial
                           Condition and Results of Operations.                                 11 - 12

         Item 3            Quantitative and Qualitative Disclosures About
                           Market Risk.                                                            12

         Item 4            Controls and Procedures.                                                12

         PART II - Other Information

         Item 1            Legal Proceedings.                                                   12 - 13

         Item 1A  Risk Factors.                                                                 13 - 16

         Item 2            Unregistered Sales of Equity
                           Securities and Use of Proceeds.                                         16

         Item 3            Defaults upon Senior Securities.                                        16

         Item 4            Submission of Matters to a Vote of Security Holders.                    16

         Item 5            Other Information.                                                      16

         Item 6            Exhibits.                                                               16

         Signatures                                                                                17

</TABLE>

                                       1
<PAGE>



                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                                APO HEALTH, INC.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>


                                                                 December 31,                September 30,
                                                                      2005                       2005
                                                              ------------------        ------------------
                                                                  (Unaudited)

                                     ASSETS
                                     ------
Current Assets:
<S>                                                                    <C>                       <C>
   Cash                                                       $         265,161         $         634,161
   Accounts Receivable, net of allowance for
   doubtful accounts of $400,000 and $405,397                           556,318                   452,878
   Inventory                                                            244,411                   228,008
   Other Current Assets                                                  33,489                    36,082
                                                              ------------------        ------------------
     Total Current Assets                                             1,099,379                 1,351,129
                                                              ------------------        ------------------

Property and Equipment, net of accumulated
   Depreciation of $90,334 and $89,639                                    1,295                     1,991
Deposits                                                                  7,500                     7,500
                                                              ------------------        ------------------
     Total Assets                                             $       1,108,174         $       1,360,620
                                                              ==================        ==================

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                  ---------------------------------------------

Current Liabilities:
   Bank Notes Payable                                         $         109,886         $         457,369
   Accounts Payable                                                   1,006,930                   783,069
   Accrued Compensation                                                  84,973                    42,473
   Customer Deposits                                                    214,180                   214,280
                                                              ------------------        ------------------
     Total Current Liabilities                                        1,415,969                 1,497,191
                                                              ------------------        ------------------
Stockholders' Equity (Deficit):
   Common stock, $.0002 par value,
     125,000,000 shares authorized, 43,587,712
     and 42,387,712 shares issued and outstanding                         8,718                     8,478
   Paid-in Capital                                                    2,283,605                 2,271,845
   Retained Earnings (Deficit)                                       (2,600,118)               (2,416,894)
                                                              ------------------        ------------------
     Total Stockholders' Equity (Deficit)                              (307,795)                 (136,571)
                                                              ------------------        ------------------

     Total Liabilities and Stockholders' Equity (Deficit)     $       1,108,174         $       1,360,620
                                                              ==================        ==================
</TABLE>

                                       2
<PAGE>

                                APO HEALTH, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                           FOR THE THREE MONTHS ENDED
                     December 31, 2005 AND 2004 (UNAUDITED)

<TABLE>
<CAPTION>

                                                                             Three Months
                                                                             ------------
                                                                     2005                       2004
                                                              ------------------        ------------------

<S>                                                                   <C>                       <C>
Revenue                                                       $       2,103,915         $       4,711,957
Cost of Revenue                                                       1,822,304                 4,325,561
                                                              ------------------        ------------------
Gross Margin                                                            281,611                   386,396
                                                              ------------------        ------------------

Operating Expenses
   Selling Expense                                                       66,017                   123,211
   General and Administrative Expenses                                  389,773                   376,957
                                                              ------------------        ------------------
                                                                        455,790                   500,168
                                                              ------------------        ------------------

(Loss) from Operations                                                 (174,179)                 (113,172)

Interest Expense                                                          9,045                    13,906
                                                              ------------------        ------------------

Net (Loss)                                                    $        (183,224)        $        (127,678)
                                                              ==================        ==================

Basic and Diluted Earnings
   Per Common Share:                                          $            (.00)        $            (.00)
                                                              ==================        ==================
Weighted Average Common Shares
   Outstanding                                                       42,787,712                35,768,601
                                                              ==================        ==================

</TABLE>


                                       3
<PAGE>

                                APO HEALTH, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           FOR THE THREE MONTHS ENDED
                     December 31, 2005 AND 2004 (UNAUDITED)

<TABLE>
<CAPTION>

                                                                      2005                     2004
                                                              ------------------        ------------------

<S>                                                                   <C>                       <C>
Cash Flow from Operating Activities:
Net (Loss)                                                    $        (183,224)        $        (127,678)
Adjustments to Reconcile Net Income to
Net Cash Flows from Operating Activities:
Depreciation and Amortization                                               696                     1,533
Stock Issued for Services                                                12,000                     6,000
Allowance for Doubtful Accounts                                          (5,397)                   50,000
Changes In:
  Accounts Receivable                                                   (98,043)                  323,904
  Inventory                                                             (16,403)                   37,104
  Other Current Assets                                                    2,593                    67,364
  Accounts Payable                                                      223,861                  (269,190)
  Accrued compensation                                                   42,500                         -
  Customer Deposits Payable                                                 100                    46,228
                                                              ------------------        ------------------
Cash Flows from Operating Activities                                    (21,517)                  135,265
                                                              ------------------        ------------------

Cash Flows from Financing Activities:
Proceeds (Payment) on Bank Notes Payable, Net                          (347,483)                 (370,510)
                                                              ------------------        ------------------
Cash Flows from Financing Activities                                   (347,483)                 (370,510)
                                                              ------------------        ------------------

Net (Decrease) in Cash                                                 (369,000)                 (235,245)

Cash Balances:
Beginning of Period                                                     634,161                   574,732
                                                              ------------------        ------------------
End of Period                                                 $         265,161         $         339,487
                                                              ==================        ==================
</TABLE>



                                       4
<PAGE>


                                APO HEALTH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following financial information is submitted in response to the requirements
of Form  10-Q  and does not  purport  to be  financial  statements  prepared  in
accordance  with  generally  accepted  accounting  principles.  Further,  in the
opinion of  management,  the interim  financial  statements  reflect  fairly the
financial position and results of operations for the periods indicated.

It is suggested that these interim consolidated  financial statements be read in
conjunction  with the financial  statements  and notes  thereto  included in APO
Health,  Inc.'s Form 10K containing the audited  financial  statements as of and
for the year ended  September 30, 2005,  filed with the  Securities and Exchange
Commission.

The results of operations  for the three months ended  December 31, 2005 are not
necessarily  indicative  of results to be  expected  for the entire  fiscal year
ending September 30, 2006.

Note 1 - SUMMARY OF ACCOUNTING POLICIES

Nature of business  and basis of  consolidation-  APO Health,  Inc.,  a New York
corporation  ("APO") was incorporated under the laws of the state of New York in
August  1978.   APO  and  its   wholly-owned   subsidiary,   Universal   Medical
Distributors,   Inc.   ("Universal")   distribute  disposable  medical  products
principally  to dental and  medical and  professionals  and  wholesalers  in the
United  States,  principally  on  the  East  Coast.  Effective  June  13,  2001,
InternetFinancialCorp.com,  Inc.,  ("IFAN"),  a Nevada corporation,  which is an
inactive public company, acquired APO (collectively,  the "Company") pursuant to
a tax-free  reorganization  agreement.  The acquisition was accounted for by the
purchase   method  under  business   combinations   in  a  reverse   acquisition
transaction.  Concurrently,  IFAN changed its name to APO Health, Inc., a Nevada
corporation.

All significant  intercompany  balances and transactions have been eliminated in
consolidation.

Operating deficit and economic conditions
-----------------------------------------
Adverse  economic  conditions  have limited the ability of the Company to market
its products at amounts  sufficient to recover its operating and  administrative
costs. As a result,  the Company  incurred losses of $663,837,  $1,048,828,  and
$517,526 for the three years ended  September 30, 2005, and an operating loss of
$183,224 for the three months  ended  December 31, 2005.  APO is in violation of
the working  capital and tangible net worth  covenants of its lending  agreement
(see note 4).  As more  fully  described  in note 8, APO is a  defendant  in two
lawsuits  with  Proctor & Gamble and Alcoa,  involved in the sale of products of
those two  companies,  by APO,  which Proctor and Gamble and Alcoa claim to have
been  counterfeit  products.  It is not  possible  to  predict  at this time the
ultimate outcome of the litigation or the extent,  if any, of the effect on APO.
In addition,  the trustee in bankruptcy of a former customer,  is seeking return
of a payment which it deems to be a preferential distribution. The above factors
cause  substantial  doubt of the  Company's  and APO's  ability to continue as a
going concern.

In view of these  matters,  realization  of a major portion of the assets in the
accompanying  balance sheet is dependent upon the Company's  ability to meet its
financing requirements,  and the success of its operations.  Management believes
that  actions  presently  being  taken to revise  the  Company's  operating  and
financial  requirements  may not  provide  the  opportunity  for the  Company to
continue  as a going  concern.  The  financial  statements  do not  include  any
adjustments  that might be necessary should the Company be unable to continue as
a going concern.

                                       5
<PAGE>

                                APO HEALTH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - SUMMARY OF ACCOUNTING POLICIES (continued)

Cash and cash  equivalents - For purposes of the statements of cash flows,  cash
equivalents  include  all highly  liquid  investments  purchased  with  original
maturities of three month or less.

Revenue recognition - Revenue recognition occurs when products are shipped.

Advertising - Advertising is expensed as incurred.  Advertising  expense for the
three months ended December 31, 2005, and 2004 was $700 and $7,650 respectively.

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

Property and equipment - Property and equipment is stated at cost.  Depreciation
is provided for on the straight-line  method over the useful estimated life. The
cost of maintenance and repairs is expensed as incurred.

Long-lived  Assets - The  Company  follows  Statement  of  Financial  Accounting
Standards No. 144, Impairment of Long-lived Assets, by reviewing such assets for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying amount may not be recoverable.

Shipping and  handling - Shipping  and handling  costs are expensed as incurred.
Shipping  and  handling  expense  included  in selling  expense  was $32,849 and
$65,298 for the three months ended December 31, 2005 and 2004 respectively.

Income  taxes - Income  taxes are  computed  using the tax  liability  method of
accounting,  whereby  deferred income taxes are determined  based on differences
between  financial  reporting  and tax bases of assets and  liabilities  and are
measured using the enacted tax rates that will be in effect when the differences
reverse.

Earnings Per Share - Basic net income per share has been calculated based on the
weighted average number of shares of common stock outstanding during the period.
Diluted  net  income per share is  computed  by  dividing  the net income by the
weighted  average number of common shares  outstanding  plus potential  dilutive
securities.

Fair value  financial  instruments - The Company's  carrying amount of financial
instruments which include cash,  accounts  receivable,  bank notes payable,  and
accounts payable approximate fair value.

Estimates and  assumptions - Preparing  financial  statements in conformity with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities, revenue
and  expenses  at the balance  sheet date and for the period then ended.  Actual
results could differ from these estimates.


                                       6
<PAGE>

                                 APO HEALTH INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - SUPPLEMENTAL CASH FLOW STATEMENT DISCLOSURES
                                                             2005         2004
                                                             ----         ----
Cash paid during the period for interest                  $  9,045    $  13,906
Non cash transactions:
         Stock issued for services                        $ 12,000    $   6,000

Note 3- OTHER CURRENT ASSETS

Other current assets consist of the following:
                                                             2005         2004
                                                             ----         ----
Prepaid Expenses                                          $ 33,489    $  36,082

Note 4 - BANK NOTES PAYABLE

On October 29, 2002,  APO entered into a financing  agreement  with  Rosenthal &
Rosenthal,  Inc. The  financing  agreement  provides  APO with a maximum  credit
facility not to exceed $3,000,000.  On September 1, 2004 the credit facility was
amended by mutual  consent and reduced  the maximum  amount of credit  under the
facility to  $1,000,000.  On March 2, 2005 the  financing  agreement was amended
reducing the maximum credit facility to $500,000. On February 1, 2006, Rosenthal
& Rosenthal  further  reduced  the credit  limit to a maximum of  $300,000.  The
credit facility is  collateralized  by substantially  all of APO's assets and is
personally  guaranteed  by Dr.  Jan  Stahl,  Chairman  and  CEO of the  Company.
Interest is payable  monthly on the average  daily loan balance at the announced
prime rate of JP Morgan Chase bank plus 2.5% (9.25% as of September  30,  2005).
Under  terms  of the  agreement,  the  lender  may  call  the  loan if APO is in
violation of any restrictive covenant. At December 31, 2005, APO is in violation
of its net worth and working  capital  covenants.  Rosenthal & Rosenthal has not
waived the violations,  and accordingly,  the entire amount of the obligation is
callable.  The credit facility matured on October 31, 2005 and has been extended
through  December  31, 2005 under  substantially  the same terms as the original
agreement  APO and the lender have agreed to continue  the credit  facility on a
month to month  basis. APO has  requested an  extension  of the credit  facility
through March 31, 2006.

Note 5 - INCOME TAXES

Income taxes (benefit) consist of the following:

                                              2005                     2004
                                         ------------              -------------
Current                                  $          -              $           -
Deferred                                            -                          -
                                         ------------              -------------
Total                                    $          -              $           -
                                         ------------              -------------

A reconciliation of income tax at the federal statutory income tax rate to total
income taxes is as follows:
                                              2005                     2004
                                         ------------              -------------
Computed at the federal statutory
         Rate of 34%                     $          -              $           -
State income tax (benefit)                          -                          -
Valuation allowance adjustment                      -                          -
Other adjustments                                   -                          -
                                         ------------              -------------
Total                                    $          -              $           -
                                         ============              =============


                                 APO HEALTH INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5 - INCOME TAXES (continued)

The components of deferred taxes are as follows:

                                                  2005                 2004
                                             ------------         -------------
Deferred tax assets
         Allowance for doubtful accounts     $    160,000         $     162,150
         Depreciation                              20,800                21,150
         Deferred compensation                     34,000                17,000
         Net operating loss carryover             696,000               624,000
         Valuation allowance                     (910,800)             (824,300)
                                             ------------         -------------
Total deferred tax assets                    $          -         $           -
                                             ------------         -------------

                                       7
<PAGE>

The Company has a net operating  loss carryover of  approximately  $1,740,000 to
offset future  taxable  income.  The carryover  loss expires  through 2025.  The
Company has offset the deferred  tax asset by a valuation of $910,800,  since it
cannot be  determined  more likely than not whether the Company  will be able to
utilize such net operating loss carryover.  During the period ended December 31,
2005, the valuation allowance increased by $86,500.

Note 6 - COMMON STOCK ISSUANCES

In December 2005, the Company issued a total of 1,200,000 shares of common stock
for professional services valued at $12,000.

During the fiscal year ended  September 30, 2005,  the Company issued a total of
2,548,000 shares of common stock for consulting and professional services valued
at $64,880.

On April 1, 2005, the Company issued 4,166,667 shares of restricted common stock
to Dr. Jan Stahl,  chief  executive  officer of the Company on the conversion of
$50,000 of deferred compensation.

Stock Option Plan

On July 22, 2002,the  Company adopted a Bonus  Compensation  Warrant  Agreement,
whereby,  the Company would issue Bonus Compensation  Warrants equivalent to 10%
of the price of any merger or  acquisition  brought to the  Company.  All of the
warrants  being  exercisable  into  shares of common  stock at 80% of the 20 day
average bid and ask price of the Company's common stock. The Company  authorized
up to a maximum  aggregate of 3,000,000 shares of common stock available for any
Bonus Compensation Warrants. To date none of these shares have been exercised.

On July 22, 2002, the Company issued a common stock purchase warrant for 260,000
shares of common stock  exercisable at $.10 per share and on September 27, 2002,
a common stock  purchase  warrant for 1,875,000  shares  exercisable at $.04 per
share,  both  expiring on August 31, 2007.  To date none of these  warrants have
been exercised.


                                       8
<PAGE>
                                APO HEALTH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - LEASES

The Company's offices are located at 3590 Oceanside Road,  Oceanside,  New York.
The premises  contain  approximately  9,800 square feet under a five-year  lease
(the "Lease") which expired on November 30, 2004 (the "Lease  Term").  The Lease
Term has been extended for an additional  five years through  November 30, 2009.
These  premises  are  occupied  under a Lease  between the  landlord,  who is an
unaffiliated  third party, and an affiliated  company PJS Trading,  Corp., a New
York  corporation  ("PJS") owned by Dr. Stahl formed for the express  purpose of
entering  into the Lease.  the Company  occupies  these  premises  under an oral
agreement with PJS and Dr. Stahl whereby the Company has agreed to discharge all
of the Lease  obligations with the landlord.  The annual lease payment under the
new lease starts at  approximately  $77,300 per year and increases to $80,000 in
the fifth year with  additional  increases  for real estate taxes over the Lease
Term.  Neither PJS nor Dr. Stahl derives any profit from the Lease nor will they
during the balance of the Lease Term.  Management  of the Company  believes  the
current facility is adequate for its current  operations.  Effective December 1,
2005, the Company has subleased for a one year period approximately 2,000 square
feet of the warehouse space at  approximately  $30,000 per year.  Rental expense
net of  subleases  was $10,336 and  $12,429 for each of the three  months  ended
December 31, 2005.

Future minimum lease payments are as follows:

For the years ended September 30,

                    2006                $   52,928
                    2007                    71,225
                    2008                    75,825
                    2009                    79,405
                    2010                    13,337


Note 8 - COMMITMENTS AND CONTINGENCIES

Employment Agreement

Effective October 1, 2001, the Company has entered into a three-year  employment
agreement  with its chief  executive  officer that provides for a minimum annual
salary  of  $250,000  with  incentives  based  on the  Company's  attainment  of
specified  levels  of sales  and  earnings  as  defined  in the  agreement.  The
employment  agreement  expired  September  30,  2004 and shall be  automatically
renewed for  successive  periods of one year unless  either party gives  written
notice to terminate the agreement.

Legal Proceedings

On or about July 7, 2004, APO was served with process in a suit commenced by The
Proctor & Gamble  Company  ("P&G")  in the US  District  Court  for the  Eastern
District of New York, against it and a number of other parties, P&G claimed that
the Company, as well as others were involved in the sale of Pantene and Head and
Shoulders  products which were not  manufactured  by P&G. APO purchased  several
shipments  of these  products  abroad  and  unbeknownst  to the APO some non P&G
products may have been included in these shipments.  APO has cooperated with P&G
as well as the Federal regulatory  agencies and has supplied P&G with all of its
documentation  in order to assist P&G in its  efforts.  The  lawsuit is seeking,
among other  relief,  a request for a temporary and  permanent  injunction  from
selling such products. Recently, the complaint

                                       9
<PAGE>

                                APO HEALTH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Legal Proceedings (continued)

was amended to include a number of additional parties,  including Dr. Jan Stahl,
chief  executive  officer of the  Company.  The  co-defendants  in the suit have
asserted cross-complaints against APO for an unspecified amount to be determined
at trial based upon their receipt and subsequent resale of these products.

On or about  December 3, 2004, APO and Dr. Jan Stahl were served with process in
a suit commenced by Alcoa, Inc. (Alcoa) in the US District Court for the Eastern
District of New York,  against it and a number of other  parties.  Alcoa claimed
that APO as well as others were involved in the sale of products  which were not
manufactured by Alcoa. APO purchased  several shipments of these products abroad
and unbeknownst to APO, Alcoa claims that counterfeit  products were included in
these  shipments.  The lawsuit is seeking,  among other relief,  a request for a
temporary and permanent  injunction  from selling such products.  Recently,  the
complaint  was  amended  to  include  a  number  of  additional   parties.   The
co-defendants  in the suit have  asserted  cross-complaints  against  APO for an
unspecified  amount to be  determined  at trial  based  upon their  receipt  and
subsequent resale of these products.

In both the P&G and Alcoa law suits,  the plaintiff's  have sought  compensatory
damages in an amount to be proven at the time of trial.  Each plaintiff has also
requested an award of punitive  damages in the sum of $10,000,000.  At this time
outside  counsel  believes that the plaintiffs at trial will be unable to render
their punitive damages.  Outside counsel indicates that the litigation is in the
early stages of discovery  and is unable to render  their  expert  opinion.  The
Company  believes it has  meritorious  defenses and is vigorously  defending its
position.

One of APO's former  customers,  Allou  Distributors Inc. has recently filed for
bankruptcy  protection.  The bankruptcy trustee is seeking the return of $70,000
which he deems is a preferential distribution for payment of merchandise sold to
Allou  Distributors  Inc.  APO  believes  the  claim is  without  merit and will
vigorously defend its position.

Product Liability

Certain of the  Company's  products  and proposed  products  will be utilized in
medical  procedures  where the Company  could be subject to claims from injuries
resulting  from  use of  the  Company's  products.  Recent  developments  in the
insurance  industry  have reduced the  availability  and  increased  the cost of
liability insurance coverage. At present, the Company is not insured for product
liability claims.

Note 9 - CONCENTRATION OF CREDIT RISK

The Company maintains cash balances at various financial institutions.  At times
such  balances  exceed the  insured  limits of the  financial  institution.  The
Company has not  experienced any losses in such accounts and does not believe it
is exposed to any significant credit risk on cash balances.  As of December 31,
2005,  the Company  had  approximately  $245,513  on  deposit,  in excess of the
$100,000 in each bank, which is insured under federal law.

The  concentration  of credit  risk due to  receivables  is  minimal  due to the
Company's  diverse  customer base  throughout the United States.  For the period
ending  December 31, 2005,  the following  customers had in excess of 10% of the
total sales:

                                            2005

Customer A                                  12%

Customer B                                  11%



                                       10
<PAGE>

No single vendor accounts for more than 10% of purchases.

Foreign manufacturing is subject to a number of risks, including  transportation
delays and interruptions,  political and economic disruptions, the imposition of
tariffs and similar  import/export  controls and changes in government policies.
Although,  to this date, the Company has not  experienced  any material  adverse
effects due to such risks,  there can be no assurance  that such events will not
occur in the future with result of possible  increases in product  costs and /or
delays in product delivery which would, in all likelihood, result in the loss of
revenues and goodwill by the Company.



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

FORWARD-LOOKING STATEMENTS

This  quarterly  report on Form 10-Q contains  forward-looking  statements.  All
statements  other than  statements of historical fact made in this annual report
are forward looking.  In particular,  the statements  herein regarding  industry
prospects  and  future   results  of   operations  or  financial   position  are
forward-looking  statements.  Forward-looking  statements  reflect  management's
current expectations and are inherently uncertain. The Company 's actual results
may differ significantly from management's expectations.

RESULTS OF OPERATIONS

Revenue for the three months ended December 31, 2005 was $2,103,915,  a decrease
of $2,608,042, or 55.3%, from $4,711,957 for the three months ended December 31,
2004.  The decrease in revenue has been  categorized  into three  areas.  First,
sales in 2004 to customers that were either no longer in business in 2005 or who
were no  longer  buying  from the  Company  and are using  alternative  sources.
Second,  revenue from  customers who are involved in the lawsuits with Proctor &
Gamble  Company  and  Alcoa,  and are no  longer  purchasing  products  from the
Company.  And third,  in prior  years,  the  Company  purchased  many  different
products  which were imported from both Canada and Europe.  In 2004, the Company
reduced  the amount of  imports  from those  areas as the United  States  dollar
decreased in value against the Canadian dollar,  British pound and the Euro. The
value of the Canadian  dollar,  British pound and the Euro continue to be strong
compared to the value of the United States  dollar.  Therefore,  the Company has
eliminated the importation of many of those foreign products

Cost of revenue for the three months ended December 31, 2005 was $1,822,304,  a
decrease of  $2,503,257,  or 57.9%,  from  $4,325,561 for the three months ended
December 31, 2004.  The decrease in cost of sales is  approximately  the same as
the  percentage  in revenue.  The gross profit  percentage  for the three months
ended  December  31, 2005 was 13.3%  compared to 8.2% for the three months ended
December  31,  2004 as the  Company  was able to  increase  margins  on  several
products and received higher gross profits margins from the retail sales.

Selling  expenses for the three months ended  December 31, 2005 were $66,017,  a
decrease of $57,194  from the three months  ended  December  31, 2004.  Shipping
costs decreased by $32,449 and commissions  decreased by  approximately  $13,000
for the  quarter  ended  December  31,  2005 due to the  decrease  in revenue to
wholesale  customers.  Advertising  and related costs declined by  approximately
$7,000 as the Company reduced its mailing of advertising  materials.  There were
minor increases and decreases in other selling expenses with an overall decrease
which was directly related to the decrease in revenue.

General and administrative expenses for the three months ended December 31, 2005
were  $389,773,  an increase of $12,816 from $376,957 for the three months ended
December  31, 200.  Total  compensation,  including  payroll  taxes and employee
benefits increased by $25,568. The increase in compensation  reflects an accrual
of  salaries  that had been  reduced  during the period to  preserve  cash flow.
Consulting  fees decreased by $25,000 to $5,000 in the period ended December 31,
2005. For the period ended December 31, 2004  consulting  expense  represented a



                                       11
<PAGE>
one year  contract  that  expired in January  2005.  The Company  increased  its
allowance for bad debts by $50,000 in the quarter ended December 31, 2004. There
was no comparable cost in 2005. Professional fees for the quarter ended December
31,  2005 were  $84,381,  an  increase of $64,632  over the three  months  ended
December 31, 2004. The entire amount of the increase is attributed to legal fees
incurred in the lawsuits with Proctor & Gamble and Alcoa.

Interest  expense for the three  months ended  December  31, 2005 was $9,045,  a
decrease of $4,861 from the three month  period ended  December  31,  2004.  The
decrease in interest  expense is due to a reduction of the credit  facility with
Rosenthal & Rosenthal, Inc which reduced the monthly minimum interest expense.

LIQUIDITY AND FINANCIAL CONDITION

As of December 31, 2005, the Company had a working  capital deficit of $316,590,
a decrease  of $170,528  from the working  capital at  September  30,  2005. The
Company 's losses from  continuing  operations  of $183,224 for the period ended
December 31, 2005 was funded by the decrease in working  capital and increase in
accounts payable and accrued expenses of $223,861.  At December 31, 2005 the APO
had available a $300,000  credit  facility with Rosenthal & Rosenthal,  Inc., of
which  $109,886  was  outstanding  at  December  31,  2005  (see  Note  4 to the
accompanying financial statements). The credit facility is collateralized by all
of APO's assets and is personally  guaranteed by Dr. Jan Stahl,  Chief Executive
Officer of the Company.  Under terms of the credit facility, the lender may call
the loan if APO is in violation of certain  restrictive  covenants.  At December
31, 2005,  APO is in violation of its net worth and working  capital  covenants.
Rosenthal & Rosenthal has not waived the violations, and accordingly, the entire
amount of the obligation is callable. The credit facility matured on October 31,
2005 and was extended  through  December 31, 2005 under  substantially  the same
terms as the original agreement.  APO and the lender have agreed to continue the
credit facility on a month to month basis. APO has requested an extension of the
credit facility through March 31, 2006.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet  arrangements that are likely to
have a current or future effect on the Company 's financial condition,  revenues
or expenses, results of operations or capital resources.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Exchange Rate Risk.  The products  distributed  by the Company are, for the most
part,  manufactured by third parties in the United States,  the Far East, Mexico
and Canada. As a result, our financial results could be affected by factors such
as changes in foreign  currency  exchange  rates or weak economic  conditions in
foreign markets.

Credit  Risk.  the  Company   maintains  cash  balances  at  various   financial
institutions. At times, such balances exceed the insured limits of the financial
institution.  To date,  the  Company  has not  experienced  any  losses  in such
accounts.  As of December  31,  2005,  the Company had  $245,513 on deposit,  in
excess of the $100,000 in each bank, which is insured under federal law.

ITEM 4.  CONTROLS AND PROCEDURES.

As of the end of the period  covered by this  report the  Company  conducted  an
evaluation,  under the supervision and with the  participation  of its principal
executive officer and principal financial officer,  of the Company's  disclosure
controls and  procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the
Exchange Act). Based upon this  evaluation,  the Company's  principal  executive
officer and principal financial officer concluded that the Company's  disclosure
controls and procedures are effective to ensure that information  required to be
disclosed  by the  Company in the  reports  that it files or  submits  under the
Exchange Act is: (1) accumulated and  communicated to the Company's  management,
including its principal  executive officer and principal  financial officer,  as
appropriate to allow timely decisions  regarding  required  disclosure;  and (2)
recorded, processed,  summarized and reported, within the time periods specified
in the  Commission's  rules and  forms.  There  was no  change in the  Company's
internal  controls or in other factors that could affect these  controls  during
the Company's last fiscal quarter that has materially affected, or is reasonably
likely to materially  affect,  the Company's s internal  control over  financial
reporting.

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

On or about July 7, 2004, APO was served with process in a suit commenced by The
Proctor & Gamble  Company  ("P&G")  in the US  District  Court  for the  Eastern
District of New York, against it and a number of other parties. P&G claimed that
APO,  as well as  others  were  involved  in the  sale of  Pantene  and Head and
Shoulders  products which were not  manufactured  by P&G. APO purchased  several
shipments of these products  abroad and unbeknownst to APO some non P&G products
are alleged to be included in these shipments. APO cooperated with P&G as well


                                       12
<PAGE>

as the  federal  regulatory  agencies  and  has  supplied  P&G  with  all of its
documentation  in order to assist P&G in its  efforts to remove  these  products
from the  marketplace and to allow it to trace back the source of these improper
products.  The lawsuit is seeking, among other relief, a request for a temporary
and permanent injunction from selling such products. Recently, the complaint was
amended  to include a number of  additional  parties,  including  Dr. Jan Stahl,
chief  executive  officer of the  Company.  The  co-defendants  in the suit have
asserted cross-complaints against APO for an unspecified amount to be determined
at trial based upon their receipt and subsequent resale of these products.

On or about December 3, 2004, APO was served with process in a suit commenced by
Alcoa,  Inc.  ("Alcoa") in the US District Court for the Eastern District of New
York,  against it and a number of other parties.  Alcoa claimed that the Company
New York, as well as others were involved in the sale of products which were not
manufactured by Alcoa. APO purchased  several shipments of these products abroad
and unbeknownst to APO, Alcoa claims that counterfeit  products were included in
these shipments APO is cooperating with Alcoa as well as the federal  regulatory
agencies and is supplying Alcoa with all of its documentation in order to assist
Alcoa in its efforts to remove these products from the  marketplace and to allow
it to trace back the source of these improper products.  Recently, the complaint
was amended to include a number of additional parties,  including Dr. Jan Stahl,
chief  executive  officer of the  Company.  The  co-defendants  in the suit have
asserted cross-complaints against APO for an unspecified amount to be determined
at trial based upon their receipt and subsequent resale of these products.


     In both the P&G and Alcoa lawsuits, the plaintiffs have sought compensatory
damages in an amount to be proven at the time of trial.  Each plaintiff has also
requested an award of punitive damages in the sum of $10,000,000.

     One of APO's former customers,  Allou  Distributors Inc. has recently filed
for  bankruptcy  protection.  The  bankruptcy  trustee is seeking  the return of
$70,000 which he deems is a preferential distribution for payment of merchandise
sold to Allou Distributors Inc. APO believes the claim is without merit and will
vigorously defend its position.

ITEM 1A. RISK FACTORS.

     The  Company's  business  involves a high degree of risk.  Before  deciding
whether  to  invest  in the  Company's  securities  potential  investors  should
carefully  consider the risks and  uncertainties  described  below and the other
information  in this report and in the Company's  annual report on Form 10-K for
the fiscal year ended September 30, 2005 which was filed with the Securities and
Exchange  Commission  on January 13,  2006.  Each of the  following  risks could
materially and adversely affect the Company's business, financial condition, and
results of  operations.  This could  cause the  trading  price of the  Company's
common stock to decline, with the loss of part or all of your investment.

APO'S  FINANCIAL  STATUS  CREATES  SUBSTANTIAL  DOUBT  WHETHER THE COMPANY  WILL
CONTINUE  AS A GOING  CONCERN  FOR  MORE  THAN 12  MONTHS  FROM THE DATE OF THIS
REPORT.  IF APO DOES NOT CONTINUE AS A GOING  CONCERN,  INVESTORS MAY LOSE THEIR
ENTIRE INVESTMENT.

The Company  reported a net loss  totaling  $183,224  for the three months ended
December 31, 2005 and net losses totaling $663,837,  $1,048,828 and $517,526 for
the fiscal years ended  September 30, 2005, 2004 and 2003,  respectively.  As of
December  31,  2005 the  Company had a  stockholders  deficit of $307,795  and a
working capital deficit of $316,590.  Adverse  economic  conditions have limited
the  ability of the  Company to market its  products  at amounts  sufficient  to
recover its  operating  and  administrative  costs.  APO is in  violation of the
tangible net worth  covenant of its credit  facility with Rosenthal & Rosenthal,
Inc. (See Note 4 to the accompanying financial statements). As further described
under Part II, Item 1 of this report,  the Company's wholly owned subsidiary the
APO is a defendant in two lawsuits commenced by The Proctor & Gamble Company and
Alcoa,  Inc.,  based  on the sale of  products  of those  two  companies,  which
unbeknownst  to APO  were  counterfeit  products.  In  view  of  these  matters,
realization of a major portion of the assets in the  accompanying  balance sheet
is dependent  upon APO's  ability to meet its  financing  requirements,  and the
success of its  operations.  Management  believes that actions  presently  being
taken  to  revise  APO's  operating  and  financial   requirements  provide  the
opportunity for APO to continue as a going concern.  The accompanying  financial
statements  do not include any  adjustments  that might be necessary  should the
Company be unable to continue  as a going  concern.  While APOy  believes it has
sufficient  capital resources to fund operations for the next 12 months ,APO may
require  additional  capital to  continue  operations  beyond such  period.  The
Company may raise additional working capital either through private  placements,
public offerings and/or bank financing. There are no assurances that APO will be
able to achieve a level of revenues  adequate to generate  sufficient  cash flow
from  operations or obtain  additional  financing  through  private  placements,
public offerings and/or bank financing  necessary to support its working capital
requirements.  To the extent that funds  generated from any private  placements,
public offerings and/or bank financing are  insufficient,  the Company will have
to raise additional  working capital.  No assurance can be given that additional
financing will be available,  or if available,  will be on acceptable  terms. If
adequate  working  capital is not  available  APO will be forced to  discontinue
operations,  which  may  cause  investors  to lose the  entire  amount  of their
investment.  In the event APO is forced to discontinue  operations,  the Company
may divest itself of its


                                       13
<PAGE>

subsidiaries,  APO and  Universall  and  attempt  to locate and  negotiate  with
another  company for the purpose of a business  combination of the two companies
in order to obtain another business opportunity for the Company's shareholders.

THE COMPANYS  WHOLLY OWNED  OPERATING  SUBSIDIARY APO NEW YORK IS A DEFENDANT IN
TWO LITIGATION PROCEEDINGS,  WHICH HAS CAUSED APO TO LOSE CUSTOMERS RESULTING IN
A SIGNIFICANT LOSS OF REVENUE.  THESE PROCEEDINGS MAY CAUSE APO NEW YORK TO LOSE
OTHER CUSTOMERS  WHICH WOULD FURTHER WORSEN APO'S FINANCIAL  CONDITION AND COULD
FORCE APO NEW YORK TO DISCONTINUE OPERATIONS.

     As further  described  under Part II, Item 1 of this report,  the Company's
wholly owned  subsidiary , APO, is a defendant in two lawsuits  commenced by The
Proctor & Gamble Company ("P&G") and Alcoa, Inc. ("Alcoa"), based on the sale of
products of those two  companies,  which  unbeknownst  to APO, were  counterfeit
products.  APO purchased several shipments of products abroad and unbeknownst to
APO, some non-P&G and non-Alcoa  products were included in these shipments.  APO
is cooperating with P&G and Alcoa as well as the federal regulatory agencies and
is supplying P&G and Alcoa with all of its  documentation in order to assist P&G
and Alcoa in their efforts to remove these products from the  marketplace and to
allow  them to trace back the source of these  improper  products.  APO lost two
wholesale  customers due to these  litigation  proceedings  resulting in reduced
revenue of approximately  $1,000,000.00  for the three months ended December 31,
2005 and  approximately  $4,250,000  during the fiscal year ended  September 30,
2005.  Although  APO  believes it has  meritorious  defenses  and is  vigorously
defending its position in these  proceedings,  the  litigation  proceedings  may
cause the APO to lose other customers which would further worsen APO's financial
condition and could force APO to discontinue operations.

APO MAY INCUR MATERIAL PRODUCT LIABILITY COSTS.

     Providers  of  medical   products  to  hospitals   and  other  health  care
institutions  may encounter  liability for damages to patients in the event that
their  products  prove to be defective.  Certain of APO's  products and proposed
products  will be utilized in medical  procedures  where APO could be subject to
claims for such  injuries  resulting  from the use of its  products.  All of the
products APO sells are produced by third-party  manufacturers.  As a distributor
of products manufactured by third parties, APO may be liable for various product
liability  claims for products APO does not manufacture  even though the APO has
no  control  over  the  manufacturing  procedures  used in  connection  with the
production  of  these  third-party  products.  At  present  APO  has no  product
liability insurance.

COMPLIANCE WITH GOVERNMENTAL  REGULATIONS MAY IMPOSE ADDITIONAL COSTS, WHICH MAY
ADVERSELY AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

     Some of APO's products may be regulated as medical devices by the U.S. Food
and Drug  Administration  (the  "FDA")  pursuant  to the  federal  Food and Drug
Cosmetic  Act and are, or may be,  subject to  regulation  by other  federal and
state governmental agencies. The FDA has comprehensive authority to regulate the
development,   production,   distribution  and  promotion  of  medical  devices.
Furthermore,  certain states impose additional  requirements on the distribution
of medical  devices.  The FDA may require  pre-market  approval of some of APO's
proposed products, requiring extensive testing and a lengthy review process. The
cost of  complying  with  present  and future  regulations  may be  significant.
Furthermore,  the regulatory  approval  process and attendant costs may delay or
prevent the marketing of products  developed by APO in the future. The Mandatory
Device Reporting regulation  obligates  manufactures  including,  in some cases,
distributors  such as APO to provide  information to the FDA on injuries alleged
to have been associated with the use of a product or certain  products  failures
which  could  cause  injury.  The  FDA  is  empowered  to  take  action  against
manufacturers of regulated  products including both civil and criminal remedies,
and may also prohibit or suspend the marketing of products if  circumstances  so
warrant.  Any such  action by the FDA  could  result  in a  disruption  of APO;s
operations  for an  undetermined  time.  Compliance  with any of these  laws and
regulations may impose additional costs on APO which may negatively affect APO's
financial condition.

THE DENTAL,  MEDICAL AND  VETERINARY  PRODUCTS  SUPPLY  BUSINESSES ARE INTENSELY
COMPETITIVE.  APO  HAS  MANY  WELL-ESTABLISHED  COMPETITORS  WITH  SUBSTANTIALLY
GREATER  FINANCIAL AND OTHER  RESOURCES THAN THE COMPANY.  THESE FACTORS MAKE IT
DIFFICULT  FOR APO TO COMPETE IN ITS  INDUSTRY  AND MAY  ADVERSELY  AFFECT APO'S
RESULTS OF OPERATIONS.

     The medical,  dental and veterinary  products  supply business is intensely
competitive.  At present,  APO estimates that there are over 40 companies  whose
products  compete  with  many of APO's  present  and  proposed  products.  These
companies  range from major  multinational  companies  to  enterprises  that are
smaller in size and  financial  ability than APO APO's  present and  prospective
competitors  also include the numerous  manufacturers  and suppliers of reusable
medical  products and  manufacturers of raw materials used by APO. Many of APO's


                                       14
<PAGE>

competitors  have far  greater  financial  resources,  larger  staffs,  and more
established  market  recognition in both the domestic and international  markets
than APO. These factors make it difficult for APO to compete in its industry and
may adversely affect APO's results of operations.

IF APO'S  SUPPLIERS ARE UNABLE TO DELIVER  PRODUCT,  THE COMPANY'S  REVENUES AND
ULTIMATELY PROFITS WILL BE REDUCED.

     APO  is  highly  dependent  on  third  party  vendors  to  manufacture  and
distribute its products.  APO does not directly  manufacture any of the products
it  presently  sells.  The products  distributed  by APO are, for the most part,
manufactured  by third parties in the United  States,  the Far East,  Mexico and
Canada.   In  general,   APO  does  not  have   long-term   contracts  with  its
manufacturers.  Although APO believes  alternative  sources for virtually all of
its products are readily available, there can be no assurance that the available
supply from such  alternative  sources  would be adequate to meet the  increased
demand for  production  that  would  most  likely  result  from any  significant
disruption in APO's traditional  manufacturers and suppliers. If APO's suppliers
are unable to deliver  product,  APO's revenues and  ultimately  profits will be
reduced.

APOIS  SUBJECT TO RISKS  SPECIFIC  TO FOREIGN  MANUFACTURING  WHICH  COULD CAUSE
INCREASES IN PRODUCT COSTS AND DELAYS IN PRODUCT  DELIVERY WHICH WOULD RESULT IN
LOSS OF REVENUES AND GOODWILL.

     Foreign   manufacturing  is  subject  to  a  number  of  risks,   including
transportation delays and interruptions, political and economic disruptions, the
imposition  of  tariffs  and  similar  import/export  controls  and  changes  in
governmental  policies.  Although, to date, APO has not experienced any material
adverse  effects due to such risks,  there can be no assurance  that such events
will not occur in the future  with the result of possible  increases  in product
costs and/or delays in product  delivery which would, in all likelihood,  result
in the loss of revenues and goodwill by APO.

THE LOSS OF THE  SERVICES OF THE  COMPANY'S  CHIEF  EXECUTIVE  OFFICER,  DR. JAN
STAHL, COULD HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY'S BUSINESS.

     The  Company's  success  depends to a large degree on the skills of Dr. Jan
Stahl,  who is presently  one of two  executive  officers.  The other  executive
officer is Kenneth  Levanthal who serves as the Company's  Corporate  Secretary.
The loss of Dr. Stahl's services could have a materially adverse effect upon the
Company's  ability  to  successfully  carry on its  business.  Furthermore,  the
Company's operations require the services of additional skilled personnel. There
can be no assurance  that the Company  will be able to attract  persons with the
requisite  skills and training to meet the Company's  needs or, even if suitable
persons  are found  that  they  will be  available  on terms  acceptable  to the
Company.

THE COMPANY'S HISTORIC STOCK PRICE HAS BEEN VOLATILE AND THE FUTURE MARKET PRICE
FOR THE  COMPANY'S  COMMON STOCK IS LIKELY TO CONTINUE TO BE VOLATILE.  FURTHER,
THE LIMITED  MARKET FOR THE  COMPANY'S  COMMON  STOCK MAKES THE STOCK PRICE MORE
VOLATILE.  THIS MAY MAKE IT DIFFICULT FOR YOU TO SELL THE COMPANY'S COMMON STOCK
FOR A POSITIVE RETURN ON YOUR INVESTMENT.

     The public market for the Company's common stock has historically been very
volatile.  During the past two fiscal  years  ended  September  30, 2005 and the
quarter ended December 31, 2005, the market price for the Company's common stock
has ranged from $0.01 to $0.18. Any future market price for the Company's common
stock is likely to continue to be very volatile.  This price volatility may make
it more  difficult  for you to sell  shares  when  you want at  prices  you find
attractive.  the  Company's  litigation  proceedings  with The  Proctor & Gamble
Company and Alcoa,  Inc. may have contributed to the volatility in the Company's
stock price. In addition,  the stock market in general has  experienced  extreme
price and volume fluctuations that have often been unrelated or disproportionate
to the  operating  performance  of  companies.  Broad  market  factors  and  the
investing public's negative  perception of the Company's business may reduce the
Company's  stock  price,  regardless  of the  Company's  operating  performance.
Further,  the market for the  Company's  common stock is limited and the Company
cannot assure you that a larger market will ever be developed or maintained.  As
of February 15, 2006, the average daily trading  volume of the Company's  common
stock  over the past three  months was  approximately  46,620  shares.  The last
reported sales price for the Company's common stock as of February 15, 2006, was
$0.0071  per  share.  Market  fluctuations  and  volatility,  as well as general
economic, market and political conditions,  could reduce the market price of the
Company's  common stock.  As a result,  this may make it difficult or impossible
for you to sell  the  Company's  common  stock  for a  positive  return  on your
investment.

THE  COMPANY'S  COMMON  STOCK IS SUBJECT TO THE "PENNY  STOCK" RULES OF THE SEC,
WHICH MAKES TRANSACTIONS IN THE COMPANY'S COMMON STOCK CUMBERSOME AND MAY REDUCE
THE VALUE OF AN INVESTMENT IN THE COMPANY.

     The  Securities  and  Exchange  Commission  has adopted  Rule 3a51-1  which
establishes the definition of a "penny stock," for the purposes  relevant to the
Company,  as any equity  security that has a market price of less than $5.00 per


                                       15
<PAGE>

share or with an exercise price of less than $5.00 per share, subject to certain
exceptions.  For any transaction  involving a penny stock,  unless exempt,  Rule
15g-9 requires:

     o    that a broker or dealer approve a person's account for transactions in
          penny stocks; and

     o    the broker or dealer receive from the investor a written  agreement to
          the transaction,  setting forth the identity and quantity of the penny
          stock to be purchased

     In order to approve a person's  account for  transactions  in penny stocks,
the broker or dealer must:

     o    obtain financial  information and investment  experience objectives of
          the person; and

     o    make a reasonable  determination that the transactions in penny stocks
          are suitable for that person and the person has  sufficient  knowledge
          and  experience in financial  matters to be capable of evaluating  the
          risks of transactions in penny stocks.

     The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure  schedule  prescribed by the SEC relating to the penny stock
market, which, in highlight form:

     o    sets  forth  the  basis  on  which  the  broker  or  dealer  made  the
          suitability determination; and
     o    that the broker or dealer  received a signed,  written  agreement from
          the investor prior to the transaction.

     Generally,   brokers  may  be  less  willing  to  execute  transactions  in
securities  subject to the "penny stock" rules.  This may make it more difficult
for  investors to dispose of the  Company's  common stock and cause a decline in
the market value of the stock.

     Disclosure also has to be made about the risks of investing in penny stocks
in both public  offerings  and in  secondary  trading and about the  commissions
payable to both the  broker-dealer  and the registered  representative,  current
quotations  for the  securities  and the rights  and  remedies  available  to an
investor  in  cases  of fraud in  penny  stock  transactions.  Finally,  monthly
statements  have to be sent  disclosing  recent price  information for the penny
stock held in the account and information on the limited market in penny stocks.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

During  December 2005, the Company issued a total of 1,200,000  shares of common
stock as  consideration  for  professional  services valued at $12,000.00.  This
transaction was exempt from registration  requirements  pursuant to Section 4(2)
of the Securities Act of 1933, as amended.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

At December 31, 2005 APO had available a $300,000 credit facility with Rosenthal
& Rosenthal,  Inc., of which $109,886 was  outstanding at December 31, 2005 (see
Note 4 to  the  accompanying  financial  statements).  The  credit  facility  is
collateralized  by all of the APO's assets and is  personally  guaranteed by Dr.
Jan Stahl,  Chief  Executive  Officer of the Company.  Under terms of the credit
facility,  the  lender  may  call  the loan if APO is in  violation  of  certain
restrictive covenants. At December 31, 2005 APO is in violation of its net worth
and  working  capital  covenants.  Rosenthal  &  Rosenthal  has not  waived  the
violations,  and  accordingly,  the entire amount of the obligation is callable.
The credit  facility  matured  on  October  31,  2005 and was  extended  through
December  31,  2005  under   substantially   the  same  terms  as  the  original
agreement.APO  and the lender have agreed to continue  the credit  facility on a
month to month  basis.APO  has  requested an  extension  of the credit  facility
through March 31, 2006.

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

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

31.1    Certification  by Dr. Jan Stahl,  Chief Executive  Officer and Principal
        Financial Officer,  pursuant to Section 302 of the Sarbanes-Oxley Act of
        2002.

32.1    Certification  by Dr. Jan Stahl,  Chief Executive  Officer and Principal
        Financial Officer,  pursuant to Section 906 of the Sarbanes-Oxley Act of
        2002.

                                       16
<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.

                                         APO HEALTH, INC.


Date: February 21, 2006                  By: /s/ Jan Stahl
                                         ---------------------------------
                                         Dr. Jan Stahl, Chief Executive
                                         Officer, Acting  Principal
                                         Accounting Officer


                                       17