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 June 30, 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: ___________


                                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 No.)

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

                                 (800) 365-2839
              (Registrant's telephone number, including area code)

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

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Ac)t. Yes _____ No __X__

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common  stock,  as of the latest  practicable  date:  As of August 10,  2005,
41,639,712 shares of Common Stock of the issuer were issued and outstanding.



<PAGE>
                                APO HEALTH, INC.

                                    FORM 10-Q
                           QUARTER ENDED JUNE 30, 2005


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

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

          Item 1   Financial Statements.

                            Consolidated Balance Sheets as of
                            June 30, 2005 and September 30, 2004.                                   2

                            Consolidated Statements of Operations for the three and nine
                            months ended June 30, 2005 and 2004.                                    3

                            Consolidated Statements of Cash Flows for the
                            nine months ended June 30, 2005 and 2004.                               4

                            Notes to Consolidated Financial Statements.                           5 - 9

          Item 2            Management's Discussion and Analysis of Financial
                            Condition and Results of Operations                                  10 - 11

          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

          Item 2            Unregistered Sales of Equity Securities and Use of Proceeds.           13

          Item 3            Defaults upon Senior Securities.                                       13

          Item 4            Submission of Matters to a Vote of Security Holders.                   13

          Item 5            Other Information.                                                     13

          Item 6            Exhibits                                                               13

 Signatures                                                                                        14


                                       1
<PAGE>
                 PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                                APO HEALTH, INC.
                           CONSOLIDATED BALANCE SHEETS


                                                                                      June 30,              September 30,
                                                                                        2005                      2004
                                                                                  ------------------     ------------------
                                   (Unaudited)

                                     ASSETS
Current Assets:
   Cash                                                                                $    278,745      $         574,732
   Accounts Receivable, net of allowance
      for doubtful accounts of $360,000 and
     $380,000                                                                               834,812              1,179,078
   Inventory                                                                                455,908                583,040
   Other Current Assets                                                                     100,155                186,274
                                                                                  ------------------     ------------------

         Total Current Assets                                                             1,669,620              2,523,124
                                                                                  ------------------     ------------------

Property and Equipment, net of accumulated
   depreciation of $88,105 and $88,430                                                        3,524                  8,124
Deposits                                                                                      7,500                  7,500
                                                                                  ------------------     ------------------
         Total Assets                                                             $       1,680,644      $       2,538,748
                                                                                  ==================     ==================


                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Bank Notes Payable                                                             $         206,784      $         609,185
   Accounts Payable                                                                         942,702              1,168,278
   Accrued Compensation                                                                      50,818                 89,224
   Customer Deposits                                                                        255,020                259,675
                                                                                  ------------------     ------------------
         Total Current Liabilities                                                        1,455,324              2,126,362
                                                                                  ------------------     ------------------

Stockholders' Equity:
   Common stock, $.0002 par value,
     125,000,000 shares authorized, 41,639,712
     and 35,673,045 shares issued and outstanding                                             8,328                  7,135
   Paid-in Capital                                                                        2,247,115              2,158,308
   Retained Earnings (Deficit)                                                           (2,030,123)            (1,753,057)
                                                                                  ------------------     ------------------
         Total Stockholders' Equity                                                         225,320                412,386
                                                                                  ------------------     ------------------

         Total Liabilities and Stockholders' Equity                               $       1,680,644      $       2,538,478
                                                                                  ==================     ==================

</TABLE>

                                       2
<PAGE>

                                APO HEALTH, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       FOR THE THREE AND NINE MONTHS ENDED
                       JUNE 30, 2005 AND 2004 (UNAUDITED)

<TABLE>
<CAPTION>

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

<S>                                               <C>                    <C>                     <C>                    <C>
Revenue                                    $       3,879,566      $       8,204,667       $      12,486,146      $      29,448,197
Cost of Revenue                                    3,582,834              8,071,884              11,352,224             28,073,093
                                           ------------------     ------------------      ------------------     ------------------
Gross Margin                                         296,732                132,783               1,133,922              1,374,294
                                           ------------------     ------------------      ------------------     ------------------

Operating Expenses
 Selling Expense                                      81,141                107,107                 294,070                481,718
 General and Administrative Expenses                 280,420                267,658               1,076,820              1,027,657
                                           ------------------     ------------------      ------------------     ------------------
                                                     361,561                374,765               1,370,890              1,509,375
                                           ------------------     ------------------      ------------------     ------------------

(Loss) from Operations                               (64,829)              (241,982)               (236,968)              (135,081)
                                           ------------------     ------------------      ------------------     ------------------

Other Income (Expense)
Recovery of Litigation Expense                             -                      -                       -                 92,755
Interest Expense                                     (12,544)               (27,230)                (40,098)               (77,292)
                                           ------------------     ------------------      ------------------     ------------------
                                                     (12,544)               (27,230)                (40,098)                15,463
                                           ------------------     ------------------      ------------------     ------------------
Income (loss) before Provision for
Income Taxes                                         (77,373)              (269,212)               (277,066)              (119,618)
Provision for Income Taxes                                 -                      -                       -                      -
                                           ------------------     ------------------      ------------------     ------------------


Net Income                                 $         (77,373)     $        (269,212)      $        (277,066)     $        (119,618)
                                           ==================     ==================      ==================     ==================
Basic and Diluted Earnings
   Per Common Share:
Total                                      $           (.00)      $            (.01)      $            (.01)     $             .00
                                           ==================     ==================      ==================     ==================
Weighted Average Common Shares
   Outstanding                                   41,639,712              35,106,145              37,833,941             33,570,589
                                           ==================     ==================      ==================     ==================
</TABLE>

                                       3
<PAGE>

                                APO HEALTH, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE NINE MONTHS ENDED
                       JUNE 30, 2005 AND 2004 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                           2005                2004
                                                                                   ------------------     ------------------

<S>                                                                                        <C>                    <C>
Cash Flow From Operating Activities:
Net Income                                                                         $        (277,066)     $        (119,618)
Adjustments to Reconcile Net Income to
Net Cash Flows from Operating Activities:
Depreciation and Amortization                                                                  4,600                  7,410
Allowance For Doubtful Accounts                                                              (20,000)                20,000
Stock Issued for Services                                                                     40,000                      -
Changes In:
  Accounts Receivable                                                                        364,266                237,647
  Inventory                                                                                  127,132                 64,234
  Other Current Assets                                                                        86,119                   (132)
  Accounts Payable                                                                          (225,576)               (30,731)
  Accrued Compensation                                                                        11,594                (18,581)
  Customer Deposits Payable                                                                   (4,655)               (61,264)
                                                                                   ------------------     ------------------

Cash Flows Provided by Operating Activities                                                  106,414                 98,965
                                                                                   ------------------     ------------------


Cash Flows From Investing Activities:
Notes Receivable                                                                                   -                  4,566
                                                                                   ------------------     ------------------
Cash Flows Provided by Investing Activities                                                        -                  4,566
                                                                                   ------------------     ------------------


Cash Flows from Financing Activities:
Cash Overdraft                                                                                     -                 71,558
Advances from officers, net                                                                        -                 20,000
Net proceeds issuance of common stock                                                              -                 90,000
Proceeds (Payment) on Bank Notes Payable, Net                                               (402,401)              (181,212)
                                                                                    ------------------     ------------------

Cash Flows (used for) Financing Activities                                                  (402,401)                 4,912
                                                                                   ------------------     ------------------

Net (Decrease) in Cash                                                                      (295,987)               103,877

Cash Balances:
Beginning of Period                                                                          574,732                405,153
                                                                                   ------------------     ------------------

End of Period                                                                      $         278,745      $         509,030
                                                                                   ==================     ==================
</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.  Certain information
and footnote  disclosures  normally included in financial statements prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted,  although  the  Company  believes  the  disclosures  that  are made are
adequate to make the  information  presented  not  misleading.  Further,  in the
opinion of the Company's  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 the
Company's Form 10-K containing the Company's audited financial  statements as of
and for the year ended September 30, 2004 filed with the Securities and Exchange
Commission.

The  results of  operations  for the nine  months  ended  June 30,  2005 are not
necessarily  indicative  of results  expected for the entire  fiscal year ending
September 30, 2005.

Note 1 ACCOUNTING POLICIES

Nature of Business and Basis of Consolidation.
APO Health,  Inc.  ("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,  medical and veterinary  professionals and wholesalers in
the United  States,  principally  on the East Coast.  Effective  June 13,  2001,
InternetFinancialCorp.com,  Inc., ("IFAN"),  a Nevada corporation,  which was 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.

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 a loss of $1,048,828 for the year ended
September 30, 2004 and an additional  loss of $277,066 for the nine months ended
June 30, 2005. The Company is in violation of the tangible net worth covenant of
its  lending  agreement  (see note  3).As more  fully  described  in note 7, the
Company is a defendant in two lawsuits with Proctor & Gamble and Alcoa, involved
in the sale of products of those two companies, which unbeknownst to the Company
were  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 the
Company.

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 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.

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 occurs when products are shipped.

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

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

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.

                                       5
<PAGE>

                                APO HEALTH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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.

Note 2 - SUPPLEMENTAL CASH FLOW STATEMENT DISCLOSURES
<TABLE>
<CAPTION>
                                                                                           2005             2004
                                                                                     --------------   -------------
<S>                                                                                      <C>              <C>
Cash paid during the year for Interest                                               $       40,098   $     77,292

Non-cash transaction:
      Common Stock Issued for Professional Fees                                      $       40,000
      Common  Stock issued upon conversion of deferred compensation                          50,000
</TABLE>

Note 3 - BANK NOTES PAYABLE

On October  29,  2002,  the Company  entered  into a  financing  agreement  with
Rosenthal & Rosenthal,  Inc. The financing agreement provided the Company with a
maximum credit facility not to exceed  $3,000,000.  The credit facility has been
amended by mutual  consent and reduced  the maximum  amount of credit  under the
facility to $500,000. The credit facility is collateralized by substantially all
the Company'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% (8.25% as
of March  31,  2005).  This  agreement  is for a period of three  years  through
October 31, 2005 and may be extended on a year to year basis  thereafter  unless
terminated as provided in the agreement.  The credit facility  provides that the
Company maintain certain  financial  covenants.  The Company is currently not in
compliance  with the tangible  net worth  covenant of the  financing  agreement.
Under terms of the agreement,  the lender may call the loan if the Company is in
violation of any restrictive covenant.
<TABLE>
<CAPTION>

Bank Notes Payable are as follows                                 June 30             September 30
                                                                    2005                 2004
                                                              ------------------ ------------------
<S>                                                               <C>                       <C>
Own note borrowing                                            $         206,784  $         609,185
                                                              ================== ==================

Note 4 - INCOME TAXES

Income taxes (benefit) consist of the following:
                                                                     2005                 2004
                                                              ------------------ ------------------
         Current                                              $               -  $               -
         Utilization of net operating loss                                    -                  -
         Deferred                                                             -                  -
                                                              ------------------ ------------------
         Total                                                $               -  $               -
                                                              ================== ==================

A reconciliation of income taxes at the federal statutory income tax rate to
total income taxes is as follows:
                                                                    2005                     2004
                                                              ------------------ ------------------
         Computed at federal statutory rate of 34%            $               -  $               -
         State income tax                                                     -                  -
         Utilization of net operating loss                                    -                  -
                                                              ------------------ ------------------
         Total                                                $               -  $               -
                                                              ------------------ ------------------
</TABLE>


                                       6
<PAGE>


                                 APO HEALTH INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 - INCOME TAXES (continued)

The components of deferred taxes are as follows:
<TABLE>
<CAPTION>
                                                                   June 30,          September 30,
                                                                    2005                 2004
                                                              ------------------ ------------------
<S>                                                                   <C>                <C>
         Deferred tax assets
            Allowance for doubtful accounts                   $         144,000  $         152,000
            Depreciation                                                 21,000             21,250
            Deferred Compensation                                        20,000             50,400
            Net operating loss carryover                                574,000            404,025
            Valuation allowance                                        (759,000)          (627,675)
                                                              ------------------ ------------------
         Total Deferred tax asset                             $               -  $               -
                                                              ================== ==================
</TABLE>

The Company has a net operating  loss carryover of  approximately  $1,139,000 to
offset future  taxable  income.  The carryover  expires at various times through
2024. The Company has offset the deferred tax asset by a valuation  allowance of
$759,000, since it cannot be determined more likely than not whether the Company
will be able to utilize such net operating loss carryover.

Note 5 - COMMON STOCK

On April 1, 2005, the Company  issued a total of 4,166,667  shares of restricted
common stock to Dr. Jan Stahl, CEO of the Company in exchange for the conversion
of $50,000 of deferred compensation.

On March 8, 2005 and March 29,  2005,  the Company  issued a total of  1,700,000
shares of common stock to  professionals  and consultants for services  rendered
valued at $34,000.

In  October,  2004,  the  Company  issued  100,000  shares of common  stock to a
professional for services rendered valued at $6,000.

On January 29, 2004, the Company  entered into an Investment  Banking  agreement
with Sloan  Securities  Corp.  ("SSC") to provide  financing  and  advisory  and
investment  banking  services  for a  period  of one  year  from the date of the
agreement.  In  consideration  for  these  services,  the  Company  issued to an
affiliate  of SSC  2,000,000  share of  restricted  common  stock in the Company
valued at $120,000.

In January of 2004,  the Company  authorized  the  creation of  3,500,000  bonus
compensation warrants exercisable at $0.025 per share, for an exercise period of
three years,  to be issued to designated  recipients  approved by the Board.  On
January 9, 2004, the Board  authorized the issuance of 2,300,000 of compensation
warrants to various officers and professionals for services rendered.

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 issued.

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.

Note 6 - 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

                                       7
<PAGE>
                                APO HEALTH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2004, 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 $34,351 and
$39,581 for the six month periods ended June 30, 2005 and 2004, respectively.

Future minimum lease payments are as follows:
For the years ended September 30,
                  2005                                      $     19,325
                  2006                                            70,571
                  2007                                            71,225
                  2008                                            75,825
                  2009                                            79,405
           After  2009                                            13,337
                                                            -------------
                 Total                                      $    329,688
                                                            -------------

Note 7 - COMMITMENTS AND CONTINGENCIES

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 the present time, the Company is self-insured
for product liability claims.

Litigation
----------

On or about July 7, 2004,  APO Health,  Inc.  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 were 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 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. In addition,  P &G is seeking damages of
$10,000,000.  Outside  counsel is unable to  predict  at this time the  ultimate
outcome of the  litigation  or the extent,  if any of the effect on the Company.
The Company believes it has meritorious defenses and is vigorously defending its
position.

On or about  December 3, 2004,  APO Health,  Inc.  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, some non Alcoa 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.  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. In addition, P &G is seeking damages of $10,000,000. Outside counsel is
unable to predict at this time the  ultimate  outcome of the  litigation  or the
extent,  if any of the  effect  on the  Company.  The  Company  believes  it has
meritorious defenses and is vigorously defending its position.

                                       8
<PAGE>

                                APO HEALTH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

One of the Company'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. The Company believes the claim is without merit
and will vigorously defend its position.

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 on September 30, 2004, and shall be automatically
renewed for  successive  periods of one year unless  either party gives  written
notice to terminate the agreement.

Note 8 - 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 June 30, 2005,
the Company had  $310,987  on deposit,  in excess of the  $100,000 in each bank,
which is insured under federal law.


                                       9
<PAGE>
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
within the meaning of the Private Securities Litigation Reform Act of 1995. This
Act  provides  a "safe  harbor"  for  forward-looking  statements  to  encourage
companies to provide  prospective  information  about themselves so long as they
identify these statements as forward looking and provide  meaningful  cautionary
statements  identifying  important  factors that could cause  actual  results to
differ from the  projected  results.  All  statements  other than  statements of
historical  fact made in this 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 June 30, 2005 was $3,879,566, a decrease
of  $4,325,101  or 52.7%,  compared  to the three  months  ended June 30,  2004.
Revenue for the nine months ended June 30, 2005 was  $12,486,146,  a decrease of
$16,962,051,  or 57.5%,  compared to the nine months  ended June 30,  2004.  The
Company  lost  three  wholesale  customers  with  total  sales of  approximately
$3,850,000  during the nine month period  ended June 30, 2004 and  approximately
$1,250,000  during the three month  period  ended June 30, 2004 due to the Alcoa
and  Proctor  &  Gamble  litigation.   In  addition,   revenue  was  reduced  by
approximately $13,500,000 for the nine months ended June 30, 2005 and $4,500,000
for the three months ended June 30, 2005 which is attributable to a reduction in
the sale of health, beauty aids and other pharmaceutical  products acquired from
European  vendors as margins on these  products  decreased due to the decline in
the value of the U.S. Dollar against both the Euro and the British Pound.  Where
product was  available for sale but the margins were such that the Company would
not be able to generate a profit, the Company declined to sell those products.

     As a result  of the  decrease  in  wholesale  revenue,  cost of goods  sold
associated with those sales also declined proportionately. Cost of sales for the
three months ended June 30, 2005 was  $3,582,834,  a decrease of $4,489,050,  or
55.6%  compared to the three months  ended June 30, 2004.  The cost of sales for
the nine months ended June 30, 2005 was $11,352,224,  a decrease of $16,720,869,
or 59.6%, compared to the nine months ended June 30, 2004.

     Gross profit for the three months ended June 30, 2005 was $269,732 compared
to $132,783 for the three  months ended June 30, 2004.  The gross profit for the
nine months ended June 30, 2005 was  $1,133,922  compared to $1,374,294  for the
nine months ended June 30, 2004.  Gross profit as a percentage of sales was 7.6%
for the three months  ended June 30, 2005  compared to 1.6% for the three months
ended June 30, 2004. Gross profit as a percentage of sales was 9.1% for the nine
months  ended June 30, 2005  compared to 4.6% for the nine months ended June 30,
2004.  The increase in gross profit as a percentage  of sales is a result of the
Company's  change in strategy away from selling very low gross profit items. The
Company is in the  process of  preparing  a new  medical  catalogue  for medical
supplies. It anticipates that this new catalogue will aid in the increase of the
sale of medical supplies which have higher gross profit margins than many of the
other products and increase the overall gross profit margin of the Company.

     Selling  expenses for the three months ended June 30, 2005 were $81,141,  a
decrease of $25,966, or 24.2%,  compared to selling expenses of $107,107 for the
three  months ended June 30,  2004.  Selling  expenses for the nine months ended
June 30, 2005 were  $294,070,  a decrease  of  $187,648,  or 39.0%,  compared to
$481,718 for the nine months ended June 30, 2004. As a direct  relationship with
the decrease in wholesale  revenue,  the Company  reduced costs  associated with
that revenue for the nine months ended June 30, 2005 as follows:  freight  costs
decreased by $78,101,  commissions  decreased by $68,839,  and  advertising  and
related costs decreased by approximately $39,246. Changes in other selling costs
were immaterial.  Advertising costs will increase when the Company completes and
distributes its new medical supply catalogue.

     General and  administrative  expenses  for the three  months ended June 30,
2005 were $280,420 compared to general and  administrative  expenses of $267,658
for the three months ended June 30, 2004.  General and  administrative  expenses
for the nine months ended June 30, 2005 were  $1,076,820  an increase of $49,163
or 4.8%  compared  to the nine  months  ended  June 30,  2004.  There were three
categories  where general and  administrative  expenses  increased from the nine
months  ended  June 30,  2004.  Bad  debt  expenses  increased  by  $101,214  as
additional  reserves  were  taken due to write off of  receivables  against  the

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<PAGE>
allowance of approximately $121,000 with an increase in the reserve of $125,000,
consulting  increased by $8,000 (one consulting agreement ended in January 2005)
and legal  expenses  related to the Alcoa and  Proctor & Gamble  litigation  was
approximately  $85,000.  These  three  categories  accounted  for  increases  of
approximately $194,000.  Compensation and related employee expenses decreased by
approximately  $75,500 as the Company  reduced the number of full time personnel
by two persons.  Other professional fees decreased by approximately  $15,000 and
bank  fees  decreased  by  approximately  $15,000  as the  Company  reduced  the
availability  on the  line of  credit.  All  other  general  and  administrative
expenses decreased by approximately $38,000.

     Interest  expense  for the three  months  ended June 30,  2005 was  $12,544
compared to  interest  expense of $27,230  for the three  months  ended June 30,
2004.  Interest  expense for the nine months ended June 30, 2005 was $40,098,  a
decrease of $37,194 from the nine month period ended June 30, 2004.  The Company
has reduced the average amount of borrowing on its line of credit with Rosenthal
& Rosenthal, Inc. by approximately 50% and the monthly minimum interest expenses
charges have been reduced by $4,000.

Financial Condition, Liquidity and Capital Resources
----------------------------------------------------

     As of June 30, 2005,  the Company had net working  capital of  $214,296,  a
decrease of $182,466  from net working  capital of $396,762  from  September 30,
2004 as a result  of the net loss  during  the  period.  At June 30,  2005,  the
Company has a $500,000  credit facility of which  approximately  $285,000 is not
being used. At June 30, 2005, the Company is not in compliance with the tangible
net worth covenant of the financing agreement. Under terms of the agreement, the
lender  may call the loan if the  Company  is in  violation  of any  restrictive
covenant.

     Exclusive of the increase in bad debt expense,  legal  expenses  related to
the Alcoa and  Proctor & Gamble  litigations  and the  expiration  of a one year
consulting  agreement in January 2004, the Company reduced selling,  general and
administrative  expenses by approximately  $350,000 during the nine months ended
June 30, 2005.  The Company has also increased the gross profit margin from 4.6%
to 9.1%.

     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 a loss of $1,048,828 for
the year ended  September  30, 2004 and an  additional  loss of $277,066 for the
nine months ended June 30, 2005. The Company is in violation of the tangible net
worth covenant of its lending  agreement ( see note 3 ).As more fully  described
in note 7, the Company is a defendant in two lawsuits  with Proctor & Gamble and
Alcoa,  involved  in  the  sale  of  products  of  those  two  companies,  which
unbeknownst  to the Company  were  counterfeit  products.  It is not possible to
predict at this time the outcome of the  litigation  or the extent of the effect
on the Company.

     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  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.

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.

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<PAGE>

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,  the  Company's  financial  results  could be
affected by factors such as changes in foreign  currency  exchange rates or weak
economic conditions in foreign markets. The Company has virtually eliminated its
purchases  from Europe as the cost of products have increased  substantially  as
the value of the U.S.  Dollar has declined  substantially  against both the Euro
and the British Pound.

     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 March 31, 2005, the Company had $310,987 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  internal  control over  financial
reporting.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

     On or about July 7, 2004,  APO Health,  Inc.  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 were 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 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. In addition,  P &G is seeking damages of
$10,000,000.  The Company believes it has meritorious defenses and is vigorously
defending its position.

     On or about  December  3, 2004,  APO  Health,  Inc.  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,  some non Alcoa
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.  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. In addition,  P &G is seeking damages of
$10,000,000.  The Company believes it has meritorious defenses and is vigorously
defending its position.

     One of the Company'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

                                       12
<PAGE>
sold to Allou  Distributors Inc. The Company believes the claim is without merit
and will vigorously defend its position.

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

     On April 1,  2005,  the  Company  issued a total  of  4,166,667  shares  of
restricted  common stock to Dr. Jan Stahl, CEO of the Company,  as consideration
for $50,000 of deferred  executive  compensation.  This issuance was exempt from
registration  requirements  under Section 4(2) of the Securities Act of 1933, as
amended.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         None.

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

         None.

ITEM 5.  OTHER INFORMATION.

     On April 1,  2005,  the  Company  issued a total  of  4,166,667  shares  of
restricted  common stock to Dr. Jan Stahl, CEO of the Company,  as consideration
for $50,000 of deferred  executive  compensation.  This issuance was exempt from
registration  requirements  under Section 4(2) of the Securities Act of 1933, as
amended.

ITEM 6.  EXHIBITS.

Exhibit
Number                             Description
------- ------------------------------------------------------------------------
31.1    Certification  by Chief Executive  Officer and Chief Financial  Officer,
        required  by Rule  13a-14(a)  or Rule  15d-14(a)  of the  Exchange  Act,
        promulgated  pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.
32.1    Certification  by Chief Executive  Officer and Chief Financial  Officer,
        required by Rule  13a-14(b)  or Rule  15d-14(b)  of the Exchange Act and
        Section  1350 of  Chapter  63 of Title  18 of the  United  States  Code,
        promulgated pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


                                       13
<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:    August 19, 2005                            By:/s/ Jan Stahl
                                                       --------------------
                                                    Dr. Jan Stahl, Chairman
                                                    Chief Executive Officer,
                                                    Principal Financial Officer,
                                                    Principal Accounting
                                                    Officer and Secretary




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