UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                   FORM 10-QSB

                Quarterly Report Pursuant to Section 13 or 15(d)
                     Of the Securities Exchange Act of 1934

     For the quarter ended September 30, 2003 Commission File Number 0-21079

                                PHLO CORPORATION


        (Exact name of small business issuer as specified in its charter)



              Delaware                                            11-3314168
  (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)

          6001-21 Argyle Forest Blvd.
                  PMB #117
         Jacksonville, Florida                                  32244-5705
(Address of principal executive offices)                        (Zip code)


       Registrant's telephone number, including area code: (973) 691-9012

The number of shares outstanding of the issuer's common stock as of April 15,
2005, is 233,418,542.

<PAGE>

                        PHLO CORPORATION AND SUBSIDIARIES

                     Quarterly Report on Form 10-QSB for the
                   Quarterly Period Ending September 30, 2003

                                Table of Contents


                                                                    Page to Page
                                                                    ------------
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheet as of
            September 30, 2003(Unaudited)                               3

         Condensed Consolidated Statements of Operations for the
         three and six months ended September 30, 2003 and 2002
         (Unaudited)                                                    4

         Condensed Consolidated Statements of Cash Flows for the
         six months ended September 30, 2003 and 2002
          (Unaudited) 5

         Notes to Condensed Consolidated Financial Statements
         (Unaudited)                                                    6

Item 2.  Managements' Discussion and Analysis or Plan
         of Operation                                                   13

Item 3.  Controls and Procedures                                        15

PART II.  OTHER INFORMATION                                             15

Item 1.  Legal Proceedings

Item 2.  Changes in Securities

Item 3.  Defaults Upon Senior Securities

Item 4.  Submission of Matters to a Vote of Security Holders
Item 5.  Other Information

Item 6.  Exhibits


Signature

Certifications


                                        2

<PAGE>

                        PHLO CORPORATION AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                    September 30, 2003

                                         ASSETS
<TABLE>
<CAPTION>
<S>                                                                           <C>
    CURRENT ASSETS
       Cash                                                                   $     81,376
       Inventory, at cost                                                          204,252
       Prepaid expense                                                              10,000
                                                                              ------------
               Total Current Assets                                                295,628

    PROPERTY PLANT & EQUIPMENT, Net                                                  1,133
                                                                              ------------

    TOTAL ASSETS                                                              $    296,761
                                                                              ============
                        LIABILITIES AND STOCKHOLDERS' DEFICIENCY

    CURRENT LIABILITIES

    Accounts payable                                                          $    889,443
    Accrued expenses and taxes                                                   1,879,216
    Notes payable (Note C)                                                         591,500
    Revolving credit line (Note B)                                                  99,717
    Deferred revenue                                                                12,025
                                                                              ------------

               Total Current Liabilities                                         3,471,901

    COMMITMENTS AND CONTINGENCIES

    STOCKHOLDERS' DEFICIENCY (Note D)

Preferred stock 15,000,000 shares authorized:
Series A convertible stock, $0.0001 par value, 500,000 shares                           50
authorized, issued and outstanding (Liquidation preferences $100,000)
Series B non-convertible stock, none issued and outstanding                             --
Series C preferred convertible stock, $0.0001 par value 3,000,000
authorized, 1,333,304 shares outstanding (Liquidation preference $13,333)              133
Series C preferred convertible stock, 15,298 shares subscribed                           1
Common stock, $0.0001 par value, 250,000,000 shares authorized
120,695,275 shares issued and outstanding                                           12,069
Common stock, $0.0001 par value, 12,395,534 shares subscribed                        1,238
Additional paid-in capital                                                       9,216,319
Unearned Compensation                                                              (40,066)
Accumulated deficit                                                            (12,364,884)
                                                                              ------------
           Total Stockholders' Deficiency                                       (3,175,140)
                                                                              ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                $    296,761
                                                                              ============
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                        3

<PAGE>

                        PHLO CORPORATION AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
         For the Three and Six Months Ended September 30, 2003 and 2002



<TABLE>
<CAPTION>
                                                Three Months      Three Months       Six Months        Six Months
                                               --------------------------------------------------------------------
                                                    2003              2002              2003              2002
                                               --------------    --------------    --------------    --------------
<S>                                            <C>               <C>               <C>               <C>
REVENUES                                       $      327,704    $       21,773    $      422,449    $       39,191

COST OF REVENUES                                           --            62,010                --            95,159
                                               --------------    --------------    --------------    --------------

   GROSS (LOSS) PROFIT                                327,704           (40,237)          422,449           (55,968)

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES          458,480           404,130           705,343           660,328
                                               --------------    --------------    --------------    --------------

   OPERATING (LOSS)                                  (130,776)         (444,367)         (282,894)         (716,296)
                                               --------------    --------------    --------------    --------------

OTHER INCOME (EXPENSES)
  Interest expense                                    (12,748)          (37,036)          (38,473)          (69,046)
                                               --------------    --------------    --------------    --------------

   TOTAL OTHER (EXPENSES) INCOME                      (12,748)          (37,036)          (38,473)          (69,046)
                                               --------------    --------------    --------------    --------------

   LOSS BEFORE INCOME TAXES                          (143,524)         (481,403)         (321,367)         (785,342)

INCOME TAXES                                               --                --                --                --
                                               --------------    --------------    --------------    --------------

NET (LOSS)                                     $     (143,524)   $     (481,403)   $     (321,367)   $     (785,342)
                                               ==============    ==============    ==============    ==============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING        110,139,720        67,791,210        70,036,702        63,590,856

                                               ==============    ==============    ==============    ==============

NET (LOSS) PER SHARE (BASIC AND DILUTED)       $        (0.00)   $        (0.01)   $        (0.00)   $        (0.01)
                                               ==============    ==============    ==============    ==============
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       4
<PAGE>

                        PHLO CORPORATION AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
       For the Six Months Ended September 30, 2003, and September 30, 2002


<TABLE>
<CAPTION>
                                                           2003            2002
                                                       ------------    ------------
<S>                                                    <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss)                                             $   (321,367)   $   (785,342)

Adjustments to reconcile net loss to net cash used
  in operating activities:
Stock-based compensation - amortization of
  deferred compensation                                      43,432          91,134
Common stock reimbursement to shareholder                     3,551              --
Common stock issued for services                             15,000              --

Depreciation and amortization                                   288           9,612
Changes in operating assets and liabilities:
         Accounts receivable                                     --           9,093
         Inventory                                          (33,123)         88,689
         Other current assets                               (10,000)         (1,669)
         Security deposits                                       --          47,695
         Accounts payable                                   249,861           1,485
         Accrued expenses and taxes                         103,331         265,487
                                                       ----------------------------
NET CASH PROVIDED BY(USED IN) OPERATING ACTIVITIES           50,973        (273,816)
                                                       ----------------------------


CASH FLOW FROM INVESTING ACTIVITIES                              --              --
                                                       ----------------------------

CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from revolving note payable                             --         150,000
Proceeds from issuance of equity securities                      --         104,980
Proceeds from issuance of capital stock subscription             --          44,074
                                                       ----------------------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                        --         299,054
                                                       ----------------------------
NET INCREASE IN CASH                                   $     50,973    $     25,238

Cash and cash equivalents, beginning of the period           30,403          93,799
                                                       ----------------------------
Cash and cash equivalents, end of the period           $     81,376    $    119,037
                                                       ============================

Supplemental Disclosures of Cash Flow Information:
  Cash paid during the period for interest             $         --    $         --
Income taxes paid                                                --              --
Amortization of deferred compensation                        43,432          10,634
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       5
<PAGE>

                        PHLO CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2003

NOTE A - SUMMARY OF ACCOUNTING POLICIES

General

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information. Accordingly, they do
not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary in order to make the
financial statements not misleading have been included. Results for the three
and six months ended September 30, 2003 are not necessarily indicative of the
results that may be expected for the fiscal year ending March 31, 2004. For
further information refer to the consolidated financial statements and footnotes
thereto included in the Phlo Corporation and Subsidiaries' annual report on Form
10-KSB for the year ended March 31, 2003.

Business and Basis of Presentation

Phlo Corporation, a Delaware corporation incorporated in December 1995, and its
affiliates (hereinafter collectively referred to as the "Company") is a
manufacturer of beverages and liquids containing patented and patent-pending
biotechnologies. The Company sells its products to distributors, which offer the
products for sale in high volume chain stores, such as supermarkets and drug and
convenience stores. Additionally, the Company develops liquids with patented or
patent-pending payloads for the U.S. Military, agencies of the United Nations,
and humanitarian organizations. The Company is positioned as a biotechnology
company which is using high volume distribution networks to commercialize its
technology. Central to the Company's strategic development plan is the
development, acquisition and/or exclusive licensing of proprietary technology,
nutraceutical, biotechnological and/or pharmaceutical in nature, which the
Company initially plans to convey to consumers through the use of liquid
formulations and beverage systems. The Company is focusing its technology
acquisition efforts on those technologies related to preventing or ameliorating
cancer, reducing the effects of aging, and enhancing cognition and personal
performance. The Company is currently conducting discussions with major
companies related to the distribution of the Company's products or joint
ventures pertaining to the Company's technology and products related thereto.

The consolidated financial statements include the accounts of the Company and
its majority owned subsidiaries and affiliates.

Stock Based Compensation

In December 2002, the Financial Accounting Standards Board (FASB) issued SFAS
No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure-an
amendment of SFAS 123". This statement amends SFAS No. 123, "Accounting for
Stock-Based Compensation," to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, this statement amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results.

The Company has chosen to continue to account for stock-based compensation using
the intrinsic value method prescribed in APB Opinion No. 25 and related
interpretations. Accordingly, compensation expense for stock options is measured
as the excess, if any, of the fair market value of the Company's stock at the
date of the grant over the exercise price of the related option. The Company has
adopted the annual disclosure provisions of SFAS No. 148 in its financial
reports for the year ended March 31, 2003 and will adopt the interim disclosure
provisions for its financial reports for the subsequent periods. The Company
does not have any awards of stock-based employee compensation issued and
outstanding at September 30, 2003.

New Accounting Pronouncements

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs-- an amendment
of ARB No. 43, Chapter 4". This Statement amends the guidance in ARB No. 43,
Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts
of idle facility expense, freight, handling costs, and wasted material
(spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that ". . .
under some circumstances, items such as idle facility expense, excessive
spoilage, double freight, and re-handling costs may be so abnormal as to require
treatment as current period charges. . . ." This Statement requires that those
items be recognized as current-period charges regardless of whether they meet
the criterion of "so abnormal." In addition, this Statement requires that
allocation of fixed production overheads to the costs of conversion be based on
the normal capacity of the production facilities. This Statement is effective
for inventory costs incurred during fiscal years beginning after June 15, 2005.
Management does not believe the adoption of this Statement will have any
immediate material impact on the Company.


In December 2004, the FASB issued SFAS No.152, "Accounting for Real Estate
Time-Sharing Transactions--an amendment of FASB Statements No. 66 and 67" ("SFAS
152"). This Statement amends FASB Statement No. 66, Accounting for Sales of Real
Estate, to reference


                                       6
<PAGE>

                        PHLO CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2003

NOTE A - SUMMARY OF ACCOUNTING POLICIES (Continued)

New Accounting Pronouncements

the financial accounting and reporting guidance for real estate time-sharing
transactions that is provided in AICPA Statement of Position (SOP) 04-2,
Accounting for Real Estate Time-Sharing Transactions. This Statement also amends
FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of
Real Estate Projects, to state that the guidance for (a) incidental operations
and (b) costs incurred to sell real estate projects does not apply to real
estate time-sharing transactions. The accounting for those operations and costs
is subject to the guidance in SOP 04-2. This Statement is effective for
financial statements for fiscal years beginning after June 15, 2005, with
earlier application encouraged. The Company does not anticipate that the
implementation of this standard will have a material impact on its financial
position, results of operations or cash flows.


On December 16, 2004, the FASB published SFAS No. 123 (Revised 2004),
"Share-Based Payment" ("SFAS 123R"). SFAS 123R requires that compensation cost
related to share-based payment transactions be recognized in the financial
statements. Share-based payment transactions within the scope of SFAS 123R
include stock options, restricted stock plans, performance-based awards, stock
appreciation rights, and employee share purchase plans. The provisions of SFAS
123R are effective as of the first interim period that begins after June 15,
2005. Accordingly, the Company will implement the revised standard in the third
quarter of fiscal year 2005. Currently, the Company accounts for its share-based
payment transactions under the provisions of APB 25, which does not necessarily
require the recognition of compensation cost in the financial statements.
Management is assessing the implications of this revised standard, which may
materially impact the Company's results of operations in the third quarter of
fiscal year 2005 and thereafter.


On December 16, 2004, FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary
Transactions" (" SFAS 153"). This statement amends APB Opinion 29 to eliminate
the exception for nonmonetary exchanges of similar productive assets and
replaces it with a general exception for exchanges of nonmonetary assets that do
not have commercial substance. Under SFAS 153, if a nonmonetary exchange of
similar productive assets meets a commercial-substance criterion and fair value
is determinable, the transaction must be accounted for at fair value resulting
in recognition of any gain or loss. SFAS 153 is effective for nonmonetary
transactions in fiscal periods that begin after June 15, 2005. The Company does
not anticipate that the implementation of this standard will have a material
impact on its financial position, results of operations or cash flows.


Reclassifications

Certain reclassifications have been made in prior year's financial statements to
conform to classifications used in the current year.

NOTE B - REVOLVING CREDIT FACILITY

In June, 2002, the Company closed a revolving credit facility with a one-year
term which provides for advances of up to a maximum principal amount of
$250,000, at the option of the lender, at an interest rate of 10% per annum,
with each advance payable within 30 days. An initial advance was made in the
amount of $150,000 and, in February 2003, a second advance was made in the
amount of $70,000. Repayment of advances under the facility and a fee of
$150,000 charged by the lender are secured by the Company's assets and are
guaranteed by two officers of the Company. In connection with securing the
repayment of the two advances under this facility, the Company issued a total of
11,700,000 shares of Common Stock. The Company did not repay the advances by the
maturity date. As a result thereof, the lender has exercised its rights provided
by the loan documents to sell shares of stock that were pledged as collateral
for the repayment of advances pursuant to the credit facility. As of September
30, 2003, the sale of collateral has reduced the outstanding principal to
$99,717 (see Note G-Subsequent Events).

NOTE C - NOTES PAYABLE

Notes payable as of September 30, 2003 consist of the following:

<TABLE>
<CAPTION>
<S>                                                                                 <C>
Note payable with interest rate of 15% per annum. The note matured on May, 2003.
The holder has agreed to extend the maturity date of the note to June 30, 2006.
                                                                                    $ 80,000

Note payable with interest at a rate of 10%. The note matured on December 31,
2000, when principal and unpaid interest were due. In consideration of this loan
and two prior bridge loans, the Company agreed to issue shares of the Company's
common and convertible preferred stock to the holder representing approximately
200,000 shares of common stock on a fully converted basis. The holder has agreed
to extend the maturity date of the note to June 30, 2006.                            104,000
</TABLE>


                                       7
<PAGE>

                        PHLO CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2003

NOTE C - NOTES PAYABLE (Continued)

<TABLE>
<CAPTION>
<S>                                                                                     <C>
Note payable in the original principal amount of $25,000 with interest at a rate
of 10% per annum. The Note matured on July 2, 1999, when principal and unpaid
interest was due. The note is currently in default, although partial payment has
been made subsequent to the maturity date. No action has been taken against the
Company to enforce the note. In connection with the note, the Company issued a
warrant to purchase 5,000 shares of common stock at an exercise price of $0.04
per share.                                                                              17,500

Note payable with interest accruing at a rate of 10%. Principal and interest
were due in February 2001. In conjunction with this financing, the Company
issued a warrant to purchase 200,000 shares of common stock at a exercise price
of $0.50 per share. The holder agreed to extend the maturity date of the note to
June 30, 2006.                                                                         100,000

Note payable with interest at a rate of 10% per annum. Principal and interest
were due in November 2000. In conjunction with this financing, the Company
issued a warrant to purchase 300,000 shares of common stock at a exercise price
of $0.50 per share. The Company, at its option, may pay the Note in common stock
or equivalent. The Company has notified the holder that it has elected to pay
the principal and interest due under the note by the issuance of 136,612 shares
of common stock.                                                                       150,000

Note payable with interest accruing at a rate of 10% per annum. Principal and
interest were due in June 2001. In conjunction with this financing, a warrant to
purchase 50,000 shares of common stock at an exercise price of $0.50 per share
is issuable to this holder. The note holder has agreed to extend the maturity
date of the note to June 30, 2006 and in connection therewith, the Company has
agreed to issue a warrant to purchase 25,000 shares of common $50,000 stock at
an exercise price of $0.50 per share.                                                   50,000

Note payable in the original principal amount of $100,000, with an interest rate
of 10% per annum. Principal and interest were due in July 2001. $50,000 of the
loan was repaid in May, 2001. In conjunction with this financing, a warrant to
purchase 100,000 shares of common stock at an exercise price of $0.50 per share
is issuable to the holder. An additional warrant to purchase 12,500 shares of
the Common Stock at the same exercise price is issuable as a result of the
Company's exercising its option to extend to October 2001 the maturity date of
the note with respect to $50,000 of principal and all of the interest payable
pursuant to the note. The holder has agreed to extend the maturity date of the
note to June 30, 2006.                                                                  50,000

In April, 2001, the Company was loaned $40,000. A promissory note has not yet
been issued, as that amount was only a partial funding of the transaction. The
note will provide an interest rate of 10% and a term of 120 days. A warrant will
be issuable in conjunction with this financing, however, the amount of shares of
common stock purchasable pursuant to the warrant will be determined once the
full amount of the financing is established.                                            40,000

                                                                                     ---------
  Total                                                                              $ 591,500
  Less: current portion                                                               (591,500)
                                                                                     ---------
  Long-term portion                                                                  $      --
                                                                                     =========
</TABLE>


NOTE D - CAPITAL STOCK

The Company has authorized 15,000,000 shares of preferred stock, with 500,000
shares designated as Series A convertible preferred stock with par value of
$.0001 per share; 500,000 shares designated as Series B non-convertible
preferred stock with par value of $0.0001 per share; and 3,000,000 shares
designated as Series C convertible preferred stock with par value of $.0001 per
share. The Company also has authorized 250,000,000 shares of common stock with
par value $0.0001 per share. As of September 30, 2003, the Company has 500,000
shares of Series A convertible preferred stock, 1,333,304 shares of Series C
convertible preferred stock, and 120,695,275 shares of common stock issued and
outstanding. The Company has no Series B non-convertible preferred stock issued
and outstanding at September 30, 2003.

In April, 2003, the Company issued 66,667 shares of Common Stock to fulfill its
obligations pursuant to an existing agreement.

In April through June, 2003, the Company issued 938,761 shares of Common Stock
which were previously subscribed.

In the quarter ended June 30, 2003, the Company issued 9,946,667 shares of
Common Stock in order to fulfill its obligations pursuant to an existing
agreement.


                                       8
<PAGE>

                        PHLO CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2003


NOTE D - CAPITAL STOCK (continued)

In July, 2003, the Company issued 666,667 shares of Common Stock in order to
fulfill its obligations pursuant to an agreement.

In the quarter ended September 30, 2003, the Company issued 25,333,333 shares of
Common Stock in order to fulfill its obligations pursuant to an existing
agreement.


NOTE E - STOCK OPTIONS AND WARRANTS

Warrants

The following table summarizes the changes in warrants outstanding and the
related prices for the shares of the Company's common stock issued to
non-employees of the Company. These warrants were granted in lieu of cash
compensation for services performed or non-compensatory warrants in connection
with financing activities.

<TABLE>
<CAPTION>
                              Warrants Outstanding                                 Warrants Exercisable
                              --------------------                                 --------------------

                                         Weighted Average       Weighed                         Weighted
                             Number    Remaining Contractual     Average          Number        Average
    Exercise Prices       Outstanding      Life (Years)      Exercise Price   Exercisable   Exercise Price
    ---------------       -----------      ------------      --------------    -----------   --------------
    <S>                   <C>           <C>                  <C>               <C>           <C>
          $    2.00            50,000           3.00               $ 2.00            50,000        $   2.00
          0.10~0.50         2,841,619           4.00                 0.34         2,846,619            0.34
               0.09         1,000,000           7.00                 0.09         1,000,000            0.09
         0.04-0.058         2,605,000           5.00                0.058         2,600,000           0.058
               0.03        33,629,487           5.00                 0.03        33,629,487            0.03
                           ----------           ----               ------        ----------       ---------
                           40,126,106           4.98               $ 0.06        40,126,106       $    0.06
                           ==========      =========               ======        ==========       =========
</TABLE>


Transactions involving warrants are summarized as follows:

                                                    Weighted Average
                                 Number of Options  Price Per Share
Outstanding at April 1, 2001
                                       8,291,604    $       0.15
   Granted                            33,426,265            0.04
   Exercised                          (5,870,426)           0.13
   Cancelled or expired                       --              --
                                    ------------    ------------
Outstanding at March 31, 2002         35,847,443    $       0.05
                                    ============    ============

   Granted                             5,280,000            0.06
   Exercised                                  --              --
   Cancelled or expired               (1,001,337)           0.50
                                    ------------    ------------
Outstanding at March 31, 2003         40,126,106    $       0.06
                                    ============    ============

   Granted                                    --              --
   Exercised                                  --              --
   Cancelled or expired
                                    ------------    ------------
Outstanding at September 30, 2003     40,126,106    $       0.06
                                    ============    ============


The Company did not grant any compensatory warrants to non-employees during the
six month periods ended September 30, 2003 and 2002. Amortization of deferred
compensation for previously granted warrants issued in exchange for prepaid
services fees amounted to $43,432 and $10,634 for the six month periods ended
September 30, 2003 and 2002, respectively.


                                       9
<PAGE>

                        PHLO CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2003


NOTE E - STOCK OPTIONS AND WARRANTS (continued)

Stock Options

As of February 19, 2003, the Company had determined that the prior management
did not validly (under the applicable provisions (including Section 157) of the
General Corporation Law of the State of Delaware) issue any of the options to
purchase an aggregate of 1,613,333 shares of common stock which it had
purportedly issued, and that, pursuant to Delaware law, these options are void.
Therefore, the Company has removed such options from its records and shall not
issue any shares of Common stock under such void options.


NOTE F - COMMITMENTS AND CONTINGENCIES

Loan Guarantee

Phlo Corporation is a guarantor of a loan obtained by an unrelated party in
connection with a purchase agreement. In addition, payments of the loan are
secured by the Company's assets. The amount outstanding on the loan at September
30, 2003 was approximately $65,000. Payment of the loan is secured by shares of
common stock owned by the unrelated party. The holder of the loan has initiated
legal action against the primary obligor and Phlo Corporation as guarantor,
claiming outstanding principal, interest and late fees in the aggregate amount
of approximately $105,000. The Company believes that it no longer has any
liability under the guaranty as a result of the actions or inactions of the
lender, including the lender's failure to mitigate its damages by selling
collateral pledged by the primary obligor at a time when the value of such
collateral exceeded all amounts due.


                                       10
<PAGE>

                        PHLO CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2003


NOTE G - SUBSEQUENT EVENTS

Financing

In June, 2004, an additional advance was made under the Company's revolving
credit facility in the amount of $100,000. In conjunction therewith, the Company
issued 2,000,000 shares of Common Stock which serve as collateral to secure
repayment of advances made to the Company under the facility and the meeting of
all obligations of the Company under the facility loan documents. Also in
connection with such advance, the Company granted to the Lender the option,
after the expiration of a period of one year from such advance, to take title to
1,785,715 shares (or any portion thereof) of such stock collateral.

In the quarter ended June 30, 2004, the Company issued 3,500,000 shares of
Common Stock in exchange for the conversion by a debt holder of $46,000 of
accrued interest and the waiver of a financing fee of $150,000 owed in
connection with a prior advance.

In January, 2005, an additional advance was made under the Company's revolving
credit facility in the amount of $40,000. In conjunction therewith, the Company
issued 3,500,000 shares of Common Stock which serve as collateral to secure
repayment of advances made to the Company under the facility and the meeting of
all obligations of the Company under the facility loan documents. Also in
connection with such advance, the Company granted to the Lender the option,
after the expiration of a period of one year from such advance, to take title to
1,212,121 shares (or any portion thereof) of such stock collateral.

In April, 2005, an additional advance was authorized under the Company's
revolving credit facility of up to $150,000, $90,000 of which has been advanced
as of the date of this filing. In conjunction therewith, the Company issued
13,700,000 shares of Common Stock which serve as collateral to secure repayment
of advances made to the Company under the facility and the meeting of all
obligations of the Company under the facility loan documents. Also in connection
with such advance, the Company granted to the Lender the option, after the
expiration of a period of one year from such advance, to take title to 4,600,000
shares (or any portion thereof) of such stock collateral ; agreed to deliver to
the Lender, until such advance has been repaid, net proceeds received by the
Company generated by the sale of its rehydration beverage of up to $50,000; and
agreed to increase the interest rate with respect to the current advance and the
outstanding principal balance on prior advances from 10% to 12%.

Equity

In the quarter ended December 31, 2003, the Company issued 12,000,000 shares of
Common Stock in order to fulfill its obligations pursuant to an existing
agreement.

In the quarter ended March 31, 2004, the Company issued 18,666,667 shares of
Common Stock in order to fulfill its obligations pursuant to an existing
agreement.

In the quarter ended March 31, 2004, in consideration of $505,000, the Company
issued 43,766,667 shares of Common Stock.

In June, 2004, in connection with a financing and in consideration of guarantees
and supplying of shares of stock as collateral in connection with financings,
the Company issued 1,000,300 shares of Common Stock to officers of the Company.

In the quarter ended June 30, 2004, in consideration of $300,000, the Company
agreed to issue 4,400,000 shares of Common Stock, 4,100,000 shares of which have
been issued to date.

In September 2004, the Company issued 3,100,000 shares of Common Stock to a
shareholder upon his conversion of 31,000 shares of Series C Convertible
Preferred Stock.

In October 2004, in consideration of $50,000, the Company agreed to issue
1,333,333 shares of Common Stock, none of which have been issued to date.

In the quarter ended March 31, 2005, in consideration of $35,000, the Company
issued 1,750,000 shares of Common Stock.

In the quarter ended March 31, 2005, in connection with a financing and in
consideration of guarantees and supplying of shares of stock as collateral in
connection with financings, the Company issued 1,750,525 shares of Common Stock
to officers of the Company.


                                       11
<PAGE>

                        PHLO CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2003


NOTE G - SUBSEQUENT EVENTS (continued)

In the quarter ended March 31, 2005, the Company issued 7,500,750 shares of
Common Stock in connection with the provision of services related to the further
development and enhancement of its intellectual property.

 During February through April, 2005, in consideration of $60,000, the Company
issued 4,000,000 shares of Common Stock and agreed to issue warrants to purchase
250,000 shares of Common Stock at an exercise price per share of $0.02.

In April 2005, the Company issued 454,545 shares of Common Stock previously
subscribed.

In April 2005 in consideration for extended payment terms relating to a Company
obligation, the Company agreed to extend the expiration date of a warrant issued
to the obligee from March 2005 to March 2007. Additionally, the number of shares
of the Common Stock purchasable pursuant to the warrant was increased from
200,000 shares to 750,000 shares and the warrant exercise price was reduced from
$0.05 to $0.03.

In the quarter ending June 30, 2005, in connection with a financing and in
consideration of guarantees and supplying of shares of stock as collateral in
connection with financings, the Company issued 6,852,055 shares of Common Stock
to officers of the Company.

Cash Dividend:

In September , 2003, the Company announced that the necessary actions had been
authorized for the payment by one of the operating companies in the Company's
corporate group of a cash dividend to shareholders of the Company in the form of
a pro rata interest in five percent (5%) of any qualifying net revenues
generated by the future sales of the Company's oral rehydration solution
products to the United States Military ("Net Revenue Interest").

The Net Revenue Interest is payable to the beneficial owners of record of the
Company's common stock as the October 17, 2003 (the "Record Date"), on a
quarterly basis, during a period of five years from the initial cash
distribution. The pro rata share of the Net Revenue Interest of the Company's
shareholders shall be based on their beneficial ownership of the Common Stock as
of March 15, 2004 (the "Certificate Exchange Date"). The dividend shall be paid
out of funds that are legally available thereof in accordance with applicable
law.

Shareholders were required to exchange certificates representing their Common
Stock for certificates which indicate their eligibility to receive a pro rata
share of the Net Revenue Interest (the "NRI Certificates") so long as the holder
owns such shares. The Net Revenue Interest is proportionately reduced as and if
shareholders sell or transfer the shares represented by the NRI Certificates.

To date, no cash dividends have been paid, and no assurances can be made with
respect to whether such orders from the United States Military will actually
materialize and with respect to the size or value of any such orders which are
actually received.


                                       12
<PAGE>

Item 2.

PHLO CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

SAFE HARBOR STATEMENT

The Company has made, and may continue to make, various forward-looking
statements with respect to its financial position, business strategy, and plans
and objectives of management. Such forward-looking statements are identified by
the use of forward-looking phrases such as "anticipates", "intends", "expects",
"plans", "believe", "estimates", or words or phrases of similar import. These
forward-looking statements are subject to numerous assumptions, risks, and
uncertainties, and the statements looking forward beyond 2003 are subject to
greater uncertainty because of the increased likelihood of changes in underlying
factors and assumptions. Actual results could differ materially from those
anticipated by the forward-looking statements.

The Company's forward-looking statements represent its judgment only on the
dates such statements are made. By making any forward-looking statements, the
Company assumes no duty to update them to reflect new, changed, or unanticipated
events or circumstances.

OVERVIEW

The following discussion of the Company's financial condition as of September
30, 2003 and results of operations for the three and six months ended September
30, 2003 and 2002 includes Phlo Corporation and its affiliates (collectively,
the "Company") and should be read in conjunction with the condensed consolidated
financial statements and notes appearing elsewhere in this 10-QSB.

RECENT DEVELOPMENTS

The Company was granted a patent on its VEP/PPC technology. The Company has
licensed VEP/PPC on an exclusive basis, worldwide, for all uses including
nutraceutical, biotechnological, and pharmaceutical. The VEP/PPC technology has
been shown to be effective in repairing cell damage in all human tissues and in
protecting cells from damage related to oxidative stress and exposure to toxins.
Cell injury related to oxidative stress is associated with aging, cancer,
emphysema, heart disease, Alzheimer's disease, alcoholic liver disease, and
drug-induced tissue injury. The Company believes that, with clinical trials,
VEP/PPC may have applications for treating such diseases.

During the fiscal quarter ended June 30, 2003, further tests were completed by
some of the world's top scientists in the rehydration field confirming that
Aquis is superior to current solutions formulated in accordance with the World
Health Organization's most advanced specifications. Tests were conducted by a
team of scientists at the International Center for Diarrheal Disease Research,
Bangladesh ("ICDDRB") and demonstrate that the use of Aquis results in superior
and faster absorption of both electrolytes and water as compared with the use of
other leading oral rehydration solutions in the world, including those based on
the World Health Organization's most advanced specifications. These results have
been presented at two of the most highly regarded conferences in the world in
the field of rehydration, the American Gastroenterological Association meeting
in New Orleans, May 15, 2004 and the 10th Asian Conference on Diarrhoeal
Diseases and Nutrition (10th ASCODD) in Dhaka, Bangladesh (December, 7-9 2003).
Additionally, Aquis has a superior taste which is conducive to increased fluid
intake by those drinking it. The ICDDRB pioneered the discovery of oral
rehydration solutions and recently received the Gates Award for Global Health in
recognition of this contribution.

During the fiscal quarter ended September 30, 2003, the Company continued its
marketing efforts with respect to its recently-commercialized Oesis Personal
Performance Spray Products. Oesis Personal Performance Spray Products contain
the Company's patented Vitamin E phosphate/polyenylphosphatidylcholine
("VEP/PPC") preparation and the Company's biologically active micro-particle
delivery system, delivered through 1-ounce sprays. Oesis Spray Products provide
cellular membrane repair and protection from toxicants while creating focus and
mental alertness without the secondary depression. Although, during the prior
quarter, the Company gained approval for distribution of its Oesis Personal
Performance Spray Products throughout the Eastern United States, in a
distribution system involving over 15,000 customers in the United States and
Canada, the Company determined that the technology contained in Oesis would be
better suited for purchasers more concerned about maintaining top levels of
performance for extended periods, such as the U.S. Military.

In May, 2001, Coca-Cola Hondo, Inc. and its affiliates (Coca-Cola Hondo)(which
signed an agreement with the Company in December 2000 to sell the Company's
products in the entire Coca-Cola Hondo distribution territory consisting of
Illinois, Wisconsin, Michigan, and parts of Indiana, Ohio, Pennsylvania and New
York) and Coca-Cola Enterprises (CCE), the master distributor on a global basis
of all of The Coca-Cola Company's beverage products, announced the acquisition
of Coca-Cola Hondo by CCE. On a short-term basis, the Coca-Cola Hondo
acquisition by CCE caused the full execution of the Company's launch of its ZO -
Vital Cell Defense beverage line to be suspended indefinitely, and the Company's
revenue was significantly adversely affected as a result thereof. Initially, CCE
requested that the Company change the packaging of its beverages to plastic
bottles to enable CCE to sell the Company's beverages in all CCE distribution
segments (including in vending machines) and desired to re-launch the beverage
line in the new plastic bottles. Extended negotiations by the Company with CCE
and The Coca-Cola Company (CCC) regarding a joint effort, followed by a major
management overhaul at CCC, prolonged the


                                       13
<PAGE>

delay. CCE has recently requested that the Company propose a joint venture
between the Company and CCC to be sponsored by CCE involving the Company's
beverage technologies and products. The manufacture and sale of ZO will remain
suspended pending this process.
The Company has no assurances that any joint venture will result from such a
proposal or, if such a transaction were consummated with CCC, of the success of
the venture.

On July 10, 2003, the Company announced its intention to spin-off the portion of
its business that involves the development and commercialization of
biotechnologies capable of being incorporated into primarily liquid products
(for oral consumption) and foods, the manufacturing and marketing of products
resulting therefrom, and the licensing or sublicensing of other biotechnologies.
The Company anticipates that the spin-off will be accomplished by the
distribution to Company shareholders of capital stock of an affiliated company.
In connection with its intention, the Company has engaged in efforts regarding
the identification of suitable intellectual property, the evaluation thereof,
and the valuation thereof. The Company still intends to pursue the spin-off
process when the required preliminary steps are completed.

The Company believes that the proposed spin-off will provide greater value to
shareholders by creating two public corporate entities that focus on separate
scientific platforms and businesses. In addition, the spin-off will allow the
management of each company to better focus on the individual businesses of the
respective companies and facilitate the establishment of executive compensation
that is more closely tied to the performance of each individual company's
results. Finally, the Company believes that the proposed spin-off will enhance
each company's access to financing.

RESULTS OF OPERATIONS

The Company's revenues increased by $305,931 to $327,704 for the three month
period ended September 30, 2003, as compared to revenues of $21,773 for the
three month period ended September 30, 2002. For the six month period ended
September 30, 2003, the Company's revenues increased by $383,258 to $422,449, as
compared to revenues of $39,191 for the six month period ended September 30,
2002.There was no cost of sales for the three and six month periods ended
September 30, 2003, as compared to $62,010 and $95,159 for the three and six
month periods ended September 30, 2002, as the revenue generated during the
periods ended September 30, 2003, resulted from the receipt of product
distribution rights fees rather than from product sales. The selling, general
and administrative expenses for the three and six month periods ended September
30, 2003 were $458,480 and $705,343,respectively, as compared to $404,130 and
$660,328 for the comparable three and six month periods during 2002. The
Company's operating loss was $130,776 and $282,894 for the three and six month
periods ended September 30, 2003, a decrease of 71% and 61%, as compared with an
operating loss of $444,367 and $716,296 for the comparable periods ended
September 30, 2002.

The Company focused its efforts during the period on marketing its
newly-commercialized Oesis Personal Performance Spray Products, which were
initially manufactured in March 2003, and in developing its marketing plan and
establishing key marketing relationships with respect to its Aquis Rapid
Response Rehydration beverages.

The Company's proprietary biotechnology base (including its commercialization
and manufacturing capabilities related thereto), the products generated
therefrom, and the access to major markets as a result thereof represent the
core of the Company's business plan, which emphasizes the building of major,
long-term fundamental value. Although the process of executing this business
plan requires significant time, the Company should be able to produce
significantly greater positive operating results and greater shareholder value
than would otherwise be possible.

LIQUIDITY AND CAPITAL RESOURCES

The Company's working capital deficit increased by $217,696 during the six month
period ended September 30, 2003, to $3,1762,273. In addition, the Company's
Stockholders' Deficiency increased from $2,957,156 to $3,175,140 during the same
six month period.

During the fiscal year ending March 31, 2006, the Company is taking steps to
reduce or eliminate the Stockholders' Deficiency and to create a positive
working capital position. The Company believes it is more likely than in prior
years to raise substantial equity funds as a result of its expanded distribution
base, the prospects for national and global distribution of its products and
joint venture activities with major international entities, the existence now of
three product lines containing commercialized biotechnology, the prospects for
numerous additional products based on the Company's biotechnology foundation,
and significantly increased scientific and commercialization capabilities.
Finally, the Company has taken steps to convert certain existing debts into
equity and will continue to pursue these steps.

While the Company has raised sufficient capital to meet its operating
requirements in the past, additional financing is required in order to meet such
operating requirements in the future. The Company can give no assurances that
the necessary funding will be completed or, if completed, on terms favorable to
the Company.

There can be no assurance that management's plans will be realized and
therefore, until the present conditions referred to above are either removed or
substantially improved, there is substantial doubt about the Company's ability
to continue as a going concern.


                                       14
<PAGE>

The Company's independent certified public accountants have stated in their
report included in the Company's March 31, 2003 Form 10-KSB, that the Company
has incurred operating losses in the last two years, and that the Company is
dependent upon management's ability to develop profitable operations. These
factors among others may raise substantial doubt about the Company's ability to
continue as a going concern.

Impact of Inflation

The Company does not believe that inflation has had a material adverse effect on
sales or income during the past periods. Future increases in supplies or other
operating costs could adversely affect the Company's operations; however, the
Company believes it could increase prices to offset increases in costs of goods
sold or other operating costs.


Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.


Item 3.

CONTROLS AND PROCEDURES

Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitations, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file under the
Exchange Act is accumulated and communicated to our management, including our
principal executive and financial officers, as appropriate to allow timely
decisions regarding required disclosure.

Evaluation of Disclosure and Controls and Procedures. As of the end of the
period covered by this Quarterly Report, we conducted an evaluation, under the
supervision and with the participation of our chief executive officer and chief
financial officer, of our disclosure controls and procedures (as defined in
Rules 13a-15(e) of the Exchange Act). Based on this evaluation, our chief
executive officer and chief financial officer concluded that our disclosure
controls and procedures are effective to ensure that information required to be
disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.

Changes in Internal Controls Over Financial Reporting. There was no change in
our internal controls, which are included within disclosure controls and
procedures, during our most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal
controls.

                                     PART II

ITEM 1  LEGAL PROCEEDINGS


                                       15
<PAGE>


The Company is a party to certain legal matters arising in the ordinary course
of business. Management believes the ultimate disposition of these matters and
the matter referred to above will not have a material adverse effect on the
Company's financial position or results of operations.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

In April, 2003, the Company issued an aggregate of 66,667 shares of Common Stock
to fulfill its obligations pursuant to an existing agreement.

In April through June, 2003, the Company issued 938,761 shares of Common Stock
which were previously subscribed.

In the quarter ended June 30, 2003, the Company issued 9,946,667 shares of
Common Stock in order to fulfill its obligations pursuant to an existing
agreement.

In July, 2003, the Company issued 666,667 shares of Common Stock in order to
fulfill its obligations pursuant to an agreement.

In the quarter ended September 30, 2003, the Company issued 25,333,333 shares of
Common Stock in order to fulfill its obligations pursuant to an existing
agreement. These transactions were exempt from registration pursuant to Section
4(2) of the Securities Act of 1933.


ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

            None

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

            (a) None

ITEM 5.     OTHER INFORMATION

            None

ITEM 6.     EXHIBITS


                                   Signatures

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



                                Phlo Corporation


April 22, 2005                         By: /s/ James B. Hovis
                                           -------------------------------------
                                           James B. Hovis
                                           President and Chief Executive Officer


                                       16