##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



FOR THE TRANSITION PERIOD FROM  TO



COMMISSION FILE NUMBER 333-84934



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World Health Alternatives, Inc.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 04-3613924                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|777 Penn Center Boulevard, Suite 111 Pittsburgh, Pennsylvania  |  | 15235                               
|(Address of principal executive offices)                       |  | (Zip Code)                          



412-829-7800

(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  x    No ̈



As of May
10, 2005, there were 46,879,382 shares of the registrants common stock outstanding.



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##### Table of Contents

World Health Alternatives, Inc. and Subsidiaries



INDEX



|                              |  |                                                                                                 |  |   
|----------------------------- |  | ----------------------------------------------------------------------------------------------- |  | --
|                              |  | Page                                                                                           
|Part I. Financial Information |  |                                                                                                
|                              |  |                                                                                                
|Item 1.                       |  | Condensed Consolidated Financial Statements                                                     |  |   
|                              |  |                                                                                                
|(a)                           |  | Balance Sheets as of March 31 (unaudited) and December 31, 2004                                 |  | 3 
|                              |  |                                                                                                
|(b)                           |  | Statements of Operations for the Three Months Ended March 31, 2005 and 2004 (unaudited)         |  | 4 
|                              |  |                                                                                                
|(c)                           |  | Statement Changes in Shareholders Equity for the Three Months Ended March 31, 2005 (unaudited) |  | 5 
|                              |  |                                                                                                
|(d)                           |  | Statements of Cash Flows for the Three Months Ended March 31, 2005 (unaudited)                  |  | 6 
|                              |  |                                                                                                
|(e)                           |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                |  | 7 
|                              |  |                                                                                                
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations           |  | 14
|                              |  |                                                                                                
|Item 3.                       |  | Controls and Procedures                                                                         |  | 18
|                              | 
|Part II. Other Information    |  |                                                                                                
|                              |  |                                                                                                
|Item 1.                       |  | Legal Proceedings                                                                               |  | 18
|                              |  |                                                                                                
|Item 2.                       |  | Changes in Securities and Small Business Issuer Purchases of Equity Securities                  |  | 19
|                              |  |                                                                                                
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                |  | 20
|                              | 
|Signature                     |  | 21                                                                                             



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##### Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

World Health Alternatives, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets



|                                                                                                                                                                         |  |                           |             |   |                     |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------- | ----------- | - | ------------------- | - | ----------- | -
|                                                                                                                                                                         |  | March 31, 2005(Unaudited) |             |   | December 31, 2004 * |  
|ASSETS                                                                                                                                                                   |  |                           |             |   |                     |   |             |  
|Current assets:                                                                                                                                                          |  |                           |             |   |                     |   |             |  
|Cash                                                                                                                                                                     |  | $                         | 473,033     |   |                     | $ | 928,135     |  
|Accounts receivable-trade                                                                                                                                                |  |                           | 25,319,348  |   |                     |   | 20,249,101  |  
|Accounts receivable-other                                                                                                                                                |  |                           | 17,704      |   |                     |   | 88,212      |  
|Escrowed cash on financing                                                                                                                                               |  |                           | 300,000     |   |                     |   |            |  
|Prepaid expenses                                                                                                                                                         |  |                           | 2,922,148   |   |                     |   | 1,614,816   |  
|                                                                                                                                                                         |  |                           |             |   |                     |   |             |  
|Total current assets                                                                                                                                                     |  |                           | 29,032,233  |   |                     |   | 22,880,264  |  
|                                                                                                                                                                         |  |                           |             |   |                     |   |             |  
|Property, plant and equipment, net                                                                                                                                       |  |                           | 2,149,709   |   |                     |   | 2,240,840   |  
|Intangible assets                                                                                                                                                        |  |                           | 15,409,293  |   |                     |   | 16,293,616  |  
|Deferred Financing Costs                                                                                                                                                 |  |                           | 1,374,554   |   |                     |   | 177,500     |  
|Goodwill                                                                                                                                                                 |  |                           | 64,870,351  |   |                     |   | 59,003,202  |  
|                                                                                                                                                                         |  |                           |             |   |                     |   |             |  
|Total assets                                                                                                                                                             |  | $                         | 112,836,140 |   |                     | $ | 100,595,422 |  
|                                                                                                                                                                         |  |                           |             |   |                     |   |             |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                     |  |                           |             |   |                     |   |             |  
|Current liabilities:                                                                                                                                                     |  |                           |             |   |                     |   |             |  
|Cash overdrafts                                                                                                                                                          |  | $                         | 1,837,019   |   |                     | $ | 3,241,798   |  
|Accounts payable                                                                                                                                                         |  |                           | 5,290,272   |   |                     |   | 4,516,620   |  
|Related party loan                                                                                                                                                       |  |                           | 1,089,949   |   |                     |   | 3,010,420   |  
|Other short term note payable                                                                                                                                            |  |                           | 4,891,897   |   |                     |   | 8,630,391   |  
|Short-term notes payable                                                                                                                                                 |  |                           | 3,873,248   |   |                     |   | 21,999,446  |  
|Accrued liabilities                                                                                                                                                      |  |                           | 3,784,678   |   |                     |   | 2,930,918   |  
|Deferred income taxes payable                                                                                                                                            |  |                           | 7,294       |   |                     |   | 7,294       |  
|Warrant derivative liability                                                                                                                                             |  |                           | 1,910,181   |   |                     |   | 3,232,151   |  
|Current portion of notes payable and capital leases                                                                                                                      |  |                           | 19,825,100  |   |                     |   | 2,302,640   |  
|                                                                                                                                                                         |  |                           |             |   |                     |   |             |  
|Total current liabilities                                                                                                                                                |  |                           | 42,509,638  |   |                     |   | 49,871,678  |  
|                                                                                                                                                                         |  |                           |             |   |                     |   |             |  
|Long Term Liabilities:                                                                                                                                                   |  |                           |             |   |                     |   |             |  
|Notes Payable and capital leases, net of current portion                                                                                                                 |  |                           | 9,749,778   |   |                     |   | 2,915,640   |  
|Malpractice liability                                                                                                                                                    |  |                           | 2,044,500   |   |                     |   | 2,470,345   |  
|                                                                                                                                                                         |  |                           |             |   |                     |   |             |  
|Total liabilities                                                                                                                                                        |  |                           | 54,303,916  |   |                     |   | 55,257,663  |  
|                                                                                                                                                                         |  |                          
|Redeemable Series A Convertible Preferred stock, $1,000 par value; 13,000 shares authorized, 12,823 shares issued and outstanding at March 31,
2005 and December 31 2004 |  |                           | 8,150,610   |   |                     |   | 7,934,838   |  
|Shareholders equity:                                                                                                                                                    |  |                           |             |   |                     |   |             |  
|Preferred stock, $0.0001 par value; 100,000,000 shares authorized, none issued and outstanding                                                                           |  |                           |             |   |                     |   |             |  
|Common stock, $0.0001 par value; 200,000,000 shares authorized, 46,879,382 and 44,099,450 shares issued and outstanding at March 31, 2005
December 31 2004, respectively |  |                           | 4,688       |   |                     |   | 4,410       |  
|Additional Paid In Capital                                                                                                                                               |  |                           | 67,690,502  |   |                     |   | 58,285,444  |  
|Retained earnings (deficit)                                                                                                                                              |  |                           | (17,313,576 | ) |                     |   | (20,886,933 | )
|                                                                                                                                                                         |  |                           |             |   |                     |   |             |  
|Total shareholders equity                                                                                                                                               |  |                           | 50,381,614  |   |                     |   | 37,402,921  |  
|                                                                                                                                                                         |  |                           |             |   |                     |   |             |  
|Total liabilities and shareholders equity                                                                                                                               |  | $                         | 112,836,140 |   |                     | $ | 100,595,422 |  
|                                                                                                                                                                         |  |                           |             |   |                     |   |             |  

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|* | Derived from audited financial statements.
|- | ------------------------------------------



See accompanying notes to condensed consolidated financial statements.



3



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##### Table of Contents

World Health Alternatives, Inc. and Subsidiaries

Statements of Condensed Consolidated Operations

For the Three Months Ended March 31, 2005 and 2004

(Unaudited)



|                                                  |  |      |            |   |      |   |            |  
|------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                  |  | 2005 |            |   | 2004 |  
|Sales                                             |  | $    | 40,477,810 |   |      | $ | 1,680,745  |  
|Cost of sales                                     |  |      | 28,979,240 |   |      |   | 1,015,293  |  
|                                                  |  |      |            |   |      |   |            |  
|Gross profit                                      |  |      | 11,498,570 |   |      |   | 665,452    |  
|Selling, marketing, and administrative expenses   |  |      | 7,886,303  |   |      |   | 840,449    |  
|                                                  |  |      |            |   |      |   |            |  
|Operating income (loss)                           |  |      | 3,612,267  |   |      |   | (174,997   | )
|Other income (expense):                           |  |      |            |   |      |   |            |  
|Interest expense                                  |  |      | (1,146,454 | ) |      |   | (71,100    | )
|Other income                                      |  |      | 1,323,316  |   |      |   | 1,894      |  
|                                                  |  |      |            |   |      |   |            |  
|Total other income (expense)                      |  |      | 176,862    |   |      |   | (69,206    | )
|                                                  |  |      |            |   |      |   |            |  
|Net loss before income tax                        |  |      | 3,789,129  |   |      |   | (244,203   | )
|Income tax expense (benefit)                      |  |      |           |   |      |   |            |  
|                                                  |  |      |            |   |      |   |            |  
|Net income (loss)                                 |  | $    | 3,789,129  |   |      | $ | (244,203   | )
|                                                  |  |      |            |   |      |   |            |  
|Preferred stock dividend                          |  |      | (215,772   | ) |      |   |           |  
|                                                  |  |      |            |   |      |   |            |  
|Net income (loss) applicable to common stock      |  | $    | 3,573,357  |   |      | $ | (244,203   | )
|                                                  |  |      |            |   |      |   |            |  
|Net income per share - Basic:                     |  | $    | 0.08       |   |      | $ | (0.01      | )
|                                                  |  |      |            |   |      |   |            |  
|Net income per share - Diluted:                   |  | $    | 0.08       |   |      | $ | (0.01      | )
|                                                  |  |      |            |   |      |   |            |  
|Weighted average common shares outstanding, Basic |  |      | 45,699,108 |   |      |   | 25,221,759 |  
|                                                  |  |      |            |   |      |   |            |  



See accompanying
notes to condensed consolidated financial statements.



4



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##### Table of Contents

World Health Alternatives, Inc. and Subsidiary

Consolidated Statements of Changes in Shareholders
Equity

for the Three Months Ended March 31, 2005

(Unaudited)



|                                                                              |  |              |  |                           |       |                  |   |            |                     |   |             |   |  |   |            |  
|----------------------------------------------------------------------------- |  | ------------ |  | ------------------------- | ----- | ---------------- | - | ---------- | ------------------- | - | ----------- | - |  | - | ---------- | -
|                                                                              |  | Common Stock |  | Additional Paid-inCapital |       | RetainedEarnings |   |            | StockholdersEquity |  
|                                                                              |  | Shares       |  | Amount                    |       |                  |  
|Balance at December 31, 2004                                                  |  | 44,099,450   |  | $                         | 4,410 |                  | $ | 58,285,444 |                     | $ | (20,886,933 | ) |  | $ | 37,402,921 |  
|Exercise of stock warrants, net of transaction costs of $185,313              |  | 679,932      |  |                           | 68    |                  |   | 2,055,268  |                     |   |            |   |  |   | 2,055,336  |  
|Preferred stock dividend, paid in kind                                        |  |             |  |                           |      |                  |   |           |                     |   | (215,772    | ) |  |   | (215,772   | )
|Litigation settlement with former majority owner of Pulse Healthcare Staffing |  | 2,100,000    |  |                           | 210   |                  |   | 7,349,790  |                     |   |            |   |  |   | 7,350,000  |  
|Net income  March 31, 2005                                                   |  |              |  |                           |       |                  |   |            |                     |   | 3,789,129   |   |  |   | 3,789,129  |  
|                                                                              |  |              |  |                           |       |                  |   |            |                     |   |             |   |  |   |            |  
|Balance at March 31, 2005                                                     |  | 46,879,382   |  | $                         | 4,688 |                  | $ | 67,690,502 |                     | $ | (17,313,576 | ) |  | $ | 50,381,614 |  
|                                                                              |  |              |  |                           |       |                  |   |            |                     |   |             |   |  |   |            |  



See accompanying
notes to consolidated financial statements.



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World Health Alternatives, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

for the Three Months Ended March 31, 2005 and 2004

(Unaudited)



|                                                                                            |  |      |             |   |      |   |            |  
|------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ---------- | -
|                                                                                            |  | 2005 |             |   | 2004 |  
|Cash flows from operating activities:                                                       |  |      |             |   |      |   |            |  
|Net income (loss)                                                                           |  | $    | 3,789,129   |   |      | $ | (244,203   | )
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |      |             |   |      |   |            |  
|Depreciation and amortization                                                               |  |      | 1,213,272   |   |      |   | 172,504    |  
|Other non-cash income                                                                       |  |      | (1,321,970  | ) |      |   |           |  
|Bad debt expense                                                                            |  |      | 80,000      |   |      |   |           |  
|(Increase) decrease in, net of effects from acquisitions:                                   |  |      |             |   |      |   |            |  
|Accounts receivable                                                                         |  |      | (5,079,739  | ) |      |   | 85,085     |  
|Other current assets                                                                        |  |      | (1,307,332  | ) |      |   | 42,735     |  
|Increase (decrease) in:                                                                     |  |      |             |   |      |   |            |  
|Accounts payable                                                                            |  |      | 773,652     |   |      |   | 60,126     |  
|Accrued liabilities                                                                         |  |      | 853,760     |   |      |   | 26,614     |  
|Malpractice liability                                                                       |  |      | (425,845    | ) |      |   |           |  
|Income taxes payable                                                                        |  |      |            |   |      |   | (12,000    | )
|                                                                                            |  |      |             |   |      |   |            |  
|Net cash provided (used) in operating activities                                            |  |      | (1,425,073  | ) |      |   | 130,861    |  
|                                                                                            |  |      |             |   |      |   |            |  
|Cash flows from investing activities:                                                       |  |      |             |   |      |   |            |  
|Purchases of property, plant and equipment                                                  |  |      | (178,054    | ) |      |   | (4,866     | )
|(Increase) decrease in deferred costs                                                       |  |      | (1,404,481  | ) |      |   | (103,826   | )
|                                                                                            |  |      |             |   |      |   |            |  
|Net cash used by investing activities                                                       |  |      | (1,582,535  | ) |      |   | (108,692   | )
|                                                                                            |  |      |             |   |      |   |            |  
|Cash flows from financing activities:                                                       |  |      |             |   |      |   |            |  
|Net proceeds from private placement of stock                                                |  |      |            |   |      |   | 1,655,000  |  
|Net proceeds from exercise of stock warrants                                                |  |      | 2,055,336   |   |      |   |           |  
|Net increase (decrease) in secured borrowings from factors                                  |  |      | (3,738,494  | ) |      |   | 345,356    |  
|Cash overdraft                                                                              |  |      | (1,404,779  | ) |      |   |           |  
|Payment of note payable assumed from Superior Staffing                                      |  |      |            |   |      |   | (591,940   | )
|Payment of notes payable                                                                    |  |      | (17,907,885 | ) |      |   | (1,585,000 | )
|Proceeds from note payable                                                                  |  |      | 25,468,799  |   |      |   |           |  
|Net advances (repayment) from related party                                                 |  |      | (1,920,471  | ) |      |   | 25,000     |  
|                                                                                            |  |      |             |   |      |   |            |  
|Net cash provided (used) by financing activities                                            |  |      | 2,552,506   |   |      |   | (151,584   | )
|                                                                                            |  |      |             |   |      |   |            |  
|Net decrease in cash and cash equivalents                                                   |  |      | (455,102    | ) |      |   | (129,415   | )
|Cash and cash equivalents, beginning of year                                                |  |      | 928,135     |   |      |   | 177,699    |  
|                                                                                            |  |      |             |   |      |   |            |  
|Cash and cash equivalents, period                                                           |  | $    | 473,033     |   |      | $ | 48,284     |  
|                                                                                            |  |      |             |   |      |   |            |  
|Supplementary disclosure of cash and non-cash activities:                                   |  |      |             |   |      |   |            |  
|Cash paid for interest                                                                      |  | $    | 1,143,596   |   |      | $ | 45,025     |  
|                                                                                            |  |      |             |   |      |   |            |  
|Cash paid for income taxes                                                                  |  | $    |            |   |      | $ | 12,000     |  
|                                                                                            |  |      |             |   |      |   |            |  



See accompanying notes to
consolidated financial statements.



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##### Table of Contents

WORLD HEALTH ALTERNATIVES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31,2005

(UNAUDITED)



NOTE 1  BASIS OF
PRESENTATION



The condensed consolidated financial statements include the
accounts of World Health Alternatives, Inc. (the Company) and its wholly owned subsidiaries and have been prepared in accordance with generally accepted accounting principles for interim financial information and Regulation S-B.
Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements.



The accompanying condensed consolidated financial statements of the Company are unaudited. However, in the opinion of management, they include all adjustments necessary
for a fair presentation of financial position, results of operations and cash flows. All adjustments made during the three months ended March 31, 2005 were of a normal, recurring nature. The amounts presented for the three months ended March 31,
2005 are not necessarily indicative of results to be expected for any other interim period or for the entire fiscal year. Additional information is contained in the Annual Report on Form 10-KSB of the Company for the year ended December 31, 2004,
dated April 15, 2005 and amended on Form 10-KSB/A of the Company for the year ended December 31, 2004, dated May 16, 2005 which should be read in conjunction with this quarterly report.



NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Cash and Cash Equivalents



The Company considers all investments purchased with an original maturity of less than three months to be cash equivalents. As of March 31, 2005, the Company had no cash
equivalents.



Revenue Recognition and Accounts Receivable



The Company recognizes revenue when persuasive evidence of an arrangement exists, services
have been performed, the price is fixed or determinable and collectibility is reasonably assured. The Company recognizes revenue on service contracts as services are performed. At the end of a period, an accrual of accounts receivable and revenue is
made for services performed but not as yet billed to customers. Permanent placement fees are recognized when earned which is upon the customers agreement to the placement.



Property, Plant and Equipment



Property, plant and equipment is carried at cost. Depreciation is computed using the straight-line method over the following estimated lives:



|                       |  |        
|---------------------- |  | -------
|Software               |  | 3 Years
|Computer equipment     |  | 5 Years
|Furniture and fixtures |  | 7 Years



Intangible Assets



Intangible assets are carried at the fair market value as determined in accordance with
Financial Accounting Standards Board No. 141, Business Combinations. Amortization is computed using the straight-line method over an estimated useful life of 3 to 8 years.



The Company defers the costs associated with evaluating potential acquisition candidates and preparing the related acquisition agreements as
Other Assets. Once an acquisition is completed, the deferred acquisition costs are capitalized and allocated as part of the purchase price allocation. Costs associated with acquisitions that are not ultimately consummated are written off to expense
in the period when the Company determined that it is no longer pursuing the potential acquisition.



7



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##### Table of Contents

Deferred Financing costs



The Company defers the costs associated with the debt refinancing completed in February, 2005 and is amortizing the costs over the three year life of the credit
facilities.



At March 31, 2005 and December 31, 2004 intangible assets
consisted of the following:



|                         |  |                |            |   |                   |   |            |  
|------------------------ |  | -------------- | ---------- | - | ----------------- | - | ---------- | -
|                         |  | March 31, 2005 |            |   | December 31, 2004 |  
|Covenants Not to Compete |  | $              | 5,576,449  |   |                   | $ | 5,576,449  |  
|Consultant Databases     |  |                | 5,054,488  |   |                   |   | 5,054,488  |  
|Customer Lists           |  |                | 6,254,209  |   |                   |   | 6,254,209  |  
|Employment Agreements    |  |                | 1,209,000  |   |                   |   | 1,209,000  |  
|Contract Rights          |  |                | 8,778      |   |                   |   | 8,778      |  
|                         |  |                |            |   |                   |   |            |  
|                         |  |                | 18,102,924 |   |                   |   | 18,102,924 |  
|Accumulated Amortization |  |                | (2,693,631 | ) |                   |   | (1,809,308 | )
|                         |  |                |            |   |                   |   |            |  
|Net                      |  | $              | 15,409,293 |   |                   | $ | 16,293,616 |  
|                         |  |                |            |   |                   |   |            |  



The Company also had deferred
financing costs of $1,434,317 as of March 31, 2005 from the debt refinancing completed in February, 2005. Amortization expense on the deferred financing costs was $59,763 for the three months ended March 31, 2005.



Use of Estimates



The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.



Reclassifications



Prior year amounts have been reclassified to conform to current year
classifications.



NOTE 3  EARNINGS PER SHARE



The financial statements are presented in accordance with Statement of Financial Accounting
Standards No. 128 (SFAS 128). Earnings Per Share. Basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect the potential
dilution from the exercise or conversion of securities into common stock.



|                                                                                                    |  |                                     |            |   |      |   |            |  
|--------------------------------------------------------------------------------------------------- |  | ----------------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                                                    |  | For the Three Months EndedMarch 31, |           
|                                                                                                    |  | 2005                                |            |   | 2004 |  
|Numerator:                                                                                          |  |                                     |            |   |      |   |            |  
|Net Income (loss)                                                                                   |  | $                                   | 3,789,129  |   |      | $ | (244,203   | )
|Preferred stock dividends                                                                           |  |                                     | (215,772   | ) |      |   |           |  
|                                                                                                    |  |                                     |            |   |      |   |            |  
|Numerator for basic earnings per shareincome available to common stockholders                      |  |                                     | 3,573,357  |   |      |   | (244,203   | )
|Effect of dilutive securities:                                                                      |  |                                     |            |   |      |   |            |  
|Preferred stock dividends                                                                           |  |                                     | 215,772    |   |      |   |           |  
|                                                                                                    |  |                                     |            |   |      |   |            |  
|Numerator for diluted earnings per shareincome available to common stock after assumed conversions |  | $                                   | 3,789,129  |   |      | $ | (244,203   | )
|                                                                                                    |  |                                     |            |   |      |   |            |  
|Denominator:                                                                                        |  |                                     |            |   |      |   |            |  
|Denominator for basic earnings per shareweighted average shares                                    |  |                                     | 45,699,108 |   |      |   | 25,221,759 |  



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At March 31, 2005 and 2004, the Company had the following warrants outstanding. The warrants with exercise prices of
$1.00 per share and $2.596 per share were consider as their inclusion was dilutive. The Warrants with exercise prices of $3.50, $3.86 and $4.425 per shares were excluded as their inclusion would have been anti-dilutive:



|                           |  |                |  |               
|-------------------------- |  | -------------- |  | --------------
|Exercise Price             |  | March 31, 2005 |  | March 31, 2004
|$1.00                      |  | 75,000         |  | 100,000       
|$2.596                     |  | 26,750         |  |              
|$3.50                      |  | 113,014        |  |              
|$3.86                      |  | 1,068,583      |  |              
|$4.425                     |  | 754,912        |  |              
|                           |  |                |  |               
|Total Warrants Outstanding |  | 2,038,159      |  | 100,000       
|                           |  |                |  |               



The Series A Convertible Preferred
Stock is convertible into 4,274,333 shares of the Companys restricted common stock. The conversion of the preferred stock was considered in the earning per share calculation as their inclusion was dilutive.



NOTE 4  PRIVATE PLACEMENTS



Effective December 15, 2004, the Company closed on a financing transaction with a group of
private investors (Investors) of up to $11,825,000. The financing consisted of two components: (a) 12,823 shares of Series A Convertible Preferred Stock with a principal amount of $12,823,000 at a dividend rate of 8% per annum and (b)
Warrants registered in the name of each Investor to purchase up to a number of shares of common stock of the Company equal to 25% of such Investors Subscription Amount divided by the subscription amount of $3.00 per share. The Investors have
the right to purchase an aggregate of 1,068,583 shares of the Companys restricted common stock. The Warrants have an exercise price equal to the closing price of the Companys common stock on the day prior to the closing ($3.86). The
Warrant, which expires five years from the date of issuance, results in proceeds of $4,124,730 to the Company upon its exercise. The dividends are cumulative until December 31, 2006, and will be paid from an escrow established at closing if the
Investors elect to be paid in cash. Under certain circumstances the Company may elect to pay the dividend in shares of the Companys common stock.



The Preferred Stock is convertible into shares of Common Stock of the Company at a conversion price of $3.00 per share, which would result in the issuance of 4,274,333
shares of the Companys common stock if all shares were converted.



The
shares of common stock underlying the securities sold in this financing will be registered for resale on a registration statement to be filed by the Company if such shares are to be issued in accordance with the agreements.



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The Company used the proceeds from this financing transaction to satisfy the outstanding obligations underlying the
Debentures arising from the financing arrangement entered into on October 22, 2004.



The Preferred Stock contains provisions that result in the warrants attached to the preferred stock to be subject to derivative accounting. At March 31, 2005 and December 31, 2004 the warrant derivative liability was $1,910,181 and
$3,232,151, respectively. Other income for the three months ended March 31, 2005 includes $1,321,970 for the current period change in the warrant derivative liability due to a decline in the price of the Companys common stock. Non-cash
preferred dividends of $215,772 were recognized on the preferred stock for the three-month period ended March 31, 2005.



Due to the redemption feature of the preferred stock, it is classified as mezzanine (temporary) equity.



NOTE 5  EXERCISE OF WARRANTS



On January 27, 2005, holders of the $1.00 warrants exercised their warrants for 5,000 shares of the Companys common stock, resulting in $5,000 of proceeds to the
Company.



Between February 14 and March 3, 2005, holders of the $3.50 warrants
exercised their warrants for 491,096 shares of the Companys common stock, resulting in $1,718,836 of proceeds to the Company.



Between February 16 and March 23, 2005, holders of the $2.596 warrants exercised their warrants for 183,836 shares of the Companys common stock, resulting in
$516,813 of proceeds to the Company.



In conjunction with the aforementioned
warrant exercises, the Company paid transaction costs of $185,313.



NOTE 6
 ACCOUNTS RECEIVABLES



Pursuant to a factoring agreement, Advance
Payroll Funding, Inc. acts as the Companys factor for a portion of its receivables, which are sold with recourse on a pre-approved basis. Fees for accounts receivables purchased by Advance Payroll Funding, Inc. include a flat rate of 1.2% for
the first 10 days an account is outstanding. An additional fee of 0.60% is payable for each 10 day period that an account is outstanding after the initial 10 day. For the three months ended March 31, 2005 and 2004, the factoring charge amounted to
$698,591 and $0, respectively. The Companys obligations to Advance Payroll Funding, Inc. are collateralized by substantially all of the Companys assets. Maximum funding under the Advance Payroll Funding, Inc. agreement is $10,000,000. On
February 14, 2005, a portion of the balance outstanding under the factoring agreement was repaid with the proceeds from the financing consummated with Capital Source Finance, LLC (CapSource). The Advance Payroll Funding, Inc. factoring agreement is
subordinated to the CapSource financing agreement. (See Note 8).



NOTE
7SEGMENT INFORMATION



The table below presents certain statement of
operations information by segment in accordance with Financial Accounting Standards Board (FASB) Statement No. 131, Disclosures about Segments of an Enterprise and Related Information:



|               |  |                                     |            |      |   |          
|-------------- |  | ----------------------------------- | ---------- | ---- | - | ---------
|               |  | For the Three Months EndedMarch 31,
|               |  | 2005                                |            | 2004
|               |  | (Unaudited)                        
|Sales:         |  |                                     |            |      |   |          
|Travel Nursing |  | $                                   | 14,182,727 |      | $ | 0        
|Locum Tenens   |  |                                     | 15,961,511 |      |   | 0        
|Other Staffing |  |                                     | 10,333,572 |      |   | 1,680,745
|               |  |                                     |            |      |   |          
|               |  | $                                   | 40,477,810 |      | $ | 1,680,745
|               |  |                                     |            |      |   |          
|Cost of Sales: |  |                                     |            |      |   |          
|Travel Nursing |  | $                                   | 11,041,928 |      | $ | 0        
|Locum Tenens   |  |                                     | 11,363,100 |      |   | 0        
|Other Staffing |  |                                     | 6,574,212  |      |   | 1,015,293
|               |  |                                     |            |      |   |          
|               |  | $                                   | 28,979,240 |      | $ | 1,015,293
|               |  |                                     |            |      |   |          
|Gross Profit:  |  |                                     |            |      |   |          
|Travel Nursing |  | $                                   | 3,140,799  |      | $ | 0        
|Locum Tenens   |  |                                     | 4,598,411  |      |   | 0        
|Other Staffing |  |                                     | 3,759,360  |      |   | 665,452  
|               |  |                                     |            |      |   |          
|               |  | $                                   | 11,498,570 |      | $ | 665,452  
|               |  |                                     |            |      |   |          



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The Company has three principal and reportable operating segments which are (1) Travel Nursing, (2) Locum Tenens and (3)
Other Staffing which are determined on the basis of the nature of the services offered. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief
operating decision-maker in deciding how to distribute resources and in evaluating performance. The Companys chief executive officer and chief operating officer have been identified as the chief operating decision-makers.



The Company evaluates performance based on several factors of which the primary financial
measures are business segment sales and gross margin. Resource distribution occurs based upon these performance measures. The accounting policies of the business segments are the same as those described in Note 2  Summary of Significant
Accounting Policies.



All of the Companys segments operate within the
United States. Neither the Company nor any of its segments depends on any single customer, small group of customers or government for more than 10% of its sales.



NOTE 8 - REFINANCING



On February 14, 2005, the Company entered into a revolving credit, term loan and security agreement (the Agreement) with Capital Source Finance, LLC (the
Lender) to refinance outstanding indebtedness and provide additional liquidity. Each of the Companys subsidiaries is a co-borrower under the Agreement. The Agreement includes a term loan in the amount of $7,500,000 (the Term
Loan) and a revolving credit facility with a maximum loan amount of $35,000,000 (the Revolving Facility). All of the assets of the Company and its subsidiaries secure the obligations under the Agreement, the Term Loan and the
Revolving Facility.



Interest on the Term Loan accrues at an annual rate equal
to the prime rate of interest plus 4.0%, and in no event less than 9.5%, and is payable monthly in arrears. Principal payments in the amount of $208,333 are due on the first day of each month, beginning on May 1, 2005. In addition, 50% of Excess
Cash Flow (as defined in the Agreement) is required to be used to repay the outstanding principal balance of the Term Loan. Any remaining outstanding principal balance of the Term Loan is due and payable on February 14, 2008, the Term Loan maturity
date.



Under the Revolving Facility, the Company may borrow an amount not to
exceed the lesser of (i) $35 million and (ii) an amount equal to 85% of the Companys eligible accounts receivables less an aggregate of $1.8 million in liquidity and debt service reserves, and any other reserves established from time to time
by the Lender. The total available for borrowing at March 31, 2005 was $19,202,719. Interest on amounts outstanding under the Revolving Facility accrues at an annual rate equal to the prime rate of interest plus 1.5%, and in no event less than 7.0%,
and is payable monthly in arrears. The outstanding principal balance under the Revolving Facility is due and payable on February 16, 2008.



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In connection with this transaction, the Company paid the Lender a commitment fee of $462,500, which will be amortized as
additional interest over the term of the Agreement. In addition, the Company is required to pay a monthly-unused line fee at the annual rate of 0.5% on the difference between the daily average amount of advances outstanding for the preceding month
and $35 million.



The Agreement includes the following covenants as measured at
the end of each month for the average of the three most recent calendar months: (a) the Company must maintain EBITDA (earnings before interest, taxes, depreciation and amortization) of not less than $3.5 million as of February 28, 2005, and
increasing on a monthly basis to not less than $7.6 million as of December 31, 2005, and thereafter; (b) the Companys senior leverage ratio (total senior debt to EBITDA) cannot exceed 1.8 to 1.0 as of February 28, 2005, and decreasing on a
monthly basis to 1.0 to 1.0 as of September 30, 2005, and thereafter; and (c) the Companys fixed charge coverage ratio (EBITDA divided by the sum of debt service, capital expenditures, income taxes and dividends) must be not less than 1.5 to
1.0 as of February 28, 2005, and increasing on a monthly basis to 2.0 to 1.0 as of August 31, 2005, and thereafter. In addition, the Companys collections of accounts receivable may not be less than $11.5 million for each calendar month through
April 30, 2005, and increasing thereafter on a quarterly basis to monthly collections of not less than $15 million for October 2005, and thereafter. The Company is also required to maintain available cash, including amounts available for borrowing
under the Revolving Facility, of not less than $1.5 million. Additional covenants governing permitted indebtedness, liens, payments of dividends and protection of collateral are included in the Agreement.



As part of the Agreement, the Company was required to put $300,000 into a escrow, which is
reflected as a restricted asset on the balance sheet.



The Company may
terminate the Agreement at any time after February 16, 2007, by paying all outstanding indebtedness and any other payments due to the Lender and paying the Lender a termination fee of $850,000. The Company has granted the Lender a right of first
refusal on future incurrence of secured debt financing, which right terminates six months after the termination of the Agreement.



NOTE 9 - ACQUISITIONS



The following unaudited pro forma condensed results of operations assume that the acquisitions of the six businesses completed in 2004 were consummated on January 1, 2004:



|                                    |  |                                  |           
|----------------------------------- |  | -------------------------------- | ----------
|                                    |  | Three Months EndedMarch 31, 2004
|Sales                               |  | $                                | 38,434,535
|Net Income                          |  | $                                | 197,145   
|Net income per common shares        |  | $                                | 0.01      
|                                    |  |                                  |           
|Weighted average shares outstanding |  |                                  | 29,039,215
|                                    |  |                                  |           



NOTE 10 
LIQUIDITY/MANAGEMENTS PLANS



The Company believes that cash flows
from operations, the current cash and cash equivalents and the proceeds from the CapSource refinancing transaction that closed on February 14, 2004 are sufficient for the Companys requirements over the next 12 months. The Company may be
required to finance any additional requirements within the next 12 months or beyond through additional equity, debt financings or credit facilities. The Company may not be able to obtain additional financings or credit facilities, or if these funds
are available they may not be on satisfactory terms. If funding is insufficient at any time in the future, the Company may be unable to develop or enhance its services, take advantage of business opportunities or respond to competitive pressures. If
the Company raises additional funds by issuing equity securities, dilution to existing shareholders will result.



Besides continuing to grow the sales and gross margin of the Companys business, managements plan also



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includes continuing to reduce overhead and operating costs through centralization of administrative operations,
maintaining focused accounts receivable collection efforts to continually improve the Companys DSO ratio and to search out new credit sources with more favorable interest rates.



NOTE 11  LEGAL MATTERS



Eric Allison Matter. On April 30, 2004, we executed a stock purchase agreement, subsequently amended on May 19, 2004, May 28, 2004, and June 22, 2004, thereby
completing our acquisition of all of the stock of Pulse Healthcare Staffing, Inc., a California corporation (Pulse). In October 2004, Eric Allison (Allison), the Controlling Management Shareholder of Pulse Healthcare
Staffing, Inc., filed suit against us and others in connection with the acquisition, alleging, in part, that the Company had not paid all amounts due in connection with the acquisition.



On January 31, 2005, the parties reached an amicable resolution of the dispute. The terms of the resolution include, in part, (a) monthly
payments to Allison totaling an aggregate of $3,500,000, which payments are subject to certain contingent deductions and have been or will be made as follows: $500,000 was paid on January 31, 2005; $750,000 was paid on February 25, 2005; $500,000
was paid on April 7, 2005; $500,000 was paid on May 11, 2005; $500,000 by May 25, 2005; $500,000 by June 25, 2005; and $250,000 by August 25, 2005; (b) the payment to Allison of 1,850,000 shares of our restricted common stock; and (c) the payment to
a former employee of Pulse of 250,000 shares of our restricted common stock. The suit has been dismissed and we admitted no liability in connection with the dispute.



Crusader Investments, LLC Matter. On February 17, 2005, we filed a lawsuit against Crusader Investments, LLC (Crusader),
in the Court of Common Pleas of Allegheny County, Pennsylvania, captioned World Health Alternatives, Inc. v. Crusader Investments, LLC, No. GD05-004159. The Complaint seeks damages against Crusader based on allegations that Crusader breached
its contractual obligation pursuant to an agreement between the parties (the Agreement) to provide us with financial advisor services in connection with certain merger and acquisition activities. The Company also seeks damages for
professional negligence, for commercial disparagement based on alleged false and misleading statements made by Crusader about us, and for Crusaders alleged unlawful use of our name and service mark on Crusaders website. Lastly, we ask
the court to declare that we presently have no contractual obligations to Crusader. On April 28, 2005, Crusader removed the case to the United States District Court for the Western District of Pennsylvania, Civ. Action No. 05-0554. On May 4, 2005,
we filed an amended complaint, which added Transaction Advisory Services, LLC (TAS), a subsidiary of Crusader, as a party, since, following the initiation of our lawsuit, Crusader allegedly assigned its rights under the Agreement to TAS.



Following its receipt of service of our lawsuit, Crusader Investments assigned
its rights under the Agreement with us to TAS (Crusader/TAS), which then initiated a lawsuit against us pursuant to a Summons with Notice filing in the Supreme Court of the State of New York, County of Suffolk, captioned Transaction
Advisory Services, LLC v. World Health Alternatives, Inc., Index No. 05778, on March 11, 2005 (the Crusader/TAS lawsuit). On April 14, 2005, we served a Demand for Complaint in that case and then removed the case to the United States
District Court for the Eastern District of New York on April 15, 2005, Case No. 05 Civ. 1858. On or about April 27, 2005, Crusader/TAS filed a Complaint alleging that we breached an agreement with Crusader Investments pursuant to which Crusader
Investments was to serve as our exclusive financial advisor with respect to our merger, acquisition and related capital-raising transactions. The lawsuit seeks compensatory damages that Crusader/TAS claims are not less than $2.2 million, plus
interest, costs and other disbursements.



On or about May 6, 2005, Crusader
filed a single count Complaint in the United States District for the Eastern District of New York, captioned Crusader Investments LLC v. World Health Alternatives, Inc., Case No. 05 Civ. 2219, alleging that we made false and misleading
statements that defamed Crusader (the Crusader lawsuit). The statements at issue were set forth in a press release we issued on April 19, 2005, and in our 10KSB for the fiscal year ended December 31, 2004, which statements discussed the
factual and legal basis for our pending lawsuit against Crusader and our view of certain statements set forth in a press release issued by Crusader on April 18, 2005. Crusaders lawsuit requests compensatory damages of not less than $1 million,
punitive damages, plus interest, costs and other disbursements.



We intend to
vigorously pursue our claims against Crusader and Transaction Advisory Services, LLC in our lawsuit, as well



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as defend ourselves against the Crusader/TAS lawsuit and the Crusader lawsuit. Because these matters are still in their
early stages, we are unable to predict their outcome or reasonably estimate our potential exposure in the two matters in which we are a defendant.



Generally.We are subject to various claims and legal actions in the ordinary course of our business, which matters may include professional liability issues,
contract disputes, payroll and employee-related matters and inquiries by governmental agencies regarding our employment practices. We are not aware of any pending or threatened litigation that we believe is reasonably likely to have a material
adverse affect on our results of operations, financial position or liquidity.



Our healthcare facility clients may also become subject to claims, governmental inquiries and investigations and legal actions to which we may become a party relating to services provided by our healthcare personnel. From time to time, and
depending on the particular facts and circumstances, we may be subject to indemnification or other similar obligations relating to these matters. At this time, we are not aware of any such pending or threatened litigation that we believe is
reasonably likely to have a material adverse affect on our results of operations, financial position or liquidity.



MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The following discussion and other sections of this Form 10-QSB contain forward-looking
statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates and projections about our industry, managements
beliefs and certain assumptions made by management. Words such as anticipates, expects, intends, plans, believes, seeks, estimates, may, and similar
expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and actual actions or results may differ materially. These statements are subject to certain risks, uncertainties and
assumptions that are difficult to predict. The Company undertakes no obligation to update publicly any forward-looking statements as a result of new information, future events or otherwise, unless required by law. Readers should, however, carefully
review the risk factors included in other reports or documents filed by the Company from time to time with the Securities and Exchange Commission.



Overview of Our Company



We are a provider of healthcare staffing services to hospitals and other healthcare facilities. We operate our nurse and allied healthcare staffing operations under the name World Health Staffing and our physician or
locum tenens staffing under the name JCNationwide. We also provide a limited amount of support services staffing and information technology staffing for clients in the healthcare industry and other industries. We deliver to our clients
timely and flexible staffing solutions through either temporary or permanent placements of healthcare personnel. Our integrated staffing services are designed to meet all of our clients staffing requirements and include interviewing, screening
and selecting our clients prospective staff. These services enable our clients to optimize their staffing needs in a flexible and timely manner while decreasing overall staffing costs. We currently provide our healthcare staffing services
through seventeen branch offices located throughout the United States and we are continually seeking to expand our presence in other regions. We were incorporated under the laws of the State of Florida on February 13, 2002.



We typically provide staffing for nurses, allied health personnel and physicians to our
clients on a travel or per diem basis. Travel staffing generally provides staffing on a contract, fixed-term basis for time periods that are typically thirteen weeks long, but can range from several weeks to one year. Per diem staffing generally
provides healthcare personnel for assignments of a single shift to thirteen weeks. Pursuant to our staffing assignment contracts, we give our clients the option of hiring our healthcare personnel as their own employees. Additional staffing services
that we provide to our clients include candidate search services, whereby we locate candidates for immediate permanent employment with our clients and a payrolling service called the $2.00 Employee Program, pursuant to which we place on
our payroll, for $2.00 per hour above all costs of employment, a candidate who typically has been chosen by and is working for the client.



During the first quarter of 2005, we directly placed or assisted in the placement of approximately 2,100 healthcare professionals. We derive our nurse, allied healthcare
and physician staffing revenue primarily from acute care hospitals,



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including community hospitals, teaching institutions, and trauma centers, private physicians practices, surgical
and ambulatory care centers, nursing homes, pharmacies, medical clinics and insurance companies located in or near metropolitan areas. Because our fees are paid by our clients rather than by third parties, we have no direct exposure to Medicare or
Medicaid reimbursements. For the quarter ended March 31, 2005, our revenue was $40,447,810.



We believe that we are well-positioned in the current environment for healthcare staffing services to take advantage of longer-term industry and demographic developments that we believe will include a growing shortage
and aging of nurses and other medical professionals, an aging U.S. population expected to increase hospital admissions, state legislation regarding minimum nurse staffing levels and maximum allowable overtime, long-term operational trends among
medical care facilities towards outsourcing healthcare staffing and increased consolidation of a fragmented healthcare staffing market.



We entered the healthcare staffing industry in February 2003. On February 20, 2003, we completed the acquisition of 100% of the outstanding common stock of Better
Solutions, Inc. (Better Solutions), a Pennsylvania corporation headquartered in Pittsburgh, Pennsylvania that provided local allied and nursing healthcare staffing services from offices in Pennsylvania, Ohio and Florida, from its two
shareholders, Richard E. McDonald and Marc D. Roup. In exchange for their stock in Better Solutions, we issued to Messrs. McDonald and Roup 33 million shares of our common stock, which represented approximately 82% of our common stock outstanding.
As a result of the transaction, Better Solutions became our wholly owned subsidiary. In addition, a change in the voting control of our common stock occurred, our previous officers and directors resigned all positions held with us and Messrs.
McDonald and Roup became our sole officers and directors at that time. This transaction was treated as a recapitalization. Prior to this transaction, we did not engage in the healthcare staffing business.



Since December 2003, our business has grown significantly, in part through our acquisition of
the operations of six medical staffing companies and one general staffing company that provided medical, professional and administrative staffing services. These acquisitions have expanded our services to include travel and per diem staffing of
nurses, allied professionals and physicians, and provided us with a nationwide presence and infrastructure. Our staffing operations are conducted through our three operating entities: (a) World Health Staffing, Inc., a Delaware corporation, which
provides primarily nurse and allied staffing on both a travel and per diem basis, as well as a limited amount of information technology and general administrative and professional staffing; (b) World Health Staffing, Inc., a California corporation,
which provides nurse and allied staffing on both a travel and per diem basis; and (c) JC Nationwide, Inc., a Delaware corporation which provides physician or locum tenens staffing on a travel and per diem basis. As of March 31, 2005, we
employed approximately 2,000 healthcare professionals and temporary staff and 292 in corporate office staff. We also had approximately 450 independent contractor physicians placed on assignments with our clients.



RESULTS OF OPERATIONS



Three Months Ended March 31, 2005 and 2004



Sales. Sales for the three months ended March 31, 2005 increased by 2,308% to $40,477,810 from $1,680,745 for the three months ended March 31, 2004. The increase was
primarily due to the acquisitions of Pulse Healthcare Staffing, Inc., Care For Them, Inc., Curley and Associates, LLC, Travel Nurse Solutions, Inc., JC Nationwide, Inc. and Parker Services, Inc., which occurred in May 2004, May 2004, June 2004,
October 2004, November 2004 and December 2004, respectively.



Gross Profit.
Gross profit is total sales less cost of sales. For the three months ended March 31, 2005 and 2004, respectively, our gross profit was $11,498,570 and $665,452, which represented a 1,628% gross profit increase. The increase in gross profit is
primarily due to the aforementioned acquisitions, which occurred in the second, third and fourth quarters of 2004. Gross profit as a percentage of sales decreased to 28.4% for the three months ended March 31, 2005, from 39.6% for the three months
ended March 31, 2004. The 11.2% gross profit decrease as a percentage of sales is attributable the new mix of pricing strategies throughout the Company. In the prior years quarter, the Company did not provide many of the service areas
currently being offered.



Selling, Marketing and Administrative Expenses.
Selling, marketing and administrative expenses increased to



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$7,886,303 from $840,449 for the three months ended March 31, 2005 and 2004, respectively, representing a 838% increase.
The primary reason for the increase was the aforementioned six acquisitions, which resulted in the Company incurring related overhead costs from these operations in the current quarter. The Companys overhead expenses in the current year
quarter included $884,323 of non-cash amortization expenses of the intangible assets created by the six aforementioned acquisitions that occurred in the 2004 and the one acquisition that occurred in December 2003 and $59,763 of non-cash amortization
expenses of the intangible assets created by the refinancing of the Companys debt with Capital Source Finance, LLC (CapSource) on February 14, 2005. The prior years quarter included $161,590 of amortization relative to the
Superior Staffing acquisition concluded in December 2003. The growth in selling, marketing and administration expenses is less than half of the percentage growth for sales as compared to the prior year quarter, as the Company was able to achieve
certain economies of scale from its newly enlarged operating structure.



Operating Income. The operating profit increased by $3,787,264 or 2,164% to $3,612,267 from an operating loss of $174,997 for the three months ended March 31, 2005 and 2004, respectively. The increase in the operating profit was a direct
result of the aforementioned significant increase in gross profit offset by increases in selling, marketing and administrative expenses, which included $944,086 and $161,590 of non-cash amortization expenses of the intangible assets created by
acquisitions and the December 2004 refinancing.



Interest Expense. Interest
expense increased to $1,146,454 from $71,100 for the three months ended March 31, 2005 and 2004, respectively. This 1,512% increase in interest expense is due to (a) additional use of the Companys factoring arrangements to factor the accounts
receivable acquired from the recent acquisitions until the replacement of a portion of the factoring agreement by the CapSource refinancing on February 14, 2005; (b) interest on the notes payable issued as part of the Companys acquisition
agreements; (c) interest on the Companys existing debt and (d) interest on the CapSource debt subsequent to February 14, 2005.



Additionally, other income includes $1,321,970 for the mark to market of the warrants liability associated with the preferred stock transaction of December 15, 2004 and
benefits realized on our malpractice liability accruals for claims and policies costs.



Income Taxes. No federal or state income tax has been provided for the three months ended March 31, 2005 due to the use of net operating loss carryforwards. No federal or state income tax has been provided for the three months ended March
31, 2004 due to the loss for the quarter.



Liquidity and Capital Resources



During the three months ended March 31, 2005, the Companys cash
decreased by $445,102 to $473,033. Cash utilized by investing activities of $1,582,535 and cash utilized by operating activities of $1,425,073 was partially offset by cash provided by financing activities of $2,552,506.



Cash used by operating activities totaled $1,425,073 in the three months ended March 31,
2005. These cash outflows included an increase in accounts receivable of $5,079,739 related to increased customer billings, a $1,307,332 increase in other current assets primarily for prepaid expenses related to the Companys insurance
programs, a $425,845 decrease in the malpractice liability and the non-cash other income of $1,321,970. These cash outflows were partially offset by cash inflows including net income of $3,789,129, a $773,652 increase in accounts payable, a $853,760
increase in accrued liabilities related to the timing of payments and $1,213,272 of depreciation and amortization.



Cash utilized by investing activities included $178,054 of cash used for the purchase of property, plant and equipment and a net $1,404,481 increase in deferred costs,
primarily related to the CapSource financing concluded on February 14, 2005.



Cash provided by financing activities include the proceeds of $2,055,336 from the exercise of warrants issued in connection with private placements 2004, which was net of $185,313 of investment banking fees and $25,468,799 of proceeds
primarily from the refinancing in February 2005 with CapSource consisting of a term portion of $7.5 million, net draws on the revolving line of credit of $17.2 million net of a $300,000 escrow required by the aforementioned CapSource financing
agreement. These cash inflows were partially offset by a total of $17,907,885 of payments on notes payable which primarily included a $14.8 million of repayment of the line of credit assumed as



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part of the JCN acquisition, $750,000 of payments on the notes issued as part of the settlement with the former majority
shareholder of Pulse, $700,000 of payments to the minority option holder of Parker Services prior to our acquisition, $800,000 of payments on lines of credit outstanding prior to the CapSource refinancing and $800,000 of other debt payments, a
$1,404,779 reduction in the cash overdraft created by outstanding checks that have not been presented to our financial institutions, a $1,920,471 repayment of the loan from a related party and a $3,738,494 net decrease in the amount due the factor.



During the three months ended March 31, 2004, the Companys cash
decreased by $129,415 to $48,284. Cash utilized by financing and investing activities of $151,584 and $108,692, respectively, was partially offset by cash inflows of $130,861 from operating activities.



Cash utilized by financing activities included the initial payment of $1,585,000 due to
Superior Staffing made in January 2004 and $591,940 of payments on a note payable assumed by the Company as part of the Superior Staffing acquisition. These cash outflows were partially offset by $1,655,000 of proceeds from two private placements of
the Companys common stock in January 2004 and was net of $445,000 of costs incurred in connection with the two private placements, net proceeds of $345,356 from the Companys factor and a $25,000 advance from a related party to fund
operations.



Cash utilized by investing activities included a $103,826 increase
in deferred acquisition costs, including due diligence, legal and associated costs, incurred in relation to the Companys four announced letters of intent and $4,866 for the purchase of property, plant and equipment.



Cash provided by operating activities totaled $130,861 in the three months ended March 31,
2004. Cash inflows included a $85,085 decrease in accounts receivable primarily from accounts receivable acquired as part of the Superior Staffing acquisition, a $42,735 decrease in prepaid expenses, a $47,352 increase in accounts payable, a $26,614
increase in accrued liabilities related to the timing of payments and $172,504 of depreciation and amortization. These cash inflows were partially offset by cash outflows of $231,429, due to the Companys loss during the quarter ended March 31,
2004 and a $12,000 decrease in accrued income taxes payable for a payment made in the quarter.



The Company believes that cash flows from operations, the current cash and cash equivalents and the proceeds from the CapSource refinancing transaction that closed on February 14, 2005 are sufficient for the
Companys requirements over the next 12 months. The Company may be required to finance any additional requirements within the next 12 months or beyond through additional equity, debt financings or credit facilities. The Company may not be able
to obtain additional financings or credit facilities, or if these funds are available they may not be on satisfactory terms. If funding is insufficient at any time in the future, the Company may be unable to develop or enhance its services, take
advantage of business opportunities or respond to competitive pressures. If the Company raises additional funds by issuing equity securities, dilution to existing shareholders will result.



Besides continuing to grow the sales and gross margin of the Companys business,
managements plan also includes continuing to reduce overhead and operating costs through centralization of administrative operations, maintaining focused accounts receivable collection efforts to continually improve the Companys DSO
ratio and to search out new credit sources with more favorable interest rates.



Financial Position



At March 31, 2005, the Companys
balance sheet reflected total assets of approximately $113.0 million, consisting of approximately $25.3 million of accounts receivable from customers, approximately $15.4 million of intangible assets relating to the Companys seven acquisitions
and approximately $64.9 million of goodwill associated with the seven aforementioned acquisitions. The Companys balance sheet at March 31, 2005 also reflected approximately $39.4 million of debt, approximately $24.7 million of which was due to
CapSource, which finances the Companys operations and approximately $4.9 million due to our factor. At March 31, 2005, the Companys stockholders equity was approximately $50.4 million.



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ITEM 3. CONTROLS AND PROCEDURES



Under the
supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e)
and 15d-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this Report. Based on that evaluation, our Chief Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures
as of March 31, 2005 were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commissions rules and forms.



There have been no material changes in our internal controls over financial reporting or in other factors that could materially affect, or are reasonably likely to affect, our internal controls over financial reporting during the quarter
ended March 31, 2005.



PART IIOTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



Eric Allison Matter.On April 30, 2004, we executed a stock purchase agreement, subsequently amended on May 19, 2004, May 28, 2004, and June 22, 2004, thereby completing our acquisition of all of the stock of Pulse Healthcare
Staffing, Inc., a California corporation (Pulse). In October 2004, Eric Allison (Allison), the Controlling Management Shareholder of Pulse Healthcare Staffing, Inc., filed suit against us and others in connection with the
acquisition, alleging, in part, that the Company had not paid all amounts due in connection with the acquisition.



On January 31, 2005, the parties reached an amicable resolution of the dispute. The terms of the resolution include, in part, (a) monthly payments to
Allison totaling an aggregate of $3,500,000, which payments are subject to certain contingent deductions and have been or will be made as follows: $500,000 was paid on January 31, 2005; $750,000 was paid on February 25, 2005; $500,000 was paid on
April 7, 2005; $500,000 was paid on May 11, 2005; $500,000 by May 25, 2005; $500,000 by June 25, 2005; and $250,000 by August 25, 2005; (b) the payment to Allison of 1,850,000 shares of our restricted common stock; and (c) the payment to a former
employee of Pulse of 250,000 shares of our restricted common stock. The suit has been dismissed and we admitted no liability in connection with the dispute.



Crusader Investments, LLC Matter. On February 17, 2005, we filed a lawsuit against Crusader Investments, LLC (Crusader), in the Court
of Common Pleas of Allegheny County, Pennsylvania, captioned World Health Alternatives, Inc. v. Crusader Investments, LLC,No. GD05-004159. The Complaint seeks damages against Crusader based on allegations that Crusader breached its
contractual obligation pursuant to an agreement between the parties (the Agreement) to provide us with financial advisor services in connection with certain merger and acquisition activities. The Company also seeks damages for
professional negligence, for commercial disparagement based on alleged false and misleading statements made by Crusader about us, and for Crusaders alleged unlawful use of our name and service mark on Crusaders website. Lastly, we ask
the court to declare that we presently have no contractual obligations to Crusader. On April 28, 2005, Crusader removed the case to the United States District Court for the Western District of Pennsylvania, Civ. Action No. 05-0554. On May 4, 2005,
we filed an amended complaint, which added Transaction Advisory Services, LLC (TAS), a subsidiary of Crusader, as a party, since, following the initiation of our lawsuit, Crusader allegedly assigned its rights under the Agreement to TAS.



Following its receipt of service of our lawsuit, Crusader
Investments assigned its rights under the Agreement with us to TAS (Crusader/TAS), which then initiated a lawsuit against us pursuant to a Summons with Notice filing in the Supreme Court of the State of New York, County of Suffolk,
captioned Transaction Advisory Services, LLC v. World Health Alternatives, Inc.,Index No. 05778, on March 11, 2005 (the Crusader/TAS lawsuit). On April 14, 2005, we served a Demand for Complaint in that case and then removed the
case to the United States District Court for the Eastern District of New York on April 15, 2005, Case No. 05 Civ. 1858. On or about April 27, 2005, Crusader/TAS filed a



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Complaint alleging that we breached an agreement with Crusader Investments pursuant to which Crusader Investments was to
serve as our exclusive financial advisor with respect to our merger, acquisition and related capital-raising transactions. The lawsuit seeks compensatory damages that Crusader/TAS claims are not less than $2.2 million, plus interest, costs and other
disbursements.



On or about May 6, 2005, Crusader filed a
single count Complaint in the United States District for the Eastern District of New York, captioned Crusader Investments LLC v. World Health Alternatives, Inc., Case No. 05 Civ. 2219, alleging that we made false and misleading statements
that defamed Crusader (the Crusader lawsuit). The statements at issue were set forth in a press release we issued on April 19, 2005, and in our 10KSB for the fiscal year ended December 31, 2004, which statements discussed the factual and
legal basis for our pending lawsuit against Crusader and our view of certain statements set forth in a press release issued by Crusader on April 18, 2005. Crusaders lawsuit requests compensatory damages of not less than $1 million, punitive
damages, plus interest, costs and other disbursements.



We
intend to vigorously pursue our claims against Crusader and Transaction Advisory Services, LLC in our lawsuit, as well as defend ourselves against the Crusader/TAS lawsuit and the Crusader lawsuit. Because these matters are still in their early
stages, we are unable to predict their outcome or reasonably estimate our potential exposure in the two matters in which we are a defendant.



Generally.We are subject to various claims and legal actions in the ordinary course of our business, which matters may include professional
liability issues, contract disputes, payroll and employee-related matters and inquiries by governmental agencies regarding our employment practices. We are not aware of any pending or threatened litigation that we believe is reasonably likely to
have a material adverse affect on our results of operations, financial position or liquidity.



Our healthcare facility clients may also become subject to claims, governmental inquiries and investigations and legal actions to which we may become a party relating to services provided by our healthcare personnel.
From time to time, and depending on the particular facts and circumstances, we may be subject to indemnification or other similar obligations relating to these matters. At this time, we are not aware of any such pending or threatened litigation that
we believe is reasonably likely to have a material adverse affect on our results of operations, financial position or liquidity.



ITEM 2. CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES



On October 19, 2004, Eric Allison, the Controlling Management Shareholder of Pulse, filed suit in the Superior Court of the State of California, for the County of Placer,
naming the Company and others as defendants. The suit alleged, in part, that the Company had not paid all amounts due in connection with the acquisition and sought, among other things, alleged unpaid principal, interest, damages, and attorneys
fees and costs.



On January 31, 2005, the parties reached an amicable
resolution of the lawsuit. The terms of the resolution include, in part, (a) monthly payments to Allison totaling an aggregate of $3,500,000, which payments are subject to certain contingent deductions and will be made as follows: $500,000 was paid
on January 31, 2005; $750,000 by February 25, 2005; $500,000 by April 7, 2005; $500,000 by May 11, 2005; $500,000 by May 25, 2005; $500,000 by June 25, 2005; and $250,000 by August 25, 2005; (b) the payment to Allison of 1,850,000 shares of the
Companys restricted common stock; and (c) the payment to a former employee of Pulse of 250,000 shares of the Companys restricted common stock. The suit has been dismissed and the Company admitted no liability in connection with the
dispute. The shares are exempt from registration with the SEC in accordance with Section 4(2) and Regulation D under the Securities Act of 1933, as amended.



Warrants



On January 27, 2005, holders of the $1.00 warrants exercised their warrants for 5,000 shares of the Companys common stock, resulting in $5,000 of proceeds to the Company.



Between February 14 and March 3, 2005, holders of the $3.50 warrants exercised their warrants for 491,096 shares of the Companys
common stock, resulting in $1,718,836 of proceeds to the Company.



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Between February 16 and March 23, 2005, holders of the $2.596 warrants exercised their warrants for 183,836 shares of the
Companys common stock, resulting in $516,813 of proceeds to the Company.



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



| | (a) | Exhibits:
| | --- | ---------



|31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.
|---- | -------------------------------------------------------------------------------------------



|31.2 | Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.
|---- | --------------------------------------------------------------------------------------------------------------



|32.1 | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.
|---- | -------------------------------------------------------------------------------------------



|32.2 | Certification of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.
|---- | --------------------------------------------------------------------------------------------------------------



| | (b) | Reports on Form 8-K
| | --- | -------------------



We filed the following current reports on Form 8-K during the three months ended March 31, 2005:



| |  |  | Form 8-K filed Items 3.02 Unregistered Sale of Equity Securities  on January 3, 2005 to report the private placement of the Companys securities.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Form 8-K filed Items 8.01 Other Events  on February 15, 2005 to report the settlement of litigation with the former Principal Shareholder of Pulse Healthcare
Staffing, Inc.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Form 8-K filed Items 2.03 Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant  on February 18, 2005 to
report the refinancing of the majority of the Companys debt with Capital Source Financial, LLC.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Form 8-K filed Item 2.02 Results of Operations and Financial Condition discussing the Companys earnings for the year ending December 31, 2004.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



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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.



WORLD HEALTH ALTERNATIVES, INC.By

/s/ Richard E. McDonaldRichard E. McDonaldPresident, Chief Executive Officer, Principal Accounting
Officer




Date: May 16, 2005



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EXHIBIT INDEX





|            |  |                                                                                                               
|----------- |  | --------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                   
|31.1        |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.                   
|            | 
|31.2        |  | Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.
|            | 
|32.1        |  | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.                   
|            | 
|32.2        |  | Certification of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.



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