UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON
      D.C. 20549





**FORM
      10-Q**





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





For the quarterly period ended:  December 31, 2005




**OR**





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





For the transition period from ______ to ______.





Commission File Number: 0-17458








**AHPC
                Holdings, Inc.**(Exact
                name of registrant as specified in its charter)**Maryland**
            
            **73-1326131**(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer
              Identification
                No.)**80
                Internationale Boulevard, Unit A**
              **Glendale
                Heights, IL 60139**(Address
                of principal executive office)**(630)
                407-0242**(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 [   ]





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





Large accelerated filer [  
                ]
              Accelerated
                  filer [ 
                   ]
              Non-accelerated
                  filer
                  [X]




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes
      [   ] No [X]







APPLICABLE
      ONLY TO CORPORATE ISSUERS





The
      number of shares of the issuer’s Common Stock, par value $.03 per share,
      outstanding as of February 13, 2006 was 1,237,728.












**AHPC
      Holdings, Inc**


**FORM
      10-Q**


**September
      30, 2005**





**INDEX**





PART
      I
      - FINANCIAL INFORMATION








Item
      1.    Financial Statements


Condensed
                Consolidated Balance Sheets (unaudited)December
                31, 2005 and June 30, 2005
            pgs.
                1-2Condensed
                Consolidated Statements of Operations (unaudited) for theThree
                Months Ended December 31, 2005 and 2004
            pg.
                3Condensed
                Consolidated Statements of Operations (unaudited) for theSix
                Months Ended December 31, 2005 and 2004
            pg.
                4Condensed
                Consolidated Statements of Cash Flows (unaudited) for theSix
                Months Ended December 31, 2005 and 2004
            pg.
                5Notes
                to Condensed Consolidated Financial Statements (unaudited)
            pg.
                6




Item
                2.    Management’s Discussion and Analysis of Financial
                Condition andResults
                of Operations
            pg.
                15Item
                3.    Quantitative and Qualitative Disclosures About Market
                Risk
            pg.
                20Item
                4.    Controls and Procedures
            pg.
                20





PART
      II - OTHER INFORMATION





Item
                1.    Legal Proceedings
            pg.
                22Item
                2.    Unregistered Sales of Equity Securities and Use of
                Proceeds
            pg.
                22Item
                3.    Defaults Upon Senior Securities
            pg.
                22Item
                4.    Submission of Matters to a Vote of Security
                Holders
            pg.
                22Item
                5.    Other Information
            pg.
                22Item
                6.    Exhibits
            pg.
                22








**ITEM** **1. Financial Statements**





**AHPC
      Holdings, Inc. and Subsidiary**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**December
      31, 2005 and June 30, 2005**


**ASSETS**
            
            
            December
                31, 2005
            
            
            
            June
                30, 2005(unaudited)
            
            
            
            (unaudited)**CURRENT
                ASSETS**Cash
                and cash equivalents
            
            $
            182,130
            
            
            $
            16,434Accounts
                receivable - trade, net of allowance for
              doubtful
                accounts of $336,351 at December 31, 2005
              and
                at June 30, 2005
            
            
            1,799,695
            
            
            
            1,844,349Inventories,
                net
            
            
            6,993,421
            
            
            
            4,992,385Prepaid
                expenses
            
            
            766,482
            
            
            
            488,733Other
                receivables
            
            
            3,694
            
            
            
            4,694Total
                current assets
            
            
            9,745,422
            
            
            
            7,346,595**PROPERTY,
                PLANT AND EQUIPMENT**Equipment,
                furniture and fixtures
            
            
            2,625,204
            
            
            
            2,617,934Building
                improvements
            
            
            35,036
            
            
            
            25,866Total
                property, plant and equipment
            
            
            2,660,240
            
            
            
            2,643,800Less
                accumulated depreciation and amortization
            
            
            2,442,843
            
            
            
            2,307,985Property,
                plant and equipment, net
            
            
            217,397
            
            
            
            335,815**OTHER
                ASSETS**
            
            
            1,108
            
            
            
            1,108Total
                assets
            
            $
            9,963,927
            
            
            $
            7,683,518





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








**AHPC
      Holdings, Inc. and Subsidiary**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS - CONTINUED**


**December
      31, 2005 and June 30, 2005**


**LIABILITIES
                AND SHAREHOLDERS' EQUITY**
            
            
            December
                31, 2005
            
            
            
            June
                30, 2005(unaudited)
            
            
            
            (unaudited)**CURRENT
                LIABILITIES**Accounts
                payable - trade
            
            $
            2,555,985
            
            
            $
            2,364,366Trade
                notes payable to bank
            
            
            2,804,465
            
            
            
            783,806Other
                notes payable
            
            
            171,040
            
            
            
            8,803Accrued
                rebates
            
            
            250,315
            
            
            
            231,755Accrued
                warrant liability
            
            
            641,476
            
            
            
            -Accrued
                expenses
            
            
            629,348
            
            
            
            644,888Total
                current liabilities
            
            
            7,052,629
            
            
            
            4,033,618**DEFERRED
                RENT**
            
            
            104,455
            
            
            
            45,950**LONG-TERM
                DEBT**
            
            
            680,951
            
            
            
            -**DEFERRED
                TAX LIABILITIES**
            
            
            308,291
            
            
            
            308,291Total
                liabilities
            
            
            8,146,326
            
            
            
            4,387,859**COMMITMENTS
                AND CONTINGENCIES**
            
            
            -
            
            
            
            -**SHAREHOLDERS'
                EQUITY**Series
                A convertible preferred stock, $0.01 par value; 220,000 shares
                authorized, none issued and
              outstanding
                at December 31, 2005 and 59,350 shares issued and outstanding at
                June 30, 2005
            
            
            -
            
            
            
            594Common
                stock, $.03 par value; 16,666,667 shares authorized; 1,361,993 shares
                issued and 1,237,728shares
                outstanding at December 31, 2005 and 1,285,052 shares issued and
                1,160,787 sharesoutstanding
                at June 30, 2005
            
            
            41,306
            
            
            
            38,551Additional
                paid-in capital
            
            
            18,527,816
            
            
            
            18,525,456Accumulated
                deficit
            
            
            (10,745,345
            )
            
            
            (9,262,766
            )7,823,777
            
            
            
            9,301,835Less
                common stock in treasury, at cost, 124,265 shares
              on
                December 31, 2005 and on June 30, 2005
            
            
            6,006,176
            
            
            
            6,006,176Total
                shareholders' equity
            
            
            1,817,601
            
            
            
            3,295,659Total
                liabilities and shareholders' equity
            
            $
            9,963,927
            
            
            $
            7,683,518





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





2


**AHPC
      Holdings, Inc. and Subsidiary**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**For
      the Three Months Ended December 31, 2005 and 2004**


Three
                Months Ended
              December
                31,2005
            
            
            
            2004(unaudited)
            
            
            
            (unaudited)Net
                sales
            
            $
            5,868,505
            
            
            $
            6,514,832Cost
                of goods sold
            
            
            4,740,282
            
            
            
            4,966,562Gross
                profit
            
            
            1,128,223
            
            
            
            1,548,270Operating
                expensesSelling,
                general and administrative
            
            
            1,958,039
            
            
            
            1,915,045Less
              from operations
            
            
            (829,816
            )
            
            
            (366,775
            )Other
                ExpenseInterest
                expense
            
            
            (154,207
            )
            
            
            (50,764
            )Other
                income and (expense)
            
            
            -
            
            
            
            (1,121
            )Loss
                from operations before provisionfor
                income taxes
            
            
            (984,023
            )
            
            
            (418,660
            )Provision
                for income taxes
            
            
            -
            
            
            
            -**NET
                LOSS**
            
            $
            (984,023
            )
            
            $
            (418,660
            )Net
                loss per common share:
              Basic
            
            $
            (0.81
            )
            
            $
            (0.44
            )Diluted
            
            $
            (0.81
            )
            
            $
            (0.44
            )(as
                restated
            )Weighted
                average common shares outstanding:
              Basic
                and diluted
            
            
            1,220,828
            
            
            
            960,066





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




3


**AHPC
      Holdings, Inc. and Subsidiary**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**For
      the Six Months Ended December 31, 2005 and 2004**


Six
                Months Ended
              December 31,2005
            
            
            
            2004(unaudited)
            
            
            
            (unaudited)Net
                sales
            
            $
            12,783,301
            
            
            $
            13,058,066Cost
                of goods sold
            
            
            10,220,226
            
            
            
            9,989,624Gross
                profit
            
            
            2,563,075
            
            
            
            3,068,442Operating
                expensesSelling,
                general and administrative
            
            
            3,843,753
            
            
            
            3,788,951Loss
                from operations
            
            
            (1,280,678
            )
            
            
            (720,509
            )Other
                ExpenseInterest
                expense
            
            
            (198,666
            )
            
            
            (70,679
            )Other
                income and (expense)
            
            
            -
            
            
            
            (1,121
            )Loss
                from operations before provision for income taxes
            
            
            (1,479,344
            )
            
            
            (792,309
            )Provision
                for income taxes
            
            
            3,235
            
            
            
            -**NET
                LOSS**
            
            $
            (1,482,579
            )
            
            $
            (792,309
            )Net
                loss per common share:
              Basic
            
            $
            (1.21
            )
            
            $
            (0.83
            )Diluted
            
            $
            (1.21
            )
            
            $
            (0.83
            )(as
                restated
            )Weighted
                average common shares outstanding:
              Basic
                and diluted
            
            
            1,220,828
            
            
            
            960,066





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




4


**AHPC
      Holdings, Inc. and Subsidiary**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**For
      the Six Months Ended December 31, 2005 and 2004**


Six
                Months Ended
              December
                31,2005
            
            
            
            2004(unaudited)
            
            
            
            (unaudited)Cash
                flows from operating activitiesNet
                loss
            
            $
            (1,482,579
            )
            
            $
            (792,309
            )Adjustments
                to reconcile net loss to net cash provided by operating
                activitiesDepreciation
                and amortization
            
            
            134,858
            
            
            
            151,142Amortization
                of discount on subordinated notes
            
            
            83,718
            
            
            
            -Loss
                on disposal of property, plant and equipment
            
            
            -
            
            
            
            1,121Deferred
                rent expense
            
            
            58,505
            
            
            
            -Changes
                in operating assets and liabilitiesAccounts
                receivable - trade
            
            
            44,654
            
            
            
            235,854Inventories,
                net
            
            
            (2,001,036
            )
            
            
            248,652Prepaid
                expenses
            
            
            (250,961
            )
            
            
            (247,055
            )Other
                assets
            
            
            1,000
            
            
            
            -Accounts
                payable - trade
            
            
            191,619
            
            
            
            609,827Accrued
                rebates
            
            
            18,560
            
            
            
            (37,059
            )Accrued
                expenses
            
            
            (3,619
            )
            
            
            (180,623
            )Net
                cash used in operating activities
            
            
            (3,205,281
            )
            
            
            (10,450
            )Cash
                flows from investing activitiesCapital
                expenditures
            
            
            (16,440
            )
            
            
            (15,800
            )Proceeds
                on sales of property, plant and equipment
            
            
            -
            
            
            
            300Net
                cash used in investing activities
            
            
            (16,440
            )
            
            
            (15,500
            )Cash
                flows from financing activitiesGross
                payments on trade notes payable to bank
            
            
            (5,266,716
            )
            
            
            (5,679,725
            )Gross
                borrowings on trade notes payable to bank
            
            
            7,287,375
            
            
            
            5,697,681Gross
                payments on notes payable
            
            
            (65,671
            )
            
            
            (547,660
            )Gross
                borrowings on notes payable
            
            
            227,908
            
            
            
            233,785Subordinated
                notes proceeds
            
            
            1,200,000
            
            
            
            -Proceeds
                from issuance of common stock
            
            
            4,521
            
            
            
            -Net
                cash provided by (used in) financing activities
            
            
            3,387,417
            
            
            
            (295,919
            )Net
                increase (decrease) in cash and cash equivalents
            
            
            165,696
            
            
            
            (321,869
            )Cash
                and cash equivalents, beginning of period
            
            
            16,434
            
            
            
            359,012Cash
                and cash equivalents, end of period
            
            $
            182,130
            
            
            $
            37,143Supplemental
                disclosure of cash flow information:Interest
                Paid
            
            $
            88,929
            
            
            $
            67,977Income
                Taxes Paid
            
            $
            32,802
            
            
            $
            -




Noncash
      financing activities:


Estimated
      fair value of accrued warrant liability as of December 31, 2005 in connection
      with the subordinated notes is $641,476.





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







5





**AHPC
      Holdings, Inc and Subsidiary**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**


**December
      31, 2005**





**1.**
            **Description
                of Business:**





AHPC
      Holdings, Inc. (the “Company”) is a marketer of foodservice and medical
      examination gloves and other disposable items used primarily in the foodservice
      and medical industries in the United States and Canada through its wholly owned
      subsidiary, American Health Products Corporation (“AHPC”).





**2.**  **Basis
      of Presentation:**





The accompanying unaudited condensed, consolidated financial statements have
      been prepared in accordance with accounting principles generally accepted in
      the
      United States of America, for interim financial information and with the
      instructions to Form 10-Q. Accordingly, they do not include all of the
      information and footnotes required by accounting principles generally accepted
      in the United States of America for a complete presentation of our financial
      statements. In the opinion of management, all adjustments necessary for a fair
      presentation, consisting only of normal recurring adjustments, have been
      included. The audited June 30, 2005 financial statements have been prepared
      under the assumption that we are a going concern. Our independent registered
      public accountants have included a “going concern” emphasis paragraph in their
      audit report accompanying the June 30, 2005 financial statements. For further
      information these financial statements and notes are to be read in conjunction
      with the consolidated financial statements contained in the Annual Report on
      Form 10-K for the year ended June 30, 2005, filed October 14, 2005. The results
      of operations for the three and six-month periods ended December 31, 2005,
      may
      not be indicative of the results that may be expected for the fiscal year ending
      June 30, 2006.





We
      have made certain reclassifications to the prior year balances to show
      comparatives.





**3.**  **Working
      Capital:**




We continue to incur operating losses and have working capital shortages.
      Despite this, we have been able to secure both short-term and long-term
      financing to support future operations (refer to Note 16). We believe that
      this
      short-term and long-term financing will be sufficient to support our liquidity
      through June 30, 2006, depending on operating results and the continued trade
      support. We expect to continue to consume cash through the end of fiscal year
      June 30, 2006. The rate at which cash will be consumed is primarily dependent
      on
      the revenues realized, cost reductions, cost of rising raw material and our
      ability to pass along some of these costs to our customers. There can be no
      assurances that the current financing will be sufficient and that favorable
      operating results will be achieved, or that additional financing will be
      available to us, or that the terms of any additional financing will be favorable
      for us.




**4.**  **Principles
      of Consolidation:**





The accompanying condensed consolidated financial statements include our
      accounts and those of AHPC. All significant intercompany transactions have
      been
      eliminated in consolidation.






6




**5.**  **Common
      Stock:**





On
      January 20, 2004, our Board of Directors approved a reverse stock split on
      a
      1-for-3 basis in order to insure the trading price of our Common Stock was
      in
      compliance with Nasdaq listing requirements. All references to per share amounts
      have been restated for this reverse stock split transaction in all periods
      presented.





During the six months ended, December 31, 2005, we issued 4,000 shares of our
      Common Stock pursuant to the exercise of employee stock options, we issued
      warrants to purchase shares of our Common Stock (refer to Note 7) and we issued
      13,591 shares in connection with a cashless exercise of 28,458 shares of
      employee stock options.





**6.**  **Series
      A Convertible Preferred Stock**





On
      February 2, 2005, we completed a private placement of 220,000 shares of Series
      A
      Convertible Preferred Stock (the “Preferred Shares”). The Preferred Shares were
      issued at a discount price of $2.60 per share. The Preferred Shares were
      convertible on a one-for-one basis into shares of our Common Stock by the
      holders at anytime or by us at anytime provided that the closing price of the
      Common Stock equaled or exceeded 150% of the closing price of our Common Stock
      (i.e. $4.88 per share) for a period equal to 21 consecutive trading days. We
      filed a registration statement with the Securities and Exchange Commission
      (the
“SEC”) on March 25, 2005 registering the shares of Common Stock issuable upon
      conversion of the Preferred Shares. As of September 30, 2005, all 220,000
      Preferred Shares have been converted into shares of our Common Stock. In
      connection with this private placement, we issued the placement company warrants
      to purchase 11,000 shares of our Common Stock (refer to Note 7).





Upon issuance, we recorded the Series A Convertible Preferred Stock as a
      beneficial conversion feature to additional paid-in-capital and retained
      earnings. The Preferred Shares were issued at a discount in the aggregate amount
      of $143,000.





Since the Preferred Shares were sold at a discount to the closing price of
      the
      Common Stock and in order to comply with the Nasdaq Stock Market, Inc., Rule
      4351 (which limits the voting rights allocable to preferred stock), the
      Preferred Shares possess, in the aggregate, that number of votes which could
      be
      cast on shares of our Common Stock had the purchase price for the Preferred
      Shares been used instead to purchase shares of our Common Stock at the same
      closing price of our Common Stock on the business day immediately preceding
      the
      closing date of the purchase of the Preferred Shares.





**7.**  **Warrants:**





On
      February 3, 2005, we issued to LaSalle St. Securities, LLC, the placement agent
      for the private placement of Preferred Shares, warrants to purchase 11,000
      shares of our Common Stock with an exercise price equal to $3.25 per share.
      These warrants may be converted by the holder on a one-for-one basis into shares
      of our Common Stock. The warrants are exercisable during the period beginning
      August 5, 2005 and ending February 2, 2008.





7


On
      September 29, 2005, we issued warrants to purchase up to 325,714 shares of
      our
      Common Stock in connection with the private placement of $1.2 million in
      subordinated promissory notes (refer to Note 16). Each Subordinated Note has
      attached a Class A Warrant and a Class B Warrant granting the holder of the
      Subordinated Note the right to purchase an aggregate of 192,000 and 120,000
      shares, respectively, of our Common Stock at an exercise price of $3.50 per
      share and $4.50 per share, respectively. In addition, in connection with this
      transaction, we issued the placement company a warrant to purchase 13,714 shares
      of our Common Stock at an exercise price of $3.50 per share. This warrant has
      similar rights and terms to the Class A Warrants and will also be referred
      to as
      a “Class A warrant.” Each of the Class A Warrants and the Class B Warrants has
      an exercise term of five years. The Class A Warrants and Class B Warrants shall
      be automatically exercised in full in a cashless exchange if the closing price
      of our Common Stock as listed on the NASDAQ Stock Market exceeds $8.75 and
      $11.25, respectively, for fifteen (15) consecutive trading days. As of December
      31, 2005, the Class A Warrants and Class B Warrants were assigned a fair value
      of $641,476, estimated using the Black-Scholes valuation model. The following
      assumptions were used to determine the fair value of these warrants using the
      Black-Scholes valuation model: a term of 4.7 years, a risk-free rate of 4.3,
      volatility of 100%, and an expected dividend yield of zero.





The holders of the Subordinated Notes and Class A Warrants and Class B Warrants
      have registration rights that require us to file a registration statement with
      the Securities and Exchange Commission within one year from the date of issuance
      of the warrants to register the resale of the Common Stock issuable upon
      exercise of the warrants if we file a registration statement or if we receive
      a
      collective demand for registration from the holders of the Class A Warrants
      and
      Class B Warrants holding in the aggregate at least 51% of the total Common
      Stock
      issuable upon exercise of all the warrants. Under EITF No. 00-19, *Accounting
      for Derivative Financial Instruments Indexed to, and Potentially Settled in,
      a
      Company’s Own Stock,* the
      ability to register the shares of Common Stock issuable upon exercise of the
      warrants is deemed to be outside of our control. Accordingly, we have on
      recorded the fair value of the Class A Warrants and Class B Warrants was
      $641,476 as an accrued warrant liability on our consolidated balance sheet,
      and
      this liability will continue to be marked to fair value at the end of each
      subsequent reporting period.




**8.**  **Stock
      Incentive Plans:**





In
      December 2004, the FASB issued Statement of Financial Accounting Standards
      (“SFAS”)  No.123,
“Share-Based Payment” (Revised 2004) (“SFAS 123R”). We adopted the provisions of
      SFAS No 123R as of July 1, 2005 using the modified prospective method. SFAS
      No.
      123R is a revision of SFAS No. 123, “Accounting for Stock Based Compensation”
and supersedes Accounting Principles Board (“APB”) Opinion No. 25,
“Accounting for Stock Issued to Employees”. SFAS 123R establishes standards for
      the accounting for transactions in which an entity exchanges its equity
      instruments for goods or services that are based on the fair value of the
      entity’s equity instruments or that may be settled by the issuance of those
      equity instruments. We have granted stock options to our employees in connection
      with the provision of services. Prior to July 1, 2005, SFAS 123 required us
      to
      disclose the pro forma effect of compensation expense for these stock options.
      Under SFAS 123R, we are required to record applicable compensation expense
      in
      our results of operations. During the period ending December 31, 2005, no
      compensation expense was recognized since all options outstanding as of June
      30,
      2005 were fully vested and there were no options granted during the
      period.




8


Prior to the adoption of SFAS 123R, we accounted for stock-based compensation
      in
      accordance with Accounting Principles Board (“APB”) Opinion No. 25,
“ *Accounting
      for Stock Issued to Employees* ,”
and
      had previously adopted the disclosure-only provisions of SFAS No. 123,
“ *Accounting
      for Stock-Based Compensation* ,”
      related to options and warrants issued to employees and directors. Option
      exercise prices for options granted under this plan were not less that the
      fair
      market value of our Common Stock on the date of grant.





The following table illustrates the effect on net earnings and earnings per
      share if we had applied the fair value recognition provisions of SFAS No. 123,
      “ *Accounting
      for Stock-Based Compensation* ,”
to
      stock-based compensation.




Three
                  Months Ended
                December
                  31,
              
              
              Six
                  Months Ended
                December
                  31,2005
              
              
              
              2004
              
              
              
              2005
              
              
              
              2004Net
                  loss, as reported
              
              $
              (984,023
              )
              
              $
              (418,660
              )
              
              $
              (1,482,579
              )
              
              $
              (792,309
              )Deduct:
                  total stock-based employee
                compensation
                  expense determined under fair
                value
                  based method for awards granted,
                modified,
                  or settled, net of related tax effects
              
              
              -
              
              
              
              4,999
              
              
              
              -
              
              
              
              9,998Pro
                  forma net loss
              
              $
              (984,023
              )
              
              $
              (413,661
              )
              
              $
              (1,482,579
              )
              
              $
              (782,311
              )Earnings
                  per shareBasic
                  - as reported
              
              $
              (0.81
              )
              
              $
              (0.44
              )
              
              $
              (1.21
              )
              
              $
              (0.83
              )Basic
                  - pro forma
              
              $
              (0.81
              )
              
              $
              (0.39
              )
              
              $
              (1.21
              )
              
              $
              (0.74
              )Dilutive
                  - as reported
              
              $
              (0.81
              )
              
              $
              (0.44
              )
              
              $
              (1.21
              )
              
              $
              (0.83
              )(as
                restated
              )
              
              
              
              
              
              
              (as
                  restated
              )Dilutive
                  - pro forma
              
              
              (0.81
              )
              
              $
              (0.39
              )
              
              $
              (1.21
              )
              
              
              (0.74
              )(as
                restated
              )
              
              
              
              
              
              
              (as
                  restated
              )


**9.**  **Net
      Loss Per Share:**





We
      follow the Statement of Financial Accounting Standards No. 128, “Earnings Per
      Share (EPS)” (“SFAS 128”), which requires dual presentation of basic and diluted
      earnings per share for all periods presented. Basic EPS amounts are based on
      the
      weighted-average number of shares of Common Stock outstanding during each period
      while diluted EPS amounts are based on the weighted-average number of shares
      of
      Common Stock outstanding during the period after the effect of dilutive stock
      options and warrants. Dilution is not applicable during the loss periods
      presented. The weighted-average number of common shares and common share
      equivalents outstanding for the three and six months ended December 31, 2005
      and
      2004, respectively, are as follows:





Three
                Months Ended
              December
                31,
            Six
                Months Ended
              December
                31,


2005
            
            
            
            2004
            
            
            
            2005
            
            
            
            2004Net
                Loss available to common shareholders
            
            $
            (984,023
            )
            
            $
            (418,660
            )
            
            $
            (1,482,579
            )
            
            $
            (792,309
            )Basic
                weighted-average number of common shares outstanding
            
            
            1,220,828
            
            
            
            960,066
            
            
            
            1,220,828
            
            
            
            960,066Dilutive
                effect of common share equivalents
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Diluted
                weighted-average number of common shares outstanding
            
            
            1,220,828
            
            
            
            960,066
            
            
            
            1,220,828
            
            
            
            960,066





9


**10.**  **Accounting
        for Income Taxes:**
 
 We
        record income taxes in accordance with Statement of Financial Accounting
        Standards No. 109 (“SFAS 109”). SFAS 109 utilizes the liability method and
        deferred taxes are determined based on the estimated future tax effects of
        differences between the financial statement and tax basis of fixed assets
        and
        other temporary differences given the provisions of enacted tax laws. Deferred
        income tax provisions and benefits are based on the changes in the deferred
        tax
        asset or tax liability from period to period.





Our U.S. operations had generated net operating loss carry-forwards (“NOL’s”) in
      prior years, of which approximately $4.998 million is remaining at December
      31,
      2005. These NOL’s are fully reserved with a valuation allowance and are included
      as a component of deferred tax assets. In accordance with federal tax
      regulations, usage of the net operating loss carryforwards is subject to
      limitations in future years as a direct result of the Redemption Transaction
      described in Note 17. We have available to utilize only $2.8 million of these
      NOL’s over the next 20 years, at which time all of the NOL’s listed above will
      have expired.





For the six months ended December 31, 2005 and 2004, we have recorded a
      provision of $3,235 and $0, respectively, for income taxes. The current period
      provision was for state income taxes.





**11.** **Contingencies:**





Over the last several years, numerous product liability lawsuits have been
      filed
      against suppliers and manufacturers of latex gloves alleging, among other
      things, adverse allergic reactions. We are one of numerous defendants that
      have
      been named in such lawsuits. During the six months ended December 31, 2005,
      there were no additional product liability lawsuits filed against the Company.
      At December 31, 2005, we were involved in a total of 9 lawsuits, either as
      a
      named defendant, third party or an indemnifier. We have agreed to defend and
      indemnify certain of our vendors solely in connection with the sale and
      distribution of our products. None of these lawsuits name us as the sole
      defendant. We are an active defendant in two of the claims. The indemnities
      have
      not pursued action against us in the remaining seven claims.





We
      possess product liability insurance coverage which covers the defense costs
      and
      certain damage awards associated with the product liability claims against
      the
      Company and AHPC. Additionally, AHPC’s customers typically procure product
      liability insurance that limits our exposure to those claims for which we have
      agreed to indemnify such customers, subject to deductions for such claims that
      remain our responsibility. We believe that all legal claims are adequately
      provided for or involve such amounts that would not materially or adversely
      affect our financial condition. However, there is no assurance that AHPC’s or
      its customers’ insurance will be sufficient to meet all damages for which we may
      be held liable. In addition, there can be no assurances that product liability
      insurance for these claims will continue to be available to us or, if available,
      that it will be available in sufficient amounts and at affordable
      terms.





**12.** **Critical
      Accounting Policies:**





While all of our accounting policies are important in assuring that we adhere
      to
      current accounting standards, certain policies are particularly important due
      to
      their impact on our financial statements. These are described in detail
      below.





Concentration of Credit Risk. A
      relatively small number of national accounts comprise a substantial portion
      of
      our revenues. As of December 31, 2005, receivables from our key national
      accounts amounted to 72.9% of our outstanding accounts receivable.





10


Reserves for Accounts Receivable and Inventory. We
      review on an ongoing basis the realizability of our trade receivables and the
      need for establishing reserves. As of December 31, 2005 and June 30, 2005,
      we
      have established reserves of $336,351 in relation to our trade
      receivables.




We
      review on an ongoing basis the realizability of our inventory value and the
      need
      for establishing reserves. Accordingly, we have established inventory reserves
      for valuation, shrinkage, excess and obsolete inventory. As of December 31,
      2005, these reserves equaled $223,056 and as of June 30, 2005 these reserves
      were $225,941.





Revenue Recognition. Sales
      for all products shipped from our Glendale Heights, Illinois warehouse are
      recognized at the time the product is shipped to our customers or picked up.
      Sales shipped or picked up from our designated two public warehouse facilities
      are recognized the day following the date of shipment. An accrual is recorded
      to
      recognize these sales in accordance with our accounting policies.





Inventories. Inventories are accounted for on a first-in, first-out basis and are valued
      at
      the lower of actual cost or market. Inventories are stored at our Glendale
      Heights, Illinois warehouse and two independent public warehouses located in:
      Oakland, California; and Fond du Lac, Wisconsin.





Property, Plant and Equipment. We
      record property, plant and equipment at cost. Depreciation is provided by both
      straight-line and accelerated methods over lives ranging from 2 to 7 years.
      Building improvements are amortized on a straight-line basis over their
      estimated useful lives or lease terms, whichever is shorter.





Sales Incentives. Certain
      customers are granted discounts, rebates or other allowances which are intended
      to assist in the promotion of our products. We record these discounts and
      rebates as our customers earn them or when they are paid, depending on the
      nature of the item. All discounts, rebates and allowances are shown as a
      deduction from gross sales to arrive at net sales in our consolidated statements
      of income.





Deferred Tax Asset. Deferred
      taxes result from the effect of transactions that are recognized in different
      periods for financial and tax reporting purposes. A valuation allowance is
      established when it is more likely than not that any portion of the deferred
      tax
      assets will not be realized. The valuation allowance is adjusted if the
      realization of deferred tax assets becomes more likely than not. Should our
      income projections result in the conclusion that realization of deferred tax
      assets is more likely than not, further adjustments to the valuation are made.





Accrued Warrant Liability. In
      connection with the issuance of the Subordinated Notes (refer to Note 16),
      we
      recorded the fair market value of the associated warrants (refer to Note 7)
      as
      an accrued warrant liability in accordance with SFAS 133 Accounting for
      Derivative Instruments and Hedging Activities and EITF 00-19 Accounting for
      Derivative Financial Instruments Indexed to, and Potentially Settled in, a
      Company's Own Stock. Accordingly, changes in the fair market value of the
      warrants will be reported in earnings as they occur. The associated discount
      on
      the Subordinated Notes is being amortized to interest expense, using the
      effective interest rate method, over the term of the Subordinated
      Notes.





11


**13.** **Recent
      Accounting Standards and Pronouncements:**





In
      December 2004, the FASB issued SFAS No.123, “Share-Based Payment” (Revised 2004)
      (“SFAS 123R”). We adopted the provisions of SFAS No 123R as of July 1, 2005
      using the modified prospective method. SFAS No. 123R is a revision of SFAS
      No.
      123, “Accounting for Stock Based Compensation” and supersedes Accounting
      Principles Board (“APB”) Opinion No. 25,
      “Accounting for Stock Issued to Employees”. SFAS 123R establishes standards for
      the accounting for transactions in which an entity exchanges its equity
      instruments for goods or services that are based on the fair value of the
      entity’s equity instruments or that may be settled by the issuance of those
      equity instruments. We have granted stock options to our employees in connection
      with the provision of services. Prior to July 1, 2005, SFAS 123 required us
      to
      disclose the pro forma effect of compensation expense for these stock options.
      Under SFAS 123R, we are required to record applicable compensation expense
      in
      our results of operations. During the period ending December 31, 2005, no
      compensation expense was recognized since all options outstanding as of June
      30,
      2005 were fully vested and there were no options granted during the
      period.





**14.** **Key
      Customers:**





Our customers include leading foodservice distributors and healthcare product
      suppliers. During the six months ended December 31, 2005, AHPC’s national
      customer group accounted for 86.2% of net sales. This customer group is
      comprised of 60 independent customers. The loss of the national customers
      comprising this customer group would have a materially adverse effect on us.
      Our
      customers tend to limit the number of qualified vendors they purchase from
      to
      gain efficiencies across their product line. We, therefore, expend substantial
      efforts to maintain and grow our relationships with our existing major
      customers. However, our products are ultimately distributed by three diversified
      distribution companies, through their combined networks of over 100 operating
      companies, to thousands of foodservice organizations and medical facilities
      throughout the United States. The ultimate end-users of our products are
      foodservice organizations and medical facilities, healthcare professionals
      and
      individuals who use our gloves and other associated disposable products.





**15.** **Trade
      Notes payable to bank:**





On
      September 9, 2004, we signed a commitment for a one-year credit facility with
      Greenfield Commercial Credit, LLC, a privately held commercial financing
      company. This credit facility consisted of an asset-based loan and security
      agreement that provided us with a $3 million revolving line of credit. Pursuant
      to the line of credit, we could borrow up to the lesser of (i) $3 million or
      (ii) the sum of 75% of eligible receivables and 35% of eligible inventory,
      with
      a limit of $1,000,000 on the amount of borrowing availability on the eligible
      inventory. The line of credit borrowings under this facility carried an interest
      rate of prime plus 8.0%. At anytime prior to maturity date, the lender had
      the
      unrestricted right to demand payment of all outstanding indebtedness. These
      bank
      obligations were secured by a security interest in substantially all of AHPC
      tangible and intangible assets. The credit facility contained certain penalties
      for early termination. This credit facility was renewed on September 9, 2005
      with certain amendments described below.





12


The renewal of our loan and security agreement with Greenfield Commercial
      Credit, LLC, on September 9, 2005, included an amendment increasing our
      borrowing availability from $3 million to a potential maximum borrowing amount
      of $5 million. Under the amended facility we may borrow up to the lesser of
      (i)
      $5 million or (ii) the sum of 80% of eligible receivables and 50% of eligible
      inventory on hand and 35% of eligible inventory in-transit, with a sub limit
      on
      the inventory in-transit of $500,000, and an overall inventory cap of
      $2,500,000. The line of credit borrowings under the amended facility carry
      an
      interest rate of prime plus 4.5%. The prime rate is the rate published in the
      Wall Street Journal in its “Money Rates” column as the “Prime Rate.” As of
      December 31, 2005, the prime rate was 7.2%. At any time prior to the maturity
      date, the lender has the unrestricted right to demand payment of all outstanding
      indebtedness. These bank obligations remain secured by a security interest
      in
      substantially all of AHPC
      tangible and intangible assets and continue to contain certain penalties for
      early termination. As of December 31, 2005 and June 30, 2005, we had an
      outstanding credit line balance of $2,804,465 and $783,806, respectively, under
      this credit facility and were contingently liable for outstanding letters of
      credit liabilities totaling $745,892 and $927,337, respectively. Also, included
      in the contingent outstanding letters of credit for both December 31, 2005
      and
      June 30, 2005 is one stand by letter of credit for $125,000 which represents
      our
      warehouse and office space security deposit.




In
      addition to our grant of a security interest in substantially all of AHPC’s
      assets, Alan Zeffer, our Chief Executive Officer, has guaranteed the repayment
      of the revolving loan in full if the loan is not repaid as a result of
      malfeasance by Mr. Zeffer in the performance of his duties.




**16.** **Long
      Term Debt:**




On
      September 29, 2005, we completed a private placement of $1.2 million in
      subordinated promissory notes (the “Subordinated Notes”). Our obligations under
      the Subordinated Notes are secured by a Security Agreement that generally grants
      the holder of the Subordinated Note a secondary interest, behind Greenfield
      Commercial Credit, LLC, in substantially all of our assets. The Subordinated
      Notes bear interest at a rate of 7% per annum with a maturity date of two years
      after the date of issuance of the Subordinated Notes. Each Subordinated Note
      has
      attached a Class A Warrant and a Class B Warrant granting the holder of the
      Subordinated Note the right to purchase shares of our Common Stock at an
      exercise price of $3.50 per share and $4.50 per share, respectively (refer
      to
      Note 7). We recorded each warrant at its fair value at the date of issuance.
      The
      $26,786 fair value of the warrants allocable to the placement agent has been
      recorded as debt issue costs and is being amortized to expense over the term
      of
      the Subordinated Notes. The discount on the Subordinated Notes for the warrants
      is being amortized to interest expense, using the effective interest rate
      method, over the term of the Subordinated Notes. At December 31, 2005, the
      unamortized discount on the warrants was $519,049. For the six months ended
      December 31, 2005, total interest expense recognized relating to the discount
      was $83,718.





**17.** **WRP
      Asia Financial Restructuring:**





On
      July 8, 2003 WRP Asia Pacific Sdn Bhd (“WRP Asia”)  announced
      the completion of its financial restructuring, which involved restructuring
      and
      reducing WRP Asia’s debt position and providing additional new funding. Due to
      the terms of the restructuring, WRP Asia was prohibited from repaying certain
      debt, including our intercompany debt in the short term.





13


On
      November 3, 2003, we announced the signing of a definitive stock redemption
      and
      exchange agreement (the “Redemption Transaction”) with WRP Asia. We completed
      the redemption from WRP Asia, which became effective on April 30, 2004, pursuant
      to a stock redemption and exchange agreement with WRP Asia. Through this
      transaction, we redeemed 417,513 shares of our Class A Common Stock and 833,333
      shares of our Class B Common Stock, which comprised all of WRP Asia's holdings
      in the Company at the effective date of the redemption. These share amounts
      reflect the 1-for-3 reverse stock split which was effective on January 20,
      2004.
      Collectively, these shares represented approximately 53.2% of our outstanding
      capital stock on the effective date of the transaction. As consideration for
      the
      redemption, we conveyed to WRP Asia our 70% ownership interest in PT WRP Buana
      Multicorpora (“PT Buana”) and forgave all indebtedness owing to us or our
      subsidiaries from WRP Asia and from PT Buana, with the exception of certain
      mutually agreed obligations related to recent product purchases. We also entered
      into a five (5) year supply agreement whereby we agreed to purchase certain
      minimum quantities of our latex glove needs from WRP Asia. In connection with
      the redemption, we received a fairness opinion from an independent professional
      valuation firm that the transaction was fair to our shareholders. On the closing
      of the transaction, the three of our seven directors who were employees of
      WRP
      Asia resigned their positions as officers and directors of the
      Company.





As
      of April 30, 2004, the market value of the stock redeemed at the closing of
      the
      stock redemption was $4,377,000. The balance sheet amounts, as of April 30,
      2004, that related to our share of PT Buana financials, net of intercompany
      receivable and payables, were assets totaling $11,305,439 and liabilities of
      approximately $2,665,854. For fiscal 2004, the portion of net revenues relating
      to PT Buana was $11,511,161 with a net operating loss of $566,268. In connection
      with the transaction, we agreed to forgive all indebtedness owing to us or
      our
      subsidiaries from WRP Asia and from PT Buana, which equaled $1,401,322. The
      loss
      on this transaction was $174,361, and was recorded in Paid-in-Capital.





In
      connection with the redemption of WRP Asia, we also changed our name from WRP
      Corporation to AHPC Holding, Inc, effective May 14, 2004. Additionally, our
      NASDAQ trading symbol changed from WRPC to GLOV.





**18.** **Restatement:**





This Form 10-Q reflects a correction of certain accounting information and
      disclosures related to the calculation of our reported basic and diluted net
      loss per share. For the quarter ended December 31, 2004 we improperly included
      potential common shares in the denominator of our diluted net loss per share
      computation, which caused an incorrect anti-dilutive diluted net loss per share
      amount. We have restated our financial statements to reflect the correction
      of
      this error.





Three
                Months
              Ended
              December
                31,
              (as
                restated)
            
            
            Six
                Months Ended December 31,
              (as
                restated)
            
            
            Three
                Months Ended
              December
                31,
              (as
                previously reported)
            
            
            Six
                Months Ended December 31,
              (as
                previously reported)2004
            
            
            2004
            
            
            2004
            
            
            2004Net
                Loss
            
            
            ($418,660
            )
            
            ($792,309
            )
            
            ($418,660
            )
            
            ($792,309
            )Basic
                net loss per common share
            
            
            ($0.44
            )
            
            ($0.83
            )
            
            ($0.44
            )
            
            ($0.83
            )Diluted
                net loss per common share
            
            
            ($0.44
            )
            
            ($0.83
            )
            
            ($0.39
            )
            
            ($0.74
            )




14





**ITEM
      2.  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations**





The
      purpose of management’s discussion and analysis of financial condition and
      results of operations is to provide shareholders with an understanding of our
      financial condition, changes in financial condition and results of operations.





***Business
      Overview***





Our
      wholly owned subsidiary, American Health Products Corporation (“AHPC”), is
      engaged in the marketing and distribution of high quality medical grade
      examination and foodservice gloves and other complimentary products within
      the
      United States and Canada. We have been in the glove business since our
      incorporation in January 1989. For the six months ended December 31, 2005,
      we
      recorded net sales of approximately $12.8 million.




**Three
      Months Ended December 31, 2005 Compared to the Three Months Ended December
      31,
      2004:**





Consolidated
      net sales for the three months ended December 31, 2005 were $5,868,505 which
      represents a decrease in net sales of $646,327 or 9.9% compared to the three
      months ended December 31, 2004. This decrease in net sales is due to competitive
      pricing pressure within some of our national account customers for our lower
      margin products. Our net sales are derived from the sales of finished product
      net of allowable rebates, discounts and returns.





Consolidated
      gross profit decreased $420,047 or 27.1% for the three months ended December
      31,
      2005 compared to the three months ended December 31, 2004. Cost of goods sold,
      a
      component in calculating our gross profit, includes all costs to purchase our
      finished products plus the related costs associated with ocean freight, customs
      duty and warehousing. The increase in cost of goods sold during the current
      year
      period was due to increases in raw material costs. We expect to improve our
      margins on our product sales in subsequent quarters due to certain price
      increases that have been approved to enable us to pass on to our customers
      certain of the increased raw material costs we have recently incurred. We
      continue to expect our gross margins to be affected by the cost of latex,
      changes in product mix, competition, manufacturing capacity levels and other
      factors.





Our
      operating loss has increased $463,041 or 126.2% for the three months ended
      December 31, 2005 from the same time period in the prior year. Selling expenses,
      a component of calculating our operating loss, include all salaries and payroll
      related costs for sales and marketing staff together with other sales related
      expenses such as sales commissions, travel costs, trade shows, advertising,
      promotions and delivery costs. During the three months ended December 31, 2005,
      our selling, general, administrative and other expenses (“SG&A expenses”)
      increased by $42,994 or 2.2%. As a percentage of net sales, SG&A expenses
      increased from 29.4% for the three months ended December 31, 2004, to 33.4%
      for
      the three months ended December 31, 2005. This percentage increase was primarily
      due to the decrease in net sales for the three month period ended December
      31,
      2005.





Loss
      from
      operations before taxes increased by $565,363 or 135.0% for the three months
      ended December 31, 2005 compared to the same period in the prior year. This
      increase in our loss from operations was primarily due to the decrease in sales
      and an increase in raw material costs. Included in the computation of our loss
      from operations is other income (or expense) which consists of interest expense
      and income and miscellaneous expense and income. Other expense increased by
      $102,322 for the three months ended December 31, 2005 from the reported amount
      in the same period in the prior year. This increase was due to amortization
      of
      the warrant discount of $87,269 (refer to Note 16) and an increase in borrowings
      on our current credit facility during the current year period.





15


The
      expense for income taxes for the three months ended December 31, 2005 was $3,235
      compared to $0 in the prior year period. The increase in the current year period
      was due to income taxes paid to various states.





As
      a
      result of the factors discussed above, we reported a net loss of $(984,023)
      for
      the three months ended December 31, 2005, which compares to a net loss of
      $(418,660) during the same period in the prior year. Basic and dilutive net
      loss
      per share for the three months ended December 31, 2005 and December 31, 2004,
      were $(0.81) and $(0.44), respectively. Outstanding options and warrants are
      excluded from the calculation of diluted net loss per share since the inclusion
      of such options and warrants is anti-dilutive.




**Six
      Months Ended December 31, 2005 Compared to the Six Months Ended December 31,
      2004:**





Consolidated
      net sales for the six months ended December 31, 2005 were $12,783,301 which
      represents a decrease in net sales of $274,765 or 2.1% compared to the six
      months ended December 31, 2004. This decrease in net sales is due to competitive
      pricing pressure within some of our national account customers for our lower
      margin products. Our net sales are derived from the sales of finished product
      net of allowable rebates, discounts and returns.





Consolidated
      gross profit decreased $505,367 or 16.5% for the six months ended December
      31,
      2005 compared to the six months ended December 31, 2004. Cost of goods sold,
      a
      component in calculating our gross profit, includes all costs to purchase our
      finished products plus the related costs associated with ocean freight, customs
      duty and warehousing. The increase in cost of goods sold during the current
      year
      period was due to increases in raw material costs. As stated above, we expect
      to
      improve our margins on our product sales in subsequent quarters due to certain
      price increases that have been approved to enable us to pass on to our customers
      certain of the increased raw material costs we have recently incurred. We
      continue to expect our gross margins to be affected by the cost of latex,
      changes in product mix, competition, manufacturing capacity levels and other
      factors.





Our
      operating loss has increased $560,169 or 77.7% for the six months ended December
      31, 2005 from the same time period in the prior year. Selling expenses, a
      component of calculating our operating loss, include all salaries and payroll
      related costs for sales and marketing staff together with other sales related
      expenses such as sales commissions, travel costs, trade shows, advertising,
      promotions and delivery costs. During the six months ended December 31, 2005,
      our SG&A expenses increased by $54,802 or 1.4%. As a percentage of net
      sales, SG&A expenses increased from 29.0% for the six months ended December
      31, 2004, to 30.0% for the six months ended December 31, 2005. This percentage
      increase was primarily due to a decrease in net sales for the six month period
      ended December 31, 2005.





Loss
      from
      operations before taxes increased by $687,035 or 86.7% for the six months ended
      December 31, 2005 compared to the same period in the prior year. This increase
      in our loss from operations was primarily due to an increase in raw material
      costs. Included in the computation of our loss from operations is other income
      (or expense) which consists of interest expense and income and miscellaneous
      expense and income. Other expense increased by $126,866 for the six months
      ended
      December 31, 2005 from the reported amount in the same period in the prior
      year.
      This increase was due to amortization of the warrant discount of $95,641 (refer
      to Note 16) and an increase in borrowings on our current credit facility during
      the current year period.





16


The
      expense for income taxes for the six months ended December 31, 2005 was $3,235
      compared to $0 in the prior year period. The increase in the current year period
      was due to income taxes paid to various states.





As
      a
      result of the factors discussed above, we reported a net loss of $(1,482,579)
      for the six months ended December 31, 2005, which compares to a net loss of
      $(792,309) during the same period in the prior year. Basic and dilutive net
      loss
      per share for the six months ended December 31, 2005 and December 31, 2004,
      were
      $(1.21) and $(0.83), respectively. Outstanding options and warrants are excluded
      from the calculation of diluted net loss per share since the inclusion of such
      options and warrants is anti-dilutive.





**Liquidity
      and Capital Resources:**





**Six
      Months Ended December 31, 2005:**





Cash
      and
      cash equivalents at December 31, 2005 were $182,130, an increase of $165,696
      from $16,434 at June 30, 2005. We experienced an increase in cash flows during
      the six months ended December 31, 2005, primarily as a result of cash provided
      by financing activities which largely related to proceeds received from issuance
      of our secured subordinated promissory notes (refer to Note 16).





Our
      operations used cash of $3,205,281 during the six months ended December 31,
      2005, primarily as a result of increases in inventory levels and product line
      extensions. Net trade accounts receivable at December 31, 2005 was $1,799,695
      which decreased from $1,844,349 at June 30, 2005 due to the timing of cash
      receipts. Net inventories at December 31, 2005 were $6,993,421, an increase
      from
      the level at June 30, 2005, of $4,992,385, due to management’s efforts to
      maintain inventory levels and bring on new product line extensions.





During
      the six months ended December 31, 2005, we used cash in investing activities
      of
      $16,440 in connection with capital improvement expenditures during such period
      primarily relating to computer software and hardware purchases.





During
      the six months ended December 31, 2005, cash provided by financing activities
      equaled $3,387,417. The cash provided by financing activities primarily came
      from the issuance of $1.2 million in secured subordinated promissory notes
      (refer to Note 16) and borrowings on our trade note payable.





We
      renewed our credit facility with Greenfield Commercial Credit, LLC on September
      9, 2005 with certain amendments described below. In connection with the renewal,
      we incurred a renewal fee of $100,000. Moreover, the fee to again renew the
      security agreement after the one-year term expires in September 2006 will be
      $50,000.





17


The
      renewal of our loan and security agreement with Greenfield Commercial Credit,
      LLC, on September 9, 2005, included an amendment increasing our borrowing
      availability from $3 million to a potential maximum borrowing amount of $5
      million. Under the amended facility, we may borrow up to the lesser of (i)
      $5
      million or (ii) the sum of 80% of eligible receivables and 50% of eligible
      inventory on hand and 35% of eligible inventory in-transit, with a sub limit
      of
      $500,000, and an overall inventory cap of $2,500,000. The line of credit
      borrowings carry an interest rate of prime plus 4.5%. At any time prior to
      the
      maturity date, the lender has the unrestricted right to demand payment of all
      outstanding indebtedness. These bank obligations are secured by a security
      interest in substantially all of AHPC's tangible and intangible assets and
      contain certain penalties for early termination. As of December 31, 2005, we
      had
      an outstanding balance under this credit facility of $2,804,465 and were
      contingently liable for outstanding letters of credit liabilities totaling
      $745,892.




The
      audited June 30, 2005 financial statements have been prepared under the
      assumption that we are a going concern. Our independent registered public
      accountants have included a “going concern” emphasis paragraph in their audit
      report accompanying the June 30, 2005 financial statements. We continue to
      experience reoccurring net losses. Although, we have benefited from several
      cost
      reduction programs, the volatility of raw material costs and rising oil prices
      together have limited the benefits of these programs in our results of
      operations.




Despite
      the negative cash flow, we have been able to secure both short-term and
      long-term financing to support future operations (refer to Note 16). We believe
      that this short-term and long-term financing will be sufficient to support
      our
      liquidity for the foreseeable future, depending on operating results and the
      continued trade support. We expect to continue to consume cash through the
      end
      of fiscal year June 30, 2006. The rate at which cash will be consumed is
      primarily dependent on the revenues realized, cost reductions, cost of rising
      raw material and our ability to pass along some of these costs to our customers.
      There can be no assurances that the current financing will be sufficient and
      that favorable operating results will be achieved, or that additional financing
      will be available to us, or that the terms of any additional financing will
      be
      favorable for us.




The
      following table summarizes our significant contractual commitments as of
      December 31, 2005:





**Payments
                Due by Period****Contractual****Obligation**
            
            
            **Total**
            
            
            **Less
                Than 1 Year**
            
            
            **1
                - 3 Years**
            
            
            **4
                - 5 Years**
            
            
            **After
                5 Years**Operating
                Leases (1)
            
            $
            1,893,591
            
            $
            209,777
            
            $
            1,306,836
            
            $
            376,978
            
            $
            -Purchase
                Commitments (2)
            
            $
            17,502,163
            
            $
            2,620,084
            
            $
            14,882,079
            
            $
            -
            
            $
            -





(1)
      On
      March 31, 2005, we entered into a Lease Agreement with ProLogis to lease
      warehouse and office space in the building known as 80 Internationale Boulevard,
      Unit A in Glendale Heights, Illinois. The term of the Lease Agreement commenced
      on May 1, 2005 and will end on June 30, 2010, subject to our option to extend
      the lease term for an additional term of 5 years.





(2)
      On
      April 30, 2004, we entered into a five year supply agreement with WRP Asia.
      This
      agreement calls for us to purchase no less than a minimum of seven forty-foot
      containers of product per month and no less than 125 forty-foot containers
      of
      product per each 12 month period commencing on April 30, 2004. Our estimated
      12
      month liability, for 125 forty-foot containers, would be $5,240,168. However,
      in
      the event that our customers comprising our major customer group cease
      purchasing latex gloves from us, we shall only be obligated to purchase from
      WRP
      Asia as many forty-foot containers of product per month as needed to meet 100%
      of our products needs, or the minimum annual amount, whichever is
      less.





18


**Forward
      Looking Statements**





Certain
      matters discussed in this Form 10-Q are “forward-looking statements,” and the
      Company intends these forward-looking statements to be covered by the safe
      harbor provisions for forward-looking statements contained in the Private
      Securities Litigation Reform Act of 1995 and is including this statement for
      purposes of those safe harbor provisions. These forward-looking statements
      can
      generally be identified as such because the context of the statement includes
      phrases such as the Company “expects,” “believes,” “anticipates” or other words
      of similar meaning. Similarly, statements that describe the Company’s future
      plans, objectives or goals are also forward-looking statements. Such
      forward-looking statements are subject to certain risks and uncertainties which
      could cause actual results or outcomes to differ materially from those currently
      anticipated. Factors that could affect actual results or outcomes include those
      contained in the Annual Report on Form 10-K for the year ended June 30, 2005,
      filed October 14, 2005, and the following: changes in consumer spending
      patterns; unanticipated issues related to the Company’s business; the Company’s
      success in implementing its strategic plan; actions of companies that compete
      with the Company; the Company’s success in managing inventory; the success of
      suppliers and customers; the ability of the Company to deploy its capital
      successfully; unanticipated outcomes related to outsourcing certain
      manufacturing processes; and unanticipated outcomes related to outstanding
      litigation matters. Shareholders, potential investors and other readers are
      urged to consider these factors in evaluating the forward-looking statements
      and
      are cautioned not to place undue reliance on such forward-looking statements.
      The forward-looking statements included herein are only made as of the date
      of
      this Form 10-Q. The Company assumes no obligation, and disclaims any obligation,
      to update such forward-looking statements to reflect subsequent events or
      circumstances.





19





**ITEM
      3. Quantitative and
      Qualitative Disclosures About Market Risk**





We
      are
      exposed to the impact of interest rate changes, foreign currency fluctuations
      and changes in the market value of investments. We have not entered into
      interest rate caps or collars or other hedging instruments.





Exposure
      to changes in interest rates is limited to borrowings under revolving credit
      and
      debt agreements, which have variable interest rates, tied to the prime rate
      of
      interest. We estimate that the fair value of each debt instrument approximated
      its market value at December 31, 2005.





**ITEM
      4. Controls and
      Procedures**





As
      of the
      end of the period covered by this report, the Company carried out an evaluation,
      under the supervision and with the participation of the Company's management,
      including the Company's Chief Executive Officer and Chief Financial Officer,
      of
      the Company's disclosure controls and procedures (as defined in Rules 13a-15(e)
      and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based
      upon
      this evaluation and because of the material weakness described below, the
      Company's Chief Executive Officer and Chief Financial Officer concluded that,
      as
      of the end of such period, the Company's disclosure controls and procedures
      were
      not effective in recording, processing, summarizing and reporting on a timely
      basis, information required to be disclosed by the Company in reports that
      the
      Company files with or submits to the Securities and Exchange Commission. It
      should be noted that in designing and evaluating the disclosure controls and
      procedures, management recognized that any controls and procedures, no matter
      how well designed and operated, can provide only reasonable assurance of
      achieving the desired control objectives, and management necessarily was
      required to apply its judgment in evaluating the cost-benefit relationship
      of
      possible controls and procedures. The Company has designed its disclosure
      controls and procedures to reach a level of reasonable assurance of achieving
      the desired control objectives and, based on the evaluation described above,
      the
      Company's Chief Executive Officer and Chief Financial Officer concluded that
      the
      Company's disclosure controls and procedures were not effective at reaching
      that
      level of reasonable assurance.





During
      the process of responding to a recent Securities and Exchange Commission comment
      letter, the Company’s management identified an error which lead to the
      identification of a material weakness within the Company’s financial reporting
      and disclosure controls.





The
      error
      relates to the Company's accounting and disclosure of the reverse three for
      one
      stock split effective January 20, 2004 and the calculation of the reported
      basic
      and diluted net loss per share. The Company incorrectly included potential
      common shares in the denominator of a diluted per-share computation that
      resulted in the disclosure of an anti-dilutive per share amount, which is not
      the equivalent of diluted earnings per share disclosure. Additionally, in
      connection with the reverse three for one stock split, the Company failed to
      retroactively adjust its loss per share amounts to reflect the stock split.
      It
      should be noted, however, that the Company's failure to accurately report its
      basic and diluted net loss per share did not have any affect on the Company's
      cash balance for the applicable periods.





In
      addition, during the quarter ended September 30, 2005, a significant adjustment
      relating to the accounting treatment for the warrants (refer to Note 7 of the
      financial statements) was proposed by our independent auditors and recorded
      by
      management and reflected in the financial statements included within this Form
      10-Q.




20





The
      material weakness relates to the lack of formal policies and procedures related
      to our financial statement reporting and regulatory filing process. Management
      is addressing this material weakness by enacting the following
      steps:





l
            Develop
                a formal policy/procedures manual for the financial statement reporting
                and regulatory filing process;


l
            Develop
                monthly, quarterly and annual closing procedures checklists and “close”
                binders. These binders should include a draft of the financials statements
                and 10-K/Q with references to supporting schedules or other documentation
                (i.e., agreements);


l
            Utilize
                a Generally Accepted Accounting Principle (GAAP) checklist to help
                ensure
                all relevant disclosures are included;


l
            Prepare
                white papers to address the accounting for any new accounting
                pronouncements and any existing and/or new complex or unusual accounting
                transactions;


l
            Documented
                detail reviews by management and others of regulatory filings and
                financial statements;


l
            Implement
                training programs for technical accounting areas and SEC reporting
                requirements; and


l
            Continue
                to consider with outside legal counsel the filing of an 8-K upon
                signature
                of any agreements made on behalf of the
                Company.





There
      was
      no change in the Company’s internal control over financial reporting (as defined
      in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934,
      as
      amended) during the Company’s most recently completed fiscal quarter that has
      materially affected, or is reasonably likely to materially affect, the Company’s
      internal control over financial reporting.





21


**PART
      II**


**Other
      Information**





**ITEM
      1.     Legal Proceedings.**




In
      the
      normal course of business, the Company may be involved in various legal
      proceedings from time to time. The Company does not believe it is currently
      involved in any claim or action the ultimate disposition of which would have
      a
      material adverse effect on the Company’s financial statements.





**ITEM
      2.     Unregistered Sales of Equity Securities and Use of
      Proceeds.**





None





**ITEM
      3.     Defaults Upon Senior
      Securities.**





None





**ITEM
      4.     Submission of Matters to a Vote of Security
      Holders.**





None





**ITEM
      5.     Other Information.**





None





**ITEM
      6.** **Exhibits.**




Exhibit
                Number
            Description
                of Document3.1
            Certificate
                of Incorporation of the Company, incorporated herein by reference
                to
                Exhibit No. 3.1 to the Company’s Form S-1 Registration Statement
                (Registration No. 33-36206).3.2
            Certificate
                of Amendment to Certificate of Incorporation of the Company, incorporated
                herein by reference to Exhibit No. 3.2 to the Company’s Form S-1
                Registration Statement (Registration No. 33-36206).3.3
            Certificate
                of Amendment to Certificate of Incorporation of the Company, incorporated
                herein by reference to Exhibit 3.3 to the Company’s form 10-K Annual
                Report for the fiscal year ended December 31, 1991 (File No.
                0-17458).3.4
            Articles
                of Amendment to Certificate of Incorporation, incorporated herein
                by
                reference to Exhibit 10.42 included in the Company’s Form 10-K Annual
                Report for the fiscal year ended December 31, 1997 (File No.
                0-17458).3.5
            Bylaws
                of the Company, incorporated herein by reference to Exhibit No. 3.4
                to the
                Company’s Form S-18 Registration Statement (Registration No.
                33-23164-FW).3.6
            Amendment
                to Bylaws of the Company, incorporation herein by reference to Exhibit
                3.5
                to the Company’s Form 10-K Annual Report for the fiscal year ended
                December 31, 1991 (File No. 0-17458).31.1
            Certification
                of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.31.2
            Certification
                of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.32.1(1)
            Certification
                Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002.




(1) This
      certification is not "filed" for purposes of Section 18 of the Securities
      Exchange Act of 1934, as amended, or incorporated by reference into any filing
      under the Securities Act of 1933, as amended, or the Securities Exchange Act
      of
      1934, as amended.





22


**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.





AHPC
                Holdings, Inc
              (Registrant)BY:/s/
                Alan E.
                Zeffer
              Alan
                E. Zeffer, Chief Executive OfficerBY:/s/
                Deborah J.
                Bills
              Deborah
                J. Bills, Chief Financial
                Officer





Dated:
      February 14, 2006






23