-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QuYnQk4NzKjwEwGKLHO0dgDzO1sztk8LZgWD286QoMVhGDNxlDGJZ+evFlu1zUl+ DKzUT+r8AQsyhrwmHIN7lw== 0001144204-04-006784.txt : 20040517 0001144204-04-006784.hdr.sgml : 20040517 20040517111055 ACCESSION NUMBER: 0001144204-04-006784 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APO HEALTH INC /NV/ CENTRAL INDEX KEY: 0001076607 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES [5047] IRS NUMBER: 860871787 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-30074 FILM NUMBER: 04810380 BUSINESS ADDRESS: STREET 1: 3590 OCEANSIDE ROAD STREET 2: - CITY: OCEANSIDE STATE: NY ZIP: 11572 BUSINESS PHONE: 8003652839 MAIL ADDRESS: STREET 1: 2080 E. FLAMINGO RD STREET 2: SUITE 112 CITY: LAS VEGAS STATE: NV ZIP: 89119 FORMER COMPANY: FORMER CONFORMED NAME: INTERNETFINANCIALCORP COM INC DATE OF NAME CHANGE: 20000229 FORMER COMPANY: FORMER CONFORMED NAME: CARIBBEAN VENTURES INC /NV/ DATE OF NAME CHANGE: 19990112 10-Q 1 v03174_10q.txt U.S. 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 March 31, 2004 OR [ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934 From the transition period from __________ to ___________ Commissions file number 00030074 -------- APO HEALTH, INC. ------------------------------------------------------ (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) NEVADA 86-0871787 ------------------------------- ---------------------- (STATE OR OTHER JURISDICTION OF (IRS EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 3590 OCEANSIDE ROAD, OCEANSIDE, NEW YORK 11575 ---------------------------------------------- (Address of principal executive offices) (800) 365-2839 --------------------------- (Issuer's Telephone Number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 April 26, 2004, 34,106,045 shares of Common Stock of the issuer were issued. APO HEALTH, INC. FORM 10-Q QUARTER ENDED MARCH 31, 2004 TABLE OF CONTENTS Page ---- PART I - FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENT. Consolidated Balance Sheet as of March 31, 2004 and September 30, 2003. 3 Consolidated Statement of Income for the three and six Months ended March 31, 2004 and 2003. 4 Consolidated Statement of Cash Flows for the Six months ended March 31, 2004 and 2003. 5 Notes to Consolidated Financial Statements. 6 - 10 ITEM 2 Management's Discussion and Analysis Or Plan of Operations. 11-12 PART II - OTHER INFORMATION ITEM 1 Legal Proceeding. 12 ITEM 2 Changes in Securities and Use of Proceeds. 12-13 ITEM 3 Default upon Senior Securities. 13 ITEM 4 Submission of Matters to a Vote of Security Holders. 13 ITEM 5 Other Information. 13 ITEM 6 Exhibits and Reports on Form 8-K. 13 SIGNATURES 13 - 2 - PART I - FINANCIAL INFORMATION APO HEALTH, INC. CONSOLIDATED BALANCE SHEET
MARCH 31, SEPTEMBER 30, 2004 2003 ----------- ----------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash $ 268,787 $ 405,153 Accounts Receivable, net of allowance for doubtful accounts of $50,000 and $50,000 1,470,040 1,702,741 Inventory 2,668,444 1,396,205 Note receivable -- 4,566 Due from Officers 60,000 108,905 Other Current Assets 161,712 55,013 ----------- ----------- Total Current Assets 4,628,983 3,672,583 ----------- ----------- Property and Equipment, net of accumulated depreciation of $78,566 and $98,992 13,063 18,003 Deposits 7,500 7,500 ----------- ----------- Total Assets $ 4,649,546 $ 3,698,086 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Bank Notes Payable $ 1,011,212 $ 1,008,123 Cash Overdraft 186,651 -- Accounts Payable 1,313,542 924,029 Accrued Compensation 198,790 248,483 Customer Deposits 446,893 294,587 ----------- ----------- Total Current Liabilities 3,157,088 2,475,222 ----------- ----------- STOCKHOLDERS' EQUITY: Common stock, $.0002 par value, 125,000,000 shares authorized, 34,106,045 and 32,106,045 shares issued and outstanding 6,725 6,325 Paid-in Capital 2,040,368 1,920,768 Retained Earnings (Deficit) (554,635) (704,229) ----------- ----------- Total Stockholders' Equity 1,492,458 1,222,864 ----------- ----------- Total Liabilities and Stockholders' Equity $ 4,649,546 $ 3,698,086 =========== ===========
- 3 - APO HEALTH, INC. CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2003 AND 2002 (UNAUDITED)
THREE MONTHS SIX MONTHS ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Revenue $ 13,859,543 $ 10,570,735 $ 21,243,530 $ 22,235,501 Cost of Revenue 13,255,203 9,996,141 20,002,019 21,101,277 ------------ ------------ ------------ ------------ Gross Margin 604,340 574,594 1,241,511 1,134,224 ------------ ------------ ------------ ------------ Operating Expenses Selling Expense 210,766 111,189 374,611 267,288 General and Administrative Expenses 420,168 533,546 759,999 860,406 ------------ ------------ ------------ ------------ 630,934 644,735 1,134,610 1,127,694 ------------ ------------ ------------ ------------ Income (Loss) from Operations (26,594) (70,141) 106,901 6,530 Other Income (Expense) Recovery of Litigation Expense 92,755 -- 92,755 -- Interest Expense (27,332) (28,280) (50,062) (55,406) ------------ ------------ ------------ ------------ 64,423 (28,280) 42,693 (55,406) ------------ ------------ ------------ ------------ Income (loss) before Provision for Income Taxes 37,829 (98,421) 149,594 (48,876) Provision for Income Taxes -- (19,818) -- -- ------------ ------------ ------------ ------------ Net Income $ 37,289 $ (78,683) $ 149,594 $ (48,876) ============ ============ ============ ============ Basic and Diluted Earnings Per Common Share: Total $ .00 $ (.00) $ .00 $ (.00) ============ ============ ============ ============ Weighted Average Common Shares Outstanding 33,439,378 25,441,560 32,772,712 24,997,893 ============ ============ ============ ============
- 4 - APO HEALTH, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED MARCH 31, 2004 AND 2003 (UNAUDITED) 2004 2003 ----------- ----------- CASH FLOW FROM OPERATING ACTIVITIES: Net Income $ 149,594 $ (48,876) Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities: Depreciation and Amortization 4,940 5,248 Allowance For Doubtful Accounts -- 20,000 Stock Issued for Services -- 55,500 Changes In: Accounts Receivable 232,701 (613,810) Other Receivables -- 152,515 Inventory (1,272,239) 710,064 Other Current Assets 13,301 (17,446) Accounts Payable 389,513 622,575 Accrued Expenses (788) 68,924 Customer Deposits Payable 152,306 (538,928) ----------- ----------- Cash Flows from Operating Activities (330,672) 415,766 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: CASH FLOWS FROM FINANCING ACTIVITIES: Cash Overdraft 186,651 -- Notes Receivable 4,566 -- Proceeds (Payment) on Bank Notes Payable, Net 3,089 (686,941) ----------- ----------- Cash Flows from Financing Activities 194,306 (686,941) ----------- ----------- Net (Decrease) in Cash (136,366) (271,175) ----------- CASH BALANCES: Beginning of Period 405,153 520,618 ----------- ----------- End of Period $ 268,787 $ 249,443 =========== =========== - 5 - APO HEALTH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following financial information is submitted in response to the requirements of Form 10-Q and does not purport to be financial statements prepared in accordance with generally accepted does not purport to be financial statements prepared in accordance with generally accepted accounting principles. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although the Company believes the disclosures that are made are adequate to make the information presented not misleading. Further, in the opinion of the management, the interim financial statements reflect fairly the financial position and results of operations for the periods indicated. It is suggested that these interim consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Form 10K containing the Company's audited financial statements as of and for the year ended September 30, 2003 filed with the Securities and Exchange Commission. The results of Operations for the six months ended March 31, 2004 are not necessarily indicative of results expected for the entire fiscal year ended September 30, 2004. NOTE 1 ACCOUNTING POLICIES Nature of business and basis of consolidation. APO Health, Inc. ("APO") was incorporated under the laws of the state of New York in August 1978. The APO and its wholly-owned subsidiary, Universal Medical Distributors, Inc. ("Universal") distribute disposable medical products principally to dental, medical and veterinary professionals and wholesalers in the United States, principally on the East Coast. Effective June 13, 2001, InternetFinancialCorp.com, Inc., ("IFAN"), a Nevada corporation, which is an inactive public company acquired APO, (collectively, the "Company"), pursuant to a tax-free reorganization agreement. The acquisition was accounted for by the purchase method under business combinations in a reverse acquisition transaction. Concurrently, IFAN changed its name to APO Health, Inc., a Nevada corporation. Cash and cash equivalents. For purposes of the statements of cash flows, cash equivalents include all highly liquid investments with original maturities of three month or less. Revenue recognition occurs when products are shipped. Merchandise inventory is stated at the lower of cost or market. Cost is determined using the first-in, first-out method. Property and equipment is stated at cost. Depreciation is provided for on the straight-line method over the useful estimated life. The cost of maintenance and repairs is expensed as incurred. -6- APO HEALTH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Income taxes are computed using the tax liability method of accounting, whereby deferred income taxes are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences reverse. Earnings Per Share, Basic .Net income per share has been calculated based on the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing the net income by the weighted average number of common shares outstanding plus potential dilutive securities. Reclassifications. Certain reclassifications of certain prior year amounts were made to conform to the current year presentation. Estimates and assumptions. Preparing financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses at the balance sheet date and for the period then ended. Actual results could differ from these estimates. NOTE 2 - SUPPLEMENTAL CASH FLOW STATEMENT DISCLOSURES 2003 2003 -------- -------- Cash paid during the year for: Interest $ 50,062 $ 55,406 Non-cash transaction: Common Stock Issued for Consulting And Professional Fees $120,000 $ 55,500 Repayment of Officers' Loan by reduction In Accrued Compensation 60,000 NOTE 3 - BANK NOTES PAYABLE On October 29, 2002, the Company entered into a financing agreement with Rosenthal & Rosenthal, Inc. The financing agreement provides the Company with a maximum credit facility not to exceed $3,000,000. The credit facility is collateralized by substantially all the Company's assets and $500,000 of the facility is personally guaranteed by Dr. Jan Stahl, Chairman and CEO of the Company. Interest is payable monthly on the average daily loan balance at the announced prime rate of JP Morgan Chase bank plus 2.5%. This agreement is for a period of three years through October 31, 2005 and may be extended on a year to year basis thereafter unless terminated as provided in the agreement. -7- APO HEALTH INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 - INCOME TAXES Income taxes (benefit) consist of the following: 2004 2003 -------- -------- Current $ 59,850 $ -- Utilization of net operating loss (59,850) -- Deferred -- -- -------- -------- Total $ -- $ -- ======== ======== A reconciliation of income taxes at the federal statutory income tax rate to total income taxes is as follows: Computed at federal statutory rate of 34% $ 50,862 $ -- State income tax 8,988 -- Utilization of net operating loss (59,850) -- -------- -------- Total $ -- $ -- -------- -------- The components of deferred taxes are as follows: March 31, September 30, 2004 2003 -------- ------------- Deferred tax assets Allowance for doubtful accounts $ 20,000 $ 20,000 Depreciation 12,000 12,000 Net operating loss carryover, less valuation allowance of $176,900 and $221,200 -- -- Reversal of valuation allowance (32,000) (32,000) -------- -------- Total deferred tax assets $ -- $ -- ======== ======== The Company has a net operating loss carryover of approximately $265,000 to offset future taxable income. The carryover expires 2018. The Company has offset the deferred tax asset by a valuation allowance of $176,900, since it cannot be determined more likely than not whether the Company will be able to utilize such net operating loss carryover. NOTE 5 - COMMON STOCK On January 29, 2004, the Company entered into an Investment Banking agreement with Sloan Securities Corp. ("SSC") to provide financing and advisory and investment banking services for a period of one year from the date of the agreement. In consideration for these services, the Company issued to an affiliate of SSC 2,000,000 share of restricted common stock in the Company valued at $120,000. -8- APO HEALTH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 - COMMON STOCK (CONTINUED) In January of 2004, the Company adopted a Special Compensation Warrant Agreement, whereby the Company would issue warrants under the following circumstances: (i) in exchange for consulting services; (ii) as consideration for accepting additional corporate responsibilities; or (iii) as consideration in special circumstances to be determined and pre-approved by the Board. A total of 3,500,000 Special Compensation Warrants were created, exercisable at $0.025 per share, for an exercise period of three years. In 2003, Dr. Stahl accepted the additional responsibility of acting as Chief Financial Officer. Also, during 2003, Dr. Stahl reduced the percentage by which his bonus was to be calculated from 1 1/2% to 1%. On January 9, 2004, the Board authorized the issuance of 2,300,000 of the special compensation warrants to various officers and professionals for services rendered. On July 22 2002, the Company adopted a Bonus Compensation Warrant Agreement, whereby, the Company would issue Bonus Compensation Warrants equivalent to 10% of the price of any merger or acquisition brought to the Company. All of the warrants being exercisable into shares of common stock at 80% of the 20 day average bid and ask price of the Company's common stock. The Company authorized up to a maximum aggregate of 3,000,000 shares of common stock available for any Bonus Compensation Warrants. To date none of these shares have been issued. On July 22 2002 the Company issued a common stock purchase warrant for 260,000 shares of common stock exercisable at $.10 per share and on September 27, 2002, a common stock purchase warrant for 1,875,000 shares exercisable at $.04 per share, both expiring on August 31, 2007. In April, 2001, investors in a private placement received warrants to acquire 1,500,000 shares of Common stock at $1.00 per share. These warrants expire on April 24, 2004. To date none of these warrants have been exercised. In June, 2001, consultants received warrants to acquire 1,350,000 shares of Common stock at prices ranging from $1.00 to $2.00 that expire on September 14, 2004. To date none of these warrants have been exercised. In June, 2001. a consultant received warrants to acquire 1,000,000 shares of Common stock at prices ranging from $1.00 to $2.00 that expire on June 5, 2006. To date none of these warrants have been exercised. NOTE 6 - LEASES The Company leases 12,000 square feet in New York. The lease is on a month-to-month basis with an affiliated company owned by the Company's officers and shareholders. The affiliate's underlying New York lease expires in 2004. Lease payments made by the Company approximate the payments due by the affiliated companies. On December 1, 2002 the Company entered into a sublease agreement to lease approximately 2,000 square feet of its warehouse through November 30, 2005. Future minimum lease payments are as follows: Year ended December 31, 2004 $54,500 -9- APO HEALTH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 - COMMITMENTS AND CONTINGENCIES Litigation - ---------- There was an action in the Circuit/Superior Court of Marion County; Indiana entitled "Kenro, Inc., on behalf of itself and all others similarly situated against APO Health, Inc., Cause No. 490120101CP000016." The lawsuit involved unsolicited broadcast faxes sent in the state and had been certified as a class action suit. On January 28, 2004, the Company announced that it had reached an out of court settlement in the unsolicited broadcast fax class action lawsuit by Kenro, Inc. The Company's attorneys agreed to settle the litigation for up to $4.5 million that will be placed in a settlement fund created and completely covered by the Company's insurer. As a result of the settlement, the Company will have no out of pocket expenses related to the creation or management of the Settlement Fund. Employment Agreement - -------------------- Effective October 1, 2001, the Company has entered into a three-year employment agreement with its chief executive officer that provides for a minimum annual salary of $250,000 with incentives based on the Company's attainment of specified levels of sales and earnings as defined in the agreement. The employment agreement expires September 30, 2004 and shall be automatically renewed for successive periods of one year unless either party gives written notice to terminate the agreement. NOTE 8 - CONCENTRATION OF CREDIT RISK The Company maintains cash balances at various financial institutions. At times such balances exceed the insured limits of the financial institution. The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risk on cash balances. As of March 31, 2004, the Company had $168,903 on deposit, in excess of the $100,000 in each bank, which is insured under federal law. -10- ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION RESULTS OF OPERATIONS - --------------------- Revenue for the six months ended March 31, 2004 was $21,243,530, a decrease of $991,971 or 4.5% compared to the six months ended March 31, 2003. The decrease was attributable to a reduction in the sale of health, beauty aids and other pharmaceutical products to wholesale distributors as margins on these products decreased. Where product was available for sale but the margins were such that the Company would not be able to generate a profit, the Company declined to sell those products. Cost of sales for the six months ended March 31, 2004 was $20,002,019, a decrease of $1,099,258 or 5.8% compared to the six months ended March 31, 2003.The gross profit for the six months ended March 31, 2004 was $1,241,511 or approximately 5.8% compared to $1,134,224 or 5.1% for the six months ended March 31, 2003. The Company is in the process of preparing a new medical catalogue for medical supplies. It anticipates that this new catalogue will aid in the increase of the sale of medical supplies which have higher gross profit margins than many of the other products and increase the overall gross profit margin of the Company. Selling expenses for the six months ended March 31, 2004 were $374,611, an increase of $107,323 or 40.2% compared to $267,288 for the six months ended March 31, 2003. Freight costs increased by $43,312 and commissions increased by $70,526 while advertising and related costs decreased by approximately $19,277. Other selling costs increased by approximately $12,762. Advertising costs over the next three to six months will increase as the Company completes and distributes its new medical supply catalogue. General and administrative expenses for the six months ended March 31, 2004 were $759,999 a decrease of $100,407 or 11.7% compared to the six months ended March 31, 2003. Included in general and administrative expenses in 2003 was a bonus of $152,500 to one of the officers for attaining certain sales levels included in his employment agreement. For the six months ended March 31, 2004, this bonus has been waived. Exclusive of the prior year's bonus, payroll and related costs increased by approximately $27,000. Professional fees, including accounting, consulting and legal expenses declined by approximately $18,500 in 2004. There were no other material increases or decreases in any one category of general and administrative expenses. There was a final settlement of litigation against the Company in January 2004 and as a result the Company was reimbursed all legal expenses incurred in prior years by its insurance company. Interest expense for the six months ended March 31, 2004 was $50,062, a decrease of $5,344 form the six month period ended March 31, 2003. The financing agreement provides for all collections to be applied against the line of credit on a daily basis and proceeds from the line of credit are only taken when needed to pay down liabilities. As a result the average daily balance outstanding on the line of credit has been reduced. The financing agreement allows the Company greater flexibility in its ability to finance increased sales and additional inventory. -11- FINANCIAL CONDITION - ------------------- As of March 31, 2004, The Company had net working capital of $1,471,895, an increase of $275,534 from September 30, 2003 as a result of the net income generated during the period. At March 31, 2004, the Company had a $3,000,000 credit facility of which approximately $1,620,000 was unused which gives the Company the ability to finance additional revenue and inventory. For fiscal 2004, the Company has reduced its budget for both selling and general and administrative expenses by approximately $250,000 eliminating unnecessary expenses and revising some of the operations. The above reductions will increase the Company's profitability based on current sales volume. Based upon the above factors, the Company believes that it has sufficient funds for operations for the next fiscal year. PART II - OTHER INFORMATION APO HEALTH, INC. ITEM 1 - LEGAL PROCEEDINGS - -------------------------- There was an action in the Circuit/Superior Court of Marion County; Indiana entitled "Kenro, Inc., on behalf of itself and all others similarly situated against APO Health, Inc., Cause No. 490120101CP000016." The lawsuit involved unsolicited broadcast faxes sent in the state and had been certified as a class action suit. On January 28, 2004, the Company announced that it had reached an out of court settlement in the unsolicited broadcast fax class action lawsuit by Kenro, Inc. The Company's attorneys agreed to settle the litigation for up to $4.5 million that will be placed in a settlement fund created and completely covered by the Company's insurer. As a result of the settlement, the Company will have no out of pocket expenses related to the creation or management of the Settlement Fund. ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS - -------------------------------------------------- Sales of Unregistered Securities during the Quarter ended March 31, 2004. In January of 2004, the Company adopted a Special Compensation Warrant Agreement, whereby the Company would issue warrants under the following circumstances: (i) in exchange for consulting services; (ii) as consideration for accepting additional corporate responsibilities; or (iii) as consideration for the reduction by Dr. Stahl in the percentage by which his bonus was to be calculated. A total of 3,500,000 Special Compensation Warrants were created, exercisable at $0.025 per share, for an exercise period of three years. Dr. Stahl accepted the additional responsibility of acting as Chief Financial Officer. Also, during 2003, Dr. Stahl reduced the percentage by which his bonus was to be calculated from 1 1/2% to 1%. In total, on January 9, 2004, the Board authorized the issuance of 2,300,000 special compensation warrants to officers and consultants for legal services. -12- On January 29, 2004, we issued to an Investment Banker 2,000,000 shares of the Company's Common Stock. On that date, the Company entered into an Investment Banking agreement with Sloan Securities Corp. ("SSC") to provide financing and advisory and investment banking services for a period of one year from the date of the agreement. The issuance is considered exempt from registration by reason of Section 4(2) Regulation D of the Securities Act of 1933. ITEM 3 - DEFAULT UPON SENIOR SECURITIES - --------------------------------------- None. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------------------------------------------------------------------------ None. ITEM 5 - CONTROLS AND PROCEDURES - -------------------------------- In the second quarter of fiscal 2004, the Company implemented controls and procedures (as defined in rule 13a-15(e) under the Securities Exchange Act of 1934). The Chief Financial Officer performed an evaluation and concluded that the disclosure controls and procedures were effective as of March 31, 2004. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K - ----------------------------------------- None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. APO HEALTH, INC. Date: May 7, 2004 By: /s/ Dr. Stahl. Jan Stahl --------------------------- Dr. Jan Stahl, Chairman Chief Executive Officer And Secretary (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Date: May 7, 2004 By: /s/ Dr. Stahl -------------- Dr. Jan Stahl, Director Date: May 7, 2004 By: /s/ Kenneth Leventhal --------------------- Kenneth Leventhal, Director -13- CERTIFICATION PURSUANT TO RULE 13A-14 AND 15D-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I, Dr. Jan Stahl, Chief Executive and Financial Officer of APO Health, Inc., certify that: 1. I have reviewed this quarterly report on Form 10 Q of APO Health, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures of a date within 45 days of the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and -14- 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: May 7, 2004 By: /s/ Dr. Jan Stahl --------------------------------- Dr. Jan Stahl Chief Executive and Financial Officer and Director -15- -----END PRIVACY-ENHANCED MESSAGE-----