NOTE RECEIVABLE - PHYHEALTH CORPORATION	9 Months Ended
Sep. 30, 2011
Notes to Financial Statements
Note 2 - NOTE RECEIVABLE - PHYHEALTH CORPORATION	According to the spin-off agreement, Phyhealth Corporation was to provide the Company with $50,000 in cash from the investments transferred during the Spin-off. However, as of September 30, 2011 the cash account of the Company was being used to support the ongoing operating activities of Phyhealth Corporation. Consequently, Phyhealth Corporation issued a promissory note for $50,000 payable to the Company. However, because the Company owns 35% of Phyhealth Corporations’ outstanding voting shares of common and series A preferred stock, the Company is deemed to have significant influence, but not control, over Phyhealth Corporation. Therefore, the Company accounts for its ownership interest in Phyhealth Corporation under the equity method of accounting. Under the equity method the Company must recognize its share of Phyhealth Corporation’s net losses up to the Company’s investment in and receivables from Phyhealth Corporation. The Company’s share of the loss recognition reduced the amount of the note receivable to $0 as of December 31, 2010 and September 30, 2011.

NOTE RECEIVABLE - PHYHEALTH CORPORATION

9 Months Ended

Sep. 30, 2011

Note 2 - NOTE RECEIVABLE - PHYHEALTH CORPORATION

According to the spin-off agreement, Phyhealth Corporation was to provide the Company with $50,000 in cash from the investments transferred during the Spin-off. However, as of September 30, 2011 the cash account of the Company was being used to support the ongoing operating activities of Phyhealth Corporation. Consequently, Phyhealth Corporation issued a promissory note for $50,000 payable to the Company.

However, because the Company owns 35% of Phyhealth Corporations’ outstanding voting shares of common and series A preferred stock, the Company is deemed to have significant influence, but not control, over Phyhealth Corporation. Therefore, the Company accounts for its ownership interest in Phyhealth Corporation under the equity method of accounting. Under the equity method the Company must recognize its share of Phyhealth Corporation’s net losses up to the Company’s investment in and receivables from Phyhealth Corporation. The Company’s share of the loss recognition reduced the amount of the note receivable to $0 as of December 31, 2010 and September 30, 2011.

Physicians Healthcare Management Group, Inc 10-Q