UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549


________________





FORM
      10-QSB


________________





**x**QUARTERLY
      REPORT
      UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For
      the quarterly period ended September 30, 2007





** ̈**  TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT





Commission
      File Number: 000-30556


________________





**FLAGSHIP
      GLOBAL HEALTH, INC.**




(Exact
      Name of Small Business Issuer as Specified in Its Charter)




________________




**Delaware**
              **11-3210792**(State
                  or Other Jurisdiction of
              (I.R.S.
                  EmployerIncorporation
                  or Organization)
              Identification
                  No.)


220
      West 42 nd Street, 23 rd Floor, New York, NY 10036


(Address
      of Principal Executive Offices)





(212)
      340-9100


(Issuer's
      Telephone Number, Including Area Code)








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  ̈





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


Yes o No x




APPLICABLE
      ONLY TO CORPORATE ISSUERS




State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date: 69,482,630 shares
      of
      common stock, $0.001 par value, outstanding as of October 31, 2007.




Transitional
      Small Business Disclosure Format (check one):     Yes  ̈ No x











**Flagship
      Global Health, Inc.**


**(Formerly
      known as Patients & Physicians, Inc.)**


**(A
      Development Stage Company)**




**INDEX**




**PART
      I. FINANCIAL INFORMATION**


Page**Item****1.   Condensed Consolidated Financial
                  Statements.**Condensed
                  Consolidated Balance Sheets, as of September 30, 2007(unaudited)
                  and December 31, 2006 (audited)
              2Condensed
                  Consolidated Statements of Operations, for the three andnine
                  months ended September 30, 2007 and 2006 and for the
                  periodfrom
                  inception (July 9, 2002) to September 30, 2007 (unaudited)
              3Condensed
                  Consolidated Statement of Stockholders’ Equity (Deficit),for
                  the nine months ended September 30, 2007 (unaudited)
              4Condensed
                  Consolidated Statements of Cash Flows, for the nine monthsended
                  September 30, 2007 and 2006 and for the period from
                  inception(July
                  9, 2002) to September 30, 2007 (unaudited)
              5Notes
                  to Condensed Consolidated Financial Statements (unaudited)
              6-18**Item
                  2.   Management’s Discussion and Analysis or Plan of
                  Operation.**
              19**Item
                  3A(T). Controls and Procedures.**
              31
  **PART
        II. OTHER INFORMATION**
 
 **Item
                  1.   Legal Proceedings.**
              32**Item
                  2.   Unregistered Sales of Equity Securities and Use of
                  Proceeds.**
              32**Item
                  3.   Defaults Upon Senior
                  Securities.**
              32**Item
                  4.   Submission of Matters to a Vote of Security
                  Holders.**
              32**Item
                  5.    Other Information.**
              32**Item
                  6.    Exhibits.**
              32








1


**Flagship
                Global Health, Inc. and Subsidiary****(Formerly
                known as Patients & Physicians, Inc.)****(A
                Development Stage Company)****Condensed
                Consolidated Balance Sheets****As
                of September 30, 2007 (unaudited) and December 31,
                2006**




September
                30,
            
            December
                31,2007
            
            2006**ASSETS**
            
            (Unaudited)
            
            (Note
                2)**Current
                Assets:**Cash
                and cash equivalents
            
            $
            11,291,716
            
            $
            941,733Prepaid
                expenses and other current assets
            
            
            174,325
            
            
            162,959Total
                current assets
            
            
            11,466,041
            
            
            1,104,692Property
                and equipment, net
            
            
            412,087
            
            
            433,586Debt
                issuance costs, net
            
            
            36,757
            
            
            113,367Restricted
                cash
            
            
            824,117
            
            
            824,117Goodwill
            
            
            61,912
            
            
            61,912Intangible
                assets, net
            
            
            36,667
            
            
            44,917Other
                assets
            
            
            35,336
            
            
            1,265**Total
                assets**
            
            $
            12,872,917
            
            $
            2,583,856**LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)****Current
                Liabilities:**Accounts
                payable
            
            $
            154,679
            
            $
            206,873Accrued
                liabilities
            
            
            313,286
            
            
            364,647Notes
                payable, current portion, net of unamortized discount
            
            
            3,885,453
            
            
            5,606,078Total
                current liabilities
            
            
            4,353,418
            
            
            6,177,598Notes
                payable, net of current portion and unamortized discount
            
            
            1,982,030
            
            
            2,676,795Deferred
                rent liability
            
            
            388,632
            
            
            272,716**Total
                liabilities**
            
            
            6,724,080
            
            
            9,127,109**COMMITMENTS
                AND CONTINGENCIES**
            
            
            -
            
            
            -**Stockholders'
                Equity (Deficit):**Preferred
                stock, $0.001 par value: 25,000,000 shares authorized, 0 shares issued
                and
                outstanding at September 30, 2007 and 5,000,000 shares authorized,
                0
                shares issued and outstanding at December 31, 2006
            
            
            -
            
            
            -Common
                stock, $0.001 par value: 175,000,000 shares authorized, 69,355,130
                shares
                issued and outstanding at September 30, 2007 and 125,000,000 shares
                authorized, 58,484,385 shares issued and outstanding at December
                31,
                2006
            
            
            69,356
            
            
            58,484Additional
                paid-in capital
            
            
            40,760,020
            
            
            18,004,468Deficit
                accumulated during the development stage
            
            
            (34,680,539
            )
            
            (24,606,205
            )Total
                stockholders' equity (deficit)
            
            
            6,148,837
            
            
            (6,543,253
            )**Total
                liabilities and stockholders' equity (deficit)**
            
            $
            12,872,917
            
            $
            2,583,856




See
                Notes to Condensed Consolidated Financial
                Statements





2





**Flagship
                Global Health, Inc. and Subsidiary****(Formerly
                known as Patients & Physicians, Inc.)****(A
                Development Stage Company)****Condensed
                Consolidated Statements of Operations****For
                the three and nine months ended September 30, 2007 and
                2006**
              **and
                for the period from inception (July 9, 2002) to September 30, 2007
                (unaudited)**




Three
                Months Ended
              September
                30,
            
            Nine
                Months Ended
              September
                30,
            
            For
                the period from inception (July 9, 2002) to
              September
                30,2007
            
            2006
            
            2007
            
            2006
            
            2007Subscription
                revenue
            
            $
            52,931
            
            $
            12,062
            
            $
            151,499
            
            $
            29,248
            
            $
            230,112Costs
                of revenue
            
            
            12,137
            
            
            5,588
            
            
            24,745
            
            
            9,309
            
            
            43,393Gross
                profit
            
            
            40,794
            
            
            6,474
            
            
            126,754
            
            
            19,939
            
            
            186,719Costs
                and expenses:Membership
                services
            
            
            371,250
            
            
            577,002
            
            
            1,667,275
            
            
            1,871,914
            
            
            6,488,000Selling,
                general and administrative
            
            
            2,361,757
            
            
            1,684,619
            
            
            5,818,070
            
            
            4,987,552
            
            
            21,458,828Loss
                on sale of equipment
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            88,953Impairment
                of long-lived assets
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            505,377Total
                costs and expenses
            
            
            2,733,007
            
            
            2,261,621
            
            
            7,485,345
            
            
            6,859,466
            
            
            28,541,158Loss
                from operations
            
            
            (2,692,213
            )
            
            (2,255,147
            )
            
            (7,358,591
            )
            
            (6,839,527
            )
            
            (28,354,439
            )Interest
                income
            
            
            128,138
            
            
            23,733
            
            
            142,787
            
            
            49,640
            
            
            222,254Amortization
                of debt discounts and
              debt
                issuance costs
            
            
            (657,594
            )
            
            (1,019,534
            )
            
            (2,424,328
            )
            
            (2,692,902
            )
            
            (5,318,265
            )Interest
                expense
            
            
            (186,048
            )
            
            (250,957
            )
            
            (665,536
            )
            
            (528,305
            )
            
            (1,502,064
            )Other
                income, net
            
            
            84,034
            
            
            -
            
            
            231,334
            
            
            -
            
            
            271,975Loss
                before provision for income taxes
            
            
            (3,323,683
            )
            
            (3,501,905
            )
            
            (10,074,334
            )
            
            (10,011,094
            )
            
            (34,680,539
            )Provision
                for income taxes
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                loss
            
            
            (3,323,683
            )
            
            (3,501,905
            )
            
            (10,074,334
            )
            
            (10,011,094
            )
            $
            (34,680,539
            )Accretion
                of preferred stock
            
            
            -
            
            
            -
            
            
            -
            
            
            (193,858
            )Net
                loss attributable to common stockholders
            
            $
            (3,323,683
            )
            $
            (3,501,905
            )
            $
            (10,074,334
            )
            $
            (10,204,952
            )Weighted
                average number of shares outstanding, basic and
              diluted
            
            
            68,723,232
            
            
            56,151,014
            
            
            62,433,978
            
            
            46,400,701Net
                loss per share, basic and diluted
            
            $
            (0.05
            )
            $
            (0.06
            )
            $
            (0.16
            )
            $
            (0.22
            )




See
                Notes to Condensed Consolidated Financial
                Statements





3




**Flagship
                Global Health, Inc. and Subsidiary****(Formerly
                known as Patients & Physicians, Inc.)****(A
                Development Stage Company)****Condensed
                Consolidated Statement of Stockholders' Equity
                (Deficit)****For
                the nine months ended September 30, 2007
                (unaudited)**




DeficitAdditional
            
            Accumulated
            
            TotalCommon
                Stock
            
            Paid-in
            
            During
                the
            
            Stockholders'Shares
            
            Amount
            
            Capital
            
            Development
                Stage
            
            Equity
                (Deficit)**Balances
                at December 31, 2006**
            
            
            58,484,385
            
            $
            58,484
            
            $
            18,004,468
            
            $
            (24,606,205
            )
            $
            (6,543,253
            )Issuance
                of common stock and warrants at $2.00 per unit in January
                2007
            
            
            565,000
            
            
            565
            
            
            1,129,435
            
            
            -
            
            
            1,130,000Issuance
                of common stock and warrants at $2.00 per unit in connection with
                conversion of Short Term Note in May 2007
            
            
            200,000
            
            
            200
            
            
            399,800
            
            
            -
            
            
            400,000Issuance
                of common stock and warrants at $2.00 per unit in June
                2007
            
            
            135,000
            
            
            135
            
            
            269,865
            
            
            -
            
            
            270,000Issuance
                of common stock and warrants at $2.00 per unit in connection with
                conversion of Apollo Notes and interest in June 2007
            
            
            2,167,877
            
            
            2,168
            
            
            4,333,586
            
            
            -
            
            
            4,335,754Exercise
                of vested options at $.10 per share in July 2007
            
            
            7,500
            
            
            8
            
            
            742
            
            
            -
            
            
            750Exercise
                of vested options at $.20 per share in July 2007
            
            
            10,000
            
            
            10
            
            
            1,990
            
            
            -
            
            
            2,000Exercise
                of warrants at $1.00 per share in July 2007
            
            
            7,500
            
            
            8
            
            
            7,492
            
            
            -
            
            
            7,500Issuance
                of common stock and warrants at $2.20 per unit in July
                2007
            
            
            6,809,258
            
            
            6,809
            
            
            14,178,417
            
            
            -
            
            
            14,185,226Issuance
                of common stock in connection with conversion of Convertible Notes
                at
                $0.90 per share in June 2007
            
            
            47,222
            
            
            47
            
            
            42,453
            
            
            -
            
            
            42,500Issuance
                of common stock in connection with conversion of Convertible Notes
                at
                $0.90 per share in July 2007
            
            
            554,631
            
            
            555
            
            
            498,613
            
            
            -
            
            
            499,168Issuance
                of common stock in connection with conversion of Convertible Notes
                at
                $0.90 per share in August 2007
            
            
            111,111
            
            
            111
            
            
            99,889
            
            
            -
            
            
            100,000Issuance
                of common stock in connection with conversion of Convertible Notes
                at
                $0.90 per share in September 2007
            
            
            125,001
            
            
            125
            
            
            112,376
            
            
            -
            
            
            112,501Issuance
                of common stock in exchange for services at $1.95 per share in June
                2007
            
            
            130,645
            
            
            131
            
            
            254,627
            
            
            -
            
            
            254,758Issuance
                of options to purchase common stock to employees for
                services
            
            
            -
            
            
            -
            
            
            722,220
            
            
            -
            
            
            722,220Issuance
                of options to purchase common stock to non-employees for
                services
            
            
            -
            
            
            -
            
            
            139,690
            
            
            -
            
            
            139,690Allocation
                of value to warrants issued in conjunction with Bridge
                Notes
            
            
            -
            
            
            -
            
            
            309,477
            
            
            -
            
            
            309,477Allocation
                of value to warrants issued in conjunction with Short Term
                Notes
            
            
            -
            
            
            -
            
            
            127,440
            
            
            -
            
            
            127,440Allocation
                of value to beneficial conversion feature in connection with Short
                Term
                Notes
            
            
            -
            
            
            -
            
            
            127,440
            
            
            -
            
            
            127,440Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (10,074,334
            )
            
            (10,074,334
            )**Balances
                at September 30, 2007 (unaudited)**
            
            
            69,355,130
            
            $
            69,356
            
            $
            40,760,020
            
            $
            (34,680,539
            )
            $
            6,148,837




See
                Notes to Condensed Consolidated Financial
                Statements


4




**Flagship
                Global Health, Inc. and Subsidiary****(Formerly
                known as Patients & Physicians, Inc.)****(A
                Development Stage Company)****Condensed
                Consolidated Statements of Cash Flows****For
                the nine months ended September 30, 2007 and 2006**
              **and
                for the period from inception (July 9, 2002) to September 30, 2007
                (unaudited)**


Nine
                Months Ended September 30,
            
            For
                the period from inception (July 9, 2002) to September 30,
                20072007
            
            2006**OPERATING
                ACTIVITIES**Net
                loss
            
            $
            (10,074,334
            )
            $
            (10,011,094
            )
            $
            (34,680,539
            )Adjustments
                to reconcile net loss to net cash used in operating activities:Share-based
                compensation expense
            
            
            861,910
            
            
            1,081,022
            
            
            3,194,519Amortization
                of debt discounts and debt issuance costs
            
            
            2,424,328
            
            
            2,692,902
            
            
            5,318,265Depreciation
                and amortization expense
            
            
            186,430
            
            
            158,921
            
            
            713,778Deferred
                rent liability
            
            
            115,916
            
            
            -
            
            
            388,632Loss
                on sale of equipment
            
            
            -
            
            
            -
            
            
            88,953Common
                stock issued in exchange for services
            
            
            254,758
            
            
            -
            
            
            506,441Common
                stock issued as payment for interest expense
            
            
            149,179
            
            
            -
            
            
            335,754Preferred
                stock issued in exchange for services
            
            
            -
            
            
            -
            
            
            85,000Common
                stock issued to employees
            
            
            -
            
            
            -
            
            
            83,896Common
                stock issued to founders
            
            
            -
            
            
            -
            
            
            16,000Common
                stock issued to employees in lieu of compensation
            
            
            -
            
            
            -
            
            
            1,591,406Note
                payable issued in lieu of compensation
            
            
            -
            
            
            -
            
            
            165,000Impairment
                of long-lived assets
            
            
            -
            
            
            -
            
            
            505,377Changes
                in operating assets and liabilities:Prepaid
                expenses and other current assets
            
            
            (11,366
            )
            
            129,245
            
            
            (174,325
            )Other
                non current assets
            
            
            (34,071
            )
            
            -
            
            
            (35,336
            )Restricted
                assets
            
            
            -
            
            
            (621,003
            )
            
            (824,117
            )Accounts
                payable and accrued liabilities
            
            
            (103,555
            )
            
            (132,289
            )
            
            467,966Net
                cash used in operating activities
            
            
            (6,230,805
            )
            
            (6,702,296
            )
            
            (22,253,330
            )**INVESTING
                ACTIVITIES**Purchases
                of property and equipment
            
            
            (156,681
            )
            
            (72,741
            )
            
            (1,233,220
            )Proceeds
                from the sale of equipment
            
            
            -
            
            
            -
            
            
            25,000Net
                cash used in investing activities
            
            
            (156,681
            )
            
            (72,741
            )
            
            (1,208,220
            )**FINANCING
                ACTIVITIES**Proceeds
                from stockholders
            
            
            -
            
            
            (18,130
            )
            
            83,763Proceeds
                from issuance of common stock and warrants
            
            
            15,585,226
            
            
            6,017
            
            
            17,918,195Proceeds
                from exercise of stock options
            
            
            2,750
            
            
            25,725
            
            
            63,525Proceeds
                from exercise of warrants
            
            
            7,500
            
            
            -
            
            
            7,500Proceeds
                from issuance of Redeemable Series A Convertible
              Preferred
                Stock
            
            
            -
            
            
            -
            
            
            1,735,000Common
                stock issued in exchange of accrued interest
            
            
            186,575
            
            
            -
            
            
            -Costs
                associated withissuance
                ofRedeemable
                Series A Convertible
              Preferred
                Stock
            
            
            -
            
            
            -
            
            
            (52,871
            )Proceeds
                from exercise of warrants to purchase Redeemable Series A
              Convertible
                Preferred Stock
            
            
            -
            
            
            137,120
            
            
            305,000Proceeds
                from issuance of Redeemable Series B Convertible
              Preferred
                Stock
            
            
            -
            
            
            -
            
            
            3,383,748Costs
                associated with issuance of Redeemable Series B Convertible
              Preferred
                Stock
            
            
            -
            
            
            -
            
            
            (37,015
            )Proceeds
                from issuance of notes payable
            
            
            400,000
            
            
            4,000,000
            
            
            7,335,000Common
                stock issued in connection with acquisition
            
            
            -
            
            
            -
            
            
            (76
            )Bank
                overdraft, net
            
            
            -
            
            
            9,706
            
            
            -Debt
                issuance costs
            
            
            -
            
            
            (166,943
            )
            
            (225,321
            )Repayments
                of notes payable
            
            
            (494,582
            )
            
            (250,000
            )
            
            (994,582
            )Proceeds
                from issuance of convertible bridge notes, net
            
            
            1,050,000
            
            
            -
            
            
            1,050,000Proceeds
                from issuance of convertible term notes, net
            
            
            -
            
            
            4,181,400
            
            
            4,181,400**Net
                cash provided by financing activities**
            
            
            16,737,469
            
            
            7,924,895
            
            
            34,753,266**Net
                increase in cash and cash equivalents**
            
            
            10,349,983
            
            
            1,149,858
            
            
            11,291,716**Cash
                and cash equivalents at beginning of period**
            
            
            941,733
            
            
            138,344
            
            
            -**Cash
                and cash equivalents at end of period**
            
            $
            11,291,716
            
            $
            1,288,202
            
            $
            11,291,716**Supplemental
                cash flow information**Cash
                payments for interest
            
            $
            550,838
            
            $
            370,179
            
            $
            1,144,237




See
                Notes to Condensed Consolidated Financial
                Statements




5




**Flagship
                  Global Health, Inc. and Subsidiary****(Formerly
                  known as Patients & Physicians, Inc.)****(A
                  Development Stage Company)****Notes
                  to Condensed Consolidated Financial Statements
                  (unaudited)**


**1.** **Nature
      of Business and Basis of Presentation**





Flagship
      Global Health, Inc (“Flagship”) (formerly known as Patients & Physicians,
      Inc.) was organized on February 5, 1993, and commenced operations on July 9,
      2002.





All
      references to “Company”, “our”, “us”, or “we” shall apply to Flagship Global
      Health, Inc. and subsidiary.





On
      June
      27, 2006, Flagship closed an Exchange Agreement (the "Share Exchange") with
      all
      of the stockholders of Flagship Patient Advocates, Inc. (“Advocates”) whereby
      Flagship acquired all of the issued and outstanding capital stock of Advocates.
      Upon completion of the Share Exchange, Advocates’ stockholders controlled
      approximately 99% of the then issued and outstanding common stock. Prior to
      the
      Share Exchange, Flagship was a shell company. Post the Share Exchange, Advocates
      business activities were the activities of Flagship. As a result of these
      factors, this transaction has been treated as a reverse merger and a capital
      transaction, equivalent to the issuance of stock by Advocates for Flagship’s net
      assets and, accordingly, the historical financial statements prior to June
      27,
      2006 are those of Advocates. All shares and per share data prior to the Share
      Exchange have been restated to reflect the stock issuances and the effect of
      the
      closing of the Share Exchange.





On
      January 12, 2007, a Certificate of Ownership and Merger was filed with the
      Secretary of State of the State of Delaware, pursuant to which Flagship merged
      with Advocates, its wholly owned subsidiary. As a result of the merger, Flagship
      assumed all the obligations of Advocates and the operations of Advocates were
      dissolved. As the surviving entity, Patients & Physicians, Inc. changed its
      name to Flagship Global Health, Inc. on January 12, 2007.





During
      2007 the Company established a wholly-owned subsidiary, Flagship Global
      Health-China, Inc. (“Flagship China”), in the People’s Republic of China
      (“PRC”). The purpose of establishing the subsidiary was to expand the Company’s
      worldwide operations and to provide the Company with a vehicle for making
      investments in joint ventures in the PRC in entities operating in related areas
      to the Company’s business.





To
      date,
      Flagship has been focused on developing an international membership-based
      specialty healthcare advocacy company providing physician referrals on a
      priority basis, emergent care needs, a personal electronic internet-based
      medical record repository and air evacuation to its members, all linked by
      a
      sophisticated IT management system.




6


**Flagship
                  Global Health, Inc. and Subsidiary****(Formerly
                  known as Patients & Physicians, Inc.)****(A
                  Development Stage Company)****Notes
                  to Condensed Consolidated Financial Statements
                  (unaudited)**


Flagship
      has not generated significant revenues through September 30, 2007, and is
      considered to be a development stage company in accordance with Statement of
      Financial Accounting Standards (“SFAS”) No. 7, *Accounting
      and Reporting by Development Stage Enterprises* .




The
      accompanying unaudited condensed consolidated financial statements have been
      prepared assuming the Company will continue as a going concern. The Company
      has
      experienced net losses of $34,680,539 since inception (July 9, 2002), including
      $10,074,334 and $10,011,094 for the nine months ended September 30, 2007 and
      2006, respectively.





The
      Company completed an equity financing in July 2007 and realized net proceeds
      of
      $14,185,226 (Note 5). Management recognizes that Flagship’s continuation as a
      going concern is dependent upon its ability to generate sufficient cash flows
      to
      allow the Company to continue the development of its business plan and satisfy
      its obligations on a timely basis. Although there can be no assurance,
      management believes that such cash flows will be provided by additional equity
      and/or debt financings through the time in which Flagship emerges from the
      development stage and generates sufficient positive cash flows from its
      operations. Our unaudited condensed consolidated financial statements do not
      include any adjustments that might result from the outcome of this
      uncertainty.





**2.** **Summary
        of Significant Accounting Policies**





**Interim
      financial statements**





The
      accompanying (a) condensed consolidated balance sheet as of December 31, 2006,
      which has been derived from audited statements, and (b) the unaudited interim
      condensed consolidated financial statements have been prepared pursuant to
      the
      rules and regulations of the Securities and Exchange Commission ("SEC"). Certain
      information and footnote disclosures normally included in financial statements
      prepared in accordance with accounting principles generally accepted in the
      United States of America have been omitted pursuant to such rules and
      regulations. However, the Company believes that the disclosures are adequate
      to
      make the information presented not misleading. The unaudited condensed
      consolidated financial statements reflect all adjustments (consisting only
      of
      normal recurring adjustments) that are, in the opinion of management, necessary
      for a fair presentation of the Company's consolidated financial position and
      consolidated results of operations. The consolidated operating results for
      the
      three and nine months ended September 30, 2007 and 2006 are not necessarily
      indicative of the results to be expected for any other interim period of any
      future year. The accompanying unaudited condensed consolidated financial
      statements should be read in conjunction with the Company's audited financial
      statements for the year ended December 31, 2006 included in its Form 10-KSB
      filed with the SEC on April 2, 2007.





7





**Flagship
                  Global Health, Inc. and Subsidiary****(Formerly
                  known as Patients & Physicians, Inc.)****(A
                  Development Stage Company)****Notes
                  to Condensed Consolidated Financial Statements
                  (unaudited)**


**Consolidation**





The
      condensed consolidated financial statements include the accounts of Flagship
      and
      its wholly-owned subsidiary, Flagship China. All significant intercompany
      transactions and balances have been eliminated in consolidation. The effect
      of
      foreign currency translation is diminimus.





**Use
      of Estimates**





The
      preparation of the Company’s condensed consolidated financial statements in
      conformity with accounting principles generally accepted in the United States
      of
      America (“GAAP”) requires management to make estimates and assumptions that
      affect the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenues, if any, and expenses during the reporting
      period. The accounting estimates that require management’s most difficult and
      subjective judgments include capitalization of certain assets,
      depreciable/amortizable lives, impairment of long-lived assets, the expected
      volatility of common stock, and the fair value of common stock and options
      issued for services as well as the allocation of proceeds from the issuance
      of
      debt and equity instruments. Because of the uncertainty inherent in such
      estimates, actual results may differ from these estimates.




**Net
      loss per share**





Net
      loss
      per share is computed based on the weighted average number of shares of common
      stock outstanding during the period.





Basic
      loss per share is computed by dividing loss available to common stockholders
      by
      the weighted average common shares outstanding for the period. Diluted earnings
      per share reflects the potential dilution that could occur if securities or
      other contracts to issue common stock were exercised or converted into common
      stock or resulted in the issuance of common stock that then shared in the
      earnings of the entity. Since the effect of outstanding warrants, options and
      debt conversion features is antidilutive, due to the losses of the Company,
      they
      have been excluded from the Company’s computation of net loss per share for the
      three and nine months ended September 30, 2007 and 2006. Therefore, basic and
      diluted loss per share were the same for the three and nine months ended
      September 30, 2007 and 2006. The total number of potentially dilutive securities
      excluded from the calculation of diluted loss per share for the three and nine
      months ended September 30, 2007 and 2006 was 25,205,565 and 16,992,063,
      respectively.





**Revenue
      Recognition**





The
      Company recognizes revenues in accordance with SEC Staff Accounting Bulletin
      No.
      101, *Revenue
      Recognition in Financial Statements* (“SAB
      No. 101”) as amended by SEC Staff Accounting Bulletin No. 104, *Revenue
      Recognition* ,
      revised
      and updated (“SAB No. 104”), which stipulates that revenue generally is realized
      or realizable and earned, once persuasive evidence of an arrangement exists,
      delivery has occurred or services have been rendered, the fee is fixed or
      determinable and collectibility is reasonably assured. The Company sells
      memberships to individuals and institutions for access to its healthcare service
      offerings. The Company recognizes revenue ratably, over the life of the
      membership. The Company recognized $151,499 and $29,248 of revenue for the
      nine
      months ended September 30, 2007 and 2006, respectively.




8




**Flagship
                  Global Health, Inc. and Subsidiary****(Formerly
                  known as Patients & Physicians, Inc.)****(A
                  Development Stage Company)****Notes
                  to Condensed Consolidated Financial Statements
                  (unaudited)**


**Stock-Based
      Compensation**





The
      Company accounts for share-based compensation to employees and directors in
      accordance with SFAS No. 123(R), *Share-Based
      Payment* (“SFAS
      No. 123(R)”), which requires the recognition of compensation expense for
      employee stock options and other share-based payments. Under SFAS No. 123(R),
      expense related to employee stock options and other share-based payments is
      recognized over the relevant service period based on the fair value of each
      stock option grant.





The
      Company has accounted for non-employee compensation expense in accordance with
      Emerging Issues Task Force (“EITF”) Issue No. 96-18, *Accounting
      for Equity Instruments That Are Issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling, Goods or Services* (“EITF
      96-18”), which requires non-employee share based compensation to be measured at
      their fair value as of the earlier of the date at which a commitment for
      performance to earn the equity instruments is reached (“performance commitment
      date”) or the date at which performance is complete (“performance completion
      date”). Non-employee stock options which involve only performance conditions
      when neither the performance commitment date nor performance completion date
      has
      occurred as of the interim financial reporting date are accounted for by
      measuring the instrument’s then-current fair value. As of September 30, 2007,
      the Company accounted for 2,545,000 options under the guidance of EITF
      96-18.




The
      Company has followed the guidance outlined in Financial Accounting Standards
      Board (“FASB”) Interpretations (“FIN”) No. 28, *Accounting
      for Stock Appreciation Rights and Other Variable Stock Option or Award
      Plans* (“FIN
      28”) as it relates to computing expense when appreciation rights vest over
      time.





**Income
      Taxes**





In
      July
      2006, the FASB issued FIN No. 48, *Accounting
      for Uncertainty in Income Taxes, and Interpretation of FASB Statement No. 109* (“FIN
      48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized
      in a company’s financial statements and prescribes a recognition threshold and
      measurement attribute for the financial statement recognition and measurement
      of
      a tax position taken or expected to be taken in an income tax return. FIN 48
      also provides guidance in derecognition, classification, interest and penalties,
      accounting in interim periods, disclosures and transition. FIN 48 is effective
      for fiscal years beginning after December 15, 2006. The adoption of FIN 48
      did
      not have a significant effect on the Company’s unaudited condensed consolidated
      financial statements.




9


**Flagship
                  Global Health, Inc. and Subsidiary****(Formerly
                  known as Patients & Physicians, Inc.)****(A
                  Development Stage Company)****Notes
                  to Condensed Consolidated Financial Statements
                  (unaudited)**


**Registration
      Payment Arrangements**





The
      Company accounts for registration rights included in financing agreements in
      accordance with FASB Staff Position EITF 00-19-2, *Accounting
      for Registration Payment Arrangements* (“EITF-00-19-2”).
      In accordance with EITF 00-19-2, the Company examines the probability that
      the
      registration of all shares of common stock in connection with future possible
      exercises of outstanding warrants to remain effective. The Company expects
      the
      registration of such shares to remain effective and therefore no contingent
      liability has been recorded as of September 30, 2007.





**Recent
      Accounting Pronouncements Issued, Not Yet Adopted**





In
      September 2006, the FASB issued FASB Statement No. 157, *Fair
      Value Measurements* (“SFAS
      No. 157”), which defines fair value, establishes a framework for measuring fair
      value under GAAP, and expands disclosures about fair value measurements. SFAS
      No. 157 applies to other accounting pronouncements that require or permit fair
      value measurements. The new guidance is effective for financial statements
      issued for fiscal years beginning after November 15, 2007, and for interim
      periods within those fiscal years. The Company is evaluating the potential
      impact, if any, of the adoption of SFAS No. 157 on its condensed consolidated
      financial statements.





In
      February 2007, FASB issued Statement No. 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities* (“SFAS
      No. 159”). SFAS No. 159 provides a “Fair Value Option” under which a company may
      irrevocably elect fair value as the initial and subsequent measurement attribute
      for certain financial assets and liabilities. SFAS No. 159 will be available
      on
      a contract-by-contract basis with changes in fair value recognized in earnings
      as those changes occur. SFAS No. 159 is effective for fiscal years after
      November 15, 2007. SFAS No. 159 also allows early adoption provided that the
      entity also adopts the requirements of SFAS No. 157. The Company does not
      believe the adoption of SFAS No. 159 will have a material impact, if any, on
      its
      condensed consolidated financial statements.




Management
      does not believe that any other recently issued, but not yet effected,
      accounting standards if currently adopted would have a material effect on the
      Company’s condensed consolidated financial statements.





**3.** **Stock-Based
      Compensation**





The
      Company issues stock-based compensation to its officers, directors, employees
      and consultants under its Amended and Restated 2006 Stock Option and Grant
      Plan
      (the “Stock Option Plan”). There are 19,622,000 shares authorized under the
      Stock Option Plan. The maximum life of options granted is generally 10 years
      and
      the options generally vest over a period of four years. The Board of Directors
      of the Company may approve other vesting schedules. Vested options may be
      exercised in whole or in part. The exercise price is determined by the Board
      of
      Directors at the end of the quarter in which the option grants are issued
      considering factors such as the reported fair market value of the stock, recent
      sales of stock, results of operations and the state of the Company’s business
      and industry.




10
 
  
 **Flagship
                  Global Health, Inc. and Subsidiary****(Formerly
                  known as Patients & Physicians, Inc.)****(A
                  Development Stage Company)****Notes
                  to Condensed Consolidated Financial Statements
                  (unaudited)**


A
      summary
      of stock-based compensation expense recognized during the three and nine months
      ended September 30, 2007 and 2006 is presented below:





Three
                Months Ended September 30,
            
            Nine
                Months Ended September 30,2007
            
            2006
            
            2007
            
            2006Membership
                services
            
            $
            207,020
            
            $
            18,502
            
            $
            243,326
            
            $
            79,715Selling,
                general and
              administrative
            
            
            237,177
            
            
            124,290
            
            
            478,894
            
            
            772,798Non-employees
            
            
            (212,450
            )
            
            83,170
            
            
            139,690
            
            
            228,509Total
                options expense
            
            $
            231,747
            
            $
            225,962
            
            $
            861,910
            
            $
            1,081,022




A
      summary
      of options activity for the nine months ended September 30, 2007 is presented
      below:





Options
            
            Weighted
                Average
              Exercise
                PriceOutstanding,
                December 31, 2006
            
            
            7,213,250
            
            $
            0.14Granted
            
            
            4,260,000
            
            $
            2.00Exercised
            
            
            (17,500
            )
            $
            0.16Forfeited
                or expired
            
            
            (47,500
            )
            $
            0.71Outstanding,
                September 30, 2007
            
            
            11,408,250
            
            $
            1.20Exercisable,
                September 30, 2007
            
            
            3,675,250
            
            $
            0.88





Outstanding
      stock options at September 30, 2007, include 2,685,000 stock options which
      will
      vest based on performance criteria and whose measurement has not been
      achieved.





The
      fair
      value of each stock option grant to employees is estimated on the date of grant.
      A Black-Scholes option-pricing model, applying the following range of
      assumptions, was used to estimate the fair value for employee stock options
      issued:




Nine
                Months Ended September 30,2007
            
            2006Expected
                volatility
            
            
            81%
                to 82
            %
            
            69
            %Risk-free
                rate
            
            
            4.23%
                to 5.03
            %
            
            4.58%
                to 4.83
            %Expected
                life of options
            
            
            5.33
                years
            
            
            10
                years




11


**Flagship
                  Global Health, Inc. and Subsidiary****(Formerly
                  known as Patients & Physicians, Inc.)****(A
                  Development Stage Company)****Notes
                  to Condensed Consolidated Financial Statements
                  (unaudited)**


Due
      to
      the Company’s limited history as a public company, the Company has estimated
      expected volatility based on the historical volatility of certain comparable
      companies as determined by management. The risk-free interest rate assumption
      is
      based upon observed interest rates appropriate for the expected term of the
      Company’s employee stock options. The dividend yield assumption is based on the
      Company’s intent not to issue a dividend under its dividend policy. The expected
      term is based on the simplified method in accordance with SEC Staff Accounting
      Bulletin No. 107, *Share-Based
      Payment* (“SAB
      No. 107”).





The
      weighted average grant-date fair value of the options granted was $1.81 per
      share and $0.90 per share for the nine months ended September 30, 2007 and
      2006,
      respectively.





The
      options outstanding at September 30, 2007 have exercise prices ranging from
      $0.035 to $2.00 per share, a weighted average remaining contractual life of
      approximately 8.0 years and an intrinsic value of $7,126,533.





The
      options which are exercisable at September 30, 2007 have a weighted average
      remaining contractual life of approximately 7.9 years, and an intrinsic value
      of
      $862,775.




As
      of
      September 30, 2007, there was $1,924,285 of total deferred compensation cost
      related to options issued to employees that will be recognized in expense over
      a
      weighted average period of 1.6 years.




**4.** **Debt**





Debt
      financings consist of the following as of September 30, 2007:





Principal
            
            Unamortized
                Debt
              Discount
            
            NetLaurus
                Convertible Notes
            
            $
            3,587,500
            
            $
            (493,666
            )
            $
            3,093,834Junior
                Convertible Notes
            
            
            2,263,749
            
            
            (322,816
            )
            
            1,940,933Bridge
                Notes
            
            
            1,050,000
            
            
            (217,284
            )
            
            832,716$
            6,901,249
            
            $
            (1,033,766
            )
            
            5,867,483Less
                current portion
            
            
            
            
            
            
            
            
            3,885,453Long
                term portion
            
            
            
            
            
            
            
            $
            1,982,030






12


**Flagship
                      Global Health, Inc. and Subsidiary****(Formerly
                      known as Patients & Physicians, Inc.)****(A
                      Development Stage Company)****Notes
                      to Condensed Consolidated Financial Statements
                      (unaudited)**
 *Convertible
              Bridge Notes*




The
      Company issued an aggregate of $1,050,000 of 9% convertible notes in the second
      quarter of 2007 (the “Bridge Notes”). Total unpaid principal, together with all
      accrued interest is due one year from the issuance date of each. The Bridge
      Note
      holders received 525,000 warrants to purchase shares of the Company’s common
      stock at an exercise price equal to $2.00 per share and a five year term. In
      the
      event the Company completes the closing of a financing, as defined, at any
      time
      prior to the maturity of the Bridge Notes, the Bridge Note holders may, at
      their
      sole option, convert the remaining outstanding principal and accrued interest,
      into the form of securities issued in such next round of financing on the same
      terms and conditions and the same price per share of the securities issued
      in
      such financing. The Company allocated the $1,050,000 of proceeds from the Bridge
      Notes based on the computed relative fair values of the debt and the warrants
      issued to the Bridge Note holders. The warrants were valued using a
      Black-Scholes option pricing model with the following assumptions: (1) common
      stock fair values ranging from $1.05 - $1.50 per share on the date of issuance,
      (2) expected volatility of 81%, (3) risk free rates ranging from 4.51% to 4.55%
      on the date of issuance, (4) life of 5 years and (5) no dividend, which resulted
      in a fair value of $438,813 for the warrants. The resulting relative fair value
      of the warrants was $309,477. Accordingly, the resulting relative fair value
      allocated to the debt component at the date of issuance was $740,523. Since
      the
      conversion of the Bridge Notes is contingent upon the completion of a future
      event no beneficial conversion was recorded at the time of issuance.




*Short
      Term Note*





In
      April
      2007, the Company issued a $400,000 short term note (the “Short Term Note”). The
      Short Term Note bears interest at 9%. The Short Term Note holder received a
      warrant to purchase 200,000 shares of the Company’s common stock at an exercise
      price equal to $2.00 per share and a five year term. The Short Term Note was
      converted into common stock under the same terms and conditions as the Interim
      Financing in May 2007 (Note 5). The warrant was valued using a Black-Scholes
      option pricing model with the following assumptions: (1) common stock fair
      value
      of $1.50 per share on the date of issuance, (2) expected volatility of 81%,
      (3)
      risk free rate of 4.56% on the date of issuance, (4) life of 5 years and (5)
      no
      dividend, which resulted in a fair value of $187,027 for the warrant. The result
      was a relative fair value of the warrant of $127,440, and a beneficial
      conversion feature of $127,440. Accordingly, the net carrying value of the
      debt
      component at the date of issuance was $145,120. Upon conversion of the Short
      Term Note the Company recorded a charge to operations for the total debt
      discount of $254,880, which is included in amortization of debt discounts and
      debt issuance costs.





*Laurus
      Notes*





In
      2006
      Flagship entered into a securities purchase agreement (the “Laurus Securities
      Agreement”) with Laurus Master Fund, Ltd. (“Laurus”). Under the Laurus
      Securities Agreement, Laurus purchased from Flagship a secured convertible
      term
      note (the “Laurus Convertible Note”) in an aggregate principal amount of
      $4,100,000. The Laurus Convertible Note bears interest at 1.0% above the prime
      rate, with a minimum interest rate of 7%, and is convertible in whole or in
      part
      into common stock of the Company at a fixed conversion price of $0.90 per share
      at the election of Laurus. During July 2007, Laurus converted principal of
      $270,000 of the Laurus Convertible Note in exchange for 300,000 shares of the
      Company’s common stock.




13


**Flagship
                      Global Health, Inc. and Subsidiary****(Formerly
                      known as Patients & Physicians, Inc.)****(A
                      Development Stage Company)****Notes
                      to Condensed Consolidated Financial Statements
                      (unaudited)**


*Junior
      Notes*





In
      2006
      Flagship entered into a securities purchase agreement (the “Junior Securities
      Agreement”) with certain holders of Flagship’s short-term notes. Under the
      Junior Securities Agreement, the note holders (the “Junior Note Holders”) agreed
      to convert $3,000,000 of the short-term notes previously issued into secured
      convertible term notes (the “Junior Convertible Notes”) in Flagship. The Junior
      Convertible Notes bear interest at 1.0% above the prime rate, with a minimum
      interest rate of 7% and are convertible in whole or in part into common stock
      of
      the Company at a fixed conversion price of $0.90 per share at the election
      of
      each of the Junior Note Holders. During June 2007 two Junior Note Holders
      converted principal of $42,500 of Junior Convertible Notes in exchange for
      47,222 shares of the Company’s common stock. Additionally, several Junior Note
      Holders converted principal of $441,669 of Junior Convertible Notes in exchange
      for 490,743 shares of the Company’s common stock during the third quarter of
      2007.




*Debt
      Discount and Debt Issuance Costs*




During
      the nine months ended September 30, 2007, and 2006, $2,347,718 and $2,648,923,
      respectively, of debt discounts were amortized and included in amortization
      of
      debt discounts and debt issuance costs on the accompanying condensed
      consolidated statements of operations. During the nine months ended September
      30, 2007 and 2006, $76,610 and $43,979, respectively, of debt issuance costs
      have been amortized and are included in amortization of debt discounts and
      debt
      issuance costs on the accompanying condensed consolidated statements of
      operations.





*Convertible
      Notes*





Flagship
      was originally required to repay the Laurus Convertible Notes and Junior
      Convertible Notes (collectively the “Convertible Notes”) on a monthly basis over
      a 24 month period beginning on February 1, 2007. In 2007 holders of the
      Convertible Notes and the Company executed waivers (the “Waivers”) whereby the
      parties agreed that the first monthly payment would be deferred until July
      1,
      2007. All deferred payments would be payable in January 2009. As consideration
      for the Waiver the Company agreed to pay a fee of approximately $57,500 to
      the
      Convertible Note holders. The Company will amortize the fee for the remaining
      time the Convertible Notes are outstanding. The Company has determined that
      the
      changes in the repayment of the debt per the Waivers did not substantially
      change the Convertible Notes. As of September 30, 2007, $9,079 of the fee has
      been amortized on the accompanying condensed consolidated statements of
      operations and charged to interest expense.




14


**Flagship
                      Global Health, Inc. and Subsidiary****(Formerly
                      known as Patients & Physicians, Inc.)****(A
                      Development Stage Company)****Notes
                      to Condensed Consolidated Financial Statements
                      (unaudited)**


In
      connection with the issuance of the Convertible Notes, the Company issued
      warrants to purchase 1,902,174 shares of common stock at an exercise price
      of
      $.92 per share and a term of seven years.





**5.** **Capital
      Stock**





*Increase
      in Authorized Shares*





In
      April
      2007 a majority of the stockholders of Flagship approved an increase in the
      number of authorized shares of common stock from 125,000,000 shares to
      175,000,000 shares and the number of authorized shares of preferred stock from
      5,000,000 shares to 25,000,000 shares.





*Interim
      Financings and Sales of Common Stock and Warrants*





On
      June
      7, 2006 the Company issued notes payable to Apollo Medical Partners, LP and
      Apollo Medical Offshore Partners, LP in the amounts of $2,700,000 and
      $1,300,000, respectively (the “Apollo Notes”). Pursuant to the terms of the
      Apollo Notes, the principal and accrued interest, were convertible into the
      form
      of securities issued in the next round of financing on the same terms and
      conditions as such financing, provided that the Company raised an additional
      $4,000,000.





In
      November 2006 the Company commenced a private placement to raise up to
      $8,000,000 in interim financing (the “Interim Financing”) by issuing up to
      4,000,000 newly issued shares of the Company’s common stock at a price of $2.00
      per share and up to 1,000,000 warrants to purchase shares of common stock at
      an
      exercise price of $1.00 per share and a term of seven years. The investors
      received warrants to purchase one share of the Company’s common stock for every
      two shares of common stock purchased.





The
      table
      below summarizes the investment activity related to the Interim
      Financing:





Date
            
            Investment
                Amount
            
            Shares
                of Common Stock Issued
            
            Warrants
                Issued to Purchase Common StockDecember
                2006
            
            $
            2,200,000
            
            
            1,100,000
            
            
            550,000January
                2007
            
            
            1,130,000
            
            
            565,000
            
            
            282,500April
                2007
            
            
            400,000
            
            
            200,000
            
            
            100,000June
                2007
            
            
            270,000
            
            
            135,000
            
            
            67,500Total
            
            $
            4,000,000
            
            
            2,000,000
            
            
            1,000,000




15




**Flagship
                    Global Health, Inc. and Subsidiary****(Formerly
                    known as Patients & Physicians, Inc.)****(A
                    Development Stage Company)****Notes
                    to Condensed Consolidated Financial Statements
                    (unaudited)**


In
      June
      2007, upon the closing of the required minimum of $4,000,000 of additional
      capital, the Apollo Notes, including all accrued interest, converted into common
      stock on the same terms as the Interim Financing. As a result, in June 2007
      the
      Company issued 2,167,877 shares of its common stock and warrants to purchase
      1,083,939 shares of common stock at $2.00 per unit for an aggregate of
      $4,335,754 ($4,000,000 of principal and $335,754 of accrued interest). The
      warrants have a term of seven years and an exercise price of $1.00 per
      share.





In
      accordance with the Interim Financing, the Company granted the investors certain
      piggyback registration rights and agreed to register the common stock issued
      to
      the investors and the common stock underlying the warrants in connection with
      the registration statement expected to be filed in connection with the next
      financing. In connection with the Securities Purchase Agreement entered into
      in
      July 2007 (see below), all of the participants in the Interim Financing agreed
      to defer registering their stock until such time as the Company meets the SEC
      regulations that will allow all of the shares relating to the Interim Financing
      to be registered.





*FrontPoint
      Financing*





In
      July
      2007 the Company sold 6,809,258 shares of its common stock and issued 2,042,777
      warrants to purchase common stock at a price of $2.20 per unit, for an aggregate
      of $14,980,367 (the “FrontPoint Financing”) to FrontPoint Healthcare Fund, L.P.,
      FrontPoint Healthcare Fund 2X, L.P., FrontPoint Healthcare Horizons Fund, L.P.
      and FrontPoint Healthcare Long Horizons Fund, L.P. (collectively, “FrontPoint”).
      The warrants are exercisable beginning July 16, 2008, have an exercise price
      of
      $3.00 per share and a term of four years. The Company incurred $795,141 of
      financing costs related to the FrontPoint Financing and, accordingly, has
      recorded such costs as an offset to additional paid-in capital on the
      accompanying condensed consolidated balance sheets.





In
      accordance with the terms and conditions of the FrontPoint Financing, the
      Company and FrontPoint entered into a Registration Rights Agreement (the
“Registration Rights Agreement”). Pursuant to the Registration Rights Agreement,
      the Company agreed to register FrontPoint’s shares of common stock issued under
      the Securities Purchase Agreement and the common stock underlying the warrants.
      The Company’s registration was filed with the SEC and became effective on
      September 19, 2007. The Company expects the registration of such shares to
      remain effective and, therefore, no contingent liability has been recorded
      as of
      September 30, 2007.





16




**Flagship
                    Global Health, Inc. and Subsidiary****(Formerly
                    known as Patients & Physicians, Inc.)****(A
                    Development Stage Company)****Notes
                    to Condensed Consolidated Financial Statements
                    (unaudited)**
  **6.**
                  **Commitments
                      and contingencies**
 
 *Pending
            litigation*
  A
          former
          independent contractor (the “Plaintiff”) has filed a lawsuit against the Company
          and Flagship, among others. The Plaintiff alleges that he was promised
          employment with the Company and performed services to Flagship based on
          these
          promises. The Plaintiff is seeking compensatory and punitive damages, including
          the issuance of additional shares of stock for these services and attorney
          fees
          in an aggregate amount of approximately $1,800,000. The Company believes
          this
          lawsuit is without merit and intends to defend it vigorously. In management’s
          opinion the final resolution of this matter will not have material impact
          on the
          consolidated financial position or consolidated results of operations of
          the
          Company.




**7.**
            **Warrants**





Outstanding
      warrants to purchase common stock issued in connection with financings consist
      of the following at September 30, 2007:





Warrants
            
            Exercise
                Price
            
            ExpirationWarrants
                issued in connection with Convertible Notes
            
            
            1,902,174
            
            $
            0.92
            
            
            1/31/2013Warrants
                issued in connection with Convertible Bridge Notes
            
            
            525,000
            
            $
            2.00
            
            
            VariousWarrant
                issued in connection with Short Term Note
            
            
            200,000
            
            $
            2.00
            
            
            4/30/2012Warrants
                issued in connection with the Interim Financing
            
            
            1,000,000
            
            $
            1.00
            
            
            VariousWarrants
                issued in connection with Apollo Notes conversion
            
            
            1,083,939
            
            $
            1.00
            
            
            6/7/2014Warrants
                issued in connection with FrontPoint Financing
            
            
            2,042,777
            
            $
            3.00
            
            
            7/16/20116,753,890











17




**Flagship
                    Global Health, Inc. and Subsidiary****(Formerly
                    known as Patients & Physicians, Inc.)****(A
                    Development Stage Company)****Notes
                    to Condensed Consolidated Financial Statements
                    (unaudited)**


**8.**  **Supplemental
      disclosure of non-cash investing and financing activities.**




Nine
                Months Ended September 30,
            
            For
                the period from inception (July 9, 2002) to September 30,
                20072007
            
            2006Value
                of contributions in-kind relating to Redeemable Series A Convertible
                Preferred Stock issued
            
            $
            -
            
            $
            -
            
            $
            85,000Value
                of contributions in-kind relating to common
              stock
                issued
            
            $
            -
            
            $
            -
            
            $
            760,000Value
                of warrants issued in connection with Redeemable Series A Convertible
                Preferred Stock
            
            $
            -
            
            $
            -
            
            $
            143,066Common
                Stock issued to founders
            
            $
            -
            
            $
            -
            
            $
            16,000Accretion
                of Redeemable Series A Convertible
              Preferred
                Stock
            
            $
            -
            
            $
            160,421
            
            $
            195,937Accretion
                of Redeemable Series B Convertible
              Preferred
                Stock
            
            $
            -
            
            $
            33,617
            
            $
            37,872Common
                stock issued to employees in lieu of
              compensation
            
            $
            -
            
            $
            -
            
            $
            1,591,406Common
                stock issued in exchange for services
            
            $
            254,758
            
            $
            -
            
            $
            506,441Conversion
                of Redeemable Series A Convertible
              Preferred
                Stock and Redeemable Series B
              Convertible
                Preferred Stock to common stock
            
            $
            -
            
            $
            5,509,605
            
            $
            5,509,605Issuance
                of common stock in connection with
              acquisition
            
            $
            -
            
            $
            (76
            )
            $
            (76Issuance
                of common stock in connection with
              financing
            
            $
            -
            
            $
            1,951
            
            $
            1,951Issuance
                of common stock in connection with the
              share
                exchange
            
            $
            -
            
            $
            -
            
            $
            1,200Cancellation
                of founder’s shares
            
            $
            -
            
            $
            -
            
            $
            3,510Allocation
                of value to common stock, issued in
              connection
                with acquisition
            
            $
            -
            
            $
            -
            
            $
            186,000Allocation
                of value to common stock, issued in connection with convertible debt
                financings
            
            $
            -
            
            $
            3,223,389
            
            $
            3,135,698Conversion
                of Convertible Notes to common stock
            
            $
            754,169
            
            $
            -
            
            $
            754,169Conversion
                of Apollo Notes and accrued interest to
              common
                stock and warrants
            
            $
            4,335,754
            
            $
            -
            
            $
            4,335,754Allocation
                of value to warrants issued in connection
              with
                debt financings
            
            $
            436,917
            
            $
            457,671
            
            $
            894,588Conversion
                of Short Term Note to equity
            
            $
            400,000
            
            $
            -
            
            $
            400,000Value
                of beneficial conversion feature in connection
              with
                convertible debt financings
            
            $
            127,440
            
            $
            1,695,111
            
            $
            1,822,551Conversion
                of short term notes to Junior Convertible
              Notes
            
            $
            -
            
            $
            3,000,000
            
            $
            3,000,000







18


**Item
      2. Management's Discussion and Analysis or Plan of
      Operation.**





This
      Management's **** Discussion
      and Analysis or Plan of Operation (MD&A) contains forward-looking statements
      that involve known and unknown risks, significant uncertainties and other
      factors that may cause our actual results, levels of activity, performance
      or
      achievements to be materially different from any future results, levels of
      activity, performance or achievements expressed, or implied, by those
      forward-looking statements. You can identify forward-looking statements by
      the
      use of the words “may,” “will,” “should,” “could,” “expects,” “plans,”
“anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,”
“proposed,” or “continue” or the negative of those terms. These statements are
      only predictions. In evaluating these statements, you should specifically
      consider various factors, including the risk factors outlined above and below.
      These factors may cause our actual results to differ materially from any
      forward-looking statements. Although we believe that the exceptions reflected
      in
      the forward-looking statements are reasonable, we cannot guarantee future
      results, levels of activity, performance or achievements. Therefore, actual
      results may differ materially and adversely from those expressed in any
      forward-looking statements. We undertake no obligation to revise or update
      publicly any forward-looking statements for any reason.




**Risk
      Factors**





*Our
      financial condition, business, operation and prospects involve a high degree
      of
      risk. You should carefully read and consider the risks and uncertainties
      described below as well as the other information in this report before deciding
      to invest in our Company. If any of the following risks are realized, our
      business, operating results and financial condition could be harmed and the
      value of our stock could go down. This means that our stockholders could lose
      all or a part of their investment.*




**Risks
      Relating To Our Business**




***The
      Company’s business is difficult to evaluate because it has a limited operating
      history.***




The
      Company has a limited operating history and participates in a relatively new
      and
      rapidly evolving market. The business has undergone significant transformation
      during its short history as a result of changes in the services and products
      offered, changes in market conditions, and changes in our targeted membership,
      and is expected to continue to change for similar reasons. We cannot assure
      you
      that our current business strategy will be successful in the long
      term.




We
      have expanded the scope of the Company’s product offerings while also expanding
      it globally. This wider scoping of the business has contributed, in part, to
      the
      significant losses we have experienced since inception and we cannot assure
      you
      that our business will be successful.




***The
      Company has a history of significant losses and may not be profitable in the
      future and has going concern considerations.***




Flagship
      has a history of net losses and has an accumulated deficit of $34,680,539 from
      inception (July 9, 2002) through September 30, 2007. This amount does not
      include losses of Flagship prior to the Share Exchange, as defined herein.
      Furthermore, developing the Company’s business strategy and expanding the
      Company’s services will require additional capital, which may or may not be
      available to the Company. You should not rely solely on the public market
      valuation of the Company and the views of security analysts and investors for
      assessing the operational, business and financial success of the Company.
      Fluctuations in our quarterly operating results or our inability to achieve
      or
      maintain profitability may cause volatility in the price of our common
      stock in the public market. In light of these factors, among others, our
      independent registered public accounting firm has stated that there is
      substantial doubt about our ability to continue as a going concern in their
      opinion dated March 28, 2007 on our audited financial statements. The financial
      statements do not include any adjustments that might result for the outcome
      of
      this uncertainty.




19






***The
      Company may be unable to fund future growth.***




The
      Company’s business strategy calls for expansion through an increase in sales of
      membership by its internal and external sales forces. To this end, the Company
      has decided to invest substantial funds to increase its sales and marketing
      resources in order to grow revenues. In order to implement this
      strategy, the Company will require funding for additional personnel, capital expenditures
      and other expenses, as well as for working capital purposes. Financing may
      not
      be available to the Company on favorable terms, if at all. If adequate funds are not available on acceptable terms, then the
      Company may not be able to meet its business objectives for expansion. This,
      in
      turn, could harm the Company’s business, results of operations and financial
      condition. In addition, if the Company raises additional funds through the
      issuance of equity or convertible debt securities, or a combination thereof,
      then the shareholders will suffer dilution, and any new securities may have rights, preferences and privileges senior to those of our common stock. Furthermore,
      if the Company raises capital or acquires businesses by incurring indebtedness, the
      Company will become subject to the risks associated with indebtedness, including
      interest rate fluctuations and any financial or other covenants that the
      Company’s lender may require. Moreover, if the Company’s strategy to increase
      its sales and marketing resources in order to grow revenues does not produce
      the
      desired result, then the Company may incur significant,
      unrecoverable expenses.




***The
      Company’s growth*** ***may*** ***be limited if it is unable to attract and retain qualified
      personnel.***




The
      Company’s business is largely dependent on the skills, experience and
      performance of key members of the Company’s senior management team. The Company
      plans to increase its sales and marketing personnel, as well as enter into
      agreements with independent third parties to sell products and services in
      order to grow revenue. The Company believes that its success depends largely
      on
      its ability to attract and retain highly-skilled and qualified technical,
      managerial and marketing personnel and enter into agreements with third parties. The
      market for highly skilled medical, sales, marketing and support personnel is highly
      competitive as a result of the limited availability of technically-qualified
      personnel with the requisite understanding of the markets which the Company serves. The inability to hire
      or
      retain qualified personnel may hinder the Company’s ability to implement its business strategy and may harm its business.




***Lengthy
      sales and implementation cycles for the Company’s product makes it difficult to
      forecast revenues and, as a result, may have an adverse impact on the Company’s
      business.***




The
      period from the Company’s initial contact with potential corporate buyers to the
      consummation of an agreement to offer the Company’s product to its employees is
      difficult to predict. These sales may be subject to delays due to a client’s
      internal procedures for approving such expenditures and other factors beyond
      the
      Company’s control. Implementation may be subject to delays based on the
      availability of the internal resources of the client that are needed, acceptance
      by potential members and other factors outside of the Company’s control. As a
      result, the Company has limited ability to forecast the timing of revenue from
      new members. This, in turn, makes it more difficult to predict the Company’s
      financial performance from quarter to quarter.




During
      the sales cycle and the implementation period, the Company may expend
      substantial time, effort and money preparing contract proposals and negotiating
      contracts without receiving any related revenue. In addition, many of the
      expenses related to providing the Company’s services are relatively fixed in the
      short term, including personnel costs, fixed overhead, and technology and
      infrastructure costs. As a result, the Company may be unable to adjust spending
      quickly enough to offset any unexpected revenue shortfall or delay, in which
      case the Company’s results of operations would suffer. In addition, in an
      attempt to enhance the Company’s long-term competitive position, the Company may
      from time to time make decisions regarding pricing, marketing, services and
      technology that could have a near-term adverse effect on the Company’s operating
      results.




20


***The
        Company faces significant competition for its products and
        services.***




While
      the Company’s products and services are relatively new, the greater healthcare
      markets in which the Company operates are intensely competitive, continually
      evolving and, in some cases, subject to rapid change. The Company expects the
      intensity of competition and the pace of change either to be maintained or
      at
      least be increased in the future. Many of the Company’s potential competitors
      may have greater financial, technical, product development, marketing and other
      resources than the Company. These organizations may be better known than the
      Company and may have more customers or users than the Company does. The Company
      cannot provide assurance that the Company will be able to compete successfully
      against these organizations or any alliances they have formed or may
      form.




***If
      the Company is unable to provide priority access to high quality healthcare
      that
      attracts and retains members, the Company’s revenues will be
      reduced.***




Interest
      in the Company’s products and services is based upon the Company’s ability to
      provide members with referrals and priority access to the Company’s network
      physicians. Although the Company has been able to continue to maintain and
      expand this network, if the Company is unable to continue to do so for any
      reason, the value of a membership would diminish and membership interest in
      the
      Company products and services would be adversely affected. Similarly, the
      Company’s ability to maintain or increase the number of highly qualified
      physicians in its network is based upon the Company’s ability to provide the
      physicians with incentive to continue to participate in the network. We cannot
      assure you that the Company will be able to retain qualified physicians for
      the
      purpose of providing referral and priority access to members. If the Company
      is
      unable to provide high quality physicians to its members, the quality of the
      Company’s products and services will be reduced.




***The
      Company is exposed to the general condition of the healthcare
      market.***




The
      Company’s business is subject to global economic conditions and, in particular,
      market conditions in the healthcare industry. The Company’s operations may be adversely affected by
      the continued declines in employee benefit spending by large corporations and small to medium
      sized businesses. If global economic conditions worsen, or a prolonged slowdown
      in providing such benefits exists, then the Company may experience adverse
      operating results.




***The
      Company’s products may not achieve acceptance in the
      marketplace.***




The
      Company intends to offer its membership based products and services to large
      corporations, small to medium sized businesses and individuals. The markets
      for
      these products are relatively new, unpredictable and rapidly evolving. Lack
      of
      acceptance in the marketplace for these new products and services could have
      a
      material adverse effect on the Company’s business, results of operations and
      financial condition.




**Risks
      Related to Our Stock Being Publicly Traded**




***We
      will incur increased costs as a result of being a publicly traded
      company.***




As
      a publicly traded company, we will incur legal, accounting and other expenses
      that we did not incur as a privately held company, including costs associated
      with the periodic reporting requirements applicable to a company whose
      securities are registered under the Securities Exchange Act of 1934, or the
      Exchange Act, recently adopted corporate governance requirements, including
      requirements under the Sarbanes-Oxley Act of 2002, and other rules implemented
      relatively recently by the SEC and The NASDAQ National Market. We expect these
      rules and regulations to substantially increase our legal and financial
      compliance costs and to make some activities more time-consuming and costly.
      We
      also expect that these rules and regulations will make it more difficult and
      more expensive for us to obtain directors and officers’ liability
      insurance.




***We
      do not intend to pay dividends on our common stock.***




We
      have never declared or paid any cash dividend on our common stock. We currently
      intend to retain any future earnings and do not expect to pay any dividends
      in
      the foreseeable future.






21







***Penny
      stock rules could make it hard to resell your shares.***




The
      Company’s common stock is traded on the Over the Counter Bulletin Board. An
      investor may find it more difficult to dispose of shares or obtain accurate
      quotations as to the market value of our common stock. In addition, rules
      promulgated by the SEC impose various practice requirements on broker-dealers
      who sell securities that fail to meet certain criteria set forth in those rules
      to persons other than established customers and accredited investors.
      Consequently, the liquidity of the Company’s securities could be impaired, not
      only in the number of securities which could be bought and sold, but also
      through delays in the timing of transactions, reduction in security analysts'
      and the news media's coverage of the Company, and lower prices for the Company’s
      securities than might otherwise be attained.




***Future
      Sales By Our Stockholders May Negatively Affect Our Stock Price And Our Ability
      To Raise Funds In New Stock Offerings.***




Sales
      of our common stock in the public market could lower the market price of our common stock. Sales
      may
      also make it more difficult for us to sell equity securities or equity-related
      securities in the future at a time and price that our management deems
      acceptable or at all. Of the 69,482,630 shares of common
      stock outstanding
      as of October 31, 2007, 21,467,964 shares are freely tradable without restriction, unless held by our "affiliates".
      The remaining 48,014,666 shares of common
      stock, which
      are held by existing stockholders, including the officers and directors, are
      "restricted securities" and may be resold in the public market only if
      registered or pursuant to an exemption from registration. Some of these shares
      may be resold under Rule 144.




***Our
      Common Stock May Be Affected By Limited Trading Volume And May Fluctuate
      Significantly, Which May Affect Our Shareholders' Ability To Sell Shares Of
      Our
      Common*** ***Stock*** ***.***




Prior
      to this filing, there has been a limited public market for our common
      stock and
      there can be no assurance that a more active trading market for our common
      stock will
      develop. An absence of an active trading market could adversely affect our
      shareholders' ability to sell our common
      stock in
      short time periods, or possibly at all. Our common
      stock has
      experienced, and is likely to experience in the future, significant price and
      volume fluctuations, which could adversely affect the market price of our common
      stock without
      regard to our operating performance. In addition, we believe that factors such
      as quarterly fluctuations in our financial results and changes in the overall
      economy or the condition of the financial markets could cause the price of
      our common
      stock to
      fluctuate substantially. These fluctuations may also cause short sellers to
      enter the market from time to time in the belief that we will have poor results
      in the future. We cannot predict the actions of market participants and,
      therefore, can offer no assurances that the market for our common stock will
      be
      stable or appreciate over time. The factors may negatively impact shareholders'
      ability to sell shares of our common stock.




***The
      Company may be subject to litigation.***




The
      Company may be subject to claims involving how the Company conducts its
      business. Any such claims against the Company may affect its business, results
      of operations and financial conditions. Such claims, including those without
      merit, could require the Company to pay damages or settlement amounts and would
      require a substantial amount of time and attention from the Company’s senior
      management as well as considerable legal expenses. Although the Company does
      not
      anticipate that its activities would warrant such claims, there can be no
      assurances that such claims will not be made.




***The
      Company lacks accounting and reporting controls.***




The
      Company’s Chief Financial Officer (the “CFO”) is solely responsible for the
      accounting and reporting functions for the Company and outsources certain of
      its
      accounting and reporting functions to an independent third party. As a result,
      the Company currently has limited segregation of duties regarding the Company’s
      accounting and reporting functions. Management recognizes this limited
      segregation of duties as a deficiency in the Company’s internal controls and is
      planning to implement procedures to mitigate this deficiency.




22




***Government
      regulation of healthcare creates risks and challenges with respect to the
      Company’s compliance efforts and business strategies.***




The
      healthcare industry is highly regulated and is subject to changing political,
      legislative, regulatory and other influences. Existing and new Federal and
      state
      laws and regulations affecting the healthcare industry could create unexpected
      liabilities for the Company and cause the Company to incur additional costs
      and
      restrict the Company’s operations. Many healthcare laws are complex and their
      application to specific products and services may not be clear. In particular,
      many existing healthcare laws and regulations, when enacted, did not anticipate
      the healthcare products and services that the Company provides. However, these
      laws and regulations may nonetheless be applied to the Company’s products and
      services. As an international company, the Company may conduct business in
      a
      number of countries and thus may be subjected to local business practices,
      laws
      and regulations. The Company's increasing penetration into the Chinese market
      in
      particular is a significant risk to our business. Management’s failure to
      accurately anticipate the application of these laws and regulations, or other
      failures to comply, could create liability, result in adverse publicity and
      negatively affect our businesses. Some of the risks the Company faces from
      healthcare regulation are as follows:




*Anti-kickback
      Laws*




There
      are federal and state laws that govern patient referrals, physician financial
      relationships and inducements to healthcare providers and patients. The federal
      healthcare programs anti-kickback laws prohibit any person or entity from
      offering, paying, soliciting or receiving anything of value, directly or
      indirectly, for the referral of patients covered by Medicare, Medicaid and
      other
      federal healthcare programs or the leasing, purchasing, ordering or arranging
      for or recommending the lease, purchase or order of any item, good, facility
      or
      service covered by these programs. Many states also have similar anti-kickback
      laws that are not necessarily limited to items or services for which payment
      is
      made by a federal healthcare program.




The
      laws in this area are broadly written and it is often difficult to determine
      precisely how the laws will be applied in specific circumstances. Penalties
      for
      violating federal anti-kickback laws include imprisonment, fines and exclusion
      from participating, directly or indirectly, in Medicare, Medicaid and other
      federal healthcare programs. Any determination by a state or federal regulatory
      agency that any of the Company’s practices violate any of these laws could
      subject the Company to civil or criminal penalties and require the Company
      to
      change or terminate some portions of its business and could have an adverse
      effect on the Company’s business. Even an unsuccessful challenge by regulatory
      authorities of the Company’s practices could result in adverse publicity and be
      costly for the Company to defend.




*Medical
      Professional Regulation*




The
      practice of most healthcare professions requires licensing under applicable
      state law. In addition, the laws in some states prohibit business entities
      from
      practicing medicine. If a state determines that some portion of the Company’s
      business violates these laws, it may seek to have the Company discontinue those
      portions or subject the Company to penalties or licensure requirements. Any
      determination that the Company is a healthcare provider and has acted improperly
      as a healthcare provider may result in liability to the Company.




***The
      Company faces potential liability related to the privacy and security of
      personal information it collects from consumer and healthcare professionals
      through its website.***




23




Internet
      user privacy has become a major issue both in the United States and abroad.
      The
      Company has privacy policies posted on its website that the Company believes
      comply with applicable laws requiring notice to users about the Company’s
      information collection, use and disclosure practices. However, whether and
      how
      existing privacy and consumer protection laws in various jurisdictions apply
      to
      the Internet is still uncertain and may take years to resolve. Any legislation
      or regulation in the area of privacy of personal information could affect the
      way the Company operates its website and could harm its business. Further,
      the
      Company cannot assure you that the privacy policies and other statements on
      its
      website or its practices will be found sufficient to protect the Company from
      liability or adverse publicity relating to the privacy and security of personal
      information.




Under
      the Health Insurance Portability and Accountability Act of 1996, or HIPAA,
      Congress established a set of federal national privacy standards for the
      protection by health plans, healthcare clearinghouses, healthcare providers
      and
      their business associates of individually identifiable health records. While
      the
      Company’s members own and control their own personal health records, the
      Company’s maintenance of these records using Flagship Global Health
      ID TM may subject the Company to HIPAA regulations. Furthermore, legislation regarding
      HIPAA is evolving and often confusing as it applies to new businesses such
      as
      the Company. Violation of HIPAA could result in substantial penalties that
      could
      adversely affect the Company’s future.




**Additional
      Information**





We
      are obligated to file reports with the SEC pursuant to the Securities Exchange
      Act of 1934, as amended, (the “Exchange Act”). The public may read and copy any
      materials that we file with the SEC at the SEC’s Public Reference Room at 100 F
      Street, N.E., Washington, D.C. 20549. The public may obtain information on
      the
      operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
      The
      SEC maintains an Internet site that contains reports, proxy and information
      statements, and other information regarding issuers that file electronically
      with the SEC. We file electronically with the SEC. The address of that site
      is http://www.sec.gov .






24




**General
      Discussion on Results of Operations and Analysis of Financial
      Condition**




**Overview**





**Corporate
      History**





Flagship
      Global Health, Inc (“Flagship”) (formerly known as Patients & Physicians,
      Inc.) was organized on February 5, 1993.





On
      June
      27, 2006, Flagship closed an Exchange Agreement (the “Share Exchange”) with all
      of the stockholders of Flagship Patient Advocates, Inc. (“Advocates”) whereby
      Flagship acquired all of the issued and outstanding capital stock of Advocates.
      Upon completion of the Share Exchange, Advocates stockholders controlled
      approximately 99% of the then issued and outstanding common stock. Prior to
      the
      Share Exchange, Flagship was a shell company. Post the Share Exchange, Advocates
      business activities were the activities of Flagship. As a result of these
      factors, this transaction has been treated as a reverse merger and a capital
      transaction, equivalent to the issuance of stock by Advocates for Flagship’s net
      assets and, accordingly, the historical financial statements prior to June
      27,
      2006 are those of Advocates. All shares and per share data prior to the Share
      Exchange have been restated to reflect the stock issuances and the effect of
      the
      closing of the Share Exchange.





On
      January 12, 2007, a Certificate of Ownership and Merger was filed with the
      Secretary of State of the State of Delaware, pursuant to which Flagship merged
      with its wholly owned subsidiary, Advocates. As a result of the merger, Flagship
      assumed all the obligations of Advocates and the operations of Advocates were
      dissolved. As the surviving entity, Patients & Physicians, Inc. changed its
      name to Flagship Global Health, Inc. on January 12, 2007.





In
      connection with the Share Exchange, the stockholders of Advocates acquired
      the
      majority of the voting shares of Flagship, with Flagship carrying on the
      business of Advocates, and the officers and directors of Advocates became the
      officers and directors of Flagship. Therefore, the transaction is being
      accounted for as Advocates being the accounting acquirer (legal acquiree) and
      Flagship being the accounting acquiree (legal acquirer). Since at the closing
      Flagship was a non-operating shell corporation no longer meeting the definition
      of a business as defined in EITF Consensus 98-3, *Determining
      Whether a Nonmonetary Transaction Involves Receipt of Productive Assets or
      of a
      Business* ,
      the transaction is equivalent to Advocates issuing stock for the net liabilities
      of Flagship, accompanied by a recapitalization. The accounting will be identical
      to that resulting from a reverse acquisition, except that there will be no
      adjustments to the historic carrying values of the assets and liabilities.




Prior
      to
      the Share Exchange, Flagship was a shell company whose primary business
      objective was to merge with an operating entity.




During
      2007 the Company established a wholly-owned subsidiary, Flagship Global
      Health-China, Inc. (“Flagship China”), in the People’s Republic of China
      (“PRC”). The purpose of establishing the subsidiary was to expand the Company’s
      worldwide operations and to provide the Company with a vehicle for making
      investments in joint ventures in the PRC in entities operating in related areas
      to the Company’s business.





Flagship
      is a n
      international membership-based, private medical group dedicated to obtaining
      the
      highest level of healthcare services for its members, whether they are at home
      or traveling. Acting as a member’s healthcare advocate, Flagship is focused on
      providing priority access to renowned and clinically acclaimed physicians,
      which
      are typically difficult to access. Rather than simply providing names, Flagship
      offers referrals, priority appointments, emergent care needs, a personal
      electronic internet-based medical record repository and air evacuation to its
      members, all linked by a sophisticated IT management system. For Flagship,
      healthcare advocacy means bringing about the delivery of exceptional “medicine
      at the speed of need” to each of our members. The Company derives revenue from
      the sale of annual memberships to a combination of various service
      offerings.




25







**Critical
      Accounting Policies**




Refer
      to the Company’s audited financial statements for the year ended December 31,
      2006 included in our Form 10-KSB, filed with the SEC on April 2, 2007, for
      a
      summary of the Company’s significant accounting policies.




**Revenue
      Recognition**




We
      derive revenue from the sale of memberships to individuals and institutions
      for
      access to its healthcare service offerings.




We
      recognize revenues in accordance with Securities and Exchange Commission (the
      “SEC”) Staff Accounting Bulletin No. 101, *Revenue
      Recognition in Financial Statements* (“SAB No. 101”) as amended by SEC Staff Accounting Bulletin No. 104, *Revenue
      Recognition* , *revised
      and updated* (“SAB No. 104”). SAB No. 104 stipulates that revenue generally is realized or
      realizable and earned, once persuasive evidence of an arrangement exists,
      delivery has occurred or services have been rendered, the fee is fixed or
      determinable and collectibility is reasonably assured. We sell memberships
      to
      individuals and institutions for access to its healthcare service offerings.
      The
      Company recognizes revenue ratably over the life of the membership.




To
      date, our memberships have been marketed only through its in-house sales force
      and a network of independent brokers.




In
      the broker channel, we recognize revenue when the broker distributor sells
      our
      memberships, provided we have satisfied all other terms and conditions.




**Stock-Based
      Compensation**




We
      have adopted Statement of Financial Accounting Standards (“SFAS”) No. 123(R)
      (revised 2004), *Share-Based
      Payment* (“SFAS No. 123(R)”), which requires the recognition of compensation expense for
      employee stock options and other share-based payments. SFAS No. 123(R) was
      issued in December 2004. Under this method of adoption, expense related to
      employee stock options and other share-based payments is recognized over the
      relevant service period based on the fair value of each stock option
      grant.




We
      have accounted for non-employee compensation expense in accordance with Emerging
      Issues Task Force (“EITF”) Issue No. 96-18, *Accounting
      for Equity Instruments That Are Issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling, Goods or Services* (“EITF 96-18”), which requires non-employee stock options to be measured at
      their fair value as of the earlier of the date at which a commitment for
      performance to earn the equity instruments is reached (“performance commitment
      date”) or the date at which performance is complete (“performance completion
      date”). Accounting for non-employee stock options, which involve only
      performance conditions when no performance commitment date or performance
      completion date has occurred as of the interim financial reporting date,
      requires measurement at the instruments then-current fair value.




We
      have followed the guidance outlined in Financial Accounting Standards Board
      (“FASB”) Interpretations (“FIN”) No. 28, *Accounting
      for Stock Appreciation Rights and Other Variable Stock Option or Award
      Plans* (“FIN 28”), as it relates to computing expense when appreciation rights vest
      over time. As of September 30, 2007, we accounted for 2,545,000 options under
      the guidance of EITF 96-18.




26




The
      fair value of each stock option grant to employees is estimated on the date
      of
      grant. The fair value of each stock option grant to non-employees is estimated
      on the applicable performance commitment date, performance completion date,
      or
      interim financial reporting date.




**Results
      Of Operations For The Three Months Ended September 30, 2007 Compared To The
      Three Months Ended September 30, 2006**





Our
      activities to date have been focused on developing a membership-based
      international health assurance company providing health management and emergency
      support resources typically not available through conventional medical
      insurance. The Company provides physician referrals, on a priority basis, and
      emergent care needs to its members, all linked by a sophisticated management
      system and is still a development stage company. Our operating activities to
      date have consisted primarily of developing our membership and physician
      databases and establishing our physician network. We had revenues of $52,931
      and
      total operating expenses of $2,733,007 for the three months ended September
      30,
      2007 compared to revenues of $12,062 and total operating expenses of $2,261,621
      for the three months ended September 30, 2006.





**Revenues**





Our
      total
      revenue increased by $40,869 to $52,931 for the three months ended September
      30,
      2007 versus $12,062 for the three months ended September 30, 2006. The increase
      is a result of the recognition of revenue from sales of annual memberships
      from
      2006. We are still in the stages of early product and services development
      and
      we do not expect to generate significant revenue from our various product lines
      until late 2007.








**Costs
      of Revenue**





Our
      total
      costs of revenue increased to $12,137 for the three months ended September
      30,
      2007 versus $5,588 for the three months ended September 30, 2006. The increase
      is directly related to costs associated with the recognition of revenues related
      to membership sales.





**Total
      Expenses**





Total
      operating expenses for the three months ended September 30, 2007 were $2,733,007
      compared to $2,261,621 for the three months ended September 30, 2006, an
      increase of $471,386 or 20.8%. The increase in expenses incurred during the
      three months ended September 30, 2007 as compared to 2006, are set forth in
      greater detail below and in the accompanying condensed consolidated financial
      statements attached.





Membership
      services expenses. Membership services expenses decreased by $205,752, or 35.7%,
      to $371,250 for the three months ended September 30, 2007 versus $577,002 for
      the three months ended September 30, 2006. The decrease was principally due
      to a
      reduction in personnel resulting in a decrease in related costs of approximately
      $106,000 and a reduction in the expense related to option issued to consultants
      of approximately $296,000 which, since these options are marked to market,
      was a
      result of a decrease in the market price of the company’s stock. This decrease
      was offset by increases in the amortization of stock options of approximately
      $188,518 related to the issuance of options to employees.





Selling,
      general and administrative expenses. Selling, general and administrative
      expenses increased by $677,138, or 40.2%, to $2,361,757 for the three months
      ended September 30, 2007 as compared to $1,684,619 for the three months ended
      September 30, 2006. This increase was principally attributable to one time
      expenses of $337,500 related to establishing the business in China, an increase
      in occupancy costs of approximately $107,000 related to the move to larger
      office space in late 2006, an increase of approximately $58,000 related to
      technology and communication costs due to increased use of outside consultants
      to maintain the systems, an increase in sales and marketing expenses of
      approximately $127,000 and an increase of approximately $183,000 related to
      increases in professional fees and investor relations costs related to being
      a
      public company, as well as the use of a labor consultant in the current quarter.
      These increases were offset by decreases in personnel costs of approximately
      $78,000 related to a decrease in personnel and a decrease of approximately
      $52,000 due to options issued in the prior year.




27





Interest
      income. Interest income increased by $104,405 to $128,138 for the three months
      ended September 30, 2007 as compared to $23,733 for the three months ended
      September 30, 2006. This increase was a result of having more cash on hand
      during the current three months ended September 30, 2006 as compared to the
      same
      period in 2006 due to the financing that closed in July 2007.





Amortization
      of debt discounts and debt issuance costs. Amortization of debt discounts and
      debt issuance costs decreased by $361,940 to $657,594 for the three months
      ended
      September 30, 2007 versus $1,019,534 for the three months ended September 30,
      2006. The costs allocated to the debt are charged to operations over the life
      of
      the debt using the interest method, which produces a constant periodic rate
      of
      return.





Interest
      expense. Interest expense decreased to $186,048 for the three months ended
      September 30, 2007 versus $250,957 for the three months ended September 30,
      2006. This decrease of approximately $65,000 is primarily due to a reduction
      in
      the principal amount of convertible notes outstanding as a result of certain
      conversion to common stock and the conversion of a $4,000,000 note to equity
      in
      June 2007. These decreases were partially offset by an increase in interest
      expense incurred in the current period related to the issuance of $1,050,000
      of
      short term notes, which did not exist in 2006.





Other
      income, net. Other income, net increased $84,034 for the three months ended
      September 30, 2007 versus $0 for the same period in 2006. This increase was
      primarily due to the sublease income generated from subletting our vacated
      office space in November 2006.





**Net
      loss**





As
      a
      result of the foregoing, for the three months ended September 30, 2007, net
      loss
      decreased by $178,222, or 5.1%, to a net loss of $3,323,683, compared to a
      net
      loss of $3,501,905 for the corresponding period in 2006.





**Results
      of Operations For The Nine Months Ended September 30, 2007 Compared To The
      Nine
      Months Ended September 30, 2006**





We
      had
      revenues of $151,499 and total operating expenses of $7,485,345 for the nine
      months ended September 30, 2007 and revenues of $29,248 and total operating
      expenses of $6,859,466 for the nine months ended September 30, 2006.





**Revenue**





For
      the
      nine months ended September 30, 2007, we generated revenues of $151,499 as
      compared to $29,248 for the nine months ended September 30, 2006. This increase
      is due to the recognition of revenue from the sale of annual memberships which
      has been increasing in 2007. We are still in the stages of early product and
      services development and we do not expect to generate significant revenue from
      our various product lines until 2008.




**Costs
      of Revenue**




Our
      total
      costs of revenue increased to $24,745 for the nine months ended September 30,
      2007 versus $9,309 for the nine months ended September 30, 2006. The increase
      is
      directly related to costs related to the recognition of revenue from membership
      sales.




28


**Total
        Expenses**


Total
      operating expenses for the nine months ended September 30, 2007 were $7,485,345,
      compared to $6,859,466 for the nine months ended September 30, 2006, an increase
      of $625,879 or 9.1%. The expenses incurred for 2007 as compared to 2006, are
      set
      forth in greater detail below and in the accompanying condensed consolidated
      financial statements attached.





**Costs
      and Expenses**




Membership
      services. Membership services expenses decreased by $204,639, to $1,667,275
      for
      the nine months ended September 30, 2007, versus $1,871,914 for the nine months
      ended September 30, 2006. These decreases were attributable to a decrease of
      approximately $278,000 related to costs associated with a reduction in personnel
      and a reduction of approximately $37,000 related to the expiration of certain
      software licenses. These decreases were partially offset by increases in stock
      compensation expense related to the amortization of stock options of
      approximately $75,000 and stipends paid to regional business consultants related
      to the establishment of business in China of approximately $34,000.




Selling,
      general and administrative. Selling, general and administrative expenses
      increased by $830,518, or 16.7%, to $5,818,070 for the nine months ended
      September 30, 2007, as compared to $4,987,552 for the nine months ended
      September 30, 2006. This increase was due to an increase in occupancy costs
      of
      approximately $497,000 related to the move to the Company’s new headquarters in
      late 2006, increases in professional fees of approximately $774,000, including
      legal and accounting, and investor relations all related to being a public
      company, an increase of approximately $111,000 in technology and communications
      primarily related to the outsourcing of computer maintenance in 2007, and one
      time expenses of $337,500 related to establishing the business in China. These
      increases were offset by decreases in personnel resulting in a reduction in
      salaries and related costs of approximately $203,000, a decrease of
      approximately $459,000 directly related to a reduction in the number of stock
      options granted in 2006 versus 2007 and a charge of $240,000 incurred in 2006
      related to the acquisition of the public shell not incurred in
      2007.




Interest
      income. Interest income increased by $93,147 to $142,787 for the nine months
      ended September 30, 2007, as compared to $49,640 for the nine months ended
      September 30, 2006. This increase was due to the Company having more cash on
      hand as a result of the financing which closed in July 2007.




Amortization
      of debt discounts and debt issuance costs. Amortization of debt discounts and
      debt issuance costs decreased by $268,574 to $2,424,328 for the nine months
      ended September 30, 2007, versus $2,692,902 for the same period last year.
      This
      decrease was due to a change in the estimated fair market value of the common
      stock used in the amortization calculation of the discounts on the Convertible
      Note financing that closed in January 2006. The costs allocated to the debt
      are
      charged to operations over the life of the debt using the interest method,
      which
      produces a constant periodic rate of return.




Interest
      expense. Interest expense increased by $137,231 to $665,536 for the nine months
      ended September 30, 2007 versus $528,305 for the nine months ended September
      30,
      2006. The increase is primarily due to the Convertible Notes being outstanding
      for nine months in 2007 versus eight months in 2006, and the Apollo Notes being
      outstanding for four months in 2006 versus five months in 2007. These increases
      were offset by the interest expense related to the short term notes payable
      issued in 2007.




Other
      income, net. Other income, net increased to $231,334 in 2007 versus $0 in 2006.
      This increase was primarily due to the recognition of sublease income generated
      from our subletting our vacated office space in 2007.




29


**Net
        Loss**


For
      the
      nine months ended September 30, 2007, we had a net loss of $10,074,334, as
      compared to a net loss of $10,011,094 for the same period in 2006, an increase
      of $63,240. Net loss per common share improved from a loss of $0.22 per share
      in
      2006 to $0.16 per share in 2007.




**Liquidity
      And Capital Resources**





At
      September 30, 2007, the Company had a working capital of $7,112,623, compared
      to
      a working capital deficiency of $5,072,906 at December 31, 2006. This change
      is
      primarily the result of the completing an equity financing in the net amount
      of
      $14,185,226 in July 2007, proceeds from short term notes of $1,050,000 and
      the
      conversion of $4,000,000 of short term convertible notes into common stock
      in
      the second quarter of 2007. These increases were offset by an increase in the
      current portion of the debt financings of approximately $1,800,000, a decrease
      in accounts payable and accrued liabilities of approximately $104,000, and
      cash
      used for operating activities of approximately $6,044,000.





At
      September 30, 2007 current liabilities include the current portion of the debt
      financings. The principal amount of the Convertible Notes, $7,100,000, is
      payable in installments over twenty-four months, commencing in July 2007 and
      the
      principal amount of the Convertible Bridge Notes, $1,050,000, is due in full
      in
      the first half of 2008. The Convertible Notes accrue interest at 1.0% above
      the
      prime rate and the Convertible Bridge Notes accrue interest at
      9.0%.





We
      completed an equity financing in the net amount of $14,185,226 (the “Financing”)
      on July 17, 2007. The terms of the transaction provided for the issuance of
      newly issued shares of our common stock and warrants with a term of three years
      to purchase shares of our common stock at an exercise price equal to $3.00
      per
      share. The total amount of warrants issued is equal to 30% of the number of
      shares purchased by each investor. Each unit was sold for $2.20 per
      unit.





Net
      cash
      used in investing activities was $156,981 for the nine months ended September
      30, 2007, versus $72,741 for the nine months ended September 30, 2006. For
      the
      nine months ended September 30, 2006, investing activities included leasehold
      improvements in our new office space.





Net
      cash
      provided by financing activities during the nine months ended September 30,
      2007
      was $16,550,894 versus $7,924,895 during the nine months ended September 30,
      2006. The increase of approximately $8,800,000 resulted from the net proceeds
      of
      approximately $15,600,000 resulting from the financing and other sales of common
      stock, and the issuance of Convertible Bridge Notes in the amount of $1,050,000
      during the nine months ended September 30, 2007, versus proceeds of $4,100,000
      received from the closing of the Convertible Notes and proceeds of $4,000,000
      from issuance of the Term Notes during the same period in 2006.







30







**Item
      3A(T). Controls and Procedures.**




**A.
      Evaluation of Disclosure Controls and Procedures:**





Our
      disclosure controls and procedures are designed to ensure that material
      information relating to the Company are made known by others within the Company
      to our Chief Executive Officer (“CEO”), CFO and others in the Company involved
      in the preparation of our annual report and our quarterly reports. The Company
      has evaluated, with the participation of the Company’s CEO and CFO, the
      effectiveness of the design and operation of the Company’s disclosure controls
      and procedures as of September 30, 2007, pursuant to Exchange Act Rule 15d-15
      and were determined not to be effective. Based upon that evaluation, the CEO
      and
      CFO identified deficiencies that existed in the design or operation of our
      internal control over financial reporting that it considered to be "material
      weaknesses." The Public Company Accounting Oversight Board defined a material
      weakness as a "significant deficiency or combination of significant deficiencies
      that results in more than a remote likelihood that a material misstatement
      of
      the annual or interim financial statements will not be prevented or detected."





The
      material weakness identified relate to:




·
              the
                  lack of sufficient knowledge and experience among the internal
                  accounting
                  personnel regarding the application of US GAAP and SEC requirements;
                  and
  ·
              insufficient
                  written policies and procedures for accounting and financial reporting
                  with respect to the current requirements and application of US
                  GAAP and
                  SEC disclosure requirements.


Notwithstanding
      the existence of this material weakness in our internal control over financial
      reporting, our management believes, including our Chief Executive Officer and
      Chief Financial Officer, that the condensed financial statements included in
      this report fairly present in all material respects our financial condition,
      results of operations and cash flows for the periods presented.




**B.
      Changes in Internal Control over Financial Reporting:**





There
      were no changes in our internal controls over financial reporting identified
      in
      connection with our evaluation of these controls during the period covered
      by
      this report that has materially affected, or is reasonably likely to materially
      affect, the Company’s internal control over financial
      reporting.


31


**PART
      II**


**OTHER
      INFORMATION**





**Item
      1. Legal Proceedings.**





A
      former independent contractor (the “Plaintiff”) has filed a lawsuit against the
      Company, among others. The Plaintiff alleges that he was promised employment
      with Flagship and performed services for Flagship based on these promises.
      The
      Plaintiff is seeking compensatory and punitive damages, including the issuance
      of additional shares of stock for these services and attorney fees in an
      aggregate amount of approximately $1,800,000. The Company believes this lawsuit
      is without merit and intends to defend it vigorously. In management’s opinion
      the final resolution of this matter will not have material impact on the
      consolidated financial position or results of operations of the
      Company.




**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.**


ExhibitNumber
                
                Description
                    of Document31.1
                
                Rule
                    13a-14(a)/15d-14(a) Certification (CEO)**31.2
                
                Rule
                    13a-14(a)/15d-14(a) Certification (CFO)**32.1
                
                Section
                    1350 Certification (CEO)**32.2
                
                Section
                    1350 Certification
                    (CFO)**





**
      Filed herewith.


32


**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




**FLAGSHIP
              GLOBAL HEALTH, INC.**Date: November 13, 2007
            
            
            By:/s/ Fred F. NazemFred
              F. Nazem, Chief Executive Officer and
              Chariman




Date: November 13, 2007
            
            
            By: /s/ Philip E. BarakPhilip
              E. Barak, Chief Financial
              Officer


33