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                     U.S. Securities and Exchange Commission
                              Washington, DC 20549
                                   Form 10-QSB


(Mark One)

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

                   For the quarterly period ended June 30, 2001.

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

                 For the transition period from _____ to _____.

                        COMMISSION FILE NUMBER 000-22719

                  PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
          (Name of small business issuer as specified in its charter.)

                 New Jersey                          22-3273637
      (State or other jurisdiction of             (I.R.S. Employer
       incorporation or organization)             Identification No.)



c/o The Pace Group, Inc., 202 Courtney Lane, McKinney, Texas 75071 formerly 2828
No. Haskell, Building 5, 6th Floor, Dallas, Texas 75204
       (Address of principal executive offices)                   (zip code)

Issuer's telephone number:    c/o (972) 562-3979

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  [_]  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: As of June 30, 2001 there were 4,629
shares of Common Stock outstanding.


Transitional Small Business Disclosure Format (Check one):  Yes  [_]  No [X]


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                              Index to Form 10-QSB


<TABLE>
<CAPTION>
                                                                                PAGE
                                                                                ----
<S>                                                                             <C>
Part I - Financial Information


      Item 1.     Financial Statements

            Statements of Net Assets in Liquidation as of
            June 30, 2001 and December 31, 2000                                   3

            Statements of Changes in Net Assets in Liquidation For the Six
            Months Ended June 30, 2001 and 2000 (unaudited)                       4

            Statements of Changes in Net Assets in Liquidation For the Three
            Months Ended June 30, 2001 and 2000 (unaudited)                       5


            Notes to (unaudited) Financial Statements                             6


      Item 2.     Management's Plan of Operations                                 7


Part II - Other Information                                                       9

      Item 1.     [Omitted]                                                       9

      Item 2.     [Omitted]                                                       9

      Item 3.     [Omitted]                                                       9

      Item 4.     [Omitted]                                                       9
      Item 5.     [Omitted]                                                       9

      Item 6.     Exhibits and Reports on Form 8-K                               11
</TABLE>


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Part I - Financial Information

Item 1.     Financial Statements

                  PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
                     STATEMENTS OF NET ASSETS IN LIQUIDATION


<TABLE>
<CAPTION>
                                                        June,30         December 31
                                                         2001              2000
                                                      (unaudited)
                                                      ----------        ----------
<S>                                                   <C>               <C>
ASSETS

      Cash                                            $  473,068        $  521,792
      Investments                                      4,076,300         4,074,654
      Accrued Investment Income                           59,872            58,107
                                                      ----------        ----------
      Total Assets                                    $4,609,240        $4,654,553

LIABILITIES

      Accounts Payable and Accrued Liabilities        $   32,025        $  166,778
      Due to Management Company                            7,525             9,492
      Cash Overdraft Liability                           117,532           122,402
                                                      ----------        ----------
                Net Assets in Liquidation             $4,452,158        $4,355,881
                                                      ==========        ==========
</TABLE>


                             See accompanying notes.


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                  PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
               STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                             For The Six Months Ended

                                                         June 30,2001       June 30,2000
                                                         ------------       ------------

<S>                                                      <C>                 <C>
Net Assets in Liquidation at Beginning of Period:        $ 4,355,881         $ 4,374,612

Investment Income                                            136,920             106,103
Realized Gains on Sale of Investments                         17,436                --
Net Change in Unrealized Gains on Investments                  2,126              15,468
General and Administrative Expenses                          (60,205)            (67,473)
                                                         -----------         -----------
Net Income for the Period                                     96,277              54,098
                                                         ===========         ===========

Net Assets in Liquidation at End of Period:              $ 4,452,158         $ 4,428,710
                                                         ===========         ===========


            Net Income per Common Share                  $        21         $        12
                                                         ===========         ===========

            Weighted Average Number of Shares                  4,629               4,629
                                                         ===========         ===========
</TABLE>


                             See accompanying notes.


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                  PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
               STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                              For The Three Months Ended

                                                             June 30,2001         June 30,2000
                                                             ------------         ------------
<S>                                                          <C>                 <C>
Net Assets in Liquidation at Beginning of Period:             $ 4,428,992         $ 4,376,883

Investment Income                                                  69,186              59,012
Realized Gains on Sale of Investments                              12,097                --
Net Change in Unrealized Gains (Losses) on Investments            (31,052)             21,503
General and Administrative Expenses                               (27,065)            (28,688)
                                                              -----------         -----------
Net Income for the Period                                          23,166              51,827
                                                              ===========         ===========

Net Assets in Liquidation at End of Period:                   $ 4,452,158         $ 4,428,710
                                                              ===========         ===========


            Net Income per Common Share                       $         5         $        11
                                                              ===========         ===========

            Weighted Average Number of Shares                       4,629               4,629
                                                              ===========         ===========
</TABLE>


                             See accompanying notes.


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                  PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
                                  June 30, 2001
                                   (UNAUDITED)

1
 . UNAUDITED FINANCIAL STATEMENTS

The financial information as of June 30, 2001 and for the six month and three
month periods ended June 30, 2001 and June 30, 2000 included herein is
unaudited. Such information includes all adjustments, consisting of a normal and
recurring nature, which in the opinion of management, are necessary for a fair
presentation of the Company's Statements of Net Assets in Liquidation and
Statements of Changes in Net Assets in Liquidation in accordance with accounting
principles generally accepted in the United States. Such information should be
read in conjunction with Management's Plan of Operations included herein and the
Notes to Financial Statements included in the Company's Annual Report on Form
10-KSB for the year ended December 31, 2000. The interim results are not
necessarily indicative of the results for the full fiscal year.

2. LIQUIDATION BASIS OF ACCOUNTING

As a result of the sale of its operations to Horizon Healthcare of New Jersey,
Inc. ("Horizon") on December 19, 1997, the Company changed from a going-concern
basis of accounting to a liquidation basis of accounting effective December 31,
1997.

The Statements of Net Assets in Liquidation at December 31, 2000 and June 30,
2001 do not distinguish between current and long-term balances as would be
reflected if such statements had been prepared on a going-concern basis.

3. SALE OF GROUP CONTRACTS AND PROVIDER AGREEMENTS

On December 19, 1997, the Company consummated the transfer and assignment of
certain provider and subscriber contracts constituting its HMO and PPO
operations (the "Transaction") to Horizon (the "Purchaser"), a health
maintenance organization affiliated with Blue Cross Blue Shield of New Jersey,
Inc. The Company received a cash payment of $1,839,300 as consideration for that
transfer and assignment.

Although the Company has sold its operations to Horizon, the Company remained
responsible for the payment of claims incurred prior to the December 19, 1997
date of the closing of the Transaction with Horizon. The Company's liability for
claims payments after December 19, 1998, the first anniversary of the
Transaction, is limited to claims asserted by a claimant for services prior to
December 19, 1997 and previously acknowledged or otherwise known to the Company.
Any other claims liability was assumed by the Purchaser effective December 19,
1998. In early 1999, the Company completed payment of claims incurred prior to
December 19, 1997. In early 2000, Horizon notified the Company that it believes
the Company is responsible for approximately $30,000 of claims because they were
incurred prior to December 19, 1997. The Company believes it has no
responsibility for these claims because they were reported to the Company after
December 19, 1998 and that they are Horizon's responsibility pursuant to the
agreements entered into in connection with the transaction. No further
communications have taken place with Horizon regarding this matter since early
2000. Beginning in December 1998, the Company initiated the process of seeking
approval from state regulators to surrender its Certificate of Authority


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("COA"). In May 2000, after discussions between the Company and its regulators,
the New Jersey Department of Banking and Insurance (the "Department") required
among other things, a Custody Agreement in the amount of $350,000 be established
for the payment of future liabilities, if any, as a condition of surrender of
the COA. The Company's Board of Directors approved the Custody Agreement on
November 15, 2000, along with a Plan of Dissolution subject to the Department's
approval of the surrender of the COA. The Custody Agreement was established on
February 26, 2001 and on and on March 7, 2001 the New Jersey insurance
regulators approved the surrender of the COA. The Company intends to proceed
with dissolution. Following dissolution, any assets remaining after satisfaction
of the Company's liabilities will be distributed to the stockholders. Amounts
distributed in respect of each outstanding share of the Company's common stock
are expected to be substantially lower than the purchase price paid for such
shares. However, the Company is unable to estimate the amount, if any, that
would be available for distribution. Dissolution requires additional stockholder
action.

4. MANAGEMENT AGREEMENT

Pursuant to a Management Services Agreement dated December 19, 1997, and amended
on July 16, 1999, the Company has engaged Horizon as its management company to
provide a substantial portion of the Company's management and administrative
services. The Company pays Horizon an hourly fee of $75 for services rendered to
the Company. The agreement can be terminated by either the Company or Horizon,
with or without cause, provided that the terminating party has furnished not
less than thirty (30) days prior written notice of such termination to the other
party. For the six months ended June 30, 2001 and 2000 the Company incurred
approximately $15,975 and $24,438 respectively related to this arrangement.

In addition, effective August 1, 1997, the Company engaged The Pace Group, Inc.
("Pace") to provide certain management transition services and certain corporate
financial and reporting assistance not otherwise provided by the Purchaser, such
as assistance in making regulatory filings with state insurance regulators and
with the Security and Exchange Commission.

5. COMMITMENTS AND CONTINGENCIES

As of June 30, 2001 the Company's investments include restricted assets of
$350,000 on deposit with the State of New Jersey for Custody Agreement related
to the Company's surrender of its COA.

ITEM 2.

MANAGEMENT'S PLAN OF OPERATIONS

The following discussion should be read in conjunction with the Financial
Statements and the Notes thereto provided herein.

The Company sold its operations to the Horizon Healthcare of New Jersey, Inc.
("Horizon" or the "Purchaser") on December 19, 1997, following the December 9,
1997 shareholder meeting at which the sale was approved, and has continued
efforts year to date to wind down operations. As a result, effective December
31, 1997, the Company changed its basis of accounting from a going-concern basis
to a liquidation basis. During the three months ended March 31, 2001, management
activities have been limited to continuing the Company's payment of existing


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liabilities, stewardship of remaining assets, and maintaining compliance as
appropriate in reporting to applicable regulatory agencies.

Although the Company has sold its operations to Horizon, the Company remained
responsible for the payment of claims incurred prior to the December 19, 1997
date of the closing of the transaction with Horizon. The Company's liability for
claims payments after December 19, 1998, the first anniversary of the
Transaction, is limited to claims asserted by a claimant for services prior to
December 19, 1997 and previously acknowledged or otherwise known to the Company.
Any other claims liability will be assumed by the Purchaser effective December
19, 1998. As of December 31, 1999, that liability had been paid out. Any claims
for services provided after December 19, 1997 or any claims for services
provided prior to December 19, 1997, but first discovered after December 19,
1998, are the responsibility of Horizon. In early 2000 Horizon notified the
Company that it believes the Company is responsible for approximately $30,000 of
claims because they were incurred prior to December 19, 1997. The Company
believes it has no responsibility for these claims because they were reported to
the Company after December 19, 1998 and that they are Horizon's responsibility.
During 1999 and 2000 the Company had ongoing discussions with the New Jersey
insurance regulators to reach agreement on the most expeditious way to surrender
the COA. The New Jersey Department of Banking and Insurance required a Custody
Agreement in the amount of $350,000 be established for the payment of any future
liabilities as a condition of surrender of the COA. The Company established the
Custody Agreement on February 26, 2001 and on March 7, 2001 the New Jersey
insurance regulators approved the surrender of the COA. The Company intends to
proceed with dissolution. Following dissolution any assets remaining after
satisfaction of the Company's liabilities will be distributed to the
stockholders. Amounts distributed in respect of each outstanding share of the
Company's common stock are expected to be substantially lower than the purchase
price paid for such shares. However, the Company is unable to estimate the
amount, if any, that would be available for distribution. Dissolution requires
additional stockholder action.

Changes in Net Assets

The increase in net assets in liquidation for the six months ended June 30, 2001
was $96,277 as compared to an increase of $54,098 for the six month period ended
June 30, 2000. The $96,277 increase in net assets for the six month period ended
June 30, 2001 primarily represents total return on investments income of
approximately $156,000 offset by general and administrative expenses of
approximately $60,000.

For the six months ended June 30, 2001, the Company incurred general and
administrative costs of approximately $60,000 as compared to approximately
$67,000 for the six months ended June 30, 2000. In 2001 and 2000, such costs and
expenses related to the limited management activities of the Company including,
but not limited to, costs and expenses incurred related to management, legal,
and accounting. While costs associated with the Company's wind-down have
decreased, it is expected these costs will increase during the dissolution
process. See Note 4 of the Notes to Financial Statements for June 30, 2001 for a
description of the Management Service Agreements.

Financial Condition

As of June 30, 2001 the Company had approximately $4.5 million in cash and cash
equivalents and investments in U.S. Treasury obligations compared to
approximately, $4.6 million as of December 31, 2000. Management believes


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sufficient liquid funds are available to satisfy any remaining liabilities
likely to occur in the near future (including, without limitation, costs and
expenses related to the anticipated administration of liquidation such as
management fees, legal fees, insurance, accounting fees, printing expenses, and
shareholder communication expenses).

As of June 30, 2001 the Company reported approximately $40,000 in accounts
payable and accrued liabilities related to various service providers.

The Company has not made any liquidating distributions since assuming a
liquidation status and does not anticipate a future distribution until such time
as outstanding liabilities are confirmed as extinguished.

The discussion in this Quarterly Report contains certain forward-looking
statements that involve risks and uncertainties, such as statements of the
Company's plans, objectives, expectations and intentions. The statements should
not be regarded as a representation by the Company that the expectations or
plans of the Company will be achieved. Actual results or events could differ
materially from those discussed herein. Factors that could cause or contribute
to such differences include, but are not limited to, the effect of requirements
imposed by regulatory agencies and the returns on the Company's investments.

PART II - OTHER INFORMATION

ITEM 1. [Omitted]

ITEM 2. [Omitted]

ITEM 3. [Omitted.]

ITEM 4. [Omitted.]

ITEM 5. [Omitted]

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) EXHIBITS

Reference is made to the Index of Exhibits hereinafter contained on Page 11.

(b) REPORTS ON FORM 8-K.

No reports on Form 8-K were filed during the quarter for which this report on
Form 10-QSB is being filed.


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                                   SIGNATURES


In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                  PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.

                  BY:  /S/    JOSEPH BILLOTTI, M.D.
                       ----------------------------
                        Joseph Billotti, M.D.
                                Chairman



  /S/ Russell F.Mohawk
---------------------------
Russell F. Mohawk
      Senior Consultant of The Pace Group, Inc.
      (Acting in the capacity of Principal Accounting Officer and Principal
      Financial Officer of the Registrant)

                             DATED: /August 14, 2001


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INDEX TO EXHIBITS


<TABLE>
<CAPTION>
EXHIBIT NO.      EXHIBIT
<S>               <C>
      3.1         Amended and restated Certificate of Incorporation
                  (incorporated by reference to Exhibit 3.1 to the Registrant's
                  Registration Statement on Form SB-2)

      3.2         Amended and restated By-Laws (incorporated by reference to
                  Exhibit 3.2 to the Registrant's Registration Statement on Form
                  SB-2)

      4.1         Secondary Offering Prospectus, as approved by the Securities
                  Exchange Commission on November 9, 1995, detailing rights of
                  security holders (incorporated by reference to the
                  Registrant's Registration Statement on Form SB-2)

     10.1         Assignment and Assumption of Lease Agreement dated February
                  11, 1997 (incorporated by reference to Exhibit 10.8 in the
                  Registrant's Registration Statement Form SB-2)

     10.2         Agreement between the Registrant and Medigroup of
                  New Jersey, Inc. dated as of June 26, 1997 (incorporated
                  by reference to Exhibit 10.9 to the Registrant's Form 10-QSB
                  for quarter ended September 30, 1997)

     10.3         Management Services Agreement between the Registrant and
                  Medigroup of New Jersey, Inc. dated as of June 26, 1997
                  (incorporated by reference to Exhibit 10.9 to the Registrant's
                  Form 10-QSB for quarter ended June 30, 1997)

     10.4         Termination and Release Agreement by and between Medical Group
                  Management, Inc. and Physician Healthcare Plan of New Jersey,
                  Inc., dated as of July 31, 1997 (incorporated by reference to
                  Exhibit 10.11 to the Registrant's Form 10-QSB for quarter
                  ended September 30, 1997)

     10.5         Letter Agreement between Medigroup of New Jersey, Inc. and
                  Physician Healthcare Plan of New Jersey., dated as of August
                  26, 1977, relating to the sale of certain fixed assets
                  (incorporated by reference to Exhibit 10.12 to the
                  Registrant's Form 10-QSB for quarter ended September 30, 1997)

     10.6         Services Agreement between The Pace Group, Inc. and Physician
                  Healthcare Plan of New Jersey, Inc., dated as of August 1,
                  1997 (incorporated by reference to Exhibit 10.13 to the
                  Registrant's Form 10-QSB for quarter ended September 30, 1997)

     10.7         Agreement between Medigroup of New Jersey, Inc. and Physician
                  Healthcare Plan of New Jersey, Inc., dated July 25, 1997,
                  relating to the use of certain computer equipment
                  (incorporated by reference to Exhibit 10.14 to the
                  Registrant's Form 10-QSB for quarter ended September 30, 1997)
</TABLE>


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<TABLE>
<S>              <C>
     10.8        Management Services Agreement dated as of December 19, 1997
                 between Physician Healthcare Plan of New Jersey, Inc. and
                 Medigroup of New Jersey, Inc. (incorporated by reference to
                 Exhibit 99.3 to the Registrant's Form 8-K filed December 29,
                 1997)
</TABLE>


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