U.S.
        SECURITIES AND EXCHANGE COMMISSION
 Washington,
        D.C. 20549
  FORM
        10-KSB
  þ ANNUAL
        REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934
  For
        the
        fiscal year ended December 31, 2006
   ̈ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT
        OF 1934
  Commission
        file number: 000-30556
  
  FLAGSHIP
        GLOBAL HEALTH, INC.
 (Name
        of
        Small Business Issuer in Its Charter)
  Delaware
                  (State
                    or Other Jurisdiction of
                  Incorporation
                    or Organization)
                11-3210792
                  (I.R.S.
                    Employer
                  Identification
                    No.)
 
 220
                    West 42ndStreet, 23rdFloor
                  New
                    York, NY
                  (Address
                    of Principal Executive Offices)
                10036
                  (Zip
                    Code)
  (212)
        340-9100
 (Issuer's
        Telephone Number, Including Area Code)
  Securities
        registered under Section 12(b) of the Exchange Act: None
  Securities
        registered under Section 12(g) of the Exchange Act:
  Title
                  of Each Class
                Common
                  Stock, $.001 Par Value
              
              Name
                  of Each Exchange on Which Registered
                Pink
                  Sheets
  Check
        whether the issuer is not required to file reports pursuant to Section 13
        or
        15(d) of the Exchange Act.   ̈
  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 þ No  ̈
  Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B contained in this form, and no disclosure will be contained,
        to
        the best of registrant's knowledge, in definitive proxy or information
        statements incorporated by reference in Part III of this Form 10-KSB or any
        amendment to this Form 10-KSB.   ̈
  Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).
 Yes  ̈ No þ
  The
        issuer's revenues for the fiscal year ended December 31, 2006 were $73,419.
  The
        aggregate market value of the common stock (23,689,135 shares) held by
        non-affiliates, based on the average of the bid ask prices ($1.42) of the
        common
        stock as of March 20, 2007 was approximately $33,638,572.
  As
        of
        March 20, 2007, the number of shares outstanding of the issuer's common stock
        is
        59,049,385 shares.
  Transactional
        Small Business Disclosure Format (Check one):  Yes  ̈ No þ
  
  **FLAGSHIP
        GLOBAL HEALTH, INC.**
  **TABLE
        OF CONTENTS TO ANNUAL REPORT**
 **ON
        FORM 10-KSB**
 **YEAR
        ENDED DECEMBER 31, 2006**
 **PART
                    I**Item
                    1.
                Description
                    of Business
                3Item
                    2.
                Description
                    of Property
                10Item
                    3.
                Legal
                    Proceedings
                10Item
                    4.
                Submission
                    of Matters to a Vote of Security Holders
                11**PART
                    II**Item
                    5.
                Market
                    for Common Equity, Related Stockholder Matters and Small Business
                    Issuer
                    Purchases of Equity Securities
                11Item
                    6.
                Management’s
                    Discussion and Analysis or Plan of Operation
                12Item
                    7.
                Financial
                    Statements
                21Item
                    8.
                Changes
                    In and Disagreements With Accountants on Accounting and Financial
                    Disclosure
                21Item
                    8A.
                Controls
                    and Procedures
                21Item
                    8B.
                Other
                    Information
                22**PART
                    III**Item
                    9.
                Directors,
                    Executive Officers, Promoters and Control Persons; Compliance
                    with Section
                    16(a) of the Exchange Act
                23Item
                    10.
                Executive
                    Compensation
                28Item
                    11.
                Security
                    Ownership of Certain Beneficial Owners and Management and Related
                    Stockholder Matters
                30Item
                    12.
                Certain
                    Relationships and Related Transactions, and Director
                    Independence
                31Item
                    13.
                Exhibits
                32Item
                    14.
                Principal
                    Accountant Fees and Services
                32
  2
  **PART
        I**
  **Item
        1. Description of Business.**
  Flagship
        Global Health, Inc (“Flagship”) (formerly known as Patients & Physicians,
        Inc., formerly known as Finity Holdings, 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”) (formerly
        U.S. Open Healthcare Management, Inc.) 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 Emerging Issues Task Force (“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.
  On
        January 30, 2006, Advocates entered into a securities purchase agreement
        (the
“Laurus Securities Agreement”) with Laurus Master Fund, Ltd. (“Laurus”). Under
        the Laurus Securities Agreement, Laurus purchased a secured convertible term
        note (the “Laurus Convertible Note”) (the Laurus Securities Agreement, the
        Laurus Convertible Note, the Common Stock Purchase Warrant, the Stock Pledge
        Agreement, the Registration Rights Agreement, the Master Security Agreement,
        the
        Subsidiary Guaranty, the Limited Guaranty and the Intellectual Property
        Agreement, collectively the “Financing Documents”) from Advocates in the
        aggregate principal amount of $4,100,000, which was collateralized by
        substantially all the assets of Advocates. In addition, on January 30, 2006,
        Advocates entered into a securities purchase agreement (the “Junior Securities
        Agreement”) (the Junior Securities Agreement, the Junior Secured Convertible
        Note, the Common Stock Purchase Warrant, the Registration Rights Agreement
        and
        the Master Security Agreement, collectively, the “Junior Debt Documents”) with
        holders of Advocates short-term notes. Under the Junior Securities Agreement
        the
        note holders (the “Junior Note Holders”) (collectively Laurus and the Junior
        Note Holders are referred to as the “Investors”) agreed to invest $3,000,000,
        including the conversion of $2,600,000 of previously issued short-term notes,
        into secured convertible term notes (the “Junior Notes”) in Advocates. The
        Laurus Convertible Note and the Junior Notes (collectively the “Convertible
        Notes”) have substantially the same terms. The Convertible Notes bear interest
        at 1.0% above the prime rate, with a minimum interest rate of 7% and are
        convertible into common stock of Advocates at a fixed conversion price of
        $0.90
        per share at the election of each of the Investors.
  3
  On
        June
        7, 2006 Advocates 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 “Term Notes”). Interest on the Term Notes accrues at 8% based
        on a 365-day year and shall be paid at maturity of the Term Notes. Any unpaid
        interest plus remaining principal on the Term Notes are due and payable on
        June
        7, 2007. The Term Notes, including all accrued interest, shall be converted
        into
        the form of securities issued in such next round of financing at the price
        per
        share of the securities issued in such financing.
  On
        August
        23, 2006, Flagship filed a Registration Statement (SB-2) with the Securities
        and
        Exchange Commission (“SEC”) registering all of the common stock underlying the
        Financing Documents and Junior Debt Documents. The Registration Statement
        was
        declared effective on September 11, 2006. Flagship has an aggregate of 9,444,095
        shares of registered common stock outstanding.
 
 All
        references to “Company”, “our”, “us”, or “we” shall apply to Flagship Global
        Health, Inc. and Flagship Patient Advocates, Inc.
  **Flagship’s
        Business**
  Flagship
        is a 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, and personalized advocacy services
        to
        its members, all linked by a sophisticated and proprietary information
        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.
  *Flagship’s
        Products*
  Flagship
        offers seven services offered through four products. The service offerings
        include Emergency Support Hotline, Global Health IDTM, Emergency Air Evacuation,
        Priority Appointments with Leading Specialists, Personal Medical Records
        Management, Medical Travel Planning and Comprehensive Physicals. Emergency
        Care
        Direct includes Emergency Support Hotline and Global Health IDTM. In addition,
        there are three Specialist Care Direct Membership Plans as follows:
  **Specialist
                  Care DirectTM Membership Plans**
  **Platinum**
              
              **Gold**
              
              **Silver**Emergency
                  Support Hotline
              
              ·
              
              ·
              
              ·Global
                  Health IDTM
              
              ·
              
              ·
              
              ·Emergency
                  Air Evacuation
              
              ·
              
              ·
              
              ·Priority
                  Appointments with Specialists
              
              ·
              
              ·
              
              ·Medical
                  Records Management
              
              ·
              
              ·Medical
                  Travel Planning
              
              ·
              
              ·Comprehensive
                  Physical
              
              ·
 4
  *Flagship’s
        Services*
  **Emergency
        Support Hotline**
  Flagship's
        24/7 global support service is available when members are in an emergency
        room
        or unexpectedly hospitalized. With just one phone call, our clinical team
        of
        experienced registered nurses and physicians can assist members and their
        families to make informed decisions about care and treatment. We will even
        speak
        directly to ER personnel on a member’s behalf, with translation services in over
        140 languages.
  **Global
        Health IDTM**
  Global
        Health IDTM is a secure, web-based, repository for personal health information.
        Members carry a Global Health IDTM Card at all times, so emergency personnel
        anywhere in the world can access vital health information through the Internet
        in the event that the member is unconscious or otherwise unable to communicate.
        Global Health IDTM is also a lifetime personal health record that contains
        valuable information about past and present health issues. Members can enter
        their medical history and update their record through a standard web browser
        and
        decide with whom and how it is shared. When visiting a new doctor, members
        can
        simply print out a copy of their medical record or provide the doctor with
        password-protected access to the information on-line.
 
 **Emergency
        Air Evacuation**
  Flagship’s
        24/7 medical air evacuation service is available if members are hospitalized
        more than 150 miles away from home. It provides medically equipped aircraft
        staffed with a trained medical team configured as flying intensive-care units.
        This service is available from virtually anywhere in the world at no extra
        cost
        to our members. Under certain conditions, members can also be transported
        from
        their home hospital to specialty hospitals in the United States.
 
 **Priority
        Appointments with Leading Specialists**
  Our
        own
        highly personalized and responsive referral center is staffed by a clinical
        team
        of physicians and registered nurses who help members find the best specialists
        for the best care possible. We understand that life-threatening illnesses
        don’t
        wait; that’s why we secure priority appointment with one of our specialists ―
often within seven days of a member’s call. In addition, a team clinician will
        follow-up with members after their appointment to discuss outcomes and next
        steps.
 
 **Personal
        Medical Records Management**
  Compiling
        and maintaining personal medical information can be a daunting task. Our
        medical
        records specialists work with members to compile their medical history from
        multiple sources and create one comprehensive, up-to-date health record.
        We then
        store this information online using our proprietary technology platform Global
        Health IDTM.
 
 **Medical
        Travel Planning**
  If
        you
        have medical conditions that require special care and attention while traveling
        or working overseas, our medical-care specialist team will develop a
        personalized medical-care travel plan. We provide assistance in locating
        and
        arranging quality care overseas for serious medical treatments, and for supplies
        and services such as purchase of diabetic supplies, renal dialysis, oxygen
        refills for those suffering emphysema, and more.
 
 **Comprehensive
        Physical Examination**
  Flagship
        will arrange a comprehensive physical examination and diagnostic evaluation
        at
        one of our leading executive-health facilities located around the country.
        These
        facilities include The Greenbrier Clinic in West Virginia, The Cooper Clinic
        in
        Dallas, The Sharp Rees-Stealy Medical Group in San Diego, and the Mt. Sinai
        Program for Diagnostic and Preventive Medicine in New York City.
  *Marketing
        Strategy*
  Flagship
        is a patient advocacy and healthcare management company that helps discerning
        individuals make better and more informed decisions regarding their health
        care.
        This is analogous to financial advisors helping them with their finances
        and
        architects helping them build their homes. Flagship’s product positioning is
        best defined by its dedication to clinical advocacy and not financial or
        administrative help, which are offered by health insurance companies and
        others.
        From a market prospective, Flagship is a part of a new and rising class of
        companies that collectively make up a new sector called consumer driven
        healthcare (“CDH”). The combination of hyper inflation in healthcare costs,
        consumer demand for choices in medical care and the burden of individuals
        paying
        an ever increasing portion of medical bills has been fueling the CDH movement.
  5
  Flagship
        provides health advocacy and extends to its members the privilege of access
        to
        outstanding healthcare specialists through annual memberships. Flagship’s
        products and services are primarily for higher income individuals, but also
        may
        appeal to anyone, regardless of income, who values high quality healthcare.
        While Flagship should appeal to all demographics, the primary target is the
        “baby-boomer” population, those born between 1946 and 1964. The “baby boomer”
population represents approximately 30% of the U.S. population, but owns
        more
        than two-thirds of the nation’s wealth. The “baby boomers” are also the key
        opinion leaders in the U. S. economy as they not only influence others with
        their own buying habits, but also often directly control the purchases for
        their
        children and elderly parents.
  *Sales
        Strategy*
  Flagship’s
        sales plan is a three-pronged simultaneous approach to attract potential
        members: large corporate customers reached via direct sales, small and
        medium-sized businesses reached via agents/intermediaries or direct sales,
        and
        individuals reached through indirect sales. As described below each of these
        category targets has some advantages and disadvantages.
  Large
        Corporations
  Large
        corporations create opportunities for acquiring large numbers of members
        either
        where the corporation pays for the membership for its employees or where
        the
        employees pay for membership as a menu benefit option. Prestigious corporations
        also serve as potential reference accounts. Based on discussions with potential
        corporate customers, we believe that corporations understand that, for a
        modest
        annual fee (often less than a car or gym allowance), giving employees access
        to
        high quality care translates into a healthy work force with reduced sick
        leave
        and, ultimately, more productivity. Flagship membership can be viewed ideally
        as
        a healthcare risk management benefit for key employees. They also recognize
        the
        importance of risk management benefits for their traveling employees, as
        they
        will have access to physicians anywhere they go. Corporations realize that
        Flagship services will yield savings far beyond the membership premiums.
  The
        disadvantage of soliciting corporations for Flagship membership is that human
        resource departments are currently in a cost-cutting mode, long lead times
        are
        usually necessary to land these corporate accounts and to coordinate with
        human
        resource timetables and, finally, corporations may demand discounts.
  Small
        and
        Medium Sized Businesses
  When
        soliciting small and medium sized businesses directly or through agents or
        intermediaries, Flagship’s advantage is that it generally can charge full price
        for Flagship’s product, decisions to accept or reject the product are usually
        made quickly by an owner, partner or trusted advisor, enrollment is manageable
        as typically enrollees number 25 to 500 people and sales agents or intermediary
        networks are already established with these entities. The downside of soliciting
        these customers is that they require a significant amount of education on
        the
        product, commissions for agents cut into profits, and when dealing through
        agents Flagship does not control its own destiny.
  Individual
        Consumers
  It
        is
        expected that selling to individuals, through indirect sales will eventually
        constitute a majority of Flagship’s sales. The difficulty with reaching
        individuals is that individuals are expensive and hard to reach and may
        potentially create significant overhead. The advantage to this channel is
        that
        Flagship can charge full retail prices to individuals. Individuals comprise
        Flagship’s biggest target group and individuals can take advantage of pre-tax
        health savings accounts (HSAs) as well as flexible savings accounts (FSAs).
        Flagship can have direct contact with individuals without potential interference
        from intermediaries such as human resource departments of the large corporate
        accounts. In addition, Flagship targets individuals through various affinity
        groups or by embedding Flagship full or partial services into insurance policies
        sold to policyholders.
  6
  **The
        Market**
  *Market
        Description*
  The
        market for Flagship’s products and service offerings include:
  ·
              Large
                  Corporations: Flagship is capitalizing on its existing corporate
                  relationships as well as those of its senior managers in order
                  to gain
                  access to targeted corporations. Flagship creates a directed, personalized
                  sales strategy and presentation for each corporation, which presents
                  to
                  the corporation’s senior management by Flagship’s senior management.
                  Flagship’s pricing schedule encourages family memberships, the value of
                  Flagship’s service in both non-emergency and crisis or trauma situations,
                  and the nationwide priority access to Flagship’s renowned physicians for
                  their increasingly mobile workforce. Flagship places priority on
                  corporations that have Chief Medical Officers in place, as it is
                  typically
                  an indicator that the company values healthcare. Corporations that
                  are
                  self insured will benefit in two ways with Flagship. First, Flagship
                  can
                  provide the corporation a network of physicians. In some cases,
                  the
                  corporation’s own network of physicians may overlap with Flagship’s
                  network; in such cases, Flagship will try to provide timely access
                  to
                  those physicians. However, large corporations, self insured or
                  otherwise,
                  utilize large PPO or HMO networks with minimal, if any, overlap
                  in
                  physician coverage with the Flagship Physician Network. Second,
                  we believe
                  that as quality medicine costs less in the long run and that self-insured
                  corporations can directly benefit through real healthcare cost
                  reductions
                  when employees utilize the Flagship physician network. Other attractive
                  corporations to Flagship are those that provide generous employee
                  benefits
                  including supplemental health, flexible savings accounts (FSAs)
                  and health
                  savings accounts (HSAs). In addition, a number of very large corporations,
                  particularly multinationals with very mobile employees are particularly
                  attracted to Flagship because of the Company’s increasingly global
                  presence (see International).
 
 ·
              Small
                  and Medium Businesses: Flagship believes that 40 million small
                  and medium
                  size businesses with 25-50 employees represent one of the best
                  market
                  opportunities for its products. These businesses are often proprietorships
                  or partnerships that are owned and operated by a few senior executives
                  who
                  are decisive and desirous of protecting their best assets—their employees.
                  Flagship utilizes its own extensive network of business connections
                  to
                  secure a “champion” within our target medium-sized firms. In addition,
                  Flagship works with intermediaries such as HR consulting firms,
                  wealth
                  management firms and HSA/FSA administrators to gain access to their
                  clients. The intermediaries provide us access to thousands of mid-sized
                  to
                  large companies, many of which are privately owned. The objective
                  is for
                  the intermediaries to include Flagship in the bundle of products
                  they
                  recommend to their clients. Flagship can either enter into a joint
                  marketing agreement with the intermediary, similar to those entered
                  into
                  with the distribution network groups, or provide the clients of
                  the
                  intermediaries with the pass through discount where the intermediary
                  requests us to do so.
 
 ·
              Individuals:
                  Flagship is working towards acquiring endorsements from affinity
                  groups,
                  associations and prominent, recognizable individuals in order to
                  reach and
                  penetrate the non-corporate market. Flagship uses these endorsements
                  to
                  create a direct marketing campaign to target select individuals
                  within the
                  affinity groups and associations. Flagship works with insurance
                  companies
                  to embed Flagship full or partial services into insurance policies
                  sold to
                  policyholders. Flagship also works with associations, endowments,
                  diplomatic corps and government agencies to offer full or partial
                  services
                  to their employees and members.
 
 7
  **Product
        Sales and Distribution**
  *Sales
        Channels*
  The
        Company makes use of an internal sales force and has entered into agreements
        with independent brokers and agents. These non-exclusive agreements provide
        that
        independent brokers and agents will facilitate introductions for Flagship
        to
        potential clients for our services and products. In return for such
        introductions, the finders and agents will be paid a commission based on
        the
        revenue generated from the sales of Flagship memberships from such
        introductions. These agreements are generally for one year and may be renewed
        on
        an annual basis by mutual agreement. The agreements may be terminated upon
        a
        material breach. In certain instances the finder agreements are for certain
        large distribution channels or for small distribution channels. Commission
        compensation may differ between the various distribution channels.
  In
        addition, Flagship has entered into several exclusive joint marketing agreements
        with third party marketers. Under the terms of agreements, Flagship and the
        marketers will establish Flagship Product Programs through alliances of the
        parties to the agreement.
  *Competition*
  To
        date,
        we are not aware of any direct competition from companies offering the same
        products and services as Flagship. There are five categories that include
        companies offering some variation of the products and services offered by
        Flagship.
  ·
              Institution-Based
                  Primary and Specialty Healthcare service suppliers comprised of
                  either
                  single hospital or clinics or a network of medical centers aiming
                  to
                  provide personalized access to emergency, episodic or chronic care.
                  These
                  competitors provide guidance services that primarily include access
                  to
                  their institutions resources. The institutions most often determine
                  which
                  physician will see the patient. Examples include the executive
                  registry of
                  most leading hospitals and clinics and Pinnacle
                  Healthcare.
 ·
                Concierge
                    Medicine generally refers to a model whereby patients essentially
                    pay an
                    annual fee for “special service” rendered primarily by a primary care
                    physician. Individual physicians charge an annual fee to an exclusive
                    set
                    of patients in their region. The program allows primary care
                    doctors to
                    reduce their practice size and increase the time spent with participants
                    in the program. This service is designed for patients who are
                    seeking
                    personalized healthcare alternatives and from physicians who
                    are tired of
                    dealing with health care insurance providers and HMO’s. Examples include
                    MDVIP and MD2.
 ·
              “Best
                  Physician” Identifiers are third parties utilizing a combination of
                  physician rankings by the media and cross references among physicians
                  to
                  identify “best physicians.” Typically, there is a membership fee charged
                  to both the patient (for access) and the physicians (for listing)
                  in these
                  arrangements. Physicians are typically chosen based on the list
                  published
                  by medical institutions with which the physicians are affiliated.
                  Examples
                  include Best Doctors and MediGuide.
 ·
                Web
                    Search Services compile and offer lists of physicians with basic
                    information about each physician. This may includes services
                    that compile
                    lists of physicians and basic information about each physician.
                    An example
                    is WebMD.
 ·
              Billing
                  and Insurance Facilitators services include review of benefits,
                  negotiation of procedures and claim disputes on behalf of the
                  member/patient. An example is Health
                  Advocate.
 
 *Intellectual
        Property*
  Flagship’s
        technology platform is considered to be an important strategic asset as it
        delivers unique benefits to each stakeholder with a consistent focus on the
        highest levels of service, ease of access, and ease of use. Each component
        of
        the platform is designed to provide targeted functionality that streamlines
        access to critical information and coordinates interaction among the
        stakeholders. The Company offers the following applications:
  ·
              Member
                  Portal:
                  a
                  secure web application accessed using a standard internet browser,
                  providing themember with access to the
                  following:
  Upcoming
        physician appointments.
 Information
        regarding an appointment including office address, contact information, and
        notes on what to bring to the visit.
 Member
        discussion forums.
 Member
        referral preferences.
 Global
        Health IDTM (see below).
  8
  ·
              Physician
                  Portal:
                  a
                  secure web application, accessed using a standard internet browser,
                  providing the physician or their authorized personnel with the
                  facilities
                  to review and manage the following
                  information:
  Network
        membership information (such as their biographies, publications, and areas
        of
        research).
 Appointment
        calendar.
 Discussion
        area for other physicians in the network.
 
 ·
              MedCiergeTM
                  Workbench:
                  assists the specialist by providing a sophisticated search engine
                  that
                  combines the clinical needs of the member with the unique practice
                  of each
                  physician in the network. The search engine takes into account
                  numerous
                  factors regarding the referral
                  including:
  The
        member’s preferences, such as distance to travel, physician gender, and office
        access requirements (e.g., wheel chair access).
 The
        member’s clinical needs.
 The
        physician’s specialty and subspecialty.
 Unique
        procedures and/or disease states the physician has indicated as key areas
        of
        excellence.
 Numerous
        other factors, such as hospital affiliations and research
        interests.
 
 Taking
        all these factors into account, the search engine produces a list of physicians
        for the referral. The workbench then facilitates specialist contact with
        the
        physician’s office in making an appointment for the member. Appointment details
        are subsequently available in both the member and physician
        portals.
  ·
              Global
                  Health IDTM:
                  a
                  secure web application accessed using a standard internet browser,
                  providing the member with access and control over a wide variety
                  of
                  personal health information. The information is managed and controlled
                  by
                  the member, but can be made accessible to other stakeholders (such
                  as the
                  police in the event of an emergency, a member’s relatives or network
                  physician) when pre-authorized by the member. Global Health IDTM provides a
                  centralized repository for key member health information,
                  including:
  Personal
        medical history (diagnoses, procedures, allergies, immunizations,
        etc.).
 Family
        medical history.
 Consent
        and Authorization forms.
 Document
        images, including:
 Medical-legal
        documents including living wills, medical powers of attorney, etc.
 Clinical
        documents including physician summary notes, test results, instruction forms,
        etc.
 Communications
        Infrastructure :
        utilizes Computer Telephony Integration, including virtual call distribution
        to
        provide 24/7 communications among the stakeholders. This allows Flagship
        to
        employ its staff (on-call doctors, triage nurses, call center supervisors,
        and
        others) using a flexible virtual network that minimizes our reliance on any
        single call center or physical location. All internet communications are
        protected using the latest security protocols to ensure the integrity and
        privacy of every communication link within the system.
  9
 
 **Employees**
  We
        have
        24 employees. In addition we use the services of 13 independent third party
        sales contractors. Our employees include: four employees in sales and marketing,
        three employees in physician network development, three employees in IT,
        five
        employees in the call center, two employees in membership services, two in
        international business development and five employees in executive and
        administrative positions.
  **Additional
        Information**
  We
        are
        obligated to file reports with the Securities and Exchange Commission (“SEC”)
        pursuant to 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 .
  **Item
        2. Description of Property.**
  The
        Company does not own any real property. In November 2004 we subleased office
        space for our headquarters at 432 Park Avenue South, 13 th Floor,
        New York, NY 10016. The lease is for approximately 9,000 square feet for
        a six
        year term through November 2010 with an annual rent of approximately $290,000.
        In November 2006 we moved to our new location and subleased this space to
        a
        third party for approximately the same amount as our annual rent
        liability.
  On
        July
        31, 2006, the Company entered into a sublease for our new headquarters at
        220
        West 42 nd Street,
        23 rd and
        24 th Floors,
        New York, NY 10036. The lease is for approximately 10,690 square feet for
        a ten
        and one half year term through 2016, with variable annual rent increases
        throughout the lease term from approximately $410,000 to $590,000. In addition,
        on October 24, 2006 the Company entered into a sublease for the 22 nd floor at
        220 West 42 nd Street,
        New York, NY 10036. The lease is for approximately 6,487 square feet for
        a five
        year term with variable annual rent increases throughout the lease term from
        approximately $264,000 to $317,600.The Company believes that this office
        space
        will provide sufficient space for their respective operations for the near
        future.
  On
        November 1, 2006, the Company entered into a lease for office space in China.
        The lease is for approximately 286 square meters for a two year term. The
        annual
        rent is approximately $44,600.
  **Item
        3. 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 the Company and performed services for the Company 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 that could reach 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.
 10
  **Item
        4. Submission of Matters to a Vote of Security Holders.**
  During
        the fourth quarter ended December 31, 2006, our stockholders adopted no
        resolutions at a meeting or by written consent.
  **PART
        II**
  **Item
        5. Market for Common Equity, Related Stockholder Matters and Small Business
        Issuer Purchases of Equity Securities.**
  Common
        Stock
  Our
        common stock currently trades on the Pink Sheets under the symbol FGHH.
  Our
        authorized capital stock consists of 125,000,000 shares of common stock.
        As of
        March 20, 2006, the Company has 59,049,385 shares issued and outstanding.
  We
        have
        approximately 216 shareholders of record.
  Fiscal
                  Year Ended2006
              
              Fiscal
                  Year Ended2005High
              
              Low
              
              High
              
              LowFirst
                  Quarter
              
              $
              3.75
              
              $
              1.50
              
              $
              0.62
              
              $
              0.62Second
                  Quarter
              
              $
              20.00
              
              $
              1.88
              
              $
              0.75
              
              $
              0.75Third
                  Quarter
              
              $
              23.75
              
              $
              8.75
              
              $
              1.25
              
              $
              1.25Fourth
                  Quarter
              
              $
              11.00
              
              $
              0.25
              
              $
              1.25
              
              $
              1.25
  The
        Company trades on the Pink Sheets under the symbol FGHH.PK. The quotes above
        have been adjusted for a one (1) for one hundred twenty five (125) reverse
        stock
        split approved on June 27, 2006 by the shareholders. The quotations reflect
        inter-dealer prices, without retail mark-up, markdown or commission and may
        not
        represent actual transactions. Immediately after the reverse stock split,
        Flagship closed an Exchange Agreement (the “Share Exchange”) on June 27, 2006,
        with all of the stockholders of Advocates whereby Flagship issued 55,710,255
        shares of newly issued common stock in exchange for all of the issued and
        outstanding stock of Advocates.
  We
        have
        never declared or paid a dividend. We do not anticipate that we will declare
        or
        pay any dividends in the future.
  On
        July
        12, 2006 Flagship issued 300,000 shares of newly issued common stock, valued
        at
        $186,000, to acquire certain assets, including principally the software and
        intellectual property for a proprietary secure web-based repository wherein
        an
        individual can store and retrieve, among other things, his/her own medical
        records from PEMMS Limited.
 
 As
        of
        December 31, 2006, in private transactions, Flagship had sold 1,100,000 shares
        of its common stock and issued warrants to purchase 550,000 shares of common
        stock for an aggregate of $2,200,000.
 
 In
        January 2007, the Company sold an additional 565,000 shares of its common
        stock
        and issued warrants to purchase 282,500 shares of common stock for an aggregate
        of $1,130,000 related to the Interim Financing.
 
 11
  **Item
        6. Management’s Discussion and Analysis or Plan of
        Operation.**
  This
        Annual Report on Form  10-KSB and certain information incorporated herein
        by reference contain forward-looking statements within the meaning of the
        Private Securities Litigation Reform Act of 1995, Section 27A of the
        Securities the Act of 1933, as amended, and Section 21E of the Securities
        Exchange Act of 1934, as amended. All statements included or incorporated
        by
        reference in this Annual Report on Form 10-KSB, other than statements that
        are purely historical, are forward-looking statements. In some cases,
        forward-looking statements are identified by words such as we “expect,”
“anticipate,” “target,” “project,” “believe,” “goals,” “estimates,” and
“intend.” Variations of these types of words and similar expressions are
        intended to identify these forward-looking statements. These forward looking
        statements include statements about our outlook for fiscal year 2007, including
        our anticipated gross margins; research and development expenses; selling,
        general and administrative expenses, and operating profitability. In addition,
        any statements that refer to our plans, expectations, strategies or other
        characterizations of future events or circumstances are forward-looking
        statements. Readers are cautioned that these forward-looking statements are
        predictions and are subject to risks, uncertainties and assumptions that
        are
        difficult to predict. Therefore, actual results may differ materially and
        adversely from those expressed in any forward-looking statements. Among the
        important factors that could cause actual results to differ materially from
        those indicated by our forward-looking statements are those discussed in
        our *Risk
        Factors* and
        elsewhere in this report, as well as in the documents filed by us with the
        Securities and Exchange Commission, specifically the most recent reports
        on
        Form 10-Q and 8-K, each as it may be amended from time to time. We
        undertake no obligation to revise or update publicly any forward-looking
        statement for any reason.
 
 Certain
        reclassifications have been made to prior periods to conform to the fiscal
        year
        2006 presentation.
  **Overview**
 
 Flagship
        Global Health, Inc (“Flagship”) (formerly known as Patients & Physicians,
        Inc., formerly known as Finity Holdings, 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”) (formerly
        U.S. Open Healthcare Management, Inc.) 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.
  12
  Prior
        to
        the Share Exchange, Flagship was a shell company whose primary business
        objective was to merge with an operating entity.
  Flagship
        is a 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, and personalized advocacy services
        to
        its members, all linked by a sophisticated and proprietary information
        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.
  **General
        Discussion on Results of Operations and Analysis of Financial
        Condition**
  ***For
        the years ended December 31, 2006 and 2005***
  *Net
        Sales*
  Net
        sales
        for 2006 increased by $68,225 to $73,419 in 2006 as compared to $5,194 in
        2005.
        The increase was a result of the Company beginning to sell memberships in
        2006
        and late 2005. In addition in 2006 we entered into several contracts with
        third
        parties to provide the Company’s products.
  *Gross
        Margin*
  Gross
        margin was 78% in 2006 up from 49% in 2005. This increase was attributable
        to
        the increase in sales and certain costs of sales being allocated over a larger
        base.
  *Membership
        Services*
  Membership
        services expenses increased by $437,785 to $2,396,851 in 2006 from $1,959,066
        in
        2005. This increase was a result of an increase in wages and benefits of
        $255,142 to $1,554,560 in 2006 from $1,299,418 in 2005. The increase in wages
        was principally the result of the reallocation of certain personnel to
        membership services in 2006. There was also an increase in stipends paid
        to
        Specialty Chiefs and Regional Medical Directors in 2006 of approximately
        $227,000. This increase was due to the increase in the number of Chiefs and
        Regional Medical Directors employed by the Company as we prepared for an
        increase in memberships. These increases were partially offset by a reduction
        in
        Licensing fees of $32,000. These fees were one time fees paid in
        2005.
  *Selling,
        General and Administrative*
  Selling,
        general and administrative expenses, excluding depreciation and
        amortization, increased by $1,679,154 to $6,910,311 in 2006 as compared to
        $5,231,157 in 2005. The increase included an increase in the amortization
        related to stock options of approximately $792,000. In addition legal,
        professional fees and consultants increased by $540,000 and insurance increased
        by $41,500. These increases were principally related to costs associated
        with
        being a public company. In 2006 the Company moved to new and larger
        headquarters. There was an increase in rent and communication costs of
        approximately $270,000 and $65,400, respectively, related to the new space.
        There was an increase in the use of consultants employed by the Company to
        generate business development and sales leads. This resulted in an increase
        of
        approximately $142,700. There was an increase in printed material, including
        brochures and general marketing material of approximately $225,000. These
        costs
        were related to the move as well as repositioning and renaming of the Company’s
        products. There was an increase in travel in 2006 of approximately $81,400
        primarily due to an increase in foreign travel to establish business in China
        as
        well as an increase domestically to develop business in the US. In addition,
        the
        increase in selling, general and administrative expenses includes the write
        off
        of the acquisition cost of the shell company in the amount of $240,000, which
        under accounting principles generally accepted in the United States, was
        charged
        to operations in the period acquired. The Company also wrote off approximately
        $126,000 of prepaid licensing fees related to the acquisition of PEMMS. This
        was
        offset by a decrease of approximately $880,500 in payroll and benefits.
  13
  *Depreciation
        and Amortization*
  Depreciation
        and amortization expense decreased by $26,070 in 2006 to $237,061 as compared
        to
        $263,131 in 2005. This decrease was due to a write off of certain assets
        in
        2005.
  Impairment
        of long-lived assets. Impairment of long lived assets was $13,323 in 2006
        as
        compared to $97,500 in 2005. The charge in 2006 was related to the write
        off of
        certain leasehold improvements at the Company’s previous office space. The
        charge of $97,500 for impairment of long-lived assets in 2005 was related
        to the
        write-off of certain assets that in the opinion of managements had no future
        benefit and were no longer in use.
  *Other
        Income and Expense*
  Interest
        income. Interest income increased by $60,389 to $66,730 in 2006 as compared
        to
        $6,341 in 2005. The increase in interest income is a result of the Company
        having more cash on hand during 2006 versus 2005 as a result of the financings
        that took place during the year.
  Interest
        expense. Interest expense increased by $722,110 in 2006 to $779,319 as compared
        to $57,209 in 2005. This was a result of the financings that took place in
        January 2006 and June 2006. The Company issued $7.1 million of secured
        Convertible Term Notes in January bearing interest at prime plus 1%. In addition
        the Company issued $4.0 million of short term notes payable in June 2006
        bearing
        interest at 8%.
  Amortization
        of debt discounts and debt issuance costs. Amortization of debt discounts
        and
        debt issuance costs increased to $2,893,937 in 2006, versus $0 for the same
        period last year. This increase was due to the amortization of the discounts
        on
        the Convertible Note financing. The costs allocated to the debt are charged
        to
        operations over the term of the debt using the effective interest method,
        which
        produces a constant periodic rate of return.
 
 Other
        income and expenses, net. Other income and expenses, net increased to $40,640
        in
        2006 as compared to $0 in 2005. This increase was primarily related to sublease
        income generated as a result of the Company moving to its new headquarters
        in
        November 2006 and subleasing the vacated space.
 
 **Liquidity
        and Capital Resources**
  At
        December 31, 2006 the Company had a working capital deficit of $5,072,906
        compared to a working capital deficit of $3,359,685 at December 31, 2005.
        The
        increase in the deficit at December 31, 2006 is primarily attributable to
        an
        increase in the current portion of the Secured Convertible Term Notes issued
        in
        January 2006 totaling $1,606,078 and the issuance of the short term notes
        issued
        in June 2006 of $4,000,000 as compared to short term notes of $2,850,000
        at
        December 31, 2005. This was offset by an increase in cash at December 31,
        2006
        versus December 31, 2005 of $803,389 as a result of the Company raising
        $2,200,000 in the fourth quarter of 2006 in an equity financing.
  During
        2006 we used a total of $9,130,737 in operating activities. The use of cash
        in
        2006 was a result of an increase in the Company’s expenses incurred in building
        operations with minimal income from membership revenues. Investing activities
        use of cash decreased by $418,717 to $112,587 from $531,304 in 2005. This
        decrease in 2006 was a result of a decrease in equipment requirements in
        2006.
        This decrease was a result of the Company incurring significant capital
        expenditures related to computer equipment necessitated by the increase in
        staff
        and the opening of its office in 2005. These expenditures did not recur in
        2006.
  14
  During
        2006 cash generated from financing activities increased by $3,850,037 to
        $10,046,713 in 2006 as compared to $6,196,676 in 2005. In 2006 the Company
        received net proceeds of $10,389,369 from three financings including: the
        January 2006 financing resulting in net proceeds of $4,181,400; the investment
        of $4,000,000 in June 2006 in the form of short term notes and the sale of
        common stock and warrants in 2006 for $2,207,969. In 2005 the Company received
        net proceeds of $6,486,628 from the following financing: the sale of Redeemable
        Series B Preferred Stock resulting in net proceeds of $3,383,748, proceeds
        from
        the issuance of notes payable of $2,935,000 and the exercise of certain
        outstanding warrants to purchase Redeemable Series A Preferred Stock in the
        amount of $167,880.
  As
        of
        December 31, 2006 we had restricted cash of $824,117 which were used to secure
        certain obligations under our lease agreement for our principal offices located
        in New York, NY.
  **Going
        Concern**
  Our
        consolidated financial statements have been prepared assuming we will continue
        as a going concern. We have experienced net losses from operations of $9,589,079
        and $7,548,309 for the years ended December 31, 2006 and December 31, 2005,
        respectively. In addition, we had a working capital deficit of $5,072,906
        at
        December 31, 2006. These factors, among others, raise substantial doubt about
        our ability to continue as a going concern. Our financial statements do not
        include any adjustment that might result from the outcome of this uncertainty.
        Assurances cannot be given that adequate financing can be obtained to meet
        our
        capital needs. If we are unable to generate profits and unable to continue
        to
        obtain financing to meet our working capital requirements, we may have to
        curtail our business sharply or cease operations altogether. Our continuation
        as
        a going concern is dependent upon our ability to generate sufficient cash
        flow
        to meet our obligations on a timely basis to retain our current financing,
        to
        obtain additional financing, and, ultimately, to attain profitability. The
        Company is actively pursuing a private placement financing and is currently
        in
        negotiation with several potential investors who are interested in investing
        in
        such private placement. This private placement, if completed, is expected
        to
        provide the Company with sufficient cash to meet its working capital
        requirements for 2007 and beyond and also provide the necessary funding for
        several investments that the Company is considering. Should any of these
        events
        not occur, we will be adversely affected and we may have to cease operations.
  **Critical
        Accounting Policies**
  **Revenue
        Recognition**
  We
        derive
        revenue from the sale of memberships to individuals and institutions for
        access
        to its healthcare service offerings.
  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”). 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. The Company sells
        memberships to individuals and institutions for access to its healthcare
        service
        offerings. The Company recognizes revenue ratably over the term of the
        membership.
  To
        date,
        the Company memberships have been marketed only through its in-house sales
        force
        and a network of independent brokers.
  In
        the
        broker channel, the Company recognizes revenue when the broker distributor
        sells
        the Company’s memberships, provided we have satisfied all other terms and
        conditions.
  **Stock-Based
        Compensation**
  We
        have
        adopted Statement of Financial 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.
  15
  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 Staff Accounting
        Bulletin No. 107 on Share Based Payment.
  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.
  The
        Company has followed the guidance outlined in 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 December 31, 2006, the Company accounted for 1,900,000 options
        under
        the guidance of EITF 96-18.
  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.
  **Risk
        Factors**
  *You
        should carefully consider the risks described below before investing in the
        Company. We consider these risks to be significant to your decision whether
        to
        invest in our Common Stock at this time. If any of the following risks actually
        occur, our business, results of operations and financial condition could
        be
        seriously harmed, the trading price of our Common Stock could decline and
        you
        may lose all or part of your 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.
  Many
        companies with business plans based on providing similar healthcare products
        and
        services have failed to be successful. We have experienced significant losses
        since inception and, even if demand from members exists, we cannot assure
        you
        that our business will be successful.
  16
 
 ***Flagship’s
        independent registered public accounting firm’s report
        discusses substantial doubt about Flagship’s ability to continue as a going
        concern.***
 
 Flagship’s
        accompanying consolidated financial statements have been prepared assuming
        Flagship will continue as a going concern, however, Flagship’s independent
        registered public accounting firm’s report discusses substantial doubt
        about Flagship’s ability to continue as a going concern as a result of its
        recurring net losses and working capital deficiency, among other matters.
        This
        basis of accounting contemplates the recovery of Flagship’s assets and
        satisfaction of its liabilities in the normal ordinary course of business.
        Successful transition to profitable operations is dependent upon obtaining
        a
        level of sales adequate to support Flagship’s cost structure. Flagship has
        suffered recurring losses resulting in an accumulated deficit of $24,606,205
        and
        a working capital deficiency of $5,072,906 as of December 31, 2006. Flagship’s
        management intends to continue to finance its operations through cash flows
        from
        operations and by raising additional capital from the sale of debt or equity
        securities. However, there can be no assurances that Flagship will be able
        to
        obtain such financing or internally generate cash flows, which may impact
        Flagship’s ability to continue as a going concern. The accompanying consolidated
        balance sheet of Flagship does not include any adjustments to reflect the
        possible future effects on the recoverability and classification of assets
        or
        the amounts and classification of liabilities that may result from the potential
        inability of Flagship to continue as a going concern. You should not rely
        on the
        results for any particular period as an indication of our future performance.
        It
        is possible that, in future periods, our results of operations may be below
        the
        expectations of public market analysts and investors. 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.
  ***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 engineering, 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.
 17
  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.
  ***The
        Company faces significant competition for its products and
        services.***
  The
        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 to
        provide 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.
  18
  **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 Securities and Exchange Commission (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.
  ***Penny
        stock rules could make it hard to resell your shares.***
  The
        Company’s common stock does not meet the listing requirements for any trading
        market other than the Pink Sheets .
        We plan
        to apply for a listing on the Over the Counter Bulletin Board (the “OTCBB”).
  The OTCBB may not accept the application of any market maker to
        initiate quotations in our Common Stock.  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.
  ***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 is solely responsible for the accounting and
        reporting functions for the Company and outsources certain of its accounting
        and
        finance functions to an independent third party. The Company has identified
        material weaknesses relating to the lack of accounting personnel with the
        requisite knowledge of accounting principles generally accepted in the United
        States of America (“GAAP”) and the financial reporting requirements of the
        Securities and Exchange Commission (the “SEC”) and insufficient written policies
        and procedures to insure the correct application of accounting and financial
        reporting with respect to the current GAAP and SEC disclosure
        requirements. In addition, 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 implementing procedures to mitigate this deficiency.
        The Company anticipates that it will undertake additional remedial measures
        during the first half of 2007.
 19
 ***Government
        regulation of healthcare creates risks and challenges with respect to Flagship’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, 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 law prohibits 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 the federal anti-kickback law 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 Web sites.***
  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.
  20
  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 MyMedVault 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.
 
 **Item
        7. Financial Statements.**
  Reference
        is made to page F-1 herein for the Index to the Financial Statements.
  **Item
        8. Changes In and Disagreements With Accountants on Accounting and Financial
        Disclosure.**
  None.
  **Item
        8A. 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”), Chief Financial Officer (“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 December 31, 2006, pursuant
        to Exchange Act Rule 15d-15. Based upon that evaluation, the CEO and CFO
        determined that the Company’s disclosure controls and procedures were not
        effective due to identified deficiencies that exist in the design or operation
        of our internal control over financial reporting. The Public Company Accounting
        Oversight Board had 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 weaknesses identified relate to:
  ·
              As
                  of December 31, 2006 there was a lack of accounting personnel with
                  the
                  requisite knowledge of accounting principles generally accepted
                  in the
                  United States of America (“GAAP”) and the financial reporting requirements
                  of the Securities and Exchange Commission (the
                  “SEC”).
  ·
              As
                  of December 31, 2006 there were insufficient written policies and
                  procedures to insure the correct application of accounting and
                  financial
                  reporting with respect to the current requirements GAAP and SEC
                  disclosure
                  requirements.
  Notwithstanding
        the existence of these material weaknesses in our internal control over
        financial reporting, our management believes, including our Chief Executive
        Officer and Chief Financial Officer that the consolidated 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.
  21
  There
        have been no changes in the Company's internal control over financial reporting
        during the quarter ended December 31, 2006 that have materially affected,
        or are reasonably likely to materially affect, the Company's internal control
        over financial reporting.
  We
        are in
        the process of designing and implementing improvements in our internal control
        over financial reporting to address the material weaknesses described above.
        In
        addition, we intend to acquire additional accounting resources with the
        expertise needed to assist us in preparation of our financial
        statements.
  **Item
        8B. Other Information**
  None.
  22
  **PART
        III**
  **Item
        9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with
        Section 16(a) of the Exchange Act.**
  As
        of
        March 20, 2007, set forth below are the names of Flagship’s directors and
        officers, their ages, all positions and offices that they hold with Flagship,
        the period during which they have served as such, and their business experience
        during at least the last five years.
 
 **Name**
              
              **Age**
              
              **Position
                  Held**
              
              **Experience**Fred
                  F. Nazem
              
              65
              
              Chairman
                  and CEO
              
              Mr.
                  Nazem has been the Chairman of the Board of Directors of Flagship
                  and its
                  Chief Executive Officer since January 2006, and has served in the
                  same
                  capacity for Advocates since February 2004. A venture capitalist
                  since the
                  early 1970’s, he launched Nazem & Lieber in 1981 and Nazem &
                  Company in 1983. Since then he has been the Managing Partner of
                  Nazem
                  & Company. Mr. Nazem has been an entrepreneur, venture capitalist
                  and
                  corporate turnaround specialist for more than 30 years. He has
                  started,
                  financed or guided several dozen companies, including Oxford Health
                  Plans,
                  Cirrus Logic (CRUS), Universal Health Services (UHS), Genesis Health
                  Ventures, Medical Care International, Sportsline.com and Apollo
                  Computers
                  (now part of Hewlett-Packard’s computer division), most of which have
                  become multibillion-dollar enterprises. As Chairman of Oxford Health
                  Plans, he led the reorganization and successful turnaround of the
                  company
                  when it experienced operational and financial difficulties in 1997.
                  Mr.
                  Nazem has a BS in Biochemistry, an MS in Physical Chemistry, both
                  from the
                  Ohio State University, and an MBA in Finance from Columbia University.
                  He
                  has also done doctoral work in Nuclear Physics at Washington
                  University.
                  Mr. Nazem serves on the Science and Technology Advisory Board of
                  Columbia
                  Presbyterian Medical Center and through the Nazem Family Foundation
                  he has
                  supported many civic, educational and healthcare related
                  causes.Michael
                  Holland
              
              61
              
              Director
              
              Michael
                  Holland has been a Director of Flagship since February 2006 and
                  has served
                  in the same capacity for Advocates since November 2004. He is the
                  Chairman
                  of Holland & Company, a private investment firm he founded in 1995 in
                  New York City and the President and Founder of the Holland Balanced
                  Fund.
                  He began his career at J.P. Morgan in 1968 where he spent twelve
                  years
                  managing both equity and fixed income assets for major institutional
                  clients as well as wealthy individuals. He served as Chief Executive
                  Officer of First Boston Asset Management in the early 1980’s and later
                  served as Chairman of Salomon Brothers Asset Management. Mr. Holland
                  has
                  been Chairman of a number of mutual funds, a General Partner of
                  the
                  Blackstone Group and a CEO of Blackstone Alternative Asset Management,
                  and
                  is the former Vice Chairman of Oppenheimer & Co., Inc. He is on the
                  Board of Directors of The China Fund, a NYSE-listed company, the
                  Vanguard
                  Charitable Endowment and the State Street Master Trust Fund. Mr.
                  Holland
                  graduated from Harvard University with a concentration in English
                  in 1966.
                  In 1968 he received his M.B.A. in finance from Columbia
                  University.
  23
  Richard
                  Howard
              
              56
              
              Director
              
              Mr.
                  Howard has been a Director of Flagship since February 2006 and
                  has served
                  in the same capacity for Advocates since November 2004. From July
                  2004 to
                  August 2005, he was the President of Advocates. From 2003 to 2004,
                  he was
                  the Managing Director of BLH Strategies, a consulting firm that
                  provides
                  management services to companies and nonprofit organizations. From
                  1985 to
                  2003, he worked for Genesis Health Ventures, Inc. At various times
                  during
                  his seventeen years with Genesis he served as Vice Chairman, President
                  and
                  Chief Operating Officer. He also served as a member of the Board
                  of
                  Directors for all seventeen years. He received a BS in Economics
                  and
                  Corporate Finance from the Wharton School at the University of
                  Pennsylvania.Michael
                  Huckabee
              
              50
              
              Director
              
              Governor
                  Huckabee has been a Director of Flagship since February 2006 and
                  has
                  served in the same capacity for Advocates since September 2005.
                  A
                  significant part of his adult life was spent as a pastor and
                  denominational leader. Michael Huckabee was first elected lieutenant
                  governor of Arkansas in 1993 and has served as governor since July
                  1996.
                  Governor Huckabee is recognized as a national leader in the areas
                  of
                  education reform and health care reform. He became chairman of
                  the
                  National Governors Association in July 2005 and will serve as the
                  leader
                  of the nation’s governors until July 2006. Governor Huckabee is also the
                  chairman of the Education Commission of the States until July 2006.
                  In
                  addition, he is the immediate past president of the Council of
                  State
                  Governments and the immediate past state co-chairman of the Delta
                  Regional
                  Authority. Governor Huckabee is also a former chairman of the Southern
                  Regional Education Board, the Southern Grown Policies Board, the
                  Southern
                  Technology Council and the Southern International Trade and the
                  Interstate
                  Oil & Gas Compact Commission. Governor Huckabee’s fourth book, “Quit
                  Digging your Grave with a Knife and Fork” was released in May 2005 and has
                  received favorable reviews. In 1975, Governor Huckabee graduated
                  magna cum
                  laude from Ouachita Baptist University in Arkadelphia, Arkansas
                  and
                  attended Southwestern Baptist Theological Seminary from 1976 to
                  1977.
  24
  Barbara
                  McNeil, MD
              
              64
              
              Director
              
              Dr.
                  Barbara McNeilhas
                  been a Director of Flagship since February 2006 and has served
                  in the same
                  capacity forAdvocates
                  since December 2005. She has worked in the fields of health policy
                  and
                  radiology (nuclear medicine) for over 25 years at Harvard Medical
                  School
                  and the Brigham and Women’s Hospital. She serves on the Board of Directors
                  of Cardiovascular Therapeutics (CVTX); in this capacity she serves
                  on the
                  Audit Committee and is chair of the Nominating and Governance Committee.
                  She is also on the Board of Edwards Lifesciences (EW). Prior to
                  this Dr.
                  McNeil was the founding head of the Department of Health Care Policy
                  at
                  Harvard Medical School, the largest research unit in this area
                  at Harvard
                  University. For over ten years she ran the Center for Cost-Effective
                  Care
                  at the Brigham and Women’s Hospital. Dr. McNeil practices nuclear medicine
                  at the Brigham and Women’s Hospital and works actively with the chief of
                  the department on general strategic issues within radiology. She
                  received
                  her AB degree from Emmanuel College in 1962 and her MD in 1966
                  and PhD
                  degree in 1972 from Harvard University. She also attended the Advanced
                  Management Program (AMP) at Harvard Business School in 1986. At
                  Harvard
                  Medical School she was one of the first tenured women.Benjamin
                  Safirstein, MD
              
              66
              
              Director
                  and EVP - Chief Medical Officer
              
              Dr.
                  Safirstein has been a Director and EVP and Chief Medical Officer
                  of
                  Flagship since February 2006 and has served in the same capacity
                  for
                  Advocates since February 2004. He did his medical training at The
                  Mount
                  Sinai Hospital of New York, where he was Chief Medical Resident,
                  and his
                  pulmonary training at the Brompton Hospital, London England, as
                  a fellow
                  of the National Tuberculosis Foundation. Dr. Safirstein is board
                  certified
                  in Internal Medicine and pulmonary medicine. Dr Safirstein was
                  a
                  co-founder and Chief Medical Officer of Oxford Health Plans and
                  was a
                  director from 1985 to 2004. He serves as chairman of the Scientific
                  Committee of the Arthur Ashe Foundation, is Founder of the New
                  Jersey
                  Asthma Foundation and is the author of over 50 peer reviewed publications
                  on Respiratory Medicine. Dr. Safirstein received his medical degree
                  from
                  The Chicago Medical School in 1965.Brian
                  Stafford
              
              57
              
              Director
              
              Mr.
                  Stafford has been a Director of Flagship since February 2006 and
                  has
                  served in the same capacity for Advocates since November 2004.
                  He was
                  Director of the United States Secret Service from March 1999 until
                  he
                  retired in January 2003. Mr. Stafford began his tenure with the
                  Secret
                  Service in 1971 as a field office special agent rising in the ranks
                  during
                  his career to supervisory position in both protective and investigative
                  assignments, including Special Agent in Charge of the Presidential
                  Protection Division. Mr. Stafford serves on the Board of Trustees
                  of Mount
                  Union College in Alliance, Ohio where he received a BA degree in
                  1969 and
                  an honorary Doctorate in Human Letters.
  25
  Richard
                  P. Torykian, Sr.
              
              66
              
              Director
              
              Mr.
                  Torykian has been a Director of Flagship since February 2006 and
                  has
                  served in the same capacity for Advocates since March 2004. He
                  currently
                  is a Director at Lazard Freres & Company. He is a member of the Board
                  of Sponsors, Mercy Hospital, Rockville Centre, NY and was the founding
                  chairman of the Chaminade High School Development Fund and advisor
                  to the
                  Catholic Big Brothers of New York City. He is a trustee of the
                  Intrepid
                  Sea-Air-Space Museum headquartered aboard the USS Intrepid. Mr.
                  Torykian
                  received his BA in Chemistry from St. Michaels College in 1961,
                  MS in
                  Chemical Engineering from St. Joseph’s University in 1963 and MBA in
                  Finance from Adelphia University in 1970.Philip
                  Barak
              
              55
              
              VP
                  - Chief Financial Officer and Corporate Secretary
              
              Mr.
                  Barak has been the VP - Chief Financial Officer and Corporate Secretary
                  of
                  Flagship since February 2006 and has served in the same capacity
                  for
                  Advocates since February 2004. For over the past twenty years he
                  has been
                  a General Partner and Chief Financial Officer of Nazem & Company, a
                  venture capital firm founded in 1976. During that time he served
                  on the
                  Boards of Directors of several public and private companies and
                  worked
                  with venture backed companies in structuring and negotiating financings.
                  He holds a BS in Accounting from Rider University and is a Certified
                  Public Accountant and a member of the AICPA and NYSSCPA.John
                  H. Flood III
              
              54
              
              President
              
              Mr.
                  Flood has been the President of Flagship and Advocates since May
                  2006. He
                  had been an EVP and Chief Marketing Officer of Flagship since February
                  2006 and had served in the same capacity for Advocates since February
                  2005. For the six months prior, he served as a consultant to the
                  Company.
                  From 1994 - 2004 Mr. Flood was the managing partner of Flood Donohue
                  Johnston & McShane where he specialized in transactional law,
                  negotiated physician employment contracts and also practiced in
                  the areas
                  of sports and entertainment law. From 1984 - 1994 he worked for
                  NFL
                  Properties, the centralized marketing company of the National Football
                  League where he served as company counsel, Executive Vice President
                  of
                  Business Affairs and President. While at NFL Properties, the company
                  grew
                  from relatively modest sales in 1984 to over a billion dollars
                  in retail
                  sales by 1994. Mr. Flood has served on the Nominating Committee for
                  the Harvard University Board of Overseers, Harvard University’s New York
                  Schools and Scholarships Committee, has been a Board Member and
                  Selector
                  of the Lawrenceville School Alumni Association and has served as
                  a Board
                  Member of St. Michael’s Heart Research Institute in Newark, NJ. He
                  received his AB in Psychology from Harvard University and his JD
                  from the
                  University of Virginia School of Law. He is admitted to the bar
                  in the
                  states of New York and New Jersey.
 
 26
  **Compliance
        with Section 16(a) of the Securities Exchange Act of 1934**
  Section
        16(a) of the Securities and Exchange Act of 1934 requires our executive officers
        and directors and persons who own more than 10% of a registered class of
        our
        equity securities, to file with the SEC initial statements of beneficial
        ownership on Form 3, reports of changes in ownership on Form 4 and annual
        reports concerning their ownership on Form 5. Executive officers, directors
        and
        greater than 10% stockholders are required by the SEC regulations to furnish
        us
        with copies of all Section 16(a) reports they file.
  During
        the fiscal year ended December 31, 2006, Michael Holland, a director, Brian
        Stafford, a director, Benjamin Safirstein, a director, and executive vice
        president, Richard Howard, a director, Richard Torykian, a director, Michael
        Huckabee, a director, Barbara McNeil, a director, and Philip Barak, Chief
        Financial Officer, Vice President and Secretary, each did not file a Form
        4,
        relating to the change in their beneficial ownership as a result of the closing
        of the Share Exchange, on a timely basis.
  **Audit
        Committee**
  On
        July
        31, 2006, the Company adopted an Audit Committee Charter. The Audit Committee
        is
        responsible for making recommendations to the Board as to the selection and
        independence of our external auditor, maintaining communication between the
        Board and the independent registered public accounting firm, reviewing the
        annual audit report submitted by the independent registered public accounting
        firm and determining the nature and extent of problems, if any, presented
        by
        such audit warranting consideration by our Board. The current members of
        the
        Audit Committee are Mr. Michael Holland, Chairman, Mr. Brian Stafford and
        Mr.
        Richard Torykian. Membership on the Audit Committee is intended to be restricted
        to directors who are independent of management and free from any relationship
        that, in the opinion of the Board, could interfere with the exercise of
        independent judgment as a committee member.
  **Code
        of Ethics**
  On
        July
        31, 2006, the Company adopted a Code of Ethics for all its employees including
        its executive officers.
 27
  **Item
        10. Executive Compensation.**
  The
        following table sets forth information concerning all cash and non-cash
        compensation awarded to, earned by or paid to all of the executive officers
        of
        the Company, who served during the fiscal year ended December 31, 2006, for
        services in all capacities to the Company:
  SUMMARY
                  COMPENSATION TABLE
  Name
                  & Principal Position
              
              Year
              
              Salary
                ($)
              
              Bonus
                ($)
              
              Stock
                Awards
                ($)
              
              Option
                Awards
                ($)(1)
              
              Non-Equity
                  Incentive Plan Compensation
                ($)
              
              Nonqualified
                  deferred compensation earnings
                ($)
              
              All
                  other Compensation
                ($)
              
              Total
                ($)Fred
                  F. Nazem, Chairman, CEO
              
              
              2006
              
              $
              274,999
              
              $
              100,000
              
              $
              0.00
              
              $
              81,374
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
                  (2
              )
              $
              456,373John
                  H. Flood, EVP
              
              
              2006
              
              $
              250,000
              
              $
              120,000
              
              $
              0.00
              
              $
              107,938
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
              
              $
              477,938BenjaminSafirstein,
                  EVP
              
              
              2006
              
              $
              200,000
              
              $
              10,000
              
              $
              0.00
              
              $
              51,397
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
                  (2
              )
              $
              261,397
  (1)
        See
        Notes 3 of the Notes to Consolidated Financial Statements.
  (2)
        Messrs. Nazem and Safirstein also serve as directors of the Company but without
        compensation for director services.
 
 **Employment
        Agreements**
 
 The
        Company does not have any employment agreements with any of its employees.
        All
        employees are issued an employment letter setting forth the terms of employment
        including salary, benefits and vacation time. The Company does not have any
        agreements pertaining to severance. Each employee is required to execute
        a
        Confidentiality and Non-Competition and Non-Disclosure Agreement which lasts
        for
        a period of 12 months following the date of the employee’s termination from the
        Company.
 
 Messrs.
        Nazem and Flood participate in the Company’s defined contribution plan, the
        Flagship Global Health, Inc. 401 (k) Plan (the “Plan”). The Plan became
        effective January 1, 2005. Eligible employees are able to make contributions
        to
        the Plan up to the maximum allowable by law, which for 2006 was generally
        $15,000. The Company did not make any contributions to the Plan.
 
 The
        Company recognizes compensation costs associated with stock options over
        each
        employee’s service period, which in all cases is the vesting period for such
        stock option grants. The 2006 stock option awards generally vest annually
        over a
        4 year period from the date of grant. In certain instances certain performance
        conditions, must be satisfied in order for the option awards to fully
        vest.
 
 The
        following table sets forth information with respect to outstanding equity
        awards
        at December 31, 2006 held by the persons named in the Summary Compensation
        Table:
 
 OUTSTANDING
                  EQUITY AWARDS AT FISCAL YEAR-END
                  (1)
  Option
                  Awards
              
              Stock
                  AwardsName
              
              Number
                  of Securities Underlying Unexercised Options
                (#)
                  Exercisable
              
              Number
                  of Securities Underlying Unexercised Options (#)
                  Unexercisable
              
              Equity
                  Incentive Plan Awards: Number of Securities Underlying Unexercised
                  Unearned Options (#)
              
              Option
                  Exercise Price
                ($)
              
              Option
                  Expiration Date
              
              Number
                  of Shares or Units of Stock That Have Not Vested (#)
              
              Market
                  Value of Shares or Units of Stock That Have Not Vested ($)
              
              Equity
                  Incentive Plan Awards: Number of Unearned Shares, Units or Other
                  Rights
                  That Have Not Vested (#)
              
              Equity
                  Incentive Plan Awards: Market or Payout Value of Unearned Shares,
                  Units or
                  Other Rights That Have Not Vested ($)Fred
                  F. Nazem
              
              
              0
                100,000
              
              
              250,000
                100,000
              (2)
                (4)
              
              
              
              $
                $
              0.99
                0.99John
                  H. Flood III
              
              
              200,000
                0
              
              
              600,000
                100,000
              (3)
                (2)
              
              
              
              $
                $
              0.20
                0.90BenjaminSafirstein
              
              
              50,000
                0
                0
              
              
              150,000
                100,000
                100,000
              (5)
                (2)
                (4)
              
              
              
              $
                $
                $
              0.20
                0.90
                0.90
   28
   (1)
              See
                  Note 3 of the Notes to Consolidated Financial
                  Statements.
 (2)
                Represents
                    stock option grants for the year ended December 31, 2006; such
                    options
                    vest annually over four years beginning on the first anniversary
                    from the
                    date of grant.
 (3)
              Represents
                  stock option grants for the year ended December 31, 2005; such
                  options
                  vest annually over four years beginning on the first anniversary
                  from the
                  date of grant.
 (4)
                Represents
                    stock options granted for the year ended December 31, 2006; such
                    options
                    vested upon the completion of certain performance criteria. The
                    requisite
                    performance criteria was met.
 (5)
              Represents
                  stock options granted for the year ended December 31, 2005; such
                  options
                  vested upon the completion of certain performance criteria. The
                  requisite
                  performance criteria was met.
 
 **Compensation
        of Directors**
  The
        following table sets forth information with respect to director’s compensation
        for the fiscal year ended December 31, 2006:
 
 DIRECTOR
                  COMPENSATION
  Name
              
              Fees
                  Earned or Paid in Cash
                ($)
              
              Stock
                  Awards ($)
              
              Option
                  Awards ($)
              
              Non-Equity
                  Incentive Plan Compensation
                ($)
              
              Nonqualified
                  Deferred Compensation Earnings
              
              All
                  Other Compensation
                ($)
              
              Total
                ($)Barbara
                  McNeil
              
              $
              0.00
              
              $
              0.00
              
              $
              33,446
              
              
              
              
              
              
              
              
              
              
              $
              33,446Brian
                  Stafford
              
              $
              0.00
              
              $
              0.00
              
              $
              27,314
              
              
              
              
              
              
              
              
              
              
              $
              27,314Michael
                  Holland
              
              $
              0.00
              
              $
              0.00
              
              $
              27,314
              
              
              
              
              
              
              
              
              
              
              $
              27,314Michael
                  Huckabee
              
              $
              0.00
              
              $
              0.00
              
              $
              33,446
              
              
              
              
              
              
              
              
              
              
              $
              33,446Richard
                  Howard
              
              $
              0.00
              
              $
              0.00
              
              $
              33,446
              
              
              
              
              
              
              
              
              
              
              $
              33,446Richard
                  Torykian
              
              $
              0.00
              
              $
              0.00
              
              $
              27,314
              
              
              
              
              
              
              
              
              
              
              $
              27,314
  Non-employee
        Directors for the Company do not receive any monetary compensation for
        attendance at meetings or for committee service. Non-employee Directors receive
        non-qualified stock options as follow:
  Initial
        Grant: Upon initial election to the Board, a Non-employee Director shall
        receive
        a non-qualified stock option grant to purchase 100,000 shares of Stock with
        an
        exercise price equal to the fair market value as of the date of grant. The
        Option shall vests as to 25,000 shares on the date of grant, 25,000 shares
        on
        the first anniversary of the date of grant, 25,000 shares on the second
        anniversary of the date of grant, and 25,000 shares on the third anniversary
        of
        the date of grant, as long as the Board member is still a member of the Board
        as
        of such date. The Option shall have a term of ten years.
  Second
        Grant: On the first anniversary of becoming a director, each Non-employee
        Director shall be entitled to receive a second non-qualified stock option
        grant
        to purchase 100,000 shares of Stock with an exercise price equal to the fair
        market value as of the date of grant. The Option shall vests as to 25,000
        shares
        on the date of grant, 25,000 shares on the first anniversary of the date
        of
        grant, 25,000 shares on the second anniversary of the date of grant, and
        25,000
        shares on the third anniversary of the date of grant, as long as the Board
        member is still a member of the Board as of such date. The Option shall have
        a
        term of ten years.
  29
 
 **Item
        11. Security Ownership of Certain Beneficial Owners and Management and Related
        Stockholder Matters.**
  The
        following table sets forth certain information with respect to the beneficial
        ownership of the common stock of the Company as of December 31, 2006, for:
        (i)
        each person who is known by the Company to beneficially own more than 5 percent
        of the Company’s common stock, (ii) all directors and officers individually and
        all directors and officers as a group. Each person named below has sole voting
        and investment power with respect to the shares shown unless otherwise
        indicated.
  Name
                  and Address of Beneficial Owner*
              
              Amount
                  of Beneficial Ownership
              
              Percentage
                  of ClassFred
                  Nazem
              
              
              22,294,351
              (1)
              
              37.03
              %Stephen
                  J. O’Brien, MD
                300
                  North Street
                Greenwich,
                  CT 06830
              
              
              11,316,230
              (2)
              
              19.35
              %Laurus
                  Master Fund, Ltd.
                c/o
                  M&C Corporate Services Limited
                P.O.
                  Box 309 GT
                Ugland
                  House
                George
                  Town
                South
                  Church Street
                Grand
                  Cayman, Cayman Islands
              
              
              7,778,536
              (3)
              
              12.22
              %John
                  H. Flood, III
              
              
              3,485,034
              (4)
              
              5.84
              %Benjamin
                  Safirstein, MD
              
              
              2,163,568
              (5)
              
              3.69
              %Richard
                  Howard
              
              
              752,083
              (4)(9)
              
              1.28
              %Philip
                  Barak
              
              
              650,000
              (6)
              
              1.11
              %Brian
                  Stafford
              
              
              164,426
              (7)
              
              .28
              %Richard
                  Torykian
              
              
              87,500
              (7)
              
              .15
              %Michael
                  Holland
              
              
              164,423
              (7)
              
              .28
              %Michael
                  Huckabee
              
              
              75,000
              (8)
              
              .13
              %Barbara
                  McNeil, MD
              
              
              75,000
              (8)
              
              .13
              %**All
                  Directors and Officers as a Group**
                **(10
                  persons)**
              
              
              **29,911,382**
              
              
              **48.12**
              **%**
  
 *Except
        as otherwise noted, the address is that of the Company
  (1)
              Includes
                  372,263 shares held by Nazem, Inc., a company that Mr. Nazem owns
                  100%,
                  the conversion of a $1,000,000 Secured Convertible Term Note at
                  $0.90 per
                  share into 1,111,111 shares of common stock, the exercise of 499,230
                  common stock warrants exercisable at $0.92 per share, 162,500 vested
                  options exercisable at $0.99 per share, 25,944 shares held in the
                  Alexander Gharib Nazem Trust and 25,944 shares held in the Taraneh
                  Gharib
                  Nazem Trust, Mr. Nazem’s children. Susie Gharib Nazem, Mr. Nazem’s wife is
                  the Trustee of the Trusts. Mr. Nazem disclaims beneficial ownership
                  of the
                  shares held in trust for his
                  children.
  (2)
              Dr.
                  O’Brien has entered into a Voting Trust Agreement whereby the Board
                  has
                  the right to vote all of the shares owned by Dr.
                  O’Brien.
  30
  (3)
              Includes
                  the conversion of a $4,100,000 Secured Convertible Term Note at
                  $0.90 per
                  share into 4,555,555 shares of common stock and the exercise of
                  621,118
                  common stock warrants exercisable at $0.92 per
                  share.
  (4)
              Includes
                  the conversion of a $500,000 Secured Convertible Term Note at $0.90
                  per
                  share into 555,556 shares of common stock and the exercise of 249,617
                  common stock warrants exercisable at $0.92 per share held by OldIron
                  Sports and Entertainment Company, Inc., of which Mr. Flood is a
                  50% owner,
                  and 400,000 vested options exercisable at $0.20 per
                  share.
  (5)
              Includes
                  the conversion of a $50,000 Secured Convertible Term Note at $0.90
                  per
                  share into 55,556 shares of common stock and the exercise of 13,441
                  common
                  stock warrants exercisable at $0.92 per share, 50,000 vested option
                  exercisable at $0.20 per share, and 1,300,000 shares held by the
                  Safirstein Family Trust 1991 for the benefit of Dr. Safirstein’s children.
                  Sheila Safirstein, Dr. Safirstein’s wife, is the Trustee of the Trust. Dr.
                  Safirstein disclaims beneficial ownership of these
                  shares.
  (6)
              Includes
                  75,000 vested options exercisable at $0.035 per share and 50,000
                  vested
                  options exercisable at $0.90 per
                  share.
  (7)
              Includes
                  37,500 options exercisable at $0.20 per share and 25,000 vested
                  options
                  exercisable at $2.00 per share.
  (8)
              Includes
                  25,000 vested options exercisable at $0.90 per share and 25,000
                  vested
                  options exercisable at $2.00 per
                  share.
  **Item
        12. Certain Relationships and Related Transactions, and Director
        Independence.**
  In
        March
        2005, Flagship issued 3,031,250 shares of common stock to certain members
        of
        management to settle $606,250 of compensation costs accrued during the year
        ended December 31, 2004. The stock was issued at $0.525 per share and resulted
        in additional compensation expense of approximately $985,156. The individuals
        receiving common stock included Fred F. Nazem, co-founder, Chairman and Chief
        Executive Officer, Dr. Stephen J. O’Brien, co-founder and former officer,
        Richard Howard, director and former President, and Dr. Benjamin Safirstein,
        director and EVP- Chief Medical Officer of the Company.
  Mr.
        Fred
        F. Nazem, is the sole stockholder and President of Nazem, Inc. From its
        inception through August 2005, Flagship occupied space in the Nazem, Inc.
        offices. During that time, Flagship paid monthly rent of $5,940 to Nazem,
        Inc.
        for the use of such space. In addition, Nazem, Inc. incurred certain operating
        expenses on behalf of Flagship and Flagship reimbursed Nazem, Inc., for the
        payment of such expenses on its behalf.
  On
        several occasions during the past two years, Fred F. Nazem made loans to
        Flagship for working capital needs. The following summarizes these loans
        and
        their status: (i) a loan of $250,000 was made in December 2004 and repaid
        in
        February 2005; (ii) a loan of $10,000 was made in January 2005 and was repaid
        in
        August 2006; (iii) loans of $200,000 made in July 2005, $500,000 made in
        August
        2005 and $300,000 was made in September 2005; all of which were converted
        into
        the Junior Convertible Notes.
  In
        July
        2005, OldIron Sports and Entertainment Company, Inc. loaned Flagship $500,000.
        This loan was converted into the Junior Convertible Notes. Mr. John H. Flood,
        III, President of the Company, owns 50% of OldIron Sports and Entertainment
        Company, Inc.
  In
        December 2005, Mr. John H. Flood, III loaned Flagship $75,000 for working
        capital purposes. This loan was repaid in February 2006.
  In
        November 2005, Dr. Benjamin Safirstein, Director and EVP- Chief Medical Officer,
        loaned Flagship $50,000. This loan was converted into the Junior Convertible
        Notes.
  As
        part
        of the Laurus Convertible Note, Fred F. Nazem and John H. Flood, III and
        certain
        shareholders (the “Guarantors”) of the Company, provided a limited guarantee of
        the Company’s obligation to Laurus. The Guarantors received an aggregate of
        1,951,596 shares of Common Stock and warrants to purchase 465,839 shares
        of
        Common Stock for providing such guaranty.
  31
  In
        January 2006, Dr. Mark Gardy and Dr. Roger London, employees of Flagship,
        each
        loaned the Flagship $100,000. These loans were converted into the Junior
        Convertible Notes.
  Michael
        Holland, Brian Stafford, Benjamin Safirstein, Richard Howard, Richard Torykian,
        Michael Huckabee, Barbara McNeil and Fred Nazem constitute the Company’s Board
        of Directors. All members of the Company’s Board of Directors, excluding Fred
        Nazem and Benjamin Safirstein, are independent directors of the Company,
        and as
        such, they satisfy the definition of independence in accordance with SEC
        rules
        and NASDAQ listing standards.
  **Item
        13. Exhibits.**
  Exhibits.
        The following exhibits of the Company are included herein.
 Exhibit
                    No.
                
                DescriptionExhibit
                    3.1
                
                Certificate
                    of Incorporation of the Company (incorporated by reference to
                    Exhibit 3.1
                    to Amendment No. 1 to the Company’s Form 10-SB, filed June 18,
                    1998)Exhibit
                    3.2
                
                Bylaws
                    of the Company (incorporated by reference to Exhibit 3.2 to Amendment
                    No.
                    1 to the Company’s Form 10-SB, filed June 18, 1998)Exhibit
                    4.1
                
                Specimen
                    Stock Certificate (incorporated by reference to Exhibit 4.1 to
                    Amendment
                    No. 1 to the Company’s Form 10-SB, filed June 18, 1998)Exhibit
                    31.1(1)
                
                Certification
                    of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
                    Act of 2002Exhibit
                    31.2(1)
                
                Certification
                    of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
                    Act of 2002Exhibit
                    32.1(1)
                
                Certification
                    of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
                    as Adopted
                    Pursuant to Section 906 of the Sarbanes-Oxley Act of
                    2002Exhibit
                    32.2(1)
                
                Certification
                    of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
                    as Adopted
                    Pursuant to Section 906 of the Sarbanes-Oxley Act of
                    2002
  
 (1)
        Filed
        herewith.
 
 **Item
        14. Principal Accountant Fees and Services.**
  **Audit
        Fees**
 
 The
        aggregate fees billed or to be billed for professional services rendered
        by our
        independent registered public accounting firm for the audit of our annual
        financial statements, review of financial statements included in our quarterly
        reports and other fees that are normally provided by the accounting firm
        in
        connection with statutory and regulatory filings or engagements for the fiscal
        years ended December 31, 2006 and December 31, 2005 were $182,800 and $90,000,
        respectively.
 
 32
  **Audit
        Related Fees**
 
 There
        were no fees billed or to be billed for assurance and related services by
        our
        independent registered public accounting firm that are reasonably related
        to the
        performance of the audit or review of our financial statements, other than
        those
        previously reported in this Item 14, for the fiscal years ended December
        31,
        2006 and 2005.
 
 **Tax
        Fees**
 
 There
        were no fees billed for professional services rendered by our independent
        registered public accounting firm for tax compliance, tax advice and tax
        planning for the fiscal years ended December 31, 2006 and 2005.
 
 **All
        Other Fees**
 
 None.
  **Audit
        Committee**
  It
        is the
        policy of the Company for all work performed by its independent registered
        public accounting firm to be approved in advance by the Company’s Board of
        Directors and its Audit Committee. All of the services described above in
        this
        Item 14 were approved in advance by the Board of Directors and the Audit
        Committee during 2006 and 2007.
 
 33
  **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.
 **FLAGSHIP
                GLOBAL HEALTH, INC.**By:
              /s/
                Fred
                F. NazemFred
                F. Nazem, Chief Executive
                Officer
  Date:
        April 2, 2007
  In
        accordance with the Exchange Act, this report has been signed below by the
        following persons on behalf of the Registrant and in the capacities and on
        the
        dates indicated.
 Signature
                
                Title
                
                Date/s/
                    Fred F. Nazem
                
                Chief
                    Executive Officer
                
                April
                    2, 2007Fred
                    F. Nazem
                
                (Principal
                    Executive Officer)/s/
                    Philip E. Barak
                
                Chief
                    Financial Officer
                
                April
                    2, 2007Philip
                    E. Barak
                
                (Principal
                    Financial and
                    Accounting Officer)/s/
                    Michael Holland
                
                Director
                
                April
                    2, 2007Michael
                    Holland/s/
                    Richard Howard
                
                Director
                
                April
                    2, 2007Richard
                    Howard/s/
                    Michael Huckabee
                
                Director
                
                April
                    2, 2007Michael
                    Huckabee/s/
                    Barbara McNeil
                
                Director
                
                April
                    2, 2007Barbara
                    McNeil/s/
                    Benjamin Safirstein
                
                Director
                
                April
                    2, 2007Benjamin
                    Safirstein/s/
                    Brian Stafford
                
                Director
                
                April
                    2, 2007Brian
                    Stafford/s/
                    Richard Torykian
                
                Director
                
                April
                    2, 2007Richard
                    Torykian
  34
  **Flagship
        Global Health, Inc. and Subsidiary**
 **(Formerly
        known as Patients & Physicians, Inc., formerly**
 **known
        as Finity Holdings, Inc.)**
 **(A
        Development Stage Company)**
  **INDEX
        TO FINANCIAL STATEMENTS**
 
 Report
                  of Independent Registered Public Accounting Firm
              F-2Consolidated
                  Financial Statements:Consolidated
                  Balance Sheet, as of December 31, 2006
              F-3Consolidated
                  Statements of Operations, for the years ended December 31, 2006
                  and 2005
                  and for the period from inception (July 9, 2002) to December 31,
                  2006
              F-4Consolidated
                  Statement of Stockholders’ Equity (Deficit), for the period from inception
                  (July 9, 2002) to December 31, 2006
              F-5Consolidated
                  Statements of Cash Flows, for the years ended December 31, 2006
                  and 2005
                  and for the period from inception (July 9, 2002) to December 31,
                  2006
              F-7Notes
                  to Consolidated Financial Statements
              F-8
                  - F-26





F-1





**Report
      of Independent Registered Public Accounting Firm**




The
      Board
      of Directors and Stockholders


Flagship
      Global Health, Inc.




We
      have
      audited the accompanying consolidated balance sheet of Flagship Global Health,
      Inc. and Subsidiary (formerly known as Patients & Physicians, Inc., formerly
      known as Finity Holdings, Inc.) (a development stage company) as of December
      31,
      2006, and the related consolidated statements of operations, stockholders’
equity (deficit) and cash flows for the years ended December 31, 2006 and 2005,
      and for the period from inception (July 9, 2002) to December 31, 2006. These
      consolidated financial statements are the responsibility of the Company's
      management. Our responsibility is to express an opinion on these consolidated
      financial statements based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the consolidated financial position of Flagship Global
      Health, Inc. and Subsidiary (formerly known as Patients & Physicians, Inc.,
      formerly known as Finity Holdings, Inc.) as of December 31, 2006, and their
      consolidated results of operations and cash flows for the years ended December
      31, 2006 and 2005, and for the period from inception (July 9, 2002) to December
      31, 2006, in conformity with accounting principles generally accepted in the
      United States of America.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note 1 to the
      consolidated financial statements, the Company is in the development stage,
      has
      incurred net losses from inception and has working capital and stockholders’
deficiencies. These matters raise substantial doubt about the Company’s ability
      to continue as a going concern. Management's plans in regard to these matters
      are also described in Note 1. The consolidated financial statements do not
      include any adjustments that might result from the outcome of this
      uncertainty.







Jericho,
      New York


March
      28,
      2006





F-2


**Flagship
        Global Health, Inc. and Subsidiary**
 **(Formerly
        known as Patients & Physicians, Inc., formerly known as Finity Holdings,
        Inc.)**
 **(A
        Development Stage Company)**


**Consolidated
      Balance Sheet**


**As
      of December 31, 2006**





**ASSETS****Current
                Assets:**Cash
                and cash equivalents
            
            $
            941,733Prepaid
                expenses and other current assets
            
            
            162,959Total
                current assets
            
            
            1,104,692Property
                and equipment, net
            
            
            433,586Debt
                issuance costs, net
            
            
            113,367Restricted
                cash
            
            
            824,117Goodwill
            
            
            61,912Intangible
                assets, net
            
            
            44,917Other
                assets
            
            
            1,265**Total
                assets**
            
            $
            2,583,856**LIABILITIES
                AND STOCKHOLDERS' DEFICIT****Current
                Liabilities:**Accounts
                payable
            
            $
            206,873Accrued
                liabilities
            
            
            364,647Notes
                payable, current portion, net of unamortized discount
            
            
            5,606,078Total
                current liabilities
            
            
            6,177,598Notes
                payable, net of current portion and unamortized discount
            
            
            2,676,795Deferred
                rent liability
            
            
            272,716**Total
                liabilities**
            
            
            9,127,109**COMMITMENTS
                AND CONTINGENCIES****Stockholders'
                Deficit:**Preferred
                stock, $0.001 par value: 5,000,000 shares authorized, 0
                sharesissued
                and outstanding at December 31, 2006
            
            
            -Common
                stock, $0.001 par value: 125,000,000 shares authorized,58,484,385
                shares issued and outstanding at December 31, 2006
            
            
            58,484Additional
                paid-in capital
            
            
            18,004,468Deficit
                accumulated during the development stage
            
            
            (24,606,205
            )Total
                stockholders' deficit
            
            
            (6,543,253
            )**Total
                liabilities and stockholders' deficit**
            
            $
            2,583,856




See
                Notes to Consolidated Financial
                Statements




F-3




**Flagship
        Global Health, Inc. and Subsidiary**
 **(Formerly
        known as Patients & Physicians, Inc., formerly known as Finity Holdings,
        Inc.)**
 **(A
        Development Stage Company)**


**Consolidated
      Statements of Operations**


**For
      the years ended December 31, 2006 and 2005**


**and
      for the period from inception (July 9, 2002) to December 31,
      2006**


Years
                  Ended December 31,
              
              For
                  the period from inception (July 9, 2002) to
                December
                  31,2006
              
              2005
              
              2006Subscription
                  revenue
              
              $
              73,419
              
              $
              5,194
              
              $
              78,613Cost
                  of revenue
              
              
              15,999
              
              
              2,649
              
              
              18,648Gross
                  profit
              
              
              57,420
              
              
              2,545
              
              
              59,965Cost
                  and expenses:Membership
                  services
              
              
              2,396,851
              
              
              1,959,066
              
              
              5,610,150Selling,
                  general and administrative (including depreciation and amortization
                  of
                $237,061,
                  $263,131 and $527,348)
              
              
              7,147,372
              
              
              5,494,288
              
              
              14,851,331Loss
                  on sale of equipment
              
              
              88,953
              
              
              -
              
              
              88,953Impairment
                  of long-lived assets
              
              
              13,323
              
              
              97,500
              
              
              505,377Total
                  costs and expenses
              
              
              9,646,499
              
              
              7,550,854
              
              
              21,055,811Loss
                  from operations
              
              
              (9,589,079
              )
              
              (7,548,309
              )
              
              (20,995,846
              )Interest
                  income
              
              
              66,730
              
              
              6,341
              
              
              79,466Amortization
                  of debt discounts anddebt
                  issuance costs
              
              
              (2,893,937
              )
              
              -
              
              
              (2,893,937
              )Interest
                  expense
              
              
              (779,319
              )
              
              (57,209
              )
              
              (836,528
              )Other
                  income and expenses, net
              
              
              40,640
              
              
              -
              
              
              40,640Loss
                  before provision for income taxes
              
              
              (13,154,965
              )
              
              (7,599,177
              )
              
              (24,606,205
              )Provision
                  for income taxes
              
              
              -
              
              
              -
              
              
              -Net
                  loss
              
              
              (13,154,965
              )
              
              (7,599,177
              )
              $
              (24,606,205
              )Accretion
                  of preferred stock
              
              
              (193,858
              )
              
              (23,728
              )Net
                  loss attributable to common stockholders
              
              $
              (13,348,823
              )
              $
              (7,622,905
              )Weighted
                  average number of shares outstanding, basic and diluted
              
              
              49,350,388
              
              
              34,069,022Net
                  loss per share, basic and diluted
              
              $
              (0.27
              )
              $
              (0.22
              )


See
        Notes
        to Consolidated Financial Statements
  F-4


**Flagship
        Global Health, Inc. and Subsidiary**
 **(Formerly
        known as Patients & Physicians, Inc., formerly known as Finity Holdings,
        Inc.)**
 **(A
        Development Stage Company)**


**Consolidated
      Statement of Stockholders’ Equity (Deficit)**


**For
      the period from inception (July 9, 2002) to December 31,
      2006**





Common
                stock
            
            Additional
                Paid-in
            
            Deficit
                Accumulated During the Development
            
            Total
                Stockholders’ EquityShares
            
            Amount
            
            Capital
            
            Stage
            
            (Deficit)**Balances
                at July 9, 2002 (inception)**
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Issuance
                of common stock to founders at $0.001 per share in August
                2002
            
            
            16,000,000
            
            
            16,000
            
            
            -
            
            
            -
            
            
            16,000Sale
                of common stock at $0.044 per share in August 2002
            
            
            2,857,150
            
            
            2,857
            
            
            122,143
            
            
            -
            
            
            125,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (107,271
            )
            
            (107,271
            )**Balances
                at December 31, 2002**
            
            
            18,857,150
            
            
            18,857
            
            
            122,143
            
            
            (107,271
            )
            
            33,729Issuance
                of common stock in exchange for goods and services at $0.056 per
                share in
                August 2003
            
            
            13,678,910
            
            
            13,679
            
            
            746,321
            
            
            -
            
            
            760,000Issuance
                of common stock to employees at $0.056 per share in August
                2003
            
            
            1,510,000
            
            
            1,510
            
            
            82,386
            
            
            -
            
            
            83,896Cancellation
                of founders’ shares at $0.001 per share in August 2003
            
            
            (3,510,000
            )
            
            (3,510
            )
            
            3,510
            
            
            -
            
            
            -Issuance
                of options to purchase common stock to employees for
                services
            
            
            -
            
            
            -
            
            
            37,243
            
            
            -
            
            
            37,243Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (495,895
            )
            
            (495,895
            )**Balances
                at December 31, 2003**
            
            
            30,536,060
            
            
            30,536
            
            
            991,603
            
            
            (603,166
            )
            
            418,973Exercise
                of stock options at $0.035 per share in August 2004
            
            
            1,000,000
            
            
            1,000
            
            
            34,000
            
            
            -
            
            
            35,000Value
                of warrants issued in connection with the sale of Redeemable Series
                A
                Convertible Preferred Stock
            
            
            -
            
            
            -
            
            
            143,066
            
            
            -
            
            
            143,066Accretion
                of Redeemable Series A Convertible Preferred Stock
            
            
            -
            
            
            -
            
            
            (16,223
            )
            
            -
            
            
            (16,223
            )Issuance
                of options to purchase common stock to employees for
                services
            
            
            -
            
            
            -
            
            
            95,162
            
            
            -
            
            
            95,162Issuance
                of options to purchase common stock to non-employees for
                services
            
            
            -
            
            
            -
            
            
            275,951
            
            
            -
            
            
            275,951Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (3,248,897
            )
            
            (3,248,897
            )**Balances
                at December 31, 2004**
            
            
            31,536,060
            
            
            31,536
            
            
            1,523,559
            
            
            (3,852,063
            )
            
            (2,296,968
            )Exercise
                of stock options at $0.20 per share in September 2005
            
            
            250
            
            
            -
            
            
            50
            
            
            -
            
            
            50Accretion
                of Redeemable Series A Convertible Preferred Stock
            
            
            -
            
            
            -
            
            
            (19,473
            )
            
            -
            
            
            (19,473
            )Accretion
                of Redeemable Series B Convertible Preferred Stock
            
            
            -
            
            
            -
            
            
            (4,255
            )
            
            -
            
            
            (4,255
            )Stock
                issued in lieu of compensation at $0.525 per share in March
                2005
            
            
            3,031,250
            
            
            3,031
            
            
            1,588,375
            
            
            -
            
            
            1,591,406Issuance
                of options to purchase common stock to employees for
                services
            
            
            -
            
            
            -
            
            
            243,470
            
            
            -
            
            
            243,470Issuance
                of options to purchase common stock to non-employees for
                services
            
            
            -
            
            
            -
            
            
            321,179
            
            
            -
            
            
            321,179Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (7,599,177
            )
            
            (7,599,177
            )**Balances
                at December 31, 2005**
            
            
            34,567,560
            
            
            34,567
            
            
            3,652,905
            
            
            (11,451,240
            )
            
            (7,763,768
            )Allocation
                of value to common stock issued in connection with convertible debt
                financings at $.001 per share in January 2006
            
            
            7,968,950
            
            
            7,969
            
            
            3,127,729
            
            
            -
            
            
            3,135,698Allocation
                of value to warrants issuedin
                connection with convertible debt financings
            
            
            -
            
            
            -
            
            
            457,671
            
            
            -
            
            
            457,671Allocation
                of value to beneficial conversion feature in connection with convertible
                debt financings
            
            
            -
            
            
            -
            
            
            1,695,111
            
            
            -
            
            
            1,695,111




F-5




**Flagship
        Global Health, Inc. and Subsidiary**
 **(Formerly
        known as Patients & Physicians, Inc., formerly known as Finity Holdings,
        Inc.)**
 **(A
        Development Stage Company)**


**Consolidated
      Statement of Stockholders’ Equity (Deficit)**


**For
      the period from inception (July 9, 2002) to December 31,
      2006**





Common
                stock
            
            Additional
                Paid-in
            
            Deficit
                Accumulated During the Development
            
            Total
                Stockholders’ EquityShares
            
            Amount
            
            Capital
            
            Stage
            
            (Deficit)Conversion
                of Redeemable Series A Convertible Preferred Stock in connection
                with
                acquisition
            
            
            7,755,481
            
            
            7,755
            
            
            2,117,244
            
            
            -
            
            
            2,124,999Conversion
                of Redeemable Series B Convertible Preferred Stock in connection
                with
                acquisition
            
            
            5,205,764
            
            
            5,206
            
            
            3,379,400
            
            
            -
            
            
            3,384,606Issuance
                of shares in connection with acquisition in June 2006
            
            
            174,130
            
            
            174
            
            
            (250
            )
            
            -
            
            
            (76
            )Exercise
                of vested options at $0.89 per share in January 2006
            
            
            2,500
            
            
            2
            
            
            2,223
            
            
            -
            
            
            2,225Exercise
                of vested options at $0.10 per share in May 2006
            
            
            75,000
            
            
            75
            
            
            7,425
            
            
            -
            
            
            7,500Exercise
                of vested options at $0.20 per share in May 2006
            
            
            12,500
            
            
            13
            
            
            2,487
            
            
            -
            
            
            2,500Exercise
                of vested options at $0.10 per share in June 2006
            
            
            110,000
            
            
            110
            
            
            10,890
            
            
            -
            
            
            11,000Exercise
                of vested options at $0.20 per share in June 2006
            
            
            12,500
            
            
            13
            
            
            2,487
            
            
            -
            
            
            2,500Accretion
                of Redeemable Series A Convertible Preferred Stock
            
            
            -
            
            
            -
            
            
            (160,241
            )
            
            -
            
            
            (160,241
            )Accretion
                of Redeemable Series B Convertible Preferred Stock
            
            
            -
            
            
            -
            
            
            (33,617
            )
            
            -
            
            
            (33,617
            )Issuance
                of shares to broker in connection with Share Exchange at $.001 per
                share
                in June 2006
            
            
            1,200,000
            
            
            1,200
            
            
            (1,200
            )
            
            -
            
            
            -Issuance
                of shares to PEMMS in connection with acquisition of assets at $.62
                per
                share in July 2006
            
            
            300,000
            
            
            300
            
            
            185,700
            
            
            -
            
            
            186,000Issuance
                of options to purchase common stock to employees for
                services
            
            
            -
            
            
            -
            
            
            1,075,008
            
            
            -
            
            
            1,075,008Issuance
                of options to purchase common stock to non-employees for
                services
            
            
            -
            
            
            -
            
            
            284,596
            
            
            -
            
            
            284,596Issuance
                of common stock and warrants in connection with interim
                financing at $2.00 per unit in December 2006
            
            
            1,100,000
            
            
            1,100
            
            
            2,198,900
            
            
            
            
            
            2,200,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (13,154,965
            )
            
            (13,154,965
            )**Balances
                at December 31, 2006**
            
            
            58,484,385
            
            $
            58,484
            
            $
            18,004,468
            
            $
            (24,606,205
            )
            $
            (6,543,253
            )




See
                Notes to Consolidated Financial
                Statements





F-6


**Flagship
        Global Health, Inc. and Subsidiary**
 **(Formerly
        known as Patients & Physicians, Inc., formerly known as Finity Holdings,
        Inc.)**
 **(A
        Development Stage Company)**


**Consolidated
      Statements of Cash Flows**


**For
      the years ended December 31, 2006 and 2005**


**and
      for the period from inception (July 9, 2002) to December 31,
      2006**


Years
                  Ended December 31,
              
              For
                  the period from inception (July 9, 2002) to
                December
                  31,2006
              
              2005
              
              2006**OPERATING
                  ACTIVITIES**Net
                  loss
              
              $
              (13,154,965
              )
              $
              (7,599,177
              )
              $
              (24,606,205
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Share-based
                  compensation expense
              
              
              1,359,604
              
              
              564,649
              
              
              2,332,609Amortization
                  of debt discounts and debt issuance costs
              
              
              2,893,937
              
              
              -
              
              
              2,893,937Depreciation
                  and amortization expense
              
              
              237,061
              
              
              263,131
              
              
              527,348Deferred
                  rent liability
              
              
              195,327
              
              
              42,594
              
              
              272,716Loss
                  on sale of equipment
              
              
              88,953
              
              
              -
              
              
              88,953Common
                  stock issued in exchange for services
              
              
              -
              
              
              -
              
              
              251,683Preferred
                  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
              
              
              -
              
              
              985,156
              
              
              985,156Note
                  payable in lieu of compensation
              
              
              -
              
              
              165,000
              
              
              165,000Impairment
                  of long-lived assets
              
              
              13,323
              
              
              97,500
              
              
              505,377Changes
                  in operating assets and liabilities:Prepaid
                  expenses and other current assets
              
              
              166,968
              
              
              (304,286
              )
              
              (162,959
              )Other
                  non current assets
              
              
              (1,265
              )
              
              -
              
              
              (1,265
              )Restricted
                  assets
              
              
              (689,117
              )
              
              -
              
              
              (824,117
              )Accounts
                  payable and accrued liabilities
              
              
              (240,563
              )
              
              255,387
              
              
              1,177,695Net
                  cash used in operating activities
              
              
              (9,130,737
              )
              
              (5,530,046
              )
              
              (16,209,176
              )**INVESTING
                  ACTIVITIES**Purchases
                  of property and equipment
              
              
              (137,587
              )
              
              (531,304
              )
              
              (1,076,539
              )Proceeds
                  from the sale of equipment
              
              
              25,000
              
              
              -
              
              
              25,000Net
                  cash used in investing activities
              
              
              (112,587
              )
              
              (531,304
              )
              
              (1,051,539
              )**FINANCING
                  ACTIVITIES**Proceeds
                  from (payments to) stockholders
              
              
              (18,130
              )
              
              (13,086
              )
              
              83,763Proceeds
                  from issuance of common stock and warrants
              
              
              2,206,018
              
              
              -
              
              
              2,332,969Proceeds
                  from exercise of stock options
              
              
              25,725
              
              
              50
              
              
              60,775Proceeds
                  from issuance of Redeemable Series A Convertible Preferred
                  Stock
              
              
              -
              
              
              -
              
              
              1,735,000Costs
                  associated with issuance of Redeemable Series A Convertible Preferred
                  Stock
              
              
              -
              
              
              -
              
              
              (52,871
              )Proceeds
                  from exercise of warrants to purchase Redeemable Series A Convertible
                  Preferred Stock
              
              
              137,120
              
              
              167,880
              
              
              305,000Proceeds
                  from issuance of Redeemable Series B Convertible Preferred
                  Stock
              
              
              -
              
              
              3,383,748
              
              
              3,383,748Costs
                  associated with issuance of Redeemable Series B Convertible Preferred
                  Stock
              
              
              -
              
              
              (37,015
              )
              
              (37,015
              )Proceeds
                  from issuance of notes payable
              
              
              4,000,000
              
              
              2,935,000
              
              
              6,935,000Bank
                  overdraft, net
              
              
              (68,478
              )
              
              68,478
              
              
              -Debt
                  issuance costs
              
              
              (166,942
              )
              
              (58,379
              )
              
              (225,321
              )Repayments
                  of notes payable
              
              
              (250,000
              )
              
              (250,000
              )
              
              (500,000
              )Proceeds
                  from issuance of secured convertible term notes, net
              
              
              4,181,400
              
              
              -
              
              
              4,181,400**Net
                  cash provided by financing activities**
              
              
              10,046,713
              
              
              6,196,676
              
              
              18,202,448**Net
                  increase in cash**
              
              
              803,389
              
              
              135,326
              
              
              941,733**Cash
                  at beginning of period**
              
              
              138,344
              
              
              3,018
              
              
              -**Cash
                  at end of period**
              
              $
              941,733
              
              $
              138,344
              
              $
              941,733**Supplemental
                  cash flow information**Cash
                  payments for interest
              
              $
              593,399
              
              $
              -
              
              $
              593,399


See
        Notes
        to Consolidated Financial Statements




F-7




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





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





*Organization*





Flagship
      Global Health, Inc (“Flagship”) (formerly known as Patients & Physicians,
      Inc., formerly known as Finity Holdings, 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”) (formerly
      U.S. Open Healthcare Management, Inc.) 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.





To
      date,
      Flagship has been focused on developing a membership-based specialty healthcare
      advocacy company that provides 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.





Flagship
      has not generated significant revenues through December 31, 2006, 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 consolidated financial statements have been prepared on a going
      concern basis. As shown in the accompanying consolidated financial statements,
      Flagship has a working capital deficit of $5,072,906 and has incurred losses
      in
      the development stage totaling $24,606,205 for the period from inception (July
      9, 2002) to December 31, 2006. These factors, among others, indicate that there
      is substantial doubt about Flagship’s ability to continue as a going concern.
      The consolidated financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.





Management
      recognizes that Flagship’s continuation as a going concern is dependent upon its
      ability to generate sufficient cash flow to allow Flagship to continue the
      development of its business plan and satisfy its obligations on a timely basis.
      Management believes that such cash flows will be funded by additional equity
      and/or debt financings through the time in which Flagship emerges from the
      development stage, if ever, and generates sufficient positive cash flows from
      its operations, if ever. However, there can be no assurance that management’s
      plans will be achieved.




F-8




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





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





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





**Consolidation**





The
      consolidated financial statements include the accounts of Flagship and
      Advocates. All significant intercompany transactions and balances have been
      eliminated.





**Use
      of Estimates**





The
      preparation of the Company’s 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, the disclosure of contingent assets
      and liabilities at the date of the financial statements, 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 and amortizable
      lives, impairment of long-lived assets, the fair value of equity
      instruments issued and expected volatility of common stock. Because of the
      uncertainty inherent in such estimates, actual results may differ from these
      estimates.




**Reclassifications**




Certain
      reclassifications have been made in the prior period consolidated financial
      statements to conform to the current period’s presentation.




**Restricted
      Cash**





Included
      in restricted assets on the accompanying consolidated balance sheet as of
      December 31, 2006, is cash of $824,117, which is being held to secure letters
      of
      credit, related to the Company’s office space operating leases (Note
      11).





**Cash
      and Cash Equivalents**





The
      Company considers all investments with a maturity of three months or less when
      purchased to be cash equivalents.





**Property
      and Equipment**





Property
      and equipment, consisting principally of computer equipment and capitalized
      purchased and internally developed software programs, are recorded at cost.
      Depreciation and amortization are provided for, using the straight-line method,
      in amounts sufficient to relate the cost of depreciable and amortizable assets
      to operations over their estimated useful lives. Repairs and maintenance are
      charged to operations as incurred.




F-9
 
  **Flagship
        Global Health, Inc. and Subsidiary**
 **(Formerly
        known as Patients & Physicians, Inc., formerly known as Finity Holdings,
        Inc.)**
 **(A
        Development Stage Company)**
 **Notes
        to Consolidated Financial Statements**





A
      summary
      of the estimated useful lives of the property and equipment is presented
      below:





Estimated
                useful livesComputer
                hardware
            
            3
                yearsComputer
                software
            
            3
                yearsEquipment
            
            5
                yearsFurniture
                and fixtures
            
            6
                yearsLeasehold
                improvements
            
            Shorter
                of life of asset or lease term




The
      Company has adopted Statement of Position 98-1, *Accounting
      for the Costs of Computer Software Developed or Obtained for Internal
      Use* .
      This
      statement requires that certain costs incurred in purchasing or developing
      software for internal use be capitalized as internal use software development
      costs and included in fixed assets. Amortization of the software begins
      as software is ready for its intended use.





**Depreciable/Amortizable
      Tangible Long-Lived Assets**





When
      events or changes in circumstances require, the Company assesses the likelihood
      of recovering the cost of tangible long-lived assets based on its expectations
      of future profitability, undiscounted cash flows and management’s plans with
      respect to the operations.





**Concentrations
      of Credit Risk**





Financial
      instruments that potentially subject the Company to concentrations of credit
      risk consist of cash and cash equivalents. The Company reduces credit risk
      by
      placing its cash and cash equivalents with major financial institutions with
      high credit ratings. At times, such amounts may exceed Federally insured limits.




**Fair
      Value of Financial Instruments**





The
      fair
      value of the Company’s assets and liabilities that qualify as financial
      instruments under SFAS No. 107, *Disclosures
      about Fair Value of Financial Instruments,* (“SFAS
      No. 107”) approximate their carrying amounts presented in the accompanying
      consolidated balance sheet at December 31, 2006.




**Revenue
      Recognition**





The
      Company recognizes revenues in accordance with SEC Staff Accounting Bulletin
      (“SAB”) No. 101, *Revenue
      Recognition in Financial Statements* (“SAB
      No. 101”) as amended by SAB 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.




F-10




**Flagship
      Global Health, Inc. and Subsidiary**


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


**(A
      Development Stage Company)**


**Notes
      to Consolidated Financial Statements**





The
      Company sells memberships to individuals and institutions for access to its
      healthcare service offerings. The Company recognizes revenue ratably over the
      term of the membership.





**Goodwill
      and Acquired Intangible Assets**





*Goodwill*





Goodwill
      represents the Company’s allocation of the cost to acquire PEMMS Limited
      (“PEMMS) (Note 12) in excess of the fair value of net assets acquired. The
      purchase price and its allocation, to reflect the fair values of assets acquired
      and liabilities assumed, have been based upon management’s estimates. Under SFAS
      No. 142 *Goodwill
      and Other Intangible Assets* (“SFAS
      No. 142”), goodwill is not amortized but is reviewed for impairment annually.
      The Company performs its annual goodwill impairment evaluation, once a year
      or
      more frequently if events or changes in circumstances indicate that goodwill
      may
      be impaired. Application of the goodwill impairment evaluation requires
      significant judgments including estimation of future cash flows, which is
      dependent on internal forecasts. Changes in these estimates and assumptions
      could materially affect the determination of fair value and/or conclusions
      on
      goodwill impairment. Goodwill at December 31, 2006 was $61,912.





*Intangible
      Assets*





Intangible
      assets are accounted for under the provisions of SFAS No. 144 “*Accounting
      for the Impairment or Disposal of Long-Lived Assets*(“SFAS
      No. 144”). Intangible assets arose from a business combination and
      consist of customer relationships that are amortized, on a straight-line basis,
      over five years. The Company follows the disclosure requirements of SFAS No.
      142. Intangible assets are reviewed for impairment under the provisions of
      SFAS
      No. 144, whenever
      events or changes in circumstances indicate that the carrying amount may not
      be
      recoverable. Intangible assets, net, at December 31, 2006 were $44,917.





**Stock-Based
      Compensation**


Since
        inception, the Company has accounted 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 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”).
      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 December 31, 2006, the
      Company accounted for 1,900,000 options under the guidance of EITF
      96-18.




F-11


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







The
      Company has followed the guidance outlined in 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**





The
      Company accounts for deferred income taxes in accordance with SFAS 109, *Accounting
      for Income Taxes* .
      Deferred income tax assets and liabilities are recognized for the future tax
      consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective tax
      bases and operating loss and tax credit carryforwards. Deferred tax assets
      and
      liabilities are measured using enacted tax rates expected to apply to taxable
      income in the years in which those temporary differences are expected to be
      recovered or settled. Deferred tax assets are reduced by a valuation allowance
      if it is more likely than not that the tax benefits will not be realized. The
      ultimate realization of deferred tax assets depends upon the generation of
      future taxable income during the periods in which those temporary differences
      become deductible.





**Net
      Loss Per Share**





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





Basic
      loss per share is computed by dividing loss applicable 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 and 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
      years ended December 31, 2006 and 2005, respectively. Therefore, basic and
      diluted loss per share were the same for the years ended December 31, 2006
      and
      2005. The total number of potentially dilutive securities excluded from the
      calculation of diluted loss per share for the years ended December 31, 2006
      and
      2005 was 17,554,313 and 5,797,767, respectively.





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





In
      June
      2006, FASB issued Interpretation No.48, *Accounting
      for Uncertainty in Income Taxes* (“FIN
      48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized
      in an enterprise’s financial statements in accordance with SFAS No. 109, *Accounting
      for Income Taxes* ,
      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 a tax return. FIN 48 also provides guidance on the recognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure and transition. FIN 48 will be applicable to the Company beginning
      January 1, 2007. The Company does not believe FIN 48 will have any immediate
      impact on its consolidated financial statements and related
      disclosures.




F-12


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


In
      September 2006, FASB issued SFAS 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 applies to financial statements issued
      for
      fiscal years beginning after November 15, 2007, and for interim periods within
      those fiscal years. The Company will evaluate the potential impact, if any,
      of
      the adoption of SFAS No. 157 on its 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
      financial statements.





Management
      does not believe that any other recently issued, but not yet effective,
      accounting standards if currently adopted would have a material effect on the
      Company’s consolidated financials statements and related
      disclosures.





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





The
      Company issues stock-based compensation to its officers, directors, employees
      and consultants under its 2004 Stock Option and Grant Plan (the “Stock Option
      Plan”). There are 9,000,000 shares authorized under the Stock Option Plan. The
      maximum term 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, which is equal to or greater than the fair market
      value of the common stock, is determined by the Board of Directors considering
      factors such as quoted stock prices, recent sales of stock, results of
      operations and the state of the Company’s business and industry.





A
      summary
      of stock-based compensation expense recognized during the years ended December
      31, 2006 and 2005 is presented below:





Year
                Ended December 31,2006
            
            2005Membership
                Services
            
            $
            67,134
            
            $
            28,324Selling,
                General and Administrative
            
            
            1,007,874
            
            
            215,146Non-Employees
            
            
            284,596
            
            
            321,179Total
                Options Expense
            
            $
            1,359,604
            
            $
            564,649





F-13


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


A
      summary
      of option activity for the year ended December 31, 2006 is presented
      below:





Options
            
            Weighted
                Average
              Exercise
                PriceOutstanding,
                December 31, 2005
            
            
            5,081,750
            
            $
            0.14Granted
            
            
            3,851,000
            
            
            1.30Exercised
            
            
            (212,500
            )
            
            0.12Forfeited
                or expired
            
            
            (1,507,000
            )
            
            0.38Outstanding,
                December 31, 2006
            
            
            7,213,250
            
            $
            0.72Exercisable,
                December 31, 2006
            
            
            2,838,000
            
            $
            1.52




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 assumptions, was
      used to estimate the fair value for employee stock options issued:





Year
                Ended December 31,2006
            
            2005Expected
                volatility
            
            
            68.83%
                - 83.95
            %
            
            80.67
            %Risk-free
                rate
            
            
            4.58%
                - 5.03
            %
            
            4.39%
                - 4.58
            %Expected
                term of options
            
            
            5
                - 10 years
            
            
            10
                yearsDividend
                yield
            
            
            0
            %
            
            0
            %




Due
      to
      the Company’s limited history as a public company, the Company has estimated
      expected volatility based on the historical volatility of certain 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 Staff Accounting Bulletin
      No.
      107 on Share Based Payment.




The
      weighted average grant-date fair value of the options granted was $1.29 per
      share and $0.47 per share for the years ended December 31, 2006 and 2005,
      respectively.




The
      options outstanding at December 31, 2006 have a weighted average remaining
      contractual term of approximately 7.8 years and an intrinsic value of
      $12,577,900.




The
      options which are exercisable at December 31, 2006 have a weighted average
      remaining contractual term of approximately 6.4 years, and an intrinsic value
      of
      $3,977,375.




The
      options exercised during the year ended December 31, 2006 had an intrinsic
      value
      of $165,675.




F-14


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


As
      of
      December 31, 2006, there was $1,412,159 of total deferred compensation cost
      related to options issued to employees that will be recognized in expense over
      a
      weighted average period of approximately 1.7 years.




**4.**
            **Property
                and Equipment, net**





Property
      and equipment, net, consisted of the following at December 31, 2006:





Asset
            
            AmountComputer
                hardware
            
            $
            206,186Computer
                software
            
            
            413,790Equipment
            
            
            94,388Furniture
                and fixtures
            
            
            56,712Leasehold
                improvements
            
            
            9,652780,728Less:
                accumulated depreciation and amortization
            
            
            (347,142
            )$
            433,586





Depreciation
      and amortization expense was $226,978 and $263,131 for the years ended December
      31, 2006 and 2005, respectively.





**5.**
            **Intangible
                Assets**





The
      Company’s intangible assets, consisting primarily of customer relationships,
      were acquired and accounted for using the purchase method of accounting. The
      Company did not have any intangible assets prior to the acquisition of PEMMS
      (Note 12) in February 2006. The following table summarizes the net intangible
      asset as of December 31, 2006:





Intangible
            
            Amortization
                Period
            
            Gross
                Asset Value
            
            Accumulated
                Amortization
            
            Net
                Asset ValueCustomer
                relationships
            
            5
                years
            
            $
            55,000
            
            $
            (10,083
            )
            $
            44,917




Amortization
      expense was $10,083 and $0 for the years ended December 31, 2006 and 2005,
      respectively.





Estimated
      amortization expense related to the intangible assets subject to amortization
      at
      December 31, 2006 for each of the years in the five year period ending December
      31, 2011 is as follows:





2007
            
            $
            11,0002008
            
            
            11,0002009
            
            
            11,0002010
            
            
            11,0002011
            
            
            917Total
            
            $
            44,917




F-15


**Flagship
          Global Health, Inc. and Subsidiary**
 **(Formerly
          known as Patients & Physicians, Inc., formerly known as Finity Holdings,
          Inc.)**
 **(A
          Development Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **6.**
              **Accrued
                  Liabilities**
 
 Accrued
        liabilities consisted of the following at December 31, 2006:
 
 Accrued
                  professional fees
              
              $
              84,851Accrued
                  interest payable
              
              
              243,129Deferred
                  revenue
              
              
              33,257Other
                  accrued liabilities
              
              
              3,410$
              364,647
  **7.**
              **Debt**
 
 Debt
        financings consisted of the following as of December 31, 2006:
 
 Principal
              
              Unamortized
                  Debt Discount
              
              NetLaurus
                  Convertible Notes
              
              $
              4,100,000
              
              $
              (1,629,897
              )
              $
              2,470,103Junior
                  Notes
              
              
              3,000,000
              
              
              (1,187,230
              )
              
              1,812,770Apollo
                  Medical Partners, LP
              
              
              2,700,000
              
              
              -
              
              
              2,700,000Apollo
                  Medical Offshore Partners, LP
              
              
              1,300,000
              
              
              -
              
              
              1,300,000$
              11,100,000
              
              $
              (2,817,127
              )
              
              8,282,873Less
                  current portion
              
              
              
              
              
              
              
              
              5,606,078Long
                  term portion
              
              
              
              
              
              
              
              $
              2,676,795
  *Convertible
        Notes*
  *Laurus
        Notes*
  On
        January 30, 2006 Advocates entered into a securities purchase agreement (the
        “Laurus Securities Agreement”) with Laurus Master Fund, Ltd. (“Laurus”). Under
        the Laurus Securities Agreement, Laurus purchased from Advocates a secured
        convertible term note (the “Laurus Convertible Note”) in an aggregate principal
        amount of $4,100,000, which is collateralized by substantially all of Advocates
        assets. 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.
  F-16
 **Flagship
            Global Health, Inc. and Subsidiary**
 **(Formerly
            known as Patients & Physicians, Inc., formerly known as Finity Holdings,
            Inc.)**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**
 
  *Junior
            Notes*
  During
        2005, Advocates issued an aggregate of $3,100,000 in short-term notes, of
        which
        $2,050,000 was issued to officers and directors of the Company. Of the aggregate
        amount issued, $165,000 was issued to an officer of the Company in lieu of
        compensation. In February 2005, $250,000 of the amounts due to an officer
        of the
        Company was repaid. Of the aggregate amount issued, $2,850,000 was outstanding
        at December 31, 2005. During January 2006, Advocates issued an additional
        $400,000 in short-term notes and repaid $240,000, and $10,000 of the notes
        issued in 2005, in January 2006 and August 2006, respectively (Note 17).
  On
        January 30, 2006 Advocates entered into a securities purchase agreement (the
        “Junior Securities Agreement”) with certain holders of Advocates 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 Notes”) in Advocates. The
        Junior Notes have substantially the same terms as the Laurus Convertible
        Note.
        The Junior 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.
  *Laurus
        and Junior Notes*
  On
        January 30, 2006, in connection with the Laurus Convertible Note and the
        Junior
        Notes (collectively the “Notes”), Advocates issued 7,968,950 shares of common
        stock to the investors for consideration of $7,969 and issued warrants to
        purchase 1,902,174 shares of common stock at an exercise price of $0.92 per
        share. The warrants have a term of seven years. The aforementioned common
        shares
        and warrants include 1,951,596 shares of common stock and warrants to purchase
        465,839 shares of common stock, valued at $176,767, issued to certain
        shareholders and officers (the “Guarantors”) that provided a limited guarantee
        of the Company’s obligation to Laurus.
  The
        Company allocated the $7,100,000 of proceeds from the Notes based on the
        computed relative fair values of the debt, stock and warrant instruments
        issued
        to Laurus, the Junior Note Holders and the Guarantors. The common stock issued
        was valued based on management’s estimate of the fair value of the Company’s
        common stock of $0.62 per share or a fair value of $4,932,780 and relative
        fair
        value of $3,127,729 for the common stock. The warrants were valued using
        a
        Black-Scholes pricing model with the following assumptions: (1) common stock
        fair value of $0.62 per share, (2) expected volatility of 67.63%, (3) risk-free
        interest rate of 4.39%, (4) term of 7 years, and (5) no dividend, which resulted
        in a fair value of $721,799 and a relative fair value of $457,671 for the
        warrants. Accordingly, the resulting relative fair value allocated to the
        debt
        component of $3,196,000 was used to measure the intrinsic value of the embedded
        conversion option of the Notes which resulted in a beneficial conversion
        feature
        of $1,695,111 recorded to additional paid-in capital. The aggregate amounts
        allocated to the warrants, equity instruments and beneficial conversion feature
        of $5,599,110 were recorded as a debt discount at the date of issuance of
        the
        Notes and are being amortized to debt discounts and debt issuance costs using
        the interest method over the stated maturities of the Notes. The initial
        aggregate carrying value of the Notes at the time of closing was $1,500,890
        after the debt discounts.
  F-17
 **Flagship
            Global Health, Inc. and Subsidiary**
 **(Formerly
            known as Patients & Physicians, Inc., formerly known as Finity Holdings,
            Inc.)**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**
 At
        the
        date of issuance of the Notes, management initially estimated the fair value
        of
        the Company’s common stock as a private company based on a recent financing
        transaction and allocated the proceeds from the Notes based on such estimated
        values. During 2006 the Company estimated the value of its common stock in
        connection with an acquisition (Note 12). Based on updated information, changes
        have been made to certain accounting estimates (Note 17).
 
 The
        fair
        value of the debt proceeds was determined by calculating the net present
        value
        of the future payment on the notes using a discount rate of 25% and an interest
        rate of 7% yielding a total net present value of $5,040,510. Transaction
        fees
        totaling $318,600 paid to Laurus, or its affiliates, and the Junior Note
        Holders
        in connection with this financing were netted against the proceeds and
        considered in the calculation of the beneficial conversion feature. Financing
        costs of $225,321 paid to third parties associated with this financing were
        recorded as debt issuance costs and included on the accompanying consolidated
        balance sheet at December 31, 2006. These costs are being amortized over
        the
        term of the Notes.
  During
        the years ended December 31, 2006, and 2005, $2,781,983 and $0, respectively,
        of
        the discount on the Notes were amortized and included in amortization of
        debt
        discounts and debt issuance costs on the accompanying consolidated statements
        of
        operations. Debt issuance costs allocated are amortized over the term of
        the
        debt using the interest method, which produces a constant periodic rate of
        return. During the years ended December 31, 2006, and 2005, $111,954 and
        $0,
        respectively, of debt issuance costs have been amortized and are included
        in
        amortization of debt discounts and debt issuance costs on the accompanying
        consolidated statements of operations.
  *Repayment
        Terms*
 
 The
        Notes
        are payable in monthly installments commencing April 2007 to Laurus and each
        of
        the Junior Note Holders in amounts ranging from $2,083 to $170,833. 
Aggregate payments due related to the Notes is approximately $2,662,000,
        $3,550,000 and $888,000 in 2007, 2008 and 2009, respectively.  The terms of
        the Notes provide that in the event that any of the principal is converted
        into
        common stock, the amount converted shall be credited against the next monthly
        payment.  Advocates has the option, but not the obligation, of prepaying
        any outstanding principal of the Notes by paying the principal, accrued
        interest, and a redemption premium on the principal of 30%.
 
 Flagship
        was originally required to repay the Notes on a monthly basis over the following
        24 months beginning on February 1, 2007. Laurus and a majority of the Junior
        Note Holders executed a waiver and amendment whereby the parties agreed that
        the
        first monthly payment would be April 1, 2007 and the two payments deferred
        would
        be payable in January 2009.
 
 *Registration
        Rights*
 
 The
        Company entered into a registration rights agreement with both Laurus and
        the
        Junior Note Holders covering the registration of the common stock issued
        to
        Laurus, the Guarantors and the Junior Note Holders, the common stock underlying
        the Notes and the warrants issued to Laurus, the Guarantors and the Junior
        Note
        Holders. The Company filed a registration statement on Form SB-2 which became
        effective on September 11, 2006. The Company is required to use its best
        efforts
        to keep the registration statement continuously effective until the date
        which
        is the earlier of when (i) all registrable securities have been sold or (ii)
        all
        registrable securities covered by such registration statement may be sold
        immediately without registration under the Securities Act and without volume
        restrictions.
  F-18
 **Flagship
            Global Health, Inc. and Subsidiary**
 **(Formerly
            known as Patients & Physicians, Inc., formerly known as Finity Holdings,
            Inc.)**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**
 Promptly
        after the closing of the Share Exchange, Flagship assumed all the outstanding
        obligations of Advocates under the Notes.
 
 *Apollo
        Short Term Convertible Notes*
 
 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”). Interest on the notes accrues at
        8% based on a 365-day year, and will be paid at maturity of the Apollo Notes.
        Any unpaid interest plus remaining principal on the Apollo Notes is due and
        payable on June 7, 2007. The Apollo Notes, including all accrued interest,
        will
        convert into the form of securities issued in the next round of financing
        on the
        same terms and conditions as such financing; provided, however, that such
        financing results in an additional $4 million in funding.
 
 As
        of
        December 31, 2006, there was $56,554 and $186,575 of accrued interest expense
        associated with the Notes and the Apollo Notes, respectively, included in
        accrued liabilities on the accompanying consolidated balance sheet.
 
 **8.**
              **Redeemable
                  Convertible Preferred
                  Stock**
 
 *Redeemable
        Series A Convertible Preferred Stock*
 
 In
        January 2006, 500,439 warrants to purchase Series A Preferred Stock were
        exercised at $0.274 per share for an aggregate purchase price of
        $137,120.
 
 In
        connection with the Exchange Agreement (Note 9), all of Advocates outstanding
        Redeemable Series A Convertible Preferred Stock was exchanged on a one-for-one
        basis for newly issued common stock of Flagship. At December 31, 2006 there
        were
        no shares of Redeemable Series A Convertible Preferred Stock authorized and
        no
        shares issued and outstanding.
 
 *Redeemable
        Series B Convertible Preferred Stock*
 
 In
        connection with the Exchange Agreement (Note 9), all of Advocates outstanding
        Redeemable Series B Convertible Preferred Stock was exchanged on a one-for-one
        basis for newly issued common stock of Flagship. At December 31, 2006 there
        were
        no shares of Redeemable Series B Convertible Preferred Stock authorized and
        no
        shares issued and outstanding.
  F-19
 **Flagship
            Global Health, Inc. and Subsidiary**
 **(Formerly
            known as Patients & Physicians, Inc., formerly known as Finity Holdings,
            Inc.)**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**
 **9.**
              **Exchange
                  Agreement**
 
 On
        January 30, 2006, Advocates entered into a Share Exchange Agreement (the
“Share
        Exchange”) with Flagship. The closing of this agreement took place on June 27,
        2006. After the closing of the Share Exchange, the minority Flagship
        shareholders own 174,130 shares, less than 1% of Flagship’s common stock.
        Flagship acquired all of the issued and outstanding capital stock of Advocates
        from the Advocates stockholders on a one-for-one basis in exchange for an
        aggregate of 55,710,255 newly-issued shares of Flagship’s common stock (the
“Exchange”). Upon completion of the Exchange, Flagship ceased to be a shell
        company and the operations of Advocates are the only operations of Flagship.
        Since the stockholders of Advocates received the majority of the voting shares
        of Flagship, Flagship will carry on the business of Advocates, and the officers
        and directors of Advocates are the officers and directors of Flagship, the
        transaction has been accounted for as Advocates being the accounting acquirer
        and Flagship being the accounting acquiree. Since Flagship is a non-operating
        shell corporation and does not fall within 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* ,
        (“EITF
        98-3”), the transaction is equivalent to Advocates issuing stock for the net
        liabilities of Flagship accompanied by a recapitalization. The accounting
        is
        identical to that resulting from a reverse acquisition, except that there
        are no
        adjustments to the historical carrying values of the assets and liabilities
        of
        Flagship.
 
 **10.**
              **Capital
                  Stock**
  *Interim
        Financing*
 
 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
        will
        receive warrants to purchase one share of the Company’s common stock for every
        two shares of common stock purchased.
 
 As
        of
        December 31, 2006, the Company had sold 1,100,000 shares of its common stock
        and
        warrants to purchase 550,000 shares of common stock for an aggregate of
        $2,200,000 related to the Interim Financing.
 
 In
        January 2007, the Company sold an additional 565,000 shares of its common
        stock
        and issued warrants to purchase 282,500 shares of common stock for an aggregate
        of $1,130,000 related to the Interim Financing.
 
 *Apollo
        Note Conversion*
 
 Once
        the
        Company has raised $4,000,000 in the Interim Financing, if ever, the Apollo
        Notes (Note 7) will convert to equity on the same terms and conditions as
        the
        Interim Financing.
  F-20
 **Flagship
            Global Health, Inc. and Subsidiary**
 **(Formerly
            known as Patients & Physicians, Inc., formerly known as Finity Holdings,
            Inc.)**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**
 **11.**
              **Commitments
                  and contingencies**
 
 *Pending
        litigation*
 
 A
        former
        independent contractor (the “Plaintiff”) has filed a lawsuit against the
        Company. The Plaintiff alleges that he was promised employment with the Company
        and performed services to the Company 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
        that
        could reach 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 a material impact on the
        consolidated financial statements of the Company.
  *Leases*
 
 The
        Company leases office space under operating leases, which expire through
        December 31, 2016. As of December 31, 2006, future minimum annual payments
        under
        these leases were as follows:
 
 2007
              
              $
              934,0002008
              
              
              1,041,0002009
              
              
              1,044,0002010
              
              
              1,070,0002011
              
              
              764,000Thereafter
              
              
              2,715,000$
              7,568,000
  Rent
        expense is recognized over the term of the lease on a straight-line basis.
        Total
        rent expense was $555,899 and $286,084 for the years ended December 31, 2006
        and
        2005, respectively.
 
 Pursuant
        to the terms of a sublease, the Company receives sublease income relating
        to
        certain space vacated in 2006. Such sublease income is approximately $317,000,
        $323,000, $329,000 and $307,000 in 2007, 2008, 2009 and 2010, respectively,
        which approximates the rent expense related to such space and is for the
        remaining term of the lease.
 
 **12.**
              **Acquisition**
  On
        July
        12, 2006, the Company entered into an Asset Purchase Agreement (the “PEMMS
        Agreement”) with PEMMS Limited (“PEMMS”), an early-stage technology company
        focusing on the electronic personal health record market. Pursuant to the
        PEMMS
        Agreement, the Company acquired certain assets, including principally the
        software and intellectual property for a proprietary secure web-based repository
        wherein an individual can store and retrieve, among other things, his/her
        own
        medical records. The Company also acquired certain contracts and equipment
        belonging to PEMMS. In exchange for the assets the Company issued PEMMS 300,000
        newly issued shares of its common stock.
  The
        Company evaluated the guidance outlined in EITF 98-3 in determining whether
        the
        PEMMS transaction is the purchase of a business or an asset purchase. EITF
        98-3
        provides that if the transfer is comprised of (a) inputs, (b) processes applied
        to those inputs, and (c) resulting outputs that are used to generate revenues
        of
        a business it is considered a business combination and not an asset purchase.
        Considering that the assets transferred in the PEMMS Agreement included all
        of
        the elements necessary to allow the Company to continue to conduct operations
        and that all the employees of PEMMS have been hired by the Company, the
        transaction has been treated as a business combination.
  Under
        the
        purchase method of accounting, the assets and liabilities acquired by the
        Company from PEMMS are recorded and added to those of the Company at their
        fair
        value as of the acquisition date. Further, the results of operations of such
        assets have been included with those of the Company since the date of
        acquisition.
  F-21
 **Flagship
            Global Health, Inc. and Subsidiary**
 **(Formerly
            known as Patients & Physicians, Inc., formerly known as Finity Holdings,
            Inc.)**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**
 The
        purchase price consists of the fair value of the newly issued common stock
        issued in connection with the acquisition which has been valued at $186,000,
        based on the Company’s evaluation of the fair value of it's common stock issued
        in exchange for the assets (Note 17).
  The
        fair
        value of the net assets assumed in the purchase have been allocated in the
        following manner:
  Asset
              
              ValueNet
                  fixed assets
              
              $
              8,088Software
                  technology
              
              
              61,000Customer
                  Relationships
              
              
              55,000Goodwill
              
              
              61,912Total
                  assets
              
              $
              186,000
  Summarized
        below are the unaudited pro forma condensed consolidated results of operations
        for the years ended December 31, 2006 and 2005 as if the results of PEMMS
        were
        included for the entire periods presented. The unaudited pro forma results
        may
        not be indicative of the results that would have occurred if the acquisition
        had
        been completed at the beginning of the period presented or which may be obtained
        in the future:
 
 Year
                  Ended December 31,2006
              
              2005Revenue
              
              $
              73,419
              
              $
              139,346Total
                  costs and expenses
              
              
              (13,241,276
              )
              
              (7,817,319
              )Net
                  loss
              
              
              (13,167,857
              )
              
              (7,677,973
              )Accretion
                  of preferred stock
              
              
              (193,858
              )
              
              (23,728
              )Net
                  loss attributable to common stockholders
              
              $
              (13,361,715
              )
              $
              (7,701,701
              )Weighted
                  average number of shares outstanding, basic and diluted
              
              
              49,561,621
              
              
              34,369,022Net
                  loss per share, basic and diluted
              
              $
              (0.27
              )
              $
              (0.22
              )
  After
        the
        acquisition of PEMMS assets, all intercompany balances and activities between
        PEMMS and the Company eliminate in consolidation.
  F-22
 **Flagship
            Global Health, Inc. and Subsidiary**
 **(Formerly
            known as Patients & Physicians, Inc., formerly known as Finity Holdings,
            Inc.)**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**
 **13.**
              **Retirement
                  Plan**
 
 *Defined
        Contribution Plan*
  The
        Company has a 401(k) Profit Sharing Plan (the “Plan”) available for
        substantially all employees who have been with the Company for a minimum
        of **** six
        months. Employees may contribute up to the annual Internal Revenue Service
        dollar limit. Company contributions to the Plan are at the discretion of
        the Company.  The Company has not made any contributions to the Plan to
        date.
  **14.**
              **Income
                  Taxes**
 
 A
        reconciliation of the statutory U.S. federal income tax rate to the
        Company’s effective tax was as follows:
 
 Years
                  Ended December 31,2006
              
              2005Statutory
                  U.S. rate
              
              
              34.0
              %
              
              34.0
              %State
                  and city income taxes, net of federal benefit
              
              
              11.0
              %
              
              11.0
              %Non-deductible
                  stock based compensation expense
              
              
              (3.1
              %)
              
              0
              %Effect
                  of valuation allowance
              
              
              (41.9
              %)
              
              (45.0
              %)Total
                  income tax expense (benefit)
              
              
              0.0
              %
              
              0.0
              %
  Significant
        components of the Company’s deferred tax assets at December 31, 2006 are as
        follows:
 
 2006Net
                  operating loss carry-forwards
              
              $
              9,276,000Stock-based
                  compensation expense
              
              
              938,500Impairment
                  of assets
              
              
              227,400Beneficial
                conversion feature
              
              
              (387,200
              )Deferred
                  rent
              
              
              122,700Other,
                  net
              
              
              10,400Deferred
                  tax assets, net
              
              
              10,187,800Effect
                  of valuation allowance
              
              
              (10,187,800
              )Net
                  deferred tax assets
              
              $
              -
  F-23
 **Flagship
            Global Health, Inc. and Subsidiary**
 **(Formerly
            known as Patients & Physicians, Inc., formerly known as Finity Holdings,
            Inc.)**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**
 The
        following table summarizes the change in the valuation allowance:
 
 Years
                  Ended December 31,2006
              
              2005Valuation
                  allowance at beginning of year
              
              $
              (5,125,300
              )
              $
              (1,718,100
              )Charged
                  to provision for income taxes
              
              
              (5,062,500
              )
              
              (3,407,200
              )Valuation
                  allowance at end of year
              
              $
              (10,187,800
              )
              $
              (5,125,300
              )
  At
        December 31, 2006, the Company had net operating loss (“NOL”)
        carry-forwards of approximately $20,614,000, which expire through 2026, subject
        to certain limitations. A full valuation allowance has been established because
        of the uncertainty regarding the Company’s ability to generate income sufficient
        to utilize the tax losses during the carryforward period.
  Under
          the
          provision of EITF No. 05-08, Income Tax Consequences of Issuing Convertible
          Debt
          with a Beneficial Conversion Feature (“EITF" No. 05-08"), the beneficial
          conversion feature results in a temporary basis difference for the purpose
          of
          applying SFAS 109, Accounting for Income Taxes ("SFAS 109"). The EITF reached
          a
          consensus that requires the temporary difference to be recorded as an adjustment
          to paid-in-capital. The deferred tax benefit resulting from the
          amortization of the beneficial conversion feature has been fully reserved
          for
          because of the lack of objective evidence supporting its realization. When,
          and
          if, such amounts become realizable they will be recorded as a component
          of
          paid-in-capital.
 **15.**
              **Warrants**
 
 Outstanding
        warrants issued in connection with financings consist of the following at
        December 31, 2006:
 
 Warrants
              
              Exercise
                  Price
              
              ExpirationLaurus
                  warrants to purchase common stock
              
              
              621,118
              
              $
              0.92
              
              
              1/31/2013Guarantor
                  warrants to purchase common stock
              
              
              465,839
              
              $
              0.92
              
              
              1/31/2013Junior
                  Note Holder warrants to purchase common stock
              
              
              815,217
              
              $
              0.92
              
              
              1/31/2013Warrants
                  issued in connection with the Interim Financing
              
              
              550,000
              
              $
              1.00
              
              
              Various2,452,174
 
 All
        of
        the Series A Preferred Stockholders’ Warrants that were outstanding as of the
        Exchange (Note 8) were cancelled pursuant to the terms of the warrant
        agreements.
 
 **16.**
              **Related
                  Party Transactions**
 
 In
        March
        2005, Flagship issued 3,031,250 shares of common stock to certain members
        of
        management to settle $606,250 of compensation costs accrued during the year
        ended December 31, 2004. The stock was issued at $0.525 per share and resulted
        in additional compensation expense of approximately $985,156. The individuals
        receiving common stock included Fred F. Nazem, co-founder, Chairman and Chief
        Executive Officer, Dr. Stephen J. O’Brien, co-founder and former officer,
        Richard Howard, director and former President, and Dr. Benjamin Safirstein,
        director and EVP- Chief Medical Officer of the Company.
  Mr.
        Fred
        F. Nazem, is the sole stockholder and President of Nazem, Inc. From its
        inception through August 2005, Flagship occupied space in the Nazem, Inc.
        offices. During that time, Flagship paid monthly rent of $5,940 to Nazem,
        Inc.
        for the use of such space. In addition, Nazem, Inc. incurred certain operating
        expenses on behalf of Flagship and Flagship reimbursed Nazem, Inc., for the
        payment of such expenses on its behalf.
  F-24
 **Flagship
            Global Health, Inc. and Subsidiary**
 **(Formerly
            known as Patients & Physicians, Inc., formerly known as Finity Holdings,
            Inc.)**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**
 On
        several occasions during the past two years, Fred F. Nazem made loans to
        Flagship for working capital needs. The following summarizes these loans
        and
        their status: (i) a loan of $250,000 was made in December 2004 and repaid
        in
        February 2005; (ii) a loan of $10,000 was made in January 2005 and was repaid
        in
        August 2006; (iii) loans of $200,000 made in July 2005, $500,000 made in
        August
        2003 and $300,000 was made in September 2005; all of which were converted
        into
        the Junior Convertible Notes.
  In
        July
        2005, OldIron Sports and Entertainment Company, Inc. loaned Flagship $500,000.
        This loan was converted into the Junior Convertible Notes. Mr. John H. Flood,
        III, President of the Company, owns 50% of OldIron Sports and Entertainment
        Company, Inc.
  In
        December 2005, Mr. John H. Flood, III loaned Flagship $75,000 for working
        capital purposes. This loan was repaid in February 2006.
  In
        November 2005, Dr. Benjamin Safirstein, Director and EVP- Chief Medical Officer,
        loaned Flagship $50,000. This loan was converted into the Junior Convertible
        Notes.
  As
        part
        of the Laurus Convertible Note, Fred F. Nazem and John H. Flood, III and
        certain
        shareholders (the “Guarantors”) of the Company, provided a limited guarantee of
        the Company’s obligation to Laurus. The Guarantors received an aggregate of
        1,951,596 shares of Common Stock and warrants to purchase 465,839 shares
        of
        Common Stock, valued at $176,767, for providing such guaranty.
  In
        January 2006, Dr. Mark Gardy and Dr. Roger London, employees of Flagship,
        each
        loaned the Flagship $100,000. These loans were converted into the Junior
        Convertible Notes.
  **17.**
              **Changes
                  in Accounting Estimates**
  During
        2006, management initially estimated the fair value of the Company’s common
        stock as a private company based on recent financing transactions. In the
        last
        quarter of 2006 the Company re-evaluated the fair value of its common stock
        in
        connection with an acquisition (Note 12). Based on the outcome of this
        valuation, management changed its initial estimated fair value of the Company’s
        common stock from $0.90 to an estimated fair value of $0.62.
 
 The
        effect of this change on the Company’s consolidated balance sheet as of December
        31, 2006 and its consolidated statement of operations for the year ended
        December 31, 2006 are summarized below:
 
 Increase(decrease)Loss
                  from operations
              
              $
              (1,627,183
              )Net
                  loss
              
              $
              (1,627,183
              )Loss
                  per share
              
              $
              (.03
              )Notes
                  payable
              
              $
              834,679Goodwill
              
              $
              (84,000
              )Deficit
                  accumulated during the development stage
              
              $
              (1,627,183
              )
  F-25
 **Flagship
            Global Health, Inc. and Subsidiary**
 **(Formerly
            known as Patients & Physicians, Inc., formerly known as Finity Holdings,
            Inc.)**
 **(A
            Development Stage Company)**
 **Notes
            to Consolidated Financial Statements**
 **18.**
              **Supplemental
                  Disclosure of Non-Cash Investing and Financing
                  Activities**
 
 Years
                  Ended December 31,
              
              For
                  the period from inception (July 9, 2002) to2006
              
              2005
              
              December
                  31, 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
              
              $
              160,241
              
              $
              19,473
              
              $
              195,937Accretion
                  of Redeemable Series B Convertible Preferred Stock
              
              $
              33,617
              
              $
              4,255
              
              $
              37,872Common
                  stock issued in lieu of compensation
              
              $
              -
              
              $
              1,591,406
              
              $
              1,591,406Conversion
                  of Redeemable Series A Convertible Preferred Stock and Redeemable
                  Series B
                  Convertible Preferred Stock to common stock
              
              $
              5,509,605
              
              $
              -
              
              $
              5,509,605Issuance
                  of shares in connection with acquisition
              
              $
              (76
              )
              $
              -
              
              $
              (76
              )Issuance
                  of common stock in connection with financing
              
              $
              1,951
              
              $
              -
              
              $
              1,951Issuance
                  of shares to a broker in connection with the share
                  exchange
              
              $
              1,200
              
              $
              -
              
              $
              1,200Cancellation
                  of founders’ shares
              
              $
              -
              
              $
              -
              
              $
              3,510Allocation
                  of value to common stock, issued in connection with the PEMMS
                  Agreement
              
              $
              186,000
              
              $
              -
              
              $
              186,000Allocation
                  of value to common stock, issued in connection with convertible
                  debt
                  financings
              
              $
              3,135,698
              
              $
              -
              
              $
              3,135,698Allocation
                  of warrants issued in connection with convertible debt
                  financings
              
              $
              457,671
              
              $
              -
              
              $
              457,671Allocation
                  of warrants issued in connection with the interim
                  financing
              
              $
              594,000
              
              $
              -
              
              $
              594,000Allocation
                  of value to beneficial conversion feature in connection with convertible
                  debt financings
              
              $
              1,695,111
              
              $
              -
              
              $
              1,695,111Conversion
                of short term notes into Junior
                convertible notes
              
              $
              3,000,000
              
              $
              -
              
              $
              3,000,000
 
 F-26