UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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                                    FORM 10-Q

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

                   For the quarter period ended June 30, 2006

                                       OR

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

                    For the transition period from ___ to ___

                           Commission File No. 0-27654

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                   LONG ISLAND PHYSICIAN HOLDINGS CORPORATION
             (Exact name of registrant as specified in its charter)

              New York                                   11-3232989
    (State or other jurisdiction                      (I.R.S. Employer
  of incorporation or organization)                Identification Number)

    One Huntington Quadrangle Suite 4C-01
             Melville, New York                             11747
  (Address of principal executive offices)               (Zip Code)

       Registrant's telephone number, including area code: (631) 454-1900

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

                      Class A Common Stock, par value $.001
                      Class B Common Stock, par value $.001

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the issuer was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes [ ] No [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined under Rule 12b-2 of the Act). Yes __ No [X]

Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock, as of the latest practicable date: As of June 30, 2006 there were
1,798 shares of Class A common stock and 4,044 shares of Class B common stock
outstanding.


<PAGE>

                                TABLE OF CONTENTS

                                                                        Page No.
                                                                        --------

PART I     FINANCIAL INFORMATION

Item 1.    Financial Statements

           Consolidated Balance Sheets                                         3
           Consolidated Statements of Operations (unaudited)                   4
           Consolidated Statements of Cash Flows (unaudited)                   5
           Notes to Consolidated Financial Statements (unaudited)            6-9

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                        9-14

Item 3.    Quantitative and Qualitative Disclosures
           about Market Risk                                                  14

Item 4.    Controls and Procedures                                         14-15

PART II    OTHER INFORMATION

Item 6.    Exhibits                                                           16

SIGNATURES, and CERTIFICATIONS                                             17-21


                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                   Long Island Physician Holdings Corporation
                          Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                               June 30,
                                                                                                 2006                   December 31,
Assets                                                                                       (unaudited)                    2005
                                                                                             ------------              ------------
<S>                                                                                          <C>                       <C>
Cash                                                                                         $  1,095,999              $  2,141,929

Premium receivables (net of allowances of approximately
$1,250,000 in 2006 and $1,295,000 in 2005)                                                      4,115,212                 5,280,579

   Reinsurance recoverables                                                                       231,446                   317,413
   Payments in excess of capitation                                                             2,300,000                 2,500,000
   Prepaid expenses and other current assets                                                    2,882,793                 3,583,882
                                                                                             ------------              ------------

     Total current assets                                                                      10,625,450                13,823,803
 Property plant and equipment, net                                                                219,425                   275,447
 Restricted cash and cash investments                                                           5,975,965                 5,911,795
 Payments in excess of capitation, net of allowances of
       $3,000,000 in 2006 and 2005                                                             10,789,838                11,497,164
                                                                                             ------------              ------------
     Total assets                                                                            $ 27,610,678              $ 31,508,209
                                                                                             ============              ============
Liabilities and Stockholders' Deficit:
   Medical claims payable                                                                    $ 22,897,098              $ 22,416,881
   Public goods payable                                                                         5,163,831                 4,746,035
   Unearned premium revenue                                                                     1,966,804                 1,885,792
   Accounts payable and accrued expenses                                                        2,176,666                 2,495,243
                                                                                             ------------              ------------
     Total current liabilities                                                                 32,204,399                31,543,951
Note payable and accrued interest                                                               3,690,475                 3,599,259
                                                                                             ------------              ------------
     Total liabilities                                                                         35,894,874                35,143,210
                                                                                             ------------              ------------

Stockholders' deficit
     Class A common stock, $.001 par value;
          10,000 shares authorized, 1,798 issued
          and outstanding                                                                               2                         2
     Class B common stock, $.001 par value;
          25,000 shares authorized, 4,044 issued
          and outstanding                                                                               4                         4
Additional paid-in capital                                                                     11,478,536                11,478,536
Accumulated deficit                                                                           (19,762,738)              (15,113,543)
                                                                                             ------------              ------------

     Total stockholders' deficit                                                               (8,284,196)               (3,635,001)
                                                                                             ------------              ------------

     Total liabilities and stockholders' deficit                                             $ 27,610,678              $ 31,508,209
                                                                                             ============              ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       3
<PAGE>

                   Long Island Physician Holdings Corporation
                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                Three months ended                      Six months ended
                                                                      June 30,                               June 30,
                                                          ------------------------------      -------------------------------------
                                                               2006              2005              2006                   2005
                                                               ----              ----              ----                   ----
                                                                    (unaudited)                            (unaudited)
<S>                                                       <C>               <C>               <C>                      <C>
Revenue:
  Premiums earned                                         $ 23,708,074      $ 29,464,966      $ 46,879,601             $ 59,352,947
                                                          ------------      ------------      ------------             ------------

Expenses:
  Medical services expense                                  22,605,882        25,418,827        43,500,374               50,601,171
  Commissions expense                                        1,194,128         1,223,896         2,380,524                2,469,093
  General and administrative expenses                        2,647,201         3,146,615         5,732,558                6,480,705
                                                          ------------      ------------      ------------             ------------

  Total expenses                                            26,447,211        29,789,338        51,613,456               59,550,969
                                                          ------------      ------------      ------------             ------------

Operating loss                                              (2,739,137)         (324,372)       (4,733,855)                (198,022)
   Investment and other income                                  43,322            28,590            86,615                   77,463
                                                          ------------      ------------      ------------             ------------

   Loss before income taxes
       and minority interest                                (2,695,815)         (295,782)       (4,647,240)                (120,559)

Benefit (Provision) for income taxes                             1,599            (1,500)           (1,955)                  (4,450)
Minority interest in loss
     of subsidiary                                                --             114,193              --                     40,593
                                                          ------------      ------------      ------------             ------------
   Net (loss)                                               (2,694,216)         (183,089)       (4,649,195)                 (84,416)
                                                          ============      ============      ============             ============

   Basic and diluted loss per share                       $    (461.18)     $     (31.34)     $    (795.82)            $     (14.45)
   Basic and diluted weighted average shares                      5842              5842              5842                     5842
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       4
<PAGE>

                   Long Island Physician Holdings Corporation
                      Consolidated Statements of Cash Flows
                     Six months Ended June 30, 2006 and 2005

<TABLE>
<CAPTION>
                                                                                                         Six months ended
                                                                                                             June 30,
                                                                                                     2006                    2005
                                                                                                     ----                    ----
                                                                                                  (unaudited)            (unaudited)

<S>                                                                                              <C>                    <C>
Cash flows from operating activities:

Net loss                                                                                         $(4,649,195)           $   (84,416)
Adjustment to reconcile net loss to net cash (used in)
provided by operating activities:
     Depreciation                                                                                     59,897                 53,381
     Minority interest in loss of subsidiary                                                            --                  (40,593)
Changes in operating assets and liabilities:
     Payments in excess of capitation                                                                907,326                803,477
     Reinsurance recoverable                                                                          85,967                 65,031
     Premium receivables                                                                           1,165,367             (1,379,579)
     Prepaid expenses and other current assets                                                       701,089               (171,467)
     Medical claims payable                                                                          480,217                941,238
     Public goods payable                                                                            417,796               (318,149)
     Unearned premium revenue                                                                         81,012                360,292
     Accounts payable and accrued expenses and accrued interest                                     (227,361)              (206,026)
                                                                                                 -----------            -----------
Net cash (used in) provided by operating activities                                                 (977,885)                23,279
                                                                                                 -----------            -----------
Cash flows from investing activities:
Increase in restricted cash and investments                                                          (64,170)               (39,167)
Purchase of property and equipment                                                                    (3,875)               (40,092)
                                                                                                 -----------            -----------
Net cash used in investing activities                                                                (68,045)               (79,259)
                                                                                                 -----------            -----------
Net change in cash and cash equivalents                                                           (1,045,930)               (55,980)

Cash beginning of period                                                                           2,141,929              1,334,326
                                                                                                 -----------            -----------
Cash end of period                                                                               $ 1,095,999            $ 1,278,346
                                                                                                 ===========            ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements


                                       5
<PAGE>

                   Long Island Physician Holdings Corporation

                   Notes to Consolidated Financial Statements

1. BASIS OF PRESENTATION

      Background

      Long Island Physician Holdings Corporation (the "Company" or "LIPH") was
formed in December 1994 in the State of New York as a holding company to advance
the delivery of healthcare on Long Island, New York. The Company is owned by
individual physicians residing in New York State. The accompanying consolidated
financial statements include the activity of the Company and its majority owned
subsidiary, MDNY HealthCare, Inc. ("MDNY"), an independent practice association
model health maintenance organization ("HMO") that operates in Nassau and
Suffolk counties. The Company owns 67% of the stock of MDNY. The Company is
exclusively a holding company whose principal asset is its investment in MDNY
and conducts no operating activities of its own. Catholic Healthcare Network of
Long Island, Inc. ("CHNLI") owns the remaining 33% of the stock in MDNY. MDNY
commenced operations in 1996 At June 30, 2006, MDNY had 26,887 members,
comprised of individuals and families, enrolled in its health maintenance plans
and point-of-service plans.

      The Company is affiliated with LIPH, LLC (the "LLC"), a New York limited
liability company formed in December 1996. Upon the formation of the LLC, the
shareholders of the Company owned all of the membership interests in the LLC.
The assets of the LLC consist of the stock in three independent practice
associations, Island Practice Association, I.P.A., Inc. ("Island IPA"), Island
Behavioral Health Association IPA, Inc. (currently inactive) and Island Dental
Professional Association IPA, Inc. MDNY has entered into various contractual
arrangements with the IPAs to arrange for the provision of applicable health
care and administrative services to the Members of MDNY.

      The interim consolidated financial statements reflect all adjustments,
which, in the opinion of management, are necessary for a fair statement of
financial condition and results of operations for the periods presented. Except
as otherwise disclosed, all such adjustments are of a normal recurring nature.
The interim consolidated financial statements have been compiled without audit.
Operating results for the interim periods are not necessarily indicative of the
results that may be expected for the full year. These interim consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements included in the Company's 2005 Annual Report on Form 10-K.
The Company's legal, accounting and other professional costs are funded by MDNY.

      Earnings Per Share

      Basic and diluted income (loss) per share is based on the number of shares
of Class A common stock and Class B common stock outstanding during the period.
At June 30, 2006 and December 31, 2005, the Company had no outstanding stock
options or other common stock equivalents.

      New Accounting Standards

      In September 2006, the FASB issued Statement of Financial Accounting
Standard No. 157, "Fair Value Measurements" ("FAS 157"). FAS 157 provides a
definition of fair value, establishes acceptable methods of measuring fair value
and expands disclosures for fair value measurements. The principles apply under
accounting pronouncements which require measurement of fair value. The Company
does not expect the adoption of FAS 157 to have a material impact on its
financial statements.

      In September 2006, Financial Accounting Standards Board ("FASB") issued
FAS 158, Employers' Accounting for Defined Benefit Pension and Other
Postretirement Plans - an Amendment of FASB Statements No. 87, 88, 106 and
132(R) ("FAS 158"). FAS 158 requires an employer that is a business entity and
sponsors one or more single employer benefit plans to (1) recognize the funded
status of the benefit in its statement of financial position, (2) recognize as a
component of other comprehensive income, net of tax, the gains or losses and
prior service costs or credits that arise during the period, but are not
recognized as components of net periodic benefit cost, (3) measure defined
benefit plan assets and obligations as of the date of the employer's fiscal year
end statement of financial position and (4) disclose in the notes to financial
statements additional information about certain effects on net periodic benefit
cost for the next fiscal year that arise from delayed recognition of the gains
or losses, prior service costs on credits, and transition asset or obligations.
The Company offers to the employees a Defined Contribution Plan and therefore
this statement will have no affect to the Company. The Company does not match or
contribute to the Plan.

      In June 2006, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 applies to all tax positions accounted for under SFAS No. 109,"


                                       6
<PAGE>

Accounting for Income Taxes" and defines the confidence level that a tax
position must meet in order to be recognized in the financial statements. The
interpretation requires that the tax effects of a position be recognized only if
it is "more-likely-than-not" to be sustained by the taxing authority as of the
reporting date. If a tax position is not considered "more-likely-than-not" to be
sustained then no benefits of the position are to be recognized. FIN 48 requires
additional disclosures and is effective as of the beginning of the first fiscal
year beginning after December 15, 2006. The Company does not expect the adoption
of FIN 48 to have a material impact on its financial statements.

      In September 2006, the SEC issued Staff Accounting Bulletin No. 108,
"Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements" ("SAB 108"). SAB 108
provides guidance on how prior year misstatements should be taken into
consideration when quantifying misstatements in current year financial
statements for purposes of determining whether the current year's financial
statements are materially misstated. SAB 108 permits registrants to record the
cumulative effect of initial adoption by recording the necessary "correcting"
adjustments to the carrying values of assets and liabilities as of the beginning
of that year with the offsetting adjustment recorded to the opening balance of
retained earnings only if material under the dual method. SAB 108 is effective
for fiscal years ending on or after November 15, 2006. The Company does not
expect the adoption of SAB 108 to have a material impact on its financial
statements.

      As of December 2005, the Company's financials do not reflect CHNLI's one
third stock ownership in MDNY as minority interest. As a result of the
cumulative operating losses of MDNY, CHNLI's interest in the company was
negative as of December 31, 2005. Negative minority interest is not allowable
under GAAP. Therefore, LIPH, has recorded the full amount of the operating
losses sustained by MDNY for the six months ended 2006.

Going Concern and Recent Developments

      The Company's financial statements have been presented on the basis that
it will continue as a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. The
Company has reported a $4.6 million loss for the six months ended June 30, 2006,
has a substantial working capital deficit, and has incurred cumulative losses
since inception and continues to decline in enrollment. Furthermore, the Company
has utilized substantially all of the cash raised in its initial equity infusion
in funding operations and currently does not meet its New York State contingent
reserve funding requirement.

      For the six months ended June 30, 2006, the Company reported a loss of
$4,649,195. This loss was the result of higher than anticipated medical costs
through the second quarter of 2006. MDNY's medical loss ratio was 92.8 % and
85.2%, respectively, for the six months ended June 30, 2006 and 2005
respectively. As of June 30, 2006 and 2005 enrollment was 26,887 and 32,792
respectively. Catholic Health Services of Long Island, Inc. ("CHSLI"), an
affiliate of CHNLI, on behalf of five catholic hospitals that act as providers
to MDNY (the "Hospitals"), did not renew the respective Hospital subscriber
contracts with MDNY upon expiration thereof on January 1, 2006, resulting in the
loss of approximately 6,000 members. MDNY's negative working capital deficit
increased from approximately $17.7 million at December 31, 2005 to approximately
$21.6 million at June 30, 2006. This increase is primarily the result of
operating losses for the six months ended June 30, 2006.

      The Company's ability to achieve profitability, and ensure its long-term
survival, depends on MDNY's ability to successfully complete a transaction with
one or more third party investor(s) to recapitalize MDNY and allow MDNY to
develop and market "new" competitive high deductible products that MDNY
currently is prohibited from selling due to its existing licensure and financial
condition. Any such transaction would likely involve the issuance by MDNY of a
controlling equity interest to a new investor and substantial dilution to the
Company and CHNLI, MDNY's existing shareholders. MDNY anticipates that any
acceptable proposal would likely contemplate the issuance to the new investor(s)
of 90% or more or MDNY's outstanding stock. MDNY is considering proposals from
potential equity investors and continues to work with a financial advisor to
effect a potential transaction and implement programs to reduce administrative
and medical costs. There is no assurance that any equity investment will be
completed on terms acceptable to MDNY (or, if necessary, its shareholders) or
approved by the New York State Insurance Department ("NYSID").

      In the second quarter 2005, the NYSID conducted a market conduct audit of
MDNY for fiscal years 2002 through 2004 with a primary audit focus on year ended
2004. On July 12, 2006, NYSID issued its Report on Examination as of December
31, 2004. The Report concluded that as of December 31, 2004, MDNY was insolvent
in the amount of $11,937,000 and its contingent reserve fund was impaired in the
amount of $18,680,000. Based on the Report, NYSID found that the "continued
operation of MDNY in an impaired state represents a hazard to policyholders and
claimants." NYSID directed MDNY to cure the impairment within 15 days of the
letter, failing which the Superintendent may proceed against MDNY pursuant to
Article 74 of the New York Insurance Law which would govern any court supervised
liquidation of MDNY. In


                                       7
<PAGE>

late August 2006, MDNY and NYSID met to discuss the financial condition of MDNY
and the status of potential transactions. MDNY has received no further
communication from NYSID.

Potential Obligations with Respect to New York Market Stabilization Pools

      MDNY is subject to certain state-regulated risk allocation pools
("Stabilization Pools") created by NYSID. The Stabilization Pools are designed
to encourage insurers to remain in or enter the small group and individual
health insurance markets and protect all insurers and health maintenance
organizations ("HMO") in those markets from extreme losses due to open
enrollment of persons for coverage who are very ill or have a history of poor
health. Under NYSID Regulation 146, as amended ("Regulation 146"), certain
insurers and HMOs participating in those markets in New York State are required
either to make payments to or receive payments from the Stabilization Pools
based upon criteria stated in Regulation 146.

      On July 13, 2005, NYSID notified MDNY as follows:

            "Due to the financially impaired status of MDNY at this time, the
            Insurance Department is not imposing any liability on MDNY for
            payments to the SMC Pools under the Fourth Amendment to Regulation
            146 [citation omitted] for years 1999 through 2004 other than the
            deposits for estimated SMC contributions previously remitted by MDNY
            for 1999 and 2000. However, please be advised that the Insurance
            Department will continue to evaluate MDNY's financial condition and
            its impact on any liabilities under the pools for 2005, and for
            future years."

      The effect of the July 13 notice is to relieve MDNY from liability under
Regulation 146 with respect to 1999 through 2004, to forfeit deposits of
$318,625 and $300,000 made by MDNY with respect to 1999 and 1998, and to leave
open the possibility of liability under Regulation 146 with respect to 2005 and
subsequent years.

      In October 2006, NYSID released the Fifth Amendment to Regulation 146
which outlines a new high cost claim based market stabilization process for
individual and small group policies. This amendment states that there will be no
payments to the pools, or collections from the pools under this Section of the
law for 2005 or 2006. Payments or distributions will be made from the pools in
2008 based upon actual premium and claims data received by the Department for
calendar year 2007. The Department has requested 2005 data for advisory purposes
only. Data for 2006 and all subsequent years is due by January 31 of the
following year. NYSID anticipates releasing estimates to carriers in 2007 based
upon 2006 data. There can be no assurance that NYSID will determine that MDNY
does not have significant payment obligations to the Stabilization Pools with
respect to 2007 and subsequent years. Any definitive determination by NYSID that
MDNY has significant payment obligations with respect to the Stabilization Pools
for such years would have a material adverse effect on the business and
financial condition and operations of MDNY and the Company.

Recovery and Subordination Agreement

      With NYSID's approval, MDNY, Island IPA and CHSLI, entered into a Recovery
and Subordination Agreement (the "Recovery and Subordination Agreement"), dated
July 12, 2001 and effective January 1, 2002. The Recovery and Subordination
Agreement provides, among other things, as follows: (i) Island IPA is required
to pay the Island Debt pursuant to a Repayment Plan whereby Island IPA is
obligated to withhold, and remit to MDNY, 5% of all payments due to Island IPA
participating providers (the "IPA Withhold"), MDNY will make claims payments to
Island IPA or its participating providers on a fee-for-service basis, MDNY is
required to pay Island IPA a $1.50 per member per month network access fee, and
Island IPA is required to pay to MDNY the net revenue it receives from sources
other than MDNY; (ii) until the Island Debt is repaid, Island IPA, Island IPA's
participating providers and the Hospitals agreed (a), in the event that MDNY
becomes insolvent (pursuant to a court approved order or admits its inability to
pay its debts), to subordinate their rights to payment by MDNY of outstanding
claims (including IBNR) to all other outstanding claims in an amount equal to
the amount of the then outstanding Island Debt, and (b) that, after payment of
third party claims, the claims of Island IPA and its providers will be
subordinated to the claims of the Hospitals; and (iii) the amount of the Island
Debt outstanding from time to time will be carried on the financial statements
of MDNY as an admitted asset. The aggregate amount owed by MDNY to the
subordinating parties in the form of medical claims payable was approximately
$15.1 million and $14 million as of June 30, 2006 and December 31,2005,
respectively.

      MDNY recognized an initial receivable of approximately $23.2 million,
which represented actual claims paid in 2001 to Island IPA participating
providers with dates of service prior to January 1, 2001. As of June 30, 2006
and December 31, 2005 the Island Debt was $13.1 million and $14 million
respectively. Island Debt is recorded net of a reserve of $3,000,000 which
represented the difference in the amount owed to MDNY compared to the amount of
claims subordinated in medical claims payable and was recorded at December 31,
2005. As a result of the operating losses through the six months ended June 30,


                                       8
<PAGE>

2006, the claim lag has increased and the result is that a larger amount IPA and
CHSLI claims remain outstanding against the Island debt as of June 30, 2006.
MDNY will continue to evaluate the adequacy of the reserve in 2006. The $908,000
reduction of the Island Debt since December 31, 2005 is the result of the IPA
Withhold paid for the six months ended June 30, 2006. As of June 30, 2006 and
December 31, 2005, no payment by MDNY to Island IPA for network access fees has
been made or will be required to be made to Island IPA. In addition, Island IPA
has not received any income from other sources as of June 30, 2006 and December
31, 2005 respectively.

      On September 16, 2005, NYSID advised MDNY that NYSID had determined that
MDNY should have reported approximately $17.6 million of payments in excess of
capitation ("Island Debt") as a non-admitted asset, and that the resulting
reduction in net worth resulted in MDNY having an insolvency in the amount of
$12,666,791 as of June 30, 2005. NYSID directed MDNY to make every effort to
collect, in cash, the outstanding amount of the Island Debt as soon as possible
but no later than December 31, 2005 and requested that MDNY provide a plan, by
September 30, 2005, detailing the steps MDNY would take to collect the
outstanding balance. In November 2005 NYSID reiterated its position that the
Island Debt should be not be reflected as an admitted asset but extended the
payment due date to June 30, 2006. MDNY continued to withhold 5% of the IPA
provider claims in repayment of Island Debt in 2005. In response to NYSID's
concerns, Island IPA agreed to increase the withhold percentage to 10% effective
January 1, 2006.

      In a letter dated May 8, 2006, NYSID reiterated its position that the
Island Debt should be reported as a non-admitted asset and further directed MDNY
to file amended statutory reports reflecting this revision. The revised negative
statutory net worth at December 31, 2005 was $13,770,000.

      According to the NYSID Final Report, the composition of MDNY's Board of
Directors does not comply with Part 98-1.11(f) of the Administrative Rules and
Regulations of the New York State Department of Health ("NYSDOH"), which
requires that at least 20% of MDNY's directors must be enrollees of MDNY. The
NYSID Final Report recommends that the requisite number of "enrollee
representatives" be elected to MDNY's Board of Directors. Upon any closing under
the Stock Purchase Agreement among LIPH, MDNY, and CHNLI, it is anticipated that
MDNY's Board of Directors would include the requisite number of enrollee
representatives.

Stock Purchase Agreement among LIPH, CHNLI and MDNY

      The Company, MDNY and CHNLI entered into a Stock Purchase Agreement dated
as of December 31, 2004 so as to allow CHNLI to exit as an MDNY shareholder. The
Stock Purchase Agreement provides for LIPH to purchase from CHNLI all shares of
Class B common stock of MDNY owned by CHNLI, and for CHNLI to contribute to the
capital of MDNY, and for cancellation, a Subordinated Note dated December 18,
1997 made by MDNY in favor of CHNLI in the original principal amount of $1.4
million, together with all interest accrued thereon (the "Section 1307
Contribution"). Upon the closing of such purchase, LIPH will be the sole
stockholder of MDNY. Conditions to closing under the Stock Purchase Agreement
include, among other things, the termination of existing agreements and certain
financial adjustments among the parties and their affiliates.

      In consideration of the sale, assignment and transfer of the Class B
Shares and of the Section 1307 Contribution, LIPH will pay CHNLI a closing
payment of $10.00. As additional consideration, LIPH will pay to CHNLI 20% or
15% of the net amount of cash and the fair market value of all securities and
other property paid by an acquiror and received by LIPH in respect of its equity
interest in MDNY upon any sale to a third party by LIPH of its stock in MDNY or
of all or substantially all of MDNY's business (through a sale of stock or
assets, or a merger, consolidation or similar transaction) that is consummated
prior to December 31, 2007 or 2008, respectively, but not to exceed $4.5 million
in the aggregate (the amount of CHNLI's equity investment in MDNY).

      The Stock Purchase Agreement remains subject to approval by the Attorney
General of the State of New York and the Supreme Court of the State of New York.
If such approval is granted, it is anticipated that the closing under the Stock
Purchase Agreement would occur concurrently with and be contingent on the
closing of an investment in and restructuring of MDNY, and would require the
renegotiation of certain closing conditions under the Stock Purchase Agreement.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Results of Operations


                                       9
<PAGE>

Statutory Reserve Requirement

      NYSDOH and the NYSID require MDNY to maintain reserves in the form of an
escrow deposit and statutory net worth.

      In June 2005, NYSDOH adopted revised regulations regarding the amount HMOs
and certain other health care organizations must maintain as the contingent
reserve fund. Prior to 2005 the contingent reserve was capped at 5% annually.
Effective December 2005 the amount is capped at 5% of premium for fiscal years
2005 and 2006 and then increases 1% per year over the next eight years to twelve
and one half percent of the HMO's annual premium income. The increase in
reserves is effective for the calendar year 2006. The contingent reserve
requirement is deemed to be met if the statutory net worth of the HMO equals or
exceeds the contingent reserve requirement.

      MDNY for calendar year 2005 and quarter ended June 30, 2006 reported its
contingent reserve at 5% of net premiums which totaled $5.8 million
respectively. As a result of the Island Debt being reported as a non admitted
asset for statutory purposes, negative statutory net assets of MDNY were $13.8
million at December 31, 2005 and $17.0 at June 30, 2006. MDNY is deficient in
maintaining the required contingent reserve fund by $19.6 and $22.8 million as
of December 31, 2005 and June 30, 2006 respectively.

      Effective March 2006, NYSDOH requires certain Managed Care Organizations
to establish a trust agreement with a bank insured by the FDIC. The trust must
be funded by an amount equal to the escrow deposit and must be on deposit with
the trust by March 31, 2006. Prior to establishment of the trust the agreement
must be approved by the NYSID. As of December 31, 2005 the escrow deposit was
calculated at 5% of MDNY's projected 2006 medical expenses of $82 million or
$4.1 million. MDNY had approximately $5.9 million in cash and cash equivalents
set aside to fund the escrow deposit. MDNY's trust agreement was approved on May
26, 2006. The trust was funded on October 1, 2006.

      The failure of MDNY to meet reserve requirements, the failure of MDNY or
the IPAs to comply with other existing laws and regulations or a significant
change in such laws or regulations could materially and adversely affect the
operations, financial condition and prospects of the Company and MDNY.

      Meeting the reserve requirements is a condition for continued licensure
and that MDNY's failure to meet the contingent reserve fund requirement could
cause the NYSID or NYSDOH to require more frequent reporting and, if necessary,
require MDNY to develop for approval a corrective action plan to cure the
impairment. However, should NYSID or NYSDOH determine that MDNY is insolvent;
they could issue a Notice of Termination and direct MDNY to perform an orderly
shutdown.

      The following table provides certain statement of operations data
expressed as a percentage of total revenue and other statistical data for the
six month period ended June 30, 2006 and 2005:

<TABLE>
<CAPTION>
                                                                                                   2006                      2005
                                                                                                   ----                      ----
<S>                                                                                                <C>                       <C>
Revenues:

Premiums earned                                                                                    100.0%                    100.0%
                                                                                                 -------                   -------

Expenses:

IPA Medical claims expense                                                                          92.8                      85.2
Commissions expense                                                                                  5.1                       4.2
General and administrative expenses                                                                 12.2                      10.9
                                                                                                 -------                   -------
     Total expenses                                                                                110.1                     100.3
     Operating loss                                                                                (10.1)                      (.3)
Investment and other income                                                                           .2                        .1
Net loss before income taxes minority interest                                                      (9.9)                      (.2)
                                                                                                 -------                   -------
Provision for income tax expense                                                                    --                          --
Minority interest in income of subsidiary                                                           --                          .1
                                                                                                 -------                   -------
</TABLE>


                                       10
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                <C>                       <C>
Net income                                                                                       (9.9) %                       (.1)%
                                                                                                 -------                   -------
Statistical data:
     Enrollment (HMO and POS)                                                                     26,887                    33,792
     HMO enrollment                                                                               25,708                    31,494
     POS enrollment                                                                                1,179                     2,298
     Member months                                                                               158,454                   204,829
     *Medical loss ratio                                                                            92.8                      85.2
     **Administrative loss ratio                                                                    17.3                      15.1
</TABLE>

*     Medical loss ratio- Medical expense and net reinsurance divided by total
      premium

**    Administrative loss ratio-Commission expense, and general administrative
      expense divided by total premium

Comparison of three months ended June 30, 2006 and 2005

      Revenues for the three months ended June 30, 2006 were $23,708,074 down
20% from $29,464,966 during the same period in the prior year. Enrollment
totaled 26,887 at June 30, 2006 down 20% from 33,792 at June 30, 2005. Premium
revenues decreased $5,756,892 as a result of the decline in enrollment offset by
slight premium rate increases in 2006. Premium yields for the second quarter
2006 increased 3% to $297.87 on a pmpm (per member per month) basis from $290.37
compared to the second quarter 2005.

      Total expenses for the quarter ended June 30, 2006 were $26,447,211 down
11% from $29,789,338 for the same period in the prior year. This decrease in
expenses is the result of declines in medical costs associated with the decline
in enrollment. Medical claim expense as a percent of premium revenues was 95.4%
for the second quarter 2006 compared to 86.3% for the second quarter 2005.
Medical costs stated on a pmpm basis increased to $284.02 for the second quarter
2006 from $250.50 during the same period in the prior year, a 13 % increase.
This increase in pmpm medical costs is the result of higher medical costs.

      Commissions as a percent of premium was approximately 5.0% for the second
quarter 2006 compared to 4.2% for the quarter ended June 30, 2005. The loss of
the CHSLI membership effective January 1, 2006 resulted in a higher proportion
of MDNY's remaining enrollment and premium in the plan to be generated through
general agents, brokers, and associations. The percentage of premium generated
through brokers and general agents was approximately 100% as of June 30, 2006
compared to 81% at June 30, 2005.

      Total general administrative costs decreased 15.8 % to $2,647,201 for the
quarter ended June 30, 2006 compared to $3,146,615 for the second quarter of
2005. Although total general and administrative costs decreased, general and
administrative costs stated as a percent of premium slightly increased to 11.2%
for the second quarter 2006 compared to 10.7% for the second quarter 2005. The
decrease in administrative costs is the result of a continued decline in
enrollment.

      Net loss for the second quarter of 2006 totaled $2,694,216 compared with a
net loss of $183,089 for the second quarter 2005. This loss is the result of
higher than anticipated medical loss ratio (MLR) for the second quarter 2006.
Lower premium yields during second quarter 2006 also resulted in a higher MLR.
The MLR for the quarter ended June 30, 2006 was 95.4% compared to 86.3% for the
second quarter 2005.

Comparison of six months ended June 30, 2006 and 2005

      Revenues for the six months ended June 30, 2006 were $46,879,601, down 21%
from $59,352,947 during the same period in the prior year. Enrollment totaled
26,887 at June 30, 2006 down 20% from 33,792 at June 30, 2005. Premium revenues
decreased $12,473,346 as a result of the decline in enrollment offset by premium
rate increases. Premium yields as of June 30, 2006 increased 2.1% to $295.85 on
a pmpm (per member per month) basis from $289.77 compared to the same time
period in 2005.

      Total expenses for the six months ended June 30, 2006 were $51,613,456
down 13% from $59,550,969 for the same period in the prior year. This decrease
in expenses is the result of enrollment declines realized during the first six
months of 2006 offset by the increase in medical costs. The ALR (including
commissions) for the six months ended June 30, 2006 and 2005 was 17.3% and 15.1%
respectively.


                                       11
<PAGE>

      Medical claim expense as a percent of premium revenues was 92.8% for the
six months ended 2006 compared to 85.3% for the same time period in 2005.
Medical costs stated on a pmpm basis increased to $274.53 as of June 30, 2006
from $247.04 during the same period in the prior year; an 11.1% increase.

      Commissions as a percent of premium remained at approximately 5.1% as of
June 30, 2006 and 4.2% at June 30, 2005 respectively. The loss of the CHSLI
membership effective January 1, 2006 resulted in, a higher proportion of the
premium remaining in the plan to be generated through general agents, brokers,
and associations. The percentage of premium generated through brokers and
general agents was approximately 100% as of June 30, 2006 compared to 81% at
June 30, 2005.

      Total general and administrative costs for the six months ended June 30,
2006 decreased 11.5% to $5,732,558 compared to $6,480,705 for the same time
period in 2005. Total general and administrative costs decreased as a result of
the decline in enrollment. General and administrative costs stated as a percent
of premium increased to 12.23% for the second quarter 2006 compared to 10.92%
for the second quarter 2005. This increase is primarily the result of a
continued decline in enrollment through the second quarter 2006.

      Net loss for the six months ended June 30, 2006 totaled $4,649,195
compared with a net loss of $84,416 for the six months ended June 30, 2005. This
loss is the result of a higher than anticipated medical loss ratio (MLR) as well
as lower premium yields and no enrollment growth for the six months ended June
30, 2006. As enrollment continues to decline the ability to reduce
administrative and commission costs becomes increasingly difficult for the MDNY.

      Liquidity and Capital Resources

      Cash and cash equivalents as of June 30, 2006 decreased to $1,095,999 from
$2,141,929 at December 31, 2005. The decrease is the result of operating losses
sustained in the six month period ended June 30, 2006. In addition, cash
balances at month end are directly related to the timing of the receipt of
premium payments and the processing of claim payments.

      MDNY had a negative working capital of $21.6 million at June 30, 2006
compared to a negative working capital of $17.7 million at December 31, 2005.
This increase in negative working capital is the result of significant operating
losses sustained through the second quarter 2006.

      There can be no assurance that the 2006 rate increases together with the
other operating initiatives will produce sufficient cash flows to meet MDNY's
obligations.

Capital Reserves and Liquidity

      Certain matters relating to MDNY's regulatory status, its compliance with
applicable reserve and statutory net worth requirements and liquidity are
discussed above under the caption - "Going Concern and Recent Developments."

      The continued failure of MDNY to meet reserve requirements, the failure of
MDNY or the IPAs to comply with other existing laws and regulations or a
significant change in such laws or regulations could materially and adversely
affect the operations, financial condition and prospects of the Company, MDNY
and the IPAs.

      Meeting the reserve requirements is a condition for continued licensure
and that MDNY's failure to meet the contingent reserve fund requirement could
cause the NYSID or NYSDOH to require more frequent reporting and, if necessary,
require MDNY to develop for approval a corrective action plan to cure the
impairment. However, should NYSID and NYSDOH determine that MDNY is insolvent;
they could issue a Notice of Termination and direct MDNY to perform an orderly
shutdown. The NYSID has not issued any such notice to MDNY.

      MDNY obtained a Section 1307 loan from LIPH, LLC for $1 million in 1997
and another from CHNLI for $1.4 million in 1998. Interest on these loans accrues
at the prime rate and is payable quarterly. These notes which are treated as
capital for statutory purposes are offset by approximately $16.0 of Island debt
which is being treated as a non-admitted asset for statutory purposes At June
30, 2006 MDNY's negative statutory net worth is $17.1 million compared to the
NYSID required net worth of $5.8 million. (Under Section 1307, the principal and
interest are treated as equity capital for regulatory purposes and are repayable
out of free and divisible surplus, subject to the prior approval of NYSID).

Critical Accounting Policies and Estimates


                                       12
<PAGE>

      The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires the Company to make
estimates and assumptions and select accounting policies that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, as well as the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.

      The Company's revenues primarily recognized during the period in which
MDNY is obligated to provide services to subscribers. Premiums collected are in
advance are deferred and recorded as unearned premium revenue in the balance
sheet. Due to the nature of MDNY's business, several of the Company's accounting
policies, primarily relating to costs of claims incurred but not reported and
allowance for doubtful accounts associated with premium and reinsurance
receivables, involve significant estimates and judgments. These accounting
policies have been described in our 2005 Annual Report on Form 10-K.

Factors Affecting Future Results

      Health Insurance Portability and Accountability Act of 1996

      The Secretary of the Department of Health and Human Services, or HHS, has
issued final regulations under the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA"), designed to improve the efficiency and
effectiveness of the health care system by facilitating the electronic exchange
of information in certain financial and administrative transactions while
protecting the privacy and security of the information exchanged. Three
principal groups of regulations have been issued: privacy regulations, security
regulations, and standards for electronic transactions.

      MDNY implemented the HIPAA privacy regulations by April 2003, as required,
and is evaluating the costs of upgrading its systems and procedures to fully
comply with the security regulations by the compliance deadline of April 20,
2005.

      The HIPAA regulations on electronic transactions, which the Company refers
to as the transaction standards, establish uniform standards for electronic
transactions and code sets, including the electronic transactions and code sets
used for claims, remittance advices, enrollment and eligibility. The transaction
standards became effective in October 2002, although covered entities were
eligible to obtain a one-year extension if approved through an application to
the Secretary of HHS. MDNY received this one-year extension through October 16,
2003 from HHS.

      HHS issued Guidance on July 24, 2003 that it will not penalize a covered
entity for post-implementation date transactions that are not fully compliant
with the transactions standards, if the covered entity can demonstrate its good
faith efforts to comply with the standards. HHS' stated purpose for this
flexible enforcement position was to "permit health plans to mitigate unintended
adverse effects on covered entities' cash flow and business operations during
the transition to the standards, as well as on the availability and quality of
patient care."

      There is a divergence of interpretation as to how the new transaction
standards are to be implemented and as a result, MDNY could face increased costs
and complexity, and a temporary disruption in MDNY's business processes. MDNY is
continuing to make good faith efforts to comply with the standards. At this
time, the Company cannot estimate the potential impact of implementing (or
failing to implement) the HIPAA transaction standards on cash flows and results
of operations.

      Impact of New Accounting Standards

      In September 2006, FASB issued SFAS No. 157, "Fair Value Measurements." In
September 2006. FASB issued SFAS 158, " Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans- an Amendment of FASB Statements
No. 87,88,106 and 132 ( R ). In June 2006, FASB issued SFAS No. 48, "Accounting
for Uncertainty in Income Taxes." In September 2006, the SEC issued SAB 108,
"Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements." The impact of the above
referenced accounting standards is discussed in Note 1 to the interim
consolidated financial statements.

      Inflation

      Medical costs have been rising at a higher rate than that for consumer
goods as a whole. The Company believes that MDNY's premium increases, provider
reimbursement arrangements and other cost control measures mitigate, but do not
wholly offset, the effects of medical cost inflation on MDNY's operations.
MDNY's inability to increase premiums could negatively affect MDNY's future
earnings.

      Certain Factors Affecting Future Operating Results


                                       13
<PAGE>

      Certain statements in this Report on Form 10-Q are forward-looking
statements and are not based on historical facts but are management's
projections or best estimates. Such forward-looking statements include but are
not limited to, statements concerning future or prospective results of
operations or financial position, liquidity, health care and administrative
costs, premium rates and yields for commercial business, growth and retention of
membership and development of new lines of business, health care benefits,
provider networks, provider utilization rates, medical loss ratio levels, claims
payment, service performance and other operations matters, administrative loss
ratio levels, proposed efforts to control health care and administrative costs,
impact of agreements with health care providers and related organizations of
providers, reinsurance coverage for risk-transfer arrangements, enrollment
levels, government regulation such as HIPAA, PBOR, the impact of new laws and
regulation, the future of the health care industry, and the impact on MDNY of
regulatory investigations and examinations. Actual results may differ materially
from those expressed or implied by such forward-looking statements due to risks
and uncertainties, including but not limited to the following: the continued
inability of MDNY to meet applicable reserve and statutory net worth
requirements; the continued decline in MDNY's enrollment; increased regulation
or modification of existing regulations which will increase health care expenses
or require additional or increased levels of statutory reserve requirements;
increased competition in MDNY's markets or a change in product mix will reduce
premium revenue; the ability (or inability) of MDNY to obtain additional capital
necessary for MDNY to compete effectively; health care costs in any given period
may be greater than expected due to general unanticipated increases in health
care costs, unexpected incidence of major cases, national emergencies, natural
disasters, epidemics, changes in physician practices, and new technologies.

      See also the matters referred to throughout Item 1 of the Company's Annual
Report on Form 10K for the fiscal year ended December 31, 2005.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

      In the normal course of operations, MDNY is exposed to market risks
arising from adverse changes in interest rates primarily through its borrowing
activities and minimally through its short-term investments. Market risk is
defined for these purposes as the potential change in the fair value of debt
instruments resulting from an adverse movement in interest rates. As of June 30,
2006, MDNY's only borrowings were under two promissory notes from LIPH, LLC and
CHNLI, in the original aggregate principal amount of $2.4 million, which accrue
interest at the prime rate. At June 30, 2006, total principal and interest due
LIPH, LLC and CHNLI was approximately $1.5 million and $2.2 million,
respectively. A 100 basis point increase in interest rates, applied to MDNY's
borrowings at June 30, 2005, would result in an increase in annual interest
expense and a corresponding reduction in cash flow (were such interest to be
paid) of approximately $24,000. The Company believes that MDNY's exposure to
market risk relating to interest rate risk is not material.

      MDNY has no derivative financial instruments or derivative commodity
instruments, nor does MDNY generally have any financial instruments entered into
for trading or hedging purposes. The Company believes that MDNY's business
operations are not exposed in any material respect to market risk relating to
foreign currency exchange risk or commodity price risk.

Item 4. Controls and Procedures

      Based upon an evaluation under the supervision and with the participation
of the Company's President and Chairman of the Board and its Chief Financial
Officer of the effectiveness of the design and operation of the Company's
disclosure controls and procedures, as of the end of the period covered by this
report, they have concluded that the Company's disclosure controls and
procedures, as defined under rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934, as amended, are not effective for gathering, analyzing and
disclosing information in the Company is required to disclose in its periodic
reports filed under such Act.

      LIPH relies on MDNY's financial and accounting staff to meet its SEC
reporting obligations. During 2006, the primary focus of MDNY's staff has been
to complete New York State statutory and internal financial reporting in order
to expedite due diligence review by potential investors in MDNY and facilitate
the potential approval by NYSID of any proposed transaction. In addition, MDNY's
staff has continued to address certain concerns raised by NYSID and NYSDOH
regarding MDNY's reserves and contingent obligations. In light of these demands,
the Company has been unable to ensure the timely completion of its SEC reporting
obligations.


                                       14
<PAGE>

      PART II - OTHER INFORMATION

Item 6. (a) Exhibits. The following exhibits to this report are being filed with
this report.

          31.1    Chief Executive Officer Rule 13a-14(a)/15d-14(a) Certification

          31.2    Chief Financial Officer Rule 13a-14(a)/15d-14(a) Certification

          32.1    Chief Executive Officer Section 1350 Certification

          32.2    Chief Financial Officer Section 1350 Certification


                                       15
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

      LONG ISLAND PHYSICIAN HOLDINGS CORPORATION

  By: /s/ PAUL KOLKER, M.D.
      --------------------------------------------
      Name:    Paul Kolker, M.D.
      Title:   President and Chairman of the Board

         (Principal Executive Officer)

      Date: _______________________


                                       16