UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-Q



(Mark One)


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

For the quarterly period endedSeptember 30, 2009



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

For the transition period from ________________ to _________________



Commission File Number:  000-52712



PEER REVIEW MEDIATION AND ARBITRATION,INC.

(Exact name of registrant as specified in its charter)



Florida

(State or other jurisdiction

of incorporation or organization)



65-1126951

(IRS Employer Identification No.)



1450 S. Dixie Highway, Ste. 201

Boca Raton, Florida 33432

(Address of principal executive offices)

(561) 347-1178

(Registrants telephone number, including area code)



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 preceding 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. YesxNoo



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes __X__

        No ____.




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



Large accelerated filero

        Accelerated fileroNon-accelerated filero(Do not check if a smaller reporting company)

        Smaller reporting companyx




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



As of November 16, 2009, there were 8,377,260 shares of Peer Review Mediation and Arbitration, Inc. Common Stock, $0.001 par value per share, issued and outstanding.



1









TABLE OF CONTENTS





PART I.

        PageFINANCIAL INFORMATIONItem 1.

        Financial Statements

        3Consolidated Balance Sheets as of September 30, 2009 (unaudited) and December 31, 2008

        5Consolidated Statements of Income and Comprehensive Income for the Three Months and Nine
Months Ended September 30, 2009 and 2008 (unaudited)

        6Consolidated Statements of Cash Flows for the Nine Month Periods Ended
September 30, 2009 and 2008 (unaudited)

        7Notes to Consolidated Financial Statements (unaudited)

        9Item 2.

        Managements Discussion and Analysis of Financial Condition and Results of Operations.

        11Item 3.

        Quantitative and Qualitative Disclosures About Market Risk.

        14Item 4T.

        Controls and Procedures.

        14PART IIOTHER INFORMATIONItem 1.

        Legal Proceedings.

        15Item 2.

        Unregistered Sales of Equity Securities and Use of Proceeds.

        15Item 3.

        Defaults Upon Senior Securities.

        15Item 4.

        Submission of Matters to a Vote of Security Holders.

        15Item 5.

        Other Information.

        15Item 6.

        Exhibits.

        15Signatures

        16










2







PART I - FINANCIAL INFORMATION



ITEM 1.

        FINANCIAL STATEMENTS














PEER REVIEW MEDIATION AND ARBITRATION, INC.



CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



Quarter Ended September 30, 2009





























3









PEER REVIEW MEDIATION AND ARBITRATION, INC.



Consolidated Financial Statements

(Unaudited)



TABLE OF CONTENTS



Page




FINANCIAL STATEMENTS




Consolidated balance sheets

        F-1


Consolidated statements of operation

        F-2


Consolidated statements of cash flows

        F-3


Notes to consolidated financial statements

        F-5






4







PEER REVIEW MEDIATION AND ARBITRATION, INC.

CONSOLIDATED BALANCE SHEETS



Dec. 31

        

        

        

        September 30,2008

        

        

        

        2009(Unaudited)ASSETSCurrent assetsCash

        

        $

        53,995

        

        

        

        $

        44,575Accounts receivable

        

        

        5,010

        

        

        

        

        3,900Marketable securities

        

        

        82

        

        

        

        

        256Total current assets

        

        

        59,087

        

        

        

        

        48,731Fixed assets

        

        

        65,621

        

        

        

        

        71,065Less accumulated depreciation

        

        

        (54,255

        )

        

        

        

        (60,534

        )Other assets

        

        

        500

        

        

        

        

        50011,866

        

        

        

        

        11,031Total Assets

        

        $

        70,953

        

        

        

        $

        59,762LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccrued payables

        

        $

        130,309

        

        

        

        $

        96,413Accrued Interest Payable

        

        

        

        

        

        

        

        113,250Related party payables

        

        

        1,976,761

        

        

        

        

        1,383,033Notes payable related party - current portion

        

        

        17,475

        

        

        

        

        737,003Notes payable

        

        

        8,271

        

        

        

        

        1,852Related party loans

        

        

        977,797

        

        

        

        

        2,336Total current liabilities

        

        

        3,110,613

        

        

        

        

        2,333,887Notes payable - related party

        

        

        175,071

        

        

        

        

        170,758Total Liabilities

        

        

        3,285,684

        

        

        

        

        2,504,645Stockholders EquityPreferred stock, Series II, $.001 par value;1,000,000 shares authorized; convertible;1,000,000 issued and outstanding

        

        

        1,000

        

        

        

        

        1,000Common stock, $.001 par value;45,000,000 shares authorized;8,264,126 (2008) and 8,373,853 (2009) shares issued and outstanding

        

        

        8,264

        

        

        

        

        8,374Additional paid in capital

        

        

        6,985,082

        

        

        

        

        8,834,120Accumulated deficit

        

        

        (10,195,406

        )

        

        

        

        (11,274,746

        )Accumulated other comprehensive income (loss)

        

        

        (13,671

        )

        

        

        

        (13,631

        )Total Stockholders Equity

        

        

        (3,214,731

        )

        

        

        

        (2,444,883

        )Total Liabilities and Stockholders Equity

        

        $

        70,953

        

        

        

        $

        59,762




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

F-1



5







PEER REVIEW MEDIATION AND ARBITRATION, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)



Three Months

        

        

        

        Three Months

        

        

        

        Nine Months

        

        

        

        Nine MonthsEnded

        

        

        

        Ended

        

        

        

        Ended

        

        

        

        EndedSeptember 30, 2008

        

        

        

        September 30, 2009

        

        

        

        September 30, 2008

        

        

        

        September 30, 2009Revenue

        

        $

        22,059

        

        

        

        $

        12,160

        

        

        

        $

        54,574

        

        

        

        $

        41,631Cost of sales

        

        

        10,193

        

        

        

        

        3,499

        

        

        

        

        21,903

        

        

        

        

        14,79911,866

        

        

        

        

        8,661

        

        

        

        

        32,671

        

        

        

        

        26,832Expenses:Depreciation

        

        

        3,009

        

        

        

        

        1,127

        

        

        

        

        8,272

        

        

        

        

        6,279Selling, general and administrative

        

        

        294,360

        

        

        

        

        335,471

        

        

        

        

        1,148,808

        

        

        

        

        993,017297,369

        

        

        

        

        336,598

        

        

        

        

        1,157,080

        

        

        

        

        999,296Loss from operations

        

        

        (285,503

        )

        

        

        

        (327,973

        )

        

        

        

        (1,124,409

        )

        

        

        

        (972,464

        )Other income (expense)Interest income

        

        

        

        

        

        

        

        18

        

        

        

        

        

        

        

        

        

        152Interest (expense)

        

        

        (185

        )

        

        

        

        (34,189

        )

        

        

        

        (981

        )

        

        

        

        (107,136

        )(185

        )

        

        

        

        (34,171

        )

        

        

        

        (981

        )

        

        

        

        (106,984

        )Income (loss) before provisionfor income taxes

        

        

        (285,688

        )

        

        

        

        (362,108

        )

        

        

        

        (1,125,390

        )

        

        

        

        (1,079,448

        )Provision for income tax

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        Net income (loss)

        

        $

        (285,688

        )

        

        

        $

        (362,108

        )

        

        

        $

        (1,125,390

        )

        

        

        $

        (1,079,448

        )Other comprehensive income (Loss) net of taxUnrealized gain (loss) on securities

        

        

        293

        

        

        

        

        84

        

        

        

        

        (668

        )

        

        

        

        148Comprehensive income (loss)

        

        $

        (285,395

        )

        

        

        $

        (362,024

        )

        

        

        $

        (1,126,058

        )

        

        

        $

        (1,079,300

        )Net income (loss) per share(Basic and fully diluted)

        

        $

        (0.03

        )

        

        

        $

        (0.04

        )

        

        

        $

        (0.14

        )

        

        

        $

        (0.13

        )Weighted average number ofcommon shares outstanding

        

        

        8,264,126

        

        

        

        

        8,345,090

        

        

        

        

        8,201,293

        

        

        

        

        8,299,814




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



F-2



6







PEER REVIEW MEDIATION AND ARBITRATION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)





Nine Months

        

        

        

        Nine MonthsEnded

        

        

        

        EndedSeptember 30, 2008

        

        

        

        September 30, 2009Cash Flows From Operating Activities:Net income (loss)

        

        $

        (1,125,390

        )

        

        

        $

        (1,079,448

        )Adjustments to reconcile net income toNet cash provided by (used for)operating activities:Depreciation

        

        

        8,272

        

        

        

        

        6,279Accounts receivable

        

        

        (3,892

        )

        

        

        

        1,110Bank Overdraft

        

        

        1,770

        

        

        

        

        __Accrued payables

        

        

        65,009

        

        

        

        

        79,354Due to related parties

        

        

        229,902

        

        

        

        

        281,272Compensatory Stock Issuances

        

        

        187,450

        

        

        

        

        25,275Net cash provided by (used for)operating activities

        

        

        (482,258

        )

        

        

        

        (686,158

        )Cash Flows From Investing Activities:Securities purchases

        

        

        

        

        

        

        

        (26)Fixed asset purchases

        

        

        

        

        

        

        

        (5,444

        )Net cash provided by (used for)investing activities

        

        

        

        

        

        

        

        (5,470

        )






(Continued on Following Page)











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



F-3



7







PEER REVIEW MEDIATION AND ARBITRATION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



(Continued From Previous Page





Nine Months

        

        

        

        Nine MonthsEnded

        

        

        

        EndedSeptember 30, 2008

        

        

        

        September 30, 2009Cash Flows From Financing Activities:Notes payable  borrowings

        

        

        

        

        

        

        

        40,000Notes payable  payments

        

        

        (9,906

        )

        

        

        

        (50,953

        )Related party loans

        

        

        18,479

        

        

        

        

        (255,712

        )Sales of common stock

        

        

        425,250

        

        

        

        

        Sales of options

        

        

        4,800

        

        

        

        

        Option and warrant exercises

        

        

        

        

        

        

        

        948,873Net cash provided by (used for)financing activities

        

        

        438,623

        

        

        

        

        682,208Net Increase (Decrease) In Cash

        

        

        (198,256

        )

        

        

        

        (9,420)Cash At The Beginning Of The Period

        

        

        198,256

        

        

        

        

        53,995Cash At The End Of The Period

        

        $

        

        

        

        

        $

        44,575Schedule of Non-Cash Investing and Financing ActivitiesNoneSupplemental DisclosureCash paid for interest

        

        $

        796

        

        

        

        $

        12,010Cash paid for income taxes

        

        $

        

        

        

        

        $

        












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



F-4



8







PEER REVIEW MEDIATION AND ARBITRATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:



Peer Review Mediation And Arbitration, Inc. (PRMA, the Company), was incorporated in the State of Florida on April 16, 2001. The Company provides peer review services and expertise to law firms, medical practitioners, insurance companies, hospitals and other organizations in regard to personal injury, professional liability and quality review.



Basis of Presentation



The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of operations for a full year.

Principles of Consolidation



The accompanying consolidated financial statements include the accounts of Peer Review Mediation and Arbitration, Inc. and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.



Cash and cash equivalents



The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.



Use of Estimates



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



Income tax



The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 (SFAS 109). Under SFAS 109 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.



F-5



9











PEER REVIEW MEDIATION AND ARBITRATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:



Net income (loss) per share



The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.

Revenue recognition



Revenue is recognized on an accrual basis after services have been performed under contract terms, the service price to the client is fixed or determinable, and collectability is reasonably assured. The Company's revenues to date have been earned primarily from consulting fees for arranging medical expert insurance case review.



Property and equipment



Property and equipment are recorded at cost and depreciated under the straight line method over each item's estimated useful life.

Financial Instruments



The carrying value of the Companys financial instruments, as reported in the accompanying balance sheet, approximates fair value.



Marketable Securities



The Company's marketable securities are classified as available-for-sale, are presented in the balance sheets at fair market value, and consist entirely of equity securities. Gains and losses are determined using the specific identification method.



Comprehensive income (loss)



The Company accounts for comprehensive income (loss) under Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS 130). SFAS 130 establishes standards for reporting and display of comprehensive income and its components. Unrealized gains (losses) from marketable securities are reported as other comprehensive income (loss) in the consolidated statements of income and comprehensive income and as accumulated other comprehensive income (loss) in stockholders equity.



Stock based compensation



The Company accounts for employee and non-employee stock awards under SFAS 123(r), whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.



F-6



10







ITEM 2.MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS




This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. The statements regarding Peer Review Mediation and Arbitration, Inc. and its subsidiaries contained in this Report that are not historical in nature, particularly those that utilize terminology such as "may," "will," "should," "likely," "expects," "anticipates," "estimates," "believes" or "plans," or comparable terminology, are forward-looking statements based on current expectations and assumptions, and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements.



OVERVIEW



We were incorporated under the laws of the State of Florida on April 16, 2001. We have been conducting business operations ever since, primarily focused on the creation and continual development of our proprietary Private Network Application (PNA) which allows direct access to our Peer Review Data Archival resource via our Peer Reviewboard.com Internet web site. Our wholly owned subsidiary, Independent Review, Inc. (IRI), is engaged in providing medical case reviews to the Texas Insurance Commission pursuant to a license from the State of Texas.



Our service enables subscribers, attorneys, insurance claims agents, healthcare providers and consumers the ability to efficiently search and engage medical experts for a variety of medical consulting projects. PRMA maintains a network of independent physicians as members of its Peer Review Board, available to assist in areas such as: expert medical opinions and testimony, legal case evaluation and strategy, assessment of damages, case valuation, medical peer review and chart review, independent medical review, quality and utilization review, medical case management, and medical second opinion.  In addition, we offer a diverse program of technology and innovation services as member benefits to our member physicians through Pro-Med Alliance, our wholly-owned subsidiary.



RESULTS OF OPERATIONS



Comparison of Results of Operations for the Three Months Ended September 30, 2009 and 2008



Sales were $12,160 for the three months ended September 30, 2009, as compared to sales of $22,059 for the three months ended September 30, 2008, a decrease of $9,899, (44.9)%.  Our decrease in revenues during our quarter ended September 30, 2009 was attributable to the increased number of independent medical review providers in the State of Texas. Management intends to deal with this development in two ways.  The business in Texas is independent medical review, and we intend to use the same network of physicians to provide other types of services, including case management, expert witness, peer review and quality review.  These additional types of service are expected to access demand that we currently are not accessing, and allow us to use our network of physicians to create additional revenue. We also plan to expand geographically, so as not to be limited to the opportunity in the
Texas market.   We expect to commence regional and national marketing efforts to expand our operations, beginning in the southeast region of the United States which, if successful, is expected to generate increased revenue. There can be no assurances that our efforts to expand will be successful, or that such expansion will result in profitable operations.



Cost of sales was $3,499 for the three months ended September 30, 2009, as compared to cost of sales of $10,193 for the comparable period in 2008, a decrease of $6,694, (65.7)%. Cost of sales decreased due to a decrease in revenues and increased efficiency in the providing of service.



For the three months ended September 30, 2009, we incurred operating expenses of $336,598, which included selling, general and administrative expenses of $335,471, compared to operating expense of $297,369 during the three months ended September 30, 2008, which included selling, general and administrative expenses of $294,360, or a 14.0% increase in selling, general and administrative expense.  This increase is due to an increase in business activity as the company hires skilled employees and improves infrastructure to support operations.  The additional employees will serve as corporate communication personnel, to assist the company in bringing our operational and revenue-generating initiatives to market.  Selling, general and administrative expenses during the three months



11







ended September 30, 2009, consisted of $48,656 in physician recruitment, $32,437 in administrative expense, $27,031 in operational expense, $44,406 in IT maintenance, $59,548 in rent, $60,000 in officers and directors compensation, $28,445 in consulting fees, $2,663 in telephone, $17,100 in legal, accounting and professional fees, $2,125  in utilities and maintenance, $8,556 in office supplies, and $4,019 in miscellaneous fees. Depreciation and amortization expense decreased to $1,127 during the three months ended September 30, 2009, compared with that of $3,009 for the same period in 2008. The decrease in depreciation and amortization expense was primarily due to the change in the percentage of depreciated assets in 2009.



As a result, we incurred a loss of ($362,024) during three months ended September 30, 2009, or ($0.04) per share, compared with a loss of ($285,395) during the three months ended September 30, 2008, or ($0.03) per share.



Comparison of Results of Operations for the Nine Months Ended September 30, 2009 and 2008



Sales were $41,631 for the nine months ended September 30, 2009, as compared to sales of $54,574 for the nine months ended September 30, 2008, a decrease of $12,943 (23.7%). Our decrease in revenues during the nine months ended September 30, 2009 was attributable to the increased number of independent medical review providers in the State of Texas. Management intends to deal with this development in two ways.  The business in Texas is independent medical review, and we intend to use the same network of physicians to provide other types of services, including case management, expert witness, peer review and quality review.  These additional types of service are expected to access demand that we currently are not accessing, and allow us to use our network of physicians to create additional revenue.  We also plan to expand geographically, so as not to be limited to the opportunity in the
Texas market.  We expect to commence regional and national marketing efforts to expand our operations, beginning in the southeast region of the United States which, if successful, is expected to generate increased revenue. There can be no assurances that our efforts to expand will be successful, or that such expansion will result in profitable operations.



Cost of sales was $14,799 for the nine months ended September 30, 2009, as compared to cost of sales of $21,903 for the comparable period in 2008, a decrease of $7,104 (32.4%). Cost of sales decreased due to a decrease in revenues and increased efficiency in the providing of service.



For the nine months ended September 30, 2009, we incurred operating expenses of $999,296, which included selling, general and administrative expenses of $993,017, compared to operating expense of $1,157,080 during the nine months ended September 30, 2008, which included selling, general and administrative expenses of $1,148,808 for the same period last year, or a 13.6% decrease in selling, general and administrative expense, principally because of reduced business activity. Selling, general and administrative expenses during the nine months ended September 30, 2009, consisted of $140,749 in physician recruitment, $93,833 in administrative expense, $78,194 in operational expense, $122,609 in IT maintenance, $178,722 in rent, $180,000 in officers and directors compensation, $77,155 in consulting fees, $5,616 in telephone, $72,060 in legal and & professional fees, $3,373  in utilities and maintenance,
$22,467 in office supplies, $1,124 in licenses/permits, $12,782 in promotion and advertising, and $7,977 in miscellaneous fees. Depreciation and amortization expense decreased to $6,279 during the nine months ended September 30, 2009, compared with that of $8,272 for the same period in 2008. The decrease in depreciation and amortization expense was primarily due to the change in the percentage of depreciated assets in 2009.



As a result, we incurred a loss of ($1,079,300) during nine months ended September 30, 2009, or ($0.13) per share, compared with a loss of ($1,126,058) during the nine months ended September 30, 2008, or ($0.14) per share.  The Company is transitioning from the initial phase of developing a physician network and supporting software, into an operational, revenue-generating, and profit-generating company.  During this transition, the Company will continue to incur operating expenses in excess of revenue, and will continue to fund this difference through investor funding as we work to ramp up revenue-generating initiatives.



LIQUIDITY AND CAPITAL RESOURCES



At September 30, 2009, we had $44,831 in cash and marketable securities.



12







During the nine months ending September 30, 2009, operations were funded through the exercise of our outstanding Common Stock Purchase Options.  On April 2, 2009 our registration statement was deemed effective by the SEC wherein we registered 323,940 shares of our Common Stock that underlie previously issued purchase options.  As of the date of this report we have received an aggregate of $1,880,885 from the exercise of these Purchase Option and issued 107,629 shares of our Common Stock as a result.  It is managements intent to use the funds generated by the exercising of these options to execute the business plan described in the Business section of our registration statement and to support continuing operations.



The net cash used in operating activities for the nine months ended September 30, 2009 was $838,211. The net cash provided from financing activities for the nine months ended September 30, 2009 was $834,234. We had $44,831 in cash and cash equivalents as of September 30, 2009, compared to $2,964 in cash and cash equivalents as of September 30, 2008. We had $3,900 in account receivables as of September 30, 2009, as compared to $3,892 at September 30, 2008.



At September 30, 2009, we had a note payable to Prosperity Bank of $1,852.  This note matures on November 28, 2009, at which point the remaining balance will be paid in full. The note accrues interest at 4.5% per annum with possible periodic adjustments, is secured by certain of our assets, requires monthly principal and interest payments ranging from $1,250 down to $750 over the life of the loan.  The note is also due on demand at the lenders discretion. Interest expense under the note for the nine months ended September 30, 2009, was $331.  Accrued interest related to the note payable was $23 at September 30, 2009.



CRITICAL ACCOUNTING POLICIES AND ESTIMATES



Critical accounting estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.  The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.  The following represents a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require managements most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.



Leases We follow the guidance in SFAS No. 13 Accounting for Leases, as amended, which requires us to evaluate the lease agreements we enter into to determine whether they represent operating or capital leases at the inception of the lease.



Stock-based compensationEffective January 1, 2006, we adopted Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standard (SFAS) No. 123R, Share Based Payment.  SFAS 123R requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.  That cost is recognized on a straight-line basis over the employee service period (usually the vesting period).  That cost is measured based on the fair value of the equity or liability instruments issued using the Black-Scholes option pricing model.



Recent accounting pronouncementsthe FASB issued SFAS No. 141 (revised 2007), Business Combinations, (SFAS 141R).  This statement replaces FAS No 141,Business Combinations, which was effective July 1, 2001.  The statement provides guidance for how the acquirer recognizes and measures the identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquiree.  SFAS 141R provides for how the acquirer recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase.  The statement provides for disclosures to enable users to be able to evaluate the nature and financial effects of the business combination.  The provisions
of SFAS 141R became effective for the first annual reporting period beginning on or after December 15, 2008, and must be applied prospectively to business combinations completed



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after that date.  Early adoption is prohibited.  Management is currently evaluating the impact of adopting this statement.



INFLATION



Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the nine month period ended September 30, 2009.



OFF-BALANCE SHEET ARRANGEMENTS



We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.



ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.



Not applicable.



ITEM 4T.

        CONTROLS AND PROCEDURES




Disclosure Controls and Procedures.Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report.



These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.



Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the applicable Securities and Exchange Commission rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.



We believe that our consolidated financial statements presented in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented herein.



Inherent Limitations -Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of
controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.



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Changes in Internal Control over Financial Reporting - There were no changes in our internal control over financial reporting during the first nine months of 2009, which were identified in conjunction with managements evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



PART II. OTHER INFORMATION



ITEM 1.

        LEGAL PROCEEDINGS




None



ITEM 2.

        UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS




None



ITEM 3.

        DEFAULTS UPON SENIOR SECURITIES




None



ITEM 4.

        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS




On June 26, 2009, we held our annual meeting of shareholders at our corporate headquarters located in Boca Raton, FL. At this meeting Willis Hale and David W. Larry were re-elected as directors of our Company and the appointment of Ronald R. Chadwick, P.C. as our independent registered public accountant for our fiscal year ending December 31, 2009 was ratified.



ITEM 5.

        OTHER INFORMATION




None



ITEM 6.

        EXHIBITS




Exhibit No.

        Description31.1

        Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2

        Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232

        Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.






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SIGNATURES



Pursuant to the requirements 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.



PEER REVIEW MEDIATION


AND ARBITRATION,INC.






Dated:  November 16, 2009

        By:s/Willis Hale_____________________


Willis Hale, Chief Executive Officer






By:s/Marc E. Combs__________________


Marc E. Combs, Chief Financial Officer






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