SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q SB

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

For the quarterly period ended September 30, 2000

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 number 0-20354

The Phoenix Group Corporation
(Exact name of small business issuer as specified in its charter)

4514 Travis Street, Suite 330, Dallas, Texas 75205
(Address of principal executive offices) (Zip Code)

214-599-9777
(Issuer's telephone number, including area code)

Formerly: Phoenix Healthcare Corporation
4514 Travis Street, Suite 330, Dallas, TX 75205

          Check whether the Issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter periods that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

          As of November 13, 2000, there were 57,418,877 shares of Common Stock issued and outstanding, 533,333 shares of Series A Senior Convertible Preferred Stock issued and outstanding, and 100,000 shares of Series B Preferred Stock issued and outstanding.

          Transitional Small Business Disclosure Format ____ YES    X    NO

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

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

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

During interim periods, The Phoenix Group Corporation (the "Company") follows the accounting policies set forth in its Annual Report on Form 10-K SB filed with the Securities and Exchange Commission. Users of financial information produced in interim periods are encouraged to refer to the footnotes contained in the Annual Report when reviewing interim financial results.

In management's opinion, the accompanying interim financial statements contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, the results of operations, and the statements of cash flows of the Company for the interim periods.

A summary of the Company's significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements is as follows:

For the nine months ended September 30, 2000, the Company reported a net loss from continuing operations of $2,881,970.

For the year ended December 31, 1999, the Company reported a net loss of $10,894,212. This is largely attributable to recent net operating losses and the resultant losses on disposal associated with now discontinued operations totaling $9,274,247. Recent operating losses reported by the Company through September 30, 2000, coupled with the burden of prior period corporate obligations have exhausted the Company's capital resources and had a material adverse effect on short term liquidity and the Company's ability to satisfy its obligations. At September 30, 2000, the Company reports a working capital deficit of $12,390,233 compared with a working capital deficit of $16,835,394 at December 31, 1999. The Company requires an infusion of new capital, an increased business base and a higher level of profitability to meet its short-term obligations.

In light of the Company's current financial position, its inability to independently meet its short-term corporate obligations, its need to further capitalize existing operations and its dependency on revenue growth to support continuing operations, its viability as a going concern is uncertain. While the Company has experienced an infusion of limited new working capital, there can be no assurance that management's efforts to re-direct and re-capitalize the Company will be successful.

During the quarter ended September 30, 2000, the Company issued 1,234,179 shares of common stock, par value $.001, of the Company ("Common Stock") through private placements for cash of $180,000. As described in Note 6, 713,833 of such shares were placed with the Company's Chairman, Chief Executive Officer and President for $80,000.

In July 2000, the Company paid certain consulting fees through the issuance of 500,000 shares of Common Stock.

In September 2000, the Company retained the services of an investor relations firm. Under the terms of the agreement, the firm is being compensated in shares of Common Stock in the amount of $10,000 per month. The firm also received an additional 250,000 shares of Common Stock as part of the compensation arrangements.

During 1999, the Company discontinued all remaining business operations associated with providing healthcare management and ancillary services.

Net current accounts of discontinued operations at September 30, 2000 and December 31, 1999 are detailed as follows:

Reductions in net current liabilities of discontinued operations represented the reduction of debt obligations through collection of a major receivable balance that was paid directly to the noteholder in the amount of $646,909, collections during the quarter ended September 30, 2000 of previously written off accounts receivable of $231,599, conversion of common stock and disposition of stock of companies that are no longer part of the Company's operating structure offset by an increase in a note obligation attributed to settlement of litigation in the amount of $161,376. $3,856,238 associated with debt foregiveness and disposition of subsidiary companies was credited to Paid-in Capital in the accompanying financial statements. The nine months ended September 30, 2000 also includes a net gain on settlement of accounts of $145,258 attributable to a note payable. The debt foregiveness, disposition of subsidiary companies and the $145,258 gain on settlement of account were with entities controlled by the Company's Chairman, Chief Executive Officer and President.

There were no operating losses from discontinued operations or gain on extinguishment of debt obligation associated with discontinued operations for the quarter or nine months ended September 30, 2000. Net losses from discontinued operations reported for the quarter ended September 30, 1999 and for the nine months then ended are detailed as follows:

In the prior year, the Company reported income from discontinued operations of $480,226 for the three months ended September 30, 1999 and $180,277 for the nine months then ended. The Company also reported a gain on the disposition of property interests and settlement of corporate obligations of $1,471,828 for the same periods. The amounts reported were exclusively from the divestiture of certain nursing home operations and related management services in August of 1999. In the fourth quarter of 1999, the Company also discontinued the operations of its ancillary operations as well as rehabilitative services and medical supply operations. Accordingly, the Consolidated Statements of Operations for the three months and nine months ended September 30, 1999 have been restated to reflect the discontinuance of all healthcare operations as well as the reclassification of recognition of a gain on debt extinguishments to an extraordinary item.

The extraordinary gain on extinguishment of debt obligations in 1999 was principally attributable to forgiveness of a note obligation related to discontinued operations.

The Company is a defendant in certain lawsuits involving third-party creditors whose claims arise from transactions, which largely occurred under prior management and are related to discontinued operations. Management believes that it has sufficiently reserved for these claims in its financial statements at September 30, 2000.

In July 2000, the Company reached an agreement, subject to final documentation, to settle litigation relating to the purchase of Trinity Rehab, Inc., a previously discontinued healthcare business. Under the terms of the settlement, the Company will issue 1,600,000 shares of Common Stock, pay $90,000 in cash over eighteen months and make a one-time cash payment of $100,000 at such time as the Company completes a recapitalization. The settlement resulted in a credit to Discontinued Operations - gain (loss) on settlement of accounts in the amount of $884,000 and will be recorded in the quarter in which the settlement is finalized, which the Company expects to be in the fourth quarter of 2000. Concurrently, net current liabilities of discontinued operations will be reduced by $1,300,000. The amount that will be credited to Common Stock and Additional Paid-In-Capital will be $1,600 and $414,400 respectively.

During the quarter ended September 30, 2000, the Company reached an agreement in principle to restructure payment terms under previously settled litigation thereby deferring payments of $1,111,950 that were due in September. No payments will be required to be made until May 1, 2001.

The Company is obligated under the terms of a line of credit agreement to Match, Inc. in the amount of $1,619,150 including $160,795 associated with liabilities of discontinued operations at September 30, 2000. Ronald E. Lusk, Chairman, Chief Executive Officer and President of the Company controls Match, Inc. as its sole stockholder and President. The line of credit agreement with Match, Inc. is available up to a limit of $2,000,000, bears interest at approximately 10.5%, is due on demand and is secured by stock and assets of subsidiary companies. To date, there have been no interest payments made to Match, Inc.

In September 2000, the Chairman, Chief Executive Officer and President purchased 713,833 shares of Common Stock in a private placement for $80,000. In August, the same individual exercised options to purchase 140,000 shares of Common Stock at a price of $.31 per share.

Match, Inc. is the sole holder of all of the issued and outstanding Series A Preferred Stock of the Company at September 30, 2000.

During the quarter ended September 30, 2000, the Company converted $83,833 of accrued compensation of Mr. Lusk into 271,089 shares of Common Stock.

At June 30, 2000, the Company was obligated to the Chairman, Chief Executive Officer and President as well as two stockholders in the amount of $67,355 related to a payment made on an obligation of a discontinued business segment. During the quarter ended September 30, 2000, the Company converted the debt by issuing 253,595 shares of Common Stock.

The Company is obligated to its Chief Operating Officer under an arrangement whereby the officer is deferring a portion of his salary as a loan to the Company.

In April 2000, the Company entered into a credit agreement with Level 3 Management to provide the Company a line of credit not to exceed $1,000,000 ("Line"). A stockholder of the Company is an owner of Level 3 Management. At September 30, 2000, $662,696 is outstanding under the Line. Proceeds of the Line were used for working capital purposes and no additional amounts will be borrowed under the Line. The Line bears interest of 1% over the prime commercial lending rate. The agreement also provides for the issuance of warrants for 1,315,789 shares of the Common Stock at an exercise price of $.76 per share. Twenty-five percent of the warrants are exercisable if loans under the Line equal or exceed $250,000 but are less than $350,000. Thereafter, the warrants are exercisable at varying amounts as the borrowings increase under the Line. As of September 30, 2000, 657,896 warrants are exercisable.

In August 2000, the Company borrowed $200,000 from a Bank. The note bears interest at 9.5% and is due January 1, 2001. The note is guaranteed by certain executive officers of the Company.

Effective September 1, 2000, the Company hired Daniel Spethmann as Executive Vice President of Healthcare Information Technologies. The Company entered into a one year employment agreement that includes, among things, stock options to purchase up to 500,000 shares of Common Stock. The employment contract terms are substantially similar to those used for other Company executives.

In October and November 2000, the Company converted a total of $83,333 of accrued compensation of the Chairman, Chief Executive Officer and President into 348,443 shares of Common Stock.

In November, the Company issued converted $20,000 of accrued consulting service fees into 102,515 shares of Common Stock.

On November 13, 2000, the Company closed a private placement with an individual for 3,416,667 shares of Common Stock for $410,000. The proceeds were advanced to the Company at different times during October.

This Quarterly Report on Form 10-QSB includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and business of the Company. When used herein, the words "anticipate," "believe," "estimate" and "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect significant assumptions, risks and subjective judgments by the Company's management concerning anticipated results. These assumptions and judgments may or may not prove to be correct. Moreover such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated in such forward-looking statements. Forward-looking statements speak only as to the date hereof.

In December 1999, the Company announced the strategic repositioning of the Company through which it completed an exit from under performing healthcare services business and anticipates emerging as a provider of business solutions. This new business is designed to reposition the Company as a technology company.

The Company has embarked on its new initiative to deliver knowledge-based media and communications in a fully interactive environment utilizing broadband and wireless communications technologies. To execute its strategies, the Company is operating on a model that manages the convergence of data, media and communications technologies to provide next level business-to-business solutions.

The Company's triumvirate organizational structure facilitates the operation of three complimentary divisions known as the Media Group, the Knowledge Group and the Communication Group. The Companies in each group deliver highly specialized products and services to targeted business and consumer profiles while offering development and support capability to the other divisions. Phoenix is pioneering the convergence of radio, telephone, television and the Internet through the use of highly specialized products and services with targeted business and consumer profiles.

The Media Group develops and distributes interactive content and programming designed to exploit the convergence of radio, television and telephone with Internet communications technologies. In March of 2000, the Company announced the formation of Converged Media, at www.convergedmediaonline.com, to deliver content rich programming for radio, interactive television and Internet simulcast. In addition to its value as an entertainment medium, this format provides advertisers with an efficient method to reach targeted audiences. The first of such programs, "On Your Side Radio", debuted on August 10, 2000 at www.onyoursideradio.com. On Your Side Radio is a consumer advocacy show hosted by Emmy award winner Marty Griffin. In September 2000, Converged Media entered into a syndication sales and clearance agreement with Business Talk Radio that provides national coverage for On Your Side Radio. The show is currently aired in over thirty radio markets from 3:00 pm to 5:00 pm Eastern Standard Time and is simulcast in video and audio over the Internet. Converged Media is in the process of developing additional content rich programs that are expected to debut in the fourth quarter of 2000 and the first quarter of 2001. In connection with the development and production of "On Your Side Radio," Converged Media has also entered into strategic agreements with Yahoo! Broadcast to stream the show to the Internet, Maxpop, Inc. for studio facilities and KRLD Radio in Dallas, Texas.

The Knowledge Group has been established to provide web-centric software solutions in an Applications Service Provider ("ASP") environment. This model facilitates the transformation of data into knowledge-based systems that permit real time analysis and decision-making. While the Company is focusing the majority of its efforts and resources on the Media Group, it has delayed the development of MedeTrack, its first modular application product.

The Communications Group is focused on the development and management of broadband and wireless communications software applications and technologies. Its current purpose is to provide technical support for the distribution and operation of products and services provided by the Knowledge and Media Groups.

Consistent with this new strategic direction, the Company will concentrate its efforts on rapidly growing its technology initiatives to establish the Company as a viable player in the development and marketing of software and Internet-based technologies and solutions for business and consumer applications.

The Company's consolidated financial statements reflect a loss from continuing operations of $947,416 for the quarter ended September 30, 2000, compared with a loss from continuing operations of $485,361 for the prior year quarter ended September 30, 1999.

The losses for both periods include general and administrative expenses reported by the Company and are principally related to corporate expenses and related corporate overhead. In April 2000, Converged Media began operations and incurred operating expenses associated with personnel, initiation of program development, as well as incurrence of promotional expenses, professional fees and other administrative expenses.

In August 2000, the first show of Converged Media, On Your Side Radio, began airing in radio markets and simulcast over the Internet at www.onyoursideradio.com. Revenues for the initial month and a half totaled $27,213 and were comparable to initial expectations. Revenue levels build as audience size and rating increase. Cost of sales for the quarter and nine months ended September 30, 2000, were $111,760 and included all costs associated with producing, directing, and airing On Your Side Radio. The costs include studio, technical crew, streaming, website management as well as salaries and wages for the show's host, director and producers. The start-up nature of On Your Side Radio resulted in a gross loss of $84,547 for the quarter and nine months ended September 30, 2000.

Significant components of selling, general and administrative expenses for the quarter ended September 30, 2000 include compensation and related costs of $355,000, professional fees of approximately $299,000 and other expenses of $119,000.

Other income for the quarter ended September 30, 2000 totaled $12,326, the majority of which represented collections of previously written off accounts receivable of discontinued operations.

For the quarter ended September 30, 1999, general and administrative expenses of $496,832 included professional fees of approximately $390,000 principally for legal fees associated with corporate litigation and settling various corporate obligations and other corporate overhead of approximately $107,000. The higher expense levels in the third quarter of 2000 are generally attributed to costs incurred by Converged Media as described above, additional personnel as well as certain prior year general and administrative expenses being absorbed by then operating business segments.

Depreciation and amortization for the quarter ended September 30, 2000 totaled $30,944 with $20,000 representing amortization of intangibles that were acquired in 1999 compared to $6,462 for the same period in 1999.

Interest expense for the quarter ended September 30, 2000 was $71,140 compared to $41,877 for the quarter ended September 30, 1999. The increase was principally comprised of interest expense attributable to interest on a note associated with a discontinued operation as well as increased borrowings.

In the quarter ended September 30, 2000, the Company incurred a gain on settlement of discontinued accounts of $231,599 resulting from the collection of previously written off receivables that were paid directly to the note holder.

For the quarter ended September 30, 1999, the Company incurred losses from operations of discontinued operations of $533,868. The 1999 amount represents actual losses incurred from operations of business segments discontinued in 1999. During the quarter ended September 30, 1999, the Company also incurred a gain on settlement of discontinued accounts of $313,404.

For the nine months ended September 30, 2000, the Company incurred a loss from continuing operations of $2,881,970 compared to a loss of $1,467,184 for the same period the prior year. The losses for both periods include general and administrative expenses reported by the Company and are principally related to corporate expenses and professional fees. The expenses for the nine months ended September 30, 2000 include non cash charges of $685,475 related to stock grants to officers of the Company, compensation and related costs of approximately $700,000, professional fees of approximately $678,000 and other expenses of approximately $277,525. The nine month results also reflect expenses of Converged Media described above as well as initial costs incurred during Converged Media's first quarter of operations, which began April 2000 of an additional $243,500. Those costs were comprised of salaries and related costs of approximately $175,300, professional fees of approximately $30,000, initial production costs of $5,200 and advertising, marketing, other promotional and operating expenses of approximately $33,000. Significant components of general and administrative expenses for the nine months ended September 30, 1999 include, professional fees of approximately $994,000 and other corporate overhead approximating $331,300. Other income for the nine months ended September 30, 2000 was $91,402 compared to other expense of $28,985 for the nine months ended September 30,1999. Other income represents principally collections of previously written off account receivables associated with discontinued operations. Depreciation and amortization expense for the nine months ended September 30, 2000 was $89,356 compared to $19,386 for the same period in 1999. The increase is principally due to amortization of licensing rights of $60,000 in the current year.

Interest expense for the nine months ended September 30, 2000 and 1999 was $214,948 and $93,499 respectively. The increase is principally attributable to interest on notes associated with previously discontinued operations as well as increased borrowings.

As discussed in Note 2 to the Financial Statements, in light of the Company's current financial position, its viability as a going concern is uncertain.

For the nine months ended September 30, 2000, the Company reported a net loss of $2,881,970 from continuing operations. Recent operating losses reported by the Company through September 30, 2000 as well as prior year operating losses and the resultant loss on disposal associated with discontinued operations have exhausted the Company's capital resources and had a material adverse effect on short-term liquidity and the Company's ability to satisfy its obligations.

At September 30, 2000, the Company reports a working capital deficit of $12,390,233 compared with a working capital deficit of $16,835,394 at December 31, 1999. The working capital deficit position results largely from the recording of net liabilities and related reserves associated with the discontinuance of the healthcare service business segments in December 1999. The Company requires an infusion of new capital, an increased business base and a higher level of profitability to meet its short-term obligations.

Notes payable at September 30, 2000, totaled $2,512,898 representing principally working capital financing compared to $1,310,021 at December 31, 1999.

Accounts payable at September 30, 2000, totaled $691,859 compared to $392,177 at December 31, 1999.

Accrued expenses and other current liabilities at September 30, 2000 totaled $298,026 compared with $685,694 at December 31, 1999. The December 31, 1999 balance includes $475,000 of accrued compensation to executive officers that was converted into Common Stock in March 2000. Net current liabilities of discontinued operations at September 30, 2000 were $8,948,359 compared to $14,472,208 at December 31, 1999. The decrease was principally attributed to conversion of certain notes into Common Stock, extinguishments of certain other obligations, the disposition of previously discontinued operations, settlement of certain litigation and payment by a major customer directly to a noteholder as well as collections of previously written off accounts receivable collected by the noteholder.

The Company does not engage in trading market risk sensitive instruments. Neither does the Company purchase as investments, hedges or for purposes "other than trading" instruments that are likely to expose the Company to market risk, whether interest rate, foreign currency exchange, commodity price or equity price risk. The Company has issued no debt instruments, entered into no forward or futures contracts, purchased no options and entered into no swaps. The Company's primary market risk exposure is that of interest rate risk.

The litigation settlement relating to Trinity Rehab, Inc. discussed in the Company's Form 10-Q SB for the quarterly period ended June 30, 2000 will be recorded in the quarter in which the settlement is finalized, which the Company expects to be in the fourth quarter of 2000.

During the quarter ended September 30, 2000, the Company reached an agreement in principle to restructure payment terms under previously settled litigation thereby deferring payments of $1,111,950 that were due in September. No payments will be required to be made until May 1, 2001.

 Item 2: Changes In Securities and Use of Proceeds

In July 2000, the Company issued 500,000 shares of Common Stock as compensation for certain consulting services.

In July 2000, the Company converted $62,500 of accrued compensation of the Company's Chairman, Chief Executive Officer and President into 197,002 shares of Common Stock.

In July and August 2000, the Company converted $67,355 of obligations associated with a payment related to a discontinued business segment made by the Company's Chairman and two other stockholders into 253,595 shares of Common Stock.

In August 2000, the Company issued 140,000 shares of Common Stock associated with the exercise of stock options to the Company's Chairman.

In August 2000, the Company converted $20,833 of accrued compensation of the Company's Chairman, Chief Executive Officer and President into 74,087 shares of Common Stock.

In September 2000, the Company issued 286,278 shares of Common Stock in payment of consulting fees to an investor relations firm.

In September 2000, the Company issued 1,234,179 shares of Common Stock through private placements for cash of $180,000. 713,833 of such shares were placed with the Company's Chairman, Chief Executive Officer and President.

In October and November 2000, the Company converted $83,333 of accrued compensation of the Chairman into 348,843 shares of Common Stock.

In November, the Company issued converted $20,000 of accrued consulting service fees into 102,515 shares of Common Stock.

On November 13, 2000, the Company closed a private placement with an individual for 3,416,667 shares of Common Stock for $410,000. The proceeds were advanced to the Company at different times during October.

The issuances of these securities were deemed to be exempt from registration under the Securities Act of 1933, as amended, because they were either sold to a limited group of persons, each of whom was believed to have been a sophisticated investor or to have had a pre-existing business or personal relationship with the Company and to have been purchasing for investment without a view to further distribution.

None

During the quarter ended September 30, 2000, the stockholders of the Company, through written consent, approved the change of the name of the Company to The Phoenix Group Corporation. Subsequent to the formal approval of the name change, the Company's ticker symbol was changed to PXGP.

Effective September 1, 2000, Daniel Spethmann was hired by the Company as Executive Vice President of Healthcare Information Technologies.

(a)          Exhibits

(b)          The Company filed the following reports on Form 8-K during the second quarter of 2000:

                    None.

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.