##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended September 30, 2010
 o
    
    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: 000-50764
 
 CapTerra Financial Group, Inc.
 (Exact name of Registrant as specified in its charter)
 
 Colorado
(State or other jurisdiction of incorporation or organization)
    
    20-0003432
(I.R.S. Employer Identification No.)
 1621 18 th Street, Suite 250
 Denver, Colordo 80202
 (Address of principal executive offices) (Zip Code)
 303-244-0700
 (Registrants telephone number, including area code)
 
 Yes þ No o
 Yes þ No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 Yes o No þ
  Common Stock
    
    47,697,921(Class)
    
    (Outstanding on November 7, 2010)




---



##### 



FORM 10-Q
 for the quarter ended September 30, 2010
 TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONITEM 1. Financial Statements (unaudited)
    
    
    2ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    20ITEM 4. Controls and Procedures
    
    
    20PART II. OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    21ITEM 1A Risk Factors
    
    
    21ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    35ITEM 3. Defaults Upon Senior Securities
    
    
    36ITEM 4. (Removed and Reserved)
    
    
    36ITEM 5. Other Information
    
    
    36ITEM 6. Exhibits
    
    
    36SIGNATURES
    
    
    37Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




---



##### Table of Contents



September 30,
    
    
    December 31,2010
    
    
    2009(Unaudited)AssetsAssets:Cash and equivalents
    
    $
    5,514,585
    
    
    $
    2,250,837Restricted cash
    
    
    1,000,000
    
    
    
    Accounts receivable, net of allowance for doubtful accounts
    
    
    281,992
    
    
    
    204,368Revenue in excess of billings
    
    
    438,372
    
    
    
    61,316Pre-development costs
    
    
    192,055
    
    
    
    457,945Investment in joint venture
    
    
    2,551,343
    
    
    
    Property and equipment, net of accumulated depreciation
    
    
    89,229
    
    
    
    72,484Real estate held for sale
    
    
    7,191,821
    
    
    
    Prepaids and deposits
    
    
    25,566
    
    
    
    39,263Total assets
    
    $
    17,284,963
    
    
    $
    3,086,213Liabilities and Shareholders EquityLiabilities:Accounts payable
    
    $
    159,129
    
    
    $
    102,746Line of credit, related parties
    
    
    500,000
    
    
    
    Accrued liabilities
    
    
    322,481
    
    
    
    109,691Senior subordinated revolving notes, related parties
    
    
    3,222,538
    
    
    
    Notes payable
    
    
    3,941,716
    
    
    
    Total liabilities
    
    $
    8,145,864
    
    
    $
    212,437Commitments and contingencies
    
    
    
    
    
    
    Shareholders equityCommon stock, $.001 par value; 200,000,000 shares authorized,
47,697,921 issued and outstanding
    
    
    47,698
    
    
    
    23,603Additional paid-in-capital
    
    
    11,013,727
    
    
    
    6,422,255Accumulated deficit
    
    
    (2,334,232
    )
    
    
    (3,572,082
    )Non-controlling interest
    
    
    411,906
    
    
    
    Total shareholders equity
    
    
    9,139,099
    
    
    
    2,873,776Total liabilities and shareholders equity
    
    $
    17,284,963
    
    
    $
    3,086,213
   2




---



##### Table of Contents



For three months ended
    
    
    For nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)
    
    
    (unaudited)Revenue:Revenue
    
    $
    3,386,224
    
    
    $
    378,954
    
    
    $
    4,136,822
    
    
    $
    1,025,876Revenue, related parties
    
    
    1,013,791
    
    
    
    263,771
    
    
    
    1,615,421
    
    
    
    2,707,218Total revenue
    
    
    4,400,015
    
    
    
    642,725
    
    
    
    5,752,243
    
    
    
    3,733,094Operating expenses:Direct costs
    
    
    23,206
    
    
    
    62,322
    
    
    
    90,013
    
    
    
    63,790Direct costs, related parties
    
    
    56,899
    
    
    
    68,072
    
    
    
    162,954
    
    
    
    194,487Selling, general and administrative
    
    
    1,782,059
    
    
    
    989,556
    
    
    
    4,262,870
    
    
    
    3,045,375Total operating expenses
    
    
    1,862,164
    
    
    
    1,119,950
    
    
    
    4,515,837
    
    
    
    3,303,652Income/(loss) from operations
    
    
    2,537,851
    
    
    
    (477,225
    )
    
    
    1,236,406
    
    
    
    429,442Non-operating income:Interest income
    
    
    367
    
    
    
    188
    
    
    
    1,444
    
    
    
    4,436Income/(loss) before income taxes
    
    
    2,538,218
    
    
    
    (477,037
    )
    
    
    1,237,850
    
    
    
    433,878Income tax provision
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income/(loss) before non-controlling interest
    
    
    2,538,218
    
    
    
    (477,037
    )
    
    
    1,237,850
    
    
    
    433,878Non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Income/(loss)
    
    $
    2,538,218
    
    
    $
    (477,037
    )
    
    $
    1,237,850
    
    
    $
    433,878Basic income/(loss) per common share
    
    $
    0.10
    
    
    $
    (0.02
    )
    
    $
    0.05
    
    
    $
    0.02Diluted income/(loss) per common share
    
    $
    0.10
    
    
    $
    (0.02
    )
    
    $
    0.05
    
    
    $
    0.02Basic weighted average common shares outstanding
    
    
    25,246,716
    
    
    
    25,000,000
    
    
    
    25,267,521
    
    
    
    25,000,000Diluted weighted average common shares outstanding
    
    
    25,267,521
    
    
    
    25,000,000
    
    
    
    25,090,153
    
    
    
    25,000,000
   3




---



##### Table of Contents



For the nine months endedSeptember 30,2010
    
    
    2009(Unaudited)
    
    
    (Unaudited)Cash flows from operating activities:Net income/(loss)
    
    $
    1,237,850
    
    
    $
    433,878Adjustments to reconcile net income/(loss) to net cash used by operating activities:Depreciation and write-off of assets
    
    
    32,991
    
    
    
    27,270Changes in operating assets and operating liabilities:Pre-construction costs
    
    
    265,890
    
    
    
    (262,298
    )Accounts receivable
    
    
    (77,624
    )
    
    
    (634,945
    )Revenue in excess of billings
    
    
    (377,056
    )
    
    
    Deposits and prepaids
    
    
    24,573
    
    
    
    3,734Accounts payable and accrued liabilities
    
    
    245,142
    
    
    
    (822,160
    )Net cash provided by(used in) operating activities
    
    
    1,351,766
    
    
    
    (1,254,521
    )Cash flows from investing activities:Cash paid for property and equipment
    
    
    (46,639
    )
    
    
    Cash acquired in reverse merger
    
    
    5,009,964
    
    
    
    Change in restricted cash
    
    
    (1,000,000
    )
    
    
    Investment in joint venture
    
    
    (2,551,343
    )
    
    
    Net cash provided by investing activities
    
    
    1,411,982
    
    
    
    Cash flows from financing activities:Proceeds from line of credit, related parties
    
    
    500,000
    
    
    
    Net cash provided by financing activities
    
    
    500,000
    
    
    
    Net change in cash
    
    $
    3,263,748
    
    
    $
    (1,254,521
    )Cash and cash equivalents, beginning of the period
    
    $
    2,250,837
    
    
    $
    2,240,348Cash and cash equivalents, end of the period
    
    $
    5,514,585
    
    
    $
    985,827Supplemental disclosure of cash flow information:Cash paid during the nine months for:Income taxes
    
    $
    
    
    
    $
    Interest
    
    $
    10,301
    
    
    $
    
   4




---



##### Table of Contents



(1) Nature of Organization and Summary of Significant Accounting Policies
  Principles of Consolidation
  Use of Estimates
  Cash and Cash Equivalents and Restricted Cash
  Accounts Receivable
  Pre-Development Costs
 Revenue
Recognition-Construction-Type and Production-Type Contracts,
  Property and Equipment
   5




---



##### Table of Contents



Long-Lived Assets
  Revenue Recognition
    Multiple-Element Arrangements
  
    
    The property owner, with ultimate approval rights relating to the expenditures and
bearing all of the economic costs of such expenditures, is determined to be the primary
obligor in the arrangement;
 
    
    Because the property owner is contractually obligated to fund all operating costs of the
property from existing cash flow or direct funding from its building operating account, the
Company bears little or no credit risk; and
 
    
    The Company generally earns no margin in the reimbursement aspect of the arrangement,
obtaining reimbursement only for actual costs incurred.
    6




---



##### Table of Contents



Equity Method Investments
  Variable Interest Entities
   Guarantees
  Fair Value Measurements
   Level 1:
    
    Quoted prices in active markets for identical assets or liabilities;Level 2:
    
    Quoted prices in active markets for similar assets and liabilities and inputs that
are observable for the asset or liability; orLevel 3:
    
    Unobservable inputs in which there is little or no market data, which requires the
reporting entity to develop its own assumptions.
  7




---



##### Table of Contents



Earnings Per Share
   Recently Adopted Accounting Pronouncements
     8




---



##### Table of Contents



(2) Business Combination
     (in thousands)Cash and equivalents
    
    $
    5,009Real estate held for sale
    
    
    7,191Other Assets
    
    
    14Senior subordinated revolving notes, related party
    
    
    3,222Notes payable
    
    
    3,942Other liabilities
    
    
    23Total
    
    $
    5,027
  Nine months endedSeptember 30,2010
    
    
    2009Pro Forma revenues
    
    $
    8,646,623
    
    
    $
    6,789,792Pro Forma net income (loss)
    
    $
    (4,306,067
    )
    
    $
    (1,540,652
    )Pro forma net income (loss) per share  basic and diluted
    
    $
    (.09
    )
    
    $
    (.03
    )
  9




---



##### Table of Contents



(3) Real Estate Held for Sale
    (4) Investment in Joint Venture
  (5) Property and Equipment
  September 30,
    
    
    December 31,2010
    
    
    2009Computer and Office Equipment
    
    $
    214,213
    
    
    $
    171,278Leasehold Improvements
    
    
    151,619
    
    
    
    144,819Office Equipment
    
    
    37,209
    
    
    
    37,209$
    403,041
    
    
    $
    353,306Less accumulated depreciation and amortization
    
    
    (313,812
    )
    
    
    (280,822
    )$
    89,229
    
    
    $
    72,484
  10




---



##### Table of Contents



(6) Accrued Liabilities
  September 30,
    
    
    December 31,2010
    
    
    2009Accrued vacation
    
    $
    148,443
    
    
    $
    56,612Employee compensation liability
    
    
    
    
    
    
    46,813Other accrued liabilities
    
    
    174,038
    
    
    
    6,266$
    322,481
    
    
    $
    109,691
 (7) Income Taxes
     11




---



##### Table of Contents



(8) Related Parties
 GDBA Investments, LLC (GDBA)
  BOCO Investments, LLC (BOCO)
   Safe Harbor I, LLC
  Guarantees
   12




---



##### Table of Contents



Revenue
  RevenueFor the three months endedSeptember 30, 2010 (unaudited)
    
    $
    1,013,791September 30, 2009 (unaudited)
    
    $
    263,771For the nine months endedSeptember 30, 2010 (unaudited)
    
    $
    1,615,421September 30, 2009 (unaudited)
    
    $
    2,707,218
 (9) Notes Payable
 United Western Bank Senior Credit Facility
    (10) Shareholders Equity
 Preferred Stock
  Common Stock
  Stock Options and Warrants
   13




---



##### Table of Contents



(11) Revenue
  For three months ended
    
    
    For nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Development fees
    
    
    1,993,584
    
    
    
    17,591
    
    
    
    2,117,646
    
    
    
    2,012,122Leasing/commission fees
    
    
    1,145,903
    
    
    
    155,520
    
    
    
    1,420,440
    
    
    
    315,764Property management
    
    
    464,168
    
    
    
    469,613
    
    
    
    1,387,372
    
    
    
    1,399,079Other
    
    
    796,360
    
    
    
    
    
    
    
    826,785
    
    
    
    6,129Total
    
    $
    4,400,015
    
    
    $
    642,724
    
    
    $
    5,752,243
    
    
    $
    3,733,094
 (12) Commitments and Contingencies
 Leases
 st
  Year
    
    Amount2010
    
    $
    59,7062011
    
    
    204,602$
    264,308
  (13) Concentration of Credit Risk for Cash
   14




---



##### Table of Contents



ITEM 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    the continuing impact of the recent, severe economic recession (including the
related high unemployment), which is having and may continue to have a negative effect
on the following, among other things:
 
    
    the fundamentals of our business, including overall market occupancy and
rental rates;
 
    
    the financial condition of our tenants, our lenders and institutions that
hold our cash balances and short-term investments, which may expose us to increased
risks of default by these parties;
 
    
    our ability to obtain debt financing on attractive terms or at all, which
may adversely impact our ability to pursue acquisition and development opportunities
and refinance existing debt and our future interest expense; and
 
    
    the value of our real estate assets, which may limit our ability to
dispose of assets at attractive prices or obtain or maintain debt financing secured
by our properties or on an unsecured basis.
 
    
    general risks affecting the real estate industry (including, without
limitation, the inability to enter into or renew leases, dependence on tenants
financial condition, and competition from other developers, owners and operators of
real estate);
 
    
    failure to manage effectively our growth and expansion into new markets and
sub-markets or to integrate acquisitions and developments successfully;
  15




---



##### Table of Contents




    
    risks and uncertainties affecting property development and construction
(including, without limitation, construction delays, cost overruns, inability to obtain
necessary permits and public opposition to such activities);
 
    
    risks associated with the availability and terms of financing and the use of
debt to fund acquisitions and developments, including the risk associated with interest
rates impacting the cost and/or availability of financing;
 
    
    risks associated with interest rate contracts and the effectiveness of such
arrangements;
 
    
    risks associated with downturns in the national and local economies, increases
in interest rates, and volatility in the securities markets;
 
    
    risks associated with actual or threatened terrorist attacks;
 
    
    costs of compliance with the Americans with Disabilities Act and other similar
laws;
 
    
    potential liability for uninsured losses and environmental contamination;
 
    
    possible adverse changes in tax and environmental laws;
 
    
    the impact of newly adopted accounting principles on our accounting policies
and on period-to-period comparisons of financial results;
 
    
    risks associated with possible state and local tax audits;
 
    
    risks associated with our dependence on key personnel whose continued service
is not guaranteed; and
 
    
    the other risk factors identified elsewhere in this report, including those
described under the caption Risk Factors.
  Overview
   16




---



##### Table of Contents



Critical Accounting Policies
  Pre-Development Costs
 Revenue
Recognition-Construction-Type and Production-Type Contracts,
  Revenue Recognition
   17




---



##### Table of Contents



Multiple-Element Arrangements
  
    
    The property owner, with ultimate approval rights relating to the expenditures and
bearing all of the economic costs of such expenditures, is determined to be the primary
obligor in the arrangement;
 
    
    Because the property owner is contractually obligated to fund all operating costs of the
property from existing cash flow or direct funding from its building operating account, the
Company bears little or no credit risk; and
 
    
    The Company generally earns no margin in the reimbursement aspect of the arrangement,
obtaining reimbursement only for actual costs incurred.
  Fair Value Measurements
  Level 1:
    
    Quoted prices in active markets for identical assets or liabilities;Level 2:
    
    Quoted prices in active markets for similar assets and liabilities and inputs that
are observable for the asset or liability; orLevel 3:
    
    Unobservable inputs in which there is little or no market data, which requires the
reporting entity to develop its own assumptions.
   18




---



##### Table of Contents



Results of Operations
          Liquidity and Capital Resources
    19




---



##### Table of Contents



ITEM 3  Quantitative and Qualitative Disclosures about Market Risk
 
 ITEM 4  Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  20




---



##### Table of Contents



Changes in Internal Control Over Financial Reporting
 
 PART II. OTHER INFORMATION
 
 ITEM 1  Legal Proceedings.
  
 ITEM 1A  Risk Factors.
 Risks Related to Our Operations and Properties
 We may not be profitable in the future.
  We will need additional capital in the future, but it may not be available to us on acceptable
terms or at all.
  We may not be able to manage our growth.
  Our quarterly operating results may fluctuate
   21




---



##### Table of Contents



Adverse macroeconomic and business conditions may significantly harm our revenues,
profitability and results of operations.
   Adverse economic or other conditions in the geographic markets in which we conduct business
could harm our occupancy levels and rental rates and therefore our operating results.
  Our real estate investments are concentrated in medical office buildings, making us more
vulnerable economically than if our investments were diversified.
   22




---



##### Table of Contents



We may be unable to successfully expand our operations into new markets.
  Our medical office buildings, the associated healthcare delivery systems with which our
medical office buildings are strategically aligned and our tenants may be unable to compete
successfully.
   We may not realize the benefits that we anticipate from focusing on medical office buildings
that are strategically aligned with a healthcare delivery system and from the relationships
established through such strategic alignments.
   23




---



##### Table of Contents



Our investments in development and re-development projects may not yield anticipated returns
which could harm our operating results.
  
    
    we may be unable to obtain ongoing financing sources for these projects on
favorable terms or at all;
 
    
    we may not complete development or re-development projects on schedule or
within budgeted amounts; and
 
    
    we may encounter delays or refusals in obtaining all necessary zoning, land
use, building, occupancy and other required governmental permits and authorizations.
   We may not be successful in identifying and consummating suitable acquisitions or development
opportunities in our existing or new geographic markets, which may impede our growth.
  We may face increasing competition for the acquisition and development of medical office
buildings which may impede our ability to make future acquisitions or may increase the cost of
these acquisitions.
   24




---



##### Table of Contents



We may not be successful in integrating and operating acquired or newly-developed medical
office buildings in the future.
   Our future investments in joint ventures could be harmed by our lack of decision-making
authority, our reliance upon our joint venture partners financial condition, any disputes that may
arise between us and our joint venture partners and our exposure to potential losses from the
actions of our joint venture partners.
  
    
    our joint venture partners may make management, financial and operating
decisions with which we disagree or that are not in our best interest;
 
    
    we may be prevented from taking actions that are opposed by our joint venture
partners;
 
    
    our ability to transfer our interest in a joint venture to a third party may be
restricted;
 
    
    our joint venture partners might become bankrupt or fail to fund their share of
required capital contributions which may delay construction or development of a medical
office building or increase our financial commitment to the joint venture;
 
    
    our joint venture partners may have business interests or goals with respect to
the medical office building that conflict with our business interests and goals which
could increase the likelihood of disputes regarding the ownership, management or
disposition of the medical office building;
 
    
    disputes may develop with our joint venture partners over decisions affecting
the medical office building or the joint venture which may result in litigation or
arbitration that would increase our expenses and distract our officers and/or directors
from focusing their time and effort on our business and possibly disrupt the daily
operations of the medical office building; and
 
    
    we may suffer losses as a result of the actions of our joint venture partners
with respect to our joint venture investments.
  25




---



##### Table of Contents



We will develop and acquire medical office buildings subject to ground or air space leases
that will expose us to the loss of such buildings upon a breach or termination of the ground or air
space leases.
  We may not be able to control our operating costs or our expenses may remain constant or
increase, even if our revenue does not increase, which could harm our results of operations.
   Uninsured losses or losses in excess of our insurance coverage could harm our financial
condition and our cash flows.
  If any of our insurance carriers become insolvent, we could be harmed.
   26




---



##### Table of Contents



Environmental compliance costs and liabilities associated with owning, leasing, developing and
operating our properties may harm our results of operations.
   Risks Related to the Healthcare Industry
 Recent healthcare reform legislation may affect our revenue and financial condition.
  Adverse trends in healthcare provider operations may negatively affect our lease revenues and
our results of operations.
  
    
    changes in the demand for and methods of delivering healthcare services;
 
    
    changes in third party reimbursement methods and policies;
 
    
    consolidation and pressure to integrate within the healthcare industry through
acquisitions and joint ventures; and
 
    
    increased scrutiny of billing, referral and other practices by U.S. federal and
state authorities.
  27




---



##### Table of Contents



Reductions in reimbursement from third-party payors, including Medicare and Medicaid, could
harm the profitability of our tenants and hinder their ability to make rent payments to us or renew
their lease.
    The healthcare industry is heavily regulated, and new laws or regulations, changes to existing
laws or regulations, loss of licensure or failure to obtain licensure could harm our company and
result in the inability of our tenants to make rent payments to us.
   28




---



##### Table of Contents



Our tenants and our company are subject to fraud and abuse laws, the violation of which by a
tenant may jeopardize the tenants ability to make rent payments to us.
   
    
    the Federal Anti-Kickback Statute, which prohibits, among other things, the
offer, payment, solicitation or receipt of any form of remuneration in return for, or
to induce, the referral of any federal or state healthcare program patients;
 
    
    the Federal Physician Self-Referral Prohibition (commonly called the Stark
Law), which, subject to specific exceptions, restricts physicians who have financial
relationships with healthcare providers from making referrals for designated health
services for which payment may be made under Medicare or Medicaid programs to an entity
with which the physician, or an immediate family member, has a financial relationship;
 
    
    the False Claims Act, which prohibits any person from knowingly presenting
false or fraudulent claims for payment to the federal government, including under the
Medicare and Medicaid programs;
 
    
    the Civil Monetary Penalties Law, which authorizes the Department of Health and
Human Services to impose monetary penalties for certain fraudulent acts; and
 
    
    state anti-kickback, anti-inducement, anti-referral and insurance fraud laws
which may be generally similar to, and potentially more expansive than, the federal
laws set forth above.
   29




---



##### Table of Contents



Our healthcare-related tenants may be subject to significant legal actions that could subject
them to increased operating costs and substantial uninsured liabilities, which may harm their
ability to pay their rent payments to us, and we could be subject to healthcare industry
violations.
   Risks Related to the Real Estate Industry
 Our operating performance is subject to risks associated with the real estate industry.
  
    
    vacancies or our inability to rent space on favorable terms, including possible
market pressures to offer tenants rent abatements, tenant improvements, early
termination rights or tenant-favorable renewal options;
 
    
    inability to collect rent from tenants;
 
    
    competition from other real estate investors with significant capital,
including other real estate operating companies, REITs and institutional investment
funds;
 
    
    reductions in the level of demand for medical office buildings and changes in
the demand for certain healthcare-related properties;
 
    
    increases in the supply of medical office space;
  30




---



##### Table of Contents




    
    increases in expenses associated with our real estate operations, including
insurance costs, third party management fees, energy prices, real estate assessments
and other taxes and costs of compliance with laws, regulations and governmental
policies, and restrictions on our ability to pass such expenses on to our tenants; and
 
    
    changes in, and changes in enforcement of, laws, regulations and governmental
policies associated with real estate, including, without limitation, health, safety,
environmental, zoning and tax laws, governmental fiscal policies and the ADA.
  Illiquidity of real estate investments could significantly impede our ability to respond to
adverse changes in the performance of our properties.
   Uncertain market conditions could cause us to sell our medical office buildings at a loss in
the future.
   31




---



##### Table of Contents



Our assets may be subject to impairment charges.
  We could become highly leveraged in the future because our organizational documents contain no
limitations on the amount of debt that we may incur.
  Failure to hedge effectively against interest rate changes may harm our results of operations.
  Our ability to sell equity to expand our business will depend, in part, upon the market price
of our common stock. Our failure to meet market expectations with respect to our business could
harm the market price of our common stock and thereby limit our ability to sell equity.
  
    
    the extent of investor interest;
 
    
    the general reputation of healthcare real estate sector and the attractiveness
of their equity securities in comparison to other equity securities, including
securities issued by other real estate-based companies;
 
    
    our financial performance and that of our tenants;
 
    
    general stock and bond market conditions, including changes in interest rates
on fixed income securities, which may lead prospective purchasers of our common stock
to demand a higher annual yield from future distributions;
  The current limitations on the availability of credit may limit our ability to refinance our
debt obligations in the short-term and may limit our access to liquidity.
   32




---



##### Table of Contents



Risks Related to Our Organization and Structure
 Our board of directors has the power to cause us to issue additional shares of our stock
without shareholder approval.
  The ownership of our common stock is highly concentrated, which may prevent or deter changes
in management or third-party acquisition proposals that you may believe to be in your best
interest.
  We depend on key personnel, the loss of any one of whom may threaten our ability to operate
our business successfully
  Our structure may result in conflicts of interest between our shareholders and the holders of
our operating partnership units
  We may change our business, investment and financing strategies without shareholder approval.
   33




---



##### Table of Contents



Our shareholders claims will be structurally subordinated to all liabilities of our operating
partnership.
  Compensation awards to our management may not correlate to or correspond with our financial
results or share price.
  Risks Related to an Investment in our Common Stock
 Our stock price may be volatile and the market for our shares is illiquid. You may not be
able to sell your shares at the time or price you chose.
  
    
    actual or anticipated fluctuations in our operating results;
 
    
    changes in our earnings estimates or publication of research reports about us
or the real estate industry;
 
    
    changes in market valuations of similar companies;
 
    
    adverse market reaction to any increased indebtedness we incur in the future;
 
    
    additions or departures of key management personnel;
 
    
    actions by institutional shareholders;
  34




---



##### Table of Contents




    
    local conditions such as an oversupply of, or a reduction in demand for,
rehabilitation hospitals, long-term acute care hospitals, ambulatory surgery centers,
medical office buildings, specialty hospitals, skilled nursing facilities, regional and
community hospitals, womens and childrens hospitals and other single-discipline
facilities;
 
    
    speculation in the press or investment community; and
 
    
    general market and economic conditions.
  Future sales of common stock may harm our stock price
  Buying a low-priced, penny stock like ours is risky and speculative
  We do not expect to pay cash dividends on our common stock
  
 ITEM 2  Unregistered Sales of Equity Securities and Use of Proceeds
 (a)
    
    During the three months ended September 30, 2010:
    35




---



##### Table of Contents



(b)
    
    Not applicable.
 (c)
    
    We did not repurchase any equity securities during the period covered by this report.
 
 ITEM 3  Defaults Upon Senior Securities.
  
 ITEM 4  (Removed and Reserved)
 
 ITEM 5  Other Information.
 (a)
    
    None.
 (b)
    
    None.
 
 ITEM 6  Exhibits
 (a)
    
    Exhibits
 3.7
    *
    
    Amended and Restated Agreement of Limited Partnership of NexCore4.6
    *
    
    Warrant issued to WestMountain Asset Management, Inc.10.43
    *
    
    Interest Purchase Agreement10.44
    *
    
    Indemnification Agreement10.45
    *
    
    Asset Indemnification Agreement10.46
    *
    
    Loan Indemnification Agreement10.47
    *
    
    Shareholders Agreement10.48
    *
    
    Lockup Agreement31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer pursuant to Section 906 of
the Sarbanes Oxley Act of 2002.32.2
    
    
    Certification of Chief Financial Officer pursuant to Section 906 of
the Sarbanes Oxley Act of 2002.
 *
    
    Incorporated by reference to the Registrants Current Report on Form 8-K, filed on October 5, 2010.  36




---



##### Table of Contents



SIGNATURES
   CAPTERRA FINANCIAL GROUP, INC./s/ James W. Creamer IIIJames W. Creamer IIIChief Financial Officer
(duly authorized officer and
principal financial officer)
  37