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FORM 10-K
 U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended September 30, 2010
 OR
 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: 000-30326
 FIRST PHYSICIANS CAPITAL GROUP, INC.
  DELAWARE
    
    77-0557617(State or Other Jurisdiction
    
    (I.R.S. Employerof Incorporation or Organization)
    
    Identification No.)433 North Camden Drive #810Beverly Hills, California
    
    90210(Address of Principal Executive Offices)
    
    (Zip Code)
 (310) 860-2501
 NONE
 COMMON STOCK, PAR VALUE $0.01 PER SHARE
 o Yes þ No
 o þ
 þ o
 o þ
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o  þ
  Number of shares of common stock outstanding as of January 31, 2011
    
    
    15,049,507




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TABLE OF CONTENTS
 PagePART I
    
    
    3Item 1. BUSINESS
    
    
    3Item 1A. RISK FACTORS
    
    
    11Item 2. PROPERTIES
    
    
    18Item 3. LEGAL PROCEEDINGS
    
    
    19Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    19PART II
    
    
    19Item 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER REPURCHASES OF EQUITY SECURITIES
    
    
    19Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
    
    
    22Item 7. MANAGEMENTS DISCUSSION & ANALYSIS OF RESULTS OF OPERATIONS
    
    
    22Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    29Item 8. CONSOLIDATED FINANCIAL STATEMENTS
    
    
    30Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    55Item 9A(T). CONTROLS AND PROCEDURES
    
    
    56Item 9B. OTHER INFORMATION
    
    
    56PART III
    
    
    56Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    
    
    56Item 11. EXECUTIVE COMPENSATION
    
    
    59Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    67Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    70Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    71PART IV
    
    
    72Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    72SIGNATURES
    
    
    79EXHIBIT INDEX
    
    
    80SubsidiariesCertification Pursuant to Rule 13a-14(d)Certification Pursuant to Rule 13a-14(d)Certification Pursuant to 18 U.S.C. 1350Certification Pursuant to 18 U.S.C. 1350
   2




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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
 Form 10-K Fiscal Year Ended September 30, 2010 Securities Act Exchange Act SEC
  
 PART I
 
 Item 1.
    
    BUSINESS
 www.firstphysicianscapitalgroup.com
 Transition Period Ended September
30, 2007 Fiscal Year Ended September 30, 2008
  COMPANY BACKGROUND
 BPO
 TIGroup Common Stock
 Fiscal Year Ended January 31,
2007 Point
Loma Del Mar San Diego ambulatory surgical centers
  3




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RHA SPMC CT MRI
  TCC
  CURRENT OPERATIONS
        4




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SPMC
       Strategy
  RHA Acquisition RHA Healthcare Operations
  5




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FUNDING
     INTELLECTUAL PROPERTY
   EMPLOYEES
    6




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GOVERNMENT REGULATIONS
  State Licensing and CONs
  CON
 Corporate Practice of Medicine
  Certification
  Medicare-Medicaid Fraud and Abuse Provisions
 Federal Anti-Kickback Statute
  7




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OIG per se
 HIPAA,
  Prohibition on Physician Ownership of Healthcare Facilities and Certain Self-Referrals
  CMS
         8




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Final
Report
   The Federal False Claims Act and Similar Federal and State Laws
 FCA
  qui tam
 qui
tam
 Healthcare Industry Investigations
  DOJ
  9




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Privacy Requirements and Administrative Simplification
    Environmental Regulation
  Medicare and Medicaid Regulatory and Audit Impacts
  2003 Act
 COMPETITORS
   10




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Item 1A.
    
    RISK FACTORS
 ANY INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER
THE FOLLOWING RISK FACTORS IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS REPORT.
 Risks Related to Our Business
 We have a need for ongoing financing.
     We are subject to uncertainties regarding healthcare reform.
  The recent disruption in the overall economy and the financial markets may adversely impact our
business.
   11




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We are dependent for our success on a few key executive officers. Were we to lose one or more of
these key executive officers, we would be forced to expend significant time and money in the
pursuit of a replacement, which would result in both a delay in the implementation of our
business plan and the diversion of working capital.
  Our ability to retain or attract employees that provide healthcare services may be adversely
impacted by recent changes in employee benefit programs.
  If we are unable to acquire and develop additional healthcare facilities on favorable terms, we
may be unable to execute our acquisition and development strategy, which could limit our future
growth.
  We have incurred significant losses and may incur losses in the future.
  If we incur material liabilities as a result of acquiring companies, hospitals or ambulatory
surgical centers, our operating results could be adversely affected.
  If we are unable to manage growth, we may be unable to achieve our growth strategy.
   12




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If we rely on third parties to provide services that are critical to our operations, we may have
reduced financial and operational control which may result in a material impact on our ability to
operate.
  If we are unable to grow revenues at our existing facilities, our operating margins and
profitability could be adversely affected.
  Appropriate acquisitions or investment opportunities may not be available.
    A significant portion of our revenues are produced by a small number of our facilities, which are
concentrated in Oklahoma and California.
   We depend on our relationships with the physicians who use our facilities. Our ability to provide
medical services at our facilities would be impaired and our revenues reduced if we were unable
to maintain these relationships.
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Continued growth in the number of uninsured and underinsured patients or further deterioration in
the collectability of the accounts of such patients could harm our results of operations.
  We may incur liabilities not covered by our insurance or which exceed our insurance limits.
  Because we have facilities in Oklahoma and California, we may incur liabilities or have
operational difficulties as a result of damage from tornados, mudslides, earthquakes and
wildfires, as well as damage from other natural disasters.
   Risks Related to Our Industry/General Market Conditions
 Current and future disruptions in the banking industries may limit our access to our funds or
cause us to lose funds, which could negatively impact our business.
  We depend on payments from third-party payors, including government healthcare programs. If these
payments are reduced, our revenue will decrease.
   14




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If federal or state healthcare programs or managed care companies reduce the payments we receive
as reimbursement for services we provide, our net operating revenues may decline.
 .
 Providers in the hospital industry have been the subject of federal and state investigations and
we could become subject to such investigations in the future.
     If we fail to comply with other applicable laws and regulations, we could suffer penalties or be
required to make significant changes to our operations.
  
    
    physician ownership of our facilities;
    
    the adequacy of medical care, equipment, personnel, operating policies and procedures;
    
    building and safety codes;
  15




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
    
    licensure, certification and accreditation;
    
    billing for services;
    
    maintenance and protection of records; and
    
    environmental protection.
   We are subject to anti-kickback and self-referral laws and regulations that provide for
criminal and civil penalties if they are violated.
   We could fail to comply with the federal Emergency Medical Treatment and Active Labor Act, or
EMTALA, which could subject us to civil monetary penalties or cause us to be excluded from
participation in the Medicare program.
  Our hospitals face competition for medical support staff, including nurses, pharmacists, medical
technicians and other personnel, which may increase our labor costs and adversely affect our
business.
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If we do not continually enhance our hospitals with the most recent technological advances in
diagnostic and surgical equipment, our ability to maintain and expand our markets will be
adversely affected.
 PET
 If we are unable to effectively compete for patients, local residents could use other hospitals.
    Risks Related to Our Common Stock
 We have broad discretion in using our cash resources and may not use them in a manner that our
stockholders would prefer.
  We may finance acquisitions by issuing additional capital stock or incurring substantial debt,
both of which could have negative consequences.
  The market for our Common Stock may be illiquid.
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Our common stock is not listed on a national securities exchange.
   
 Item 2.
    
    PROPERTIES
  Facility
    
    Address
    
    Lease Term
    
    Monthly Rent
    
    
    Area (sq. ft.)Outpatient Surgery Center
    
    12264 El Camino Real, Suite 55 
San Diego, California 92130
    
    Lease expires 
1/1/2016; one, seven year option to extend
    
    $
    20,169.07
    
    
    
    6,684RHA Home Office
    
    3555 N.W. 58th Street, Suite 700
Oklahoma City, Oklahoma 73112

    
    Lease expires 
11/30/2012
    
    $
    13,429.50
    
    
    
    10,232The Chandler Clinic
    
    114 North Highway 18 
Chandler, Oklahoma 74834
    
    Lease expires 
4/30/2014
    
    $
    7,417.50
    
    
    
    4,470Office Sublease from HSP, Inc.
    
    433 N. Camden, Suite 810 
Beverly Hills, California 90210
    
    Lease expires 
11/1/2012
    
    $
    4,800.00
    
    
    
    1183.5Physicians Clinic
    
    2222 W. Iowa Avenue 
Chickasha, OK 73018
    
    Lease expires 
1/12/2030
    
    $
    60,325.00
    
    
    
    65,800
   Facility
    
    Address
    
    Area (sq. ft.)Hospital and Medical Office Buildings
    
    1002 E. Central Boulevard Anadarko, Oklahoma 73005
    
    
    57,887Hospital and Medical Office Building
    
    1101 S. ByrdTishomingo, Oklahoma 73460
    
    
    37,393Hospital and Clinic
    
    2308 Highway 66 WestStroud, Oklahoma 74079
    
    
    33,333
   18




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Item 3.
    
    LEGAL PROCEEDINGS
  
 Item 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 Item 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER REPURCHASES OF
EQUITY SECURITIES
 MARKET INFORMATION
  The Fiscal Year Ended September 30, 2010
    
    High
    
    
    LowFirst Quarter
    
    $
    0.60
    
    
    $
    0.35Second Quarter
    
    
    0.65
    
    
    
    0.20Third Quarter
    
    
    0.65
    
    
    
    0.40Fourth Quarter
    
    
    0.65
    
    
    
    0.23
 The Fiscal Year Ended September 30, 2009
    
    High
    
    
    LowFirst Quarter
    
    $
    0.75
    
    
    $
    0.15Second Quarter
    
    
    1.00
    
    
    
    0.30Third Quarter
    
    
    0.70
    
    
    
    0.50Fourth Quarter
    
    
    0.80
    
    
    
    0.36
 STOCKHOLDERS
  DIVIDENDS
 5-A Preferred pari passu
  19




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EQUITY COMPENSATION PLAN INFORMATION
 Number of securitiesremaining available forNumber of securities
    
    
    
    
    
    
    future issuance underto be issued upon
    
    
    Weighted-average
    
    
    equity compensationexercise of
    
    
    exercise price of
    
    
    plans (excludingoutstanding options,
    
    
    outstanding options,
    
    
    securities reflected inwarrants and rights at
    
    
    warrants and rights
    
    
    column (a)) atSep. 30, 2010
    
    
    at Sep. 30, 2010
    
    
    Sep. 30, 2010Plan category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation plans
approved by security
holders(2)(5)(6)(7)(8)(9)(10(11)
    
    
    9,005,983
    
    
    $
    0.6129
    
    
    
    9,682,601Equity compensation plans not approved by
security holders(1)(3)(4)
    
    
    1,420,206
    
    
    $
    0.7773
    
    
    
    12,579Total
    
    
    10,426,189
    
    
    $
    0.6353
    
    
    
    9,695,180
 (1)
    
    In July 2000, our Board of Directors approved a stock option plan (the 2000 Plan). Our stockholders have not
approved this plan. The 2000 Plan authorizes the grant of incentive stock options and non-statutory stock
options covering an aggregate of 39,750 shares of Common Stock, as adjusted for our November 2002 reverse stock
split (subject to limitations of applicable laws, and adjustment in the event of stock dividends, stock splits,
reverse stock splits and certain other corporate events). The 2000 Plan expires on July 6, 2010, unless it is
terminated earlier or suspended by the Board. The 2000 Plan is not subject to any provisions of the Employee
Retirement Income Security Act of 1974. As of September 30, 2009, options to purchase an aggregate of 27,171
shares of Common Stock are classified as outstanding under the 2000 Plan, with a weighted average exercise price
of $15.25. We do not intend to issue any further options under the 2000 Plan or warrants to purchase stock to
additional individuals or vendors as compensation for services rendered.(2)
    
    In 2001, at our 2001 Annual Meeting, our stockholders
approved two equity compensation plans: (a) our 2001
Stock Options/Stock Issuance Plan (the  2001 Plan)
and (b) our Employee Stock Purchase Plan ( ESPP).
The maximum number of shares of Common Stock that may
be issued under the 2001 Plan cannot exceed 20% of the
total shares of Common Stock outstanding at the time
the calculation is made (including, on an as-converted
basis, all convertible preferred stock, convertible
debt securities, warrants, options and other
convertible securities that are exercisable), but in no
event will the maximum number of shares of Common Stock
which may be issued under the 2001 Plan as incentive
stock options exceed 20,000,000. The weighted average
exercise price under the 2001 Plan shall be fixed by
the Plan Administrator (as that term is defined in the
2001 Plan) and, in the case of an incentive option,
shall be limited by the following: 1) the exercise
price per share shall not be less than 100% of the fair
market value (as that term is defined in the 2001 Plan)
per share of our Common Stock on the date of option
grant and 2) in the event that the optionee is a 10%
stockholder, then the exercise price per share shall
not be less than 110% of the fair market value per
share of Common Stock on the date of option grant. We
have granted various incentive stock options as well as
non-qualified stock options to key executives,
management and other employees at exercise prices equal
to or below the market price at the date of grant. As
of September 30, 2009, based on the 20% calculation,
the maximum number of shares issuable under the 2001
Plan was 17,756,180, and as of September 30, 2009,
9,682,601 shares remain available for issuance. The
maximum number of shares of Common Stock that may be
purchased under our ESPP is 350,000, with a weighted
average exercise price of $1.48. As of September 30,
2009, we have discontinued offering the ESPP, no shares
have been issued subsequent to the original issuance,
and we currently have no intention to issue additional
shares under the ESPP. Since its inception, a total of
22,940 shares of Common Stock have been purchased
pursuant to the ESPP.(3)
    
    On November 20, 2001, our Board of Directors approved a
grant of options to purchase a total of 3,750 shares
(adjusted for reverse split) of our Common Stock at an
exercise price of $2.00 per share to Robert N.
Schwartz, one of the members of our Board of Directors.
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(4)
    
    On August 2, 2005, our Board of Directors approved the
issuance of warrants to purchase an aggregate of
727,500 shares of our Common Stock at an exercise price
of $0.35 per share to the seven initial members of our
Advisory Board, as compensation for participation on
our Advisory Board. The shares underlying these
warrants became fully vested in August 2007. In August
2008, three of the initial Advisory Board members
exercised their warrants in full and a total of 302,500
shares of Common Stock were issued. The other four
initial Advisory Board members, holding an aggregate of
425,000 shares of Common Stock, allowed their warrants
to expire unexercised. In December 2006, our Board of
Directors approved the issuance of a warrant to
purchase 50,000 shares of our Common Stock at an
exercise price of $0.45 per share to Steven Spector,
upon his addition as a member to the Advisory Board.
The shares underlying the warrant issued to Mr. Spector
became fully vested on December 12, 2008. The warrant
issued to Mr. Spector expired unexercised on December
12, 2008. On September 11, 2007, our Board of Directors
approved the issuance of warrants to purchase an
aggregate of 350,000 shares of our Common Stock at an
exercise price of $0.45 per share to six new members of
our Advisory Board. The shares underlying these
warrants became fully vested on September 13, 2009 and
expired on September 13, 2009. On February 15, 2008,
our Board of Directors approved the issuance of a
warrant dated October 30, 2007, to purchase a total of
714,285 shares of our Common Stock at an exercise price
of $0.45 per share to Brian Potiker, in consideration
for his continued service as a member of our Advisory
Board. The shares underlying the warrant issued to Mr.
Potiker became fully vested on October 30, 2008, and
the warrant was exercised on October 30, 2009. During
the Fiscal Year Ended September 30, 2009, we issued
warrants to purchase 125,000 shares of our Common Stock
to individuals for participation on our Advisory Board.
These warrants were issued at an exercise price of
$0.625. One-third of the shares underlying the warrants
vested immediately, one-third vest on March 16, 2010
and one-third vest on March 16, 2011. These warrants
expire on March 16, 2012. As of September 30, 2009, all
of these warrants remain outstanding. During the Fiscal
Year Ended September 30, 2009, we issued warrants to
purchase 150,000 shares of our Common Stock to a member
of the newly-created Medical Advisory Board. These
warrants were issued an exercise price of $0.625.
One-third of the shares underlying the warrants vested
immediately upon issuance on June 10, 2009, and the
remaining two-thirds vest on June 10, 2010. These
warrants expire on June 10, 2012. As of September 30,
2010, all of these warrants remain outstanding.(5)
    
    On November 17, 2005, our Board of Directors approved
the grants of options to acquire an aggregate of
360,000 shares of our Common Stock at an exercise price
of $0.40 per share to two independent directors. The
shares underlying these options vested in quarterly
increments over three years, beginning on the effective
issuance date of August 1, 2005.(6)
    
    On July 1, 2008, our Compensation Committee approved
the issuance of options to purchase 6,250,000 shares of
our Common Stock to David Hirschhorn pursuant to the
2001 Plan. These options are exercisable for a period
of seven years at an exercise price of $0.625 per
share. Mr. Hirschhorns shares vest according to the
following schedule: 1,250,000 shares vested on July 1,
2009; 1,250,000 shares vest on July 1, 2010; 1,250,000
shares vest on July 1, 2011; 1,250,000 shares vest on
July 1, 2012 and the last 1,250,000 vest on July 1,
2013.(7)
    
    On November 10, 2008, in connection with Thomas Rices
employment agreement, we entered into an Option Grant
Agreement under which we granted Mr. Rice an incentive
stock option to purchase up to 500,000 shares of Common
Stock at an exercise price of $0.625 per share. Mr.
Rices shares vest according to the following schedule:
125,000 shares vested immediately on November 10, 2008;
125,000 shares vested on November 10, 2009 and the
remaining 250,000 shares vest on November 10, 2010. The
option expires on November 15, 2015.(8)
    
    On April 22, 2009, pursuant to the terms of our 2001
Plan, we granted incentive stock options (the 2009
Employee Options) to 126 of our subsidiaries
employees (the  2009 Employee Optionees) to purchase
an aggregate of 1,319,390 shares of Common Stock in
variable individual amounts. Pursuant to the terms of
the Option Grant Agreements, and subject to the terms
of the 2001 Plan, the shares of Common Stock subject to
the 2009 Employee Options (the  2009 Employee Option
Shares) vest according to the following schedule: (1)
one-quarter vested immediately upon the date of
issuance; (2) an additional one-quarter of the 2009
Employee Option Shares vest upon the passing of the one
year anniversary of the date of issuance and (3) the
remaining one-half of the 2009 Employee Option Shares
vest upon the second anniversary of the date of
issuance. The 2009 Employee Options were issued at an
exercise price of $0.625 per share and are exercisable
by the 2009 Employee Optionees with respect to all or
any of the vested Shares until April 22, 2016, subject
to the terms and conditions of the 2001 Plan and the
related Option Grant Agreements. As of September 30,
2010, 420,308 of these options have been forfeited due
to employee terminations.(9)
    
    On May 27, 2009, in connection with the employment of
David Jamin as the administrator of RHA Stroud, LLC, we
entered into an Option Grant Agreement, under which we
granted to Mr. Jamin an incentive stock option to
purchase up to 20,000 shares of Common Stock, at an
exercise price of $0.625 per share, which option was to
expire on May 27, 2016. Mr. Jamins option to purchase
Common Stock vested incrementally on the following
vesting schedule: (1) 6,667 shares vest on May 27,
2010; (2) 6,667 shares vest on May 27, 2011; and (3)
6,666 shares shall vest on May 27, 2012. As of
September 30, 2010, 20,000 of these options have been
forfeited due to the employees termination.
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(10)
    
    On December 29, 2009, in connection with Dan Chens
employment agreement, we entered into an option grant
agreement with Mr. Chen effective as of December 29,
2009, under which we granted to Mr. Chen an incentive
stock option to purchase up to 500,000 shares of Common
Stock, at an exercise price of $0.625 per share, which
option shall expire on December 29, 2016. Mr. Chens
option to purchase Common Stock vests incrementally on
the following vesting schedule: (1) the option to
purchase up to 100,000 shares vested immediately on
December 29, 2009; (2) an option to purchase up to
100,000 shares vests incrementally on each anniversary
date of the date of grant thereafter (with the final
options vesting on the fourth anniversary date of the
date of grant).(11)
    
    On June 14, 2010, in connection with Sean Kirranes
employment agreement, we entered into an option grant
agreement with Mr. Kirrane effective as of June 14,
2010, under which we granted to Mr. Kirrane an
incentive stock option to purchase up to 150,000 shares
of Common Stock, at an exercise price of $0.625 per
share, which option sha11 expire on June 14, 2017.
Mr. Kirranes option to purchase Common Stock vests
incrementally on the following vesting schedule: (1)
the option to purchase up to 30,000 shares vested
immediately on June 14, 2010; (2) an option to purchase
up to 30,000 shares vests incrementally on each
anniversary date of the date of grant thereafter (with
the final options vesting on the fourth anniversary
date of the date of grant).
 SALES OF UNREGISTERED EQUITY SECURITIES
    Warrant Exercise Shares Securities Act
 
 Item 6.
    
    SELECTED CONSOLIDATED FINANCIAL DATA
  
 Item 7.
    
    MANAGEMENTS DISCUSSION & ANALYSIS OF RESULTS OF OPERATIONS
  FORWARD LOOKING STATEMENTS
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OVERVIEW
    CHANGE IN THE FISCAL YEAR END
  FUNDING
    Bridge Financing
     23




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CRITICAL ACCOUNTING POLICIES
  Accounts Receivable
    Impairment of Goodwill and Long-lived Assets
    Revenue Recognition
   24




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Income Taxes
  Accounting for Uncertainty in Income Taxes
 FASB ASC
 Stock-Based Compensation
  Earnings Per Share
  Recent Accounting Pronouncements
    Fair Value of Financial Instruments
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RESULTS OF OPERATIONS (All amounts in thousands)
 Fiscal
    
    
    FiscalYear
    
    
    YearEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009Revenue from services
    
    $
    39,502
    
    
    $
    39,090Selling, general and administrative expenses
and provision for doubtful accounts
    
    
    44,152
    
    
    
    44,075Amortization of stock-based compensation
    
    
    1,078
    
    
    
    1,245Impairment of long-lived assets and goodwill
    
    
    187
    
    
    
    209Depreciation and amortization
    
    
    1,383
    
    
    
    1,102Total costs and expenses
    
    
    46,800
    
    
    
    46,631Operating loss
    
    
    (7,298
    )
    
    
    (7,541
    )Other income (expense)
    
    
    453
    )
    
    
    (281
    )Interest income
    
    
    42
    
    
    
    42Interest expense
    
    
    (2,012
    )
    
    
    (2,094
    )Net loss from operations before taxation
and non-cash beneficial conversion feature
    
    
    (8,815
    )
    
    
    (9,874
    )Non-controlling interest
    
    
    (681
    )
    
    
    (177
    )Net loss before non-cash beneficial
conversion feature
    
    
    (9,496
    )
    
    
    (10,051
    )Non-cash beneficial conversion feature
preferred dividend
    
    
    (48
    )
    
    
    (317
    )Net loss allocable to common stockholders
    
    $
    (9,544
    )
    
    $
    (10,368
    )
 MANAGEMENTS DISCUSSION & ANALYSIS OF RESULTS OF OPERATIONS  FISCAL YEAR ENDED SEPTEMBER
30, 2010 COMPARED TO YEAR ENDED SEPTEMBER 30, 2009
 Revenue
  Selling, General and Administrative Expenses and Provision for Doubtful Accounts
   Amortization of Stock-Based Compensation
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Impairment of Long-Lived Assets and Goodwill
  Operating Loss
  Other Income (Expense)
   Interest Income
  Interest Expense
  Non-Controlling Interest
  Taxation
  Net Income or Loss Before Non-Cash Beneficial Conversion Feature
  Non-Cash Beneficial Conversion Feature Preferred Dividend
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Net Income or Loss Allocable to Common Stockholders
  LIQUIDITY AND CAPITAL RESOURCES
        OFF-BALANCE SHEET FINANCING
  DISCLOSURE OF CONTRACTUAL OBLIGATIONS
 Contractual Obligations (in thousands)
 Payments due by periodTotal
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    More than 5 yearsLong-term debt
obligations
    
    $
    18,539
    
    
    $
    2,083
    
    
    $
    5,221
    
    
    $
    1,139
    
    
    $
    10,096Capital lease obligations
    
    
    389
    
    
    
    192
    
    
    
    181
    
    
    
    16
    
    
    
    Operating lease
obligations
    
    
    4,225
    
    
    
    1,328
    
    
    
    2,062
    
    
    
    760
    
    
    
    75Other contractual
obligations
    
    
    8
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    23,161
    
    
    $
    3,611
    
    
    $
    7,464
    
    
    $
    1,915
    
    
    $
    10,171
  28




---



##### Table of Contents



Item 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 INTEREST RATE RISK
  FOREIGN CURRENCY RISK
   29




---



##### Table of Contents



Item 8.
    
    CONSOLIDATED FINANCIAL STATEMENTS
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
  30




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##### Table of Contents



September 30,
    
    
    September 30,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,667
    
    
    $
    2,324Restricted cash
    
    
    
    
    
    
    1,523Accounts receivable, net of allowance for uncollectible accounts
    
    
    3,787
    
    
    
    4,891Prepaid expenses
    
    
    123
    
    
    
    111Other current assets
    
    
    968
    
    
    
    1,772Total current assets
    
    
    6,545
    
    
    
    10,621Property and equipment, net
    
    
    17,557
    
    
    
    17,033Goodwill (Note 8)
    
    
    759
    
    
    
    759Other assets
    
    
    869
    
    
    
    1,078Total assets
    
    $
    25,730
    
    
    $
    29,491LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS EQUITY/ (DEFICIT)Current liabilities:Accounts payable
    
    $
    4,338
    
    
    $
    3,598Accrued expenses
    
    
    3,663
    
    
    
    3,515Notes payable
    
    
    
    
    
    
    4,309Current maturities of long term debt
    
    
    2,260
    
    
    
    1,028Total current liabilities
    
    
    10,261
    
    
    
    12,450Long term debt, net of current portion
    
    
    16,637
    
    
    
    12,441Deferred Gain
    
    
    1,705
    
    
    
    Total liabilities
    
    
    28,603
    
    
    
    24,891Commitments and contingenciesNon-redeemable preferred stock:Preferred stock Series 1-A ($0.01 par value, 2,802,000 shares authorized; 67,600 shares issued and outstanding as of September 30, 2010 and 2009)
    
    
    166
    
    
    
    166Preferred stock Series 2-A ($0.01 par value, 1,672,328 shares authorized; 3,900 shares issued and outstanding as September 30, 2010 and 2009)
    
    
    25
    
    
    
    25Total non-redeemable preferred stock
    
    
    191
    
    
    
    191Redeemable preferred stock: (Note 14)Preferred stock Series 5-A ($0.01 par value, 5,000,000 shares authorized; 9,000 and 8,987 shares issued and outstanding as of September 30, 2010 and 2009, respectively)
    
    
    7,832
    
    
    
    7,819Preferred stock Series 6-A ($0.01 par value, 5,000 shares authorized; 4,875 and 4,957 shares issued and outstanding as of September 30, 2010 and September 30, 2009, respectively)
    
    
    4,381
    
    
    
    4,463Total redeemable preferred stock
    
    
    12,213
    
    
    
    12,282Stockholders deficit and Non-controlling interests:Common stock ($0.01 par value, 100,000,000 shares authorized; 15,049,507 and 13,448,683 shares issued and outstanding as of September 30, 2010 and September 30, 2009, respectively)
    
    
    153
    
    
    
    136Additional paid-in-capital
    
    
    79,235
    
    
    
    77,109Accumulated deficit
    
    
    (95,666
    )
    
    
    (86,122
    )Treasury stock, at cost (149,744 and 93,494 shares as of September 30, 2010 and September 30, 2009 respectively)
    
    
    (104
    )
    
    
    (79
    )Total First Physicians Capital Group Stockholders Deficit:
    
    
    (16,382
    )
    
    
    (8,956
    )Non-controlling interests (Note 11)
    
    
    1,105
    
    
    
    1,083Total Stockholders Deficit
    
    
    (15,277
    )
    
    
    (7,873
    )Total liabilities, preferred stock and stockholders deficit and Non-controlling interests
    
    $
    25,730
    
    
    $
    29,491
   31




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##### Table of Contents



Fiscal
    
    
    FiscalYear
    
    
    YearEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009Revenue from services
    
    $
    39,502
    
    
    $
    39,090Cost and expenses:Selling, general and administrative expenses
    
    
    44,153
    
    
    
    44,075Amortization of stock-based compensation (Note 15)
    
    
    1,077
    
    
    
    1,245Impairment of long-lived assets and goodwill
    
    
    187
    
    
    
    209Depreciation and amortization
    
    
    1,383
    
    
    
    1,102Total costs and expenses
    
    
    46,800
    
    
    
    46,631Operating loss
    
    
    (7,298
    )
    
    
    (7,541
    )Interest income
    
    
    42
    
    
    
    42Interest expense
    
    
    (2,012
    )
    
    
    (2,094
    )Other income (expense)
    
    
    453
    
    
    
    (281
    )Non-controlling interests
    
    
    (681
    )
    
    
    (177
    )Net loss from operations before taxation and non-cash beneficial conversion feature
    
    
    (9,496
    )
    
    
    (10,051
    )Taxation
    
    
    
    
    
    
    Non-cash beneficial conversion feature preferred dividend
    
    
    (48
    )
    
    
    (317
    )Net loss allocable to common stockholders
    
    $
    (9,544
    )
    
    $
    (10,368
    )Net loss per common share:Basic
    
    $
    (0.64
    )
    
    $
    (0.94
    )Diluted
    
    
    N/A
    
    
    
    N/A
   32




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##### Table of Contents



Additional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalCommon Shares
    
    
    Paid-in
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Treasury
    
    
    StockholdersStock
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Income (Loss)
    
    
    Stock
    
    
    DeficitBalance at Sept. 30, 2008
    
    
    10,322,927
    
    
    $
    103
    
    
    $
    71,301
    
    
    $
    (75,702
    )
    
    $
    (52
    )
    
    $
    0
    
    
    $
    (4,350
    )Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,368
    )
    
    
    
    
    
    
    
    
    
    
    (10,368
    )Issuance of Common Stock
    
    
    160,000
    
    
    
    2
    
    
    
    98
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100Conversion of Series B Preferred to Common Stock
    
    
    2,384,250
    
    
    
    25
    
    
    
    2,477
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,502Proceeds from exercise of warrants
    
    
    525,000
    
    
    
    5
    
    
    
    258
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    263Beneficial Conversion Feature related to preferred stock issuance
    
    
    
    
    
    
    
    
    
    
    317
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    317Stock based compensation
    
    
    150,000
    
    
    
    1
    
    
    
    1,244
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,245Issuance of warrants as discount on convertible debt
    
    
    
    
    
    
    
    
    
    
    1,184
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,184Equity transactions in consolidated affiliates (see note 11)
    
    
    
    
    
    
    
    
    
    
    230
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    230Purchase of treasury stock
    
    
    (93,494
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79
    )
    
    
    (79
    )Balance at Sept. 30, 2009
    
    
    13,448,683
    
    
    $
    136
    
    
    $
    77,109
    
    
    $
    (86,070
    )
    
    $
    (52
    )
    
    $
    (79
    )
    
    $
    (8,956
    )Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,596
    )
    
    
    52
    
    
    
    
    
    
    
    (9,544
    )Issuance of Common Stock
    
    
    200,000
    
    
    
    2
    
    
    
    98
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100Conversion of 6-A Preferred to Common Stock
    
    
    400,000
    
    
    
    4
    
    
    
    121
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125Proceeds from exercise of warrants
    
    
    1,105,685
    
    
    
    11
    
    
    
    492
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    503Cancellation of Restricted Shares
    
    
    (48,611
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase of treasury stock
    
    
    (56,250
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25
    )
    
    
    (25
    )Issuance of warrants with 5-A Preferred Stock
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11Issue of warrants with 6-A Preferred Stock
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36Bridge Loan Warrant Extension
    
    
    
    
    
    
    
    
    
    
    291
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    291Stock based Compensation
    
    
    
    
    
    
    
    
    
    
    1,077
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,077Balance at Sept. 30, 2010
    
    
    15,049,507
    
    
    $
    153
    
    
    $
    79,235
    
    
    $
    (95,666
    )
    
    $
    
    
    
    $
    (104
    )
    
    $
    (16,382
    )
   33




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##### Table of Contents



Fiscal
    
    
    FiscalYear
    
    
    YearEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (9,496
    )
    
    $
    (10,051
    )Adjustments to reconcile net loss to net cash used in operating activities:Non-controlling interest
    
    
    681
    
    
    
    177Depreciation and amortization
    
    
    1,383
    
    
    
    1,102Bad debt provision
    
    
    5,914
    
    
    
    4,561Amortization of stock-based compensation
    
    
    1,077
    
    
    
    1,245Amortization of debt discount
    
    
    522
    
    
    
    952Amortization of deferred gain on sale of assets
    
    
    (55
    )
    
    
    Loss from sale of investments
    
    
    
    
    
    
    281Impairment
of long-lived assets and goodwill
    
    
    187
    
    
    
    209Changes in working capital components:Accounts receivable
    
    
    (4,810
    )
    
    
    (3,163
    )Accounts payable and accrued expenses
    
    
    888
    
    
    
    1,455Other
    
    
    812
    
    
    
    (275
    )Net cash used in operating activities
    
    
    (2,897
    )
    
    
    (3,507
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (1,906
    )
    
    
    (4,515
    )Purchase of equity interest in consolidated affiliate
    
    
    
    
    
    
    (35
    )Deferred gain from sale of property and equipment
    
    
    1,760
    
    
    
    Proceeds from sale of equity interests in consolidated affiliate
    
    
    
    
    
    
    325Decrease (increase) in restricted cash
    
    
    1,523
    
    
    
    (9
    )Acquisition of subsidiaries, net of cash acquired
    
    
    
    
    
    
    (55
    )Net cash provided by (used in) investing activities
    
    
    1,377
    
    
    
    (4,289
    )Cash flows from financing activities:Borrowings on convertible loans
    
    
    
    
    
    
    2,200Payments on long term debt
    
    
    (4,961
    )
    
    
    (5,786
    )Proceeds from notes payable
    
    
    5,849
    
    
    
    10,246Distributions to non-controlling interests
    
    
    (659
    )
    
    
    (144
    )Purchase of treasury stock
    
    
    (25
    )
    
    
    (79
    )Proceeds from exercise of stock warrants
    
    
    503
    
    
    
    263Proceeds from issuance of preferred stock, net of cost
    
    
    56
    
    
    
    350Proceeds from issuance of common stock
    
    
    100
    
    
    
    100Net cash provided by financing activities
    
    
    863
    
    
    
    7,150Net decrease in cash and cash equivalents
    
    
    (657
    )
    
    
    (646
    )Cash and cash equivalents at beginning of year
    
    
    2,324
    
    
    
    2,970Cash and cash equivalents at end of year
    
    $
    1,667
    
    
    $
    2,324Supplemental cash flow information:Cash paid for interest
    
    $
    1,356
    
    
    $
    1,204Cash paid for taxes
    
    
    
    
    
    
    
       34




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##### Table of Contents



FIRST PHYSICIANS CAPITAL GROUP, INC.
 
  1. Company Background
 BPO
 TIGroup Common Stock SEC
 Fiscal Year Ended January 31,
2007 Point
Loma Del Mar San Diego ambulatory surgical centers
 RHA SPMC CT MRI
  TCC
    35




---



##### Table of Contents



SPMC
      36




---



##### Table of Contents



Strategy
  RHA Acquisition RHA Healthcare Operations
     Funding
   RHA Loan 2008 Loans USDA
  37




---



##### Table of Contents



2. Summary of Significant Accounting Policies
  Principles of Consolidation and Basis of Presentation
  Use of Estimates
  Reclassifications
  Cash and Cash Equivalents
   Accounts Receivable
     38




---



##### Table of Contents



Property and Equipment
  Computer hardware
    
    
    2 to 5 yearsComputer software
    
    
    3 to 5 yearsOffice equipment, furniture and fixtures
    
    
    5 yearsMedical equipment
    
    
    5 to 7 yearsBuildings
    
    
    30 to 40 yearsLeasehold improvements
    
    
    15 years
  Impairment of Goodwill and Long-lived Assets
  Fiscal Year Ended September 30, 2009
 Revenue Recognition
  Income Taxes
  Accounting for Uncertainty in Income Taxes
 FASB ASC
 Functional Currency
  Other Comprehensive Income (Loss)
  Stock-Based Compensation
   39




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##### Table of Contents



Earnings Per Share
  Recent Accounting Pronouncements
    Fair Value of Financial Instruments
  3. Net Income/(Loss) Allocable to Common Stockholders and Comprehensive Income/(Loss)
  Fiscal
    
    
    FiscalYear Ended
    
    
    Year EndedSeptember 30, 
2010
    
    
    September 30, 
2009Net loss available to common stockholders
    
    $
    (9,544
    )
    
    $
    (10,368
    )Other comprehensive (loss)/gain foreign currency translations
    
    
    
    
    
    
    Comprehensive income/(loss)
    
    $
    (9,544
    )
    
    $
    (10,368
    )
  40




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##### Table of Contents



Earnings/(Loss) Per Share
  Fiscal
    
    
    FiscalYear Ended
    
    
    Year EndedSeptember 30, 
2010
    
    
    September 30, 
2009Numerator for basic and diluted income/(loss) per share:Net income/(loss)
    
    $
    (9,544
    )
    
    $
    (10,368
    )Denominator for basic earnings/(loss) per share  weighted average shares
    
    
    14,819,280
    
    
    
    10,977,770Basic
    
    $
    (0. 64
    )
    
    $
    (0.94
    )Diluted
    
    
    N/A
    
    
    
    N/A
  4. Accounts receivable
  September 30,
    
    
    September 30,2010
    
    
    2009Gross patient accounts receivable
    
    $
    24,911
    
    
    $
    18,470Reserves for bad debt
    
    
    (5,648
    )
    
    
    (3,842
    )Reserves for contractual allowances
    
    
    (15,476
    )
    
    
    (9,737
    )Patient accounts receivable, net
    
    $
    3,787
    
    
    $
    4,891
 5. Other current assets
 September 30,
    
    
    September 30,2010
    
    
    2009Other current assets:Deposits
    
    $
    120
    
    
    $
    120Medical supplies
    
    
    500
    
    
    
    510Other receivables
    
    
    348
    
    
    
    1,142Total other assets
    
    $
    968
    
    
    $
    1,772
 6. Property and equipment
 September 30,
    
    
    September 30,2010
    
    
    2009Property and equipment:Computer hardware
    
    $
    79
    
    
    $
    92Furniture, fixtures and medical equipment
    
    
    4,642
    
    
    
    4,458Land
    
    
    1,029
    
    
    
    834Buildings
    
    
    14,857
    
    
    
    13,340Construction in progress
    
    
    
    
    
    
    124Leasehold improvements
    
    
    920
    
    
    
    944Accumulated depreciation
    
    
    (3,970
    )
    
    
    (2,759
    )Property and equipment, net
    
    $
    17,557
    
    
    $
    17,033
   41




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##### Table of Contents



7. Advance to Affiliated Entity
 Cross Shore AIM RPS
 8. Bridge Financing
 Bridge Financing SMP Ciabattoni Bridge
Notes Bridge Lender Bridge Lenders
       42




---



##### Table of Contents



Second Bridge Notes Second Bridge Lenders
    Darras Darras Note SFV SFV Note Katz Katz Note Third Bridge Note Third Bridge Notes Third Bridge Lender Third Bridge Lenders
     43




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##### Table of Contents



Sales of Unregistered Equity Securities
    Warrant Exercise Shares Securities Act
 9. Long-term Debt
  September 30, 2010
    
    
    September 30, 2009Note payable, secured by equipment, $4,558 payable monthly, including interest equal to the Wall Street Journal Prime Rate, rate is currently 3.25%, through September 2011
    
    $
    36
    
    
    $
    898% Notes
payable to prior shareholders for stock repurchases, five notes
outstanding at September 30, 2010, maturity dates ranging from 2013 through 2017
    
    
    220
    
    
    
    260Note payable, secured by equipment, $2,825 payable monthly, including 13.6% interest through April 2010
    
    
    
    
    
    
    14Note payable secured by real estate, $27,513 payable monthly, including interest based on Wall Street Journal prime plus 2% adjusted quarterly, floor of 7%, rate is currently 7%, matures
November 2028
    
    
    3,365
    
    
    
    3,453Note payable secured by real estate, $34,144 payable monthly, including interest based on Wall Street Journal prime plus 2% adjusted quarterly, floor of 7%, rate is currently 7%, matures
November 2024
    
    
    3,348
    
    
    
    3,513Note payable secured by real estate, $9,327 payable monthly, including interest based on Wall Street Journal prime plus 2% adjusted quarterly, floor of 7%, rate is currently 7%, matures
November 2028
    
    
    1,140
    
    
    
    1,164
  44




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##### Table of Contents



September 30, 2010
    
    
    September 30, 2009Note payable, 5% interest payable quarterly, matures on or before December 11, 2011
    
    
    1,500
    
    
    
    1,500Capitalized lease obligations  ten leases for buildings and medical equipment with imputed interest rates ranging from 4% to 17.2%, maturing at various dates through 2015
    
    
    358
    
    
    
    521Note payable, secured by real estate, $36,736 payable monthly, including interest based on Wall Street Journal Prime plus 2% adjusted quarterly, floor of 7%, rate is currently 7%, matures
January 2030
    
    
    4,628
    
    
    
    Note payable, secured by equipment, $7,530 payable monthly, including 6.75% interest through June 15, 2013
    
    
    223
    
    
    
    298Note payable, 10% interest, matures on or before April, 2013
    
    
    2,200
    
    
    
    1,416Note payable, non-interest bearing purchase obligation, annual payments of $83,333, August 2011, $33,333, August 2012 and $33,334, August 2013
    
    
    150
    
    
    
    150Notes payable, unsecured, 11.25% interest, matures September 2012 through June 2013
    
    
    1,681
    
    
    
    1,027Note payable, secured by equipment, $1,567 payable monthly, including 6.75% interest through July 2013
    
    
    48
    
    
    
    64Total
    
    
    18,897
    
    
    
    13,469Less current maturities of long-term debt
    
    
    (2,260
    )
    
    
    (1,028
    )Total long-term debt
    
    $
    16,637
    
    
    $
    12,441
  Fiscal Year Ended September 30,
    
    Payments2011
    
    $
    2,2602012
    
    
    3,0272013
    
    
    2,3612014
    
    
    5612015
    
    
    593Thereafter
    
    
    10,095Total
    
    $
    18,897
 10. Non-controlling Interests
      45




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##### Table of Contents



11. Warrants
  Remaining
    
    ExerciseDescription
    
    Life
    
    Price
    
    
    WarrantsSeptember 30, 2007 Preferred Stock Series 5-A warrants issued
to investor
    
    1.8 years
    
    $
    0.45
    
    
    
    50,000September 30, 2008 warrants issued in connection with notes
payable
    
    1 month
    
    
    0.31
    
    
    
    1,980,000September 30, 2008 warrants issued in connection with notes
payable
    
    1 month
    
    
    0.50
    
    
    
    1,237,500September 30, 2008 Preferred Stock Series 5-A warrants issued
to placement agent
    
    2.5 years
    
    
    0.50
    
    
    
    436,250February 6, 2009 warrants issued in connection with notes
payable
    
    1.4 years
    
    
    0.50
    
    
    
    1,125,000February 6, 2009 warrants issued in connection with notes
payable
    
    1.4 years
    
    
    0.75
    
    
    
    750,000March 3, 2009 warrants issued in connection with notes payable
    
    1.4 years
    
    
    0.50
    
    
    
    375,000March 3, 2009 warrants issued in connection with notes payable
    
    1.4 years
    
    
    0.75
    
    
    
    250,000March 16, 2009 warrants issued to advisory board
    
    1.5 years
    
    
    0.63
    
    
    
    83,334March 31, 2009 warrants issued in connection with notes payable
    
    1.5 years
    
    
    0.50
    
    
    
    112,500March 31, 2009 warrants issued in connection with notes payable
    
    1.5 years
    
    
    0.75
    
    
    
    75,000April 14, 2009 warrants issued in connection with notes payable
    
    1.5 years
    
    
    0.50
    
    
    
    37,500April 14, 2009 warrants issued in connection with notes payable
    
    1.5 years
    
    
    0.75
    
    
    
    25,000June 8, 2009 Preferred Stock Series 6-A warrants issued to
investor
    
    8 months
    
    
    0.50
    
    
    
    210,000June 10, 2009 warrants issued to Medical Advisory Board
    
    1.7 years
    
    
    0.63
    
    
    
    150,000October 19, 2009 Preferred Stock Series 5-A warrants issued to
investor
    
    1.0 years
    
    
    0.50
    
    
    
    25,800October 19, 2009 Preferred Stock Series 6-A warrants issued to
investor
    
    1.0 years
    
    
    0.50
    
    
    
    4,200November 6, 2009 warrants issued in connection with notes
payable
    
    1.3 years
    
    
    0.50
    
    
    
    375,000November 6, 2009 warrants issued in connection with notes
payable
    
    1.3 years
    
    
    0.75
    
    
    
    250,000December 3, 2009 warrants issued in connection with notes
payable
    
    1.4 years
    
    
    0.50
    
    
    
    125,000December 3, 2009 warrants issued in connection with notes
payable
    
    1.4 years
    
    
    0.75
    
    
    
    83,331December 2, 2009 warrants issued in connection with issuance
of common stock
    
    1.2 years
    
    
    0.50
    
    
    
    60,000December 14, 2009 Preferred Stock Series 6-A warrants issued
to investor
    
    1.2 years
    
    
    0.50
    
    
    
    3,600December 31, 2009 warrants issued in connection with notes
payable
    
    1.5 years
    
    
    0.50
    
    
    
    37,500December 31, 2009 warrants issued in connection with notes
payable
    
    1.5 years
    
    
    0.75
    
    
    
    24,999January 14, 2010 warrants issued in connection with notes
payable
    
    1.3 years
    
    
    0.50
    
    
    
    12,500January 14, 2010 warrants issued in connection with notes
payable
    
    1.3 years
    
    
    0.75
    
    
    
    8,3337,907,347
  46




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##### Table of Contents



Warrants Issued Pursuant to the Sale and Issuance of Series 5-A Convertible Preferred Stock
  Warrants Issued Pursuant to the Sale and Issuance of Series 6-A Convertible Preferred Stock
   Warrants Issued Pursuant to the Individuals for Advisory Board Participation
    Other Warrant Issuances
 Holders
  47




---



##### Table of Contents



Weighted-AverageNumber of Shares of Common Stock
    
    
    Exercise Price Per ShareFiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalYear
    
    
    Year
    
    
    Year
    
    
    YearEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Warrants outstanding at beginning of the period
    
    
    14,459,635
    
    
    
    11,965,635
    
    
    $
    0.49
    
    
    $
    0.46Issued
    
    
    1,010,263
    
    
    
    3,235,000
    
    
    $
    0.59
    
    
    $
    0.60Exercised
    
    
    (1,105,685
    )
    
    
    (525,000
    )
    
    $
    0.46
    
    
    $
    0.50Cancelled or expired
    
    
    (6,415,200
    )
    
    
    (216,000
    )
    
    $
    0.50
    
    
    $
    0.48Warrants outstanding at end of the period
    
    
    7,949,013
    
    
    
    14,459,635
    
    
    $
    0.51
    
    
    $
    0.49
 12. Commitments and Contingencies
   Operating
    
    
    Capital LeaseYear Ending September 30,
    
    Leases
    
    
    Obligations
    
    
    Total2011
    
    $
    1,328
    
    
    $
    192
    
    
    $
    1,5202012
    
    
    1,273
    
    
    
    123
    
    
    
    1,3962013
    
    
    789
    
    
    
    58
    
    
    
    8472014
    
    
    436
    
    
    
    9
    
    
    
    4452015
    
    
    324
    
    
    
    7
    
    
    
    3312016 and thereafter
    
    
    75
    
    
    
    
    
    
    
    75$
    4,225
    
    
    $
    389
    
    
    $
    4,614
  13. Preferred Stock
 Non-Redeemable Preferred Stock and Redeemable Preferred Stock
   48




---



##### Table of Contents



Series 1-A Convertible Preferred Stock
  Series 2-A Convertible Preferred Stock
  Series 5-A Convertible Preferred Stock
 pari passu
  49




---



##### Table of Contents



Series 6-A Convertible Preferred Stock
 6-A Purchase Agreement
 pari passu pari passu
   Series B Preferred Stock issued by subsidiary
    50




---



##### Table of Contents



Related Party Interests in Preferred Stock
  14. Stock Options
 Stock-Based Compensation
  Fiscal
    
    
    FiscalYear Ended
    
    
    Year EndedSep. 30, 2010
    
    
    Sep. 30, 2009Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Expected volatility
    
    
    163
    %
    
    
    161
    %Risk-free rate of return
    
    
    2.4
    %
    
    
    1.7
    %Expected life (years)
    
    
    4.75
    
    
    
    3.6
 Stock Option Plans
 2000 Plan
 2001 Plan
  2009
Employee Options 2009
Employee Optionees
  51




---



##### Table of Contents



Weighted-AverageNumber of Options
    
    
    Exercise Price Per ShareFiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalYear
    
    
    Year
    
    
    Year
    
    
    YearEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Options outstanding at beginning of the
period
    
    
    8,249,002
    
    
    
    7,333,750
    
    
    $
    0.59
    
    
    $
    0.59Granted at above fair market value
    
    
    650,000
    
    
    
    1,839,390
    
    
    
    0.63
    
    
    
    0.63 at fair market value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
     at below fair market value
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (239,920
    )
    
    
    (924,138
    )
    
    
    0.65
    
    
    
    0.40Options outstanding at end of the period
    
    
    8,659,082
    
    
    
    8,249,002
    
    
    $
    0.62
    
    
    $
    0.62Options vested/exercisable at end of
the period
    
    
    3,689,541
    
    
    
    2,037,613
    
    
    $
    0.60
    
    
    $
    0.59
  Weighted-averageWeighted-average
    
    
    remainingExercise price
    
    Number of options
    
    
    exercise price
    
    
    contractual life$0.40
    
    
    360,000
    
    
    $
    0.40
    
    
    
    5.1$0.63
    
    
    8,299,082
    
    
    $
    0.63
    
    
    
    5.0
  52




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##### Table of Contents



Employee Stock Purchase Plan
 ESPP
 15. 401(k) Plan
 401(k) Plan
 16. Income Taxes
  September 30,
    
    
    September 30,2010
    
    
    2009Statutory federal income tax rate
    
    $
    (3,244,828
    )
    
    $
    (3,525,140
    )Increase (reduction) in taxes resulting from:State income taxes, net of federal benefit
    
    
    (213,135
    )
    
    
    (149,804
    )Permanent differences
    
    
    433,054
    
    
    
    563,375Change in valuation allowance
    
    
    4,133,647
    
    
    
    3,068,472Other
    
    
    (1,108,738
    )
    
    
    43,097Income tax provision
    
    $
    
    
    
    $
    
  September 30,
    
    
    September 30,2010
    
    
    2009Deferred tax assets: Net operating loss carry forward
    
    $
    18,049
    
    
    $
    17,519 Accounts receivable reserves
    
    
    5,839
    
    
    
    4,238 Deferred gain
    
    
    647
    
    
    
     Accrued expenses
    
    
    192
    
    
    
    219 Goodwill
    
    
    70
    
    
    
    75Gross deferred tax assets
    
    
    24,797
    
    
    
    22,051Deferred tax
liabilities: Fixed
assets
    
    $
    (114
    )
    
    $
    (1,811
     ) Cash
to accrual
    
    
    (1,963
    )
    
    
    (1,653
    )Gross
deferred tax liabilities
    
    
    (2,077
    )
    
    
    (3,464
    )Net deferred tax assets
    
    $
    22,720
    
    
    $
    18,587Valuation allowance
    
    
    22,720
    
    
    
    18,587$
    
    
    
    $
    
    53




---



##### Table of Contents



17. Subsequent Events
  Reorganization of Operations
    Operational Changes:
  Proposed Corporate Structure Changes
  Contemplated and Completed Asset Sales
  Transactions
  
    
    The Chandler Clinic
    
    Johnson Memorial Hospital in Tishomingo OK
    
    Southern Plains Medical Clinic
  54




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##### Table of Contents



Chandler-Sale
  Johnson Memorial Hospital in Tishomingo OK-Sale
  Southern Plains Medical Clinic  LOI
  Other Operating Facilities in Oklahoma
  Acquisitions, Mergers and Growth Initiatives:
  Other
 Local Management Changes
  Certain Common Stock Warrants
  
 Item 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
   55




---



##### Table of Contents



Item 9A(T).
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
  Managements Assessment of Internal Control Over Financial Reporting
   
 Item 9B.
    
    OTHER INFORMATION
  
 PART III
 
 Item 10.
    
    DIRECTORS AND EXECUTIVE OFFICERS OF
  Name
    
    Age
    
    
    PositionDavid Hirschhorn
    
    
    49
    
    
    Chairman and Director
Chief Executive OfficerSean Kirrane
    
    
    33
    
    
    VP Finance and Principal Accounting OfficerTodd Parker (1)
    
    
    47
    
    
    DirectorRobert N. Schwartz, PhD.(2)
    
    
    71
    
    
    DirectorRichardson E. Sells(2)
    
    
    64
    
    
    DirectorWilliam Houlihan(1)
    
    
    55
    
    
    DirectorThomas Rice
    
    
    64
    
    
    President and Chief Operating Officer of RHA
 (1)
    
    Member of the Audit Committee.(2)
    
    Member of the Audit Committee and Compensation Committee.
  56




---



##### Table of Contents



David Hirschhorn.
 Donald C. Parkerson.
 Sean Kirrane. New York Mortgage Hudson United
 Todd Parker.
 Robert N. Schwartz, Ph.D.
 Richardson E. Sells.
  57




---



##### Table of Contents



William A. Houlihan.
 Thomas Rice.
 Board Meetings and Committees
  Stockholder Communications with the Board of Directors
  
  Compensation of Directors
   Section 16(a) Beneficial Ownership Reporting Compliance
   58




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##### Table of Contents



Number ofTransactions Not
    
    
    Known FailuresNumber of Late
    
    
    Reported On a
    
    
    To File aName
    
    Reports
    
    
    Timely Basis
    
    
    Required Form(#)
    
    
    (#)None
    
    
    0
    
    
    
    0
    
    
    
    0
 Code of Ethics
 Code of Ethics
 
 Item 11.
    
    EXECUTIVE COMPENSATION
 COMPENSATION DISCUSSION AND ANALYSIS
 Compensation Philosophy and Compensation Program Objectives
  
    
    Attract the highest caliber of talent required for the success of our business;
    
    Retain those individuals capable of achieving challenging performance standards;
    
    Incent our executives to strive for superior company-wide and individual performance; and
    
    Align management and stockholder interests over both the short and long-term.
  
    
    Base Salaries.We seek to provide competitive base salaries factoring
in the position, the executives skills and experience, the
executives performance, as well as other factors. We believe
appropriate base salary levels are critical in helping us to attract
and retain talented executives.
    
    Annual Cash Incentives.The aim of this element of compensation is to
reward individual contributions to align with our annual operating
performance and to recognize the achievement of challenging
performance standards.
    
    Long-Term Equity Incentives.The long-term element of our compensation
program consists of discretionary grants of equity awards which are
reviewed annually. These are designed to align our interests with
those of management, employees and our stockholders by directly
linking individual compensation to our long-term performance, as
reflected in stock price appreciation and increased stockholder value.
  59




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##### Table of Contents



The Executive Compensation Process
 The Board of Directors
  
    
    Reviewing and approving our compensation philosophy;
    
    Determining executive compensation levels;
    
    Annually reviewing and assessing performance goals and objectives for
all executive officers, including our Chief Executive Officer and
Chief Financial Officer; and
    
    Determining short-term and long-term incentive compensation for all
executive officers, including our Chief Executive Officers and Chief
Financial Officer.
  Outside Compensation Advice
  Benchmarking Process
  Compensation of Executive Officers
   60




---



##### Table of Contents



Components of the Executive Compensation Program
  Base Salary
  Annual Cash Incentives
  Long-Term Equity Incentives
  Perquisites and Other Benefits
   61




---



##### Table of Contents



Retirement Plans
  Benefits Upon Termination of Employment
     Tax and Accounting Matters
 Code
   62




---



##### Table of Contents



THE FISCAL YEARS ENDED SEPTEMBER 30, 2010, 2009, 2008 AND TRANSITION PERIOD ENDED SEPTEMBER
30, 2007 SUMMARY EXECUTIVE COMPENSATION TABLE
  Non-
    
    
    Change inEquity
    
    
    PensionIncentive
    
    
    Value andName
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plan
    
    
    Nonqualified
    
    
    All otherand
    
    
    
    
    
    
    
    
    
    
    
    Stock
    
    
    Option
    
    
    Compen-
    
    
    Deferred
    
    
    Compen-Principal
    
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    sation
    
    
    Compensation
    
    
    sation
    
    
    TotalPosition
    
    Year
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    Earnings
    
    
    ($)
    
    
    ($)David Hirschhorn
    
    The Transition PeriodChief Executive Officer
    
    ended Sep. 30, 2007
    
    $
    183,508
    
    
    
    
    (1)
    
    $
    99,041
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    282,549(formerly Co-Chief Executive Officer
    
    Sep. 30, 2008
    
    $
    360,000
    
    
    $
    225,000
    
    
    
    
    
    
    $
    3,704,807
    
    
    
    
    
    
    
    
    
    
    $
    37,163
    
    
    $
    4,326,970and Co-Chief Financial Officer)
    
    Sep. 30, 2009
    
    $
    495,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    24,526
    
    
    $
    519,526Sep 30,2010
    
    $
    555,000
    (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0
    
    
    $
    550,000Donald C Parkerson
    
    The Transition PeriodFormer Chief Financial Officer
    
    ended Sep. 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sep. 30, 2008
    
    $
    63,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    63,000Sep. 30, 2009
    
    $
    252,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,303
    
    
    $
    257,303Sep 30, 2010
    
    $
    225,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    225,750Dennis M. Smith
    
    The Transition PeriodFormer Chief Financial Officer
    
    ended Sep. 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    200,000
    (2)
    
    $
    200,000Sep. 30, 2008
    
    $
    275,000
    
    
    
    
    
    
    
    
    
    
    $
    50,000
    
    
    
    
    
    
    
    
    
    
    $
    8,230
    
    
    $
    333,230Sep. 30, 2009
    
    $
    229,170
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,931
    
    
    $
    232,101Sep 30, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Thomas Rice
    
    The Transition PeriodPresident/Chief Operating Officer,
    
    ended Sep. 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    RHA
    
    Sep. 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sep. 30, 2009
    
    $
    189,962
    
    
    
    
    
    
    
    
    
    
    $
    153,236
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    343,198Sep 30, 2010
    
    $
    220,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    220,000Sean Kirrane 
VP Finance, Principal Accounting Officer
    
    Sep 30, 2010
    
    $
    43,750
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
 (1)
    
    Mr. Hirschhorn was entitled to a guaranteed bonus
payment in the amount of $56,250 during the Transition
Period Ended September 30, 2007. He did not receive
this bonus during the Transition Period Ended September
30, 2007, we have reserved this bonus amount in its
financial statements.(2)
    
    Mr. Hirschhorn has voluntarily agreed to assist with
our liquidity needs by deferring payment of $100,000 of
his salary, which was earned, from August 1, 2010
through September 30, 2010.
 EMPLOYMENT AGREEMENTS
    63




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##### Table of Contents



THE FISCAL YEAR ENDED SEPTEMBER 30, 2010  GRANTS OF PLAN-BASED AWARDS
 .
  All OtherAll Other
    
    
    OptionStock
    
    
    Awards:Awards:
    
    
    Number
    
    
    Exercise
    
    
    GrantEstimated Future Payouts
    
    
    Estimated Future Payouts
    
    
    Number
    
    
    of
    
    
    or Base
    
    
    Date FairUnder Non-Equity
    
    
    Under Equity
    
    
    of Shares of
    
    
    Securities
    
    
    Price of
    
    
    Value ofIncentive Plan Awards
    
    
    Incentive Plan Awards
    
    
    Stock
    
    
    Underlying
    
    
    Option
    
    
    Stock andThreshold
    
    
    Target
    
    
    Maximum
    
    
    Threshold
    
    
    Target
    
    
    Maximum
    
    
    or Units
    
    
    Options
    
    
    Awards
    
    
    OptionName
    
    Grant Date
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    (#)
    
    
    (#)
    
    
    (#)
    
    
    (#)
    
    
    (#)
    
    
    ($/Sh)
    
    
    Awards(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)
    
    
    (i)
    
    
    (j)
    
    
    (k)
    
    
    (l)Sean Kirrane, VP of
Finance and
Principal
Accounting Officer
    
    
    6/14/2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    150,000
    
    
    $
    0.625
    
    
    $
    91,113
 THE FISCAL YEAR ENDED SEPTEMBER 30, 2010  OUTSTANDING EQUITY AWARDS (update for Sean)
  Option Awards
    
    
    Stock AwardsEquityIncentivePlanEquity
    
    
    Awards:Incentive
    
    
    Market orEquity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plan
    
    
    PayoutIncentive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Awards:
    
    
    ValuePlan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Number of
    
    
    ofAwards:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unearned
    
    
    UnearnedNumber
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares,
    
    
    Shares,Number of
    
    
    Number of
    
    
    of
    
    
    
    
    
    
    
    
    
    
    Number of
    
    
    
    
    
    
    Units
    
    
    UnitsSecurities
    
    
    Securities
    
    
    Securities
    
    
    
    
    
    
    
    
    
    
    Shares or
    
    
    Market Value
    
    
    or Other
    
    
    or OtherUnderlying
    
    
    Underlying
    
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    Units of
    
    
    of Shares or
    
    
    Rights
    
    
    RightsUnexercised
    
    
    Unexercised
    
    
    Unexercised
    
    
    Option
    
    
    
    
    
    
    Stock
    
    
    Units of Stock
    
    
    That
    
    
    That HaveOptions
    
    
    Options
    
    
    Unearned
    
    
    Exercise
    
    
    Option
    
    
    That Have
    
    
    That Have
    
    
    Have Not
    
    
    Not(#)
    
    
    (3)
    
    
    Options
    
    
    Price
    
    
    Expiration
    
    
    Not Vested
    
    
    Not Vested
    
    
    Vested
    
    
    VestedName
    
    Exercisable
    
    
    Unexercisable
    
    
    (#)
    
    
    ($)
    
    
    Date
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)David Hirschhorn 
Chief Executive
Officer (formerly
Co-Chief Executive
Officer and
Co-Chief Financial
Officer)
    
    
    2,500,000
    
    
    
    3,750,000
    
    
    
    
    
    
    $
    0.625
    
    
    
    07/01/2015
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sean Kirrane,
VP of Finance &
Chief Accounting
Officer
    
    
    30,000
    
    
    
    120,000
    
    
    
    
    
    
    $
    0.625
    
    
    
    06/14/2017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Thomas Rice, 
President and Chief
Operating officer
of our indirect
wholly owned
subsidiary, Rural
Hospital
Acquisition, L.L.C.
    
    
    250,000
    
    
    
    250,000
    
    
    
    
    
    
    $
    0.625
    
    
    
    11/10/2015
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 (1)
    
    On July 1, 2008, our Compensation Committee
approved the issuance of options to purchase
6,250,000 shares of our Common Stock pursuant
to the 2001 Plan to David Hirschhorn. These
options are exercisable for a period of seven
years at an exercise price of $0.625 per
share.(2)
    
    On June 14, 2010, our Compensation
Committee approved the issuance of options to
purchase 150,000 shares of our Common Stock
pursuant to the 2001 Plan to Sean Kirrane.
These options are exercisable for a period of
serve years at an exercise price of $0.625 per share.(3)
    
    On November 10, 2008, our Compensation
Committee approved the issuance of options to
purchase 500,000 shares of our Common Stock
pursuant to the 2001 Plan to Thomas Rice.
These options are exercisable for a period of
seven years at an exercise price of $0.625 per
share.
  64




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##### Table of Contents



(2) THE FISCAL YEAR ENDED SEPTEMBER 30, 2010  POTENTIAL PAYMENTS UPON TERMINATION OR A
CHANGE IN CONTROL
  DAVID HIRSCHHORN, CHIEF EXECUTIVE OFFICER (FORMERLY CO-CEO and CO-CFO)
 InvoluntaryTerminationVoluntary
    
    
    Involuntary Not
    
    
    
    
    
    
    Without CauseTermination
    
    
    For
    
    
    
    
    
    
    or TerminationBenefits/Payments
    
    (including
    
    
    Cause
    
    
    For Cause
    
    
    for Good
    
    
    Death orUpon Termination
    
    Retirement)
    
    
    Termination
    
    
    Termination
    
    
    Reason
    
    
    DisabilitySalary(1)
    
    $
    120,000
    
    
    $
    120,000
    
    
    $
    120,000
    
    
    $
    1,620,000
    
    
    $
    120,000Accelerated Vesting
of Deferred
Compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Compensation(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000,000
    (3)Accelerated Vesting
of Options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Continuation of
Insurance Benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 (1)
    
    In the event of Mr. Hirschhorns voluntary termination, we are
required to pay Mr. Hirschhorn any amount of base salary earned
by, but not yet paid to, Mr. Hirschhorn through the effective date
of termination.(2)
    
    In the event of Mr. Hirschhorns voluntary termination, we are
additionally required to pay to Mr. Hirschhorn (i) all benefits
that have been earned by or vested in, and are payable to, Mr.
Hirschhorn under and subject to the terms (including all
eligibility requirements) of, the compensation and benefit plans
in which Mr. Hirschhorn participated through the effective date of
termination; (ii) all reimbursable expenses due, but not yet paid,
to Mr. Hirschhorn as of the effective date of termination and
(iii) an amount equal to all accrued and unused paid vacation or
time off, calculated in accordance with our paid vacation or time
off policies, practices and procedures (including authorized
deductions and the deductions required by law), as of the
effective date of termination.(3)
    
    Mr. Hirschhorns employment agreement provides that he shall
receive a term life insurance policy with a death benefit of
$1,000,000 for the first year of the agreement; $1,500,000 for the
second and third years of the agreement and $2,000,000 for each of
the fourth and fifth years of the agreement.
  65




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##### Table of Contents



DONALD C. PARKERSON, CHIEF FINANCIAL OFFICER
 InvoluntaryTerminationVoluntary
    
    
    Involuntary Not
    
    
    
    
    
    
    Without CauseTermination
    
    
    For
    
    
    
    
    
    
    or TerminationBenefits/Payments
    
    (including
    
    
    Cause
    
    
    For Cause
    
    
    for Good
    
    
    Death orUpon Termination
    
    Retirement)
    
    
    Termination
    
    
    Termination
    
    
    Reason
    
    
    DisabilitySalary(1)
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0Accelerated Vesting
of Deferred
Compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accelerated Vesting
of Options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Continuation of
Insurance Benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  Sean Kirrane, VP of Finance and Principal Accounting Officer
 InvoluntaryTerminationVoluntary
    
    
    Involuntary Not
    
    
    
    
    
    
    Without CauseTermination
    
    
    For
    
    
    
    
    
    
    or TerminationBenefits/Payments
    
    (including
    
    
    Cause
    
    
    For Cause
    
    
    for Good
    
    
    Death orUpon Termination
    
    Retirement)
    
    
    Termination
    
    
    Termination
    
    
    Reason
    
    
    DisabilitySalary(1)
    
    $
    37,500
    
    
    $
    37,500
    
    
    $
    37,500
    
    
    $
    37,500
    
    
    $
    0Salary (2)
    
    $
    82,500
    
    
    $
    82,500
    
    
    $
    82,500
    
    
    $
    82,500
    
    
    $
    0Salary (3)
    
    $
    165,000
    
    
    $
    165,000
    
    
    $
    165,000
    
    
    $
    165,000
    
    
    $
    0Accelerated Vesting
of Deferred
Compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accelerated Vesting
of Options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Continuation of
Insurance Benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 (1)
    
    In the event Mr. Kirranes employment is terminated in
the first six months of employment, he shall receive
the continued payment of his base salary for three
months(2)
    
    In the event Mr. Kirranes employment is terminated
between six and twenty four months of employment, he
shall receive the continued payment of his base salary
for six months(3)
    
    In the event Mr. Kirranes employment is terminated two
years of employment, he shall receive the continued
payment of his base salary for twelve months
 THE FISCAL YEAR ENDED SEPTEMBER 30, 2010 DIRECTOR COMPENSATION
   66




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##### Table of Contents



Item 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 Common Stock, Series 1-A Convertible Preferred Stock, Series 2-A Convertible Preferred Stock,
Series 5-A Convertible Preferred Stock and Series 6-A Convertible Preferred Stock
  Amount and Nature of
    
    
    Percent ofTitle of Class
    
    Name of Beneficial Owner(1)
    
    Beneficial Ownership
    
    
    Class5% Holders or Potential 5% Holders of Common StockCommon(2)
    
    SMP Investments I, LLC
    
    
    11,797,618
    
    
    
    47.7
    %c/o HSP Group, LLC875 Prospect Street, Suite 220La Jolla, CA 92037 (4)Common
    
    Carol Schuster
    
    
    4,250,000
    
    
    
    28.7
    %3555 NW 58th StreetSuite 700Oklahoma City, OK 73112Common
    
    Ciabattoni Living Trust 8/17/2000
    
    
    8,322,917
    
    
    
    37.3
    %16 Lagunita DriveLaguna Beach, CA 92561 (5)Common
    
    The Kupfer Family Trust UTD May 3, 2009
    
    
    2,384,250
    
    
    
    16.1
    %P.O. Box 9330Rancho Santa Fe, CA 92067Current DirectorsCommon
    
    David Hirschhorn (3)
    
    
    5,482,800
    
    
    
    23.9
    %Common
    
    Todd Parker (6)
    
    
    793,389
    
    
    
    5.2
    %Common
    
    Robert N. Schwartz, Ph.D (7)
    
    
    185,857
    
    
    
    1.2
    %Common
    
    Richardson E. Sells (8)
    
    
    380,000
    
    
    
    2.9
    %Common
    
    William Houlihan (12)
    
    
    1,100,000
    
    
    
    7.0
    %Current OfficersCommon
    
    David Hirschhorn (3)
    
    
    5,482,800
    
    
    
    23.9
    %Common
    
    Donald C. Parkerson
    
    
    
    
    
    
    Common
    
    Thomas Rice (9)
    
    
    375,000
    
    
    
    1.7
    %Common
    
    Current directors and officers as a group (7 persons) (11)
    
    
    7,212,171
    
    
    
    41.9
    %Former Officers and DirectorsCommon
    
    Dennis M. Smith (10)
    
    
    475,000
    
    
    
    3.1
    %5% Holders of Series 1-A Convertible Preferred StockSeries 1-A Preferred
    
    First Clearing Corporation
    
    
    20,000
    
    
    
    29.6
    %P.O. Box 6570Glen Allen, VA 23058Series 1-A Preferred
    
    Susan Lacerra & Steven Tingey, as joint tenants
    
    
    7,600
    
    
    
    11.2
    %c/o Jefferies & Co, Inc.650 California StreetSan Francisco, CA 94108
  67




---



##### Table of Contents



Amount and Nature of
    
    
    Percent ofTitle of Class
    
    Name of Beneficial Owner(1)
    
    Beneficial Ownership
    
    
    ClassSeries 1-A Preferred
    
    Ron Soderling
    
    
    40,000
    
    
    
    59.2
    %901 Dove Street, Suite 270Newport Beach, CA 92660Series 1-A Preferred
    
    First Clearing Corporation
    
    
    20,000
    
    
    
    29.6
    %PO Box 6570Glen Allen, VA 23058Series 1-A Preferred
    
    Steven Tingey Jt Ten
    
    
    7,600
    
    
    
    11.2
    %C/O Jeffries & Co Inc.650 California StreetSan Francisco, CA 941085% Holders of Series 2-A Preferred StockSeries 2-A Preferred
    
    Gretchen K. Musey
    
    
    3,900
    
    
    
    100
    %2312 NaplesNewport Beach, CA 926605% Holders of Series 5-A Preferred StockSeries 5-A Preferred
    
    Ciabattoni Living Trust 8/17/2000
    
    
    600
    
    
    
    6.7
    %16 Lagunita DriveLaguna Beach, CA 92561Series 5-A Preferred
    
    Richard Sambora Living Trust 4/13/00
    
    
    500
    
    
    
    5.6
    %c/o Gelfand Rennert & Feldman LLP360 Hamilton Avenue, Suite 100White Plains, New York 10601Series 5-A Preferred
    
    SMP Investments I, LLC
    
    
    1,250
    
    
    
    13.9
    %c/o HSP Group, LLC875 Prospect Street, Suite 220La Jolla, CA 92037Series 5-A Preferred
    
    South Bay Capital LLC
    
    
    500
    
    
    
    5.6
    %c/o Keith Lehman, Managing Member960 Third Street, Apt. 204Santa Monica, CA 90403Current DirectorsSeries 5-A Preferred
    
    David Hirschhorn
    
    
    131
    
    
    
    1.5
    %Series 5-A Preferred
    
    Todd Parker
    
    
    135
    
    
    
    1.5
    %Series 5-A Preferred
    
    William Houlihan
    
    
    250
    
    
    
    2.8
    %Series 5-A Preferred
    
    Richardson E. Sells
    
    
    
    
    
    
    Series 5-A Preferred
    
    Robert N. Schwartz, Ph.D
    
    
    
    
    
    
    Current OfficersSeries 5-A Preferred
    
    David Hirschhorn
    
    
    131
    
    
    
    1.4
    %Series 5-A Preferred
    
    Donald C. Parkerson
    
    
    
    
    
    
    Series 5-A Preferred
    
    Thomas Rice
    
    
    
    
    
    
    Series 5-A Preferred
    
    Current directors and officers as a group (7 persons) (11)
    
    
    516
    
    
    
    5.8
    %Former Officers and DirectorsSeries 5-A Preferred
    
    Dennis M. Smith
    
    
    125
    
    
    
    1.4
    %
  68




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##### Table of Contents



Amount and Nature of
    
    
    Percent ofTitle of Class
    
    Name of Beneficial Owner(1)
    
    Beneficial Ownership
    
    
    Class5% Holders of Series 6-A Preferred StockSeries 6-A Preferred
    
    Ciabattoni Living Trust 8/17/2000
    
    
    600
    
    
    
    12.3
    %16 Lagunita DriveLaguna Beach, CA 92561Series 6-A Preferred
    
    Darras Revocable Trust dated 9/2/94
    
    
    250
    
    
    
    5.1
    %600 South Indian Hill BoulevardClaremont, CA 91711Series 6-A Preferred
    
    SMP Investments I, LLC
    
    
    1,000
    
    
    
    20.5
    %c/o HSP Group, LLC875 Prospect Street, Suite 220La Jolla, CA 92037Series 6-A Preferred
    
    Hector S. Torres
    
    
    300
    
    
    
    6.2
    %c/o Joseph Apuzzo, CPA150 Airport Road, Suite 1000Lakewood, NJ 08701Series 6-A Preferred
    
    James Chao
    
    
    350
    
    
    
    7.2
    %5471 Kearny Villa Road, # 200San Diego, CA 92123Current DirectorsSeries 6-A Preferred
    
    David Hirschhorn
    
    
    
    
    
    
    Series 6-A Preferred
    
    Todd Parker
    
    
    
    
    
    
    Series 6-A Preferred
    
    William Houlihan
    
    
    
    
    
    
    Series 6-A Preferred
    
    Richardson E. Sells
    
    
    
    
    
    
    Series 6-A Preferred
    
    Robert N. Schwartz, Ph.D
    
    
    
    
    
    
    Current OfficersSeries 6-A Preferred
    
    David Hirschhorn
    
    
    
    
    
    
    Series 6-A Preferred
    
    Donald C. Parkerson
    
    
    
    
    
    
    Series 6-A Preferred
    
    Thomas Rice
    
    
    
    
    
    
    Series 6-A Preferred
    
    Current directors and officers as agroup (7 persons) (11)
    
    
    
    
    
    
    
 (1)
    
    Except as otherwise indicated, we believe that
the beneficial owners of the securities listed
have sole investment and voting power with
respect to their shares.(2)
    
    The number of shares of Common Stock shown as
beneficially owned by any person or entity
includes all Preferred Stock, options,
warrants and other convertible securities
currently exercisable by that person or entity
within 60 days of January 9, 2011. The
percentages of beneficial ownership of Common
Stock shown assume the exercise or conversion
of all preferred stock, options, warrants and
other securities convertible into Common Stock
held by such person or entity currently
exercisable within 60 days of January 9, 2011,
but not the exercise or conversion of
preferred stock, options, warrants and other
convertible securities held by other holders
of such securities.(3)
    
    Consists of (a) 1,250,000 restricted shares of
Common Stock granted in connection with Mr.
Hirschhorns Employment Agreement, dated as of
July 18, 2005; (b) 419,200 shares beneficially
owned by Mr. Hirschhorn in his capacity as
President of Hope & Abel Investments, LLC,
which directly holds 125 shares of 5-A
Preferred and 6 shares of 5-A Preferred owned
by him individually, which are convertible
into 400,000 shares of Common Stock; (c)
60,000 shares of Common Stock issued to Mr.
Hirschhorn in his capacity as President of
Hope & Abel Investments, LLC, pursuant to the
exercise of a warrant dated July 18, 2005; (d)
2,500,000 vested options convertible into
shares of Common Stock and (e) 3,600 warrants
dated January 7, 2011.(4)
    
    Consists of (a) 1,250 shares of 5-A Preferred, which are convertible into 4,000,000
shares of Common Stock; (b)
1,000 shares of 6-A Preferred
which are convertible into
3,200,000 shares of Common
Stock; (c) 1,014,285 shares of
Common Stock at $0.45 per
share; (d) a warrant to
purchase 1,200,000 shares of
Common Stock at a price of
$0.3125 per share; (e)
warrants to purchase an
aggregate of 1,250,000 shares
of Common Stock at a price of
$0.50 per share; (f) warrants
to purchase an aggregate of
333,333 shares of Common Stock
at a price of $0.75 per share
and (g) $500,000 of debt
convertible at $0.625 per
share into 800,000 shares of
Common Stock.(5)
    
    Consists of (a) 600 shares of
5-A Preferred, which are
convertible into 1,920,000
shares of Common Stock; (b)
600 shares of 6-A Preferred,
which are convertible into
1,920,000 shares of Common
Stock; (c) a warrant to
purchase 600,000 shares of
Common Stock at a price of
$0.3125 per share; (d)
warrants to purchase an
aggregate of 1,556,250 shares
of Common Stock at a price of
$0.50 per share; (e) warrants
to purchase an aggregate of
666,667 shares of Common Stock
at a price of $0.75 per share
and (f) $1,000,000 of debt
convertible at $0.625 per
share into 1,600,000 shares of
Common Stock.(6)
    
    Consists of (a) 361,389 shares
of Common Stock, of which (i)
350,000 restricted shares were
granted in connection with Mr.
Parkers employment agreement,
dated as of July 18, 2005, of
which 48,611 have been
cancelled pursuant to
termination of Mr. Parkers
employment agreement, and (ii)
60,000 were issued pursuant to
the exercise of a warrant
dated July 18, 2005, and (b)
135 shares of 5-A Preferred,
which are convertible into
432,000 shares of Common
Stock.(7)
    
    Consists of (a) 982 shares
directly owned by Dr.
Schwartz; (b) 1,125 shares
owned in a trust on behalf of
Dr. Schwartz and (c) 183,750
shares of Common Stock
issuable upon exercise of Dr.
Schwartzs stock options.
  69




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##### Table of Contents



(8)
    
    Consists of (a) 180,000 shares of Common Stock issuable upon exercise of Mr. Sells stock
options; (b) 200,000 shares of Common Stock and which are currently vested; (c) warrants to
purchase 60,000 shares of Common Stock at a price of $0.50 per share.(9)
    
    Consists of 375,000 shares of Common Stock issuable upon exercise of Mr. Rices stock options.(10)
    
    Consists of (a) 125 shares of 5-A Preferred which are convertible into 400,000 shares of
Common Stock; (b) 60,000 shares of Common Stock issued pursuant to the exercise of a warrant
dated July 18, 2005 and (c) 15,000 shares of Common Stock granted pursuant to the exercise of
a warrant dated September 18, 2006.(11)
    
    Includes shares held directly, as well as shares held jointly with family members, held in
retirement accounts, held in a fiduciary capacity, held by certain of the group members
families, or held by trusts of which the group member is a trustee or substantial
beneficiary, with respect to which shares the group member may be deemed to have sole or
shared voting or investment powers.(12)
    
    Consists of (a) 250 shares of 5-A Preferred, which are convertible into 800,000 shares of
Common Stock and (b) 300,000 shares of Common Stock.
 
 Item 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  Advisory Board
     70




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##### Table of Contents



Advance to Affiliated Entity
 AIM
 Sub-Lease from HSP, Inc.
  Repurchase of 49% Interest in RHA
  Exercise of Warrants
  
 Item 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Fees
  Year
    
    
    YearEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009Audit Fees
    
    $
    282,500
    
    
    $
    234,141Audit-Related Fees
    
    $
    
    
    
    $
    Tax Fees
    
    $
    42,500
    
    
    $
    36,410All Other Fees
    
    $
    33,500
    
    
    $
    19,366Total
    
    $
    358,500
    
    
    $
    289,917
 Audit
 Audit Related
 Tax Other
  71




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##### Table of Contents



Audit Committee Pre-Approval Policies and Procedures
  
 PART IV
 
 Item 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  (1)
    
    Consolidated Financial Statements
 Reports of Independent Registered Public Accounting Firm
    
    
    30Consolidated Balance Sheets as of September 30, 2010 and September 30, 2009
    
    
    31Consolidated Statements of Operations for the Fiscal Years Ended September 30, 2010 and September 30, 2009
    
    
    32Consolidated Statements of Stockholders Equity for the Fiscal Years Ended September 30, 2010 and September 30, 2009
    
    
    33Consolidated Statements of Cash Flows for the Fiscal Years Ended September 30, 2010 and September 30, 2009
    
    
    34Notes to the Consolidated Financial Statements
    
    
    35
 (2)
    
    Financial Statement SchedulesAll schedules have been omitted because they are not required or the required information is shown in the financial statements or notes
thereto.
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(3)
    
    The following documents are filed as exhibits to this Form 10-K (exhibits marked with an asterisk (*) have been
previously filed with the SEC as indicated and are incorporated herein by reference):
 Exhibit No.
    
    Description2.1
    *
    
    Membership Interest Purchase Agreement (filed
as Exhibit 2.1 to the Form 8-K, as filed with
the SEC on November 5, 2007)3.1
    *
    
    Certificate of Incorporation (filed as Exhibit
3.1 to the Form 8-K, as filed with the SEC on
November 14, 2000)3.2
    *
    
    Amended and Restated Bylaws dated October 25,
2002 (filed as Exhibit 3.2 to the Form 8-K, as
filed with the SEC on October 28, 2002)3.3
    *
    
    Certificate of Designation of Rights and
Preferences of Series 2-A Convertible
Preferred Stock filed November 8, 2000 (filed
as Exhibit 4.1 to the Form 8-K, as filed with
the SEC on November 14, 2000)3.4
    *
    
    Certificate of Merger filed November 8, 2000,
merging Vsource, Inc. (a Nevada corporation)
with and into the Vsource, Inc. (a Delaware
corporation) (filed as Exhibit 4.2 to the Form
8-K, as filed with the SEC on November 14,
2000)3.5
    *
    
    Agreement and Plan of Merger dated as of
December 14, 2000, among the Registrant, OTT
Acquisition Corp., Online Transaction
Technologies, Inc. and its Shareholders (filed
as Exhibit 10.11 to the Form 10-Q, as filed
with the SEC on December 15, 2000)3.6
    *
    
    Certificate of Designation of Rights and
Preferences of Series 3-A Convertible
Preferred Stock filed June 20, 2001 (filed as
Exhibit 4.1 to the Form 8-K, as filed with the
SEC on July 2, 2001)3.7
    *
    
    Amendment to Certificate of Incorporation,
dated January 16, 2002 (filed as Exhibit 3.3
to the Form 8-K, as filed with the SEC on
January 23, 2002)3.8
    *
    
    Certificate of Designation of Rights and
Preferences of Series 4-A Convertible
Preferred Stock (filed as Exhibit 3.1 to the
Form 8-K, as filed with the SEC on October 28,
2002)3.9
    *
    
    Amendment to Certificate of Incorporation,
dated November 20, 2002 (filed as Exhibit 3.1
to the Form 10-Q for the period ending October
31, 2002, as filed with the SEC on December 5,
2002)3.10
    *
    
    Certificate of Designation of Rights and
Preferences of Series 5-A Convertible
Preferred Stock (filed as Exhibit 3.1 to the
Form 8-K, as filed with the SEC on July 21,
2005)3.11
    *
    
    Amendment to Certificate of Incorporation,
dated December 16, 2005 (filed as Exhibit 3.5
to the Form 10-Q for the period ending October
31, 2005, as filed with the SEC on December
20, 2005)3.12
    *
    
    Certificate of Amendment to the Certificate of
Designation of Rights and Preferences Series
5-A Convertible Preferred Stock filed January
10, 2008 (filed as Exhibit B to the Form of
Series 5-A Preferred Stock and Warrant
Purchase Agreement, filed as Exhibit 10.52
herein)3.13
    *
    
    Certificate of Designation of Rights and
Preferences of Series 6-A Convertible
Preferred Stock filed April 2, 2008 (filed as
Exhibit 3.1 to the Form 8-K, as filed with the
SEC on April 3, 2008)3.14
    *
    
    Certificate of Amendment to the Certificate of
Designation of Rights and Preferences of
Series 5-A Convertible Preferred Stock filed
May 15, 2008 (filed as Exhibit 4.2 to the Form
10-Q, as filed with the SEC on May 20, 2008)3.15
    *
    
    Certificate of Amendment to the Certificate of
Designation of Rights and Preferences of
Series 6-A Convertible Preferred Stock filed
May 15, 2008 (filed as Exhibit B to the Form
of Series 6-A Preferred Stock and Warrant
Purchase Agreement, filed as Exhibit 10.54
herein)
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Exhibit No.

    
    Description3.16
    *
    
    Amendment to Certificate of Incorporation, dated September 29, 2009 (filed as Exhibit 3.1
to the Form 8-K, as filed with the SEC on October 1, 2009)4.1
    *
    
    Certificate of Decrease of Shares Designated as Series 1-A Convertible Preferred Stock
(filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on July 13, 2005)4.2
    *
    
    Certificate of Decrease of Shares Designated as Series 2-A Convertible Preferred Stock
(filed as Exhibit 4.2 to the Form 8-K, as filed with the SEC on July 13, 2005)4.3
    *
    
    Certificate of Decrease of Shares Designated as Series 3-A Convertible Preferred Stock
(filed as Exhibit 4.3 to the Form 8-K, as filed with the SEC on July 13, 2005)4.4
    *
    
    Certificate of Decrease of Shares Designated as Series 4-A Convertible Preferred Stock
(filed as Exhibit 4.4 to the Form 8-K, as filed with the SEC on July 13, 2005)4.5
    *
    
    Series 5-A Preferred Stock and Warrant Purchase Agreement, dated as of July 7, 2005, by and
among Vsource, Inc. and the investors listed therein (filed as Exhibit 4.1 to the Form 8-K,
as filed with the SEC on July 21, 2005)4.6
    *
    
    Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on July 21, 2005)4.7
    *
    
    Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on August 23, 2005)4.8
    *
    
    Series 5-A Preferred Stock and Warrant Purchase Agreement, dated as of September, 18, 2006,
by and among First Physicians Capital Group, Inc. and certain Series 5-A Preferred Stock
Investors (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on September 22,
2006)4.9
    *
    
    Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on September 22, 2006)4.10
    *
    
    Amended and Restated Articles of Organization of Rural Hospital Acquisition LLC (filed as
Exhibit 4.1 to the Form 8-K, as filed with the SEC on November 5, 2007)4.11
    *
    
    Amended and Restated Operating Agreement Rural Hospital Acquisition LLC (filed as Exhibit
4.2 to the Form 8-K, as filed with the SEC on November 5, 2007)4.12
    *
    
    Form of Extension of Warrant, dated July 18, 2007 (filed as Exhibit 4.1 to Form 8-K as
filed with the SEC on December 18, 2008)10.1
    *
    
    Form of First Group Notes (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on
November 2, 2007)10.2
    *
    
    Form of Second Group Notes (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on
November 2, 2007)10.3
    *
    
    Form of First Group Warrants (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC
on November 2, 2007)10.4
    *
    
    Form of Second Group Warrants (filed as Exhibit 10.4 to the Form 8-K, as filed with the SEC
on November 2, 2007)
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Exhibit No.

    
    Description10.5
    *
    
    Form of Limited Guaranty by Tri-Isthmus Group, Inc.
(filed as Exhibit 10.1 to the Form 8-K, as filed with
the SEC on November 5, 2007)10.6
    *
    
    Employment Agreement of Dennis M. Smith, dated
effective as of October 10, 2007 (filed as Exhibit 10.1
to the Form 8-K, as filed with the SEC on December 21,
2007)10.7
    *
    
    Option Agreement of Dennis M. Smith, dated effective as
of October 10, 2007 (filed as Exhibit 10.2 to the Form
8-K, as filed with the SEC on December 21, 2007)10.8
    *
    
    Series 5-A Preferred Stock and Warrant Purchase
Agreement, dated January 14, 2008 (filed as Exhibit
10.1 to the Form 8-K, as filed with the SEC on January
22, 2008)10.9
    *
    
    Form of Investor Warrant (filed as Exhibit 10.2 to the
Form 8-K, as filed with the SEC on January 22, 2008)10.10
    *
    
    Form of Warrant issued to SMP Investments I, LLC (filed
as Exhibit 10.1 to the Form 8-K, as filed with the SEC
on March 26, 2008)10.11
    *
    
    Series 6-A Preferred Stock and Warrant Purchase
Agreement, dated March 31, 2008 (filed as Exhibit 10.1
to the Form 8-K, as filed with the SEC on April 3,
2008)10.12
    *
    
    Form of Investor Warrant (filed as Exhibit 10.2 to the
Form 8-K, as filed with the SEC on April 3, 2008)10.13
    *
    
    Form of Waveland Warrant (filed as Exhibit 10.3 to the
Form 8-K, as filed with the SEC on April 3, 2008)10.14
    *
    
    Agreement and Plan of Merger, dated April 24, 2008
(filed as Exhibit 10.1 to the Form 8-K, as filed with
the SEC on April 30, 2008)10.15
    *
    
    Form of Series 5-A Preferred Stock and Warrant Purchase
Agreement (filed as Exhibit 10.1 to the Form 8-K, as
filed with the SEC on May 7, 2008)10.16
    *
    
    Form of Warrant issued to each of SMP Investments I,
LLC and Ciabattoni Living Trust dated August 17, 2000
(filed as Exhibit 10.2 to the Form 8-K, as filed with
the SEC on May 7, 2008)10.17
    *
    
    Form of Letter Agreement for the issuance of shares of
Series 6-A Convertible Preferred Stock in complete
satisfaction of that certain convertible promissory
note dated as of October 29, 2007 between Tri-Isthmus
Group, Inc., Surgical Center Acquisition Holdings,
Inc., Del Mar Acquisition, Inc., Del Mar GenPar, Inc.,
Point Loma Acquisition, Inc., and Point Loma GenPar,
Inc. (filed as Exhibit 10.3 to the Form 8-K, as filed
with the SEC on May 7, 2008)10.18
    *
    
    Series 6-A Preferred Stock and Warrant Purchase
Agreement, dated May 29, 2008 (filed as Exhibit 10.1 to
the Form 8-K, as filed with the SEC on June 4, 2008)10.19
    *
    
    Form of Investor Warrant (filed as Exhibit 10.2 to the
Form 8-K, as filed with the SEC on June 4, 2008)10.20
    *
    
    Employment Agreement of David Hirschhorn, dated as of
July 1, 2008 (filed as Exhibit 10.1 to the Form 8-K, as
filed with the SEC on July 7, 2008)10.21
    *
    
    Form of Option Grant Agreement of David Hirschhorn,
dated as of July 1, 2008 (filed as Exhibit 10.2 to the
Form 8-K, as filed with the SEC on July 7, 2008)
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Exhibit No.

    
    Description10.22
    *
    
    Series 6-A Preferred Stock and Warrant Purchase
Agreement, dated September 8, 2008 (filed as Exhibit
10.1 to the Form 8-K, as filed with the SEC on
September 12, 2008)10.23
    *
    
    Form of Investor Warrant (filed as Exhibit 10.2 to the
Form 8-K, as filed with the SEC on September 12, 2008)10.24
    *
    
    Employment Agreement of Thomas Rice, dated effective as
of November 10, 2008 (filed as Exhibit 10.1 to the Form
8-K, as filed with the SEC on November 14, 2008)10.25
    *
    
    Option Grant Agreement of Thomas Rice, dated effective
as of November 10, 2008 (filed as Exhibit 10.2 to the
Form 8-K, as filed with the SEC on November 14, 2008)10.26
    *
    
    Form of Loan Agreement, effective November 6, 2008,
among RHA Anadarko, LLC, Tri-Isthmus Group, Inc., Rural
Hospital Acquisition, LLC, First Physicians Community
Healthcare Services, Inc., RHA Stroud, LLC, RHA
Tishomingo, LLC, TSG Physicians Group, LLC, and
Canadian State Bank (filed as Exhibit 10.2 to the Form
8-K, as filed with the SEC on December 17, 2008)10.27
    *
    
    Form of Loan Agreement, effective November 6, 2008,
among RHA Stroud, LLC, Tri-Isthmus Group, Inc., Rural
Hospital Acquisition, LLC, First Physicians Community
Healthcare Services, Inc., RHA Anadarko, LLC, RHA
Tishomingo, LLC, TSG Physicians Group, LLC, and
Valliance Bank (filed as Exhibit 10.3 to the Form 8-K,
as filed with the SEC on December 17, 2008)10.28
    *
    
    Form of Loan Agreement, effective November 6, 2008,
among RHA Tishomingo, LLC, Tri-Isthmus Group, Inc.,
Rural Hospital Acquisition, LLC, First Physicians
Community Healthcare Services, Inc., RHA Stroud, LLC,
RHA Anadarko, LLC, TSG Physicians Group, LLC, and
Canadian State Bank (filed as Exhibit 10.4 to the Form
8-K, as filed with the SEC on December 17, 2008)10.29
    *
    
    Form of Promissory Note, effective November 6, 2008, by
RHA Anadarko, LLC, in favor of Canadian State Bank
(filed as Exhibit 10.5 to the Form 8-K, as filed with
the SEC on December 17, 2008)10.30
    *
    
    Form of Promissory Note, effective November 6, 2008, by
RHA Stroud, LLC, in favor of Valliance Bank (filed as
Exhibit 10.6 to the Form 8-K, as filed with the SEC on
December 17, 2008)10.31
    *
    
    Form of Promissory Note, effective November 6, 2008, by
RHA Tishomingo, LLC, in favor of Canadian State Bank
(filed as Exhibit 10.7 to the Form 8-K, as filed with
the SEC on December 17, 2008)10.32
    *
    
    USDA Guaranty Agreement, effective November 6, 2008, by
RHA Anadarko, LLC, in favor of Canadian State Bank
(filed as Exhibit 10.8 to the Form 8-K, as filed with
the SEC on December 17, 2008)10.33
    *
    
    USDA Guaranty Agreement, effective November 6, 2008, by
RHA Stroud, LLC, in favor of Valliance Bank (filed as
Exhibit 10.9 to the Form 8-K, as filed with the SEC on
December 17, 2008)10.34
    *
    
    USDA Guaranty Agreement, effective November 6, 2008, by
RHA Anadarko, LLC, in favor of Canadian State Bank
(filed as Exhibit 10.10 to the Form 8-K, as filed with
the SEC on December 17, 2008)
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Exhibit No.

    
    Description10.35
    *
    
    Form of Promissory Note, dated December 11,
2008, by Rural Hospital Acquisition, LLC, in
favor of Carol Schuster (filed as Exhibit 10.11
to the Form 8-K, as filed with the SEC on
December 17, 2008)10.36
    *
    
    Form of Guaranty of Tri-Isthmus Group, Inc.,
dated December 11, 2008, in favor of Carol
Schuster (filed as Exhibit 10.12 to the Form
8-K, as filed with the SEC on December 17, 2008)10.37
    *
    
    Form of Convertible Promissory Note Issued in
Favor of SMP Investments I, LLC (filed as
Exhibit 10.1 to the Form 8-K, as filed with the
SEC on February 13, 2009)10.38
    *
    
    Form of Convertible Promissory Note Issued in
Favor of Anthony J. Ciabattoni, Trustee of the
Ciabattoni Living Trust dated August 17, 2000
(filed as Exhibit 10.2 to the Form 8-K, as filed
with the SEC on February 13, 2009)10.39
    *
    
    Form of Warrant No. 108 (filed as Exhibit 10.3
to the Form 8-K, as filed with the SEC on
February 13, 2009)10.40
    *
    
    Form of Warrant No. 109 (filed as Exhibit 10.4
to the Form 8-K, as filed with the SEC on
February 13, 2009)10.41
    *
    
    Form of Warrant No. 110 (filed as Exhibit 10.5
to the Form 8-K, as filed with the SEC on
February 13, 2009)10.42
    *
    
    Form of Warrant No. 111 (filed as Exhibit 10.6
to the Form 8-K, as filed with the SEC on
February 13, 2009)10.43
    *
    
    Form of Convertible Promissory Note (filed as
Exhibit 10.1 to the Form 8-K, as filed with the
SEC on March 5, 2009)10.44
    *
    
    Form of Warrant (exercisable at $0.50 per share)
issued to each of Michael Ciabattoni, Scott
Casey, Jean Heaton, Stephanie Heaton, Jennifer
Heaton, Cobea Associates, LLC, William Wallace,
Trustee of the Wallace Family Revocable Trust
dated April 23, 2001, Otto J. Claricurzio, and
Phillip J. Ciabattoni (filed as Exhibit 10.2 to
the Form 8-K, as filed with the SEC on March 5,
2009)10.45
    *
    
    Form of Warrant (exercisable at $0.75 per share)
issued to each of Michael Ciabattoni, Scott
Casey, Jean Heaton, Stephanie Heaton, Jennifer
Heaton, Cobea Associates, LLC, William Wallace,
Trustee of the Wallace Family Revocable Trust
dated April 23, 2001, Otto J. Claricurzio, and
Phillip J. Ciabatton (filed as Exhibit 10.3 to
the Form 8-K, as filed with the SEC on March 5,
2009)10.46
    *
    
    Form of Convertible Promissory Note issued to
each of Frank Darras, Trustee of the Darras
Family Trust, SFV, Incorporated, NFS LLC/FMTC
Rol IRA FBO Neal Katz A/C LMG-001902 (filed as
Exhibit 10.1 to the Form 8-K, as filed with the
SEC on April 20, 2009)10.47
    *
    
    Form of Warrant (exercisable at $0.50 per share)
Frank Darras, Trustee of the Darras Family
Trust, SFV, Incorporated, NFS LLC/FMTC Rol IRA
FBO Neal Katz A/C LMG-001902 (filed as Exhibit
10.2 to the Form 8-K, as filed with the SEC on
April 20, 2009)10.48
    *
    
    Form of Warrant (exercisable at $0.75 per share)
Frank Darras, Trustee of the Darras Family
Trust, SFV, Incorporated, NFS LLC/FMTC Rol IRA
FBO Neal Katz A/C LMG-001902 (filed as Exhibit
10.3 to the Form 8-K, as filed with the SEC on
April 20, 2009)10.49
    *
    
    Form of Series 6-A Preferred Stock and Warrant
Purchase Agreement (filed as Exhibit 10.1 to the
Form 8-K, as filed with the SEC on June 12,
2009)
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Exhibit No.

    
    Description10.50
    *
    
    Form of Investor Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on
June 12, 2009)10.51
    *
    
    Form of Medical Advisory Board Warrant (filed as Exhibit 10.3 to the Form 8-K, as filed with
the SEC on June 12, 2009)10.52
    *
    
    Form of Series 5-A Preferred Stock and Warrant Purchase Agreement, dated October 19, 2009
(filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on October 23, 2009)10.53
    *
    
    Form of Warrant issued in connection with 5-A (filed as Exhibit 10.2 to the Form 8-K, as
filed with the SEC on October 23, 2009)10.54
    *
    
    Form of Series 6-A Preferred Stock and Warrant Purchase Agreement, dated October 19, 2009
(filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on October 23, 2009)10.55
    *
    
    Form of Warrant issued in connection with 6-A (filed as Exhibit 10.4 to the Form 8-K, as
filed with the SEC on October 23, 2009)10.56
    *
    
    Form Subscription Agreement, dated December 3, 2009 (filed as Exhibit 10.1 to the Form 8-K,
as filed with the SEC on December 14, 2009)10.57
    *
    
    Form of Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on December 14,
2009)14.1
    *
    
    Corporate Code of Business Conduct and Ethics for Directors, Executive Officers, and
Employees, dated effective as of April 22, 2008 (filed as Exhibit 14.1 to the Form 10-K, as
filed with the SEC on January 13, 2009)21.1
    
    
    Subsidiaries of First Physicians Capital Group, Inc. (f/k/a Tri-Isthmus Group, Inc.)31.1
    
    
    Certification Pursuant to Rule 13a-14(d) promulgated under the Securities Exchange Act of 193431.2
    
    
    Certification Pursuant to Rule 13a-14(d) promulgated under the Securities Exchange Act of 193432.1
    
    
    Certification Pursuant to 18 U.S.C. 135032.2
    
    
    Certification Pursuant to 18 U.S.C. 1350
 *
    
    Previously filed with the SEC as indicated, and hereby incorporated herein by reference.
    
    Certain portions of these documents have been omitted based on a request for
confidential treatment submitted to the SEC. The non-public information that has been
omitted from these documents has been separately filed with the SEC. Each redacted
portion of these documents is indicated by a [*] and is subject to the request for
confidential treatment submitted to the SEC. The redacted information is confidential
information of the Registrant.
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SIGNATURES
  First Physicians Capital Group, Inc.Date: January 12, 2011
    By:
    /s/ David Hirschhorn  Signature
    
    Title
    
    Date/s/ David Hirschhorn
    
    Chairman of the Board, Chief Executive Officer
    
    January 12, 2011David Hirschhorn/s/ Sean Kirrane
    
    Principal
Accounting Officer
    
    January 12, 2011Sean Kirrane/s/ Todd Parker
    
    Director
    
    January 12, 2011Todd Parker/s/ Robert N. Schwartz
    
    Director
    
    January 12, 2011Robert N. Schwartz/s/ Richardson E. Sells
    
    Director
    
    January 12, 2011Richardson E. Sells/s/ William Houlihan
    
    Director
    
    January 12, 2011William Houlihan
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EXHIBIT INDEX
 Exhibit No.

    
    Description2.1
    *
    
    Membership Interest Purchase Agreement (filed as
Exhibit 2.1 to the Form 8-K, as filed with the SEC on
November 5, 2007)3.1
    *
    
    Certificate of Incorporation (filed as Exhibit 3.1 to
the Form 8-K, as filed with the SEC on November 14,
2000)3.2
    *
    
    Amended and Restated Bylaws dated October 25, 2002
(filed as Exhibit 3.2 to the Form 8-K, as filed with
the SEC on October 28, 2002)3.3
    *
    
    Certificate of Designation of Rights and Preferences of
Series 2-A Convertible Preferred Stock filed November
8, 2000 (filed as Exhibit 4.1 to the Form 8-K, as filed
with the SEC on November 14, 2000)3.4
    *
    
    Certificate of Merger filed November 8, 2000, merging
Vsource, Inc. (a Nevada corporation) with and into the
Vsource, Inc. (a Delaware corporation) (filed as
Exhibit 4.2 to the Form 8-K, as filed with the SEC on
November 14, 2000)3.5
    *
    
    Agreement and Plan of Merger dated as of December 14,
2000, among the Registrant, OTT Acquisition Corp.,
Online Transaction Technologies, Inc. and its
Shareholders (filed as Exhibit 10.11 to the Form 10-Q,
as filed with the SEC on December 15, 2000)3.6
    *
    
    Certificate of Designation of Rights and Preferences of
Series 3-A Convertible Preferred Stock filed June 20,
2001 (filed as Exhibit 4.1 to the Form 8-K, as filed
with the SEC on July 2, 2001)3.7
    *
    
    Amendment to Certificate of Incorporation, dated
January 16, 2002 (filed as Exhibit 3.3 to the Form 8-K,
as filed with the SEC on January 23, 2002)3.8
    *
    
    Certificate of Designation of Rights and Preferences of
Series 4-A Convertible Preferred Stock (filed as
Exhibit 3.1 to the Form 8-K, as filed with the SEC on
October 28, 2002)3.9
    *
    
    Amendment to Certificate of Incorporation, dated
November 20, 2002 (filed as Exhibit 3.1 to the Form
10-Q for the period ending October 31, 2002, as filed
with the SEC on December 5, 2002)3.10
    *
    
    Certificate of Designation of Rights and Preferences of
Series 5-A Convertible Preferred Stock (filed as
Exhibit 3.1 to the Form 8-K, as filed with the SEC on
July 21, 2005)3.11
    *
    
    Amendment to Certificate of Incorporation, dated
December 16, 2005 (filed as Exhibit 3.5 to the Form
10-Q for the period ending October 31, 2005, as filed
with the SEC on December 20, 2005)3.12
    *
    
    Certificate of Amendment to the Certificate of
Designation of Rights and Preferences Series 5-A
Convertible Preferred Stock filed January 10, 2008
(filed as Exhibit B to the Form of Series 5-A Preferred
Stock and Warrant Purchase Agreement, filed as Exhibit
10.52 herein)3.13
    *
    
    Certificate of Designation of Rights and Preferences of
Series 6-A Convertible Preferred Stock filed April 2,
2008 (filed as Exhibit 3.1 to the Form 8-K, as filed
with the SEC on April 3, 2008)3.14
    *
    
    Certificate of Amendment to the Certificate of
Designation of Rights and Preferences of Series 5-A
Convertible Preferred Stock filed May 15, 2008 (filed
as Exhibit 4.2 to the Form 10-Q, as filed with the SEC
on May 20, 2008)
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Exhibit No.

    
    Description3.15
    *
    
    Certificate of Amendment to the Certificate of Designation of Rights and Preferences of
Series 6-A Convertible Preferred Stock filed May 15, 2008 (filed as Exhibit B to the Form
of Series 6-A Preferred Stock and Warrant Purchase Agreement, filed as Exhibit 10.54
herein)3.16
    *
    
    Amendment to Certificate of Incorporation, dated September 29, 2009 (filed as Exhibit 3.1
to the Form 8-K, as filed with the SEC on October 1, 2009)4.1
    *
    
    Certificate of Decrease of Shares Designated as Series 1-A Convertible Preferred Stock
(filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on July 13, 2005)4.2
    *
    
    Certificate of Decrease of Shares Designated as Series 2-A Convertible Preferred Stock
(filed as Exhibit 4.2 to the Form 8-K, as filed with the SEC on July 13, 2005)4.3
    *
    
    Certificate of Decrease of Shares Designated as Series 3-A Convertible Preferred Stock
(filed as Exhibit 4.3 to the Form 8-K, as filed with the SEC on July 13, 2005)4.4
    *
    
    Certificate of Decrease of Shares Designated as Series 4-A Convertible Preferred Stock
(filed as Exhibit 4.4 to the Form 8-K, as filed with the SEC on July 13, 2005)4.5
    *
    
    Series 5-A Preferred Stock and Warrant Purchase Agreement, dated as of July 7, 2005, by and
among Vsource, Inc. and the investors listed therein (filed as Exhibit 4.1 to the Form 8-K,
as filed with the SEC on July 21, 2005)4.6
    *
    
    Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on July 21, 2005)4.7
    *
    
    Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on August 23, 2005)4.8
    *
    
    Series 5-A Preferred Stock and Warrant Purchase Agreement, dated as of September, 18, 2006,
by and among First Physicians Capital Group, Inc. and certain Series 5-A Preferred Stock
Investors (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on September 22,
2006)4.9
    *
    
    Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on September 22, 2006)4.10
    *
    
    Amended and Restated Articles of Organization of Rural Hospital Acquisition LLC (filed as
Exhibit 4.1 to the Form 8-K, as filed with the SEC on November 5, 2007)4.11
    *
    
    Amended and Restated Operating Agreement Rural Hospital Acquisition LLC (filed as Exhibit
4.2 to the Form 8-K, as filed with the SEC on November 5, 2007)4.12
    *
    
    Form of Extension of Warrant, dated July 18, 2007 (filed as Exhibit 4.1 to Form 8-K as
filed with the SEC on December 18, 2008)10.1
    *
    
    Form of First Group Notes (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on
November 2, 2007)10.2
    *
    
    Form of Second Group Notes (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on
November 2, 2007)10.3
    *
    
    Form of First Group Warrants (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC
on November 2, 2007)10.4
    *
    
    Form of Second Group Warrants (filed as Exhibit 10.4 to the Form 8-K, as filed with the SEC
on November 2, 2007)
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Exhibit No.

    
    Description10.5
    *
    
    Form of Limited Guaranty by Tri-Isthmus Group,
Inc. (filed as Exhibit 10.1 to the Form 8-K, as
filed with the SEC on November 5, 2007)10.6
    *
    
    Employment Agreement of Dennis M. Smith, dated
effective as of October 10, 2007 (filed as
Exhibit 10.1 to the Form 8-K, as filed with the
SEC on December 21, 2007)10.7
    *
    
    Option Agreement of Dennis M. Smith, dated
effective as of October 10, 2007 (filed as
Exhibit 10.2 to the Form 8-K, as filed with the
SEC on December 21, 2007)10.8
    *
    
    Series 5-A Preferred Stock and Warrant Purchase
Agreement, dated January 14, 2008 (filed as
Exhibit 10.1 to the Form 8-K, as filed with the
SEC on January 22, 2008)10.9
    *
    
    Form of Investor Warrant (filed as Exhibit 10.2
to the Form 8-K, as filed with the SEC on
January 22, 2008)10.10
    *
    
    Form of Warrant issued to SMP Investments I, LLC
(filed as Exhibit 10.1 to the Form 8-K, as filed
with the SEC on March 26, 2008)10.11
    *
    
    Series 6-A Preferred Stock and Warrant Purchase
Agreement, dated March 31, 2008 (filed as
Exhibit 10.1 to the Form 8-K, as filed with the
SEC on April 3, 2008)10.12
    *
    
    Form of Investor Warrant (filed as Exhibit 10.2
to the Form 8-K, as filed with the SEC on April
3, 2008)10.13
    *
    
    Form of Waveland Warrant (filed as Exhibit 10.3
to the Form 8-K, as filed with the SEC on April
3, 2008)10.14
    *
    
    Agreement and Plan of Merger, dated April 24,
2008 (filed as Exhibit 10.1 to the Form 8-K, as
filed with the SEC on April 30, 2008)10.15
    *
    
    Form of Series 5-A Preferred Stock and Warrant
Purchase Agreement (filed as Exhibit 10.1 to the
Form 8-K, as filed with the SEC on May 7, 2008)10.16
    *
    
    Form of Warrant issued to each of SMP
Investments I, LLC and Ciabattoni Living Trust
dated August 17, 2000 (filed as Exhibit 10.2 to
the Form 8-K, as filed with the SEC on May 7,
2008)10.17
    *
    
    Form of Letter Agreement for the issuance of
shares of Series 6-A Convertible Preferred Stock
in complete satisfaction of that certain
convertible promissory note dated as of October
29, 2007 between Tri-Isthmus Group, Inc.,
Surgical Center Acquisition Holdings, Inc., Del
Mar Acquisition, Inc., Del Mar GenPar, Inc.,
Point Loma Acquisition, Inc., and Point Loma
GenPar, Inc. (filed as Exhibit 10.3 to the Form
8-K, as filed with the SEC on May 7, 2008)10.18
    *
    
    Series 6-A Preferred Stock and Warrant Purchase
Agreement, dated May 29, 2008 (filed as Exhibit
10.1 to the Form 8-K, as filed with the SEC on
June 4, 2008)10.19
    *
    
    Form of Investor Warrant (filed as Exhibit 10.2
to the Form 8-K, as filed with the SEC on June
4, 2008)10.20
    *
    
    Employment Agreement of David Hirschhorn, dated
as of July 1, 2008 (filed as Exhibit 10.1 to the
Form 8-K, as filed with the SEC on July 7, 2008)
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Exhibit No.

    
    Description10.21
    *
    
    Form of Option Grant Agreement of David
Hirschhorn, dated as of July 1, 2008 (filed as
Exhibit 10.2 to the Form 8-K, as filed with the
SEC on July 7, 2008)10.22
    *
    
    Series 6-A Preferred Stock and Warrant Purchase
Agreement, dated September 8, 2008 (filed as
Exhibit 10.1 to the Form 8-K, as filed with the
SEC on September 12, 2008)10.23
    *
    
    Form of Investor Warrant (filed as Exhibit 10.2
to the Form 8-K, as filed with the SEC on
September 12, 2008)10.24
    *
    
    Employment Agreement of Thomas Rice, dated
effective as of November 10, 2008 (filed as
Exhibit 10.1 to the Form 8-K, as filed with the
SEC on November 14, 2008)10.25
    *
    
    Option Grant Agreement of Thomas Rice, dated
effective as of November 10, 2008 (filed as
Exhibit 10.2 to the Form 8-K, as filed with the
SEC on November 14, 2008)10.26
    *
    
    Form of Loan Agreement, effective November 6,
2008, among RHA Anadarko, LLC, Tri-Isthmus
Group, Inc., Rural Hospital Acquisition, LLC,
First Physicians Community Healthcare Services,
Inc., RHA Stroud, LLC, RHA Tishomingo, LLC, TSG
Physicians Group, LLC, and Canadian State Bank
(filed as Exhibit 10.2 to the Form 8-K, as filed
with the SEC on December 17, 2008)10.27
    *
    
    Form of Loan Agreement, effective November 6,
2008, among RHA Stroud, LLC, Tri-Isthmus Group,
Inc., Rural Hospital Acquisition, LLC, First
Physicians Community Healthcare Services, Inc.,
RHA Anadarko, LLC, RHA Tishomingo, LLC, TSG
Physicians Group, LLC, and Valliance Bank (filed
as Exhibit 10.3 to the Form 8-K, as filed with
the SEC on December 17, 2008)10.28
    *
    
    Form of Loan Agreement, effective November 6,
2008, among RHA Tishomingo, LLC, Tri-Isthmus
Group, Inc., Rural Hospital Acquisition, LLC,
First Physicians Community Healthcare Services,
Inc., RHA Stroud, LLC, RHA Anadarko, LLC, TSG
Physicians Group, LLC, and Canadian State Bank
(filed as Exhibit 10.4 to the Form 8-K, as filed
with the SEC on December 17, 2008)10.29
    *
    
    Form of Promissory Note, effective November 6,
2008, by RHA Anadarko, LLC, in favor of Canadian
State Bank (filed as Exhibit 10.5 to the Form
8-K, as filed with the SEC on December 17, 2008)10.30
    *
    
    Form of Promissory Note, effective November 6,
2008, by RHA Stroud, LLC, in favor of Valliance
Bank (filed as Exhibit 10.6 to the Form 8-K, as
filed with the SEC on December 17, 2008)10.31
    *
    
    Form of Promissory Note, effective November 6,
2008, by RHA Tishomingo, LLC, in favor of
Canadian State Bank (filed as Exhibit 10.7 to
the Form 8-K, as filed with the SEC on December
17, 2008)10.32
    *
    
    USDA Guaranty Agreement, effective November 6,
2008, by RHA Anadarko, LLC, in favor of Canadian
State Bank (filed as Exhibit 10.8 to the Form
8-K, as filed with the SEC on December 17, 2008)10.33
    *
    
    USDA Guaranty Agreement, effective November 6,
2008, by RHA Stroud, LLC, in favor of Valliance
Bank (filed as Exhibit 10.9 to the Form 8-K, as
filed with the SEC on December 17, 2008)10.34
    *
    
    USDA Guaranty Agreement, effective November 6,
2008, by RHA Anadarko, LLC, in favor of Canadian
State Bank (filed as Exhibit 10.10 to the Form
8-K, as filed with the SEC on December 17, 2008)
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Exhibit No.

    
    Description10.35
    *
    
    Form of Promissory Note, dated December 11,
2008, by Rural Hospital Acquisition, LLC, in
favor of Carol Schuster (filed as Exhibit 10.11
to the Form 8-K, as filed with the SEC on
December 17, 2008)10.36
    *
    
    Form of Guaranty of Tri-Isthmus Group, Inc.,
dated December 11, 2008, in favor of Carol
Schuster (filed as Exhibit 10.12 to the Form
8-K, as filed with the SEC on December 17, 2008)10.37
    *
    
    Form of Convertible Promissory Note Issued in
Favor of SMP Investments I, LLC (filed as
Exhibit 10.1 to the Form 8-K, as filed with the
SEC on February 13, 2009)10.38
    *
    
    Form of Convertible Promissory Note Issued in
Favor of Anthony J. Ciabattoni, Trustee of the
Ciabattoni Living Trust dated August 17, 2000
(filed as Exhibit 10.2 to the Form 8-K, as filed
with the SEC on February 13, 2009)10.39
    *
    
    Form of Warrant No. 108 (filed as Exhibit 10.3
to the Form 8-K, as filed with the SEC on
February 13, 2009)10.40
    *
    
    Form of Warrant No. 109 (filed as Exhibit 10.4
to the Form 8-K, as filed with the SEC on
February 13, 2009)10.41
    *
    
    Form of Warrant No. 110 (filed as Exhibit 10.5
to the Form 8-K, as filed with the SEC on
February 13, 2009)10.42
    *
    
    Form of Warrant No. 111 (filed as Exhibit 10.6
to the Form 8-K, as filed with the SEC on
February 13, 2009)10.43
    *
    
    Form of Convertible Promissory Note (filed as
Exhibit 10.1 to the Form 8-K, as filed with the
SEC on March 5, 2009)10.44
    *
    
    Form of Warrant (exercisable at $0.50 per share)
issued to each of Michael Ciabattoni, Scott
Casey, Jean Heaton, Stephanie Heaton, Jennifer
Heaton, Cobea Associates, LLC, William Wallace,
Trustee of the Wallace Family Revocable Trust
dated April 23, 2001, Otto J. Claricurzio, and
Phillip J. Ciabattoni (filed as Exhibit 10.2 to
the Form 8-K, as filed with the SEC on March 5,
2009)10.45
    *
    
    Form of Warrant (exercisable at $0.75 per share)
issued to each of Michael Ciabattoni, Scott
Casey, Jean Heaton, Stephanie Heaton, Jennifer
Heaton, Cobea Associates, LLC, William Wallace,
Trustee of the Wallace Family Revocable Trust
dated April 23, 2001, Otto J. Claricurzio, and
Phillip J. Ciabattoni (filed as Exhibit 10.3 to
the Form 8-K, as filed with the SEC on March 5,
2009)10.46
    *
    
    Form of Convertible Promissory Note issued to
each of Frank Darras, Trustee of the Darras
Family Trust, SFV, Incorporated, NFS LLC/FMTC
Rol IRA FBO Neal Katz A/C LMG-001902 (filed as
Exhibit 10.1 to the Form 8-K, as filed with the
SEC on April 20, 2009)10.47
    *
    
    Form of Warrant (exercisable at $0.50 per share)
Frank Darras, Trustee of the Darras Family
Trust, SFV, Incorporated, NFS LLC/FMTC Rol IRA
FBO Neal Katz A/C LMG-001902 (filed as Exhibit
10.2 to the Form 8-K, as filed with the SEC on
April 20, 2009)10.48
    *
    
    Form of Warrant (exercisable at $0.75 per share)
Frank Darras, Trustee of the Darras Family
Trust, SFV, Incorporated, NFS LLC/FMTC Rol IRA
FBO Neal Katz A/C LMG-001902 (filed as Exhibit
10.3 to the Form 8-K, as filed with the SEC on
April 20, 2009)
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Exhibit No.

    
    Description10.49
    *
    
    Form of Series 6-A Preferred Stock and Warrant Purchase Agreement (filed as Exhibit 10.1 to
the Form 8-K, as filed with the SEC on June 12, 2009)10.50
    *
    
    Form of Investor Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on
June 12, 2009)10.51
    *
    
    Form of Medical Advisory Board Warrant (filed as Exhibit 10.3 to the Form 8-K, as filed with
the SEC on June 12, 2009)10.52
    *
    
    Form of Series 5-A Preferred Stock and Warrant Purchase Agreement, dated October 19, 2009
(filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on October 23, 2009)10.53
    *
    
    Form of Warrant issued in connection with 5-A (filed as Exhibit 10.2 to the Form 8-K, as
filed with the SEC on October 23, 2009)10.54
    *
    
    Form of Series 6-A Preferred Stock and Warrant Purchase Agreement, dated October 19, 2009
(filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on October 23, 2009)10.55
    *
    
    Form of Warrant issued in connection with 6-A (filed as Exhibit 10.4 to the Form 8-K, as
filed with the SEC on October 23, 2009)10.56
    *
    
    Form Subscription Agreement, dated December 3, 2009 (filed as Exhibit 10.1 to the Form 8-K,
as filed with the SEC on December 14, 2009)10.57
    *
    
    Form of Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on December 14,
2009)14.1
    *
    
    Corporate Code of Business Conduct and Ethics for Directors, Executive Officers, and
Employees, dated effective as of April 22, 2008 (filed as Exhibit 14.1 to the Form 10-K, as
filed with the SEC on January 13, 2009)21.1
    
    
    Subsidiaries of First Physicians Capital Group, Inc. (f/k/a Tri-Isthmus Group, Inc.)31.1
    
    
    Certification Pursuant to Rule 13a-14(d) promulgated under the Securities Exchange Act of 193431.2
    
    
    Certification Pursuant to Rule 13a-14(d) promulgated under the Securities Exchange Act of 193432.1
    
    
    Certification Pursuant to 18 U.S.C. 135032.2
    
    
    Certification Pursuant to 18 U.S.C. 1350
 *
    
    Previously filed with the SEC as indicated, and hereby incorporated herein by reference.
    
    Certain portions of these documents have been omitted based on a request for confidential treatment submitted to the SEC. The non-public information that has been
omitted from these documents has been separately filed with the SEC. Each redacted portion of these documents is indicated by a [*] and is subject to the request
for confidential treatment submitted to the SEC. The redacted information is confidential information of the Registrant.
  85