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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, 2009
 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
(State or Other Jurisdiction 
of Incorporation or Organization)
    
    77-0557617
(I.R.S. Employer
Identification No.)433 North Camden Drive #810
Beverly 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 Yes þ No
 þ o
 o Yes þ
No
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
  Number of shares of common stock outstanding as of January 7, 2010
    
    14,807,851




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##### 



TABLE OF CONTENTS
 PagePART I
    
    
    1Item 1. BUSINESS
    
    
    1Item 1A. RISK FACTORS
    
    
    10Item 2. PROPERTIES
    
    
    19Item 3. LEGAL PROCEEDINGS
    
    
    19Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    20PART II
    
    
    20Item 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER REPURCHASES OF EQUITY
SECURITIES
    
    
    20Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
    
    
    25Item 7. MANAGEMENTS DISCUSSION & ANALYSIS OF RESULTS OF OPERATIONS
    
    
    26Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    37Item 8. CONSOLIDATED FINANCIAL STATEMENTS
    
    
    37Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    66Item 9A(T). CONTROLS AND PROCEDURES
    
    
    67Item 9B. OTHER INFORMATION
    
    
    67PART III
    
    
    68Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    
    
    68Item 11. EXECUTIVE COMPENSATION
    
    
    71Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    81Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    84Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    86PART IV
    
    
    87Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    87SIGNATURES
    
    
    94EXHIBIT INDEX
    
    
    95SubsidiariesCertification 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
   i




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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
 Form 10-K Fiscal Year Ended September 30, 2009 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
  1




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TIGroup Common Stock
 Fiscal Year Ended January 31,
2007 Point Loma Del Mar San Diego ambulatory surgical centers
 RHA SPMC CT MRI
  TCC
  CURRENT OPERATIONS
   2




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Strategy
   3




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RHA Acquisition RHA Healthcare Operations
   FUNDING
   
    
    In February 2009 we received $1,500,000 in connection with the issuance of two
promissory notes under the Bridge Financing (as defined in Item 7, Funding, in this
Form 10-K)
 
    
    In March 2009 we received $500,000 in connection with the issuance of nine
promissory notes under the Bridge Financing.
 
    
    In April 2009 we received $200,000 in connection with the issuance of three
promissory notes under the Bridge Financing.
 
    
    In April and May 2009 we received $202,500 in connection with the exercise of
then-outstanding warrants to purchase 405,000 shares of our Common Stock.
 
    
    In June 2009 we received $350,000 in connection with the subscription of 350 shares
of our Series 6-A Convertible Preferred Stock, par value $0.01 per share (the 6-A
Preferred) and warrants to purchase our Common Stock.
 RHA Loan 2008 Loans USDA
  4




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INTELLECTUAL PROPERTY
   EMPLOYEES
   GOVERNMENT REGULATIONS
  State Licensing and CONs
   5




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CON
 Corporate Practice of Medicine
  Certification
  Medicare-Medicaid Fraud and Abuse Provisions
 Federal Anti-Kickback Statute
 OIG per se
  6




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HIPAA,
  Prohibition on Physician Ownership of Healthcare Facilities and Certain Self-Referrals
  CMS
      7




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Final Report
   The Federal False Claims Act and Similar Federal and State Laws
 FCA
   8




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qui tam
 qui tam
 Healthcare Industry Investigations
  DOJ
 Privacy Requirements and Administrative Simplification
    Environmental Regulation
   9




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Medicare and Medicaid Regulatory and Audit Impacts
  2003 Act
 COMPETITORS
  
 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 are subject to uncertainties regarding healthcare reform.
   10




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We have a need for ongoing financing.
  The recent disruption in the overall economy and the financial markets may adversely impact our
business.
  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.
   11




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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.
  If we are unable to grow revenues at our existing facilities, our operating margins and
profitability could be adversely affected.
   12




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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.
   13




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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.
   14




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We depend on payments from third-party payors, including government healthcare programs. If these
payments are reduced, our revenue will decrease.
  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.
     15




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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;
    
    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.
   16




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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.
  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.
   17




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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.
  Our common stock is not listed on a national securities exchange.
   18




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Item 2.
    
    PROPERTIES
  Facility
    
    Address
    
    Lease Term
    
    Monthly Rent
    
    
    Area (sq. ft.)Outpatient Surgery
    
    12264 El Camino Real, Suite 55
    
    Lease expires
    
    $
    20,169.07
    
    
    
    6,684Center
    
    San Diego, California  92130
    
    1/1/2016; one,seven year optionto extendRHA Home Office
    
    3555 N.W. 58th Street, Suite 700
    
    Lease expires
    
    $
    13,429.50
    
    
    
    10,232Oklahoma City, Oklahoma  73112
    
    11/30/2012The Chandler Clinic
    
    114 North Highway 18
    
    Lease expires
    
    $
    7,417.50
    
    
    
    4,470Chandler, Oklahoma  74834
    
    4/30/2014Office Sublease
    
    433 N. Camden, Suite 810
    
    Lease expires
    
    $
    4,800.00
    
    
    
    1183.5from HSP, Inc.
    
    Beverly Hills, California  90210
    
    11/1/2012
  Facility
    
    Address
    
    Area (sq. ft.)Hospital and Medical Office Buildings
    
    1002 E. Central Boulevard
    
    
    57,887Anadarko, Oklahoma 73005Hospital and Medical Office Building
    
    1101 S. Byrd
    
    
    37,393Tishomingo, Oklahoma  73460Physician Clinic
    
    2222 W. Iowa Avenue
    
    
    65,800Chickasha, OK  73018Hospital and Clinic
    
    2308 Highway 66 West
    
    
    33,333Stroud, Oklahoma  74079
 
 Item 3.
    
    LEGAL PROCEEDINGS
   19




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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
 PERFORMANCE GRAPH
 1
 
 1
    
    Our current self-determined peer group is
made up of AmSurg Corp., Community Health Systems, Inc., Health Management
Associates, Inc., Novamed, Inc., and Universal Health Services, Inc. Our prior
self-determined peer group index is made up of Community Health Systems, Inc.,
Health Management Associates, Inc., and Lifepoint Hospitals, Inc.  20




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COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG FIRST PHYSICIANS CAPITAL GROUP, INC. PEER GROUP AND
NASDAQ COMPOSITE INDEX
 
 ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING SEPT. 30, 2009  ASSUMES $100 INVESTED ON JAN 31, 2003
 The Fiscal Year Ended
    
    1/31/2003
    
    
    1/31/2004
    
    
    1/31/2005
    
    
    1/31/2006
    
    
    9/30/2007
    
    
    9/30/2008
    
    
    9/30/2009Company/Index/MarketFirst Physicians Capital
Group, Inc.
    
    $
    100.00
    
    
    $
    32.00
    
    
    $
    8.57
    
    
    $
    51.43
    
    
    $
    20.57
    
    
    $
    20.57
    
    
    $
    34.29Peer Group Index
    
    $
    100.00
    
    
    $
    175.49
    
    
    $
    232.48
    
    
    $
    239.60
    
    
    $
    177.72
    
    
    $
    183.86
    
    
    $
    181.35Old Peer Group Index
    
    $
    100.00
    
    
    $
    138.40
    
    
    $
    139.56
    
    
    $
    141.62
    
    
    $
    106.51
    
    
    $
    100.54
    
    
    $
    104.54NASDAQ Market Index
    
    $
    100.00
    
    
    $
    156.26
    
    
    $
    157.97
    
    
    $
    171.29
    
    
    $
    210.49
    
    
    $
    147.43
    
    
    $
    160.68
   21




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MARKET INFORMATION
  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
 The Fiscal Year Ended September 30, 2008
    
    High
    
    
    LowFirst Quarter
    
    $
    0.37
    
    
    $
    0.26Second Quarter
    
    
    0.51
    
    
    
    0.29Third Quarter
    
    
    0.89
    
    
    
    0.35Fourth Quarter
    
    
    0.75
    
    
    
    0.31
 STOCKHOLDERS
  DIVIDENDS
 5-A Preferred pari passu
 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, 2009
    
    
    at Sep. 30, 2009
    
    
    Sep. 30, 2009Plan category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation plans
approved by security
holders(2)(5)(6)(7)(8)(9)
    
    
    8,355,983
    
    
    $
    0.61191
    
    
    
    9,682,601Equity compensation plans
not approved by security
holders(1)(3)(4)
    
    
    1,420,206
    
    
    $
    0.7773
    
    
    
    12,579Total
    
    
    9,776,189
    
    
    $
    0.6359
    
    
    
    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.  22




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(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.(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, 2009, all of these warrants remain outstanding.  23




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(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,
2009, 161,003 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 shall expire on May 27, 2016. Mr. Jamins option to
purchase Common Stock shall vest 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. SALES OF UNREGISTERED EQUITY SECURITIES
   24




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Item 6.
    
    SELECTED CONSOLIDATED FINANCIAL DATA
 Fiscal
    
    
    Transition
    
    
    FiscalYear
    
    
    Period
    
    
    YearEnded
    
    
    Ended
    
    
    EndedSep. 30,
    
    
    Sep. 30,
    
    
    Jan. 31,2009
    
    
    2008
    
    
    2007
    
    
    2007
    
    
    2006
    
    
    2005Revenue
    
    $
    39,090
    
    
    $
    29,641
    
    
    $
    2,452
    
    
    $
    702
    
    
    $
    
    
    
    $
    254Operating expenses
    
    
    46,631
    
    
    
    34,689
    
    
    
    4,444
    
    
    
    2,453
    
    
    
    2,175
    
    
    
    2,503Net income/(loss) before
minority interest
    
    
    (9,874
    )
    
    
    (5,601
    )
    
    
    (1,990
    )
    
    
    (1,748
    )
    
    
    (2,170
    )
    
    
    (2,252
    )Minority interest
    
    
    (177
    )
    
    
    1,368
    
    
    
    93
    
    
    
    168
    
    
    
    
    
    
    
    Net profit/(loss) per
share allocable to common
stockholders
    
    
    (10,368
    )
    
    
    (7,111
    )
    
    
    (1,897
    )
    
    
    (1,580
    )
    
    
    (2,170
    )
    
    
    (2,252
    )- Basic
    
    $
    (0.94
    )
    
    $
    (0.86
    )
    
    $
    (0.50
    )
    
    $
    (0.43
    )
    
    $
    (0.91
    )
    
    $
    9.77- Diluted
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    $
    9.53Cash and cash equivalents
    
    
    2,324
    
    
    
    2,970
    
    
    
    733
    
    
    
    286
    
    
    
    1,289
    
    
    
    1,064Accounts receivables
    
    
    4,891
    
    
    
    6,289
    
    
    
    1,418
    
    
    
    1,403
    
    
    
    
    
    
    
    Property and equipment, net
    
    
    17,033
    
    
    
    12,277
    
    
    
    1,163
    
    
    
    1,115
    
    
    
    1
    
    
    
    40Goodwill
    
    
    759
    
    
    
    759
    
    
    
    759
    
    
    
    987
    
    
    
    
    
    
    
    Total assets
    
    
    29,491
    
    
    
    26,498
    
    
    
    4,504
    
    
    
    4,571
    
    
    
    1,579
    
    
    
    2,714Current liabilities
    
    
    12,450
    
    
    
    9,803
    
    
    
    1,624
    
    
    
    839
    
    
    
    552
    
    
    
    779Long term liabilities
    
    
    12,441
    
    
    
    1,091
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    1,083
    
    
    
    967
    
    
    
    920
    
    
    
    1,285
    
    
    
    
    
    
    
    Non-redeemable preferred
stock
    
    
    191
    
    
    
    191
    
    
    
    191
    
    
    
    191
    
    
    
    191
    
    
    
    191Redeemable preferred stock
    
    
    12,282
    
    
    
    14,432
    
    
    
    5,019
    
    
    
    4,050
    
    
    
    1,307
    
    
    
    Stockholders equity/
(deficit)
    
    
    (8,956
    )
    
    
    (4,350
    )
    
    
    (3,250
    )
    
    
    (1,603
    )
    
    
    (280
    )
    
    
    1,744
  25




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##### Table of Contents



Item 7.
    
    MANAGEMENTS DISCUSSION & ANALYSIS OF RESULTS OF OPERATIONS
  FORWARD LOOKING STATEMENTS
   OVERVIEW
    CHANGE IN THE FISCAL YEAR END
  FUNDING
    26




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##### Table of Contents



Bridge Financing
  CRITICAL ACCOUNTING POLICIES
  Principles of Consolidation and Basis of Presentation
  Use of Estimates
  Reclassifications
  Cash and Cash Equivalents
    27




---



##### Table of Contents



Accounts Receivable
    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
   Revenue Recognition
   28




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##### Table of Contents



Income Taxes
  Accounting for Uncertainty in Income Taxes
 FASB ASC
 Functional Currency
  Other Comprehensive Income (Loss)
  Stock-Based Compensation
  Earnings Per Share
  Recent Accounting Pronouncements
   29




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##### Table of Contents



Fair Value of Financial Instruments
   30




---



##### Table of Contents



RESULTS OF OPERATIONS (All amounts in thousands)
 Fiscal
    
    
    Fiscal
    
    
    Transition
    
    
    FiscalYear
    
    
    Year
    
    
    Period
    
    
    YearEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedSep. 30,
    
    
    Sep. 30,
    
    
    Sep. 30,
    
    
    Jan. 31,2009
    
    
    2008
    
    
    2007
    
    
    2007Revenue from services
    
    $
    39,090
    
    
    $
    29,641
    
    
    $
    2,452
    
    
    $
    702Selling, general and administrative
expenses and provision for doubtful
accounts
    
    
    44,075
    
    
    
    33,336
    
    
    
    3,966
    
    
    
    2,255Amortization of stock-based compensation
    
    
    1,245
    
    
    
    339
    
    
    
    250
    
    
    
    198Impairment of long-lived assets and goodwill
    
    
    209
    
    
    
    308
    
    
    
    228
    
    
    
    Depreciation and amortization
    
    
    1,102
    
    
    
    706
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    46,631
    
    
    
    34,689
    
    
    
    4,444
    
    
    
    2,453Operating loss
    
    
    (7,541
    )
    
    
    (5,048
    )
    
    
    (1,992
    )
    
    
    (1,751
    )Other income (expense)
    
    
    (281
    )
    
    
    
    
    
    
    
    
    
    
    Interest income
    
    
    42
    
    
    
    320
    
    
    
    2
    
    
    
    3Interest expense
    
    
    (2,094
    )
    
    
    (873
    )
    
    
    
    
    
    
    Net loss from operations before taxation
and non-cash beneficial conversion feature
    
    
    (9,874
    )
    
    
    (5,601
    )
    
    
    (1,990
    )
    
    
    (1,748
    )Minority interest
    
    
    (177
    )
    
    
    1,368
    
    
    
    93
    
    
    
    168Taxation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss before non-cash beneficial
conversion feature
    
    
    (10,051
    )
    
    
    (4,233
    )
    
    
    (1,897
    )
    
    
    (1,580
    )Non-cash beneficial conversion feature
preferred dividend
    
    
    (317
    )
    
    
    (2,878
    )
    
    
    
    
    
    
    Net loss allocable to common stockholders
    
    $
    (10,368
    )
    
    $
    (7,111
    )
    
    $
    (1,897
    )
    
    $
    (1,580
    )
 MANAGEMENTS DISCUSSION & ANALYSIS OF RESULTS OF OPERATIONS  FISCAL YEAR ENDED SEPTEMBER 30, 2009
COMPARED TO YEAR ENDED SEPTEMBER 30, 2008, EIGHT-MONTH TRANSITION PERIOD ENDED SEPTEMBER 30, 2007
AND YEAR ENDED JANUARY 31, 2007
 Revenue
  Selling, General and Administrative Expenses and Provision for Doubtful Accounts
    31




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##### Table of Contents



Amortization of Stock-Based Compensation
  Fiscal Year Ended January 31, 2006
       32




---



##### Table of Contents



33




---



##### Table of Contents



Impairment of Long-Lived Assets and Goodwill
  Operating Loss
  Other Income (Expense)
  Interest Income
  Interest Expense
  Minority Interest
  Taxation
   34




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##### Table of Contents



Net Income or Loss Before Non-Cash Beneficial Conversion Feature
  Non-Cash Beneficial Conversion Feature Preferred Dividend
  Net Income or Loss Allocable to Common Stockholders
  LIQUIDITY AND CAPITAL RESOURCES
     35




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##### Table of Contents



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
    
    $
    13,169
    
    
    $
    935
    
    
    $
    3,208
    
    
    $
    2,052
    
    
    $
    6,974Capital lease obligations
    
    
    300
    
    
    
    93
    
    
    
    176
    
    
    
    31
    
    
    
    Operating lease obligations
    
    
    5,271
    
    
    
    1,243
    
    
    
    2,580
    
    
    
    1,152
    
    
    
    296Other contractual obligations
    
    
    345
    
    
    
    120
    
    
    
    153
    
    
    
    72
    
    
    
    Total
    
    $
    19,085
    
    
    $
    2,391
    
    
    $
    6,117
    
    
    $
    3,307
    
    
    $
    7,270
   36




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##### Table of Contents



Item 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 INTEREST RATE RISK
  FOREIGN CURRENCY RISK
  
 Item 8.
    
    CONSOLIDATED FINANCIAL STATEMENTS
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Company
   /s/
Whitley Penn LLP
Dallas, TexasJanuary 11, 2010
  37




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##### Table of Contents



Sep. 30,
    
    
    Sep. 30,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    2,324
    
    
    $
    2,970Restricted cash
    
    
    1,523
    
    
    
    1,514Accounts receivable, net of allowance for uncollectible accounts
    
    
    4,891
    
    
    
    6,289Advance to affiliated entity (Note 7)
    
    
    
    
    
    
    72Prepaid expenses
    
    
    111
    
    
    
    103Other current assets
    
    
    1,772
    
    
    
    1,754Total current assets
    
    
    10,621
    
    
    
    12,702Property and equipment, net
    
    
    17,033
    
    
    
    12,277Goodwill (Note 8)
    
    
    759
    
    
    
    759Other assets
    
    
    1,078
    
    
    
    760Total assets
    
    $
    29,491
    
    
    $
    26,498LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS EQUITY/ (DEFICIT)Current liabilities:Accounts payable
    
    $
    3,598
    
    
    $
    2,944Accrued expenses
    
    
    3,515
    
    
    
    2,715Notes payable
    
    
    4,309
    
    
    
    3,980Current maturities of long term debt
    
    
    1,028
    
    
    
    164Total current liabilities
    
    
    12,450
    
    
    
    9,803Long term debt, net of current portion
    
    
    12,441
    
    
    
    1,091Notes payable
    
    
    
    
    
    
    4,364Total liabilities
    
    
    24,891
    
    
    
    15,258Minority interest (Note 11)
    
    
    1,083
    
    
    
    967Commitments and contingenciesNon-redeemable preferred stock:Preferred stock Series 1-A ($0.01 par value, 67,600 shares
authorized; 67,600 shares issued and outstanding as of Sep. 30, 2009 and 2008)
    
    
    166
    
    
    
    166Preferred stock Series 2-A ($0.01 par value, 3,900 shares
authorized; 3,900 shares issued and outstanding as Sep. 30, 2009
and 2008)
    
    
    25
    
    
    
    25Total non-redeemable preferred stock
    
    
    191
    
    
    
    191Redeemable preferred stock: (Note 14)Preferred stock Series 5-A ($0.01 par value, 9,000 shares
authorized; 8,987 shares issued and outstanding as of Sep. 30, 2009 and 2008)
    
    
    7,819
    
    
    
    7,819Preferred stock Series 6-A ($0.01 par value, 5,000 shares
authorized; 4,957 and 4,607 shares issued and outstanding as of
Sep. 30, 2009 and Sep. 30, 2008, respectively)
    
    
    4,463
    
    
    
    4,113Series B preferred stock issued by subsidiary ($0.01 par value,
38,250 shares authorized, zero shares and 19,990 shares issued
and outstanding as of Sep. 30, 2009 and 2008, respectively)
    
    
    
    
    
    
    2,500Total redeemable preferred stock
    
    
    12,282
    
    
    
    14,432Stockholders equity/(deficit):Common stock ($0.01 par value, 100,000,000 shares authorized;
13,448,683 and 10,322,927 shares issued and outstanding as of
Sep. 30, 2009 and Sep. 30, 2008, respectively)
    
    
    136
    
    
    
    103Additional paid-in-capital
    
    
    77,109
    
    
    
    71,301Accumulated deficit
    
    
    (86,070
    )
    
    
    (75,702
    )Other comprehensive income (loss)
    
    
    (52
    )
    
    
    (52
    )Treasury stock, at cost (93,494 shares as of Sep. 30, 2009)
    
    
    (79
    )
    
    
    Total stockholders equity/(deficit)
    
    
    (8,956
    )
    
    
    (4,350
    )Total liabilities, preferred stock and stockholders equity/(deficit)
    
    $
    29,491
    
    
    $
    26,498
   38




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##### Table of Contents



Fiscal
    
    
    FiscalYear
    
    
    YearEnded
    
    
    EndedSep. 30, 2009
    
    
    Sep. 30, 2008Revenue from services
    
    $
    39,090
    
    
    $
    29,641Cost and expenses:Selling, general and administrative expenses
    
    
    39,514
    
    
    
    29,544Provision for doubtful accounts
    
    
    4,561
    
    
    
    3,792Amortization of stock-based compensation (Note 15)
    
    
    1,245
    
    
    
    339Impairment of long-lived assets and goodwill
    
    
    209
    
    
    
    308Depreciation and amortization
    
    
    1,102
    
    
    
    706Total costs and expenses
    
    
    46,631
    
    
    
    34,689Operating loss
    
    
    (7,541
    )
    
    
    (5,048
    )Interest income
    
    
    42
    
    
    
    320Interest expense
    
    
    (2,094
    )
    
    
    (873
    )Other income (expense)
    
    
    (281
    )
    
    
    Minority interest
    
    
    (177
    )
    
    
    1,368Net loss from operations before taxation and non-cash
beneficial conversion feature
    
    
    (10,051
    )
    
    
    (4,233
    )Taxation
    
    
    
    
    
    
    Non-cash beneficial conversion feature preferred dividend
    
    
    (317
    )
    
    
    (2,878
    )Net loss allocable to common stockholders
    
    $
    (10,368
    )
    
    $
    (7,111
    )Net loss per common share:Basic
    
    $
    (0.94
    )
    
    $
    (0.86
    )Diluted
    
    
    N/A
    
    
    
    N/A
   39




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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 Sep. 30, 2007
    
    
    3,828,739
    
    
    $
    38
    
    
    $
    65,355
    
    
    $
    (68,591
    )
    
    $
    (52
    )
    
    $
    0
    
    
    $
    (3,250
    )Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,111
    )
    
    
    
    
    
    
    
    
    
    
    (7,111
    )Issuance of Common Stock
    
    
    6,494,188
    
    
    
    65
    
    
    
    2,175
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,240Issuance of warrants
    
    
    
    
    
    
    
    
    
    
    554
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    554Beneficial Conversion Feature
related to preferred stock issuance
    
    
    
    
    
    
    
    
    
    
    2,878
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,878Stock based compensation
    
    
    
    
    
    
    
    
    
    
    339
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    339Balance 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
    )
   40




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##### Table of Contents



Fiscal
    
    
    FiscalYear
    
    
    YearEnded
    
    
    EndedSep. 30, 2009
    
    
    Sep. 30, 2008Cash flows from operating activities:Net loss
    
    $
    (10,051
    )
    
    $
    (4,233
    )Adjustments to reconcile net loss to net cash used in operating activities:Minority interest
    
    
    177
    
    
    
    (1,368
    )Depreciation and amortization
    
    
    1,102
    
    
    
    706Bad debt provision/(writeback)
    
    
    4,561
    
    
    
    3,792Loss from sale of investments
    
    
    281
    
    
    
    Impairment loss on property and equipment
    
    
    
    
    
    
    308Amortization of stock-based compensation
    
    
    1,245
    
    
    
    339Amortization of debt discount
    
    
    952
    
    
    
    233Impairment loss on goodwill
    
    
    209
    
    
    
    Changes in working capital components:Accounts receivable
    
    
    (3,163
    )
    
    
    (4,275
    )Accounts payable and accrued expenses
    
    
    1,455
    
    
    
    348Others
    
    
    (275
    )
    
    
    (1,322
    )Net cash used in operating activities
    
    
    (3,507
    )
    
    
    (5,472
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (4,515
    )
    
    
    (676
    )Purchase of equity interest in consolidated affiliate
    
    
    (35
    )
    
    
    Payments from affiliated entity
    
    
    
    
    
    
    33Proceeds from sale of equity interests in consolidated affiliate
    
    
    325
    
    
    
    Restricted cash
    
    
    (9
    )
    
    
    (1,514
    )Acquisition of subsidiaries, net of cash acquired
    
    
    (55
    )
    
    
    175Net cash used in investing activities
    
    
    (4,289
    )
    
    
    (1,982
    )Cash flows from financing activities:Borrowings on convertible loans
    
    
    2,200
    
    
    
    1,650Payments on notes payable
    
    
    (5,786
    )
    
    
    (2,613
    )Proceeds on notes payable
    
    
    10,246
    
    
    
    162Distributions to minority partners
    
    
    (144
    )
    
    
    Purchase of treasury stock
    
    
    (79
    )
    
    
    Proceeds from exercise of warrants
    
    
    263
    
    
    
    440Proceeds from issuance of preferred stock, net of cost
    
    
    350
    
    
    
    10,052Proceeds from issuance of Common Stock
    
    
    100
    
    
    
    Net cash provided by financing activities
    
    
    7,150
    
    
    
    9,691Net increase/(decrease) in cash and cash equivalents
    
    
    (646
    )
    
    
    2,237Cash and cash equivalents at beginning of year
    
    
    2,970
    
    
    
    733Cash and cash equivalents at end of year
    
    $
    2,324
    
    
    $
    2,970Supplemental cash flow information:Cash paid for interest
    
    $
    1,204
    
    
   $
    873Cash paid for taxes
    
    
    
    
    
    
    Non-cash transaction  Purchase of the 49% minority interest in RHA for a
promissory note of $1,800,000, first payment of $50,000 paid at closing.The fair value of warrants issued in conjunction with the convertible
notes amounted to $932,000.


The beneficial conversion feature associated
with the convertible notes amounted to $253,000.The fair value of
warrants issued in conjunction with the issuance of preferred stock
amounted $84,473. The beneficial conversion feature associated with the
preferred stock amounted to $317,000.
   41




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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
   42




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##### Table of Contents



TCC
  Current Operations
         43




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##### Table of Contents



Strategy
  RHA Acquisition RHA Healthcare Operations
   Funding
   
    
    In February 2009 we received $1,500,000 in connection with the issuance of two
promissory notes under the Bridge Financing (as defined in Item 7, Funding, in this
Form 10-K)
 
    
    In March 2009 we received $500,000 in connection with the issuance of nine
promissory notes under the Bridge Financing.
  44




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##### Table of Contents




    
    In April 2009 we received $200,000 in connection with the issuance of three
promissory notes under the Bridge Financing.
 
    
    In April and May 2009 we received $202,500 in connection with the exercise of
then-outstanding warrants to purchase 405,000 shares of our Common Stock.
 
    
    In June 2009 we received $350,000 in connection with the subscription of 350 shares
of our Series 6-A Convertible Preferred Stock, par value $0.01 per share (the 6-A
Preferred) and warrants to purchase our Common Stock.
 RHA Loan 2008 Loans USDA
   2. Summary of Significant Accounting Policies
  Principles of Consolidation and Basis of Presentation
  Use of Estimates
  Reclassifications
   45




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##### Table of Contents



Cash and Cash Equivalents
   Accounts Receivable
    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
   46




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##### Table of Contents



Fiscal Year Ended September 30,
2009 Fiscal
Year Ended September 30, 2008
 Revenue Recognition
  Income Taxes
  Accounting for Uncertainty in Income Taxes
 FASB ASC
 Functional Currency
  Other Comprehensive Income (Loss)
  Stock-Based Compensation
  Earnings Per Share
   47




---



##### Table of Contents



Recent Accounting Pronouncements
      Fair Value of Financial Instruments
   48




---



##### Table of Contents



3. Net Income/(Loss) Allocable to Common Stockholders and Comprehensive Income/(Loss)
  Fiscal
    
    
    FiscalYear Ended
    
    
    Year EndedSep. 30, 2009
    
    
    Sep. 30, 2008Net loss available to common stockholders
    
    $
    (10,368
    )
    
    $
    (7,111
    )Other comprehensive (loss)/gain foreign currency translations
    
    
    
    
    
    
    Comprehensive income/(loss)
    
    $
    (10,368
    )
    
    $
    (7,111
    )
 Earnings Per Share
  Fiscal
    
    
    FiscalYear Ended
    
    
    Year EndedSep. 30, 2009
    
    
    Sep. 30, 2008Numerator for basic and diluted income/(loss) per share:Net income/(loss)
    
    $
    (10,368
    )
    
    $
    (7,111
    )Denominator for basic earnings/(loss) per share  weighted average shares
    
    
    10,977,770
    
    
    
    8,223,865Basic
    
    $
    (0.94
    )
    
    $
    (0.86
    )Diluted
    
    
    N/A
    
    
    
    N/A
  4. Accounts receivable
  Sep. 30, 2009
    
    
    Sep. 30, 2008Gross patient accounts receivable
    
    $
    18,470
    
    
    $
    16,309Reserves for bad debt
    
    
    (3,842
    )
    
    
    (2,721
    )Reserves for contractual allowances
    
    
    (9,737
    )
    
    
    (7,299
    )Patient accounts receivable, net
    
    $
    4,891
    
    
    $
    6,289
 5. Other current assets
 Sep. 30, 2009
    
    
    Sep. 30, 2008Other current assets:Deposits
    
    $
    120
    
    
    $
    119Medical supplies
    
    
    510
    
    
    
    558Other receivables
    
    
    1,142
    
    
    
    1,077Total other assets
    
    $
    1,772
    
    
    $
    1,754
  49




---



##### Table of Contents



6. Property and equipment
 Sep. 30, 2009
    
    
    Sep. 30, 2008Property and equipment:Computer hardware
    
    $
    92
    
    
    $
    76Furniture, fixtures and medical equipment
    
    
    4,458
    
    
    
    3,369Land
    
    
    834
    
    
    
    694Buildings
    
    
    13,340
    
    
    
    8,851Construction in progress
    
    
    124
    
    
    
    Leasehold improvements
    
    
    944
    
    
    
    944Accumulated depreciation
    
    
    (2,759
    )
    
    
    (1,657
    )Property and equipment, net
    
    $
    17,033
    
    
    $
    12,277
  7. Advance to Affiliated Entity
 Cross Shore AIM RPS
 8. Goodwill
  9. Bridge Financing
 Bridge Financing SMP Ciabattoni Bridge
Notes Bridge Lender Bridge Lenders
  50




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##### Table of Contents



Bridge Financing
Maturity Date
   Second Bridge Notes Second Bridge Lenders
 Second Bridge
Maturity Date
   51




---



##### Table of Contents



Darras Darras Note SFV SFV Note Katz Katz Note Third
Bridge Note Third Bridge Notes Third Bridge Lender Third
Bridge Lenders
 Third Bridge Maturity
Dates
    Sales of Unregistered Equity Securities
 Transition Period Ended
September 30, 2007
  52




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##### Table of Contents



10. Long-term Debt
  September 30, 2009
    
    
    September 30, 2008Note payable,
secured by
equipment,
$4,558 payable
monthly,
including 8.25%
interest through
September 2011
    
    $
    89
    
    
    $
    139Note payable,
secured by
equipment,
$13,456 payable
monthly,
including 8.75%
interest
    
    
    
    
    
    
    2498% Notes payable
to prior
shareholders for
stock
repurchases,
eleven notes
outstanding at
September 30,
2009, maturity
dates ranging
from 2008
through 2017
    
    
    260
    
    
    
    307Note payable,
secured by
equipment,
$2,825 payable
monthly,
including 13.6%
interest through
April 2010
    
    
    14
    
    
    
    45Note 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
    
    
    3,453
    
    
    
    Note 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
    
    
    3,513
    
    
    
    Note 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
    
    
    1,164
    
    
    
    Note payable,
secured by
equipment,
$2,660 payable
monthly
including 5.3%
interest through
March 2013
    
    
    99
    
    
    
    Note payable, 5%
interest payable
quarterly,
matures on or
before December
11, 2011
    
    
    1,500
    
    
    
    Capitalized
lease
obligations 
six leases for
buildings and
medical
equipment with
imputed interest
rates ranging
from 4% to
17.2%, maturing
at various dates
through 2013
    
    
    300
    
    
    
    515Note payable,
secured by
equipment,
$2,413 payable
monthly,
including 7.04%
interest through
March 2011
    
    
    39
    
    
    
    Note payable,
secured by
equipment,
$7,530 payable
monthly,
including 6.75%
interest through
June 15, 2013
    
    
    298
    
    
    
    Note payable,
secured by
equipment,
$5,116 payable
monthly,
including 7.05%
interest through
March 2011
    
    
    83
    
    
    
    Note payable,
16% interest,
matures on or
before December
3, 2012, face
value $1.5
million less
beneficial
conversion
feature and debt
discount of $84,000
    
    
    1,416
    
    
    
    Note payable, non-interest bearing
purchase obligation, annual payments of
$50,000, August 2010, $33,333, August
2011, $33,333, August 2012 and $33,334,
August 2013
    
    
    150
    
    
    
    Notes
payable, unsecured, 11.25% interest, matures October 2012
    
    
    1,027
    
    
    
    Note payable, secured by equipment, $1,567
payable monthly, including 6.75% interest
through July 2013
    
    
    64
    
    
    
    Total
    
    
    13,469
    
    
    
    1,255Less current maturities of long-term debt
    
    
    (1,028
    )
    
    
    (164
    )Total long-term debt
    
    $
    12,441
    
    
    $
    1,091
  53




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##### Table of Contents



Fiscal Year Ended September 30,
    
    Payments2010
    
    $
    1,0282011
    
    
    9852012
    
    
    2,3992013
    
    
    2,0832014 and thereafter
    
    
    6,974Total
    
    $
    13,469
 11. Minority Interests
     54




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##### Table of Contents



12. Warrants
  RemainingDescription
    
    Life
    
    
    Exercise Price
    
    
    WarrantsSeptember 30, 2007 Preferred Stock Series 5-A warrants issued to
investor
    
    1 year
    
    $
    0.50
    
    
    
    90,000September 30, 2007 warrants issued to advisory board
    
    1 year
    
    
    0.45
    
    
    
    275,000September 30, 2008 warrants issued in connection with notes payable
    
    2 years
    
    
    0.31
    
    
    
    1,980,000September 30, 2008 warrants issued in connection with notes payable
    
    2 years
    
    
    0.50
    
    
    
    1,237,500September 30, 2008 Preferred Stock Series 5-A warrants issued to
investor and placement agent
    
    2 years
    
    
    0.50
    
    
    
    2,736,000September 30, 2008 Preferred Stock Series 6-A warrants issued to
investor
    
    2 years
    
    
    0.50
    
    
    
    3,589,200September 30, 2008 Preferred Stock Series 5-A warrants issued to
placement agent
    
    4 years
    
    
    0.50
    
    
    
    436,250September 30, 2008 warrants issued to advisory board
    
    2 years
    
    
    0.45
    
    
    
    714,285February 6, 2009 warrants issued in connection with notes payable
    
    3 years
    
    
    0.50
    
    
    
    1,125,000February 6, 2009 warrants issued in connection with notes payable
    
    3 years
    
    
    0.75
    
    
    
    750,000March 3, 2009 warrants issued in connection with notes payable
    
    3 years
    
    
    0.50
    
    
    
    375,000March 3, 2009 warrants issued in connection with notes payable
    
    3 years
    
    
    0.75
    
    
    
    250,000March 16, 2009 warrants issued to advisory board
    
    3 years
    
    
    0.63
    
    
    
    41,667March 31, 2009 warrants issued in connection with notes payable
    
    3 years
    
    
    0.50
    
    
    
    112,500March 31, 2009 warrants issued in connection with notes payable
    
    3 years
    
    
    0.75
    
    
    
    75,000April 14, 2009 warrants issued in connection with notes payable
    
    3 years
    
    
    0.50
    
    
    
    37,500April 14, 2009 warrants issued in connection with notes payable
    
    3 years
    
    
    0.75
    
    
    
    25,000June 8, 2009 Preferred Stock Series 6-A warrants issued to investor
    
    3 years
    
    
    0.50
    
    
    
    210,000June 10, 2009 warrants issued to Medical Advisory Board
    
    3 years
    
    
    0.63
    
    
    
    50,00014,109,902
 Warrants Issued Pursuant to the Sale and Issuance of Series 5-A Convertible Preferred Stock
 Fiscal Year Ended January 31,
2006 5-A Preferred
   55




---



##### Table of Contents



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
        56




---



##### Table of Contents



Other Warrant Issuances
 Holders
  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 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Warrants outstanding
at beginning of
the period
    
    
    11,795,035
    
    
    
    2,868,700
    
    
    $
    0.46
    
    
    $
    0.48Issued
    
    
    3,235,000
    
    
    
    10,744,035
    
    
    $
    0.60
    
    
    $
    0.46Reinstated
    
    
    166,400
    
    
    
    
    
    
    $
    0.48
    
    
    
    Exercised
    
    
    525,000
    
    
    
    970,300
    
    
    $
    0.50
    
    
    $
    0.46Cancelled or expired
    
    
    266,000
    
    
    
    847,400
    
    
    $
    0.48
    
    
    $
    0.47Warrants outstanding
at end of the
period
    
    
    14,405,435
    
    
    
    11,795,035
    
    
    $
    0.49
    
    
    $
    0.46
 13. Commitments and Contingencies
   57




---



##### Table of Contents



Operating
    
    
    Capital LeaseYear Ending September 30,
    
    Leases
    
    
    Obligations
    
    
    Total2010
    
    $
    1,243
    
    
    $
    93
    
    
    $
    1,3362011
    
    
    1,556
    
    
    
    98
    
    
    
    1,6542012
    
    
    1,024
    
    
    
    78
    
    
    
    1,1022013
    
    
    807
    
    
    
    31
    
    
    
    8382014
    
    
    345
    
    
    
    
    
    
    
    3452015 and thereafter
    
    
    296
    
    
    
    
    
    
    
    296$
    5,271
    
    
    $
    300
    
    
    $
    5,571
   14. Preferred Stock
 Non-Redeemable Preferred Stock and Redeemable Preferred Stock
  Series 1-A Convertible Preferred Stock
   58




---



##### Table of Contents



Series 2-A Convertible Preferred Stock
  Series 5-A Convertible Preferred Stock
 pari passu
  59




---



##### Table of Contents



Series 6-A Convertible Preferred Stock
 6-A Purchase Agreement
 pari passu pari
passu
  Series B Preferred Stock issued by subsidiary
    60




---



##### Table of Contents



Related Party Interests in Preferred Stock
  15. Stock Options
 Stock-Based Compensation
  Fiscal
    
    
    FiscalYear Ended
    
    
    Year EndedSep. 30, 2009
    
    
    Sep. 30, 2008Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Expected volatility
    
    
    161
    %
    
    
    140
    %Risk-free rate of return
    
    
    1.7
    %
    
    
    3.3
    %Expected life (years)
    
    
    3.6
    
    
    
    5.0
 Stock Option Plans
 2000 Plan
 2001 Plan
   61




---



##### Table of Contents



2009
Employee Options 2009
Employee Optionees
   Weighted-AverageNumber of Options
    
    
    Exercise Price Per ShareFiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    FiscalYear
    
    
    Year
    
    
    Year
    
    
    YearEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedSep. 30,
    
    
    Sep. 30,
    
    
    Sep. 30,
    
    
    Sep. 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Options outstanding at
beginning of the period
    
    
    7,333,750
    
    
    
    483,750
    
    
    $
    0.59
    
    
    $
    0.42Granted at above fair market value
    
    
    1,839,390
    
    
    
    
    
    
    
    0.63
    
    
    
     at fair market value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
     at below fair market value
    
    
    
    
    
    
    6,850,000
    
    
    
    
    
    
    $
    0.60Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    924,138
    
    
    
    
    
    
    
    0.40
    
    
    
    Options outstanding at
end of the period
    
    
    8,249,002
    
    
    
    7,333,750
    
    
    $
    0.62
    
    
    $
    0.59Options
vested/exercisable at
end of the period
    
    
    2,037,613
    
    
    
    513,750
    
    
    $
    0.59
    
    
    $
    0.31
  62




---



##### Table of Contents



Weighted-average
    
    
    Weighted-averageremainingExercise price
    
    Number of options
    
    
    exercise price
    
    
    contractual life$0.40
    
    
    360,000
    
    
    $
    0.40
    
    
    
    6.1$0.63
    
    
    7,885,252
    
    
    $
    0.63
    
    
    
    5.9$2.00
    
    
    3,750
    
    
    $
    2.00
    
    
    
    0.7
 
 Employee Stock Purchase Plan
 ESPP
 16. 401(k) Plan
 401(k) Plan
 17. Income Taxes
  Sep. 30, 2009
    
    
    Sep. 30, 2008Statutory federal income tax rate
    
    $
    (3,525,140
    )
    
    $
    (2,265,005
    )Increase (reduction) in taxes resulting from:State income taxes, net of federal benefit
    
    
    (149,804
    )
    
    
    (211,140
    )Permanent differences
    
    
    563,375
    
    
    
    1,227,024Change in valuation allowance
    
    
    3,068,472
    
    
    
    1,282,351Other
    
    
    43,097
    
    
    
    (33,230
    )Income tax provision
    
    $
    
    
    
    $
    
  Sep. 30, 2009
    
    
    Sep. 30, 2008Deferred tax assets: net operating loss carry forward
    
    $
    17,519
    
    
    $
    14,193 Accounts receivable reserves
    
    
    4,238
    
    
    
    2,080Gross deferred tax assets
    
    
    21,757
    
    
    
    16,273Deferred tax liabilities
    
    $
    3,169
    
    
    $
    828Net deferred tax assets
    
    $
    18,588
    
    
    $
    15,445Valuation allowance
    
    
    18,588
    
    
    
    15,445$
    
    
    
    $
    
   63




---



##### Table of Contents



18. Acquisitions
   Cash and cash equivalents
    
    $
    348Accounts receivable, net
    
    
    2,524Other current assets
    
    
    550Property and equipment, net
    
    
    6,067Accounts payable
    
    
    (556
    )Accrued expenses
    
    
    (1,106
    )Notes payable
    
    
    (5,283
    )Total
    
    $
    2,544Less: Minority interest - 49%
    
    
    (1,246
    )Share of net assets
    
    $
    1,298Purchase considerationIssuance of restricted shares
    
    $
    (1,233
    )Incidental costs
    
    
    (65
    )$
    (1,298
    )
  Merger
Agreement Parent Merger Sub SPMC SPMC
Shareholder SPMC Shareholders
 Merger Shares
  64




---



##### Table of Contents



Cash
    
    $
    644Accounts receivable
    
    
    1,692Other current assets
    
    
    258Property and equipment
    
    
    5,385Other assets
    
    
    329Current liabilities
    
    
    (2,655
    )Long-term liabilities
    
    
    (4,305
    )$
    1,348
  September 30,2008Revenues
    
    $
    36,612Net Loss
    
    $
    (7,965
    )Net loss per common (basic and diluted)
    
    $
    (0.87
    )Weighted average common shares common
shares outstanding (basic and diluted)
    
    
    9,198,865
  65




---



##### Table of Contents



19. Subsequent Events
        
 Item 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 MBC
   66




---



##### 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
   67




---



##### Table of Contents



PART III
 
 Item 10.
    
    DIRECTORS AND EXECUTIVE OFFICERS OF
  Name
    
    
    Age
    
    
    PositionDavid Hirschhorn
    
    
    48
    
    
    Chairman and Director 

Chief Executive OfficerDonald C. Parkerson
    
    
    59
    
    
    Chief Financial OfficerTodd Parker (1)
    
    
    46
    
    
    DirectorRobert N. Schwartz, PhD.(2)
    
    
    70
    
    
    DirectorRichardson E. Sells(2)
    
    
    63
    
    
    DirectorWilliam Houlihan(1)
    
    
    54
    
    
    DirectorThomas Rice
    
    
    63
    
    
    President and Chief Operating Officer
of RHA
 (1)
    
    Member of the Audit Committee.(2)
    
    Member of the Audit Committee and Compensation Committee. David Hirschhorn.
 Donald C. Parkerson.
 Todd Parker.
  68




---



##### Table of Contents



Robert N. Schwartz, Ph.D.
 Richardson E. Sells.
 William A. Houlihan.
 Thomas Rice.
 Board Meetings and Committees
    69




---



##### Table of Contents



Stockholder Communications with the Board of Directors
  
  Compensation of Directors
   Section 16(a) Beneficial Ownership Reporting Compliance
   70




---



##### Table of Contents



Number ofTransactions Not
    
    
    Known FailuresNumber of Late
    
    
    Reported On a
    
    
    To File aName
    
    Reports
    
    
    Timely Basis
    
    
    Required Form(#)
    
    
    (#)David Hirschhorn
    
    
    1
    
    
    
    1
    
    
    
    0Todd Parker
    
    
    0
    
    
    
    1
    
    
    
    1
 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.
  71




---



##### 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
   72




---



##### Table of Contents



Compensation of Executive Officers
    Components of the Executive Compensation Program
   73




---



##### Table of Contents



Base Salary
  Annual Cash Incentives
  Long-Term Equity Incentives
  Perquisites and Other Benefits
  Retirement Plans
   74




---



##### Table of Contents



Benefits Upon Termination of Employment
   Tax and Accounting Matters
 Code
   75




---



##### Table of Contents



THE FISCAL YEAR ENDED SEPTEMBER 30, 2009, SEPTEMBER 30, 2008 AND 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
    
    
    $
    519,526Donald C Parkerson
    
    The Transition PeriodChief Financial Officer
    
    ended Sep. 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sep. 30, 2008
    
    $
    63,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    63,000Sep. 30, 2009
    
    $
    252,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,303
    
    
    $
    257,303Dennis 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
    
    
    $
    232,101Thomas Rice
    
    The Transition PeriodPresident/Chief Operating Officer,
    
    ended Sep. 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    RHA
    
    Sep. 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sep. 30, 2009
    
    $
    189,962
    
    
    
    
    
    
    
    
    
    
    $
    153,236
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    343,198
 
 (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. Smith earned $200,000 in consulting fees in respect of consulting services he provided to
us during the Transition Period Ended September 30, 2007 prior to becoming our Chief Financial
Officer.  76




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##### Table of Contents



EMPLOYMENT AGREEMENTS
    THE FISCAL YEAR ENDED SEPTEMBER 30, 2009  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)Thomas Rice,
President and Chief
Operating officer
of our indirect
wholly owned
subsidiary, Rural
Hospital
Acquisition, L.L.C.
    
    
    11/10/2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500,000
    
    
    
    500,000
    
    
    $
    0.625
    
    
    $
    153,236
  77




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##### Table of Contents



THE FISCAL YEAR ENDED SEPTEMBER 30, 2009  OUTSTANDING EQUITY AWARDS
  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)
    
    
    1,250,000
    
    
    
    5,000,000
    
    
    
    
    
    
    $
    0.625
    
    
    
    07/01/2015
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Thomas Rice,
President and Chief
Operating officer
of our indirect
wholly owned
subsidiary, Rural
Hospital
Acquisition, L.L.C.
    
    
    125,000
    
    
    
    375,000
    
    
    
    
    
    
    $
    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 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.  78




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##### Table of Contents



(2) THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 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)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,500,000
    (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.  79




---



##### 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 DIRECTOR COMPENSATION
   80




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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
    
    
    12,847,618
    
    
    
    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
    
    
    8,801,667
    
    
    
    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)
    
    
    4,232,800
    
    
    
    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)
    
    
    440,000
    
    
    
    2.9
    %Common
    
    William Houlihan (12)
    
    
    1,100,000
    
    
    
    7.0
    %Current OfficersCommon
    
    David Hirschhorn  (3)
    
    
    4,232,800
    
    
    
    23.9
    %Common
    
    Donald C. Parkerson
    
    
    
    
    
    
    Common
    
    Thomas Rice (9)
    
    
    250,000
    
    
    
    1.7
    %Common
    
    Current directors and officers as a group (7 persons) (11)
    
    
    7,002,046
    
    
    
    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
  81




---



##### 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  926605% Holders of Series 2-A Preferred StockSeries 2-A Preferred
    
    Ali R. Moghaddami
    
    
    3,900
    
    
    
    100
    %333 E. GlenOaks BoulevardSuite 202Glendale, CA  912075% 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
    
    
    125
    
    
    
    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
    %
  82




---



##### 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 a group (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 7, 2010. 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 7, 2010, 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, 2010.  83




---



##### Table of Contents



(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) an Advisory Board warrant to purchase an aggregate of 150,000 shares of
Common Stock at a price of $0.45 per share; (d) 714,285 shares of Common Stock at $0.45 per
share; (e) a warrant to purchase 1,200,000 shares of Common Stock at a price of $0.3125 per
share; (f) warrants to purchase an aggregate of 2,450,000 shares of Common Stock at a price of
$0.50 per share; (g) warrants to purchase an aggregate of 333,333 shares of Common Stock at a
price of $0.75 per share and (h) $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 2,095,000 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.(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.(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
   84




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Advisory Board
    Advance to Affiliated Entity
 AIM
 Sub-Lease from HSP, Inc.
   85




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##### Table of Contents



Repurchase of 49% Interest in RHA
  Exercise of Warrants
  
 Item 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Fees
  Year
    
    
    Year
    
    
    TransitionEnded
    
    
    Ended
    
    
    Period EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2007Audit Fees
    
    $
    234,141
    
    
    $
    335,137
    
    
    $
    70,350Audit-Related Fees
    
    $
    
    
    
    $
    8,565
    
    
    $
    Tax Fees
    
    $
    36,410
    
    
    $
    
    
    
    $
    68,300All Other Fees
    
    $
    19,366
    
    
    $
    
    
    
    $
    Total
    
    $
    289,917
    
    
    $
    343,702
    
    
    $
    138,650
 Audit
  86




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##### Table of Contents



Audit Related
 Tax Other
   Audit Committee Pre-Approval Policies and Procedures
  
 PART IV
 
 Item 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  (1) Consolidated Financial StatementsReports of Independent Registered Public Accounting Firm
    
    
    37Consolidated Balance Sheets as of September 30, 2009 and September 30, 2008
    
    
    38Consolidated Statements of Operations for the Fiscal Year Ended September 30, 2009 and
September 30, 2008
    
    
    39Consolidated Statements of Stockholders Equity for the Fiscal Year Ended September 30, 2009
and September 30, 2008
    
    
    40Consolidated Statements of Cash Flows for the Fiscal Year Ended September 30, 2009 and
September 30, 2008
    
    
    41Notes to the Consolidated Financial Statements
    
    
    42(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.
  87




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##### Table of Contents



(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)
  88




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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)
  89




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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)
  90




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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)
  91




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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.  93




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##### Table of Contents



SIGNATURES
  First Physicians Capital Group, Inc.Date: January 12, 2010
    
    By:
    
    /s/ David Hirschhorn
  Signature
    
    Title
    
    Date/s/ David Hirschhorn
David Hirschhorn
    
    Chairman of the Board, Chief Executive Officer
    
    January 12, 2010/s/ Donald C. ParkersonDonald C. Parkerson
    
    Chief Financial Officer
    
    January 12, 2010/s/ Todd ParkerTodd Parker
    
    Director
    
    January 12, 2010/s/ Robert N. SchwartzRobert N. Schwartz
    
    Director
    
    January 12, 2010/s/ Richardson E. SellsRichardson E. Sells
    
    Director
    
    January 12, 2010/s/ William HoulihanWilliam Houlihan
    
    Director
    
    January 12, 2010
  94




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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.  100