##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedOctober 31, 2005
 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
 TRI-ISTHMUS GROUP, INC.
 
  Delaware
    
    77-0557617(State of Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Indentification No.)
 7855 Ivanhoe Avenue, Suite 200, La Jolla, California
    
    92037-4508(Address of Principal Executive Offices)
    
    (Zip Code)
 (858) 551-2920
 
   
   þ o
  o þ
  þ o
    1




---



##### Table of Contents



TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    
    3Condensed Consolidated Balance Sheets October 31, 2005 (Unaudited) and January 31, 2005
    
    
    3Condensed Consolidated Statements of Income Three and nine months ended October 31, 2005 and 2004 (Unaudited)
    
    
    5Consolidated Statements of Shareholders Equity October 31, 2005 (Unaudited)
    
    
    6Condensed Consolidated Statements of Cash Flows Nine months ended October 31, 2005 and 2004 (Unaudited)
    
    
    7Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    23Item 4.
    
    Controls and Procedures
    
    
    23PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    24Item 1A.
    
    Risk Factors
    
    
    24Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3.
    
    Defaults Upon Senior Securities
    
    
    24Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    24Item 5.
    
    Other Information
    
    
    24Item 6.
    
    Exhibits
    
    
    26Signatures
    
    
    24EXHIBIT INDEXExhibit 3.5:
    Certificate of Amendment to Certificate of Incorporation dated
December 16, 2005CERTIFICATIONSCertificate of Amendment to Certificate of IncorporationCertification Pursuant to Rule 13a-14(d)Certification Pursuant to Rule 13a-14(d)Certification Pursuant to 18 U.S.C. Section 1350Certification Pursuant to 18 U.S.C. Section 1350
 2




---



##### Table of Contents



PART I
 FINANCIAL INFORMATION
 
 Item 1. Financial Statements
  
   October 31, 2005
    
    
    January 31, 2005(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,494
    
    
    $
    1,064Receivable from related
party (net of estimated
discount of $0.783 million
as at January 31, 2005)
    
    
    
    
    
    
    956Restricted cash
    
    
    250
    
    
    
    258Prepaid expenses
    
    
    39
    
    
    
    308Other current assets
    
    
    245
    
    
    
    88Total current assets
    
    
    2,028
    
    
    
    2,674Property and equipment, net
    
    
    1
    
    
    
    40Total assets
    
    $
    2,029
    
    
    $
    2,714LIABILITIES, PREFERRED STOCK AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    202
    
    
    $
    497Accrued expenses
    
    
    184
    
    
    
    262Staff accruals
    
    
    4
    
    
    
    20Total current liabilities
    
    
    390
    
    
    
    779Commitments and contingencies (Note 9)
  3




---



##### Table of Contents



October 31, 2005
    
    
    January 31, 2005(Unaudited)Non-redeemable Preferred Stock:Preferred stock Series 1-A ($0.01 par value, 67,600 shares
authorized; 67,600 shares issued and outstanding as of
October 31 and January 31, 2005)(Aggregate liquidation value is $169 as of October 31 and
January 31, 2005)
    
    
    166
    
    
    
    166Preferred stock Series 2-A ($0.01 par value, 3,900 shares
authorized; 3,900 shares issued and outstanding as of October
31 and January 31, 2005)(Aggregate liquidation value is $25 as of October 31 and
January 31, 2005)
    
    
    25
    
    
    
    25191
    
    
    
    191Redeemable Preferred Stock:Preferred stock Series 5-A ($0.01 par value, 3,752 shares
authorized; 1,478 shares issued and outstanding as of October
31, 2005)
    
    
    1,266
    
    
    
    (Aggregate liquidation value is $1,478 as of October 31, 2005)(Aggregate redemption value is $1,774 as of October 31, 2005)Receivable from issuance of preferred stock
    
    
    (150
    )
    
    
    1,116
    
    
    
    Total preferred stock
    
    
    1,307
    
    
    
    191Shareholders equity:Common stock ($0.01 par value, 500,000,000 shares authorized;
2,074,032 and 2,074,234 shares issued and outstanding as of
October 31 and January 31, 2005, respectively)
    
    
    21
    
    
    
    21Committed stock (1,600,000 shares outstanding as of October
31,2005)
    
    
    320
    
    
    
    Additional paid-in capital
    
    
    64,959
    
    
    
    67,375Deferred stock based compensation
    
    
    (462
    )
    
    
    Accumulated deficit
    
    
    (64,455
    )
    
    
    (65,600
    )Other comprehensive loss
    
    
    (51
    )
    
    
    (52
    )Total shareholders equity
    
    
    332
    
    
    
    1,744Total liabilities, preferred stock and shareholders equity
    
    $
    2,029
    
    
    $
    2,714
  4




---



##### Table of Contents



Three months ended
    
    
    Nine months endedOctober 31,
    
    
    October 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenue from services
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    163Costs and expenses:Cost of revenue from services
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    131Selling, general and
administrative expenses
    
    
    500
    
    
    
    536
    
    
    
    1,413
    
    
    
    1,363Amortization of stock based
compensation
    
    
    101
    
    
    
    
    
    
    
    101
    
    
    
    Total costs and expenses, net
    
    
    601
    
    
    
    579
    
    
    
    1,514
    
    
    
    1,494Operating loss
    
    
    (601
    )
    
    
    (579
    )
    
    
    (1,514
    )
    
    
    (1,331
    )Interest income
    
    
    2
    
    
    
    4
    
    
    
    3
    
    
    
    12Interest expense
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    (12
    )Net loss from continuing operations before taxation
    
    $
    (599
    )
    
    $
    (582
    )
    
    $
    (1,511
    )
    
    $
    (1,331
    )Taxation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss from continuing operations after taxation
    
    $
    (599
    )
    
    $
    (582
    )
    
    $
    (1,511
    )
    
    $
    (1,331
    )Discontinued operations(Loss)/income from discontinued operations before
taxation
    
    
    
    
    
    
    (921
    )
    
    
    
    
    
    
    4,184Taxation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (118
    )(Loss)/income from discontinued operations after
taxation
    
    
    
    
    
    
    (921
    )
    
    
    
    
    
    
    4,066Net (loss)/income
    
    
    (599
    )
    
    
    (1,503
    )
    
    
    (1,511
    )
    
    
    2,735Net loss available to common shareholders (Note 5)
    
    $
    (599
    )
    
    $
    (5,352
    )
    
    $
    (1,511
    )
    
    $
    (8,148
    )Net (loss)/income per common share:Basic and diluted loss per share from continuing
operations
    
    $
    (0.29
    )
    
    $
    (2.19
    )
    
    $
    (0.73
    )
    
    $
    (6.03
    )Basic and diluted (loss)/income per share from
discontinued operations
    
    
    
    
    
    $
    (0.45
    )
    
    
    
    
    
    $
    2.01Net basic and diluted loss per share
    
    $
    (0.29
    )
    
    $
    (2.64
    )
    
    $
    (0.73
    )
    
    $
    (4.02
    )
  5




---



##### Table of Contents



Deferredstock
    
    
    
    
    
    
    
    
    
    
    TotalAdditional
    
    
    based
    
    
    
    
    
    
    Other
    
    
    ShareholCommon Shares
    
    
    Committed
    
    
    Paid-in
    
    
    compensat
    
    
    Accumula
    
    
    Comprehen
    
    
    dersStock
    
    
    Amount
    
    
    stock
    
    
    Capital
    
    
    ion
    
    
    ted Deficit
    
    
    sive Loss
    
    
    EquityBalance at January 31, 2005
    
    
    2,074,234
    
    
    $
    21
    
    
    
    
    
    
    $
    67,375
    
    
    
    
    
    
    $
    (65,600
    )
    
    $
    (52
    )
    
    $
    1,744Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,511
    )
    
    
    
    
    
    
    (1,511
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Fractional shares arising on
reverse stock split
    
    
    (202
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Warrants cancelled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,796
    )
    
    
    
    
    
    
    2,656
    
    
    
    
    
    
    
    (140
    )Issuance of Series 5-A
preferred stock and warrants
under private placement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137Restricted stock to be issued
    
    
    
    
    
    
    
    
    
    
    320
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    320Issuance of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161Issuance of options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82Deferred stock based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (462
    )
    
    
    
    
    
    
    
    
    
    
    (462
    )Balance at October 31, 2005
    
    
    2,074,032
    
    
    
    21
    
    
    
    320
    
    
    
    64,959
    
    
    
    (462
    )
    
    
    (64,455
    )
    
    
    (51
    )
    
    
    332
  6




---



##### Table of Contents



Nine months ended October 31,2005
    
    
    2004Cash flows from operating activities:Net (loss)/profit
    
    $
    (1,511
    )
    
    $
    2,735Adjustments to reconcile net (loss) / profit to net cash used in
operating activities:Depreciation and amortization
    
    
    16
    
    
    
    1,689Bad debt expense/(writeback)
    
    
    12
    
    
    
    (20
    )Loss/(gain) on disposal of property and equipment
    
    
    26
    
    
    
    (4
    )Amortization of stock based compensation
    
    
    101Minority interest in loss of a subsidiary
    
    
    
    
    
    
    (566
    )Gain on disposal of partial interest in a subsidiary
    
    
    
    
    
    
    (7,611
    )Loss on disposal of discontinued operations
    
    
    
    
    
    
    162Changes in working capital components
    
    
    638
    
    
    
    (3,958
    )Net cash used in operating activities
    
    
    (718
    )
    
    
    (7,573
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (3
    )
    
    
    (299
    )Proceeds from sale of property and equipment
    
    
    1
    
    
    
    4Proceeds from disposal of subsidiaries
    
    
    24
    
    
    
    9,490Cash disposed of in conjuction with the disposal of Vsource Texas
    
    
    
    
    
    
    (125
    )Net cash provided by investing activities
    
    
    22
    
    
    
    9,070Cash flows from financing activities:Proceeds from issuance of preferred stock
    
    
    1,328
    
    
    
    Cost of issuance of preferred stock
    
    
    (62
    )
    
    
    Warrants cancelled
    
    
    (140
    )
    
    
    Net cash provided by financing activities
    
    
    1,126
    
    
    
    Effect of exchange rates on cash
    
    
    
    
    
    
    (5
    )Net increase in cash and cash equivalents
    
    
    430
    
    
    
    1,492Cash and cash equivalents at beginning of period
    
    
    1,064
    
    
    
    1,322Cash and cash equivalents at end of period
    
    $
    1,494
    
    
    $
    2,814
  7




---



##### Table of Contents



1. Summary of Significant Accounting Policies
 Basis of Presentation
   Future Funding
      8




---



##### Table of Contents



Use of Estimates
  Concentration of Credit Risk
  2. Discontinued Operations
      9




---



##### Table of Contents



Three Months Ended October 31, 2004Vsource
    
    
    VsourceAsia
    
    
    Texas
    
    
    TotalRevenues, net
    
    $
    4,240
    
    
    $
    
    
    
    $
    4,240Loss before income tax benefit/(expense)
    
    $
    (921
    )
    
    $
    
    
    
    $
    (921
    )Income tax benefit
    
    
    
    
    
    
    
    
    
    
    Net loss (including loss on disposal of
Vsource Texas of $162)
    
    $
    (921
    )
    
    $
    
    
    
    $
    (921
    )
 Nine months Ended October 31, 2004Vsource
    
    
    VsourceAsia
    
    
    Texas
    
    

    TotalRevenues, net
    
    $
    12,810
    
    
    $
    254
    
    
    $
    13,064Income/(loss) before income tax benefit/(expense)
    
    $
    5,332
    
    
    $
    (1,148
    )
    
    $
    4,184Income tax expense
    
    
    (118
    )
    
    
    
    
    
    
    (118
    )Net income/(loss) (including gain on disposal of
Vsource Asia of $7,611 and loss on disposal of
Vsource Texas of $162)
    
    $
    5,214
    
    
    $
    (1,148
    )
    
    $
    4,066
 3. Other Current Assets
 October 31, 2005
    
    
    January 31, 2005(in thousands)Other current assets:Deposits
    
    $
    135
    
    
    $
    43Loan advance
    
    
    100
    
    
    
    Other receivables
    
    
    10
    
    
    
    45$
    245
    
    
    $
    88
  4. Restricted Cash
  10




---



##### Table of Contents



5. Net (Loss)/Profit Available to Common Shareholders
  Three months ended
    
    
    Nine months endedOctober 31,
    
    
    October 31,2005
    
    
    2004
    
    
    2005
    
    
    2004(in thousands)
    
    
    (in thousands)Net (loss)/profit
    
    $
    (599
    )
    
    $
    (1,503
    )
    
    $
    (1,511
    )
    
    $
    2,735Less: Deemed
non-cash dividend
to preferred
shareholders
    
    
    
    
    
    
    (3,849
    )
    
    
    
    
    
    
    (10,883
    )Net loss available
to common
shareholders
    
    $
    (599
    )
    
    $
    (5,352
    )
    
    $
    (1,511
    )
    
    $
    (8,148
    )
  6. Net Loss Per Share
  Three months ended
    
    
    Nine months endedOctober 31,
    
    
    October 31,2005
    
    
    2004
    
    
    2005
    
    
    2004(in thousands, except per share data)
    
    
    (in thousands, except per share data)Numerator for basic and diluted loss per
share:Net loss  continuing operations
    
    $
    (599
    )
    
    $
    (4,431
    )
    
    $
    (1,511
    )
    
    $
    (12,214
    )Net (loss)/income  discontinued operations
    
    
    
    
    
    
    (921
    )
    
    
    
    
    
    
    4,066Net loss
    
    $
    (599
    )
    
    $
    (5,352
    )
    
    $
    (1,511
    )
    
    $
    (8,148
    )Denominator for basic and diluted loss per
share  weighted average shares
    
    
    2,074,032
    
    
    
    2,026,026
    
    
    
    2,074,058
    
    
    
    2,026,034Basic and diluted (loss)/income per common
share:Continuing operations
    
    $
    (0.29
    )
    
    $
    (2.19
    )
    
    $
    (0.73
    )
    
    $
    (6.03
    )Discontinued operations
    
    
    
    
    
    $
    (0.45
    )
    
    
    
    
    
    $
    2.46Total
    
    $
    (0.29
    )
    
    $
    (2.64
    )
    
    $
    (0.73
    )
    
    $
    (4.02
    )
 11




---



##### Table of Contents



7. Comprehensive Loss
  Three months ended
    
    
    Nine months endedOctober 31,
    
    
    October 31,2005
    
    
    2004
    
    
    2005
    
    
    2004(in thousands)
    
    
    (in thousands)Net loss available to common
shareholders
    
    $
    (599
    )
    
    $
    (5,352
    )
    
    $
    (1,511
    )
    
    $
    (8,148
    )Other comprehensive (loss)/gain
foreign currency translations
    
    
    
    
    
    
    3
    
    
    
    1
    
    
    
    11Comprehensive loss
    
    $
    (599
    )
    
    $
    (5,349
    )
    
    $
    (1,510
    )
    
    $
    (8,137
    )
 8. Stock-Based Compensation
   Three months ended
    
    
    Nine months endedOctober 31,
    
    
    October 31,2005
    
    
    2004
    
    
    2005
    
    
    2004(in thousands, except per share data)
    
    
    (in thousands, except per share data)Net loss available to common shareholders
    
    $
    (599
    )
    
    $
    (5,352
    )
    
    $
    (1,511
    )
    
    $
    (8,148
    )Less: Total stock-based employee
compensation expense determined under
fair value method for all awards
    
    
    
    
    
    
    (341
    )
    
    
    
    
    
    
    (1,089
    )Net loss
    
    $
    (599
    )
    
    $
    (5,693
    )
    
    $
    (1,511
    )
    
    $
    (9,237
    )Basic and diluted net loss available to
common shareholders per shareAs reported
    
    $
    (0.29
    )
    
    $
    (2.64
    )
    
    $
    (0.73
    )
    
    $
    (4.02
    )Pro forma
    
    $
    (0.29
    )
    
    $
    (2.81
    )
    
    $
    (0.73
    )
    
    $
    (4.56
    )
 12




---



##### Table of Contents



9. Commitments and Contingencies
 Operating Leases
  For the Years Ending January 31,2006
    
    $
    262007
    
    
    342008
    
    
    $
    60
 Commitments
  Litigation
  10. Segment Data
  11. Issuance of Restricted Shares
  12. Issuance of Warrants and Options
   13




---



##### Table of Contents



13. Subsequent Events
     14




---



##### Table of Contents



Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  FORWARD LOOKING STATEMENTS
  SUBSEQUENT EVENTS
 Issuance of Previously Approved Restricted Stock.
 Delivery of Previously Approved Warrants.
 Independent Directors Options.
 Reservation of Common Stock.
 Del Mar & Point Loma Surgical Center Acquisitions.
 15




---



##### Table of Contents



Charter Amendments Approved at Annual Meeting.
 OVERVIEW
 OUR FISCAL YEAR ENDS ON JANUARY 31 OF THE FOLLOWING CALENDAR YEAR. UNLESS OTHERWISE
INDICATED, REFERENCES TO 2006 AND 2005 RELATE TO THE FISCAL YEARS ENDED JANUARY 31, 2006 AND
2005, RESPECTIVELY, RATHER THAN CALENDAR YEARS.
 Historical Background
     Recent Developments
  Symphony House-related Transactions.
 16




---



##### Table of Contents



Series 5-A Preferred Stock and Warrants Financing
     Executive Employment Agreements.
 Advisory Board Creation.
 Independent Directors Options.
 17




---



##### Table of Contents



Reservation of Common Stock.
 Del Mar & Point Loma Surgical Center Acquisitions.
 Charter Amendments Approved at Annual Meeting.
 Forward Strategy
  Phoenix LLC Loan
 18




---



##### Table of Contents



MATERIAL CHANGES IN RESULTS OF OPERATIONS  THREE AND NINE MONTHS ENDED OCTOBER 31, 2005, COMPARED
TO THREE AND NINE MONTHS ENDED OCTOBER 31, 2004
 REVENUE
  COST OF REVENUE
  SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
   STOCK BASED COMPENSATION
   19




---



##### Table of Contents



INTEREST INCOME/EXPENSE
  DISCONTINUED OPERATIONS
    BASIC WEIGHTED AVERAGE NUMBER OF COMMON STOCK OUTSTANDING
  BASIC AND DILUTED LOSS PER SHARE AVAILABLE TO COMMON SHAREHOLDERS
   20




---



##### Table of Contents



MATERIAL CHANGES IN FINANCIAL CONDITION  OCTOBER 31, 2005 COMPARED TO JANUARY 31, 2005
 CASH AND CASH EQUIVALENTS
  PREPAID EXPENSES
  PROPERTY AND EQUIPMENT, NET
  OTHER CURRENT ASSETS
  ACCOUNTS PAYABLE
  ACCRUED EXPENSES AND STAFF ACCRUALS
  RESTRICTED COMMON STOCK
  WARRANTS
  21




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
      CRITICAL ACCOUNTING POLICIES
  RECENT ACCOUNTING PRONOUNCEMENTS
   22




---



##### Table of Contents



Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 Item 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
 Changes in Internal Control Over Financial Reporting
 23




---



##### Table of Contents



PART II
OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  
 Item 1A. RISK FACTORS
  
 Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 Item 3. DEFAULTS UPON SENIOR SECURITIES
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 Item 5. OTHER INFORMATION
  
 Item 6. EXHIBITS
  3.1*
    
    Certificate of Incorporation (filed as Exhibit 3.1 to the Companys Form 8-K,
as filed with the SEC on November 14, 2000 (the November 14, 2000 Form 8-K))3.2*
    
    Bylaws (filed as Exhibit 3.2 to the November 14, 2000 Form 8-K)3.3*
    
    Amendment to Certificate of Incorporation, dated January 16, 2002 (filed as
Exhibit 3.3 to the Companys Form 8-K, as filed with the SEC on January 23, 2002)3.4*
    
    Amendment to Certificate of Incorporation, dated November 20, 2002 (filed as
Exhibit 3.1 to the Companys Form 10-Q for the period ending October 31, 2002, as filed
with the SEC on December 5, 2002)3.5
    
    Certificate of Amendment to Certificate of Incorporation, dated December 16,
2005 (filed herewith)4.1*
    
    Certificate of Designations of Rights and Preferences of Series 5-A Convertible
Preferred Stock (filed as Exhibit 3.1 to the Companys Form 8-K, as filed with the SEC
on July 21, 2005 (the July 21, 2005 Form 8-K))4.2*
    
    Certificate of Decrease of Shares Designated as Series 1-A Convertible
Preferred Stock (filed as Exhibit 4.1 to the Companys Form 8-K, as filed with the SEC
on July 13, 2005 (the July 13, 2005 Form 8-K))4.3*
    
    Certificate of Decrease of Shares Designated as Series 2-A Convertible
Preferred Stock (filed as Exhibit 4.2 to the July 13, 2005 Form 8-K)
 24




---



##### Table of Contents



4.4*
    
    Certificate of Decrease of Shares Designated as Series 3-A Convertible
Preferred Stock (filed as Exhibit 4.3 to the July 13, 2005 Form 8-K)4.5*
    
    Certificate of Decrease of Shares Designated as Series 4-A Convertible
Preferred Stock (filed as Exhibit 4.4 to the July 13, 2005 Form 8-K)4.6*
    
    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 July 21, 2005 Form 8-K)4.7*
    
    Form of Vsource, Inc. Common Stock Purchase Warrant (filed as Exhibit 4.2 to
the July 21, 2005 Form 8-K)4.8*
    
    Form of Vsource, Inc. Common Stock Purchase Warrant issuable to Advisory Board
members (filed as Exhibit 4.2 to the Companys Form 8-K, as filed with the SEC on
August 23, 2005 (the August 23, 2005 Form 8-K))10.1*
    
    Purchase and Sale of Obligation Agreement, dated as of May 24, 2005, by and
among Vsource, Inc. and Symphony House Berhad (filed as Exhibit 10.1 to the Companys
Form 8-K, as filed with the SEC on May 27, 2005)10.2*
    
    Consulting and Non-Competition Agreement, dated as of July 18, 2005, by and
between Vsource, Inc. and Dennis M. Smith (filed as Exhibit 10.1 to the July 21, 2005
Form 8-K)10.3*
    
    Loan Agreement, dated as of July 29, 2005, between Clinicis-Phoenix Surgery,
LLC and Vsource (USA) Inc. (filed as Exhibit 10.1 to the Companys Form 8-K, as filed
with the SEC on August 9, 2005 (the August 9, 2005 Form 8-K))10.4*
    
    Secured Promissory Note, dated as of July 29, 2005, executed by
Clinicis-Phoenix Surgery, LLC. (filed as Exhibit 10.2 to the August 9, 2005 Form 8-K)10.5*
    
    Stock Pledge Agreement, dated as of July 29, 2005, between Donald A. Cook and
Vsource (USA) Inc. (filed as Exhibit 10.3 to the August 9, 2005 Form 8-K)10.6*
    
    Inducement Agreement, dated as of July 29, 2005, between Vsource, Inc. and
Clinicis, Inc. (filed as Exhibit 10.4 to the August 9, 2005 Form 8-K)10.7*
    
    Employment and Non-Competition Agreement, dated as of July 18, 2005, between
David Hirschhorn and Vsource (USA) Inc. (filed as Exhibit 10.1 to the August 23, 2005
Form 8-K)10.8*
    
    Employment and Non-Competition Agreement, dated as of July 18, 2005, between
Todd Parker and Vsource (USA) Inc. (filed as Exhibit 10.2 to the August 23, 2005 Form
8-K)10.9*
    
    Partnership Interest Purchase Agreement, dated as of December 2, 2005, by and
among Del Mar GenPar, Inc. and Del Mar Acquisition, Inc., as the buyers; Surgical
Ventures, Inc., as the seller; and David M. Kupfer, M.D. (filed as Exhibit 10.1 to the
Companys Form 8-K, as filed with the SEC on December 7, 2005 (the December 7, 2005
Form 8-K)10.10*
    
    Partnership Interest Purchase Agreement, dated as of December 2, 2005, by and among
Point Loma GenPar, Inc. and Point Loma Acquisition, Inc., as the buyers; Surgical
Ventures, Inc., as the seller; and David M. Kupfer, M.D. (filed as Exhibit 10.2 to the
December 7, 2005 Form 8-K)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
 25




---



##### Table of Contents



SIGNATURES
  Date: December 20, 2005
    
    
    
    Tri-Isthmus Group, Inc.(Registrant)By:
    
    /s/ David HirschhornDavid HirschhornCo-Chief Executive OfficerDate: December 20, 2005
    
    
    
    /s/ David HirschhornDavid HirschhornCo-Chief Financial Officer(Co-Principal Financial Officer)Date: December 20, 2005
    
    
    
    /s/ Todd ParkerTodd ParkerCo-Chief Financial Officer(Co-Principal Financial Officer)
 26




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description3.1*
    
    Certificate of Incorporation (filed as Exhibit 3.1 to the Companys Form 8-K, as filed with the SEC on
November 14, 2000 (the November 14, 2000 Form 8-K))3.2*
    
    Bylaws (filed as Exhibit 3.2 to the November 14, 2000 Form 8-K)3.3*
    
    Amendment to Certificate of Incorporation, dated January 16, 2002 (filed as Exhibit 3.3 to the
Companys Form 8-K, as filed with the SEC on January 23, 2002)3.4*
    
    Amendment to Certificate of Incorporation, dated November 20, 2002 (filed as Exhibit 3.1 to the
Companys Form 10-Q for the period ending October 31, 2002, as filed with the SEC on December 5, 2002)3.5
    
    Certificate of Amendment to Certificate of Incorporation, dated December 16, 2005 (filed herewith)4.1*
    
    Certificate of Designations of Rights and Preferences of Series 5-A Convertible Preferred Stock (filed
as Exhibit 3.1 to the Companys Form 8-K, as filed with the SEC on July 21, 2005 (the July 21, 2005
Form 8-K))4.2*
    
    Certificate of Decrease of Shares Designated as Series 1-A Convertible Preferred Stock (filed as
Exhibit 4.1 to the Companys Form 8-K, as filed with the SEC on July 13, 2005 (the July 13, 2005 Form
8-K))4.3*
    
    Certificate of Decrease of Shares Designated as Series 2-A Convertible Preferred Stock (filed as
Exhibit 4.2 to the July 13, 2005 Form 8-K)4.4*
    
    Certificate of Decrease of Shares Designated as Series 3-A Convertible Preferred Stock (filed as
Exhibit 4.3 to the July 13, 2005 Form 8-K)4.5*
    
    Certificate of Decrease of Shares Designated as Series 4-A Convertible Preferred Stock (filed as
Exhibit 4.4 to the July 13, 2005 Form 8-K)4.6*
    
    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 July 21, 2005 Form 8-K)4.7*
    
    Form of Vsource, Inc. Common Stock Purchase Warrant (filed as Exhibit 4.2 to the July 21, 2005 Form 8-K)4.8*
    
    Form of Vsource, Inc. Common Stock Purchase Warrant issuable to Advisory Board members (filed as
Exhibit 4.2 to the Companys Form 8-K, as filed with the SEC on August 23, 2005 (the August 23, 2005
Form 8-K))10.1*
    
    Purchase and Sale of Obligation Agreement, dated as of May 24, 2005, by and among Vsource, Inc. and
Symphony House Berhad (filed as Exhibit 10.1 to the Companys Form 8-K, as filed with the SEC on May
27, 2005)10.2*
    
    Consulting and Non-Competition Agreement, dated as of July 18, 2005, by and between Vsource, Inc. and
Dennis M. Smith (filed as Exhibit 10.1 to the Companys Form 8-K, as filed with the SEC on July 21,
2005)10.3*
    
    Loan Agreement, dated as of July 29, 2005, between Clinicis-Phoenix Surgery, LLC and Vsource (USA) Inc.
(filed as Exhibit 10.1 to the Companys Form 8-K, as filed with the SEC on August 9, 2005 (the August
9, 2005 Form 8-K))10.4*
    
    Secured Promissory Note, dated as of July 29, 2005, executed by Clinicis-Phoenix Surgery, LLC. (filed
as Exhibit 10.2 to the August 9, 2005 Form 8-K)10.5*
    
    Stock Pledge Agreement, dated as of July 29, 2005, between Donald A. Cook and Vsource (USA) Inc. (filed
as Exhibit 10.3 to the August 9, 2005 Form 8-K)10.6*
    
    Inducement Agreement, dated as of July 29, 2005, between Vsource, Inc. and Clinicis, Inc. (filed as
Exhibit 10.4 to the August 9, 2005 Form 8-K)10.7*
    
    Employment and Non-Competition Agreement, dated as of July 18, 2005, between David Hirschhorn and
Vsource (USA) Inc. (filed as Exhibit 10.1 to the August 23, 2005 Form 8-K)10.8*
    
    Employment and Non-Competition Agreement, dated as of July 18, 2005, between Todd Parker and Vsource
(USA) Inc. (filed as Exhibit 10.2 to the August 23, 2005 Form 8-K)10.9*
    
    Partnership Interest Purchase Agreement, dated as of December 2, 2005, by and among Del Mar GenPar,
Inc. and Del Mar Acquisition, Inc., as the buyers; Surgical Ventures, Inc., as the seller; and David M.
Kupfer, M.D. (filed as Exhibit 10.1 to the Companys Form 8-K, as filed with the SEC on December 7,
2005 (the December 7, 2005 Form 8-K)10.10*
    
    Partnership Interest Purchase Agreement, dated as of December 2, 2005, by and among Point Loma GenPar,
Inc. and Point Loma Acquisition, Inc., as the buyers; Surgical Ventures, Inc., as the seller; and David
M. Kupfer, M.D. (filed as Exhibit 10.2 to the December 7, 2005 Form 8-K)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