**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-KSB**





x ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934


For
      the
      fiscal year ended June 30, 2008





 ̈ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934





Commission
      file number: 000-5137





**THE
      CENTER FOR WOUND HEALING, INC.**


(Name
      of
      Small Business Issuer in Its Charter)





Nevada
            
            87-0618831(State
                or jurisdiction of Incorporation or organization
            
            (IRS
                Employer ID Number)





155
                White Plains RoadTarrytown,
                NY
            
            10591(Address
                of principal executive offices)
            
            (Zip
                Code)





Issuer's
      telephone number, including area code:   (914)
      372-3150




Securities
      registered under Section 12(b) of the Exchange Act:




None




Securities
      registered under Section 12(g) of the Exchange Act:




Common
      Stock, $0.001 par value per share


(Title
      of
      Class)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports); and (2) has been subject
      to such filing requirements for the past 90 days. Yes  ̈ No x




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definite proxy or information statements
      incorporated by reference in Part III of this form 10-KSB or any amendment
      to
      this Form 10-KSB. x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes  ̈ No x




The
      issuer's revenues for the year ended June 30, 2008 were $26,357,619.




The
      aggregate market value of the registrant's common stock held by non-affiliates
      as of September 19, 2008 was approximately $8,190,333.




State
      the
      number of shares outstanding of each of the issuer's classes of equity
      securities, as of the latest practicable date. As of September 19, 2008, there
      were 23,373,281 shares of common stock issued and outstanding.




DOCUMENTS
      INCORPORATED BY REFERENCE:    None.




Transitional
      Small Business Disclosure Format (check one):  Yes  ̈ No x


2


**THE
      CENTER FOR WOUND HEALING, INC.**


**Report
      on Form 10-KSB**


**For
      the Fiscal Year Ended June 30, 2008**





**TABLE
      OF CONTENTS**





PAGEPART
                IItem
                1.
            Description
                of Business
            
            4Item
                2.
            Description
                of Property
            
            17Item
                3.
            Legal
                Proceedings
            
            17Item
                4.
            Submission
                of Matters to Vote of Security Holders
            
            17PART
                IIItem
                5.
            Market
                for Common Equity, Related Stockholder Matters and Small Business
                Issuer
                Purchases of Equity Securities
            
            18Item
                6.
            Management’s
                Discussion and Analysis or Plan of Operation
            
            22Item
                7.
            Financial
                Statements
            
            31Item
                8.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            
            62Item
                8A.
            Controls
                and Procedures
            
            62Item
                8B.
            Other
                Information
            
            63PART
                IIIItem
                9.
            Directors,
                Executive Officers, Promoters and Control Persons; Compliance with
                Section
                16(a) of the Exchange Act
            
            63Item
                10.
            Executive
                Compensation
            
            69Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            
            76Item
                12.
            Certain
                Relationships and Related Transactions, and Director
                Independence
            
            78Item
                13.
            Exhibits
            
            78Item
                14
            Principal
                Accountant Fees and Services
            
            81Signatures
            
            
            83


3


**Forward-Looking
      Statements**




This
      Report contains, in addition to historical information, forward-looking
      statements regarding The Center for Wound Healing, Inc. (the “Company” or
“CFWH”), which represent the Company’s expectations or beliefs including, but
      not limited to, statements concerning the Company’s operations, performance,
      financial condition, business strategies, and other information and that involve
      substantial risks and uncertainties. The Company’s actual results of operations,
      some of which are beyond the Company’s control, could differ materially. For
      this purpose, any statements contained in this Report that are not statements
      of
      historical fact may be deemed to be forward-looking statements. Without limiting
      the generality of the foregoing, words such as “may,” “will,” “expect,”
“believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue” or the
      negative or other variations thereof or comparable terminology are intended
      to
      identify forward-looking statements. Factors that could cause or contribute
      to
      such difference include, but are not limited to; limited history of operations;
      need for additional financing; competition; dependence on management; and other
      factors discussed herein and in the Company’s other filings with the Securities
      and Exchange Commission.




PART
      I




**ITEM
              1.**
            **DESCRIPTION
                OF BUSINESS**




As
      used
      in this annual report, "we", "us", "our", "CFWH", "Company" or "our company"
      refers to The Center for Wound Healing, Inc. and all of its subsidiaries and
      affiliated companies.




**Business
      Development:**




The
      Center for Wound Healing, Inc. (“CFWH” or the “Company”), formerly known as
      American Hyperbaric, Inc., was organized in the State of Florida on May 25,
      2005. CFWH develops and manages comprehensive wound care centers, which are
      marketed as “THE CENTER FOR WOUND HEALING tm ”
      throughout the United States. These centers render the specialized service
      of
      comprehensive wound care and hyperbaric medicine, and are developed in
      partnerships with acute care hospitals. CFWH can be contracted to startup and
      manage the wound care program or offer a turnkey operation including the
      furnishing of hyperbaric oxygen chambers to hospitals. On December 9, 2005,
      CFWH
      completed a “reverse acquisition” transaction with Kevcorp Services, Inc.
      (“Kevcorp”), a publicly-held Nevada corporation, in which Kevcorp acquired all
      the assets and assumed all of the liabilities of CFWH, in consideration for
      the
      issuance of a majority of Kevcorp’s shares of common stock pursuant to an
      Agreement and Plan of Reorganization. The transaction was a tax-free
      reorganization. Following the reorganization, CFWH became a wholly-owned
      subsidiary of Kevcorp. After this transaction closed, in December 2005 CFWH
      amended its Articles of Incorporation and changed its name to The Center for
      Wound Healing, Inc. CFWH is headquartered in Tarrytown, New York. Our principal
      executive office is located at 155 White Plains Road, Suite 200, Tarrytown,
      NY
      10591.


4





On
      April
      7, 2006, we acquired the majority membership interests in 12 individual limited
      liability companies (the “Twelve LLCs”) from the holders of these companies’
majority members (the “Majority Members”) pursuant to the rights granted to us
      by the Majority Members of the Twelve LLCs in December 2005. As a condition
      precedent to the purchase contract we closed on a financing transaction
      resulting in $5,500,000 and $4,912,500 in gross and net cash proceeds,
      respectively, to fulfill our operational and expansion plans.




On
      April
      7, 2006, the Company simultaneously received $5.5 million in gross proceeds
      (the
“Secured Convertible Debenture” or “Debenture”) ($4,912,500 after placement
      agent fees and other offering costs, plus an additional 150,000 common shares
      issued to the placement agent), in exchange for its secured convertible
      debenture issued to DKR Sound Shore Oasis Holding Fund Ltd (“Oasis”) ($5.1
      million) and Harborview Master Fund LP ($0.4 million), together the
“Bondholders”. The Debenture was originally due on April 7, 2007. As provided in
      the agreement, the due date was extended to September 7, 2007 since the shares
      underlying the Oasis warrants were not registered. The debentures were
      convertible at the option of the Bondholders into common shares, at $3 per
      common share (subject to adjustment) at any time and in any amount prior to
      maturity. As originally issued, the debenture bore interest at 8% per annum,
      payable in cash or in common shares at the conversion price (subject to certain
      eligibility requirements). $2,000,000 of the proceeds of the debenture was
      paid
      to the Majority Members as partial consideration for the simultaneous
      acquisitions of the Twelve LLCs previously discussed.




The
      debenture agreement contained EBITDA (Earnings before Interest, Taxes,
      Depreciation and Amortization) targets which, if not met, would result in a
      downward adjustment to the conversion price although the conversion price could
      not be less than $2.00 per share. Through June 30, 2007, these targets were
      not
      met and the conversion price was reduced to $2.00. Among other conditions,
      the
      Company was required to file a registration statement covering the common shares
      issuable in the event of conversion of the debenture into common shares and
      for
      common shares issuable upon exercise of the Oasis warrants.




In
      addition, each Bondholder received a series of five year common stock purchase
      warrants with exercise prices ranging from $4.00 to $5.00 per share (subject
      to
      adjustment downward upon the occurrence of certain specified events) for an
      aggregate of 2,750,000 common shares. If the Company failed to file a
      registration statement by April 7, 2007, which it did, the holders of the
      warrants received the option to exercise the warrants on a “cashless” basis.




Of
      these
      warrants, 916,667, exercisable at $4.00 per common share, were exercisable
      on
      their 11 month anniversary of issuance and were callable at the option of the
      Company until exercisable. Since the Company did not exercise its call right,
      the due date of the convertible debenture was extended to September 7, 2007.
      All
      other warrants are immediately exercisable.


5


Because
      the senior convertible debentures were immediately convertible, and could be
      converted at a price on the date of sale ($3.00 per share) which was less than
      the market value of the shares on that date ($4.00 per share), this transaction
      included a beneficial conversion feature. In addition, the corresponding
      warrants attached were determined to have fair values utilizing the
      Black-Scholes option-pricing model in excess of the notes’ proceeds of
      $5,500,000. Consequently, $2,108,240 was allocated to the beneficial conversion
      feature and $3,391,760 to the warrants, using a relative valuation method to
      the
      value of the senior convertible note and credited to additional paid-in capital.
      The beneficial conversion feature, the fair value of the immediately convertible
      warrants, and those warrants exercisable as of June 30, 2007, were charged
      to
      interest expense and accreted to the senior convertible debenture in the
      accompanying financial statements. As of June 30, 2007, there was no remaining
      unamortized discount.




As
      part
      of this agreement, the Company was required to file a Registration Statement
      within 60 days of the date of closing of the shares and warrants associated
      with
      the aforementioned $5.5 million 8% Secured Debenture. Since the Company failed
      to do so, it incurred damages payable to each Bondholder equivalent to 1.5%
      of
      the aggregate purchase price paid by each Bondholder for each month the
      Registration Statement was not filed up to a maximum of 9% per Bondholder.
      The
      maximum damages amounted to $495,000, which was fully accrued for in fiscal
      2007.




On
      February 28, 2007 Oasis issued a Default Notice to the Company because of the
      Company’s failure to timely file its June 30, 2006 annual report on Form 10-KSB,
      the cessation of the Company’s securities being listed or quoted on the
      Over-the-Counter Bulletin Board of the NASD, and the Company’s failure to file a
      Registration Statement within 60 days of the Registration Rights Agreement.
      As a
      result of these defaults the Company incurred a $1,650,000 penalty (30% of
      the
      principal amount of the debenture), as provided for in the Debenture Agreement.
      On May 29, 2007 the Company, its debenture holders and Signature Bank negotiated
      a restructuring of the Company’s senior secured loan and the secured debenture.
      Among other things, the debenture holders withdrew their default notice and
      all
      alleged defaults under both agreements were waived.




The
      restructured subordinated debentures increased the principal amount of
      debentures for accrued interest on the debentures through May 29, 2007 by
      $504,778 and the $495,000 in damages referred to above. The interest rate on
      the
      restructured $6,499,778 in indebtedness was increased from 8% to 9%. The revised
      debt required a $1,000,000 payment to the bondholders of which $800,000 was
      a
      principal reduction and $200,000 was a “consent fee” to restructure the
      debentures; this payment was made on June 21, 2007. The bondholders received an
      additional $1,650,000 as “additional consideration” for amending the agreements.
      The consent fee and the additional consideration were charged to operations
      as
      additional interest from the restructure date to December 31, 2007, the initial
      maturity date of the debentures. On the initial maturity date the Company
      exercised its option to extend the maturity date to March 31, 2008 by paying
      a
      $1,200,000 in principal payments and an additional consent fee of $300,000.


6


Pursuant
      to the Third Amendment to the credit facility effective May 29, 2007, and to
      three subsequent amendments, the bank extended the line’s maturity to April 15,
      2008, and increased the revolving credit line to $6,500,000 at substantially
      the
      same interest rates and secured by the same collateral. The Company also
      received the proceeds from a $1,500,000 term loan payable in equal monthly
      principal installments of $33,333 commencing September 1, 2007, with the balance
      due April 15, 2008.




The
      amended agreement required the Company to maintain certain financial covenants
      and ratios, limited capital expenditures and additional indebtedness, and
      prohibited dividends and distributions to minority interest without prior
      approval. The Company was required to assign the aggregate proceeds of key
      man
      life insurance of $7,500,000 on the life of the Company’s CEO, and two directors
      personally guaranteed the bank debt.




On
      March
      31, 2008, the Company completed a $20 million 15% senior secured subordinated
      financing agreement with Bison Equity Capital Partners (“Bison”) (the “Bison
      Note”) (the “Bison Financing”). The Company received $17.5 million, net of a
      $2.5 million discount, and after providing for transaction fees, approximately
      $12.8 million was used to retire in its entirety the Secured Convertible
      Debenture, accrued interest and penalty; the Signature Bank term loan; the
      CFWH
      Mezzanine loan and accrued interest, the December 2007 and January 2008 Bridge
      Loan and accrued interest; and certain extended accounts payable and other
      obligations.





As
      part
      of the May 29, 2007 refinancing agreement with the Bondholders, the Company
      agreed to pay the Bondholders $800,000 in principal and $200,000 as a consent
      fee within 21 days of the agreement becoming effective. In order to raise
      capital to effectuate this payment, the Company formed a new limited liability
      company, CFWH Mezzanine, LLC (“Mezzanine”) and sold an aggregate total of 25% of
      the membership interests in Mezzanine to private investors for an aggregate
      sum
      of $1 million. The Company contributed to Mezzanine its rights to the proceeds
      of certain specifically identified wound care centers the Company contemplated
      opening in the near term and the minority investors were entitled to receive
      25%
      of the earnings of such centers. At the time the Company called for the
      redemption of the minority ownership interests in Mezzanine, each investor
      had
      the option to either receive payment for the principal or may convert his or
      her
      principal investment into the Company’s common stock at a conversion price of $2
      per share. The Mezzanine loan was retired in full from the proceeds of the
      Bison
      Financing.




On
      June
      16, 2006, the Company closed on a contribution agreement, effective June 1,
      2006, to acquire Far Rockaway Hyperbaric, (“Far Rockaway”) for $5 million. The
      consideration consisted of $1,000,000 in cash on closing, 615,385 shares of
      the
      Company’s common stock valued at $3.25 per share, which carry piggyback
      registration rights, based upon the closing price of the stock on the date
      of
      the acquisition, a two year promissory note in the amount of $1,350,000 bearing
      interest at 8% per annum, and a 60 day promissory note in the amount of $650,000
      bearing interest at 8% per annum. The 60 day note was repaid on August 9, 2006,
      and the two year note was retired in full on June 14, 2008.


7


**Business
      of Issuer:**




Hyperbaric
      Oxygen Treatment (“HBOT”) is a medical treatment administered by delivering
      one-hundred percent (100%) oxygen at pressures greater than atmospheric (sea
      level) pressure to a patient inside an enclosed chamber. This means that the
      pressure is typically 21⁄2 times greater than normal atmospheric pressure, causing
      blood to carry larger amounts of oxygen, which is delivered to organs and
      tissues in the body. The increased pressure combined with the increased oxygen
      dissolves oxygen in the blood and throughout all body tissues and fluids at
      up
      to 20 times normal concentration. By doing so, wounds, particularly infected
      wounds, heal more quickly.




Hyperbaric
      oxygen acts as a drug, eliciting varying levels of response at different
      treatment depths, durations and dosages and has been proven effective as
      adjunctive therapy for specifically indicated conditions. The amount of pressure
      increase and the length of time under pressure are determined by the conditions
      being treated. Treatment pressures are usually between two and three-times
      atmospheric pressure and usually last from one to two hours at full pressure.




The
      US
      Food and Drug Administration (“FDA”) has approved HBOT to treat decompression
      sickness, gangrene, brain abscess, air bubbles in the blood, and injuries in
      which tissues are not getting enough oxygen. Oxygen is considered to be a drug
      by the FDA that must be prescribed by a physician or a licensed health care
      provider in order to help treat illnesses or health conditions.




HBOT
      does
      not compete with or replace other treatment modalities, however, it is now
      increasingly being used on an adjunctive basis in the management of a variety
      of
      disorders refractory to standard medical and surgical care and has been shown
      to
      be particularly effective in treating problem wounds, chronic bone infections,
      and radiation injury. In general, people are using HBOT to help themselves
      heal
      faster from surgeries and injuries.




We
      contract with hospitals to supply hyperbaric oxygen chambers and manage wound
      care facilities offering the services related to this treatment. Generally
      for
      each center we are provided with appropriate space requirements by the
      institution. We are responsible for the complete management of our services
      for
      each treatment scheduled including non-medical staff and billing of patient
      services directly through the hospital for inclusion in a patient’s overall
      billing. We also are responsible for designing and installing the necessary
      leasehold improvements of the hospital-provided space and supplying the
      appropriate number of hyperbaric chambers, based upon anticipated demand. We
      generally either acquire the chambers under three year lease financing
      transactions with $1 buyout arrangements (treated as capitalized leases in
      our
      accompanying condensed consolidated financial statements) or we rent the units
      from third parties for which we pay a per use (treatment) fee. This has allowed
      us to leverage our resources and maximize the number of centers that we can
      support. As our operation grows, we have the ability to transfer chambers
      between institutions in order to balance demand and maximize the use of our
      resources.


8


CFWH
      has
      entered into separate multi-year operating agreements to startup and manage
      the
      wound care programs in 38 hospitals, which offer turnkey operations including
      the furnishing of hyperbaric oxygen chambers to each hospital. For the period
      ending June 30, 2008, CFWH had 35 of the 38 agreements operational; however,
      in
      September 2008 we determined to close one underperforming center, which resulted
      in a loss on abandonment accrual of $190,000 as of June 30, 2008. Although
      there
      can be no assurance that we will be successful in each instance, our plan at
      each center requires a multi-year committed contract term with a fixed and
      or
      variable fee schedule based on paid hyperbaric treatments and wound care
      procedures. This fee is adequate for us to recover our investment in leasehold
      improvements (a sunk cost and non-transferable asset), our start-up costs,
      including recruiting and training of personnel, and the amortization of chamber
      lease financing.




CFWH
      is a
      provider of contract services for wound care and hyperbaric medicine in the
      United States. Through medical leadership based upon a multi-disciplinary team
      of physicians and defined clinical standards, CFWH is committed to achieving
      patient results while simultaneously providing both physicians and hospitals
      professional and economic opportunities.




The
      goal
      of present management and the physician-founders of CFWH is to bring HBOT into
      the mainstream of wound and non-emergent treatment modalities. At the time
      of
      CFWH’s inception, hyperbaric therapy was already well regarded in certain
      emergency medical applications but was not a recognized modality in the
      treatment of non-healing wounds, particularly within the vascular community.
      CFWH has begun to form strong bonds with the vascular and podiatric communities
      in order to integrate HBOT as a core modality.




CFWH’s
      individualized therapies, established protocols and proactive care and case
      management has proven successful in treating chronic wounds that have previously
      resisted healing with outcomes exceeding national averages. In all of its
      centers, CFWH utilizes a best practice model enhanced by nationally accepted
      wound care algorithms to significantly improve the medical results for patients
      with chronic non-healing wounds.




In
      addition to wound healing management, CFWH also provides Hyperbaric Oxygen
      Therapy as an adjunct treatment modality to enhance the body’s natural healing
      abilities and to strengthen the body’s immune system. This is resulting in more
      rapid and comprehensive healing powers for patients. HBOT is a simple,
      non-invasive, painless treatment that has been proven to benefit patients
      presenting with Center for Medicare and Medicaid Services approved indications,
      including:




·
            Acute
                arterial insufficiency


·
            Osteomyelitis


·
            Radiation
                injury/necrosis


·
            Necrotizing
                infection


·
            Compromised
                skin grafts and flaps


·
            Diabetic
                wounds of the lower extremities


9


To
      measure the effectiveness of our wound management program, CFWH has developed
      a
      functional assessment scoring system to measure the healing of a wound. In
      addition, CFWH has developed a proprietary tracking software and database of
      over 1,000 patient outcomes that have been collected over the past four years.
      In reviewing the data collected, CFWH has registered healing rates of close
      to
      80% in 5-6 weeks of combination local wound care and HBOT. This group of
      patients falls within the high risk category that would otherwise require
      amputation. Instead, less than eight percent of this patient population will
      undergo amputation. This is well below national benchmarks consistently
      reporting amputation rates over 20% in the high risk group.




**Competition:**




Our
      principal competition in the chronic wound care market consists of specialty
      clinics that have been established by some hospitals or physicians.
      Additionally, there are a number of private companies that provide wound care
      services through an HBOT program format. In the market for disease management
      products and services, we face competition from other disease management
      entities, general health care facilities and service providers,
      biopharmaceutical companies, pharmaceutical companies and other competitors.
      Many of these companies have substantially greater capital resources and
      marketing staffs, and greater experience in commercializing products and
      services than we have. In addition, recently developed technologies, or
      technologies that may be developed in the future, are or may be the basis for
      products which compete with our chronic wound program. There can be no assurance
      that we will be able to enter into co-marketing arrangements with respect to
      these products or that we will be able to compete effectively against such
      companies in the future.




As
      the
      FDA issues formal approvals of HBOT as treatment for specific illness, both
      physician and patient awareness will continue to increase as to the benefits
      of
      using HBOT.




**Marketing:**




CFWH
      conducts market awareness programs and advertising to promote the utilization
      of
      its centers among medical professional, care givers, and patients. A
      multifaceted marketing approach is used to create awareness of the Center’s
      capabilities and to secure appropriate referrals. This approach is implemented
      over several months and features:




·
            Educational
                lectures and dinners with homecare agencies, nursing homes and physicians
                (both individual and group
                practices)




·
            Grand
                opening ceremonies




·
            Outcome
                data presented at annual vascular
                conferences




·
            Sponsored
                healthcare events for the community




·
            Distribution
                of collateral materials




·
            Media
                advertising –both radio and
                print


10


·
            Sponsorship
                of local and national podiatry society meetings and
                lectures




·
            Efforts
                to secure patients from other local hospital’s medical
                staffs




·
            Efforts
                to establish substantial business key physicians in the area particularly
                major PCP groups




**Government
      Regulation:**




Our
      operations and the marketing of our services are subject to extensive regulation
      by numerous federal and state governmental authorities in the United States.
      We
      believe that we are currently in substantial compliance with applicable laws,
      regulations and rules. However, we cannot assure you that a governmental agency
      or a third party will not contend that certain aspects of our business are
      either subject to or are not in compliance with such laws, regulations or rules
      or that the state or federal regulatory agencies or courts would interpret
      such
      laws, regulations and rules in our favor. The sanctions for failure to comply
      with such laws, regulations or rules could include denial of the right to
      conduct business, significant fines and criminal and civil penalties.
      Additionally, an increase in the complexity or substantive requirements of
      such
      laws, regulations or rules could have a material adverse effect on our
      business.




Any
      change in current regulatory requirements or related interpretations by or
      positions of, state officials where we operate could adversely affect our
      operations within those states. In states where we are not currently located,
      we
      intend to utilize the same approaches adopted elsewhere for achieving state
      compliance. However, state regulatory requirements could adversely affect our
      ability to establish operations in such other states.




Various
      state and federal laws apply to the operations of health care providers
      including, but are not limited to, the following:




**Licensure:**




Certain
      health care providers are required to be licensed by various state regulatory
      bodies. However, if we are found to not be in compliance, we could be subject
      to
      fines and penalties or ordered to cease operations which could have an adverse
      effect on our business.




**False
      Claims Act:**




The
      Federal False Claims Act and some state laws impose requirements in connection
      with the submission of claims for payment for health care services and products,
      including prohibiting the knowing submission of false or fraudulent claims
      and
      submission of false records or statements to the United States government or
      state government. Such requirements would apply to the hospital customers to
      which we provide wound care management services. Not only are government
      agencies active in investigating and enforcing actions with respect to
      applicable health laws, but also health care providers are often subject to
      actions brought by individuals on behalf of the government. As such
      "whistleblower" lawsuits are generally filed under seal with a court to allow
      the government adequate time to investigate and determine whether it will
      intervene in the action, health care providers affected are often unaware of
      the
      suit until the government has made its determination and the seal is lifted.
      The
      Federal False Claims Act provides for penalties equal to three (3) times the
      actual amount of any overpayments plus $11,000 per claim.


11


**Fraud
      and Abuse Laws:**




The
      Anti-Kickback Law




The
      federal Anti-Kickback law prohibits the solicitation, payment, receipt or
      offering of any direct or indirect remuneration in exchange for the referral
      of
      Medicare and Medicaid patients or for purchasing, arranging for or recommending
      the purchasing, leasing or ordering of Medicare or Medicaid covered services,
      items or equipment. The Anti-Kickback law is an intent based statute, which
      means that it is violated only if the party intends to induce the referral
      of
      Medicare or Medicaid patients or the purchase, lease, or ordering of a good,
      item, or services reimbursable by Medicare or Medicaid. Nevertheless, federal
      courts have broadly construed the intent standard and held that it is satisfied
      even if only one purpose of the referral is to induce a prohibited
      referral.




The
      Center for Medicare and Medicaid Studies (“CMS”) has promulgated regulations
      containing “safe harbors” which protect certain activities from prosecution
      under the federal Anti-Kickback law. A safe harbor immunizes from criminal
      or
      civil penalties certain payment or business practices that are prohibited by
      the
      Anti-Kickback law. In order to have protection under the safe harbor, a party
      must comply with each requirement of the applicable safe harbor.




However,
      falling outside a safe harbor does not mean the arrangement is illegal, but
      means that the arrangement will be evaluated based on a facts and circumstances
      test to determine whether the party intends to induce the referral of Medicare
      or Medicaid patients or the purchase, lease, or ordering of a good, item or
      service reimbursable by Medicare or Medicaid. While we believe that our
      operations and marketing are in compliance with the Anti-Kickback law and
      certain of the safe harbors, there are no assurances that the Office of
      Inspector General ("OIG") OIG or other governmental authority will agree with
      that belief.




The
      OIG
      from time to time publishes its interpretations on various fraud and abuse
      issues and about fraudulent or abusive activities OIG deems suspect and
      potentially in violation of the federal laws, regulations and rules. If our
      actions are found to be inconsistent with OIG's interpretations, such actions
      could have a material adverse effect on our business.




Violations
      of these fraud and abuse laws may result in fines and penalties as well as
      civil
      or criminal penalties for individuals or entities, including exclusion from
      participation in the Medicare or Medicaid programs. Several states have adopted
      similar laws that cover patients in both private and government programs.
      Because the fraud and abuse laws have been broadly interpreted, they limit
      the
      manner in which we can operate our business and market our services to, and
      contract for services with, other health care providers.


12


**The
      Stark Law:**




Federal
      and some state laws prohibit physician referrals to an entity in which the
      physician or his or her immediate family members have a financial interest
      for
      provision of certain designated health services that are reimbursed by Medicare
      or Medicaid. Outpatient prescription drugs are one of the designated services.
      We believe we have structured our operations to comply with these provisions
      but
      no assurances can be given that a federal or state agency charged with
      enforcement of the Stark Law, its regulations, or similar state laws might
      not
      assert a contrary position. In addition, periodically, there are efforts to
      expand the scope of these referral restrictions from its application to
      government health care programs to all payors and to additional health services.
      Certain states are considering adopting similar restrictions or expanding the
      scope of existing restrictions. We cannot assure you that the federal
      government, or other states in which we operate, will not enact similar or
      more
      restrictive legislation or restrictions or interpret existing laws and
      regulations in a manner that could harm our business.




**Professional
      Fee Splitting:**




The
      laws
      of many states prohibit physicians from sharing professional fees with
      non-physicians and prohibit entities not solely owned by physicians, including,
      us, from practicing medicine and from employing physicians to practice medicine.
      The laws in most states regarding the corporate practice of medicine have been
      subjected to judicial and regulatory interpretation and while we have attempted
      to structure our relationships with physicians and our operations in a manner
      that complies with these requirements, there is no assurance that various state
      regulators will agree that we are in compliance.




**Professional
      Licenses:**




State
      laws prohibit the practice of medicine without a license. We believe that our
      arrangements with physicians and physician groups are structured in a manner
      that precludes a determination that we are practicing medicine. Nevertheless,
      a
      state could consider our activities to constitute the practice of medicine.
      If
      we are found to have violated these laws, we could face civil and criminal
      penalties and be required to reduce, restructure or even cease our business
      in
      that state.




**HIPAA:**




The
      Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) broadened
      the scope of certain fraud and abuse laws by adding several criminal provisions
      for health care fraud offenses that apply to all health benefit programs. HIPAA
      also added a prohibition against incentives intended to influence decisions
      by
      Medicare beneficiaries as to the provider from which they will receive services.
      In addition, HIPAA created new enforcement mechanisms to combat fraud and abuse,
      including the Medicare Integrity Program and an incentive program under which
      individuals can receive up to $1,000 for providing information on Medicare
      fraud
      and abuse that leads to the recovery of at least $100 of Medicare funds. Federal
      enforcement officials now have the ability to exclude from Medicare and Medicaid
      any investors, officers, and managing employees associated with business
      entities that have committed health care fraud, even if the officer or managing
      employee had no knowledge of the fraud.


13


HIPAA
      also contains certain administrative simplification provisions that require
      the
      use of uniform electronic data transmission standards for certain health care
      claims and payment transactions submitted or received electronically. The United
      States Department of Health and Human Services (“HHS”) has issued regulations
      implementing the HIPAA administrative simplification provisions and compliance
      with these regulations became mandatory for our facilities on October 16, 2003.
      Although HHS temporarily agreed to accept noncompliant Medicare claims, CMS
      stopped processing non-HIPAA-compliant Medicare claims beginning October 1,
      2005. We believe that the cost of compliance with these regulations has not
      had
      and is not expected to have a material adverse effect on our business, financial
      condition, results of operations, and cash flows.




The
      Administrative Simplification Provisions of HIPAA require HHS to adopt standards
      to protect the security and privacy of health-related information. In February
      2002, HHS issued final rules concerning the security standards, do not require
      the use of specific technologies, e.g., no specific hardware or software is
      required, but instead require health plans, health care clearinghouses and
      health care providers to comply with certain minimum security procedures in
      order to protect data integrity, confidentiality and availability. The
      compliance deadline was April 2005.




With
      respect to the privacy standards, HHS published final rules in December of
      2000.
      However, on August 14, 2002, HHS published final modifications to the privacy
      standards. The final modifications eliminate the need for patient consent when
      the protected information is disclosed for treatment payment issues or health
      care operations. In addition, the final modifications clarified the requirements
      related to the authorizations, marketing and minimum necessary disclosures
      of
      information. All health care providers were required to be compliant with the
      new federal privacy requirements no later than April 14, 2003. HIPAA privacy
      standards contain detailed requirements regarding the use and disclosure of
      individually identifiable health information. Improper use or disclosure of
      identifiable health information covered by HIPAA privacy regulations can result
      in the following fines and/or imprisonment: (i) civil money penalties for HIPAA
      privacy violations are $100 per incident, up to $25,000, per person, per year,
      per standard violated; (ii) a person who knowingly and in violation of HIPAA
      privacy regulations obtains individually identifiable health information or
      discloses individually identifiable health information to another person may
      be
      fined up to $50,000 and imprisoned up to one year, or both; (iii) if the offense
      is committed under false pretenses, the fine may be up to $100,000 and
      imprisonment for up to five years; and (iv) if the offense is done with the
      intent to sell, transfer or use individually identifiable health information
      for
      commercial advantage, personal gain or malicious harm, the fine may be up to
      $250,000 and imprisonment for up to ten years.


14


We
      must
      meet the various HIPAA standards by the deadlines noted above. The decentralized
      nature of our operations could represent significant challenges to us in the
      implementation of these standards. If we are found to not be in compliance,
      we
      could be subject to fines, penalties and other actions which could have an
      adverse effect on our business.




**Confidentiality:**




Under
      federal and state laws, we must adhere to stringent confidentiality regulations
      intended to protect the confidentiality of patient records. We believe our
      operations are in compliance with these laws but we could be subject to claims
      from patients as well as charges of violations from regulators and such claims
      or charges could have a material adverse effect on our business.




**Ongoing
      Investigations:**




Federal
      and state investigations and enforcement actions continue to focus on the health
      care industry, scrutinizing a wide range of items such as joint venture
      arrangements and referral and billing practices. We believe our current and
      planned activities are substantially in compliance with applicable legal
      requirements. We cannot assure you, however, that a governmental agency or
      a
      third party will not contend that certain aspects of our business are subject
      to, or are not in compliance with, such laws, regulations or rules, or that
      state or federal regulatory agencies or courts would interpret such laws,
      regulations and rules in our favor, or that future interpretations of such
      laws
      will not require structural or organizational modifications of our existing
      business or have a negative impact on our business. Applicable laws and
      regulations are very broad and complex, and, in many cases, the courts interpret
      them differently, making compliance difficult. Although we try to comply with
      such laws, regulations and rules, a violation could result in denial of the
      right to conduct business, significant fines and criminal penalties.
      Additionally, an increase in the complexity or substantive requirements of
      such
      laws, regulations or rules, or reform of the structure of health care delivery
      systems and payment methods, could have a material adverse effect on our
      business.




**Intellectual
      Property:**




Our
      success depends in part on our ability to maintain trade secret protection
      and
      operate without infringing on or violating the proprietary rights of third
      parties. In addition, we also rely, in part, on trade secrets, proprietary
      know-how and technological advances which we seek to protect by measures, such
      as confidentiality agreements with our employees, consultants and other parties
      with whom we do business. We cannot assure you that these agreements will not
      be
      breached, that we will have adequate remedies for any breach or that our trade
      secrets and proprietary know-how will not otherwise become known, be
      independently discovered by others or found to be unprotected.


15


Our
      Subsidiaries:





Name
                of Subsidiary
            
            Jurisdiction
                of Incorporation of
              OrganizationAtlantic
                Associates, LLC
            
            DelawareAtlantic
                Hyperbaric, LLC
            
            New
                YorkBayonne
                Hyperbaric, LLC
            
            New
                JerseyCEF
                Products, LLC
            
            New
                YorkCFWH
                Mezzanine, LLC
            
            New
                JerseyCMC
                Hyperbaric, LLC
            
            PennsylvaniaEIN
                Hyperbaric, LLC
            
            New
                YorkElise
                King, LLC
            
            New
                YorkFar
                Rockaway Hyperbaric, LLC
            
            New
                YorkForest
                Hills Hyperbaric, LLC
            
            New
                YorkGreater
                Bronx Hyperbaric LLC
            
            New
                YorkJFK
                Hyperbaric LLC
            
            New
                JerseyLowell
                Hyperbaric LLC
            
            MassachusettsMaimonides
                Hyperbaric, LLC
            
            New
                YorkMassachusetts
                Hyperbaric, LLC
            
            MassachusettsMeadowlands
                Hyperbaric, LLC
            
            New
                JerseyMuhlenberg
                Hyperbaric LLC
            
            New
                JerseyNew
                York Hyperbaric & Wound Care Centers LLC
            
            New
                YorkNew
                York Hyperbaric & Wound Care Centers LLC
            
            DelawareNewark
                BI LLC
            
            New
                JerseyNJ
                Hyperbaric, LLC
            
            New
                JerseyNY
                Hyperbaric, LLC
            
            New
                YorkPassaic
                Hyperbaric, LLC
            
            New
                JerseyPennsylvania
                Hyperbaric, LLC
            
            PennsylvaniaRaritan
                Bay Hyperbaric, LLC
            
            New
                JerseyScranton
                Hyperbaric LLC
            
            PennsylvaniaSouth
                N Hyperbaric LLC
            
            New
                YorkSouth
                Nassau Hyperbaric, LLC
            
            New
                YorkSt.
                Josephs Hyperbaric LLC
            
            New
                YorkThe
                Center For Wound Healing I, LLC
            
            New
                JerseyThe
                Center For Wound Healing II, LLC
            
            New
                YorkThe
                Square Hyperbaric, LLC
            
            New
                YorkTrenton
                Hyperbaric, LLC
            
            New
                JerseyVB
                Hyperbaric, LLC
            
            New
                York




**Employees**




The
      Company consists of over 183 full-time employees coming from various
      backgrounds. In addition to over 100 physicians accredited in hyperbaric
      medicine, including some of the top physicians practicing in vascular surgery
      today, the Company boasts a number of ex-hospital executives, registered nurses,
      financial professionals, and business executives. To ensure and facilitate
      the
      successful planning, implementation and continued operations of our numerous
      wound care centers, our team also utilizes architects, engineers, contractors,
      and healthcare attorneys. Currently, CFWH provides management and operations
      for
      35 hospital-based hyperbaric and wound programs.


16


**ITEM
      2. Description of Properties:**




Prior
      to
      December 2007, our headquarters were located in Iselin, NJ. The corporate office
      was moved to Tarrytown, NY in December 2007. The lease at the new facility
      extends through November 30, 2012 at a starting base rate of $6,480 per
      month.




Minimum
      payments under non-cancelable operating lease obligations for office space
      at
      June 30, 2008 are as follows:




Years Ending June 30,2009
            
            $
            140,2012010
            
            
            108,0842011
            
            
            105,1332012
            
            
            98,9782013
            
            
            35,100




Rent
      expense under all operating leases in fiscal year ended June 30, 2008 was
      $225,925 and $234,440 in 2007. In August 2007, the company entered into a lease
      with Ephrata Community Hospital for the Hyperbaric Wound Care Services. This
      lease will add lease obligations of $24,133 for 2009, $24,133 for 2010, $24,133
      for 2011 and $16,088 for 2012. As of September 1, 2008, a new lease agreement
      was entered in with Woodbridge Place Association. The remaining three years
      of
      the existed lease was brought out for $100,000, and was replaced with a one
      year
      lease for $25,809.




**ITEM
              3.**
            **Legal
                Proceedings:**




There
      is
      no action, suit, proceeding, inquiry or investigation before or by any public
      board, government agency, self-regulatory organization or body pending or,
      to
      the knowledge of the executive officers of our company or any of our
      subsidiaries, threatened against or affecting our company, our common stock,
      any
      of our subsidiaries or of our company's or our company’s subsidiaries’ officers
      or directors in their capacities as such, in which an adverse decision could
      have a material adverse effect.




**ITEM
              4.**
            **Submission
                of Matters to a Vote of Security
                Holders:**




No
      matters were submitted to shareholders for the quarter ended June 30,
      2008.


17


**PART
      II**




**ITEM
              5.**
            **Market
                for Registrant's Common Equity and Related Stockholder Matters and
                Small
                Business Issuer Purchases of Equity
                Securities:**




From
      December 5, 2005 through November 15, 2006 our common stock was quoted on the
      Over-The-Counter Bulletin Board system and the Financial Industry Regulatory
      Authority (“FINRA”) Electronic Bulletin Board under the symbol "CFWH.PK." On
      November 16, 2006, The Center for Wound Healing, Inc., as a result of being
      unable to timely file its annual report on Form 10-KSB, was no longer being
      quoted on the OTCBB. Our stock has continued to be reported on the “Pink Sheets”
under the symbol “CFWH.PK.”




The
      closing price of our common stock on September 12, 2008, as reported on the
      “Pink Sheets,” was $1.06 per share.




Quarter
                Ended
            
            High
            
            LowSeptember
                2006
            
            $
            5.10
            
            $
            5.10December
                2006
            
            $
            5.25
            
            $
            2.75March
                2007
            
            $
            3.75
            
            $
            3.75June
                2007
            
            $
            2.75
            
            $
            2.75September
                2007
            
            $
            2.75
            
            $
            2.50December
                2007
            
            $
            2.50
            
            $
            2.50March
                2008
            
            $
            3.00
            
            $
            1.40June
                2008
            
            $
            1.95
            
            $
            1.25




The
      quotations set forth above reflect inter-dealer prices, without retail markup,
      markdown, or commission, and may not necessarily represent actual transactions.




**Holders:**




As
      of
      September 19, 2008, there were approximately 64 shareholders of record of our
      common stock.




**Dividends:**




We
      have
      never declared or paid any cash dividends on our capital stock and do not
      anticipate paying any cash dividends on our capital stock in the foreseeable
      future. Instead, we intend to retain our earnings, if any, to finance the
      expansion of our business. The declaration and payment of dividends in the
      future, if any, will be determined by the board of directors in light of
      conditions then existing, including our earnings, financial condition, capital
      requirements and other factors.


18


**Recent
      sales of unregistered securities:**




During
      the period covered by this annual report, we have sold securities pursuant
      to
      the following transactions, all of which were exempt from the registration
      requirements of the Securities Act of 1933, as amended (the "Securities Act").




·
            CFWH
                Mezzanine Financing




In
      June
      2007, the Company received the proceeds from $1,000,000 in securities
      (“Mezzanine Loan”) from various investors (“Investors”). These securities were
      classified as liabilities in the financial statements since the Company could
      repay the Investors as described below. The securities gave the Investors an
      aggregate 25% share of a newly formed entity, CFWH Mezzanine, LLC (“Mezzanine”).
      Mezzanine operates a Hyperbaric and Wound Care facility at each of 10 new
      hospitals (as determined by the Company). The Company contributed the hospital
      contracts for these 10 facilities, manages Mezzanine and will pay any net
      profits to Mezzanine, of which the Investors will receive a 25%
      share.




The
      Investors’ shares in Mezzanine were redeemable by the Company if the Company
      paid the Investors 125% of the original subscription price within 180 days
      from
      the signing of the agreement, or pays 130% of the original subscription price
      within 210 days, or paid 150% of the original subscription price within 270
      days, or 200% of the original subscription price within one year. If the Company
      did not redeem the interest in Mezzanine within one year, the Company would
      have
      lost the right to redeem the Investors interest in Mezzanine, and no money
      would
      have been due to the Investors. The Investors had the option to convert their
      interest in Mezzanine to shares of the Company’s stock at a conversion rate of
      $2.00 invested per share, or 500,000 shares for a two year period expiring
      in
      June 2009. After the closing on the Bison Note, the Company retired the
      Mezzanine Loan.




In
      April
      and May 2008 the Company issued 187,500 shares of its common stock in payment
      of
      accrued interest on the above mezzanine loan.




·
            **December
                2007 and January 2008
                Financing**




In
      December, 2007 and January, 2008 the Company raised a total of $1.6 million
      from
      individual investors in the form of a short term unsecured note, (the “Bridge
      Financing Note”) the terms of which provided the lenders with interest paid in
      cash or in lieu of cash, warrants with an exercise price of $2. These funds
      were
      used to fund the $1.5 million payment due the Bondholders on or before January
      31, 2008 (of the $1.5 million, $1.2 million was used to retire principal and
      $300 thousand was paid for a consent fee). Prior to the payment in full of
      the
      Bondholders on March 31, 2008, the $1.6 million was held by an escrow agent
      and
      shown as Restricted Cash on the Company’s balance sheet. Certain members of the
      Company’s board of directors and officers of the Company participated in this
      Bridge Financing and lent the Company $600 thousand of the total $1.6 million
      raised.


19


On
      January 25, 2008 the Company used $1.5 million of the Bridge Financing Note
      to
      pay the Bondholders and $100 thousand for working capital purposes. On March
      31,
      2008 the entire $1.6 million Bridge Financing Note was paid in full from the
      proceeds of the Bison financing.




·
            In
                May 2008 a bridge financing note holder purchased 200,000 shares
                of the
                Company’s common stock for $400,000 in
                cash.




·
            **15%
                Senior Secured Subordinated Promissory
                Note.**




On
      March
      31, 2008, the Company completed a $20 million 15% senior secured subordinated
      financing agreement with Bison Equity Capital Partners (“Bison”) (the “Bison
      Note”). The Company received $17.5 million, net of a $2.5 million discount, and
      after providing for transaction fees, approximately $12.3 million was used
      to
      retire in its entirety the Secured Convertible Debenture, accrued interest
      and
      penalty; the Signature Bank term loan; the CFWH Mezzanine loan and accrued
      interest; and certain extended accounts payable and other
      obligations.





The
      financial terms of the Bison Note are summarized as follows:




·
            The
                Note is a five year note maturing March 31,
                2013.




·
            Interest
                is payable in cash at 12% per annum plus 6% payment in kind (“PIK”). After
                certain payoff conditions are met, as defined in the Bison Note,
                the
                Scheduled Interest is payable in cash at the rate of 12% per annum
                plus 3%
                PIK per annum. If no defaults exist and the Company has met the payoff
                conditions, the Company has the option of deferring the scheduled
                payment
                of interest at the Scheduled Cash Interest Rate for up to 12 months
                ending
                on October 31, 2009, which would be added to the outstanding principal
                of
                the Note.




·
            Principal
                amortization begins on the second anniversary of the Note and the
                amortization payment is $2.5 million per year until the fifth year
                at
                which point the Company is obligated to retire in full the balance
                of the
                outstanding principal.




·
            Bison
                also received warrants equal to 20% of the fully diluted common stock
                of
                the Company. The Company has the opportunity to extinguish a certain
                number of these warrants based upon its achievement of EBITDA and
                leverage
                thresholds. The warrants which are calculated to be 7,168,488 at
                March 31,
                2008 are exercisable at $5.00 per share, have a seven year life and
                carry
                standard anti-dilution and registration rights provisions. The Note
                carries certain EBITDA and leverage ratio covenants, limitations
                on
                maximum allowable debt with Signature and other credit parties,
                limitations on capital expenditures, and limitations on investments
                and
                acquisitions.


20






·  The
      debt
      is subordinated to Signature Bank.




The
      offer
      and sale of such shares of our common stock were effected in reliance on the
      exemptions for sales of securities not involving a public offering, as set
      forth
      in Rule 506 promulgated under the Securities Act and in Section 4(2) of the
      Securities Act, based on the following: (a) the investors confirmed to us that
      they were “accredited investors,” as defined in Rule 501 of Regulation D
      promulgated under the Securities Act and had such background, education and
      experience in financial and business matters as to be able to evaluate the
      merits and risks of an investment in the securities; (b) there was no public
      offering or general solicitation with respect to the offering; (c) the investors
      were provided with certain disclosure materials and all other information
      requested with respect to our company; (d) the investors acknowledged that
      all
      securities being purchased were “restricted securities” for purposes of the
      Securities Act, and agreed to transfer such securities only in a transaction
      registered under the Securities Act or exempt from registration under the
      Securities Act; and (e) a legend was placed on the certificates representing
      each such security stating that it was restricted and could only be transferred
      if subsequent registered under the Securities Act or transferred in a
      transaction exempt from registration under the Securities Act.




**Equity
      Compensation Plan Information**




The
      following table gives information about our common stock that may be issued
      upon
      the exercise of options, warrants or rights under our existing equity
      compensation plan, the 2006 Stock Option Plan. The information in this table
      is
      as of June 30, 2008.




**Plan
                Category**
            
            **Number
                of securities to**
              **be
                issued upon exercise**
              **of
                outstanding options,**
              **warrants
                and rights**
            
            **Weighted
                average**
              **exercise
                price of**
              **outstanding
                options,**
              **warrants,
                and rights**
            
            **Number
                of**
              **securities**
              **remaining**
              **available**Equity
                compensation plans approved by security holders(1)
            
            
            1,857,667
            
            $
            3.37
            
            
            5,642,333Equity
                compensation plans not approved by security holders
            
            
            -
            
            
            -
            
            
            -Total
            
            
            1,857,667
            
            $
            3.37
            
            
            5,642,333





(1)
            Our
                2006 Stock Option Plan permits the issuance of restricted stock,
                stock
                appreciation rights, options to purchase our common stock, deferred
                stock
                and other stock-based awards, not to exceed 7,500,000 shares of our
                common
                stock, to employees, outside directors, and
                consultants.




21





**ITEM
      6.**  **Management's
      Discussion and Analysis of Financial Condition and Results of Operations**




**GENERAL
      OVERVIEW**




The
      following Management’s Discussion and Analysis (“MD&A”) is intended to help
      the reader understand our company. The MD&A is provided as a supplement to,
      and should be read in conjunction with, our financial statements and the
      accompanying notes (“Notes”).




**FORWARD-LOOKING
      INFORMATION**




This
      Annual Report on Form 10-KSB includes forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended. We have based these
      forward-looking statements on our current expectations and projections about
      future events. These forward-looking statements are subject to known and unknown
      risks, uncertainties and assumptions about us that may cause our actual results,
      levels of activity, performance or achievements to be materially different
      from
      any future results, levels of activity, performance or achievements expressed
      or
      implied by such forward-looking statements. In some cases, you can identify
      forward-looking statements by terminology such as “may,” “should,” “could,”
“would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or
      the negative of such terms or other similar expressions. Actual operations
      and
      results may differ materially from present plans and projections due to changes
      in economic conditions, new business opportunities, changed business conditions,
      and other developments. Other factors that could cause results to differ
      materially are described in our filings with the Securities and Exchange
      Commission.




There
      are
      several factors that could cause actual results or events to differ materially
      from those anticipated, and include, but are not limited to, general economic,
      financial and business conditions, changes in and compliance with governmental
      laws and regulations, including various state and federal government
      regulations, our ability to obtain additional financing from outside investors
      and/or bank and mezzanine lenders, and our ability to generate revenues
      sufficient to achieve positive cash flow.




Readers
      are cautioned not to place undue reliance on the forward-looking statements
      contained herein, which speak only as of the date hereof. We believe the
      information contained in this Form 10-KSB to be accurate as of the date hereof.
      Changes may occur after that date. We will not update that information except
      as
      required by law in the normal course of its public disclosure practices.




Additionally,
      the following discussion regarding our financial condition and results of
      operations should be read in conjunction with the financial statements and
      related notes contained in Item 1 of Part I of this Form 10-KSB.




22




**GENERAL**




The
      Company develops and manages comprehensive wound care centers, which are
      marketed as “THE CENTER FOR WOUND HEALING tm ”
      (“CFWH”) primarily in the mid-Atlantic and northeastern parts of the country.
      These centers render the specialized service of hyperbaric medicine and are
      developed in partnerships with acute care hospitals. We enter into separate
      multi-year operating agreements to startup and manage the wound care program
      as
      well as offer a turnkey operation including the furnishing of hyperbaric oxygen
      chambers to hospitals. Although there can be no assurance that we will be
      successful in each instance, our plans for each hospital center requires a
      multi-year committed contract term adequate for us to recover our investment
      in
      leasehold improvements (a sunk cost and non-transferable asset); our start-up
      costs, including recruiting and training of personnel; and the amortization
      of
      chamber lease financing. Generally, the hospital provides us with appropriate
      space for each of our centers.




We
      are
      responsible for the development and management of the wound care and hyperbaric
      centers, including providing direct staff and billing support to ensure
      hospitals are reimbursed appropriately. We also are responsible, at our expense,
      for designing and installing necessary leasehold improvements of the
      hospital-provided space and to supply the appropriate number of hyperbaric
      chambers, which is based upon the anticipated demand for this type of treatment.
      We acquire the chambers under both operating and capitalized lease financing
      transactions with $1 buyout arrangements (treated as capitalized leases in
      our
      accompanying audited consolidated financial statements). As our operation grows,
      we have the ability to transfer chambers between institutions to balance demand
      and maximize the use of our resources.




**RESULTS
      OF OPERATIONS:**




The
      Company was formed on May 25, 2005, and as discussed previously, began
      operations with six centers on July 1, 2005. As more fully described in the
      notes to our audited consolidated financial statements, the Company acquired
      the
      interests of two additional LLCs effective January 1, 2006, and 12 additional
      LLCs effective April 1, 2006. Our revenues vary based on the demand for
      treatments and the utilization of wound care centers and hyperbaric chambers.
      The demand from the hospitals for our services is dependent upon their abilities
      to attract patients and their reputation in the medical communities and the
      geographic areas they serve, as well as on the allowable rates and frequency
      of
      reimbursement by health care insurance providers, managed care providers,
      Medicare, Medicaid and others. We conduct market awareness programs and
      advertising to promote the utilization of our centers among medical
      professionals, care-givers and patients. Revenues fluctuate monthly with the
      number of days per month that the hospitals in which we operate our centers
      are
      open.




23




**2007
      RESTRUCTURING CHARGE**




During
      fiscal 2008 and fiscal 2007 management undertook a detailed evaluation of the
      Company’s contracts and operations and concluded that in fiscal 2007 several
      partnerships and joint ventures to which it was a party were not generating
      sufficient earnings to merit the Company’s continued participation. Accordingly,
      management decided to sever its involvement in these ventures and negotiated
      the
      termination of its relationship with its joint venture partners. As a result
      of
      its evaluation the Company recorded a noncash charge to operations of $2,076,266
      in fiscal 2007. The major components of these noncash, nonrecurring charges
      include:





·
            The
                termination of the Company’s participation in a contract with its former
                joint venture partner to provide hyperbaric treatment services at
                a
                facility in Southampton, NY, $259,622;





·
            The
                termination by the Company of several contracts the Company maintained
                with one individual in the form of several joint ventures. The major
                components of this write-off include the termination of the Company’s
                interest in a contract to operate a hyperbaric treatment center at
                Victory
                Memorial Hospital (“Victory”), one of the hospitals identified for closure
                by the Berger Commission, $51,025; the termination of a joint venture
                to
                develop a hyperbaric treatment facility at Peninsula Hospital, another
                institution identified for possible closure by the Berger Commission;
                the
                termination of its participation at a free-standing hyperbaric and
                sleep
                treatment facility in New Jersey; and the termination of a consulting
                contract with the principal of the joint venture partner, collectively,
                $365,648; the final write-off component is the termination of the
                Company’s participation in a free-standing hyperbaric treatment facility
                in New York, $83,333. During the fourth quarter of 2008 an independent
                third party expressed interest in acquiring Victory. The possible
                ownership change caused management, along with the minority interest
                owner
                of the Victory operating contract, to reconsider its position and
                decided
                to continue to operate the facility during the discussions and possibly
                thereafter.





·
            Management
                concluded that its contract with Interfaith Hospital, acquired as
                part of
                the Far Rockaway acquisition, which was consummated June 1, 2006,
                had no
                value to the Company. The Company’s centers are located in hospitals that
                have large Medicare populations. Management determined that the Medicare
                population served by that hospital was of insufficient size to warrant
                the
                maintenance and expense of a wound care and hyperbaric center at
                the
                hospital. At the time of the transaction a firm was engaged to issue
                a
                valuation of the Interfaith Hospital contract and a value of $1.1
                million
                was assigned to it. It is this value, a noncash intangible asset,
                which
                management has elected to write-off together with $63,400 of leasehold
                improvements the Company made at the wound care center after it was
                acquired in 2006.





·
            The
                Company wrote-off an additional $240,700 of leasehold improvements
                relating to: the termination of the Warminster Hospital contract,
                $47,400
                (the hospital was acquired by a competing hospital that has its own
                wound
                care program); the aforementioned Interfaith Hospital termination,
                $63,400; and $129,000 of improvements at Mercy Nanticoke Hospital,
                a
                contract the Company decided to terminate prior to its term because
                treatment volumes at the hospital were not meeting expectations.




24




·
            In
                September 2008, management determined that its contract with one
                hospital
                was impaired. Management will move the furniture, fixtures and equipment
                at this facility to a new facility in the second quarter of fiscal
                2009
                and abandon the remaining assets at the hospital. A charge for the
                abandonment of assets of approximately $190,000 was charged to operations
                in the fourth quarter of fiscal
                2008.





**REVENUES:**




Revenues
      for the years ended June 30, 2008 and 2007 were $26.4 million and $19.8 million,
      respectively. The $6.6 million increase is attributable to revenues from centers
      opened during the year and increased revenues from existing centers.




**OPERATING
      EXPENSES:**




Cost
      of services :
      Cost of
      services, which are comprised principally of payroll and payroll related costs
      for professional and nursing staff required to administer treatments at our
      centers as well as depreciation relating to hyperbaric medical chambers and
      leasehold improvements, was $13.2 million or 49.9% of total revenues for the
      year ended June 30, 2008 compared with $11.6 million or 58.7% in the year ended
      June 30, 2007. The increase of $1.5 million or 13.0% is primarily attributable
      to the increased depreciation costs associated with the leasehold improvements
      and the addition of the intangible asset amortization for the six wound care
      centers opened during the year; and the change of terms for the amortization
      of
      intangible assets related to two hospital contracts from nine years to the
      remaining lives of the contracts of 4.5 years. The 8.8% decrease in cost of
      services as a percent of revenue is a result of more efficient use of medical
      chambers.




Sales
      and marketing :
      Sales
      and marketing expense was $180 thousand or approximately 0.7% of total revenues
      for the year ended June 30, 2008, approximately $100 thousand or 37.2% less
      than
      the prior year. The decrease is mainly due to advertising programs that were
      undertaken in 2007 and were not repeated in 2008.




General
      and administrative :
      General
      and administrative expenses are comprised primarily of payroll and payroll
      related costs, insurance and professional fees, including legal, accounting
      and
      systems implementation costs. Fiscal 2008 general and administrative costs
      were
      $8.5 million, approximately 32.1% of total revenues, compared with $11.8 million
      and 59.4% in fiscal 2007. The $3.3 million or 28.2% year-over-year decrease
      in
      general and administrative costs is due to a reduction in the use of consultants
      and temporary accounting services through the establishment of an accounting
      department, and a reduction in noncash compensation amortization from fewer
      options being granted in 2008.




25


Depreciation
      and amortization :
      Depreciation and amortization expense related to our corporate leasehold
      improvements aggregated $400 thousand or 1.7% of revenues in fiscal 2008
      compared with $60 thousand or 0.3% of revenues in the prior fiscal year. The
      increase was mainly due to the amortization expense for the development of
      the
      new electronic medical records application, and the accounting system the
      Company has deployed.




Depreciation
      related to hyperbaric medical chambers, contracts and leasehold improvements
      at
      the facilities totaled $3.6 million or 13.7% of revenues in 2008 and $2.1
      million or 10.6% in 2007. These costs are classified in Cost of Services.




Bad
      debt expense :
      Bad
      debt expense was $800 thousand or 3.0 % of total revenues for the year ended
      June 30, 2008 compared with $1.0 million or 4.9% of fiscal 2007 total revenues.
      The reduction was due to the Company having greater control of its accounts
      receivable, the result of much greater focus during the year than in fiscal
      2007.




Abandonment
      and Impairment Loss: Abandonment and Impairment Loss was $190 thousand or 0.7%
      of total revenues for fiscal 2008 compared with $2.1 million or 10.5% of fiscal
      2007 total revenues. The decrease of $1.9 million is attributable to the company
      having performed a detailed analysis in 2008 and 2007 resulting in the
      elimination of several ventures that were not generating sufficient earnings
      to
      merit further participation. Two of the centers eliminated in 2007 resulted
      in a
      write-off of $1.5 million of intangible assets for the value of the contracts
      at
      those centers.




**OTHER
      INCOME (EXPENSE):**




Interest
      expense :
      The
      Company incurred interest expense of $7.2 million or 27.5% of total revenues
      for
      the year ended June 30, 2008 compared with $3.6 million and 18.1% in the fiscal
      year ended June 30, 2007. The increase of $3.6 million is mostly attributable
      to
      $2.0 million in financing costs paid to the 8% secured convertible debenture
      holders, $600 thousand of interest charged for the Mezzanine Loan, $700 thousand
      of interest charged for the Bridge Financing Note and $300 thousand of
      amortization of the discount of the 15% Senior Secured Subordinated Promissory
      Note.




Minority
      interest in net income or loss of consolidated subsidiaries :
      Minority interest was $132 thousand or 0.5% of total revenues for the year
      ended
      June 30, 2008 compared to a $170 thousand or 0.9% income benefit in the prior
      fiscal year. This expense varies directly with the results of operations of
      the
      entities having minority interests.




Loss
      on disposal of property and equipment :
      The
      loss on disposal of property and equipment was $69 thousand or 0.3 % of total
      revenues compared with a loss of $29 thousand or 0.1% in fiscal
      2007.




Other
      Expense :
      Other
      expenses in 2007 were comprised primarily of liquidating damages associated
      with
      the prior secured debentures, which were retired in full on March 31,
      2008.




26


**INCOME
      TAXES:**




Income
      tax for fiscal year 2008 was $20 thousand compared to income benefit of $1.5
      million in fiscal 2007.




**NET
      LOSS:**




For
      the
      fiscal year ended June 30, 2008, the Company lost $4.3 million or $0.19 cents
      per diluted share compared with a net loss of $9.4 million or $0.41 cents per
      year loss incurred in fiscal 2007. The $5.5 million reduction is the result
      of
      the aforementioned revenues and expense differences between the two fiscal
      years.




**LIQUIDITY
      AND CAPITAL RESOURCES:**




Operating
      Activities :
      Net
      cash provided by operating activities was $2.0 million for the year ended June
      30, 2008. While our net loss was $4.3 million, substantial noncash expenses
      were
      incurred during the year such as (a) depreciation and amortization of $4.0
      million related to equipment, leasehold improvements, and certain hospital
      contracts, (b) interest charged for the amortization of deferred financing
      costs
      of $2.1 million, (c) interest accrued for convertible debenture and notes
      payable of $1.2 million, (d) amortization of stock options of $1.5 million,
      (e)
      interest charged for the beneficial conversion features of 8% senior convertible
      debentures of $0.9 million, (f) warrants issued in payment of interest expense
      of $0.7 million, and (g) $0.2 million for the abandonment of leasehold
      improvements at one hospital that management determined was underperforming
      and
      will be closed within the next several months. In addition, the allowance for
      bad debts increased $0.7 million to a total of $2.9 million. Gross accounts
      receivable increased $4.5 million for the year ended June 30, 2008, which was
      anticipated as the number of centers operated by the Company increased from
      the
      prior year. The growth in accounts payable and accrued expenses experienced
      during the prior year ending June 30, 2007 was partially reversed in the current
      year by $1.5 million. These impacts were partially offset by income tax refunds
      collected of $0.9 million.




Investing
      Activities :
      Net
      cash used in investing activities was $3.3 million for the year ended June
      30,
      2008. The primary use of cash was for the purchase of property and equipment
      for
      new centers, including chambers and leasehold improvements.




Financing
      Activities :
      Net
      cash provided by financing activities was $1.2 million for the year ended June
      30, 2008. As described in Part II, Item 5, the Company refinanced certain
      existing debt on March 31, 2008 through the issuance of a 15% Senior Secured
      Subordinated Promissory Note with Bison Equity Capital Partners from which
      we
      received $17.5 million in proceeds. Additional proceeds were received from
      notes
      payable of $1.6 million and $0.4 million from the issuance of common stock.
      The
      total proceeds were used by (a) deferred financing costs of $3.0 million, (b)
      repayment of $7.4 million of principal, interest and penalties associated with
      the 8% senior convertible debentures, (c) repayment of certain notes and loans
      of $5.0 million, and (d) repayment of the bank line of credit of $1.3 million.
      In addition, we made disbursements of $1.7 million for the year ended June
      30,
      2008, of which $1.3 million was for payments on capital lease obligations and
      $0.4 million was for distributions to minority members.




27




We
      participate in a working capital accounts receivable financing and term loan
      arrangement with Signature Bank, which matures March 31, 2010. The use of these
      funds will be required to support our operations in the future and will be
      dependent upon satisfying borrowing base requirements, among other covenants.
      We
      were in full compliance with all the terms of the bank financing as of June
      30,
      2008.




We
      believe that the senior bank debt and the 15% Senior Secured Subordinated
      Promissory Note will provide sufficient liquidity for the Company to be able
      to
      finance our operations for the next twelve months.




**RECENT
      ACCOUNTING PRONOUNCEMENTS**





In
      May
      2008, the FASB issued FSP APB 14-1, *Accounting
      for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
      (Including Partial Cash Settlement)* ,
      which
      specifies that issuers of convertible debt instruments that may be settled
      in
      cash upon conversion should separately account for the liability and equity
      components in a manner reflecting their nonconvertible debt borrowing rate
      when
      interest costs are recognized in subsequent periods.  FSP APB 14-1 is
      effective for interim periods and fiscal years beginning after December 15,
      2008.  The Company will adopt FSP APB 14-1 effective July 1,
      2009.  The Company is currently assessing the impact of FSP APB 14-1
      on its financial statements.




In
      June
      2008, the FASB ratified Emerging Issues Task Force Issue No. (“EITF”) 07-5,
“Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an
      Entity’s Own Stock” (EITF 07-5). EITF 07-5 provides that an entity should use a
      two step approach to evaluate whether an equity-linked financial instrument
      (or
      embedded feature) is indexed to its own stock, including evaluating the
      instrument’s contingent exercise and settlement provisions. It also clarifies on
      the impact of foreign currency denominated strike prices and market-based
      employee stock option valuation instruments on the evaluation. EITF 07-5 is
      effective for fiscal years beginning after December 15, 2008. The Company is
      currently assessing the impact of EITF 07-5 on its consolidated financial
      position and results of operations.




In
      June 2008, the FASB issued FSP Emerging Issues Task Force
      (EITF) No. 03-6-1, “Determining Whether Instruments Granted in
      Share-Based Payment Transactions Are Participating Securities.” Under
      the  FSP, unvested share-based payment awards that contain rights to
      receive nonforfeitable dividends (whether paid or unpaid) are participating
      securities, and should be included in the two-class method of computing EPS.
      The
      FSP is effective for fiscal years beginning after December 15, 2008, and
      interim periods within those years. The Company does not expect the adoption
      of
      FSP EITF No. 03-6-1 to have a material effect on its consolidated financial
      statements.




28





In
      September 2007, the FASB issued SFAS No. 157, “Fair Value Measurements”
(“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a
      framework for measuring fair value in accordance with generally accepted
      accounting principles, and expands disclosures about fair value measurements.
      This statement does not require any new fair value measurements; rather, it
      applies under other accounting pronouncements that require or permit fair value
      measurements. The provisions of this statement are to be applied prospectively
      as of the beginning of the fiscal year in which this statement is initially
      applied, with any transition adjustment recognized as a cumulative-effect
      adjustment to the opening balance of retained earnings. The provisions of SFAS
      No. 157 are effective for the fiscal years beginning after
      November 15, 2007; therefore, the Company anticipates adopting this
      standard as of July 1, 2008. The Company does not believe adoption of SFAS
      157 will have a material impact on its financial position, results of operations
      or cash flows.





In
      February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
      Financial Assets and Financial Liabilities. Under the provisions of SFAS
      No. 159, the Company may choose to carry many financial assets and
      liabilities at fair values, with changes in fair value recognized in earnings.
      The company will adopt the pronouncement effective for periods beginning after
      July 1, 2008. The Company is currently evaluating the impact of adopting
      this pronouncement on its consolidated financial statements, but does not expect
      it to have a material effect.




In
      December 2007, the FASB issued SFAS NO. 160, “Noncontrolling Interests in
      Consolidated Financial Statements—an amendment of ARB No. 51”. The
      objective of this Statement is to improve the relevance, comparability, and
      transparency of the financial information that a reporting entity provides
      in
      its consolidated financial statements by establishing accounting and reporting
      standards that require the following changes. The ownership interests in
      subsidiaries held by parties other than the parent be clearly identified,
      labeled, and presented in the consolidated statement of financial position
      within equity, but separate from the parent’s equity. The amount of consolidated
      net income attributable to the parent and to the noncontrolling interest must
      be
      clearly identified and presented on the face of the consolidated statement
      of
      income. When a subsidiary is deconsolidated, any retained noncontrolling equity
      investment in the former subsidiary is initially measured at fair value. The
      gain or loss on the deconsolidation of the subsidiary is measured using the
      fair
      value of any noncontrolling equity investment rather than the carrying amount
      of
      that retained investment and entities provide sufficient disclosures that
      clearly identify and distinguish between the interest of the parent and the
      interest of the noncontrolling owners. The changes to current practice resulting
      from the application of SFAS No. 160 is effective for financial statements
      issued for fiscal years beginning after December 15, 2008, and interim
      periods within those fiscal years. The adoption of SFAS No. 160 before
      December 15, 2008 is prohibited. The Company has not determined the effect
      that may result from the adoption of SFAS No. 160 on its financial
      statements.




29


In
      December 2007, the FASB issued SFAS No. 141(R), “Business
      Combinations – Revised” that improves the relevance, representational
      faithfulness, and comparability of the information that a reporting entity
      provides in its financial reports about a business combination and its effects.
      To accomplish that, this statement establishes principles and requirements
      how
      the acquirer recognizes and measures in its financial statement the identifiable
      assets acquired, the liabilities assumed, and any noncontrolling interest in
      the
      acquiree, recognizes and measures the goodwill acquired in the business
      combination or a gain from a bargain purchase, and determines what information
      to disclose to enable users of the financial statements to evaluate the nature
      and financial effects of the business combination. The changes to current
      practice resulting from the application of SFAS No. 141(R) are effective
      for financial statements issued for fiscal years beginning after
      December 15, 2008. The adoption of SFAS No. 141(R) before
      December 15, 2008 is prohibited. The Company has not determined the effect,
      if any, that may result from the adoption of SFAS No. 141(R) on its
      financial statements.





Management
      does not believe that any other recently issued but not yet effective accounting
      pronouncement, if adopted, would have a material effect on the accompanying
      financial statements.




30




**ITEM
      7.**  **FINANCIAL
      STATEMENTS**




**THE
      CENTER FOR WOUND HEALING, INC.**




Report
                of Independent Registered Public Accounting Firm
            
            32Consolidated
                Balance Sheets as of June 30, 2008 and 2007
            
            33Consolidated
                Statements of Operations for the Years Ended June 30, 2008 and
                2007
            
            34Consolidated
                Statement of Cash Flows for the Years Ended June 30, 2008 and
                2007
            
            35,
                36Consolidated
                Statements of Changes in Stockholders' Equity for theYears
                Ended June 30, 2008 and 2007
            
            37Notes
                to Consolidated Financial Statements
            
            38 –
                61




31




REPORT
        OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To
        the
        Board of Directors and
 Stockholders
        of The
        Center for Wound Healing, Inc
  We
        have
        audited the accompanying consolidated balance sheets of The
        Center for Wound Healing, Inc as of June
        30,
        2008 and
        2007, and the related consolidated statements of operations, stockholders’
equity, and cash flows for each of the years in the two-year period ended June
        30,
        2008 . The
        Center for Wound Healing, Inc ’s
        management is responsible for these financial statements. Our responsibility
        is
        to express an opinion on these financial statements based on our
        audits.
  We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. The company is not required
        to
        have, nor were we engaged to perform, an audit of its internal control over
        financial reporting. Our audit included consideration of internal control
        over
        financial reporting as a basis for designing audit procedures that are
        appropriate in the circumstances, but not for the purpose of expressing an
        opinion on the effectiveness of the company’s internal control over financial
        reporting. Accordingly, we express no such opinion. An audit also includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements, assessing the accounting principles used and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audits provide a
        reasonable basis for our opinion.
  In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of The
        Center for Wound Healing, Inc as of June
        30,
        2008 and
        2007, and the results of its operations, stockholders’ equity and its cash flows
        for each of the years in the two-year period ended June
        30,
        2008 in
        conformity with accounting principles generally accepted in the United States
        of
        America.
  ***/s/
                  Raich Ende Malter & Co. LLP***Raich
                  Ende Malter & Co. LLPNew
                  York, NYSeptember
                  24, 2008




32


THE
        CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES
 CONSOLIDATED
        BALANCE SHEET
 AS
        OF
        JUNE 30,
 
 2008
              
              2007ASSETSCURRENT
                  ASSETSCash
                  in bank
              
              $
              55,139
              
              $
              216,458Accounts
                  receivable, net of allowance for doubtful accounts of $2,941,917
                  and
                  $2,202,510 respectively
              
              
              14,563,325
              
              
              10,754,557Notes
                  Receivable
              
              
              460,872
              
              
              367,484Income
                  tax refunds receivable
              
              
              2,090
              
              
              883,596Prepaid
                  expenses and other current assets
              
              
              398,631
              
              
              157,801Total
                  current assets
              
              
              15,480,058
              
              
              12,379,896Notes
                  Receivable
              
              
              134,295
              
              
              385,478Property
                  and equipment, net
              
              
              8,886,005
              
              
              7,970,325Invesment
                  in unconsolidated affiliates
              
              
              -
              
              
              75,702Intangible
                  assets
              
              
              4,402,495
              
              
              3,131,184Goodwill
              
              
              751,957
              
              
              447,531Other
                  assets
              
              
              2,822,687
              
              
              1,959,717TOTAL
                  ASSETS
              
              $
              32,477,495
              
              $
              26,349,833LIABILITIES
                  AND STOCKHOLDERS'
                  EQUITYCURRENT
                  LIABILITIESAccounts
                  payable and accrued expenses
              
              $
              3,844,541
              
              $
              5,661,811Current
                  maturities of capital leases
              
              
              526,107
              
              
              1,530,862Short-term
                  borrowings
              
              
              4,200,000
              
              
              5,500,000Notes
                  payable
              
              
              939,856
              
              
              2,429,2608%
                  Secured convertible debentures
              
              
              -
              
              
              6,485,601Payable
                  to former Majority Members
              
              
              618,033
              
              
              771,357Due
                  to affiliates
              
              
              261,006
              
              
              206,082Total
                  current liabilities
              
              
              10,389,542
              
              
              22,584,97315%
                  senior secured note payable
              
              
              15,291,782
              
              
              -Notes
                  payable, net of current maturities
              
              
              782,133
              
              
              65,254Capital
                  lease obligations, net of current maturities
              
              
              131,774
              
              
              498,688Minority
                  interest in consolidated subsidiaries
              
              
              558,205
              
              
              908,202TOTAL
                  LIABILITIES
              
              
              27,153,437
              
              
              24,057,117COMMITMENTS
                  AND CONTINGENCIESSTOCKHOLDERS'
                  EQUITYPreferred
                  stock, $0.001 par value; 10,000,000 shares authorized; none outstanding
              
              
              -
              
              
              -Common
                  stock, $0.001 par value; 290,000,000 shares authorized; 23,373,281
                  and
                  22,655,781 issued and outstanding at June 30, 2008 and 2007, respectively
              
              
              23,373
              
              
              22,656Additional
                  paid-in capital
              
              
              26,220,288
              
              
              18,866,478Accumulated
                  deficit
              
              
              (20,919,603
              )
              
              (16,596,418
              )TOTAL
                  STOCKHOLDERS' EQUITY
              
              
              5,324,058
              
              
              2,292,716TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY
              
              $
              32,477,495
              
              $
              26,349,833
 
 The
        accompanying notes are an integral part of these financial
        statements.
  33
 
 THE
        CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES
 CONSOLIDATED
        STATEMENTS OF OPERATIONS
 For
        the
        years ended June 30,
 
 2008
              
              2007REVENUESTreatment
                  fees
              
              $
              26,357,619
              
              $
              19,842,064OPERATING
                  EXPENSESCost
                  of Services
              
              
              13,157,728
              
              
              11,642,333Sales
                  and marketing
              
              
              180,367
              
              
              287,060General
                  and administration
              
              
              8,466,779
              
              
              11,785,313Abandonmentand
                  Impairment Loss
              
              
              189,992
              
              
              2,076,266Depreciation
                  and amortization
              
              
              443,581
              
              
              59,917Bad
                  debt expense
              
              
              796,027
              
              
              965,553TOTAL
                  OPERATING EXPENSES
              
              
              23,234,475
              
              
              26,816,442OPERATING
                  INCOME (LOSS)
              
              
              3,123,144
              
              
              (6,974,378
              )OTHER
                  EXPENSE (INCOME)Interest
                  expense
              
              
              7,245,961
              
              
              3,595,044Interest
                  income
              
              
              (41,344
              )
              
              (25,281
              )Minority
                    interest in net loss (income) of consolidatedsubsidiaries
              
              
              131,901
              
              
              (172,390
              )Loss
                  on disposal of property and equipment
              
              
              68,880
              
              
              29,270Other
                  expenses
              
              
              20,865
              
              
              432,500TOTAL
                  OTHER EXPENSE
              
              
              7,426,264
              
              
              3,859,143(LOSS)
                  BEFORE INCOME TAXES
              
              
              (4,303,121
              )
              
              (10,833,521
              )PROVISION
                  (BENEFIT) FOR INCOME TAXESCurrent
                  taxes
              
              
              20,065
              
              
              (356,511
              )Deferred
                  taxes
              
              
              -
              
              
              (1,094,984
              )TOTAL
                  PROVISION (BENEFIT) FOR INCOME TAXES
              
              
              20,065
              
              
              (1,451,495
              )NET
                  (LOSS)
              
              $
              (4,323,186
              )
              $
              (9,382,026
              )NET
                         (LOSS) PER COMMON SHARE - BASIC AND DILUTED
              
              $
              (0.19
              )
              $
              (0.41
              )WEIGHTED
                      AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND
                      DILUTED
              
              
              22,997,476
              
              
              22,655,781
 
 The
        accompanying notes are an integral part of these financial
        statements.


34




THE
      CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


For
      The
      Years Ended June 30,





**2008**
            
            **2007**CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (4,323,185
            )
            $
            (9,382,026
            )Adjustments
                to reconcile net loss to net cash provided by (used in) operating
                activitiesDepreciation
                and amortization
            
            
            4,046,018
            
            
            2,164,956Abandonment
                and impairment loss
            
            
            189,992
            
            
            2,076,266Interest
                charged for beneficial conversion features of 8% senior
                convertibledebentures
            
            
            912,524
            
            
            -Interest
                    charged for fair valuation of warrants issued in connection with
                    8% senior
                    convertible and other debentures
            
            
            -
            
            
            1,959,915Interest
                charged for amortization of deferred financing costs
            
            
            2,099,399
            
            
            1,269,701Bad
                debts
            
            
            796,027
            
            
            965,553Deferred
                income taxes
            
            
            -
            
            
            (1,094,984
            )Minority
                interest in net income of consolidated subsidiaries
            
            
            131,901
            
            
            (172,390
            )Loss
                on disposal of property and equipment
            
            
            68,880
            
            
            29,270Interest
                accrued for convertible debenture and notes payable
            
            
            1,184,030
            
            
            13,889Amortization
                of 15% convertible debenture original issue discount
            
            
            142,526
            
            
            -Amortization
                of stock options
            
            
            1,516,604
            
            
            2,787,240Warrants
                issued in payment of interest expense
            
            
            736,226
            
            
            -Changes
                in operating assets and liabilities:Accounts
                and notes receivable
            
            
            (4,447,000
            )
            
            (2,508,318
            )Prepaid
                expenses and other current assets
            
            
            (357,981
            )
            
            30,046Other
                assets
            
            
            -
            
            
            27,194Accounts
                payable and accrued expenses
            
            
            (1,517,287
            )
            
            3,484,862Income
                taxes
            
            
            881,506
            
            
            (1,685,596
            )Deferred
                tax asset
            
            
            -
            
            
            -Current
                income tax liability
            
            
            -
            
            
            -Payments
                to former majority members
            
            
            (45,330
            )
            
            149,089NET
                CASH PROVIDED BY OPERATING ACTIVITIES
            
            
            2,014,850
            
            
            114,667CASH
                FLOWS FROM INVESTING ACTIVITIESPurchases
                of property and equipment
            
            
            (3,385,296
            )
            
            (2,577,325
            )Proceeds
                from sale of propertyand
                equipment
            
            
            45,000
            
            
            68,222(Increase)
                decrease in security deposits
            
            
            (460
            )
            
            -Investment
                in unconsolidated affiliates
            
            
            -
            
            
            (105,000
            )NET
                CASH USED IN INVESTING ACTIVITIES
            
            
            (3,340,756
            )
            
            (2,614,103
            )CASH
                FLOWS FROM FINANCING ACTIVITIESPrincipal
                payments on capital lease obligations
            
            
            (1,309,079
            )
            
            (1,955,179
            )Advances
                from affiliates
            
            
            25,948
            
            
            100,870Net
                (repayment) proceeds from bank line of credit
            
            
            (1,300,000
            )
            
            2,300,000Proceeds
                from issuance of 15% senior secured subordinated note
                payable
            
            
            17,500,000
            
            
            -Deferred
                financing costs
            
            
            (2,995,780
            )
            
            (522,831
            )Repayment
                of notes and loans
            
            
            (4,990,268
            )
            
            (1,940,240
            )Repayment
                of minority member loans
            
            
            -
            
            
            (70,943
            )Repayment
                of 8% senior convertible debentures
            
            
            (7,398,125
            )
            
            -Proceeds
                from issuance of common stock
            
            
            400,000
            
            
            -Proceeds
                from notes payable
            
            
            1,600,000
            
            
            1,000,000Distributions
                to LLC members
            
            
            (368,109
            )
            
            —NET
                CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
            
            
            1,164,587
            
            
            (1,088,323
            )NET
                (DECREASE) IN CASH AND CASH EQUIVALENTS
            
            
            (161,319
            )
            
            (3,587,759
            )CASH
                AND CASH EQUIVALENTS – BEGINNING OF YEAR
            
            
            216,458
            
            
            3,804,218CASH
                AND CASH EQUIVALENTS – END OF YEAR
            
            $
            55,139
            
            $
            216,459


35





THE
      CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


For
      The
      Years Ended June 30,





SUPPLEMENTAL
                DISCLOSURES OF NON-CASH INVESTING AND FINANCING
                ACTIVITIES:
            
            **2008**
            
            **2007**Cash
                paid during the year:Interest
            
            $
            2,029,146
            
            $
            739,260Income
                taxes
            
            $
            22,405
            
            $
            1,230,451Non
                -cash financing and investing activities:Equipment
                acquired through capital lease obligation
            
            $
            217,148
            
            $
            213,410Discount
                of convertible debenture for fair value of beneficial conversion
                feature
            
            $
            -
            
            $
            912,524Warrants
                and common stock issued in payment of accrued interest
            
            $
            839,659
            
            $
            -Issuance
                of common stock in connection with MedAir settlement
            
            $
            825,000
            
            $
            -Issuance
                of common stock in connection with Warantz settlement
            
            $
            75,000
            
            $
            -Debt
                issued in connection with Intangible asset acquired
            
            $
            2,617,744
            
            $
            -Warrants
                issued in connection with Bison financing
            
            $
            3,431,341
            
            $
            -





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


36





THE
      CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES


CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITY


FOR
      THE
      YEARS ENDED JUNE 30, 2008 AND 2007





Common Stock
            
            Additional Paid-
            
            AccumulatedShares
            
            Amount
            
            in Capital
            
            Deficit
            
            TotalBalance
                at July 1, 2006
            
            
            22,655,781
            
            $
            22,656
            
            $
            15,362,539
            
            $
            (7,214,392
            )
            $
            8,170,803Share-Based
                Compensation
            
            
            -
            
            
            -
            
            
            2,439,328
            
            
            -
            
            
            2,439,328Net
                effect of increased relative fair value of beneficial conversion
                feature
                of 2006 convertible debentures due to extension
            
            
            -
            
            
            -
            
            
            1,064,611
            
            
            -
            
            
            1,064,611Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (9,382,026
            )
            
            (9,382,026
            )Balance
                at June 30, 2007
            
            
            22,655,781
            
            
            22,656
            
            
            18,866,478
            
            
            (16,596,418
            )
            
            2,292,716Share-Based
                Compensation
            
            
            -
            
            
            -
            
            
            1,783,527
            
            
            -
            
            
            1,783,527Issuance
                of common stock in connection with MedAir settlement
            
            
            300,000
            
            
            300
            
            
            824,700
            
            
            -
            
            
            825,000Issuance
                of common stock in connection with Warantz settlement
            
            
            30,000
            
            
            30
            
            
            74,970
            
            
            -
            
            
            75,000Issuance
                of warrants in connection with Bison refinancing
            
            
            -
            
            
            -
            
            
            3,431,341
            
            
            -
            
            
            3,431,341Issuance
                of warrants in Connection with Bridge Financing
            
            
            -
            
            
            -
            
            
            564,659
            
            
            -
            
            
            564,659Issuance
                of shares for cash
            
            
            200,000
            
            
            200
            
            
            399,800
            
            
            -
            
            
            400,000Issuance
                of Shares in Connection with Mezzanine Loan
            
            
            187,500
            
            
            188
            
            
            274,813
            
            
            -
            
            
            275,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (4,323,185
            )
            
            (4,323,185
            )Balance
                at June 30, 2008
            
            
            23,373,281
            
            $
            23,373
            
            $
            26,220,288
            
            $
            (20,919,603
            )
            $
            5,324,058





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


37






**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2008 AND 2007**





**Note
      1 - Organization and Nature of Business**




The
      Center for Wound Healing, Inc. (“CFWH” or the “Company”) (formerly known as
      American Hyperbaric, Inc.) was organized in the State of Florida on May 25,
      2005. CFWH develops and manages comprehensive wound care centers, which are
      marketed as “THE CENTER FOR WOUND HEALING tm” throughout the United States.
      These centers render the specialized service of hyperbaric medicine. They are
      developed in partnerships with acute care hospitals. CFWH can be contracted
      to
      startup and manage the wound care program as well as offer a turnkey operation
      including the furnishing of hyperbaric oxygen chambers to hospitals.




As
      of
      June 30, 2008, CFWH operates thirty-five (35) wound care and hyperbaric centers
      with various institutions. Such centers operate as either a wholly-owned limited
      liability company of CFWH or CFWH owns the majority interest in the limited
      liability company. CFWH is headquartered in Tarrytown, New York. Currently,
      the
      Company has signed agreements to open and manage three (3) additional wound
      care
      and hyperbaric centers.




**Note
      2 - Summary of Significant Accounting Policies**




a.  Principles
      of Consolidation .
      The
      accompanying consolidated financial statements include the accounts of CFWH
      and
      its wholly-owned and majority-owned subsidiaries (collectively, the "Company").
      Acquisitions of entities under common control are accounted for under the
      pooling method of accounting at their historical costs in accordance with
      Statement of Financial Accounting Standards (“SFAS”) No.141, “Business
      Combinations”. All other acquisitions of majority ownership interests are
      accounted for under the purchase method of accounting and reflect the fair
      value
      of net assets acquired at the date of acquisition. All intercompany profits,
      transactions, and balances have been eliminated. Minority interests in the
      net
      assets and earnings or losses of the Company’s majority-owned subsidiaries are
      reflected in the caption “Minority interest in consolidated subsidiaries” in the
      accompanying consolidated balance sheet and the caption “Minority interest in
      net loss of consolidated subsidiaries” in the accompanying consolidated
      statement of operations. Minority interest adjusts the Company's consolidated
      results of operations to reflect only the Company's share of the earnings or
      losses of the majority owned LLCs and adjust the Company’s net assets to reflect
      only the Company’s share of the net assets of the majority-owned
      LLCs.




Investments
      in unconsolidated affiliates are accounted for using the equity method of
      accounting. Under the equity method, the Company recognizes its share of the
      earnings and losses of the unconsolidated affiliates as they accrue. The equity
      method is used when the Company holds more than a 20% interest in the
      affiliates, but does not have significant control. The Company had a 40%
      ownership interest in an entity, Bayonne Hyperbaric LLC, which it accounted
      for
      under the equity method. In August 2007, the Company acquired the additional
      40%
      of Bayonne Hyperbaric LLC (See Note 15 – Subsequent Events). A third
      individual own the remaining 20% interest in Bayonne Hyperbaric LLC. The Company
      had a 49% interest in one affiliate that it consolidates because it has
      significant control over the entity. This entity, Raritan Bay Hyperbaric LLC,
      was owned 51% by two individuals who were also the majority members who sold
      their Far Rockaway Hyperbaric, LLC interest to the Company effective June 1,
      2006 In addition, the Company had several consulting/lease agreements with
      these
      two individuals which were terminated as part of a settlement agreement
      effective August, 2007(See Note 14 – Commitments and Contingencies and Note
      15 – Subsequent Events).




38




b.  Revenue
      Recognition .
      Patient
      service revenue is recognized when the service is rendered and the amount due
      is
      estimable, in accordance with the terms of the individual contracts with
      hospitals. Generally, the contracts provide for a flat fee per patient
      treatment, which may be derived from amounts allowable by third party payers.
      Although revenue is recognized at the time of service, the hospitals are usually
      not billed for the service until the hospital is paid by the third party payers.
      As a result, the accounts receivable of the Company include amounts not yet
      billed to the hospitals. As of June 30, 2008 and 2007 approximately $9.7 million
      and $5.6 million of Accounts Receivable were unbilled,
      respectively.




c.  Cash
      and Cash Equivalents .
      Cash
      equivalents are defined as short-term investments with original maturities
      of
      three months or less.




d.  Property
      and Equipment .
      Property and equipment are recorded at cost. The Company provides for
      depreciation of property and equipment over their estimated useful lives using
      the straight-line method. Hyperbaric chambers are depreciated over seven years.
      Leasehold improvements, primarily located at hospitals, are amortized on a
      straight-line basis over the lesser of the remaining term of the hospital
      contract or the economic life of the improvement.




Hospital
      chamber installation costs are included in Other Assets until the chambers are
      operational. When chambers become operational, the total costs are transferred
      to Property and Equipment and depreciated.




Maintenance
      and repairs are charged to operating expenses as they are incurred. Improvements
      and betterments which extend the lives of the assets are capitalized. The cost
      and accumulated depreciation of assets retired or otherwise disposed of are
      relieved from the appropriate accounts and any profit or loss on the sale or
      disposition of such assets is credited or charged to income.




e.  Leases .
      Leases
      are classified as capital leases or operating leases in accordance with the
      terms of the underlying lease agreements. Capital leases are recorded as assets
      and the related obligations as liabilities at the lower of fair market value
      or
      present value. Such assets are amortized on a basis consistent with the
      provisions of Statement of Financial Accounting Standards Board No. 13,
“Accounting for Leases,” as amended. The lease payments under capital leases are
      applied as a reduction of the obligation and interest expense. Assets associated
      with capitalized leases are included in property and equipment.




The
      lease
      expense for rent, which may have a rent holiday included, is straight lined
      over
      the initial life of the rent agreement.




f.  Long-Lived
      Assets .
      The
      Company adopted the provisions of Financial Accounting Standards Board Statement
      No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which
      requires management to review the Company’s long-lived assets for impairment
      whenever events or changes in circumstances indicate the carrying value may
      not
      be recoverable. Impairment is measured by comparing the carrying value of the
      long-lived assets to the estimated undiscounted future cash flows expected
      to
      result from use of the assets and their ultimate disposition. In December 2006,
      management determined that its interest in Southampton Hyperbaric, LLC was
      valueless and both the Company and the other members abandoned the facility
      which resulted in a charge to operation of approximately $260,000. Additionally,
      management’s review of its long-lived assets resulted in an additional
      impairment loss of $1,817,000 charge to operations in the fourth quarter of
      fiscal 2007.




39




g.  Advertising
      Costs .
      Advertising costs are expensed as incurred. Advertising expense incurred for
      the
      twelve months ended June 30, 2008 and 2007 were $15 thousand and $81 thousand,
      respectively.




h.  Accounts
      Receivable .
      Accounts receivable have been reduced for all known bad debts and allowances.
      In
      accordance with terms of the underlying contracts, CFWH records revenues upon
      rendering of patient services. Generally, the hospital is invoiced by CFWH
      when
      the hospital has collected its related fee from the patient or third party
      payers. Earned revenues not yet billed to a hospital are also reflected in
      accounts receivable. An allowance for doubtful accounts has been recorded in
      the
      accompanying consolidated financial statements based on historical trends and
      management estimates. Accounts are written off only after exhaustive efforts
      at
      collection.




i.  Income
      Taxes .
      The
      Company uses the asset and liability method of accounting for income taxes
      in
      accordance with FAS 109, “Accounting for Income Taxes”. Under the asset and
      liability method, deferred tax assets and liabilities are recognized for the
      future tax consequences attributable to differences between the financial
      statement carrying amounts and the tax bases of existing assets and liabilities.
      A valuation allowance against deferred tax assets is provided when it is more
      likely than not that the deferred tax asset will not be fully realized.




j.  Use
      of
      Estimates .
      The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and the disclosure of
      commitments and contingencies, if any, at the date of the financial statements,
      and revenue and expenses during the reporting period. Actual results could
      differ from those estimates. Significant estimates made by management include
      the collectability of accounts receivable, the impairment of long-lived and
      intangible assets, and the fair value of stock and warrants issued.




k.  Concentrations .
      The
      Company places its temporary cash investments primarily with one high
      credit-quality financial institution. At June 30, 2008 such investments were
      in
      excess of the FDIC insurance limit by approximately $15,000.




There
      are
      a limited number of manufacturers of hyperbaric chambers. All hyperbaric
      chambers to date have been supplied by one vendor.




l.  Fair
      Value of Financial Instruments .
      The
      carrying amounts of current assets and current liabilities approximate fair
      value due to the short-term maturities of the instruments. The carrying amounts
      of capital lease obligations approximate their fair values and the current
      interest rates on such instruments approximate current market interest rates
      on
      similar instruments. See Notes 10 and 11 on the carrying value of debt issued.




40




m.  Stock
      Based Compensation .
      The
      Company applies FASB Statement No. 123 R, "Share Based Payment" in accounting
      for its stock-based compensation plans. Statement 123R requires all share
      payments to employees, including grants of employee stock options, to be
      recognized as an expense based on fair values measured on award grant dates.
      The
      compensatory amount of stock options issued to employees that was charged to
      operations was $1.5 million in 2008 and $2.3 million in 2007.




n.  Earnings
      Per Share .
      Basic
      net earnings (loss) per share is calculated based on the weighted average number
      of common shares outstanding for each period. Common shares issuable upon the
      exercise of warrants and options outstanding that could potentially dilute
      basic
      EPS in the future were not included in the computation of diluted EPS because
      to
      do so would have been anti-dilutive for the periods presented.




o.  Deferred
      Financing Costs .
      All
      costs associated with the placement of Company debt is deferred and written
      off
      over the term of the debt.




p.  Goodwill .
      Goodwill in the amount of $447,531 was acquired as a result of the June 1,
      2006
      acquisition of Far Rockaway. In December 2007, as part of the Warantz settlement
      (see Note 10), the company recorded additional goodwill of $304,426. In
      accordance with SFAS 142, “Goodwill and Other Intangible Assets”, Goodwill is
      not amortized but reviewed for possible impairment at least annually or more
      frequently upon the occurrence of an event or when circumstances indicate that
      a
      reporting unit’s carrying amount may be greater than its fair value. As of the
      fiscal year ended June 30, 2008, no impairment of Goodwill has
      occurred.




q.  Amortization
      of Intangibles .
      The
      intangibles with finite lives are amortized over the estimated useful lives
      of
      these assets. The Company’s major intangible assets are comprised of hospital
      and treatment center contracts acquired by the Company. These contracts are
      amortized over a period of two to nine years representing the lives of the
      contract. Results for the years ending June 30, 2008 and 2007 include $1,613,150
      and $503,615, respectively, in amortization expense. These assets are evaluated
      by management at least annually. In 2008, management completed a review of
      its
      intangibles and determined that one hospital’s contract was impaired, resulting
      in a charge to operations of $189,992. During fiscal 2007, management conducted
      a review of all its intangible assets and determined that contracts at five
      hospitals were deemed impaired and will cease operations at those locations.
      The
      intangibles at these locations were charged to operations in 2007 as part of
      the
      $2.1 million loss on abandonments. Included in the 2007 charge is $233,000
      for
      the contract with Victory Memorial Hospital.




**RECENT
      ACCOUNTING PRONOUNCEMENTS**





In
      May
      2008, the FASB issued FSP APB 14-1, *Accounting
      for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
      (Including Partial Cash Settlement)* ,
      which
      specifies that issuers of convertible debt instruments that may be settled
      in
      cash upon conversion should separately account for the liability and equity
      components in a manner reflecting their nonconvertible debt borrowing rate
      when
      interest costs are recognized in subsequent periods.  FSP APB 14-1 is
      effective for interim periods and fiscal years beginning after December 15,
      2008.  The Company will adopt FSP APB 14-1 effective July 1,
      2009.  The Company is currently assessing the impact of FSP APB 14-1
      on its financial statements.




41




In
      June
      2008, the FASB ratified Emerging Issues Task Force Issue No. (“EITF”) 07-5,
“Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an
      Entity’s Own Stock” (EITF 07-5). EITF 07-5 provides that an entity should use a
      two step approach to evaluate whether an equity-linked financial instrument
      (or
      embedded feature) is indexed to its own stock, including evaluating the
      instrument’s contingent exercise and settlement provisions. It also clarifies on
      the impact of foreign currency denominated strike prices and market-based
      employee stock option valuation instruments on the evaluation. EITF 07-5 is
      effective for fiscal years beginning after December 15, 2008. The Company is
      currently assessing the impact of EITF 07-5 on its consolidated financial
      position and results of operations.




In
      June 2008, the FASB issued FSP Emerging Issues Task Force
      (EITF) No. 03-6-1, “Determining Whether Instruments Granted in
      Share-Based Payment Transactions Are Participating Securities.” Under
      the  FSP, unvested share-based payment awards that contain rights to
      receive nonforfeitable dividends (whether paid or unpaid) are participating
      securities, and should be included in the two-class method of computing EPS.
      The
      FSP is effective for fiscal years beginning after December 15, 2008, and
      interim periods within those years. The Company does not expect the adoption
      of
      FSP EITF No. 03-6-1 to have a material effect on its consolidated financial
      statements.





In
      September 2007, the FASB issued SFAS No. 157, “Fair Value Measurements”
(“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a
      framework for measuring fair value in accordance with generally accepted
      accounting principles, and expands disclosures about fair value measurements.
      This statement does not require any new fair value measurements; rather, it
      applies under other accounting pronouncements that require or permit fair value
      measurements. The provisions of this statement are to be applied prospectively
      as of the beginning of the fiscal year in which this statement is initially
      applied, with any transition adjustment recognized as a cumulative-effect
      adjustment to the opening balance of retained earnings. The provisions of SFAS
      No. 157 are effective for the fiscal years beginning after
      November 15, 2007; therefore, the Company anticipates adopting this
      standard as of July 1, 2008. The Company does not believe adoption of SFAS
      157 will have a material impact on its financial position, results of operations
      or cash flows.





In
      February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
      Financial Assets and Financial Liabilities. Under the provisions of SFAS
      No. 159, the Company may choose to carry many financial assets and
      liabilities at fair values, with changes in fair value recognized in earnings.
      The company will adopt the pronouncement effective for periods beginning after
      July 1, 2008. The Company is currently evaluating the impact of adopting
      this pronouncement on its consolidated financial statements, but does not expect
      it to have a material effect.




42





In
      December 2007, the FASB issued SFAS NO. 160, “Noncontrolling Interests in
      Consolidated Financial Statements—an amendment of ARB No. 51”. The
      objective of this Statement is to improve the relevance, comparability, and
      transparency of the financial information that a reporting entity provides
      in
      its consolidated financial statements by establishing accounting and reporting
      standards that require the following changes. The ownership interests in
      subsidiaries held by parties other than the parent be clearly identified,
      labeled, and presented in the consolidated statement of financial position
      within equity, but separate from the parent’s equity. The amount of consolidated
      net income attributable to the parent and to the noncontrolling interest must
      be
      clearly identified and presented on the face of the consolidated statement
      of
      income. When a subsidiary is deconsolidated, any retained noncontrolling equity
      investment in the former subsidiary is initially measured at fair value. The
      gain or loss on the deconsolidation of the subsidiary is measured using the
      fair
      value of any noncontrolling equity investment rather than the carrying amount
      of
      that retained investment and entities provide sufficient disclosures that
      clearly identify and distinguish between the interest of the parent and the
      interest of the noncontrolling owners. The changes to current practice resulting
      from the application of SFAS No. 160 is effective for financial statements
      issued for fiscal years beginning after December 15, 2008, and interim
      periods within those fiscal years. The adoption of SFAS No. 160 before
      December 15, 2008 is prohibited. The Company has not determined the effect
      that may result from the adoption of SFAS No. 160 on its financial
      statements.





In
      December 2007, the FASB issued SFAS No. 141(R), “Business
      Combinations – Revised” that improves the relevance, representational
      faithfulness, and comparability of the information that a reporting entity
      provides in its financial reports about a business combination and its effects.
      To accomplish that, this statement establishes principles and requirements
      how
      the acquirer recognizes and measures in its financial statement the identifiable
      assets acquired, the liabilities assumed, and any noncontrolling interest in
      the
      acquiree, recognizes and measures the goodwill acquired in the business
      combination or a gain from a bargain purchase, and determines what information
      to disclose to enable users of the financial statements to evaluate the nature
      and financial effects of the business combination. The changes to current
      practice resulting from the application of SFAS No. 141(R) are effective
      for financial statements issued for fiscal years beginning after
      December 15, 2008. The adoption of SFAS No. 141(R) before
      December 15, 2008 is prohibited. The Company has not determined the effect,
      if any, that may result from the adoption of SFAS No. 141(R) on its
      financial statements.




Management
      does not believe that any other recently issued but not yet effective accounting
      pronouncement, if adopted, would have a material effect on the accompanying
      financial statements.




**Note
      3 – Private Placements and Common Stock**




a.  In
      July
      2006, two individuals were granted 50,000 options each in connection with
      agreeing to serve as members of the Company’s Board of Directors.




b.  In
      August
      2006, 50,000 options were granted to a company with whom the Company entered
      into a consulting agreement.




c.  During
      the period, August through November 2006, four employees were granted a total
      of
      245,000 options in connection with accepting employment with the Company; one
      of
      those employees subsequently resigned which resulted in the expiration of
      175,000 options.




43




d.  In
      January 2007, the Company issued an aggregate of 1,000,000 options to its CEO.
      The options vest in varying amounts over varying terms. Part of these options
      requires the attainment of certain performance goals by the Company. The fair
      value of the options at the date of grants, as determined by the Black-Scholes
      option pricing model, is $2,721,447 which is being charged to operations ratably
      over the period the grants vest. $975,185 and $1,338,045 was charged to
      operations in 2008 and 2007. On July 21, 2008 the Company’s board of directors
      approved the CEO’s Amended and Restated Employment Agreement. As part of that
      Agreement, the CEO was granted an additional 750,000 options at the then fair
      market value. In addition, the aforementioned 1,000,000 options were re-priced
      to the fair market value as of July 21, 2008. There is no effect of the option
      re-pricing on the Company’s June 30, 2008 financial results; the noncash costs
      of these options will be reflected in the Company’s September 30, 2008 10Q
      report.




e.  In
      March
      2007, 42,667 options were granted to an independent contractor in connection
      with its marketing activities on behalf of the Company.




f.  In
      June
      2007, the Company received the proceeds from $1,000,000 in securities
      (“Mezzanine Loan”) from various investors (“Investors”). These securities were
      classified as liabilities in the financial statements since the Company could
      repay the Investors as described below. The securities gave the Investors an
      aggregate 25% share of a newly formed entity, CFWH Mezzanine, LLC (“Mezzanine”).
      Mezzanine operates a Hyperbaric and Wound Care facility at each of 10 new
      hospitals (as determined by the Company). The Company contributed the hospital
      contracts for these 10 facilities, manages Mezzanine and will pay any net
      profits to Mezzanine, of which the Investors will receive a 25%
      share.




The
      Investors’ shares in Mezzanine were redeemable by the Company if the Company
      paid the Investors 125% of the original subscription price within 180 days
      from
      the signing of the agreement, or pays 130% of the original subscription price
      within 210 days, or paid 150% of the original subscription price within 270
      days, or 200% of the original subscription price within one year. If the Company
      did not redeem the interest in Mezzanine within one year, the Company would
      have
      lost the right to redeem the Investors interest in Mezzanine, and no money
      would
      have been due to the Investors. The Investors had the option to convert their
      interest in Mezzanine to shares of the Company’s stock at a conversion rate of
      $2.00 invested per share, or 500,000 shares for a two year period expiring
      in
      June 2009. After the closing on the Bison Note (see Note 12), the Company
      retired the Mezzanine Loan.




In
      April
      and May 2008 the Company issued 187,500 shares of its common stock in payment
      of
      accrued interest on the above mezzanine loan.




g.  In
      December, 2007 and January, 2008 the Company raised a total of $1.6 million
      from
      individual investors in the form of a short term unsecured note, (the “Bridge
      Financing Note”) the terms of which provided the lenders with interest paid in
      cash or in lieu of cash, warrants with an exercise price of $2. These funds
      were
      used to fund the $1.5 million payment due the Bondholders on or before January
      31, 2008 (of the $1.5 million, $1.2 million was used to retire principal and
      $300 thousand was paid for a consent fee). Prior to the payment in full of
      the
      Bondholders on March 31, 2008, the $1,600,000 was held by an escrow agent and
      shown as Restricted Cash on the Company’s balance sheet. Certain members of the
      Company’s board of directors and officers of the Company participated in this
      Bridge Financing and lent the Company $600,000 of the total $1.6 million
      raised.




44


On
      January 25, 2008 the Company used $1.5 million of the Bridge Financing Note
      to
      pay the Bondholders and $100 thousand for working capital purposes. On March
      31,
      2008 the entire $1.6 million Bridge Financing Note was paid in full from the
      proceeds of the Bison financing. In May 2008 a bridge financing note holder
      purchased 200,000 shares of the Company’s common stock for $400,000 in
      cash.




h.  On
      March
      31, 2008, the Company completed a $20 million 15% senior secured subordinated
      financing agreement with Bison Equity Capital Partners (“Bison”) (the “Bison
      Note”). The Company received $17.5 million, net of a $2.5 million discount, and
      after providing for transaction fees, approximately $12.3 million was used
      to
      retire in its entirety the Secured Convertible Debenture, accrued interest
      and
      penalty; the Signature Bank term loan; the CFWH Mezzanine loan and accrued
      interest; and certain extended accounts payable and other
      obligations.





The
      financial terms of the Bison Note are summarized as follows:




·
            The
                Note is a five year note maturing March 31,
                2013.




·
            Interest
                is payable in cash at 12% per annum plus 6% payment in kind (“PIK”). After
                certain payoff conditions are met, as defined in the Bison Note,
                the
                Scheduled Interest is payable in cash at the rate of 12% per annum
                plus 3%
                PIK per annum. If no defaults exist and the Company has met the payoff
                conditions, the Company has the option of deferring the scheduled
                payment
                of interest at the Scheduled Cash Interest Rate for up to 12 months
                ending
                on October 31, 2009, which would be added to the outstanding principal
                of
                the Note.




·
            Principal
                amortization begins on the second anniversary of the Note and the
                amortization payment is $2.5 million per year until the fifth year
                at
                which point the Company is obligated to retire in full the balance
                of the
                outstanding principal.




·
            Bison
                also received warrants equal to 20% of the fully diluted common stock
                of
                the Company. The Company has the opportunity to extinguish a certain
                number of these warrants based upon its achievement of EBITDA and
                leverage
                thresholds. The warrants which are calculated to be 7,168,488 at
                March 31,
                2008 are exercisable at $5.00 per share, have a seven year life and
                carry
                standard anti-dilution and registration rights provisions. The Note
                carries certain EBITDA and leverage ratio covenants, limitations
                on
                maximum allowable debt with Signature and other credit parties,
                limitations on capital expenditures, and limitations on investments
                and
                acquisitions.




45


The
      following table summarizes the assumptions used in valuing options issued by
      us
      during the periods ended June 30, 2008 and 2007.





For the Year Ended
              June 30, 2008
            
            For the Year Ended
              June 30, 2007Average expected life (years)
            
            
            4.6
            
            
            8.5Average risk free interest rate
            
            
            4.3
            %
            
            4.73
            %Expected volatility
            
            
            153
            %
            
            144
            %Expected dividend rate
            
            
            0
            %
            
            0
            %Expected forfeiture rate
            
            
            1
            %
            
            1
            %





The
      following is a summary of our stock options and warrant activity for the years
      shown below:





Number of
              Shares
            
            Weighted
              Average
              Exercise Price
            
            Number
                of
              Shares
            
            Weighted
              Average
              Exercise
              PriceStock Options
            
            WarrantsOutstanding,
                at June 30, 2006
            
            
            410,000
            
            $
            3.39
            
            
            2,750,000
            
            $
            2.00Granted
            
            
            1,437,667
            
            $
            3.23
            
            
            -Exercised
            
            
            -
            
            
            
            
            
            -Forfeited/expired
            
            
            (175,000
            )
            $
            (3.50
            )
            
            -Outstanding,
                at June 30, 2007
            
            
            1,672,667
            
            $
            3.39
            
            
            2,750,000
            
            $
            2.00Granted
            
            
            255,000
            
            $
            3.41
            
            
            7,468,488
            
            $
            4.88Exercised
            
            
            -
            
            
            
            
            
            -Forfeited/expired
            
            
            (70,000
            )
            $
            (3.93
            )
            
            -Outstanding,
                at June 30, 2008
            
            
            1,857,667
            
            $
            3.37
            
            
            10,218,488
            
            $
            4.10Exercisable
                at June 30, 2008
            
            
            1,137,667
            
            $
            3.33
            
            
            7,590,042
            
            $
            3.79




46




The
      number and weighted average exercise prices of all common shares and common share
      equivalents issuable and stock purchase options and warrants outstanding as
      of
      June 30, 2008 is as follows:


Stock Options & Warrants Outstanding
                
                Stock Options & Warrants
                  ExercisableExercise Prices
                
                Number of
                  Shares
                
                Weighted
                  Average
                  Remaining
                  Life
                  (Yrs)
                
                Weighted
                  Average
                  Exercise Price
                
                Number of
                  Shares
                
                Weighted
                  Average
                  Exercise
                  Price$
                2.00
                
                
                3,050,000
                
                
                2.94
                
                $
                2.00
                
                
                3,050,000
                
                $
                2.00$
                3.00
                
                
                260,000
                
                
                2.32
                
                $
                3.00
                
                
                260,000
                
                $
                3.00$
                3.10
                
                
                1,000,000
                
                
                8.55
                
                $
                3.10
                
                
                500,000
                
                $
                3.10$
                3.50
                
                
                300,000
                
                
                2.49
                
                $
                3.50
                
                
                180,000
                
                $
                3.50$
                3.75
                
                
                42,667
                
                
                3.75
                
                $
                3.75
                
                
                42,667
                
                $
                3.75$
                4.00
                
                
                105,000
                
                
                2.82
                
                $
                4.00
                
                
                105,000
                
                $
                4.00$
                5.00
                
                
                7,318488
                
                
                9.57
                
                $
                5.00
                
                
                4,590,042
                
                $
                5.00Total
                    – June 30, 2008
                
                
                12,076,155
                
                
                7.40
                
                $
                3.99
                
                
                1,137,667
                
                $
                3.73




d.  Common
      Shares Reserved




As
      of
      June 30, 2008, the Company has reserved an aggregate of 12,361,155 shares of
      its
      common stock for issuance of awards pursuant to its 2006 Stock Option Plan,
      the
      conversion of debentures, and the exercise of common stock purchase warrants.




**Note
      4 - Property and Equipment**




Property
      and equipment consists of the following at June 30, 2008 and 2007:




**2008**
            
            **2007**Medical
                chambers and equipment, including $2,352,934 for 2008 and $6,198,646
                for
                2007 under capital leases
            
            $
            7,945,838
            
            $
            7,294,518Furniture,
                fixtures and computers
            
            
            2,084,382
            
            
            829,724Leasehold
                improvements
            
            
            4,807,466
            
            
            4,005,954Autos
                and Vans
            
            
            494,051
            
            
            459,63915,331,737
            
            
            12,589,835Less:
                Accumulated depreciation and amortization – including $780,025and
                $1,303,911 for medical chambers and equipment under capital
                lease
            
            
            6,445,732
            
            
            4,619,510$
            8,886,005
            
            $
            7,970,325




Depreciation
      expense for fiscal 2008 is $2,432,890 of which $2,108,107 is included in cost
      of
      services and 2007 was $1,661,341 with cost of services amounted to
      $1,601,424.


47




**Note
      5 - Intangible Assets**




Intangible
      Assets consist of the following as of June 30:





**2008**
            
            **2007**Hospital
                Contracts Acquired
            
            $
            6,444,123
            
            $
            3,559,661Treatment
                Center Contract
            
            
            -
            
            
            -Total
                intangible assets with finite lives
            
            
            6,144,123
            
            
            3,559,661Less:
                Accumulated amortization
            
            
            2,041,628
            
            
            428,477Net
                intangible assets with finite lives
            
            
            4,402,495
            
            
            3,131,184Goodwill
            
            
            751,957
            
            
            447,531Total
                Intangible Assets
            
            $
            5,154,452
            
            $
            3,578,715




Amortization
      of intangibles of $1,494,355 and $503,615 was charged to cost of services in
      2008 and 2007, respectively.




As
      part
      of the settlement agreement with the Greenbergs (see Note 10), the Greenbergs
      agreed not to compete with the Company for a five year period through August
      2012 in exchange for $600,000, including imputed interest of $51,850, payable
      in
      52 bi-weekly installments. Additionally, as part of a settlement with another
      related party (see Note 10), the Company agreed to pay $658,337 for a covenant
      not to solicit and compete for 36 months ending August 2010.




Furthermore,
      as part of the settlement with Warantz as disclosed in Note 10, the Company
      recorded goodwill in the amount of $304,426.




Management
      has adjusted the remaining useful lives of hospital contracts downward from
      their useful lives as determined by independent appraisers when the contracts
      were acquired because management is unable to determine that it is more likely
      than not that the contract will be renewed. The new period over which the
      contracts are being amortized are the remaining lives of the contracts. The
      effect of this change in estimate increased amortization in the current year
      by
      $420,000 and will increase such expense in each subsequent year by approximately
      $560,000 until the contracts are fully amortized.




The
      following represents the estimated future amortization of the Hospital and
      Treatment Center Contracts over the next five years:




Year or Period Ending June 30,2009
            
            $
            1,845,9702010
            
            $
            1,845,9702011
            
            $
            573,5172012
            
            $
            109,6292013
            
            $
            27,409




48




**Note
      6 - Other Assets**




Other
      Assets consist of the following as of June 30:




**2008**
            
            **2007**Subordination
                & Consent Fee, net of amortization of $1,850,000 and
                $264,286.
            
            $
            0
            
            $
            1,585,715Deferred
                Financing Costs, net of amortization of $513,685 and
                $1,206,500
            
            
            2,804,927
            
            
            322,831Equipment
                Lease Fees
            
            
            -
            
            
            12,500Security
                Deposit
            
            
            17,760
            
            
            38,671Total
                Other Assets
            
            $
            2,822,687
            
            $
            1,959,917




Amortization
      of the consent fee and deferred financing costs of $2,099,399 and $1,068,619
      is
      included in interest expense in fiscal 2008 and 2007, respectively.




**Note
      7 - Obligations under Capital Leases**




The
      Company leases medical and other equipment under capital lease agreements with
      annual interest rates ranging from 4.09% to 15.21% over three to seven year
      terms. Most leases are guaranteed by certain Company stockholders.




Summary
      of obligations under capital leases as of June 30,




**2008**
            
            **2007**Total
                obligations under capital leases
            
            $
            657,881
            
            $
            2,029,550Less:
                Current installments
            
            
            526,107
            
            
            1,530,862$
            131,774
            
            $
            498,688




The
      following is a schedule by years of future minimum lease payments under capital
      leases, together with the present value of the net minimum lease payments as
      of
      June 30, 2008:




2009
            
            $
            587,8412010
            
            
            138,2922011
            
            
            5,006Total
                minimum lease payments amount
            
            
            731,139Less:
                Amounts representing interest
            
            
            73,258Present
                value of minimum lease payments
            
            $
            657,881




**Note
      8 - Related Party Transactions**





In
      December, 2007 and January, 2008 the Company raised a total of $1.6 million
      from
      individual investors in the form of a short term unsecured note, (the “Bridge
      Financing Note”) the terms of which provided the lenders with interest paid in
      cash or in lieu of cash, warrants with an exercise price of $2. These funds
      were
      used to fund the $1.5 million payment due the Bondholders on or before January
      31, 2008 (of the $1.5 million, $1.2 million was used to retire principal and
      $300 thousand was paid for a consent fee). Prior to the payment in full of
      the
      Bondholders on March 31, 2008, the $1.6 million was held by an escrow agent
      and
      shown as Restricted Cash on the Company’s balance sheet. Certain members of the
      Company’s board of directors and officers of the Company participated in this
      Bridge Financing and lent the Company $600,000 of the total $1.6 million
      raised.


49


On
      January 25, 2008 the Company used $1.5 million of the Bridge Financing Note
      to
      pay the Bondholders and $100 thousand for working capital purposes. On March
      31,
      2008 the entire $1.6 million Bridge Financing Note was paid in full from the
      proceeds of the Bison financing with the exception of the $100 thousand interest
      due the Company’s board of directors and officers who participated in the
      financing.




b.  Certain
      advances are made to and from affiliates in the ordinary course of business.
      The
      balances due to and from affiliates are noninterest bearing and due on demand.
      The amounts owing to the affiliates at June 30, 2008 and 2007 were $261,006
      and
      $206,082, respectively.




**Note
      9 – Short-term Borrowings**




The
      Company entered into a three-year $5.0 million bank line of credit with
      Signature Bank on June 17, 2005, as amended on April 7, 2006. The original
      termination date of the bank line was June 16, 2006. Pursuant to an amendment
      entered into on April 7, 2006, the termination date of the bank line became
      February 1, 2007, and pursuant to an amendment entered into on April 7, 2007,
      the termination date became May 2, 2007.




Pursuant
      to the Third Amendment to the credit facility effective May 2, 2007, the bank
      extended the line’s maturity to February 29, 2008, and increased the revolving
      credit line to $6.0 million at substantially the same interest rates and secured
      by the same collateral. The Company also received the proceeds from a $1.5
      million term loan payable in six equal monthly principal installments of $33,333
      commencing September 1, 2007, with the balance due February 29, 2008.




The
      amended agreement required the Company to maintain certain financial covenants
      and ratios, limits capital expenditures and additional indebtedness, and
      prohibits dividends and distributions to minority interest without prior
      approval. The Company assigned the aggregate proceeds of key man life insurance
      of $7.5 million on the life of the Company’s CEO.




The
      Company negotiated the Fourth and Fifth Amendments to the credit facility that,
      among other things, increased the availability under its revolving line of
      credit. The Sixth Amendment, executed March 19, 2008 and effective February
      29,
      2008, provided for the extension of the credit facility to April 15, 2008.
      On
      March 31, 2008 the Company entered into a new two year agreement with the bank
      (the “Seventh Amendment”) that includes a $5.5 million revolving line of credit
      and a $1 million term loan. The term loan matures March 31, 2009 and has 12
      monthly principal amortization payments of $83,333. The Company agreed to pay
      off the $1.3 million balance of the existing term loan, was able to reduce
      the
      amount of key man insurance the bank had required be in place (naming the bank
      as the beneficiary), and removed the personal guarantees two of the Company’s
      directors had provided to the bank.




For
      the
      year ended June 30, 2008 the average debt outstanding under the working capital
      line of credit was $5,187,525 at an average interest rate of 8.7%. The highest
      balance outstanding under the working capital line was $6,500,000 and the
      Company was charged interest of $449,712 during the year.


50


**Note
      10 – Notes Payable**




a.  The
      Company periodically buys vans for courtesy transportation of patients to the
      hyperbaric centers for treatment. These vans are financed by traditional
      automotive financing. Rates on these loans range to a high of 8%. As of June
      30,
      2008, the Company has an outstanding balance due on these loans of $65,255.
      For
      the 12 months ended June 30, 2008, average monthly principal payments were
      approximately $5,447.




b.  As
      part
      of the acquisition of Far Rockaway LLC, the Company issued a $650,000 note,
      which was paid in August 2006 and a $1,350,000 promissory note, which was paid
      off in full on June 13, 2008.




c.  Effective
      September 30, 2007 the Company negotiated the termination of Ms. Greenberg’s
      five year employment with the Company, in which all of the Company’s obligations
      under the employment agreement were concluded, as well as the termination of
      a
      consulting agreement with Ms. Greenberg’s spouse, in which JD Keith LLC, the
      spouse’s consulting firm, was to be paid $10,000 per month for five years as
      well as commissions and other compensation. As part of the settlement, the
      Company entered into a non-compete and non-solicitation agreement with the
      Greenbergs. Among other things, the Greenbergs agreed to a five year non-compete
      with the Company. The Company will pay JD Keith LLC approximately $600,000
      in 52
      bi-weekly installments during the first two years of the five year non-compete
      agreement. The present value of the payments aggregated $548,150 which is
      included in the accompanying financial statements as an intangible asset and
      is
      being amortized over its five year life. As of June 30, 2008 the balance due
      JD
      Keith, LLC was $359,824.




d.  In
      June
      2007, the Company received the proceeds from $1.0 million in securities
      (“Mezzanine Loan”) from various investors (“Investors”). These securities were
      classified as liabilities in the financial statements since the Company could
      repay the Investors as described below. The securities gave the Investors an
      aggregate 25% share of a newly formed entity, CFWH Mezzanine, LLC (“Mezzanine”).
      Mezzanine operates a Hyperbaric and Wound Care facility at each of 10 new
      hospitals (as determined by the Company). The Company contributed the hospital
      contracts for these 10 facilities, manages Mezzanine and will pay any net
      profits to Mezzanine, of which the Investors will receive a 25%
      share.




The
      Investors’ shares in Mezzanine were redeemable by the Company if the Company
      paid the Investors 125% of the original subscription price within 180 days
      from
      the signing of the agreement, or pays 130% of the original subscription price
      within 210 days, or paid 150% of the original subscription price within 270
      days, or 200% of the original subscription price within one year. If the Company
      did not redeem the interest in Mezzanine within one year, the Company would
      have
      lost the right to redeem the Investors interest in Mezzanine, and no money
      would
      have been due to the Investors. The Investors had the option to convert their
      interest in Mezzanine to shares of the Company’s stock at a conversion rate of
      $2.00 per share, or 500 thousand shares for a two year period expiring in June
      2009. After the closing on the Bison Note (see Note 12), the Company retired
      the
      Mezzanine Loan.


51


e.  Effective
      August 8, 2007, the Company entered into an agreement with Med-Air
      Consultants, Inc. (“Med-Air”) whereby the Company terminated several joint
      venture and consulting agreements with Med-Air. The key elements of this
      agreement include the Company’s purchase of the 51% of the membership interest
      of Raritan Bay LLC and the 40% of the membership interest of Bayonne LLC owned
      by Med-Air, the elimination of Med-Air’s right to participate in a certain
      number of wound care centers the Company anticipates opening over several years,
      the elimination of fees associated with treatments at three of the Company
      treatment centers, and Med-Air’s covenant not to compete with or solicit
      employees of the Company. The purchase price paid by the Company was 300,000
      shares of the Company’s common stock, whose fair value at the date of issuance
      was $825,000; a non-interest bearing 36 month note of $1,692,000, net of 9%
      imputed interest of $202,000; and its interest in Southampton LLC. The purchase
      price note also includes all amounts due under capital leases for six chambers,
      approximately $232,667 at June 30, 2008, and the option to acquire the chambers
      for $1 each. The total assets acquired aggregated $2,411,312 of which $658,312
      is for the non-solicitation agreement and hospital contracts of $1,753,000.
      The
      balance remaining on the note as of June 30, 2008 was $1,019,683.




f.  Effective
      October 1, 2007, the Company entered into an agreement with Warantz Healthcare
      Group Inc., Rapid Recovery of America, Inc. Millennium Healthcare LLC, SMWNJ,
      Inc. SMWNY, Inc and Modern Medical Specialties, LLC (“Warantz”) whereby the
      Company terminated several joint venture and consulting agreements with Warantz.
      The key elements of this agreement includes the Company acquiring, for $431,000
      and 30 thousand restricted shares of common stock, whose fair value was $75
      thousand, the 40% interest in Modern Medical, LLC that it did not own. The
      Company recorded a Notes Payable in the amount of $377,665, which is net of
      imputed interest of $45,002. As of June 30, 2008 the balance outstanding was
      $277,228. The settlement also provided for the termination of a joint venture
      for two stand-alone healthcare facilities for total cash consideration of
      $96,000, and the elimination of its joint venture participation in a potential
      hospital-based healthcare facility that the Company believes may compete with
      an
      existing wound care center. Payment requirements for these negotiated agreements
      range from six to 33 months.




g.  In
      December, 2007 the Company received $800 thousand from individual lenders in
      the
      form of a short term unsecured note, (the “Bridge Financing Note”) the terms of
      which provided the lenders with interest paid in cash or in lieu of cash,
      warrants with an exercise price of $2 per share. These funds were used to fund
      the $1.5 million payment due the Bondholders on or before January 31, 2008
      (of
      the $1.5 million, $1.2 million was used to retire principal and $300 thousand
      was paid for a consent fee).




In
      January, 2008 the Company raised an additional $800 thousand according to the
      same terms as described above, bringing the total Bridge Financing Note to
      $1.6
      million. On January 25, 2008 the Company used $1.5 million of the Bridge
      Financing Note to pay the Bondholders and $100 thousand for working capital
      purposes. After the closing on the Bison Note (see Note 12), the Company retired
      the Bridge Financing Note.


52


Summary
–
      Notes Payable, including the 15% senior secured note payable, as of June 30,
      2008 and 2007 consists of the following:




**2008**
            
            **2007**Notes
                payable
            
            $
            17,013,771
            
            $
            2,494,514Less:
                Current portion
            
            
            939,856
            
            
            2,429,260$
            16,073,915
            
            $
            65,254




Maturities
      of the long-term portion of notes payable as of June 30, 2008 are as
      follows:




Year
                Ending June 30,2009
            
            $
            939,8562010
            
            
            708,9092011
            
            
            1,385,7442012
            
            
            1,376,1892013
            
            
            12,603,073$
            17,013,771




**Note
      11 - 8% Secured Convertible Debenture**




On
      April
      7, 2006, the Company received $5,500,000 in gross proceeds ($4,912,500 after
      placement agent fees and other offering costs, plus an additional 150,000 common
      shares issued to the placement agent), in exchange for its secured convertible
      debenture issued to DKR Sound Shore Oasis Holding Fund Ltd. ($5.1 million)
      and
      Harborview Master Fund LP ($0.4 million), together the “Bondholders.” The
      debenture was originally due on April 7, 2007. As provided in the agreement,
      the
      due date was extended to September 7, 2007 since the Company did not exercise
      its rights to call certain warrants. The debenture is convertible at the option
      of the Bondholders into common shares at $3 per common share (subject to
      adjustment) at any time and in any amount prior to maturity; however, the
      debenture is subordinated to the Signature Bank line of credit. This debenture
      bears interest at 8% per annum, payable in cash or in common shares at the
      conversion price (subject to certain eligibility requirements). $2,000,000
      of
      the proceeds of the debenture was paid to the Majority Members as partial
      consideration for the simultaneous acquisitions of the Twelve LLCs previously
      discussed.




As
      the
      Company failed to meet EBITDA (Earnings before Interest, Taxes, Depreciation
      and
      Amortization) targets as specified under the debenture, the conversion price
      was
      reduced to its minimum of $2.00 per share.




In
      addition, each Bondholder received a series of five year common stock purchase
      warrants with exercise prices ranging from $4.00 to $5.00 per share (subject
      to
      adjustment downward upon the occurrence of certain specified events) for an
      aggregate of 2,750,000 common shares. Since the Company failed to file a
      registration statement by April 7, 2007, the holders of the warrants received
      the option to exercise the warrants on a “cashless” basis. Of these warrants,
      916,667, exercisable at $4.00 per common share, were exercisable on their 11
      month anniversary of issuance and are callable at the option of the Company
      until exercisable. Since the Company did not exercise its call right, the due
      date of the convertible debenture was extended to September 7, 2007. All other
      warrants are immediately exercisable.


53




Because
      the senior convertible debentures were immediately convertible, and can be
      converted at a price on the date of sale ($3.00 per share), which was less
      than
      the market value of the shares on that date ($4.00 per share), this transaction
      included a beneficial conversion feature. In addition, the corresponding
      warrants attached were determined to have fair values utilizing the
      Black-Scholes option-pricing model in excess of the notes’ proceeds of
      $5,500,000. Consequently, $2,108,240 was allocated to the beneficial conversion
      feature, and $3,391,760 to the warrants, using a relative valuation method
      to
      the value of the senior convertible note and credited to additional paid-in
      capital. The beneficial conversion feature, the fair value of the immediately
      convertible warrants, and those warrants exercisable as of June 30, 2006 were
      charged to interest expense and accreted to the senior convertible debenture
      in
      the accompanying financial statements. For the nine months ended March 31,
      2007,
      $842,863 was charged to operations, and this amount was amortized to expense
      to
      the un-extended maturity date of the senior convertible debenture of April
      7,
      2007.




As
      part
      of this agreement, the Company was required to file a Registration Statement
      within 60 days of the date of closing of the shares and warrants associated
      with
      the aforementioned $5.5 million 8% Secured Debenture. Since the Company failed
      to do so, it has incurred damages payable to each Bondholder equivalent to
      1.5%
      of the aggregate purchase price paid by each Bondholder for each month the
      Registration Statement is not filed up to a maximum of 9% per Bondholder. The
      maximum damages amount to $495 thousand. As of March 31, 2008 and 2007, the
      Company recorded an accrual for damages amounting to $0 and $495,000,
      respectively. Another condition of the agreement requires the Company to reserve
      up to 2,333,333 of its unissued common shares of stock to satisfy an
      anti-dilution provision of the debenture agreement. These shares are reserved
      for issuance to the Majority Members if the debentures’ conversion options are
      exercised by Oasis.




On
      February 28, 2007, Oasis issued a Default Notice to the Company because of
      the
      Company’s failure to timely file this annual report on Form 10KSB, the cessation
      of the Company’s securities being listed or quoted on the Over-the-Counter
      Bulletin Board of the NASD, and the Company’s failure to file a Registration
      Statement within 60 days of the Registration Rights Agreement. On March 1,
      2007,
      Signature Bank issued a “blocking letter” that, among other things, precluded
      the debenture holders exercising any of the remedies as provided for as provided
      for in the Debenture Agreement. On May 29, 2007 the Company, its debenture
      holders and Signature Bank negotiated a restructuring of the Company’s senior
      secured loan and the secured debentures. Among other modifications, the
      debenture holders withdrew their default notice and all alleged defaults under
      both agreements were waived.




The
      restructured subordinated debentures increased the principal amount of
      debentures for accrued interest on the debentures through May 29, 2007 by
      $504,778 and the $495,000 in damages referred to in the second preceding
      paragraph. The interest rate on the restructured $6,499,778 in indebtedness
      was
      increased from 8% to 9%. The revised debt required a $1.0 million payment to
      the
      bondholders on June 21, 2007 of which $800 thousand was principal reduction
      and
      $200 thousand was a “consent fee” to restructure the debentures; this payment
      was made on June 20, 2007. The bondholders will receive an additional $1,650,000
      after the indebtedness and interest thereon has been repaid in full as
“additional consideration” for amending the agreements. The consent fee and the
      additional consideration were charged to operations as additional interest
      from
      the restructure date to March 31, 2008, the initial maturity date of the
      debentures. On the initial maturity date, the Company had the option to repay
      the outstanding principal and accrued interest thereon, or to extend the
      maturity to March 31, 2008 if it has paid an additional $1.2 million in
      principal payments and an additional consent fee of $300 thousand. On December
      21, 2007 the Company and the bondholders agreed to extend until January 31,
      2008
      the date by which the Company had to make the $1.5 million payment. The Company
      exercised this maturity extension option on January 25, 2008 and the remaining
      outstanding principal and accrued interest, and the additional consideration
      payment of $1.65 million, was paid in full on March 31, 2008 from the proceeds
      of the Bison Financing.


54


**Note
      12 – 15% Senior Secured Subordinated Promissory Note.**




On
      March
      31, 2008, the Company completed a $20 million 15% senior secured subordinated
      financing agreement with Bison Equity Capital Partners (“Bison”) (the “Bison
      Note”) (the “Bison Financing”). The Company received $17.5 million, net of a
      $2.5 million discount, and after providing for transaction fees, approximately
      $12.3 million was used to retire in its entirety the Secured Convertible
      Debenture, accrued interest and penalty; the Signature Bank term loan; the
      CFWH
      Mezzanine loan and accrued interest; and certain extended accounts payable
      and
      other obligations.





The
      financial terms of the Bison Note are summarized as follows:




· The
      Note
      is a five year note maturing March 31, 2013.




· Interest
      is payable in cash at 12% per annum plus 6% payment in kind (“PIK”). After
      certain payoff conditions are met, as defined in the Bison Note, the Scheduled
      Interest is payable in cash at the rate of 12% per annum plus 3% PIK per annum.
      If no defaults exist and the Company has met the payoff conditions, the Company
      has the option of deferring the scheduled payment of interest at the Scheduled
      Cash Interest Rate for up to 12 months ending on October 31, 2009, which would
      be added to the outstanding principal of the Note.




· Principal
      amortization begins on the second anniversary of the Note and the amortization
      payment is $2.5 million per year until the fifth year at which point the Company
      is obligated to retire in full the balance of the outstanding
      principal.




· Bison
      also received warrants equal to 20% of the fully diluted common stock of the
      Company. The Company has the opportunity to extinguish a certain number of
      these
      warrants based upon its achievement of EBITDA and leverage thresholds. The
      warrants which are calculated to be 7,168,488 at March 31, 2008 are exercisable
      at $5.00 per share, have a seven year life and carry standard anti-dilution
      and
      registration rights provisions. The Note carries certain EBITDA and leverage
      ratio covenants, limitations on maximum allowable debt with Signature and other
      credit parties, limitations on capital expenditures, and limitations on
      investments and acquisitions.


55




· The
      debt
      is subordinated to Signature Bank.




**Note
      13 – Income taxes**




The
      Company’s domestic effective income tax rate for the years presented is based on
      management’s estimate of the Company’s effective tax rate for the applicable
      year and differs from the federal statutory income tax rate primarily due to
      nondeductible permanent differences, state income taxes and changes in the
      valuation allowance for deferred income taxes. In assessing the realizability
      of
      deferred tax assets, management considers whether it is more likely than not
      that some portion or all of the deferred tax assets will not be realized. The
      ultimate realization of deferred tax assets is dependent upon the generation
      of
      future taxable income during the periods in which those temporary differences
      become deductible.




The
      Company maintains a full valuation allowance on its deferred tax assets.
      Accordingly, the Company has not recorded a benefit for income taxes.





The
      Company adopted the provisions of FIN 48 on July 1, 2007. FIN 48 clarifies
      the accounting for uncertainty in income taxes recognized in an enterprise’s
      financial statements in accordance with SFAS No. 109, “Accounting for Income
      Taxes”, and prescribes a recognition threshold and measurement process for
      financial statement recognition and measurement of a tax position taken or
      expected to be taken in a tax return. FIN 48 also provides guidance on
      derecognition, classification, interest and penalties, accounting in interim
      periods, disclosure and transition. The adoption of FIN 48 did not have a
      material effect on the Company's consolidated financial position or results
      of
      operation. We classify interest and penalties, if any, associated with our
      uncertain tax positions as a component of income tax expense. No interest and
      penalties related to uncertain tax positions were accrued at June 30,
      2008.





During
      the year ended June 30, 2008, the Company recognized no adjustments for
      uncertain tax benefits. The Company is subject to U.S. federal and state
      examinations by tax authorities for all years since its inception. The Company
      does not expect any significant changes to its unrecognized tax positions during
      the next 12 months.




The
      Company has a federal tax operating loss carry-forward of $1,312,000 at June
      30,
      2008 which expires through 2028.




56





The
      components of the net deferred tax asset (liability) at June 30, 2008 and 2007
      consist of the following




2008
            
            2007Deferred
                tax assets:Allowance
                for doubtful accounts
            
            $
            990,000
            
            $
            1,035,000Property
                assets
            
            
            218,000
            
            
            80,000Intangibles
            
            
            75,000
            
            
            472,000Accrued
                expenses
            
            
            371,000
            
            
            371,000Stock
                option compensation
            
            
            1,844,000
            
            
            1,315,000Net
                operating loss
            
            
            489,000
            
            
            153,000Total
                deferred tax asset
            
            
            3,987,000
            
            
            3,426,000Less
                valuation allowance
            
            
            (3,987,000
            )
            
            (3,426,000
            )Net
                deferred assets (liabilities)
            
            $
            0
            
            $
            0




The
      provision (benefit) for income taxes is comprised of the following:




For the Year Ended
              June 30, 2008
            
            For the Year Ended
              June 30, 2007Current:Federal
            
            $
            -
            
            $
            (832,388
            )State
            
            
            20,065
            
            
            475,87720,065
            
            
            (356,511
            )Deferred:Federal
            
            
            -
            
            
            (872,281
            )State
            
            
            -
            
            
            (222,703
            )-
            
            
            (1,094,984
            )Net
                provision (benefit)
            
            $
            20,065
            
            $
            (1,451,495
            )




57




A
      reconciliation of the statutory income tax effective rate to the actual
      provision shown in the financial statements is as follows:




For the Year Ended
              June 30, 2008
            
            For the Year Ended
              June 30, 2007Computed
                tax benefit
            
            
            (34.0
            )%
            
            (34.0
            )%State
                and local taxes, net of federal benefit
            
            
            (3.7
            )
            
            (4.7
            )Minority
                interest
            
            
            1.0
            
            
            0.9Non
                deductible interest expense
            
            
            13.8
            
            
            3.1Tax
                effect on income reported by members
            
            
            -
            
            
            -Other
            
            
            2.0
            
            
            0.2NOL
                valuation reserve
            
            
            21.4
            
            
            21.6Total
                tax benefit
            
            
            0.5
            %
            
            (12.9
            )%




**Note
      14 - Defined Contribution Plan**




The
      Company maintains a defined 401(k) Contribution Plan which all employees, over
      the age of 21, are eligible to participate in after three months of employment.
      The Company does not match employee contributions. Currently there are thirteen
      employees who are enrolled in this program. The 401(k) Contribution Plan is
      administered by a third party.




**Note
      15 - Commitments and Contingencies**




a.  Effective
      on December 1, 2005, the Company entered into short-term and long-term
      employment agreements with Dr. Phillip Forman, Dr. John Capotorto and Elise
      Greenberg. The terms and conditions of each agreement are identical except
      for
      the salary levels.




The
      short
      term employment agreements were for terms commencing December 1, 2005 and
      terminating March 31, 2006. The arrangements for Dr. Forman and Dr. Capotorto
      provided for aggregate salaries of $25,000 per month. Ms. Greenberg’s agreement
      provided for a salary of $7,500 per month.




The
      long
      term employment agreements were for terms commencing April 1, 2006 and
      terminating April, 2011. The arrangements for Dr. Forman and Dr. Capotorto
      provided for aggregate salaries of $50,000 per month. Ms. Greenberg provided
      for
      a salary of $15,000 per month. The agreements provide for participation in
      the
      Company paid health insurance, life and disability insurance plans, a 401(k)
      plan, stock option plan, incentive compensation and stock purchase plans and
      similar plans as may now exist or as may be adopted by the Company in the
      future. Each employee is to be provided with additional perquisites at an annual
      cost of not in excess of $25,000. These agreements provide for certain
      additional compensation in the event of a change in control or other termination
      not for cause. Ms. Greenberg’s employment with the Company, and all contractual
      obligations to her, ceased effective September 30, 2007


58




Each
      officer is subject to usual and customary non disclosure of confidential
      information and a covenant not-to-compete during the term of the agreement
      and
      for a five year period thereafter with respect to the non-disclosure
      requirements and three years thereafter with respect to the covenant
      not-to-compete.




b.  In
      April
      2006, the Company entered into a three year agreement with David Walz in which
      Mr. Walz will receive a base salary of $200,000 per annum, receive an annual
      guarantee bonus of $50,000, an $800 monthly car allowance, 210,000 options
      to
      purchase common stock (110,000 at $3.00 per share, vested June 1, 2006; 50,000
      options at $3.00 per share, vesting January 1, 2007; 50,000 options at $4.00
      per
      share, vesting January 1, 2008) and other executive benefits consistent with
      the
      Company's personnel policies. The agreement also includes an incentive related
      to new business referrals. The agreement provides for certain additional
      compensation in the event of a change in control or other termination not for
      cause.




c.  In
      May
      2006, the Company entered into a three year agreement with Paul Toomey, in
      which
      Mr. Toomey will receive a base salary of $200,000 per annum, a sign on bonus
      of
      $50,000, receive an annual guarantee bonus of $50,000, a $500 monthly car
      allowance, 150,000 options to purchase common stock at $5.00 per share (50,000
      options will vest two years from date of agreement; 100,000 will vest upon
      the
      Company having an EBITA of $14,000,000) and other executive benefits consistent
      with the Company's personnel policies. The agreement provides for certain
      additional compensation in the event of a change in control or other termination
      not for cause.




d.  In
      August
      2006, the Company entered into an agreement with its former CFO, Donald T.
      Kelly, which terminated upon his resignation on February 13, 2007.




e.  On
      January 3, 2007, Andrew G. Barnett was appointed by the Board of Directors
      of
      CFWH as Chief Executive Officer, effective January 19, 2007. Mr. Barnett,
      pursuant to the terms and condition of his three year employment agreement,
      will
      receive a base salary of $320,000 per annum, 1,000,000 ten year options to
      purchase common stock of CFWH at $3.10 per share (such options will vest
      incrementally based on time and performance criteria), incentive awards, and
      standard benefits. Effective February 13, 2007, Mr. Barnett assumed the chief
      financial officer title and role in addition to his role as the Company’s chief
      executive officer. On July 21, 2008, the Company approved an Amended and
      Restated Employment Agreement that provides for an increase to $375,000 in
      Mr.
      Barnett’s base salary effective March 31, 2008, cash bonuses that relate to the
      achievement of several performance goals, the re-pricing to $1.05 per share
      (the
      fair market value as of July 21, 2008) of the aforementioned 1,000,000 stock
      options; and the grant of an additional 750,000 stock options at $1.05 per
      share
      (the fair market value as of July 21, 2008), the vesting of which depend upon
      the Company’s achievement of annual EBITDA targets.




f.  The
      Company entered into a five year sales representative agreement with an entity
      owned by a shareholders’ spouse, as of December 7, 2006. The sales
      representative is to receive $10,000 per month plus a commission for serving
      as
      one of the Company’s non-exclusive representatives for introducing the Company
      to potential clients for the purpose of the Company establishing a business
      relationship. The representative will also receive a commission payment, as
      determined in the agreement, for each successful business relationship
      introduced. In
      September 2007, this agreement was terminated and replaced with a five-year
      non-compete agreement.


59




g.  Minimum
      payments under non-cancelable operating lease obligations for office space
      at
      June 30, 2008 are as follows:




Year Ending June 30,2009
            
            $
            140,2012010
            
            
            108,0842011
            
            
            105,1332012
            
            
            98,9782013
            
            
            35,100Thereafter
            
            
            0




In
      September 2008, a new lease agreement was entered into for our administrative
      office in New Jersey. The remaining three years of the existed lease was bought
      out for $100,000, which was charged to operations in 2008. The old lease was
      replaced with a new one year lease requiring payment of $25,809. Rent expense
      under all operating leases in fiscal year ended June 30, 2008 was $225,925
      and
      $234,440 in 2007.




h.  Effective
      August 8, 2007 the Company entered into an agreement with Med-Air Consultants,
      Inc. (“Med-Air”) whereby the Company terminated several joint venture and
      consulting agreements with Med-Air. The key elements of this agreement includes
      the Company’s purchase of the 51% of the Raritan Bay LLC and 40% of Bayonne LLC
      owned by Med-Air, the elimination of Med-Air’s right to participate in a certain
      number of wound care and hyperbaric treatment centers the Company anticipates
      opening over several years, the elimination of fees associated with treatments
      at three of the Company treatment centers, and Med-Air’s covenant not to compete
      with or solicit employees of the Company. The purchase price paid by the Company
      was 300 thousand shares of the Company’s common stock, whose fair value at the
      date of issuance was $825 thousand, a non-interest bearing 36 month note of
      $1,655,000 – net of 9% imputed interest of $239 thousand, and its interest in
      Southampton LLC. The purchase price note also includes all amounts due under
      capital leases for six chambers, approximately $232,667 at June 30, 2008, and
      the option to acquire the chambers for $1 each.




i.  In
      fiscal
      2008 the Company signed contracts to open three (3) additional wound care and
      hyperbaric centers. The estimated cost for leasehold improvements in preparation
      for the opening of the facilities that will be occur in fiscal 2009, exclusive
      of leased chambers, is approximately $650,000.




j.  In
      September 2006, the Company entered into an independent contractor agreement
      with AMT, LLC and Boyer Marketing Associates, Inc. (collectively the
“Representative”) to serve as the Company’s non-exclusive business development
      representative for several geographic regions of the country through April
      30,
      2009. The Representative is paid a base compensation and an incentive predicated
      on the opening of new wound care and hyperbaric treatment centers that the
      Representative has identified and with whom the Company enters into contractual
      relationships.




60


k.  Effective
      September 30, 2007, the Company negotiated the termination of Ms. Greenberg’s
      five year employment with the Company, in which all of the Company’s obligations
      under the employment agreement were concluded, as well as the termination of
      a
      consulting agreement with Ms. Greenberg’s spouse, in which JD Keith LLC, the
      spouse’s consulting firm, was to be paid $10 thousand per month for five years
      as well as commissions and other compensation. Instead, the Company entered
      into
      a five year non-compete and non-solicitation agreement with the Greenbergs.
      Among other things, the Greenbergs agreed to a five year non-compete with the
      Company; the Company will pay total compensation to the Greenbergs of
      approximately $320 thousand for each of the first two years of the five-year
      non-compete agreement after which point all payments from the Company to the
      Greenbergs cease.




l.  In
      August
      2007, the Company negotiated the termination of a consulting agreement in with
      a
      firm in which the Company agreed to pay $45 thousand and options to purchase
      50
      thousand shares of the Company’s stock at $3.00 per share. The fair value of the
      options utilizing the Black-Scholes option pricing model of $266,913 as well
      as
      the $45 thousand cash payment was charged to operations in 2007.




m.  Effective
      October 1, 2007 the Company negotiated the termination of several joint venture
      and consulting agreements with Warantz Healthcare and related parties in which
      the Company acquired, for $275 thousand and 30 thousand restricted shares of
      common stock, the 40% share of the Modern Medical hospital contract that it
      did
      not own; the termination of a joint venture for two stand-alone healthcare
      facilities, for total cash consideration of $96 thousand; and the elimination
      of
      its joint venture participation in a potential hospital-based healthcare
      facility that the Company believes may compete with an existing wound care
      and
      hyperbaric treatment center. Payment requirements for these negotiated
      agreements range from six to 33 months.




n.  At
      June
      30, 2008, four officers or directors of the Company are owed an aggregate of
      $100,000 for interest on the Bridge Financing Note (see Note 10).




**Note
      16 - Subsequent Events**




In
      July
      2008, Andrew Barnett’s employment agreement was amended as discussed
      ( *in
      Note 15 e.)* above.




In
      September 2008 the Board of Directors approved




·
            The
                issuance of options to acquire 60,000 and 100,000 shares of the Company’s
                common stock to Messrs. Basmajian and Meyrowitz, respectively, for
                services to rendered through December 2008. The Board also approved
                the
                repricing of the options to acquire 50,000 shares previously issued
                to
                these two directors;




·
            The
                Amended and Restated Employment Agreement for David Walz, the Company’s
                president. Among other changes, the exercise price of the options
                previously granted to Mr. Walz were repriced to the fair market value
                as
                of the September board meeting; Mr. Walz was granted an additional
                375,000
                options with an exercise price set as of the grant date, 225,000
                of which
                vest when and if certain performance criteria are met and the balance
                vest
                upon the anniversary date of the confirmation of the terms of Mr.
                Walz’s
                Amended Employment Agreement; and an increase in Mr. Walz’s base
                compensation to $285,000 per annum. In addition, Mr. Walz will be
                eligible
                for incentive compensation if certain performance targets are
                met.




61




**ITEM 8.**
            **Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure:**




We
      have
      not had any disagreements with our accountants on accounting and financial
      disclosures during our two recent fiscal years or any later interim
      period.




**Item
      8A(T). Controls and Procedures:**




(a)  Evaluation
      of Disclosure Controls and Procedures.




The
      Company’s management carried out an evaluation, conducted by its chief executive
      officer and chief financial officer, on the effectiveness of the design and
      operation of the Company’s disclosure controls and procedures (as such term is
      defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June
      30,
      2008, pursuant to Exchange Act Rule 13a-15. Such disclosure controls and
      procedures are designed to ensure that information required to be disclosed
      by
      the Company is accumulated and communicated to the appropriate management on
      a
      basis that permits timely decisions regarding disclosure. Based upon that
      evaluation, the Company’s chief executive officer and chief financial officer
      concluded that the Company’s disclosure controls and procedures as of June 30,
      2008 were not effective.




(b)  Changes
      in Internal Control over Financial Reporting.




During
      the year ended June 30, 2008, there was no change in our internal control over
      financial reporting (as such term is defined in Rule 13a-15(f) under the
      Exchange Act) that has materially affected, or is reasonably likely to
      materially affect, our internal control over financial reporting. The Company
      has now established appropriate controls and procedures with respect to the
      use
      of corporate funds and is in the process of installing a company-wide accounting
      and financial reporting application suite.




**Management’s
      Report on Internal Control over Financial Reporting**




Under
      Section 404 of the Sarbanes-Oxley Act of 2002, our management is required to
      assess the effectiveness of the Company’s internal control over financial
      reporting as of the end of each fiscal year and report, based on that
      assessment, whether the Company’s internal control over financial reporting is
      effective.




Management
      of the Company is responsible for establishing and maintaining adequate internal
      control over financial reporting. The Company’s internal control over financial
      reporting is designed to provide reasonable assurance as to the reliability
      of
      the Company’s financial reporting and the preparation of financial statements
      for external purposes in accordance with generally accepted accounting
      principles.




Internal
      control over financial reporting, no matter how well designed, has inherent
      limitations. Therefore, internal control over financial reporting determined
      to
      be effective can provide only reasonable assurance with respect to financial
      statement preparation and may not prevent or detect all misstatements. Moreover,
      projections of any evaluation of effectiveness to future periods are subject
      to
      the risk that controls may become inadequate because of changes in conditions,
      or that the degree of compliance with the policies or procedures may
      deteriorate.


62




The
      Company’s management has assessed the effectiveness of the Company’s internal
      control over financial reporting as of June 30, 2008. In making this assessment,
      the Company used the criteria established by the Committee of Sponsoring
      Organizations of the Treadway Commission (COSO) in “Internal Control-Integrated
      Framework.” These criteria are in the areas of control environment, risk
      assessment, control activities, information and communication, and monitoring.
      The Company’s assessment included extensive documenting, evaluating and testing
      the design and operating effectiveness of its internal control over financial
      reporting.




Based
      on
      the Company’s processes and assessment, as described above, management has
      concluded that, as of June 30, 2008, the Company’s internal control over
      financial reporting was not effective.





This
      annual report does not include an attestation report of the Company’s registered
      public accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to the attestation by the Company’s
      registered public accounting firm pursuant to temporary rules of the SEC that
      permit the Company to provide only management’s report in this annual
      report.





**Item
      8B.**  **Other
      Information:**




None.




**PART
      III**




**ITEM 9.**
            **Directors,
                Executive Officers, Promoters and Control Persons; Compliance with
                Section
                16(a) of the Exchange Act:**




Our
      directors, executive officers and control persons their respective ages as
      of
      September 15, 2008 are as follows:





Name
            
            Age
            
            PositionAndrew G. Barnett
            
            54
            
            CEO, CFO, Secretary, DirectorDavid Walz
            
            47
            
            President, TreasurerJohn Capotorto, MD
            
            48
            
            DirectorDavid H. Meyrowitz
            
            62
            
            DirectorPaul Basmajian
            
            50
            
            DirectorJohn DeNobile
            
            35
            
            DirectorDr. Phillip Forman
            
            50
            
            DirectorDouglass Trussler
            
            37
            
            DirectorLouis Bissette
            
            39
            
            Director




63




**Business
      Experience of Current Officers and Directors:**




All
      of
      our directors serve a one year term until their successors are elected and
      qualified by our shareholders, or until their earlier death, retirement,
      resignation or removal. The following is a brief description of the business
      experience of our executive officers, director and significant employees:




***Andrew
      G. Barnett*** has been
      our Chief Executive Officer since January 19, 2007, our Chief Financial officer
      since February 13, 2007 and is also our Corporate Secretary. From January 1,
      2001 through January, 2007, Andrew G. Barnett was a principal of Morris Anderson
      & Associates, Ltd., a financial and management consulting firm. Mr. Barnett
      brings extensive expertise in the development and implementation of strategic
      plans, and operational and financial strategies. Mr. Barnett has served in
      advisory and senior management capacities as CEO, COO, and CFO to both publicly
      and privately held companies. Mr. Barnett has acted in such capacities in many
      companies including a $1 billion tobacco and HBA distributor, a $100 million
      outdoor security lighting company, a $150 million periodicals agency, a $90
      million consumer products company, a $100 million financial services company,
      a
      $100 million industrial parts distributor, and a $50 million professional
      services firm. Mr. Barnett has served a broad range of clients with operations
      throughout the United States as well as in Europe, the Middle East and Asia.
      Industry experience includes retail, manufacturing, consumer products,
      publishing, financial services, wholesale distribution and professional
      services.




***David
      J. Walz*** was
      named President on September 27, 2006 and is also our Treasurer. Mr. Walz joined
      the predecessor company in November 2003 as Executive Vice President and Chief
      Operating Officer. Mr. Walz is an executive with over twenty-one years of
      experience in hospital operations, financial management, business development
      and strategic planning within complex healthcare organizations. From November
      2000 to September 2003, Mr. Walz was Executive Director/Vice President of
      Operations at St. John’s Queens Hospital, a teaching division of Saint Vincent’s
      Catholic Medical Centers in New York, where he was responsible for the
      day-to-day operations. Prior to this role, Mr. Walz held various positions
      in
      finance, including director of finance for a four-hospital system. Mr. Walz
      has
      a Bachelors degree in Finance, Banking and Investments and also holds a Master
      Degree in Healthcare Administration. Mr. Walz is a Fellow (“FHFMA”) and a
      Certified Managed Care Professional (“CMCP”) in the Healthcare Financial
      Management Association




***Phillip
      Forman, DPM*** ,
      who
      serves as the Company’s Co-Chief Compliance Officer, was the Medical Director of
      the New York Hyperbaric, the predecessor to American Hyperbaric, Inc., since
      2001 and, from July, 2005 through January 18, 2007, served as the chief
      executive officer of American Hyperbaric, Inc. Prior to joining New York
      Hyperbaric, he was a private practitioner. He received his doctor degree of
      Podiatric Medicine from the Pennsylvania College of Podiatric Medicine. His
      degree is a Diplomat, American Board of Podiatric Surgery. His academic
      appointments include Podiatric Attending, Staten Island University Hospital
      and
      Associate Director, Residency Program, Staten Island University Hospital. Dr.
      Forman has extensive experience in wound care. He has participated in numerous
      clinical trials involving diabetic foot infections, novel antibiotics and new
      biopharmaceuticals for problem and non-healing wounds of the lower extremities.
      He has participated in trials with Merck & Co., Inc., Pharmacia,
      OrthoBiotech, Novartis/Organogenesis, Johnson & Johnson, Monsanto,
      Ortho-McNiel, Alpha Therapeutics and Ortec International. In addition to his
      clinical trial participation, Dr. Forman has several research projects underway
      involving Osteomyelitis and Vascular Disease in patients with
      Diabetes.




64




***John
      V. Capotorto, M.D*** .,
      who
      serves as the Company’s Co-Chief Compliance Officer, was the Chief Medical
      Director of New York Hyperbaric, the predecessor to American Hyperbaric, Inc.,
      since 2001 and from July, 2005 through January 18 was the Vice President of
      American Hyperbaric, Inc. Prior to joining New York Hyperbaric Dr. Capotorto
      was
      an attending physician in Adult and Pediatric Endocrinology and was a clinical
      assistant professor at SUNY HSCB since 1996. He holds board certification in
      Internal Medicine, Pediatrics, Adult and Pediatric Endocrinology and Metabolism,
      and is accredited in Hyperbaric Medicine. Additionally, he is the Medical
      Director of the Diabetes Treatment Center at Staten Island University Hospital
      and has extensive experience in both wound care and hyperbaric medicine. Dr.
      Capotorto graduated from Vassar College in 1981 and studied Medicine at the
      University of Bologna. He returned to New York where he completed a combined
      medical and pediatric internship and residency. Dr. Capotorto was a Research
      Fellow in Islet Cell Transplantation at the Joslin Diabetes Center and a
      clinical fellow in Adult and Pediatric Endocrinology at both the Joslin Diabetes
      Center and Children’s Hospital, part of the Harvard Medical School system. In
      addition to his medical training, Dr. Capotorto has completed an Executive
      MBA
      program at the Baruch College. He is a member of the Beta Gamma Sigma Honor
      Society and has used his combined medical and business knowledge towards
      developing and opening comprehensive Hyperbaric and Wound Care Centers.




***David
      H. Meyrowitz*** was
      appointed to the Board of Directors on June 19, 2006. Mr. Meyrowitz received
      his
      Jurist Doctor from Brooklyn Law School in 1970 and was admitted to the New
      York
      Bar in 1971. He received his Bachelor of Science degree, majoring in accounting,
      from the University of Bridgeport in 1967. Mr. Meyrowitz is a partner in the
      law
      firm of Kamerman Meyrowitz & Soniker, P.C. located in New York City. Mr.
      Meyrowitz was appointed as Advisor to Registrants for the United States
      Selective Service System and served as such through the end of the Viet Nam
      War.
      Mr. Meyrowitz was also appointed by then Governor Carey to be a member of the
      counsel of the State University Agricultural and Technical College at
      Farmingdale where he served as such for approximately 10 years. Mr. Meyrowitz
      also acts as special collection counsel to the New York City Housing authority.
      Mr. Meyrowitz is a member of the New York County Lawyers Association and the
      Bar
      Association of Nassau County. He is a member of the United States Customs Court.




***Paul
      Basmajian*** was
      appointed to the board of directors on July 20, 2006. Mr. Basmajian has 24
      years
      servicing global asset management and plan sponsor communities. He is a Senior
      Managing Partner and member of the Board of Directors of BNY ESI & Co.,
      subsequently acquired by the Bank of New York in 1998. Currently, Mr. Basmajian
      serves as the director of trading operations for BNY Brokerage and part of
      senior management team for the Bank of New York.




65




***John
      DeNobile*** founded
      American Hyperbaric in May 2005. From April 2002 through May, 2005, Mr. DeNobile
      invested in real estate development projects, from pre-construction through
      rental phase, as well as acting as a consultant to emerging companies. From
      1995
      through April 2002, Mr. DeNobile was a licensed stock broker at Winchester
      Investment Securities, Inc. Mr. DeNobile is currently president of Axcess,
      Inc.,
      a company dedicated to providing state of the art imaging, diagnostic and
      interventional services and education to meet the vascular access needs of
      the
      hemodialysis community.




***Douglas
      B. Trussler*** co-founded Bison Capital in 2001 and is a partner and serves as its
      president. Previously, he was at Windward Capital Partners LP, and at
      Credit Suisse First Boston. Mr. Trussler is currently a member of the Board
      of
      Directors of GTS Holdings, Inc., Performance Team Freight Systems, Inc., Royal
      Wolf Australia Ltd., Royal Wolf Trading New Zealand Limited, Precision
      Assessment Technology Corporation, and Big Rock Sports, LLC. He was formerly
      a
      member of the Board of Directors of Twin Med, LLC and Helinet Aviation, Inc.
      Mr.
      Trussler earned a BA with honors in Business Administration from the University
      of Western Ontario in Canada.




***Louis
      Bissette*** is
      a
      partner of Bison Capital, having joined the firm in 2005 to head its east coast
      operations based in Charlotte, NC.  Previously, he was a General Partner at
      Brentwood Associates, a leading Los Angeles-based middle market private equity
      firm.  Prior to Brentwood, he worked in the corporate finance department of
      Morgan Stanley & Co., where his primary coverage responsibilities included
      the firm's private equity clients.  Mr. Bissette is a member of the Board
      of Directors of Big Rock Sports, LLC. Mr. Bissette graduated with a degree
      in
      Economics from the University of North Carolina at Chapel Hill, where he was
      a
      John Motley Morehead Scholar.




Directors
      are elected at the Company’s annual meeting of stockholders and serve for one
      year until the next annual Stockholders’ meeting or until their successors are
      elected and qualified. Officers are elected by the Board of Directors and their
      terms of office are, except to the extent governed by employment contract,
      at
      the discretion of the Board. The Company reimburses all directors for their
      expenses in connection with their activities as directors of the Company.
      Directors of the Company who are also employees of the Company will not receive
      additional compensation for their services as directors.




**Family
      Relationships:**




There
      are
      no family relationships between any two or more of our former or current
      directors or executive officers. There is no arrangement or understanding
      between any of our former or current directors or executive officers and any
      other person pursuant to which any director or officer was or is to be selected
      as a director or officer, and there is no arrangement, plan or understanding
      as
      to whether non-management shareholders will exercise their voting rights to
      continue to elect the current board of directors. There are also no
      arrangements, agreements or understandings to our knowledge between
      non-management shareholders that may directly or indirectly participate in
      or
      influence the management of our affairs.




66




**Board
      Committees and Independence:**




All
      of
      the directors serve until the next annual meeting of common shareholders and
      until their successors are elected and qualified by our common shareholders,
      or
      until their earlier death, retirement, resignation or removal. Our bylaws set
      the authorized number of directors at not less than one or more than nine,
      with
      the actual number fixed by our board of directors. Our bylaws authorized the
      Board of Directors to designate from among its members one or more committees
      and alternate members thereof, as they deem desirable, each consisting of one
      or
      more of the directors, with such powers and authority (to the extent permitted
      by law and these Bylaws) as may be provided in such resolution.




The
      entire board of directors will perform the function of the Audit Committee
      until
      we appoint directors to serve on the Audit Committee. The principal functions
      of
      the Audit Committee are to recommend the annual appointment of the Company’s
      auditors concerning the scope of the audit and the results of their examination,
      to review and approve any material accounting policy changes affecting the
      Company’s operating results and to review the Company’s internal control
      procedures. The principal functions of the Compensation Committee are to review
      and recommend compensation and benefits for the executives of the Company.




The
      entire board performs the functions of the Compensation Committee until we
      appoint directors to serve on the Compensation Committee.




**Compliance
      with Section 16(a) of the Exchange Act**




Section
      16(a) of the Exchange Act requires our directors, executive officers and persons
      who own more than 10% of a required class of our equity securities, to file
      with
      the SEC initial reports of ownership and reports of changes in ownership of
      common stock and other equity securities of our company. Officers, directors
      and
      greater than 10% shareholders are required by SEC regulation to furnish us
      with
      copies of all Section 16(a) forms they file.




To
      our
      knowledge, based upon a review of the copies of such reports furnished to us
      and
      based upon written representations that no other reports were required, all
      Section 16(a) filing requirements applicable to our officers, directors and
      greater than 10% beneficial owners were complied with for the fiscal year ended
      June 30, 2008.




**Code
      of Ethics**




A
      code of
      ethics relates to written standards that are reasonably designed to deter
      wrongdoing and to promote:




1)  Honest
      and ethical conduct, including the ethical handling of actual or apparent
      conflicts of interest between personal and professional
      relationships;




2)  Full,
      fair, accurate, timely and understandable disclosure in reports and documents
      that are filed with, or submitted to the Securities and Exchange Commission
      and
      in other public communications made by the company;




3)  Compliance
      with applicable government laws, rules and regulations;




67




4)  The
      prompt internal reporting of violations of the code to an appropriate person
      or
      persons identified in the code; and




5)  Accountability
      for adherence to the code.




The
      company adopted a formal code of ethics statement that is designed to deter
      wrong doing and to promote ethical conduct and full, fair, accurate, timely
      and
      understandable reports that the company files or submits to the SEC and others.
      A copy of the code of ethics is filed as an exhibit to the Annual Report filed
      with the SEC on September 24, 2004, and may be obtained from the Company upon
      request.




68


**ITEM 10.**  **Executive
      Compensation:**




**FISCAL
      2008 SUMMARY COMPENSATION TABLE**




The
      following table summarizes the compensation of the Named Executive Officers
      for
      the fiscal years ended June 30, 2008 and 2007. The Named Executive Officers
      are the Company’s Chief Executive Officer and Chief Financial Officer and the
      Company’s President. These are the only two executive officers that served
      during the year ended June 30, 2008.


**Name and Principal Position**
              
              **Fiscal**
                **Year**
              
              **Salary**
                **($)**
              
              **Bonus**
                **($)**
              
              **Stock**
                **Awards**
                **($)**
              
              **Option**
                **Awards**
                **($)(1)**
              
              **Non-Equity**
                **Incentive Plan**
                **Compensation**
                **($)**
              
              **All Other**
                **Compensation**
                **($)**
              
              **Total**
                **($)**Andrew
                  G. Barnett (2)
              
              
              2008
              
              
              335,880
              
              
              —
              
              
              —
              
              
              975,185
              
              
              125,000
              (3)
              
              22,075
              (4)
              
              1,458,140*Chief
                  Executive Officer and*
              
              
              2007
              
              
              136,615
              
              
              —
              
              
              —
              
              
              1,338,045
              
              
              —
              
              
              6,600
              
              
              1,481,260*Chief
                  Financial Officer*David
                  J. Walz (5)
              
              
              2008
              
              
              215,385
              
              
              42,308
              
              
              —
              
              
              204,172
              
              
              —
              
              
              16,306
              (4)
              
              478,171*President*
              
              
              2007
              
              
              218,469
              
              
              50,000
              
              
              —
              
              
              204,172
              
              
              —
              
              
              9,600
              
              
              482,241





(1)
            The
                values for option awards in this column represent the cost recognized
                for
                financial statement reporting purposes for fiscal year 2008 and 2007,
                respectively, in accordance with FAS 123R. However, pursuant to SEC
                rules these values are not reduced by an estimate for the probability
                of
                forfeiture. The assumptions used to value these awards can be found
                in
                Note 3 to the financial statements in this Form 10-K.




(2)
            Mr. Barnett
                entered into an employment agreement on January 3, 2007, with an
                effective date of January 19, 2007, to serve as Chief Executive
                Officer. Mr. Barnett assumed the role of Chief Financial Officer on
                February 13, 2007.




(3)
            Pursuant
                to the terms of his employment agreement, Mr. Barnett earned $75,000
                for
                the successful implementation of a new accounting system during fiscal
                2008 and $50,000 for the successful closing of a transaction with
                Bison
                Capital Equity Partners II-B, L.P. during fiscal
                2008.





(4)
            We
                reimbursed automobile expenses for Messrs. Barnett and Walz in the
                amounts
                of $14,400 and $8,631, respectively, and health benefit expenses
                for both
                named executive officers in the amount of
                $7,675.




(5)
            Mr. Walz
                was appointed as our president on September 27, 2006.




69




**Employment
      Agreements with the Named Executive Officers**




***Employment
      Agreement for Andrew G. Barnett***





On
      July
      21, 2008, the Company entered into an employment agreement (the amended and
      restated employment agreement) with Andrew G. Barnett, effective as of March
      31,
      2008, which amended and restated the employment agreement dated January 3,
      2007
      (the 2007 employment agreement). Pursuant to the amended and restated employment
      agreement Mr. Barnett agreed to serve as our Chief Executive Officer and
      Chief Financial Officer. The initial term of the amended and restated employment
      agreement commenced on March 31, 2008 and ends on June 30, 2011, and will
      automatically be renewed for an additional 12 months unless Mr. Barnett or
      the
      Company provides written notice of the intent not to renew on or before June
      30,
      2010. After each 12 month extension, the term will continue to renew for
      successive 12 month periods unless Mr. Barnett or the Company provides written
      notice of the intent not to renew no less than 180 days prior to the end of
      the
      renewal term.




Under
      the
      terms of the agreement, Mr. Barnett will receive an annual base salary of
      $375,000 beginning March 31, 2008, which salary will be reviewed annually by
      the
      board of directors. In addition, Mr. Barnett has earned (1) a one-time
      cash bonus of $75,000 for successfully implementing a new accounting system
      (the
“accounting bonus”) that will be paid to him upon the filing of certain reports
      with the Securities and Exchange Commission; and (2) a one-time cash bonus
      of $50,000 for closing the transaction with Bison Capital Equity Partners II-B,
      L.P. (the “closing bonus”) that will be paid to him on or before September 15,
      2008. He is eligible to earn annual cash performance bonuses based on the
      Company’s achievement of certain adjusted EBITDA targets for fiscal years 2008
      through 2013 and thereafter. The amount of the annual cash performance bonus,
      if
      earned, will be set by the Board in its sole discretion, but will be no less
      than $50,000 and no greater than 50% of his then-existing base salary.
      Mr. Barnett is also eligible for all employee benefits made available
      generally to other senior executive officers, including participation in medical
      and life insurance programs and profit sharing plans, and is entitled to
      reimbursement for automobile expenses, provided such expenses do not exceed
      $15,000 per year and $3,000 per month. We have agreed to establish a long-term
      incentive plan no later than September 30, 2008, in which Mr. Barnett will
      be
      entitled to participate. If Mr. Barnett is subject to an excise tax under
      the Internal Revenue Code of 1986, as amended, he will be entitled to a gross-up
      payment.




On
      January 3, 2007 Mr. Barnett was granted the option to purchase 1,000,000
      shares of our common stock pursuant to the Center for Wound Healing, Inc. 2006
      Stock Option Plan under the 2007 Employment Agreement. Six hundred thousand
      of
      these options are time vesting options and 400,000 are performance vesting
      options. With respect to the 600,000 shares of time vesting options, 400,000
      are
      fully vested, 100,000 shares will vest on the second anniversary of the date
      of
      grant and 100,000 shares will vest on the third anniversary of the date of
      grant, provided for each vestment that Mr. Barnett has remained
      continuously employed by us during those terms. With respect to the 400,000
      performance vesting options, 100,000 options are fully vested and
      Mr. Barnett will vest in his option to purchase the remaining 300,000
      options (100,000 options in each of fiscal years 2009, 2010 and 2011) if we
      meet
      certain financial targets during fiscal years 2009, 2010 and 2011 as set forth
      in his agreement. These options will expire ten years from the date of grant.
      Effective July 21, 2008, the exercise price for these options was reduced from
      $3.10 per share to $1.05 per share.




70




Under
      the
      amended and restated employment agreement, on July 21, 2008 Mr. Barnett is
      granted an additional 750,000 performance vesting options at an exercise price
      of $1.05 per share. These performance vesting options will vest 33 1/3% per
      year
      if we meet certain quarterly Adjusted EBITDA targets during fiscal years 2009,
      2010 and 2011. Mr. Barnett’s options will vest upon a change of control as
      described below. Mr. Barnett’s option to purchase such shares of our common
      stock will remain outstanding for 10 years following the date of its grant.




The
      agreement provides that we may terminate Mr. Barnett for cause at any time
      upon written notice. For purposes of the agreement, cause means any of the
      following: (1) Mr. Barnett’s material breach of the agreement, breach
      of fiduciary duty having a material adverse impact on our Company, material
      breach of our employment policies applicable to him, or refusal to follow the
      lawful directives of our board of directors that is not corrected (to the extent
      correctable) within 10 days after delivery of written notice to Mr. Barnett
      with respect to such breach; (2) Mr. Barnett’s breach of a fiduciary
      duty to us, material breach of our employment policies applicable to him,
      refusal to follow the lawful directives of our board of directors, or repeated
      breach of the same provision of the agreement, each on more than two occasions,
      regardless of whether such breach has been or may be corrected;
      (3) Mr. Barnett’s indictment for or conviction of a felony or any
      crime involving fraud; (4) Mr. Barnett’s misappropriation of our funds
      or material property; or (5) Mr. Barnett’s material dishonesty,
      disloyalty or willful misconduct. In addition, we may terminate
      Mr. Barnett’s employment without cause upon 30 days’ prior written notice.
      A failure by us to renew the amended and restated employment agreement is a
      termination without cause.




Pursuant
      to the agreement, Mr. Barnett may terminate his employment for good reason
      at any time upon written notice to us. Mr. Barnett may also terminate his
      employment without good reason upon 45 days’ prior written notice. For purposes
      of the agreement, good reason means the occurrence of: (1) a material
      change in Mr. Barnett’s duties, reporting responsibilities, titles or
      elected or appointed offices as in effect immediately prior to the effective
      date of such change, provided, however that Mr. Barnett’s ceasing to be our
      chief financial officer does not constitute good reason; (2) any reduction
      or failure to pay when due any compensation to which Mr. Barnett is
      entitled; (3) our breach of any material provisions of the amended and
      restated agreement; (4) the relocation of our corporate offices more than
      100 miles away from Mr. Barnett’s current residence; (5) us hiring,
      retaining or promoting any employee or consultant whose base salary is or
      becomes greater than Mr. Barnett’s base salary; or (6) we fail to elect Mr.
      Barnett a member of the board of directors.




In
      addition, Mr. Barnett may terminate his employment within 60 days of a
      change of control, defined to occur at such time as (1) any person is or
      becomes the beneficial owner of securities representing 45% or more of the
      combined voting power for election of directors of our then outstanding
      securities, subject to certain exceptions; (2) during any period of two
      years or less, individuals who at the beginning of such period constitute the
      board of directors cease to constitute at least a majority of the board of
      directors; (3) the consummation of a sale or disposition of 50% or more of
      our assets or business; or (4) the consummation of any reorganization,
      merger, consolidation or share exchange, subject to certain exceptions.




If
      we
      terminate Mr. Barnett’s employment without cause or if Mr. Barnett
      terminates his employment for good reason, then Mr. Barnett is entitled to:
      (1) his then-existing base salary through the end of the term of the
      amended and restated agreement, or for two years, whichever is longer;
      (2) the full amount of the Accounting Bonus and the Closing Bonus, to the
      extent that they have not been paid as of the date of termination; (3) a
      pro-rata amount of any annual bonus for which he is eligible and (4) the
      continuation of his health or medical benefit plans for a period of two years.
      However, if his employment is terminated as a result of our failure to renew
      the
      initial term of his amended and restated employment agreement, then he is
      generally entitled to receive the continuation of his base salary and his health
      or medical benefit plans for a period of one year. In addition, any unvested
      time vesting stock options to which Mr. Barnett may have been entitled will
      immediately vest. The performance vesting options will vest if the adjusted
      EBITDA for the quarter meets the adjusted EBITDA targets. If Mr. Barnett
      terminates his employment pursuant to a change of control, Mr. Barnett will
      be entitled to receive the payments described above, as well as a cash payment
      of $800,000 if the average price per-share sale price resulting in the change
      of
      control is less than $7.50.




71




Mr. Barnett
      may not disclose any confidential information about us, including our financial
      condition, our products and services, and information concerning the identity
      of
      individuals affiliated with us, during the term of his employment and for a
      period of five years thereafter.




Mr. Barnett
      agrees not to manage, operate, participate in, be employed by or perform
      consulting services for our competitors listed in the amended and restated
      employment agreement during the term of his employment, and during any period
      which he is receiving the continuation payments from us as described above.
      During this period, Mr. Barnett agrees to abstain from soliciting any
      individual, partnership, corporation, association, or entity who, within the
      36
      month period prior to Mr. Barnett’s termination of employment, contracted
      with us or was solicited by us for business, and to abstain from soliciting
      any
      of our officers, managers or salespersons.




To
      the
      fullest extent permitted by law, we agree to indemnify Mr. Barnett pursuant
      to our standard indemnification agreement and by any directors’ and officers’
liability insurance we maintain. We also agree to maintain directors’ and
      officers’ liability insurance in appropriate amounts for the benefit of
      Mr. Barnett throughout the term of his employment with us, and for a period
      of three years thereafter.




***Employment
      Agreement for David Walz***





In
      April
      2006, we entered into an employment agreement with David Walz, pursuant to
      which
      Mr. Walz agreed to serve as our Executive Vice President. The term of the
      agreement is three years, commencing April 1, 2006 and ending
      March 31, 2009. Under the terms of the agreement, Mr. Walz will
      receive a base salary of $200,000 per year, an annual guarantee bonus of
      $50,000, and profit sharing opportunities in each of the limited liability
      companies and hospitals listed in the agreement. In addition, Mr. Walz will
      receive 210,000 options to purchase common stock, which will vest as follows:
      110,000 at $3.00 per share, vested June 1, 2006; 50,000 options at $3.00
      per share, vested January 1, 2007; and 50,000 options at $4.00 per share,
      vesting January 1, 2008. Mr. Walz will also receive other executive
      benefits consistent with our personnel policies, as well as an $800 monthly
      automobile allowance.




Pursuant
      to the terms of the agreement, Mr. Walz may terminate his employment upon 60
      days’ prior written notice to us and upon 30 days’ written notice if the
      termination is for good reason. We may terminate his employment upon written
      notice without cause, or immediately upon written notice for cause. For purposes
      of the agreements, cause means (1) conviction of any felony; (2) the
      commission of an act of fraud, theft, dishonesty or breach of trust upon our
      company; (3) the intentional and wrongful disclosure to others, outside our
      company, of any secret or confidential information; or (4) willful refusal
      or gross neglect to perform the duties assigned to them, or to otherwise comply
      with the material provisions of the agreements. Good reason means (1) our
      material breach of the agreement that is not cured within 20 days after written
      notice to us; or (2) any failure by a successor of us to assume the
      obligations of the agreements.




72




Upon
      termination of employment for cause, or if Mr. Walz elects to terminate his
      employment without good reason, then he shall receive his accrued but unpaid
      base salary through the effective date of termination. If he is terminated
      without cause, or if either elects to terminate his employment for good reason,
      then he is entitled to his accrued but unpaid base salary through the effective
      date of termination, as well as an amount equal to 50% or his base salary.




In
      the
      event of a termination arising from a change in control, Mr. Walz is
      entitled to payment of accrued but unpaid base salary through the effective
      date
      of termination, payment of an amount equal to two times the then-base
      compensation, any vested amounts or benefits owed to him at the effective date
      of termination and the vesting of all options that would have become vested
      during the term of employment but for the termination of the officer. In the
      event of a change of control, Mr. Walz can elect to voluntarily terminate his
      employment and be entitled to this payment. For purposes of this agreement,
      change of control means (1) the sale of all or substantially all of our
      assets and business; or (2) any merger or consolidation involving our
      company, or sale or exchange of our capital stock, or similar transaction if,
      immediately following such transaction, 50% or more of the voting rights of
      the
      security holders of the surviving entity are held by a single holder who was
      not
      immediately prior to such transaction a holder of 50% or more of our voting
      securities.




Mr.
      Walz
      is bound by restrictive covenants pursuant to which he may not, during the
      term
      of the agreements or for a period of 24 months thereafter, be engaged in any
      capacity with any business that competes with our Company. In addition, he
      may
      not solicit any business from any of our customers or prospective customers,
      or
      solicit any of our employees, agents or contractors to terminate their
      relationship with us. He is also bound by nondisclosure of confidential
      information provisions, whereby he is prohibited from disclosing any of our
      confidential or proprietary information for the term of his employment or at
      any
      time following the termination of his employment.




Mr. Walz
      is entitled to indemnification from us to the fullest amount provided for in
      our
      certificate of incorporation and by-laws. Their right to indemnification
      survives the termination of the employment agreements.




**OUTSTANDING
      EQUITY AWARDS AT 2008 FISCAL YEAR END**




The
      following table shows the number of shares covered by exercisable and
      unexercisable options held by the Company’s Named Executive Officers on
      June 30, 2008. All options were granted under the Center for Wound Healing
      2006 Stock Option Plan, formerly called the Kevcorp Services Inc. 2006 Stock
      Option Plan. **** There
      were no stock awards outstanding on June 30, 2008.




73




**Option
                Awards****Name**
            
            **Number**
              **of**
              **Securities**
              **Underlying**
              **Unexercised**
              **Options**
              **(#)**
              **Exercisable**
            
            **Number
                of**
              **Securities**
              **Underlying**
              **Unexercised**
              **Options**
              **(#)**
              **Unexercisable**
            
            **Equity**
              **Incentive**
              **Plan Awards:**
              **Number
                of**
              **Securities**
              **Underlying**
              **Unexercised**
              **Unearned**
              **Options**
              **(#)**
            
            **Option**
              **Exercise**
              **Price**
              **($)**
            
            **Option**
              **Grant
                Date**
            
            **Option**
              **Expiration
                Date**Andrew
                G. Barnett
            
            
            400,000
            
            
            200,000
            (1)
            
            
            
            
            3.10
            (2)
            
            January
                3, 2007
            
            
            January
                3, 2017100,000
            
            
            
            
            
            300,000
            (3)
            
            3.10
            (2)
            
            January
                3, 2007
            
            
            January
                3, 2017David
                J. Walz
            
            
            160,000
            
            
            
            
            
            
            
            
            3.00
            
            
            April
                1, 2006
            
            
            April
                1, 201650,000
            
            
            
            
            
            
            
            
            4.00
            
            
            April
                1, 2006
            
            
            April
                1, 2016







(1)
            Of
                these options, 100,000 will vest on January 3, 2009 and 100,000 will
                vest on January 3, 2010.





(2)
            In
                accordance with the terms of the 2007 employment agreement, effective
                July
                21, 2008 the exercise price for Mr. Barnett’s options was reduced from
                $3.10 per share to $1.05 per share.





(3)
            100,000
                of these options will vest if the Company meets certain financial
                targets
                during fiscal 2009, 100,000 of these options will vest if the Company
                meets certain financial targets during fiscal 2010 and 100,000 of
                these
                options will vest if the Company meets certain financial targets
                during
                fiscal 2011.




**FISCAL
      2008 DIRECTOR COMPENSATION**




The
      following table sets forth the compensation paid to our non-executive officer
      directors in fiscal year 2008. Mr. Barnett’s compensation is set forth in the
      Fiscal 2008 Summary Compensation Table.





**Name**
            
            **Fees**
              **Earned
                or**
              **Paid
                in**
              **Cash**
              **($)**
            
            **Stock**
              **Awards**
              **($)**
            
            **Option**
              **Awards**
              **($)(1)**
            
            **Non-Equity**
              **Incentive
                Plan**
              **Compensation**
              **($)**
            
            **All
                Other**
              **Compensation**
              **($)**
            
            **Total**
              **($)**Paul
                Basmajian
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Louis
                Bissette
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —John
                Capotorto, M.D.
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            325,000
            (2)
            
            325,000John
                DeNobile
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Phillip
                Forman, M.D.
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            325,000
            (2)
            
            325,000David
                H. Meyrowitz
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Douglas
                B. Trussler
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —





(1)
            As
                of June 30, 2008, each of Messrs. Basmajian and Meyrowitz held 50,000
                vested options that expire on July 18, 2012. These are the only
                outstanding equity awards held by the directors listed in the table.
                In
                September 2008, the Board of Directors approved the re-pricing of
                the
                vested options to the current market value at the re-price date.
                The Board
                also issued an additional 60,000 options to Mr. Basmajian and 100,000
                options to Mr. Meyrowitz.




74




(2)
            Drs. Capotorto
                and Forman received $300,000 in salary and $25,000 for a car allowance
                for
                their service as Medical Director, a non-executive officer position.
                The
                employment agreements are described
                below.




***Employment
      Agreements for John Capotorto and Phillip Forman***





We
      have
      employment agreements with two of our directors that continue to serve as
      non-executive officers of the Company.




On
      December 1, 2005, our predecessor, American Hyperbaric, Inc., entered into
      short-term and long-term employment agreements with Dr. Phillip Forman and
      Dr.
      John Capotorto pursuant to which Dr. Forman agreed to serve as our Chief
      Executive Officer and Dr. Capotorto agreed to serve as our Chairman and Medical
      Director. The term of the short-term agreements was four months, commencing
      on
      December 1, 2005 and ending on April 1, 2006. The term of the long-term
      agreements is five years, commencing on April 1, 2006 and ending on April 1,
      2011. Both the short-term and long-term agreements are subject to earlier
      termination. As of January 3, 2007, Dr. Forman resigned as our Chief Executive
      Officer, although he remains a member of our board of directors.




Under
      the
      terms of the agreements, Doctors Forman and Capotorto received a base salary
      at
      the rate of $150,000 per year during the term of the short-term agreements,
      and
      will receive $300,000 per year during the term of the long-term agreements.
      In
      addition, Doctors Forman and Capotorto are eligible for all employee benefits
      made available generally to other senior executive officers, including
      participation in medical and life insurance programs and profit sharing plans,
      and may lease or purchase an automobile at our expense, provided such purchase
      or lease does not exceed $25,000 per year.




The
      agreements provide that we may terminate the employment of Doctors Forman and
      Capotorto for cause upon 15 days’ written notice. For the purpose of the
      agreements, cause means (1) conviction for fraud or a felony; (2) embezzlement;
      (3) willful and continued material failure to perform the duties and services
      required under the employment agreements for a continued period of 45 days
      following written notice thereof from us; or (4) the employee voluntarily
      leaving our employ other than for good reason. The employment agreements also
      provide that we may terminate the employment of Dr. Forman or Dr. Capotorto
      without cause, upon 30 days’ prior written notice to that employee. In addition,
      Dr. Forman or Dr. Capotorto may terminate his own employment, upon prior written
      notice to us, for good reason. For the purpose of the agreements, good reason
      means (1) a material adverse change in the employee’s title,
      responsibilities or assignment of duties inconsistent with, or adverse to,
      his
      current duties; (2) any failure by us to comply with the terms of the
      employment agreements; (3) any requirement by us that the employee’s office
      be located more than 15 miles from his or her current office; (4) any
      requirement that the employee travel in connection with his duties to any
      location located more than 15 miles from his or her current office
      location; or (5) 30 days following a material breach by us of our
      obligations under the employment agreements that is not cured within 15 days
      following receipt of written notice from the employee specifying such breach.




75




Upon
      a
      change of control of our Company, if (1) an employee is terminated by us at
      any time subsequent to a change of control, other than for cause; or (2) an
      employee voluntarily terminates such employment within one 180 subsequent to
      a
      change of control, then, in addition to any other amounts we may be obligated
      to
      pay that employee, we agree to pay to the employee within 10 days after such
      termination a lump sum payment in cash in an amount equal to 2.99 times the
      employee’s base salary. For purposes of the employment agreements, a change of
      control occurs if (1) any person or group of persons becomes the beneficial
      owner of more than 35% of our outstanding voting securities; or (2) when
      individuals who are members of the board of directors at any one time shall,
      within a period of 13 months thereafter, cease to constitute a majority of
      the board of directors except where such change is approved by a majority of
      such members of the board of directors who both are then serving as such and
      were serving as such at the beginning of the period.




Each
      of
      Doctors Forman and Capotorto is bound by a nondisclosure of confidential
      information provision included in the employment agreements, pursuant to which
      they may not disclose any confidential information about us, including our
      financial condition, our products and services, and information concerning
      the
      identity of individuals affiliated with us, during the term of his employment
      and for a period of five years thereafter. In addition, Doctors Forman and
      Capotorto agree to abide by the provisions of the covenants not to compete
      found
      in the employment agreements, pursuant to which they agree, during the period
      of
      employment with us and for a period of three years thereafter, not to engage
      as,
      among other things, an officer, director, employee, shareholder (other than
      ownership of less than 5% of the issued and outstanding stock of a public
      company) or consultant for any entity which is engaged in providing services
      in
      competition with our business.




Under
      the
      terms of the employment agreements, we agree to indemnify Dr. Forman, Dr.
      Capotorto to the maximum extent permitted by law against all claims, judgments,
      fines, penalties, liabilities, losses, costs and expenses (including reasonable
      attorneys’ fees) arising from their position as executive officers, or from acts
      or omissions made in the course of performing their duties for us. However,
      such
      indemnity does not apply to acts or omissions which constitute willful
      misconduct, gross negligence, or which resulted in an improper personal benefit
      for the employee. In addition, we agree to maintain directors’ and officers’
liability insurance on behalf of the employees.




**ITEM
              11.**
            **Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters:**




The
      following table sets forth certain information with respect to the beneficial
      ownership of The Center for Wound Healing’s Common Stock as of September 1, 2008
      by each director and named executive officer of the Company, all executive
      officers and directors as a group, and each person known to the Company to
      own
      beneficially more than 5% of the Common Stock.




76


**NAME AND ADDRESS OF BENEFICIAL OWNER(1)**
              
              **AMOUNT OF**
                **OWNERSHIP(2)(3)**
              
              **PERCENTAGE**
                **OF CLASS(4)**Andrew
                  G. Barnett
              
              
              500,000
              
              
              2.1
              %Paul
                  Basmajian
              
              
              166,667
              
              
              
              *Louis
                  Bissette
              
              
              –
              
              
              
              *John
                  Capotorto, M.D.
              
              
              4,409,292
              
              
              18.9
              %John
                  DeNobile
              
              
              1,976,297
              
              
              8.5
              %Phillip
                  Forman, M.D.
              
              
              3,909,292
              
              
              16.7
              %David
                  H. Meyrowitz
              
              
              70,000
              
              
              
              *Douglas
                  B. Trussler
              
              
              –
              
              
              
              *David
                  Walz
              
              
              210,000
              
              
              
              *Directors
                  and executive officers as a group (9 persons)
              
              
              11,574,660
              
              
              49.5
              %The
                  Elise Trust
              
              
              4,021,294
              
              
              17.2
              %





*
      Less
      than 1%





(1)
      Unless otherwise indicated, the address of each beneficial owner is c/o The
      Center for Wound Healing, Inc., 155 White Plains Road, Suite 200, Tarrytown,
      NY
      10591.





(2)
      Under
      the rules of the Securities and Exchange Commission, a person is deemed to
      be
      the beneficial owner of a security if that person, directly or indirectly has
      or
      shares the powers to direct the voting of the security or the power to dispose
      or direct the disposition of the security. Accordingly, more than one person
      may
      be deemed to be a beneficial owner of the same securities. A person is also
      deemed to be a beneficial owner of any securities with respect to which that
      person has the right to acquire beneficial ownership within 60 days of September
      1, 2008. Unless otherwise indicated by footnote, the named individuals have
      sole
      voting and investment power with respect to the shares of stock beneficially
      owned.





(3)
      Includes shares which may be acquired through stock options exercisable through
      October 30, 2008 in the following amounts: Barnett - 500,000; Basmajian -
      50,000; Meyrowitz - 50,000; and Walz - 210,000.





(4)
      Based
      on 23,373,281 shares of Common Stock issued and outstanding as of September
      1,
      2008.




77




**ITEM
      12.**  ****  **Certain
      Relationships and Related Transactions:**




In
      December 2007 and January 2008 the Company raised a total of $1.6 million from
      individual investors in the form of a short term unsecured note, (the “Bridge
      Financing Note”) the terms of which provided the lenders with interest paid in
      cash or in lieu of cash, warrants with an exercise price of $2. These funds
      were
      used to fund the $1.5 million payment due the Bondholders on or before January
      31, 2008 (of the $1.5 million, $1.2 million was used to retire principal and
      $300 thousand was paid for a consent fee). Prior to the payment in full of
      the
      Bondholders on March 31, 2008, the $1.6 million was held by an escrow agent
      and
      shown as Restricted Cash on the Company’s balance sheet. John Capotorto, the
      Company’s Co-Chief Compliance Officer and chairman of the board of directors;
      David Meyrowitz and Paul Basmajian, directors of the Company; and Andrew Barnett
      and Dave Walz, respectively, the chief executive officer and president of the
      Company collectively loaned the Company $600 thousand of the total $1.6 million
      raised. On January 25, 2008 the Company used $1.5 million of the Bridge
      Financing Note to pay the Bondholders and $100 thousand for working capital
      purposes. On March 31, 2008 the entire $1.6 million Bridge Financing Note was
      paid in full from the proceeds of the Bison financing.




**ITEM
      13.**  **Exhibits:**




The
      following exhibits are included as part of this Annual Report.


Exhibit No.
              
              Description of Exhibit2.1
              
              Agreement
                  and Plan of Reorganization dated October 28, 2005 between Kevcorp
                  Services, Inc. and American Hyperbaric, Inc. (incorporated by reference
                  to
                  Exhibit 10 to Form 10-QSB/A filed on November 1, 2005)2.2
              
              First
                  Amended and Restated Contribution Agreement dated as of June 16,
                  2006
                  between the Company, Joel Macher, Alan Richer, Braintree Hyperbaric,
                  LLC
                  and Far Rockaway Hyperbaric LLC (incorporated by reference to Exhibit
                  2.1
                  to Form 8-K filed on June 22, 2006)3.1
              
              Amended
                  and Restated Articles of Incorporation (incorporated by reference
                  to
                  Exhibit 3(i) to Form 10-KSB filed on April 10, 2008)3.2
              
              Amended
                  and Restated By-Laws (incorporated by reference to Exhibit 3.1
                  to Form 8-
                  filed on July 25, 2008)4.1†
              
              Securities
                  Purchase Agreement dated as of April 7, 2006 among the Company
                  and the
                  purchasers named therein with respect to $5.5 million principal
                  amount of
                  Debentures and Warrants to purchase common stock of the Company,
                  including
                  the form of Common Stock Purchase Warrant4.2†
              
              8%
                  Secured Convertible Debenture due April 7, 20074.3
              
              Securities
                  Purchase Agreement dated as of March 31, 2008 among the Company
                  and Bison
                  Capital Equity Partners II-A, L.P. and Bison Capital Equity Partners
                  II-B,
                  L.P. (“Bison”) (incorporated by reference to Exhibit 4.1 to Form 8-K filed
                  on April 7, 2008)
  78
  4.4
              
              15%
                  Senior Secured Subordinated Promissory Note in the principal amount
                  of $20
                  million due March 31, 2013 (incorporated by reference to Exhibit
                  4.2 to
                  the Current Report on Form 8-K filed on April 7, 2008)4.5
              
              Common
                  Stock Warrant Agreement dated as of March 31, 2008 among the Company
                  and
                  Bison, and the related Series W-1 and W-2 Warrants (incorporated
                  by
                  reference to Exhibits 4.3, 4.4 and 4.5 to the Current Report on
                  Form 8-K
                  filed on April 7, 2008)4.6
              
              Registration
                  Rights Agreement dated as of March 31, 2008 among the Company and
                  Bison
                  (incorporated by reference to Exhibit 4.6 to the Current Report
                  on Form
                  8-K filed on April 7, 2008)9.1
              
              Form
                  of Voting Agreement dated as of March 31, 2008 among the Company,
                  Bison
                  and certain shareholders of the Company (incorporated by reference
                  to
                  Exhibit 4.7 to the Current Report on Form 8-K filed on April 7,
                  2008)10.1*
              
              Employment
                  Agreement between American Hyperbaric, Inc. and Dr. John Capotorto
                  dated
                  December 1, 2005 (incorporated by reference to Exhibit 10.4 to
                  Form 10-QSB
                  filed February 21, 2006)10.2*
              
              Employment
                  Agreement between American Hyperbaric, Inc. and Dr. Phillip Forman
                  dated
                  December 1, 2005 (incorporated by reference to Exhibit 10.5 to
                  Form 10-QSB
                  filed February 21, 2006)10.3*
              
              Employment
                  Agreement between The Center for Wound Healing, Inc. and David
                  Walz, dated
                  April 1, 2006 (incorporated by reference to Exhibit 10.6 to Form
                  10-KSB
                  filed on April 10, 2008)10.4*
              
              Employment
                  Agreement between The Center for Wound Healing, Inc. and Andrew
                  Barnett,
                  dated January 3, 2007 (incorporated by reference to Exhibit 10.8
                  to Form
                  10-KSB filed on April 10, 2008)10.5*†
              
              Amended
                  and Restated Employment Agreement between The Center for Wound
                  Healing,
                  Inc. and Andrew Barnett executed July 21, 200810.6†
              
              2006
                  Stock Option Plan, as Amended and Restated July 21,
                  2008
  79
  10.7†
              
              Settlement
                  Agreement between the Company and Keith Greenberg, Elise Greenberg,
                  the
                  Elise Trust, Raintree Development, LLC, JD Keith LLC and Braintree
                  Properties LLC dated September 21, 200710.8†
              
              Settlement
                  Agreement between the Company and Med-Air Consultants, Inc., Alan
                  Richer
                  and Joel Macher dated August 9, 200710.9†
              
              Third
                  Amendment and Waivers to Amended and Restated Loan Agreement dated
                  May 29,
                  2007 by and among the Company, certain borrowers named therein
                  and
                  Signature Bank10.10†
              
              Seventh
                  Amendment to Amended and Restated Loan Agreement dated March 31,
                  2008 by
                  and among the Company, certain borrowers named therein and Signature
                  Bank14.1
              
              Code
                  of Ethics (incorporated by reference to Exhibit 99.1 to Form 10-KSB
                  filed
                  on September 24, 2004)21.1†
              
              Subsidiaries31.1†
              
              Certification
                  of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
                  Act.31.2†
              
              Certification
                  of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
                  Act.32.1†
              
              Certification
                  of Chief Executive Officer and Chief Financial Officer Pursuant
                  to Section
                  906 of the Sarbanes-Oxley Act.




†  Filed
      herewith




*  Management
      contract




80




**Item
      14. Principal Accounting Fees and Services:**




Fiscal
      Year Ended 2008




**(a)**
            **Audit
                Fees:**




Our
      principal accountant, RAICH ENDE MALTER & Co. LLP, billed us aggregate fees
      in the amount of approximately $668,000 for the fiscal year ended June 30,
      2008.
      These amounts were billed for professional services that Raich Ende Malter
&
Co. LLP provided for the audit of our annual financial statements, review of
      our
      interim financial information and other services typically provided by an
      accountant in connection with statutory and regulatory filings or engagements
      for this fiscal year.




**(c)**
            **Tax
                Fees:**




RAICH
      ENDE MALTER & Co. LLP billed us aggregate fees in the amount of $150,000 for
      the fiscal year ended June 30, 2008  for
      tax
      compliance.




**(d)**
            **All
                Other Fees:**




RAICH
      ENDE MALTER & Co. LLP billed us aggregate fees in the amount of $0 for the
      fiscal year ended June 30, 2008 for all other fees.




Fiscal
      Year Ended 2007




**(a)**
            **Audit
                Fees:**




Our
      principal accountant, RAICH ENDE MALTER & Co. LLP, billed us aggregate fees
      in the amount of approximately $1,000,000 for the fiscal year ended June 30,
      2007. These amounts were billed for professional services that Raich Ende Malter
      & Co. LLP provided for the audit of our annual financial statements, review
      of our interim financial information and other services typically provided
      by an
      accountant in connection with statutory and regulatory filings or engagements
      for this fiscal year.




**(c)**
            **Tax
                Fees:**




RAICH
      ENDE MALTER & Co. LLP billed us aggregate fees in the amount of $150,000 for
      the fiscal year ended June 30, 2007 for tax compliance.




**(d)**
            **All
                Other Fees:**




RAICH
      ENDE MALTER & Co. LLP billed us aggregate fees in the amount of $0.00 for
      the fiscal year ended June 30, 2007 for all other fees.




The
      Board
      of Directors has reviewed and discussed with the Company's management and
      auditors the audited consolidated financial statements of the Company contained
      in the Company's Annual Report on Form 10-KSB for the Company's 2008 fiscal
      year. The Board has also discussed with the auditors the matters required to
      be
      discussed pursuant to SAS No. 61 (Codification of Statements on Auditing
      Standards, AU Section 380), which includes, among other items, matters related
      to the conduct of the audit of the Company's consolidated financial
      statements.




81




Based
      on
      the review and discussions referred to above, the Board approved the inclusion
      of the audited consolidated financial statements be included in the Company's
      Annual Report on Form 10-KSB for its 2008 fiscal year for filing with the
      SEC.




The
      Board
      pre-approved all fees described above.




82


SIGNATURES




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.


Signature
              
              Title
              
              Date/s/
                  Andrew G. Barnett
              
              Chief
                  Executive Officer; Chief
              
              September
                  25, 2008Andrew
                  G. Barnett
              
              Financial
                  Officer;
  In
        accordance with the requirements of the Exchange Act, this report has been
        signed by the following persons on behalf of the registrant and in the
        capacities and on the dates indicated:
  Signature
              
              Title
              
              Date/s/
                  Andrew G. Barnett
              
              Chief
                  Executive Officer; Chief
              
              September
                  25, 2008Andrew
                  G. Barnett
              
              Financial
                  Officer; Director/s/
                  John DeNobile
              
              Director
              
              September
                  25, 2008John
                  DeNobile/s/
                  Dr. John Capotorto
              
              Director
              
              September
                  25, 2008Dr.
                  John Capotorto/s/
                  David H. Meyrowitz
              
              Director
              
              September
                  25, 2008David
                  H. Meyrowitz/s/
                  Paul Basmajian
              
              Director
              
              September
                  25, 2008Paul
                  Basmajian/s/
                  Dr. Phillip Forman
              
              Director
              
              September
                  25, 2008Dr.
                  Phillip Forman/s/Douglas
                  B. Trussler
              
              Director
              
              September
                  25, 2008Douglas
                  B. Trussler/s/Louis
                  Bissette
              
              Director
              
              September
                  25, 2008Louis
                  Bissette
  83