- Quarterly Report (10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010


o		TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-30326

FIRST PHYSICIANS CAPITAL GROUP, INC.

(Exact name of Registrant as Specified in its Charter)


DELAWARE		77-0557617

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

433 North Camden Drive #810
Beverly Hills, California		90210

(Address of principal executive offices)		(Zip Code)

(310) 860-2501
(Registrant’s Telephone Number, Including Area Code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. þ Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company þ
		(Do not check if a smaller reporting company)

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


Number of shares of common stock outstanding as of May 13, 2010			15,045,757

TABLE OF CONTENTS


	Page
PART I — FINANCIAL INFORMATION

Item 1. Financial Statements		3

Condensed Consolidated Balance Sheets March 31, 2010 (Unaudited) and September 30, 2009		3

Condensed Consolidated Statements of Operations (Unaudited) Three and Six months ended March 31, 2010 and March 31, 2009		5

Condensed Consolidated Statements of Cash Flows (Unaudited) Six months ended March 31, 2010 and March 31, 2009		6

Notes to Condensed Consolidated Financial Statements (Unaudited)		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item 3. Quantitative and Qualitative Disclosures About Market Risk		23

Item 4T. Controls and Procedures		23

PART II — OTHER INFORMATION

Item 1. Legal Proceedings		23

Item 1A. Risk Factors		23

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		24

Item 3. Defaults upon Senior Securities		24

Item 4. Submission of Matters to a Vote of Security Holders		24

Item 5. Other Information		24

Item 6. Exhibits		24

Signatures		30

Exhibit Index		31

Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I
FINANCIAL INFORMATION


Item 1.		Financial Statements

FIRST PHYSICIANS CAPITAL GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except shares and per share data)


	March 31,		September 30,
	2010		2009
	(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents	$	2,704	$	2,324
Restricted cash		—		1,523
Accounts receivable, net of allowance for uncollectible accounts		4,678		4,891
Prepaid expenses		496		111
Other current assets		1,871		1,772

Total current assets		9,749		10,621

Property and equipment, net		18,227		17,033
Goodwill		759		759
Other assets		1,207		1,078

Total assets	$	29,942	$	29,491


LIABILITIES, PREFERRED STOCK AND SHAREHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	4,419	$	3,598
Accrued expenses		3,237		3,515
Notes payable		—		4,309
Current maturities of long-term debt		1,339		1,028

Total current liabilities		8,995		12,450

Long-term debt, net of current portion		17,691		12,441
Deferred gain		1,749		—
Commitments and contingencies

The accompanying notes are an integral part of these condensed consolidated financial statements. Quarterly comparative financial information is based on unaudited financial reports, prepared by management, based on previous quarterly filings.

FIRST PHYSICIANS CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and per share data)


	March 31,			September 30,
	2010			2009
	(Unaudited)

Non-redeemable Preferred Stock:
Preferred stock Series 1-A ($0.01 par value, 67,600 shares authorized; 67,600 shares issued and outstanding as of March 31, 2010 and September 30, 2009)		166			166

Preferred stock Series 2-A ($0.01 par value, 3,900 shares authorized; 3,900 shares issued and outstanding as of March 31, 2010 and September 30, 2009)		25			25


Total non-redeemable preferred stock		191			191

Redeemable preferred stock:
Preferred stock Series 5-A ($0.01 par value, 9,000 shares authorized; 9,000 and 8,987 shares issued and outstanding as of March 31, 2010 and September 30, 2009, respectively)		7,832			7,819

Preferred stock Series 6-A ($0.01 par value, 5,000 shares authorized; 4,875 and 4,957 shares issued and outstanding as of March 31, 2010 and September 30, 2009, respectively)		4,381			4,463


Total redeemable preferred stock		12,213			12,282

Common stock ($0.01 par value, 100,000,000 shares authorized; 15,045,757 and 13,448,683 shares issued and outstanding as of March 31, 2010 and September 30, 2009, respectively)		152			136
Additional paid-in capital		78,673			77,109
Accumulated deficit		(90,980	)		(86,122	)
Treasury stock, at cost (93,494 shares as of March 31, 2010 and September 30, 2009)		(79	)		(79	)


Total First Physicians Capital Group shareholders’ deficit		(12,234	)		(8,956	)

Noncontrolling interests		1,337			1,083

Total shareholders’ deficit		(10,897	)		(7,873	)

Total liabilities, preferred stock and shareholders’ deficit	$	29,942		$	29,491

FIRST PHYSICIANS CAPITAL GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except share and per share data)

(Unaudited)


	Three Months Ended						Six Months Ended
	March 31,			March 31,			March 31,			March 31,
	2010			2009			2010			2009
Revenue from services	$	9,605		$	10,180		$	19,932		$	21,001


Costs and expenses:
Selling, general and administrative expenses		9,844			9,637			19,557			19,573
Provision for doubtful accounts		1,022			1,128			2,705			2,165
Amortization of stock-based compensation		267			208			546			516
Depreciation and amortization		351			271			671			502

Total costs and expenses		11,484			11,244			23,479			22,756


Operating loss		(1,879	)		(1,064	)		(3,547	)		(1,755	)

Other income (expense)		18			(221	)		454			(183	)
Interest expense		(516	)		(440	)		(1,222	)		(612	)

Net loss from operations before taxation and non-cash beneficial conversion feature		(2,377	)		(1,725	)		(4,315	)		(2,550	)
Taxation		—			—			—			—

Net loss	$	(2,377	)	$	(1,725	)	$	(4,315	)	$	(2,550	)
Net income attributable to Noncontrolling interest		(316	)		(142	)		(496	)		(236	)

Net loss attributable to First Physicians Capital Group		(2,693	)		(1,867	)		(4,811	)		(2,786	)
Non-cash beneficial conversion feature preferred dividend		(1	)		—			(47	)		—

Net loss attributable to First Physicians Capital Group common shareholders	$	(2,694	)	$	(1,867	)	$	(4,858	)	$	(2,786	)

Net loss per common share:
Basic	$	(0.18	)	$	(0.18	)	$	(0.33	)	$	(0.27	)
Diluted		N/A			N/A			N/A			N/A

FIRST PHYSICIANS CAPITAL GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Six months ended
	March 31,			March 31,
	2010			2009
Cash flows from operating activities:
Net loss	$	(4,811	)	$	(2,786	)
Adjustments to reconcile net loss to net cash used in operating activities:

Noncontrolling interest		496			236
Depreciation and amortization		671			502
Amortization of stock based compensation		546			516
Amortization of debt discount		522			166
Bad debt provision		2,705			2,165
Loss from sale of investments		—			281
Changes in working capital components:
Accounts receivable		(2,492	)		(2,615	)
Accounts payable and accrued expenses		543			333
Others		(613	)		(1,104	)


Net cash provided by (used in) operating activities		(2,433	)		(2,306	)


Cash flows from investing activities:
Purchase of property and equipment		(1,865	)		(3,744	)
Deferred gain from sale of property and equipment		1,749			—
Acquisition of subsidiaries, net of cash acquired		—			(50	)
Proceeds from sale of equity interests in consolidated affiliates		—			60
Decrease (Increase) in restricted cash		1,523			(8	)

Net cash provided by (used in) investing activities		1,407			(3,742	)


Cash flows from financing activities:
Drawdown on convertible loans		—			2,150
Repayment of notes payable		(4,348	)		(5,182	)
Proceeds from long-term debt		5,368			8,559
Distributions to noncontrolling interests		(243	)		(31	)
Proceeds from exercise of stock warrants		473			—
Issuance of common stock		100			—
Issuance of preferred stock Series 5-A, net of costs		13			—
Issuance of preferred stock Series 6-A, net of costs		43			—

Net cash provided by financing activities		1,406			5,496


Net increase (decrease) in cash and cash equivalents		380			(552	)


Cash and cash equivalents at beginning of period		2,324			2,970

Cash and cash equivalents at end of period	$	2,704		$	2,418

Cash paid for interest	$	628		$	587

During the six-month period ended March 31, 2009, there was a non-cash transaction which involved the purchase of the 49% minority interest in RHA (as that term is defined herein) for a promissory note of $1,800,000, with the first payment of $50,000 paid at closing.

During the six-month period ended March 31, 2010, the fair value of warrants issued in conjunction with the extension of the convertible notes which were issued in connection with the bridge financing we entered into during the Fiscal Year Ended September 30, 2009 amounted to $291,000.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of First Physicians Capital Group, Inc., f/k/a Tri-Isthmus Group, Inc., a Delaware corporation (the “ Company ,” “ we ,” “ us ,” or “ our ,” depending on the context), as of March 31, 2010 and September 30, 2009 and for the six-month periods ended March 31, 2010 and March 31, 2009, respectively, have been prepared on substantially the same basis as our annual consolidated financial statements and should be read in conjunction with our Annual Report on Form 10-K (the “ Form 10-K ”), filed with the United States Securities and Exchange Commission (the “ SEC ”) on January 12, 2010, and any amendments thereto, for the year ended September 30, 2009. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to present fairly the financial information included herein.

The consolidated financial statements include our accounts and the accounts of our subsidiaries. All significant intercompany balances and transactions have been eliminated.

The results as of September 30, 2009 have been derived from our audited consolidated financial statements for the fiscal year ended as of such date.

The unaudited consolidated results for interim periods are not necessarily indicative of expected results for the full fiscal year.

Name Change

Effective November 18, 2008, our subsidiary, Rural Health Acquisition, LLC, an Oklahoma limited liability company (“ RHA ”) added the trade name “Southern Plains Medical Group,” under which RHA conducts its business.

On September 29, 2009, at our Annual Meeting of Stockholders, our stockholders voted to amend our Certificate of Incorporation to change our legal name from “Tri-Isthmus Group, Inc.” to “First Physicians Capital Group, Inc.” to reflect our focus on the healthcare industry. We became First Physicians Capital Group, Inc. on September 29, 2009.

Future Funding

We have sustained operating losses since inception and had an accumulated deficit of approximately $91.0 million as of March 31, 2010. This deficit has been funded primarily through preferred stock financing, sales of promissory notes and cash generated from operations.

At March 31, 2010, we had current liabilities of $9.0 million and current assets of $9.7 million.

We will need additional capital to continue to maintain and expand our operations and will endeavor to raise funds through the sale of equity shares and other types of securities, issuance of debt and revenues from operations, but despite our efforts we may not generate revenues from operations or obtain sufficient capital on acceptable terms, if at all. If we cannot obtain such capital or generate such operating revenues it would have an adverse impact on our financial position and results of operations and ability to continue as a going concern. Our operating capital and capital expenditure requirements will vary based on a number of factors, including the level of sales and marketing activities for our services and products and there can be no assurance that additional private or public financings, including debt or equity financing, will be available as needed, or, if available, on terms favorable to us. To the extent we use debt financing, if available, we will have to pay interest and we may have to agree to restrictive covenants that could impose limitations on our operating flexibility. If we cannot successfully obtain additional future funding it may jeopardize our ability to continue our business and operations.

We believe that we have adequate funding from the operations of our subsidiary, RHA, our Del Mar, California ambulatory surgical center (the “ Del Mar Ambulatory Surgical Center ”) and cash and cash equivalents for us to continue in operation for at least 12 months from the balance sheet date. Therefore, we have prepared our financial statements on a going-concern basis.

Our investment and acquisition targets will continue to derive their working capital from their respective operations or financing efforts. Our management will seek to assist our subsidiaries to expand their access to working capital as appropriate.

Reclassifications

Certain reclassifications have been made to the prior period amounts in order to conform to the current period presentation.

Critical Accounting Policies

For critical accounting policies affecting us, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the fiscal year ended September 30, 2009 (the “ Fiscal Year Ended September 30, 2009 ”). Critical accounting policies affecting us have not changed materially since September 30, 2009.

Recent Accounting Pronouncements

In December 2007, the FASB issued guidance on “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51.” This guidance requires companies with noncontrolling interests to disclose such interests clearly as a portion of equity but separate from the parent’s equity. The noncontrolling interest’s portion of net income must also be clearly presented on the income statement. This is effective for financial statements issued for fiscal years beginning after December 15, 2008 and was adopted by us in the first quarter of fiscal year 2010. The adoption of this standard did not have a material impact on our financial condition or results of operations.

In December 2007, the FASB issued updated guidance on business combinations. This guidance applies the acquisition method of accounting for business combinations where the acquirer gains a controlling interest, regardless of whether consideration was exchanged. The updated guidance requires the acquirer to fair value the assets and liabilities of the acquiree and record goodwill on bargain purchases and is effective for financial statements issued for fiscal years beginning after December 15, 2008 and was adopted by us in the first quarter of 2010. The adoption of this standard did not have a material impact on our financial condition or results of operations.

Fair Value of Financial Instruments

In accordance with the reporting requirements of FASB ASC Topic 825-10-50, Disclosures about Fair Value of Financial Instruments, we calculate the fair value of its assets and liabilities which qualify as financial instruments under this topic and includes this additional information in the notes to consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair values of accounts receivable, accounts payable, and other current assets and accrued liabilities approximate their carrying amounts due to the relatively short maturity of these instruments. The carrying value of long-term debt approximates market value due to the use of market interest rates.

2. Net Loss Per Share


	Three Months ended						Six Months ended
	(in thousands)						(in thousands)
	March 31,			March 31,			March 31,			March 31,
	2010			2009			2010			2009
Numerator for basic and diluted loss per share:
Net loss attributable to common shareholders	$	(2,694	)	$	(1,867	)	$	(4,858	)	$	(2,786	)

Denominator for basic (loss)/profit per share — weighted average shares		15,005,446			10,322,929			14,589,354			10,322,929
Effect of dilutive shares
Employee stock options		N/A			N/A			N/A			N/A
Preferred stock		N/A			N/A			N/A			N/A
Warrants		N/A			N/A			N/A			N/A

Net (loss)/profit per common share:
Basic and diluted	$	(0.18	)	$	(0.18	)	$	(0.33	)	$	(0.27	)

As we had a net loss for the three and six months ended March 31, 2010 and March 31, 2009, respectively, potential shares of common stock equivalents outstanding are excluded from the computation of diluted net loss per share as their effect is anti-dilutive.

3. Accounts Receivable

Accounts receivable consisted of the following (in thousands):


	March 31,			September 30,
	2010			2009
Gross patient accounts receivable	$	23,343		$	18,470
Reserves for bad debt		(6,111	)		(3,842	)
Reserves for contractual allowances		(12,554	)		(9,737	)
Patient accounts receivable, net	$	4,678		$	4,891

4. Other Current Assets

Other current assets consisted of the following (in thousands):


	March 31,		September 30,
	2010		2009
Deposits	$	120	$	120
Medical supplies		505		510
Other receivables		1,246		1,142

Total other current assets	$	1,871	$	1,772

5. Property and Equipment

Property and equipment consisted of the following (in thousands):


	March 31,			September 30,
	2010			2009
Computer hardware	$	95		$	92
Furniture, fixtures and medical equipment		4,560			4,458
Land		1,029			834
Buildings		14,796			13,340
Construction in progress		—			124
Leasehold improvements		944			944
Accumulated depreciation		(3,197	)		(2,759	)

Property and equipment, net	$	18,227		$	17,033

6. Acquisitions

On December 11, 2008, we entered into a membership interest purchase agreement, pursuant to which RHA repurchased the 49% of the issued and outstanding voting membership units of RHA owned by Ms. Carol Schuster, for an aggregate purchase price of $1,800,000 (the “ Membership Interest Purchase Agreement ”). In connection with the repurchase, RHA issued a promissory note, and we entered into a guarantee agreement of RHA’s obligations under the Membership Interest Purchase Agreement. This resulted in additional property and equipment of $1.3 million and goodwill of $209,000. In the Fiscal Year Ended September 30, 2009, we determined that an impairment on the goodwill recorded had occurred. An impairment charge of $209,000 was recorded in the Fiscal Year Ended September 30, 2009.

7. Bridge Financing and Unregistered Sales of Equity Securities

During the Fiscal Year Ended September 30, 2009, we entered into a bridge financing transaction (the “ Bridge Financing ”) which was consummated in three separate closings. On February 11, 2009, we completed the first closing of the Bridge Financing, a transaction in which we entered into the following two promissory notes, each dated as of February 6, 2009: (i) a convertible promissory note with SMP Investments I, LLC, a Michigan limited liability company (“ SMP ”), in the principal amount of $500,000 and (ii) a convertible promissory note with Anthony J. Ciabattoni, Trustee of the Ciabattoni Living Trust, dated August 17, 2000 (“ Ciabattoni ”), in the principal amount of $1,000,000 (collectively, the “ Bridge Notes ”). SMP and Ciabattoni are each a “ Bridge Lender ” and are collectively referred to herein as the “ Bridge Lenders .”

On February 11, 2009, in addition to the issuance of the Bridge Notes, we issued four warrants to purchase our Common Stock, par value $0.01 per share (the “ Common Stock ”), to the Bridge Lenders as follows: (i) a warrant issued to SMP for the purchase of up to 375,000 shares of Common Stock at an initial exercise price of $0.50 per share and exercisable for a period of three years from the date of issuance; (ii) a warrant issued to SMP for the purchase of up to 250,000 shares of Common Stock at an initial exercise price of $0.75 per share and exercisable for a period of three years from the date of issuance; (iii) a warrant issued to Ciabattoni for the purchase of up to 750,000 shares of Common Stock at an initial exercise price of $0.50 per share and exercisable for a period of three years from the date of issuance; and (iv) a warrant issued to Ciabattoni for the purchase of up to 500,000 shares of Common Stock at an initial exercise price of $0.75 per share and exercisable for a period of three years from the date of issuance.

Each Bridge Note became due and payable on November 6, 2009 (the “ Bridge Financing Maturity Date ”); we extended these notes under the terms of an extension option contained in the Bridge Notes. Pursuant to the terms of the extension option, we are required to issue warrants to the Bridge Lenders to purchase shares of Common Stock in the following amounts in the event that we choose to exercise the option to extend: (i) to SMP, 125,000 shares at a price of $0.50 per share, and 83,333 shares at a price of $0.75 per share and (ii) to Ciabattoni, 250,000 shares at a price of $0.50 per share, and 166,667 shares at a price of $0.75 per share. On the Bridge Financing Maturity Date, we will pay the unpaid principal of each Bridge Note, together with accrued and unpaid interest of 16% per annum. The new due date of the Bridge Notes pursuant to the extension option was February 6, 2010.

The Bridge Lenders have agreed to extensions as follows: the maturity date of the promissory note held by SMP, in the principal amount of $500,000, is extended to August 6, 2011; the maturity date of the promissory note held by Ciabattoni, in the principal amount of $1,000,000, is extended to February 6, 2013. Effective February 1, 2010, the interest rate is changed from 16% to 10% per annum for the Bridge Notes.

The Bridge Notes include a conversion feature allowing each Bridge Lender to convert all or any portion of the entire unpaid principal and any unpaid accrued interest at the date upon which the conversion is to be effected into a number of shares of Common Stock, determined by dividing the sum of the unpaid principal and unpaid accrued interest at the conversion date by the conversion price in effect at the conversion date. The initial conversion price is $0.625, which price is adjustable as set forth in the Bridge Notes.

The Bridge Notes include a provision granting the Bridge Lenders, to the extent that the Bridge Lenders holding notes representing a majority of the aggregate outstanding principal amount of the Bridge Notes agree, demand registration rights with respect to the resale of the shares of Common Stock that would be issuable upon conversion of the Bridge Notes, which rights vest thirty six (36) months after the date of issuance of the Bridge Notes. The registration statement would be prepared by us at our expense and filed on Form S-1 or other appropriate form and, once declared effective, allow the registered securities to be sold on a continuous basis. In such circumstances, we would keep the registration statement continuously effective until certain conditions are met which would allow us to stop maintaining its effectiveness.

Each Second Bridge Note became due and payable on December 3, 2009 (the “ Second Bridge Maturity Date ”); provided, however, that each of the Second Bridge Notes contained an extension option to extend such note for an additional three months at our discretion. The Second Bridge Notes include a conversion feature allowing each Second Bridge Lender to convert all or any portion of the entire unpaid principal and any unpaid accrued interest at the date upon which the conversion is to be effected into a number of shares of Common Stock, determined by dividing the sum of the unpaid principal and unpaid accrued interest at the conversion date by the conversion price in effect at the conversion date. The initial conversion price is $0.625, which price is adjustable as set forth in the Second Bridge Notes. We extended the Second Bridge Notes under the terms of an extension option contained in the Second Bridge Notes. By exercising this option, we are required to issue warrants to the Second Bridge Lenders to purchase an aggregate of 208,333 shares of our Common Stock, 125,000 shares of which will be issued at an exercise price of $0.50 per share and 83,333 shares of which will be issued at an exercise price of $0.75 per share. The new due date for the Second Bridge Notes pursuant to the extension option was March 3, 2010. The Second Bridge Lenders have agreed to an additional extension period for the notes ranging from eighteen to thirty-six months from the March 3, 2010 due date and also agreed to a reduction in the annual interest rate from 16% to 10%.

The Second Bridge Notes also include a provision granting the Second Bridge Lenders, to the extent holders of a majority of the aggregate outstanding principal amount of the Bridge Notes and Second Bridge Notes agree, demand registration rights with respect to the resale of the shares of Common Stock that would be issuable upon conversion of the Second Bridge Notes, which rights vest thirty-six (36) months after the date of issuance of the Second Bridge Notes. The registration statement would be prepared by us at our expense and filed on Form S-1 or other appropriate form and, once declared effective, allow the registered securities to be sold on a continuous basis and we will keep the registration statement continuously effective until certain conditions are met which would allow us to stop maintaining its effectiveness.

The Darras Note and the SFV Note became due and payable on December 31, 2009 and the Katz Note became due and payable on January 14, 2010 (collectively, the “ Third Bridge Maturity Dates ”); provided, however, that the term of each of the Third Bridge Notes contained an extension option to extend such notes for an additional three months at our discretion. We extended the Darras Note and the SFV Note under the terms of the respective options, and therefore are obligated to issue warrants to Darras and SFV as follows: (i) Darras — 25,000 shares at an exercise price of $0.50 per share, and 16,667 shares at an exercise price of $0.75 per share; (ii) SFV — 12,500 shares at an exercise price of $0.50 per share, and 8,333 shares at an exercise price of $0.75 per share. We extended the Katz Note under the terms of an extension option contained in the Katz Note. By exercising this option, we are required to issue warrants to Katz to purchase an aggregate of 20,833 shares of our Common Stock, 12,500 shares of which will be issued at an exercise price of $0.50 per share and 8,333 shares of which will be issued at an exercise price of $0.75 per share. The new due date of the Third Bridge Notes, pursuant to the extension option for the Darras Note and the SFV Note was March 31, 2010 and April 14, 2010 for the Katz Note. The Third Bridge Lenders have agreed to an additional extension period for the notes ranging from eighteen to thirty-six months from the March 31, 2010 and April 14, 2010 due dates and also agreed to a reduction in the annual interest rate from 16% to 10%.

The Third Bridge Notes include a conversion feature allowing each Third Bridge Lender to convert all or any portion of the entire unpaid principal and any unpaid accrued interest at the date upon which the conversion is to be effected into a number of shares of Common Stock, determined by dividing the sum of the unpaid principal and unpaid accrued interest at the conversion date by the conversion price in effect at the conversion date. The initial conversion price is $0.625, which price is adjustable as set forth in the Third Bridge Notes.

The Third Bridge Notes include a provision granting the Third Bridge Lenders, to the extent the holders of a majority of the aggregate outstanding principal amount of the notes issued in the Bridge Financing agree, demand registration rights with respect to the resale of the shares of Common Stock that would be issuable upon conversion of the Third Bridge Notes, which rights vest thirty-six (36) months after the date of issuance of the Third Bridge Notes. The registration statement would be prepared by us at our expense and filed on Form S-1 or other appropriate form and, once declared effective, allow the registered securities to be sold on a continuous basis and we will keep the registration statement continuously effective until certain conditions are met which would allow us to stop maintaining its effectiveness.

The fair value of the warrants issued in conjunction with the convertible notes issued under the Bridge Financing amounted to $932,000, and the fair value of the warrants issued in conjunction with the extension of the Bridge Notes, the Second Bridge Notes, the Darras Note, the SFV Note and the Katz Note amounted to $291,000. The beneficial conversion feature associated with the convertible notes issued in conjunction with the Bridge Financing totaled $253,000. Both the fair value of the warrants issued under the Bridge Financing and the subsequent extension of the Bridge Notes, the Second Bridge Notes the Darras Note, the SFV Note and the Katz Note, as well as the beneficial conversion feature, will be amortized over the term of the loans. Amortization for the fiscal quarter ended December 31, 2009 and March 31, 2010 was $359,000 and $163,000, respectively.

Unregistered Sales of Equity Securities

On December 14, 2009, we entered into a Series 5-A Preferred Stock and Warrant Purchase Agreement with David Hirschhorn, our chief executive officer, whereby we issued and sold an additional 6 shares of our Series 5-A Convertible Preferred Stock, par value $0.01 per share and 3,600 warrants to purchase shares of Common Stock at an exercise price of $0.50 per share, exercisable for a period of two years from the date of issuance, in a private placement for an aggregate purchase price of $6,000. The transaction closed on December 14, 2009.

8. Long-term Debt

Long-term debt consists of the following (in thousands):


	March 31,			September 30,
	2010			2009

Note payable, secured by equipment, $4,558 payable monthly, including 8.25% interest through September 2011	$	63		$	89

8% Notes payable to prior shareholders for stock repurchases, six notes outstanding at March 31, 2010, unsecured, maturity dates ranging from 2010 through 2017		238			260

Note payable, secured by real estate, $36,736 payable monthly, including interest based on Wall Street Journal prime plus 2% adjusted quarterly, floor of 7%, rate is currently 7%, matures January 2030		4,682			—

Note payable, secured by equipment, $2,825 payable monthly, including 13.6% interest through April 2010		—			14

Note payable secured by real estate, $27,513 payable monthly, including interest based on Wall Street Journal prime plus 2% adjusted quarterly, floor of 7%, rate is currently 7%, matures November 2028		3,408			3,453

Note payable secured by real estate, $34,144 payable monthly, including interest based on Wall Street Journal prime plus 2% adjusted quarterly, floor of 7%, rate is currently 7%, matures November 2024		3,431			3,513

Note payable secured by real estate, $9,327 payable monthly, including interest based on Wall Street Journal prime plus 2% adjusted quarterly, floor of 7%, rate is currently 7%, matures November 2028		1,155			1,164

Note payable, secured by equipment, $2,660 payable monthly including 5.3% interest through March 2013		86			99

Note payable, 5% interest payable quarterly, unsecured, matures on or before December 11, 2011		1,500			1,500

Capitalized lease obligations — five leases for buildings and medical equipment with imputed interest rates ranging from 4% to 17.2%, maturing at various dates through 2013		255			300

Note payable, secured by equipment, $2,413 payable monthly, including 7.04% interest through March 2011		26			39

Note payable, secured by equipment, $7,530 payable monthly, including 6.75% interest through June 15, 2013		262			298

Notes payable, two (2) notes, secured by equipment, $5,116 payable monthly, including 7.05% interest through March, 2011		55			83

Note payable, 10% interest, unsecured, matures on or before December 3, 2012, face value $1.5 million less beneficial conversion feature and debt discount of $84,000 at September 30, 2009		1,500			1,416

Notes payable, 16% interest, unsecured, matures on or before December 31, 2011, face value $.7 million less beneficial conversion feature and debt discount of $1,000 at March 31, 2010		699			—

Note payable, unsecured, non-interest bearing purchase obligation, annual payments of $50,000, August 2010, $33,333, August 2011, $33,333, August 2012 and $33,334, August 2013		150			150

Note payable, unsecured, 11.25% interest, matures October 2012		931			1,027

Note payable, unsecured 11.25% interest, matures March 2013		533			—

Note payable, secured by equipment, $1,567 payable monthly, including 6.75% interest through July 2013		56			64


Total		19,030			13,469

Less current maturities of long-term debt		(1,339	)		(1,028	)


Total long-term debt	$	17,691		$	12,441

The following chart shows scheduled principal payments due on long-term debt for the next five years and thereafter:


March 31,	Payments
2011	$	1,339
2012		3,960
2013		2,170
2014		599
2015		572
Thereafter		10,390

Total	$	19,030

9. Noncontrolling Interests

Noncontrolling interest attributable to equity interests not held by us in RHA, the Del Mar Ambulatory Surgical Center and Southern Plains Associates, LLC, an Oklahoma limited liability company (“ SPA ”),during the six months ended March 31, 2010 amounted to $496,000, compared to $236,000 for the six months ended March 31, 2009. Noncontrolling interest has increased at our Del Mar Ambulatory Surgical Center from 44% at March 31, 2009 to 65% at March 31, 2010 primarily as a result of sales of our equity interest, but we have retained voting control.

On December 11, 2008, we entered into a Membership Interest Purchase Agreement with RHA, pursuant to which RHA repurchased the 49% of the noncontrolled issued and outstanding voting membership units of RHA for an aggregate purchase price of $1,800,000. In connection with the repurchase, RHA issued a promissory note, and we entered into a limited guaranty agreement of RHA’s obligations under the promissory note.

10. Warrants

Outstanding exercisable warrants consisted of the following as of March 31, 2010:


	Remaining	Exercise
Description	Life	Price		Warrants
September 30, 2007 Preferred Stock Series 5-A warrants issued to investor	1 year	$	0.50		150,000
September 30, 2008 warrants issued in connection with notes payable	1 year		0.31		1,980,000
September 30, 2008 warrants issued in connection with notes payable	1year		0.50		1,237,500
September 30, 2008 Preferred Stock Series 5-A warrants issued to investor and placement agent	1 year		0.50		2,736,000
September 30, 2008 Preferred Stock Series 6-A warrants issued to investor	1 year		0.50		3,589,200
September 30, 2008 Preferred Stock Series 5-A warrants issued to placement agent	3 years		0.50		436,250
February 6, 2009 warrants issued in connection with notes payable	2 years		0.50		1,125,000
February 6, 2009 warrants issued in connection with notes payable	2 years		0.75		750,000
March 3, 2009 warrants issued in connection with notes payable	2 years		0.50		375,000


	Remaining	Exercise
Description	Life	Price		Warrants
March 3, 2009 warrants issued in connection with notes payable	2 years		0.75		250,000
March 16, 2009 warrants issued to advisory board	2 years		0.63		125,000
March 31, 2009 warrants issued in connection with notes payable	2 years		0.50		112,500
March 31, 2009 warrants issued in connection with notes payable	2 years		0.75		75,000
April 14, 2009 warrants issued in connection with notes payable	2 years		0.50		37,500
April 14, 2009 warrants issued in connection with notes payable	2 years		0.75		25,000
June 8, 2009 Preferred Stock Series 6-A warrants issued to investor	3 years		0.50		210,000
June 10, 2009 warrants issued to Medical Advisory Board	3 years		0.63		50,000
October 19, 2009 Preferred Stock Series 5-A warrants issued to investor	2 years		0.50		25,800
October 19, 2009 Preferred Stock Series 6-A warrants issued to investor	2 years		0.50		4,200
November 6, 2009 warrants issued in connection with notes payable	3 years		0.50		375,000
November 6, 2009 warrants issued in connection with notes payable	3 years		0.75		250,000
December 3, 2009 warrants issued in connection with notes payable	3 years		0.50		125,000
December 3, 2009 warrants issued in connection with notes payable	3 years		0.75		83,331
December 2, 2009 warrants issued in connection with issuance of common stock	2 years		0.50		60,000
December 14, 2009 Preferred Stock Series 6-A warrants issued to investor	2 years		0.50		3,600
December 31, 2009 warrants issued in connection with notes payable	3 years		0.50		37,500
December 31, 2009 warrants issued in connection with notes payable	3 years		0.75		24,999
January 14, 2010 warrants issued in connection with notes payable	3 years		0.50		12,500
January 14, 2010 warrants issued in connection with notes payable	3 years		0.75		8,333


					14,274,213

A summary of our stock warrant activity and related information at March 31, 2010 and September 30, 2009 is as follows:


							Weighted-Average
	Number of Shares of Common Stock						Exercise Price Per Share
	Six months						Six months
	ended			Year ended			ended		Year ended
	March 31,			September 30,			March 31,		September 30,
	2010			2009			2010		2009
Warrants outstanding at beginning of the period		14,405,435			11,795,035		$	0.49	$	0.46
Issued		1,010,263			3,235,000			0.59		0.60
Reinstated		—			166,400			—		0.48
Exercised		(1,045,685	)		(525,000	)		0.45		0.50
Cancelled or expired		—			(266,000	)		—		0.48


Warrants outstanding at end of the period		14,370,013			14,405,435		$	0.50	$	0.49

All warrants have a two-year to five-year expiration. The warrant fair value was determined by using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include (i) risk-free interest rate between 1.1% and 4.5%; (ii) expected warrant life equal to the actual remaining life of the warrants as of the period end; (iii) expected volatility between 52%-212%; and (iv) zero expected dividends.

11. Stock Options

On December 29, 2009, in connection with Dan Chen’s employment agreement, we entered into an Option Grant Agreement with Mr. Chen effective as of December 29, 2009, under which we granted to Mr. Chen an incentive stock option to purchase up to 500,000 shares of Common Stock, at an exercise price of $0.625 per share, which option shall expire on December 29, 2016. Mr. Chen’s option to purchase Common Stock vests incrementally on the following vesting schedule: (1) the option to purchase up to 100,000 shares vested immediately on December 29, 2009; (2) an option to purchase up to 100,000 shares vest incrementally on each anniversary date of the Date of Grant thereafter (with the final options vesting on the fourth anniversary date of the Date of Grant). The amortization recognized in connection with this option for the three and six month periods ended March 31, 2010 was $11,500 and $57,500, respectively.

The following summarizes activities under the stock option plans:


							Weighted-Average
	Number of Options						Exercise Price Per Share
	March 31,			September 30,			March 31,		September 30,
	2010			2009			2010		2009
Options outstanding at beginning of the period		8,249,002			7,333,750		$	0.62	$	0.59
Granted
— at above fair market value		500,000			1,839,390			0.63		0.63
— at fair market value		—			—			—		—
— at below fair market value					—			—		—
Exercised		—			—			—		—
Cancelled		—			—			—		—
Forfeited		(161,322	)		(924,138	)		0.63		0.40


Options outstanding at end of the period		8,587,680			8,249,002		$	0.62	$	0.62


Options vested/exercisable at end of the period		2,222,793			2,037,613		$	0.59	$	0.59

12. SPMC Sale/Leaseback

On January 13, 2010, Southern Plains Medical Center (“ SPMC ”), our indirect wholly-owned subsidiary, entered into a sale/leaseback transaction pursuant to a purchase agreement, whereby SPMC sold certain property to SPA.

The purchase price for the sale/leaseback transaction was paid to SPMC as follows: (i) $1,500,000 was paid in the form of a promissory note, dated January 13, 2010, and (ii) $4,500,000 was paid in cash at the closing. Our wholly-owned subsidiary, First Physicians Realty Group, LLC, an Oklahoma limited liability company, owns 50% of SPA, and Capital Investors of Oklahoma, LLC, an Oklahoma limited liability company, owns 50% of SPA. First Physicians Realty Group, LLC has controlling interest in SPA and is therefore consolidated into First Physicians Capital Group, Inc.

In connection with the purchase agreement, SPMC leased the SPMC the property sold from SPA, pursuant to a lease agreement dated December 16, 2009. The lease agreement provides for a 20-year term with an automatic 10-year renewal.

The $4,500,000 in cash proceeds was used to pay-off short-term debt associated with the property sold in the amount of $3,700,942 plus related interest. SPMC received net proceeds of $732,221 after retirement of the debt and other associated closing costs. Restricted cash on deposit with the debt holder and pledged as security on the debt in the amount of $1,524,091 was released and returned to us.

More detailed information regarding this transaction can be found in our Current Report on Form 8-K, filed with the SEC on January 20, 2010.

13. Subsequent Events

Exercise of Warrants

On May 21, 2010, we accepted warrant exercises in the amount of 60,000 shares (the “ Warrant Exercise Shares ”) of Common Stock, for an aggregate purchase price of $30,000 from one investor. The Warrant Exercise Shares were issued pursuant to the exercise of a warrant to purchase shares of Common Stock at an exercise price of $0.50 per share, in connection with the private placement of our Series 5-A Preferred Stock and warrants to purchase Common Stock. The investor represented to us in writing that he is an ”Accredited Investor,” as that term is defined in Rule 501(a) of Regulation D, promulgated under the Securities Act of 1933, as amended (the “ Securities Act ”). The offers and sales of the Warrant Exercise Shares pursuant to the warrant exercises were exempt from the registration and prospectus delivery requirements of the Securities Act, by virtue of Section 4(2) of the Securities Act and Regulation D promulgated thereunder.

Bridge Financing

The Second Bridge Lenders and the Third Bridge Lenders agreed to extend their notes for eighteen to thirty-six months for their latest due date. They also agreed to a reduction in the annual interest rate from 16% to 10%.


Item 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the related notes appearing elsewhere herein.

FORWARD LOOKING STATEMENTS

Depending on the market for our stock and other conditional tests, a specific safe harbor under the Private Securities Litigation Reform Act of 1995 may be available. The discussion in this Form 10-Q contains forward-looking statements made pursuant to such safe harbor provisions, and such statements should not be unduly relied upon. Forward-looking statements can be identified by the use of words such as ”may,” ”will,” ”could,” ”should,” ”anticipates,” ”believes,” ”estimates,” ”expects,” ”intends,” ”plans” and variations thereof or of similar expressions. All forward-looking statements included in this Form 10-Q are based on information available to us on the date hereof. We assume no obligation to update any such forward-looking statements. Our actual results in future periods could differ materially from those indicated in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, possession of significant voting control over us by the holders of our Series 5-A Preferred Stock and Series 6-A Convertible Preferred Stock, par value $0.01 per share, our limited cash resources, our ability to redirect and finance our business, our significant corporate expenses and expenses related to the United States Securities and Exchange Commission (the “ SEC ”) and limited revenue to offset these expenses, availability of appropriate prospective acquisitions or investment opportunities, litigation, other risks discussed in our Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2009 under the heading ”Risk Factors” and the risks discussed in our other SEC filings.

OVERVIEW

References to ”we,” ”us,” ”our,” ”FPCG” or the ”Company” refer to First Physicians Capital Group, Inc. and its subsidiaries. We maintain our executive offices at 433 North Camden Drive, #810, Beverly Hills, California 90210. Our telephone number is +1 (310) 860-2501, and our website is at www.firstphysicianscapitalgroup.com .

We invest in and provide financial and managerial services to healthcare facilities in non-urban markets. We promote quality medical care by offering improved access and breadth of services. We unlock the value of our investments by developing strong, long-term and mutually beneficial relationships with our physicians and the communities they serve.

This Form 10-Q report covers the six-month period ended March 31, 2010.

Information in this Form 10-Q is current as of May 21, 2010, unless otherwise specified.

CURRENT OPERATIONS

We focus on the delivery of financial and managerial services to healthcare facilities in non-urban markets.

Our support staff at hospitals owned by Rural Health Acquisition, LLC, an Oklahoma limited liability company (“ RHA ”), and our Del Mar, California ambulatory surgical center (the “ Del Mar Ambulatory Surgical Center ”) consists of registered nurses, operating room technicians, an administrator who supervises the day-to-day activities and a small number of office staff. Each operating unit also has appointed a medical director, who is responsible for and supervises the quality of medical care provided at the center. Use of our surgery center is limited to licensed physicians. Our business depends upon the efforts and success of these employee and non-employee physicians who provide medical services at our facilities. Our business could be adversely affected by the loss of our relationship with, or a reduction in use of our facilities by, a key physician or group of physicians.

STRATEGY

Our initial strategy was to identify and invest in ”platform” companies in the business services and healthcare industries that provided essential core offerings, which could be expanded over time. As we focused our efforts in the healthcare industry, two particular segments—ambulatory surgical centers and rural hospitals—stood out in terms of fundamentally-favorable economics, positive regulatory trends, inherent cost advantages, improving demographics and, for non-urban healthcare opportunities, a large, chronically under-served market. We determined that the top-down trends and attractive cash flows of ambulatory surgical centers made this an area of particular interest. We determined that focusing on rural healthcare would represent a significant long-term opportunity for us. We believe that we have identified a differentiated approach based on the recognition that the physician is at the center of the healthcare industry. Our operating philosophy is tied to a belief that the provision of flexible financial solutions to rural hospitals and ambulatory surgical centers through the alignment of our interests with those of the physicians will result in a strong, predictable cash flow stream with excellent risk-adjusted returns.

Our strategy has evolved from a focus on investment in ”platform” strategies in the business services and healthcare industries to a concentration on healthcare and ancillary services, targeting companies valued at $3 million to $50 million. In particular, we actively seek to build a portfolio of interests in healthcare services operations, including rural hospitals, ambulatory surgical centers, surgical hospitals and other healthcare delivery platforms operating in partnership with physicians.

In line with our strategy, we re-branded our activities. The operations in non-urban markets previously known as RHA were re-branded “Southern Plains Medical Group” to leverage the old and well-established recognition that Southern Plains Medical Center (“ SPMC ”), our indirect wholly-owned subsidiary, has in the regional markets. In addition, we changed our name from “Tri-Isthmus Group, Inc.,” to “First Physicians Capital Group, Inc.” at our annual meeting in 2009 on September 29, 2009 to reflect our focus on healthcare.

Part of our strategy to increase our revenues and earnings is through the continuing acquisition of interests in rural hospitals, physician practices, ambulatory surgical centers, surgical hospitals and other healthcare delivery platforms operating in partnership with physicians’ ambulatory surgical centers. Our efforts to execute our acquisition and development strategy may be affected by our ability to identify suitable candidates and negotiate and close acquisition and development transactions, and we are currently evaluating some potential acquisitions and development projects and expect to continue to evaluate acquisitions and development projects in the foreseeable future. We may not be successful in acquiring additional companies or achieving satisfactory operating results at acquired or newly developed facilities and the businesses we acquire may experience losses in their early months of operation, may never become profitable or may not ultimately produce returns that justify our related investment. If we are unable to execute our acquisition and development strategy, our ability to increase revenues and earnings through future growth would be impaired.

Our portfolio is expected to consist of (i) majority interests in healthcare platforms or facilities, such as RHA, the Del Mar Ambulatory Surgical Center and SPMC; and (ii) equity positions in a diversified portfolio of minority interests in ambulatory surgical centers with a history of positive cash flows. In addition, we expect to selectively invest in business solutions providing financial and processing services to healthcare providers and physicians and in support of new treatment solutions.

We will need additional capital to continue to maintain and expand our operations and will endeavor to raise funds through the sale of equity shares and other types of securities, issuance of debt and revenues from operations, but despite our efforts we may not generate revenues from operations or obtain sufficient capital on acceptable terms, if at all. If we can not obtain such capital or generate such operating revenues it would have an adverse impact on our financial position and results of operations and ability to continue as a going concern. Our operating capital and capital expenditure requirements will vary based on a number of factors, including the level of sales and marketing activities for our services and products and there can be no assurance that additional private or public financings, including debt or equity financing, will be available as needed, or, if available, on terms favorable to us. To the extent we use debt financing, if available, we will have to pay interest and we may have to agree to restrictive covenants that could impose limitations on our operating flexibility. If we cannot successfully obtain additional future funding it may jeopardize our ability to continue our business and operations.

RECENT DEVELOPMENTS

Exercise of Warrants

On January 20, 2010, we accepted warrant exercises in the aggregate amount of 181,400 shares of our Common Stock (as defined below) (the “ First Warrant Exercise Shares ”), for an aggregate purchase price of $84,450 from four investors. The First Warrant Exercise Shares were issued pursuant to the exercise of i) four Advisory Board warrants to purchase shares of Common Stock at an exercise price of $0.45 per share, one of which was issued on December 12, 2006, and three of which were issued on September 13, 2007, in consideration for the strategic advice and assistance provided to us by the four investors on our Advisory Board; and ( ii) a warrant to purchase shares of Common Stock at an exercise price of $0.50 per share, in connection with the private placement of our Series 5-A Preferred Stock and warrants to purchase Common Stock. Each of the investors represented to us in writing that he is an ”Accredited Investor,” as that term is defined in Rule 501(a) of Regulation D, promulgated under the Securities Act of 1933, as amended (the “ Securities Act ”). The offers and sales of the First Warrant Exercise Shares pursuant to the warrant exercises were exempt from the registration and prospectus delivery requirements of the Securities Act, by virtue of Section 4(2) of the Securities Act and Regulation D promulgated thereunder.

On May 21, 2010, we accepted warrant exercises in the amount of 60,000 shares (the “ Second Warrant Exercise Shares ”) of our Common Stock, for an aggregate purchase price of $30,000 from one investor. The Second Warrant Exercise Shares were issued pursuant to the exercise of a warrant to purchase shares of Common Stock at an exercise price of $0.50 per share, in connection with the private placement of our Series 5-A Preferred Stock and warrants to purchase Common Stock. The investor represented to us in writing that he is an ”Accredited Investor,” as that term is defined in Rule 501(a) of Regulation D, promulgated under the Securities Act. The offers and sales of the Second Warrant Exercise Shares pursuant to the warrant exercises were exempt from the registration and prospectus delivery requirements of the Securities Act, by virtue of Section 4(2) of the Securities Act and Regulation D promulgated thereunder.

Bridge Financing

On February 11, 2009, in addition to the issuance of the Bridge Notes, we issued four warrants to purchase Common Stock, par value $0.01 per share (the “ Common Stock ”), to the Bridge Lenders as follows: (i) a warrant issued to SMP for the purchase of up to 375,000 shares of Common Stock at an initial exercise price of $0.50 per share and exercisable for a period of three years from the date of issuance; (ii) a warrant issued to SMP for the purchase of up to 250,000 shares of Common Stock at an initial exercise price of $0.75 per share and exercisable for a period of three years from the date of issuance; (iii) a warrant issued to Ciabattoni for the purchase of up to 750,000 shares of Common Stock at an initial exercise price of $0.50 per share and exercisable for a period of three years from the date of issuance; and (iv) a warrant issued to Ciabattoni for the purchase of up to 500,000 shares of Common Stock at an initial exercise price of $0.75 per share and exercisable for a period of three years from the date of issuance.

Each Bridge Note became due and payable on November 6, 2009 (the “ Bridge Financing Maturity Date ”); we extended these notes under the terms of an extension option contained in the Bridge Notes. Pursuant to the terms of the extension option, we are required to issue warrants to the Bridge Lenders to purchase shares of Common Stock in the following amounts in the event that we choose to exercise the option to extend: (i) to SMP, 125,000 shares at a price of $0.50 per share, and 83,333 shares at a price of $0.75 per share and (ii) to Ciabattoni, 250,000 shares at a price of $0.50 per share, and 166,667 shares at a price of $0.75 per share. On the Bridge Financing Maturity Date, we will pay the unpaid principal of each Bridge Note, together with accrued and unpaid interest of 16% per annum. The new due date of the Bridge Notes, pursuant to the extension option was February 6, 2010.

The Bridge Lenders have agreed to further extensions as follows: the maturity date of the promissory note held by SMP, in the principal amount of $500,000, is extended to August 6, 2011; the maturity date of the promissory note held by Ciabattoni, in the principal amount of $1,000,000, is extended to February 6, 2013. Effective February 1, 2010, the interest rate is changed from 16% to 10% per annum for the Bridge Notes.

On March 3, 2009, we completed the second closing of the Bridge Financing, a transaction in which we entered into nine (9) promissory notes, each dated as of March 3, 2009, in the aggregate principal amount of $500,000 (the “ Second Bridge Notes ”), with various investors (the “ Second Bridge Lenders ”).Each Second Bridge Note became due and payable on December 3, 2009 (the “ Second Bridge Maturity Date ”); provided, however, that each of the Second Bridge Notes contained an extension option to extend such note for an additional three months at our discretion. The Second Bridge Notes include a conversion feature allowing each Second Bridge Lender to convert all or any portion of the entire unpaid principal and any unpaid accrued interest at the date upon which the conversion is to be effected into a number of shares of Common Stock, determined by dividing the sum of the unpaid principal and unpaid accrued interest at the conversion date by the conversion price in effect at the conversion date. The initial conversion price is $0.625, which price is adjustable as set forth in the Second Bridge Notes. We extended the Second Bridge Notes under the terms of an extension option contained in the Second Bridge Notes. By exercising this option, we are required to issue warrants to the Second Bridge Lenders to purchase an aggregate of 208,333 shares of our Common Stock, 125,000 shares of which will be issued at an exercise price of $0.50 per share and 83,333 shares of which will be issued at an exercise price of $0.75 per share. The new due date for the Second Bridge Notes pursuant to the extension option was March 3, 2010. The Second Bridge Lenders have agreed to an additional extension period for the notes ranging from eighteen to thirty-six months from the March 3, 2010 due date and also agreed to a reduction in the annual interest rate from 16% to 10%.

On April 14, 2009, we completed the third closing of the Bridge Financing, a transaction in which we entered into the following three (3) promissory notes: (i) a convertible promissory note, dated as of March 31, 2009, with Frank Darras, Trustee of the Darras Family Trust (“ Darras ”), in the principal amount of $100,000 (the “ Darras Note ”); (ii) a convertible promissory note, dated as of March 31, 2009, with SFV, Inc., a California corporation (“ SFV ”), in the principal amount of $50,000 (the “ SFV Note ”) and (iii) a convertible promissory note, dated as of April 14, 2009, with NFS LLC/FMTC Rol IRA FBO Neal Katz (“ Katz ”), in the principal amount of $50,000 (the “ Katz Note ”) (collectively, the “ Third Bridge Notes ”). Darras, SFV and Katz are each a “ Third Bridge Lender ” and are collectively referred to herein as the “ Third Bridge Lenders .”The Darras Note and the SFV Note became due and payable on December 31, 2009 and the Katz Note became due and payable January 14, 2010 (collectively, the “ Third Bridge Maturity Dates ”); provided, however, that the term of each of the Third Bridge Notes contained an extension option to extend such notes for an additional three months at our discretion. We extended the Darras Note and the SFV Note under the terms of the respective options, and therefore are obligated to issue warrants to Darras and SFV as follows: (i) Darras — 25,000 shares at an exercise price of $0.50 per share, and 16,667 shares at an exercise price of $0.75 per share; (ii) SFV — 12,500 shares at an exercise price of $0.50 per share, and 8,333 shares at an exercise price of $0.75 per share. We extended the Katz Note under the terms of an extension option contained in the Katz Note. By exercising this option, we are required to issue warrants to Katz to purchase an aggregate of 20,833 shares of our Common Stock, 12,500 shares of which will be issued at an exercise price of $0.50 per share and 8,333 shares of which will be issued at an exercise price of $0.75 per share. The new due date of the Third Bridge Notes, pursuant to the extension option for the Darras Note and the SFV Note was March 31, 2010 and April 14, 2010 for the Katz Note. The Third Bridge Lenders have agreed to an additional extension period for the notes ranging from eighteen to thirty-six months from the March 31, 2010 and April 14, 2010 due dates and also agreed to a reduction in the annual interest rate from 16% to 10%.

The fair value of the warrants issued in conjunction with the convertible notes issued under the Bridge Financing amounted to $932,000, and the fair value of the warrants issued in conjunction with the extension of the Bridge Notes, the Second Bridge Notes, the Darras Note, and the SFV Note amounted to $283,000. The beneficial conversion feature associated with the convertible notes issued in conjunction with the Bridge Financing totaled $252,000. Both the fair value of the warrants issued under the Bridge Financing and the subsequent extension of the Bridge Notes, the Second Bridge Notes, the Darras Note and the SFV Note, as well as the beneficial conversion feature, will be amortized over the term of the loans. Amortization for the six-month period ended March 31, 2010 was $163,000.

Subsequent to the balance sheet date, the Second Bridge Lenders and the Third Bridge Lenders agreed to extend their notes for eighteen to thirty-six months from their latest due date. They also agreed to a reduction in the annual interest rate from 16% to 10%.

Decrease of Series 7-A Convertible Preferred Stock

On January 22, 2010, we filed a Certificate of Decrease of Shares Designated as Series 7-A Convertible Preferred Stock with the Secretary of State of Delaware, which decreased the number of 7-A Preferred from 20,000 shares to zero shares. The 20,000 shares of 7-A Preferred have been returned to the status of authorized but unissued shares of the Registrant’s preferred stock. The 7-A Preferred had previously been designated, but no shares of 7-A Preferred were ever issued, and our Board of Directors subsequently retired the designation.

SPMC Sale/Leaseback

More detailed information regarding this transaction can be found in our Current Report on Form 8-K, filed with the SEC on January 20, 2010.

RESULTS OF OPERATIONS

MATERIAL CHANGES IN RESULTS OF OPERATIONS

REVENUE

Revenue from services was $9.6 million for three-month period ended March 31, 2010, compared to $10.2 million for the three-month period ended March 31, 2009 representing a decrease of $0.6 million, or 5.9%. Revenue from services was up $0.4 million at our Del Mar Ambulatory Surgical Center. The increase was primarily due to an increase in case volume. Additionally we saw an increase over the three-month period ended March 31, 2009 of $0.2 million due to the acquisition of The Chandler Clinic in Chandler, Oklahoma (“ The Chandler Clinic ”) in May 2009. These increases were offset by decreases in revenue from services of $1.1 million at our critical access hospitals and $0.1 million at our other clinics, due to lower number of days spent at our facilities by patients, reduced rates from governmental programs and an increase in outpatient services that are reimbursement rates from governmental payors. For the six-month periods ended March 31, 2010 and March 31, 2009 revenue from services was $19.9 million at March 31, 2010, compared to $21.0 million for March 31, 2009 representing a decrease of $1.1 million, or 5.2%. Revenue from services was up $1.3 million at our Del Mar Ambulatory Surgical Center. The increase was primarily due to an increase in case volume. Additionally we saw an increase over the six-month period ended March 31, 2009 of $0.5 million due to the acquisition of The Chandler Clinic in May 2009. These increases were offset by decreases in revenue from services of $2.4 million at our critical access hospitals and $0.5 million at our other clinics, due to lower number of days spent at our facilities by patients, a decrease in patient clinical visits, reduced rates from governmental programs and an increase in outpatient services that are reimbursement rates from governmental payors. The remaining difference is due to a decrease in other non-patient service revenue.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses relating to operations increased by $0.2 million, from $9.6 million in the three-month period ended March 31, 2009 to $9.8 million in the three-month period ended March 31, 2010, representing a 2.1% increase. The increase resulted primarily from $0.3 million in additional expenses associated with The Chandler Clinic that was purchased in May 2009, offset by net reductions of $0.1 million in other selling, general and administrative expenses. Selling, general and administrative expenses remained unchanged for the six-month period ended March 31, 2010 as compared to the six-month period ended March 31, 2009. Expenses related to The Chandler Clinic $0.6 million were offset by net reductions in other selling, general and administrative expenses.

PROVISION FOR DOUBTFUL ACCOUNTS

Provision for doubtful accounts decreased from $1.1 million in the three-month period ended March 31, 2009 to $1.0 million in the three-month period ended March 31, 2010, a decrease of $0.1 or 9.1%. The decrease was primarily due to decrease in revenue for services. The provision for doubtful accounts increased from $2.2 million for the six-month period ended March 31, 2009 to $2.7 million for the six-month period ended March 31, 2010. This represents a $0.5 million or 22.7% increase. Revenue from private pay uninsured patients at our critical access hospitals increased approximately 1% or $0.2 million as compared to the six-month period ended March 31, 2009.

OTHER INCOME (EXPENSE)

Other income (expense) was $18,000 for the three-month period ended March 31, 2010 and was an expense of ($221,000) for the three-month period ended March 31, 2009. The $239,000 change is primarily due to a loss of $281,000 resulting from the sale of equity interests in the Del Mar Ambulatory Surgical Center recorded in the three-month period ended March 31, 2009 . Other income (expense) was ($183,000) for the six-month period ended March 31, 2009 and $454,000 income in the six -month period ended March 31, 2010. This represents an increase of $637,000, or 348.1%. This increase is primarily due to $429,000 of insurance proceeds received in the six-month period ended March 31, 2010 and the absence of the loss on the sale of equity interest that occurred in the prior year. The insurance proceeds were a reimbursement for tornado damage at one of our critical access hospitals.

INTEREST EXPENSE

Interest expense increased to $0.5 million for the three-month period ended March 31, 2010 as compared to $0.4 for the three-month period ended March 31, 2009. This represents an increase of $0.1 million or 25.0%. The increase in interest expense is primarily due to additional interest on the Bridge Financing. Interest expense increased to $1.2 million for the six-month period ended March 31, 2010, compared to $0.6 million for the six-month period ended March 31, 2009. This represents an increase of $0.6 million or 100.0%. The increase in interest expense arose primarily from (i) increased borrowings under the loans entered into in December 2008; (ii) the Bridge Financing in February, March and April 2009; and (iii) the amortization of the loan discount and beneficial conversion feature associated with those borrowings. Amortization for the six months ended March 31, 2010 was $522,000.

BASIC WEIGHTED-AVERAGE NUMBER OF COMMON STOCK OUTSTANDING

The weighted average number of shares outstanding was 15,005,446 and 10,322,929 for the three-month periods ended March 31, 2010 and March 31, 2009, respectively The weighted average number of share was 14,589,354 and 10,322,929 for the six-month periods ended March 31, 2010 and March 31, 2009, respectively. The weighted average number of shares increased as a result of the conversion of preferred shares to common stock, as well as the exercise of warrants.

MATERIAL CHANGES IN FINANCIAL CONDITION — AT MARCH 31, 2010, COMPARED TO SEPTEMBER 30, 2009:

CASH AND CASH EQUIVALENTS

As of March 31, 2010, cash and cash equivalents totaled $2.7 million, an increase of $0.4 million when compared with the $2.3 million on hand at September 30, 2009. This represents a change of 17.4%. Contributing to the increase was $1.5 million in restricted cash on deposit with a debt holder and pledged as security that was released and returned to us as a result of the SPMC Sale/Leaseback transaction described in the ”Recent Developments” section of this Form 10-Q. Net cash provided from financing activities of $1.4 million offset by cash used in other investing activities of 0.1 million and $2.4 million cash used for operations resulted in a decrease of $1.1 million.

ACCOUNTS RECEIVABLES

As of March 31, 2010, accounts receivables, net of reserves for third-party contractual adjustments and allowance for uncollectible accounts, totaled $4.7 million, a decrease of $0.2 million from $4.9 million at September 30, 2009. This represents a change of 4.1%. The decrease in accounts receivable was the result of increased cash collections during the current period and the $1.0 million decrease in revenue in the six-month period ended March 31, 2010.

PREPAID EXPENSES

As of March 31, 2010, prepaid expenses totaled $0.5 million, an increase of $0.4 million from $0.1 million at September 30, 2009. This represents a change of 400.0%. The increase arose primarily from the purchase of additional prepaid insurance.

OTHER CURRENT ASSETS

As of March 31, 2010, other current assets totaled $1.9 million, an increase of $0.1 million from $1.8 million at September 30, 2009. This represents a change of 5.6%. The increase arose primarily from a cash advance in the amount of $0.1 million to our minority partner in SPA during the current period.

ACCOUNTS PAYABLE

As of March 31, 2010, accounts payable totaled $4.4 million, compared to $3.6 million at September 30, 2009. This represents an increase of $0.8 million, or 22.2%. Of this increase, $0.1 million is attributable to an increase in refunds due to patients and other third parties. The remainder is due to normal operational fluctuations.

ACCRUED EXPENSES

As of March 31, 2010, accrued expenses totaled $3.2 million, compared to $3.5 million at September 30, 2009. This represents a decrease of $0.3 million or 8.6%. The decrease is primarily attributable to a reduction in accrued professional fees and other accrued expenses of $0.2 million and a decrease in funds received in advance for the exercise of stock warrants of $0.1 million.

NOTES PAYABLE

At September 30, 2009 notes payable consisted of Bridge Financing promissory notes with a face value of $0.7 million and $3.6 million in short-term debt related to the SPMC building and property, which was paid-off in the current period. Please refer to the SPMC Sale/Leaseback transaction described in the ”Recent Developments” section of this Form 10-Q. The Bridge Financing promissory notes have been extended.

INFLATION

Inflation has had a net neutral impact on our revenues and expenses. We expect future payment contracts from third parties and future supplies and cost of operations to increase or decrease proportionally in the future.

LIQUIDITY AND CAPITAL RESOURCES

Our cash and cash equivalents totaled $2.7 million as of March 31, 2010, as compared to $2.3 million at September 30, 2009, a decrease of $0.4 million. As of September 30, 2009, we had working capital deficit of $(1.8) million compared with $0.7 million of working capital at March 31, 2010. As of March 31, 2010, we had a shareholders’ deficit of ($12.2) million, as compared to a shareholders’ deficit of $9.0 million as of September 30, 2009. The increase in shareholders’ deficit arose primarily from operating losses.

Net cash provided by investing activities in the six-month period ended March 31, 2010 was $1.4 million, as compared with net cash used of $3.7 million in the six-month period ended March 31, 2009. This change was primarily due to the purchase of property for our hospital located in Stroud, Oklahoma and the acquisition of the membership units in RHA.

Cash generated in respect of financing activities totaled $1.4 million in the six-month period ended March 31, 2010, as compared with $5.5 million at March 31, 2009. The change was principally derived from the proceeds of debt instruments decreasing in the six-month period ended March 31, 2010, as compared with the proceeds of debt instruments in the six-month period ended March 31, 2009.

As of March 31, 2010 we had current liabilities of $9.0 million and current assets of $9.7 million, including $2.7 million in cash and cash equivalents, compared to current liabilities of $12.4 million and current assets of $10.6 million, including $2.3 million in cash and cash equivalents, as of September 30, 2009. The increase in working capital is a result of restricted cash released in the amount of $1.5 million that was pledged as security on debt related SPMC Building and Property and the reduction of $3.6 million of short-term debt related to the SPMC building and property. Please see SPMC Sale/Leaseback in the ”Recent Developments” section of this Form 10-Q.

We have sustained operating losses since our inception and had an accumulated deficit of approximately $91.0 million as of March 31, 2010, as compared with an accumulated deficit of $86.1 million as of September 30, 2009. These losses have been funded principally through the issuance of preferred stock, the issuance of promissory notes and cash generated from operations.

We are unaware of any trends, demands, events or uncertainties that will result in a material change in our liquidity or capital resources, nor do we expect any changes in the cost of our capital resources.

OFF-BALANCE SHEET FINANCING

None.


Item 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.


Item 4T.		CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures : As of the end of the period covered by this report, an evaluation was carried out by our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. Based on our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our controls and procedures were effective as of the end of the period covered by this report.

(b) Changes in Internal Control Over Financial Reporting : There have been no changes in our internal control over financial reporting during the fiscal quarter ended March 31, 2010 that have a material effect on our internal control over financial reporting.

PART II
OTHER INFORMATION


Item 1.		LEGAL PROCEEDINGS

None.


Item 1A.		RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, ”Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, 2009, which could materially affect our business, financial condition or future results. Except as set forth below, we are currently unaware of any material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2009; however, additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

We cannot predict the effect that health care reform and other changes in government programs may have on our business, financial condition, results of operations or cash flows.

In March of 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, “ PPACA ”) was signed into law. The PPACA dramatically alters the United States health care system and is intended to decrease the number of uninsured Americans and reduce overall health care costs, in part through an overall reduction in Medicare and Medicaid program spending. The PPACA contains a number of provisions designed to significantly reduce Medicare and Medicaid program spending, including reductions in Medicare market basket updates for hospice providers that are scheduled to take effect on October 1, 2012. The PPACA also contains a number of measures that are intended to reduce fraud and abuse in the Medicare and Medicaid programs, such as requiring the use of recovery audit contractors in the Medicaid program and the expansion of False Claims Act liability for the knowing failure to report and return an overpayment within 60 days of identifying the overpayment or by the date a corresponding cost report is due, whichever is later.

It is difficult to predict the full impact of the PPACA due to the law’s complexity and current lack of implementing regulations or interpretive guidance. Furthermore, many of the provisions of the PPACA will not become effective until October 1, 2012 or later and could be delayed or even blocked due to court challenges. Additionally, there may be efforts to repeal or amend the law. Because much of our revenues are derived from government health care programs, principally Medicare and Medicaid, reductions in amounts paid by government programs for our services or changes in regulations or other Medicare or Medicaid requirements governing payments or delivery of care could cause our net patient service revenue and profits to materially decline.


Item 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.


Item 3.		DEFAULTS UPON SENIOR SECURITIES

None.


Item 4.		SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


Item 5.		OTHER INFORMATION

None.


Item 6.		EXHIBITS

The following documents are filed as exhibits to this Form 10-Q (exhibits marked with an asterisk (*) have been previously filed with the SEC as indicated and are incorporated herein by reference):


Exhibit No.			Description

	2.1	*	Membership Interest Purchase Agreement (filed as Exhibit 2.1 to the Form 8-K, as filed with the SEC on November 5, 2007)

	3.1	*	Certificate of Incorporation (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on November 14, 2000)

	3.2	*	Amended and Restated Bylaws dated October 25, 2002 (filed as Exhibit 3.2 to the Form 8-K, as filed with the SEC on October 28, 2002)

	3.3	*	Certificate of Designation of Rights and Preferences of Series 2-A Convertible Preferred Stock filed November 8, 2000 (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on November 14, 2000)

	3.4	*	Certificate of Merger filed November 8, 2000, merging Vsource, Inc. (a Nevada corporation) with and into the Vsource, Inc. (a Delaware corporation) (filed as Exhibit 4.2 to the Form 8-K, as filed with the SEC on November 14, 2000)

	3.5	*	Agreement and Plan of Merger dated as of December 14, 2000, among the Registrant, OTT Acquisition Corp., Online Transaction Technologies, Inc. and its Shareholders (filed as Exhibit 10.11 to the Form 10-Q, as filed with the SEC on December 15, 2000)

	3.6	*	Certificate of Designation of Rights and Preferences of Series 3-A Convertible Preferred Stock filed June 20, 2001 (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on July 2, 2001)


Exhibit No.			Description

	3.7	*	Amendment to Certificate of Incorporation, dated January 16, 2002 (filed as Exhibit 3.3 to the Form 8-K, as filed with the SEC on January 23, 2002)

	3.8	*	Certificate of Designation of Rights and Preferences of Series 4-A Convertible Preferred Stock (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on October 28, 2002)

	3.9	*	Amendment to Certificate of Incorporation, dated November 20, 2002 (filed as Exhibit 3.1 to the Form 10-Q for the period ending October 31, 2002, as filed with the SEC on December 5, 2002)

	3.10	*	Certificate of Designation of Rights and Preferences of Series 5-A Convertible Preferred Stock (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on July 21, 2005)

	3.11	*	Amendment to Certificate of Incorporation, dated December 16, 2005 (filed as Exhibit 3.5 to the Form 10-Q for the period ending October 31, 2005, as filed with the SEC on December 20, 2005)

	3.12	*	Certificate of Amendment to the Certificate of Designation of Rights and Preferences Series 5-A Convertible Preferred Stock filed January 10, 2008 (filed as Exhibit B to the Form of Series 5-A Preferred Stock and Warrant Purchase Agreement, filed as Exhibit 10.52 herein)

	3.13	*	Certificate of Designation of Rights and Preferences of Series 6-A Convertible Preferred Stock filed April 2, 2008 (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on April 3, 2008)

	3.14	*	Certificate of Amendment to the Certificate of Designation of Rights and Preferences of Series 5-A Convertible Preferred Stock filed May 15, 2008 (filed as Exhibit 4.2 to the Form 10-Q, as filed with the SEC on May 20, 2008)

	3.15	*	Certificate of Amendment to the Certificate of Designation of Rights and Preferences of Series 6-A Convertible Preferred Stock filed May 15, 2008 (filed as Exhibit B to the Form of Series 6-A Preferred Stock and Warrant Purchase Agreement, filed as Exhibit 10.54 herein)

	3.16	*	Amendment to Certificate of Incorporation, dated September 29, 2009 (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on October 1, 2009)

	3.17	*	Certificate of Decrease of Shares Designated as Series 7-A Convertible Preferred Stock, dated and filed January 22, 2010 (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on January 28, 2010)

	4.1	*	Certificate of Decrease of Shares Designated as Series 1-A Convertible Preferred Stock (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on July 13, 2005)

	4.2	*	Certificate of Decrease of Shares Designated as Series 2-A Convertible Preferred Stock (filed as Exhibit 4.2 to the Form 8-K, as filed with the SEC on July 13, 2005)

	4.3	*	Certificate of Decrease of Shares Designated as Series 3-A Convertible Preferred Stock (filed as Exhibit 4.3 to the Form 8-K, as filed with the SEC on July 13, 2005)

	4.4	*	Certificate of Decrease of Shares Designated as Series 4-A Convertible Preferred Stock (filed as Exhibit 4.4 to the Form 8-K, as filed with the SEC on July 13, 2005)

	4.5	*	Series 5-A Preferred Stock and Warrant Purchase Agreement, dated as of July 7, 2005, by and among Vsource, Inc. and the investors listed therein (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on July 21, 2005)

	4.6	*	Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on July 21, 2005)

	4.7	*	Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on August 23, 2005)


Exhibit No.			Description

	4.8	*	Series 5-A Preferred Stock and Warrant Purchase Agreement, dated as of September, 18, 2006, by and among First Physicians Capital Group, Inc. and certain Series 5-A Preferred Stock Investors (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on September 22, 2006)

	4.9	*	Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on September 22, 2006)

	4.10	*	Amended and Restated Articles of Organization of Rural Hospital Acquisition LLC (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on November 5, 2007)

	4.11	*	Amended and Restated Operating Agreement Rural Hospital Acquisition LLC (filed as Exhibit 4.2 to the Form 8-K, as filed with the SEC on November 5, 2007)

	4.12	*	Form of Extension of Warrant, dated July 18, 2007 (filed as Exhibit 4.1 to Form 8-K as filed with the SEC on December 18, 2008)

	10.1	*	Form of First Group Notes (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on November 2, 2007)

	10.2	*	Form of Second Group Notes (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on November 2, 2007)

	10.3	*	Form of First Group Warrants (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on November 2, 2007)

	10.4	*	Form of Second Group Warrants (filed as Exhibit 10.4 to the Form 8-K, as filed with the SEC on November 2, 2007)

	10.5	*	Form of Limited Guaranty by Tri-Isthmus Group, Inc. (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on November 5, 2007)

	10.6	*	Employment Agreement of Dennis M. Smith, dated effective as of October 10, 2007 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on December 21, 2007)

	10.7	*	Option Agreement of Dennis M. Smith, dated effective as of October 10, 2007 (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on December 21, 2007)

	10.8	*	Series 5-A Preferred Stock and Warrant Purchase Agreement, dated January 14, 2008 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on January 22, 2008)

	10.9	*	Form of Investor Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on January 22, 2008)

	10.10	*	Form of Warrant issued to SMP Investments I, LLC (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on March 26, 2008)

	10.11	*	Series 6-A Preferred Stock and Warrant Purchase Agreement, dated March 31, 2008 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on April 3, 2008)

	10.12	*	Form of Investor Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on April 3, 2008)

	10.13	*	Form of Waveland Warrant (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on April 3, 2008)

	10.14	*	Agreement and Plan of Merger, dated April 24, 2008 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on April 30, 2008)


Exhibit No.			Description

	10.15	*	Form of Series 5-A Preferred Stock and Warrant Purchase Agreement (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on May 7, 2008)

	10.16	*	Form of Warrant issued to each of SMP Investments I, LLC and Ciabattoni Living Trust dated August 17, 2000 (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on May 7, 2008)

	10.17	*	Form of Letter Agreement for the issuance of shares of Series 6-A Convertible Preferred Stock in complete satisfaction of that certain convertible promissory note dated as of October 29, 2007 between Tri-Isthmus Group, Inc., Surgical Center Acquisition Holdings, Inc., Del Mar Acquisition, Inc., Del Mar GenPar, Inc., Point Loma Acquisition, Inc., and Point Loma GenPar, Inc. (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on May 7, 2008)

	10.18	*	Series 6-A Preferred Stock and Warrant Purchase Agreement, dated May 29, 2008 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on June 4, 2008)

	10.19	*	Form of Investor Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on June 4, 2008)

	10.20	*	Employment Agreement of David Hirschhorn, dated as of July 1, 2008 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on July 7, 2008)

	10.21	*	Form of Option Grant Agreement of David Hirschhorn, dated as of July 1, 2008 (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on July 7, 2008)

	10.22	*	Series 6-A Preferred Stock and Warrant Purchase Agreement, dated September 8, 2008 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on September 12, 2008)

	10.23	*	Form of Investor Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on September 12, 2008)

	10.24	*	Employment Agreement of Thomas Rice, dated effective as of November 10, 2008 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on November 14, 2008)

	10.25	*	Option Grant Agreement of Thomas Rice, dated effective as of November 10, 2008 (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on November 14, 2008)

	10.26	*	Form of Loan Agreement, effective November 6, 2008, among RHA Anadarko, LLC, Tri-Isthmus Group, Inc., Rural Hospital Acquisition, LLC, First Physicians Community Healthcare Services, Inc., RHA Stroud, LLC, RHA Tishomingo, LLC, TSG Physicians Group, LLC, and Canadian State Bank (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.27	*	Form of Loan Agreement, effective November 6, 2008, among RHA Stroud, LLC, Tri-Isthmus Group, Inc., Rural Hospital Acquisition, LLC, First Physicians Community Healthcare Services, Inc., RHA Anadarko, LLC, RHA Tishomingo, LLC, TSG Physicians Group, LLC, and Valliance Bank (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.28	*	Form of Loan Agreement, effective November 6, 2008, among RHA Tishomingo, LLC, Tri-Isthmus Group, Inc., Rural Hospital Acquisition, LLC, First Physicians Community Healthcare Services, Inc., RHA Stroud, LLC, RHA Anadarko, LLC, TSG Physicians Group, LLC, and Canadian State Bank (filed as Exhibit 10.4 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.29	*	Form of Promissory Note, effective November 6, 2008, by RHA Anadarko, LLC, in favor of Canadian State Bank (filed as Exhibit 10.5 to the Form 8-K, as filed with the SEC on December 17, 2008)


Exhibit No.			Description

	10.30	*	Form of Promissory Note, effective November 6, 2008, by RHA Stroud, LLC, in favor of Valliance Bank (filed as Exhibit 10.6 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.31	*	Form of Promissory Note, effective November 6, 2008, by RHA Tishomingo, LLC, in favor of Canadian State Bank (filed as Exhibit 10.7 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.32	*	USDA Guaranty Agreement, effective November 6, 2008, by RHA Anadarko, LLC, in favor of Canadian State Bank (filed as Exhibit 10.8 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.33	*	USDA Guaranty Agreement, effective November 6, 2008, by RHA Stroud, LLC, in favor of Valliance Bank (filed as Exhibit 10.9 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.34	*	USDA Guaranty Agreement, effective November 6, 2008, by RHA Anadarko, LLC, in favor of Canadian State Bank (filed as Exhibit 10.10 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.35	*†	Form of Promissory Note, dated December 11, 2008, by Rural Hospital Acquisition, LLC, in favor of Carol Schuster (filed as Exhibit 10.11 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.36	*	Form of Guaranty of Tri-Isthmus Group, Inc., dated December 11, 2008, in favor of Carol Schuster (filed as Exhibit 10.12 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.37	*	Form of Convertible Promissory Note Issued in Favor of SMP Investments I, LLC (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on February 13, 2009)

	10.38	*	Form of Convertible Promissory Note Issued in Favor of Anthony J. Ciabattoni, Trustee of the Ciabattoni Living Trust dated August 17, 2000 (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on February 13, 2009)

	10.39	*	Form of Warrant No. 108 (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on February 13, 2009)

	10.40	*	Form of Warrant No. 109 (filed as Exhibit 10.4 to the Form 8-K, as filed with the SEC on February 13, 2009)

	10.41	*	Form of Warrant No. 110 (filed as Exhibit 10.5 to the Form 8-K, as filed with the SEC on February 13, 2009)

	10.42	*	Form of Warrant No. 111 (filed as Exhibit 10.6 to the Form 8-K, as filed with the SEC on February 13, 2009)

	10.43	*	Form of Convertible Promissory Note (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on March 5, 2009)

	10.44	*	Form of Warrant (exercisable at $0.50 per share) issued to each of Michael Ciabattoni, Scott Casey, Jean Heaton, Stephanie Heaton, Jennifer Heaton, Cobea Associates, LLC, William Wallace, Trustee of the Wallace Family Revocable Trust dated April 23, 2001, Otto J. Claricurzio, and Phillip J. Ciabattoni (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on March 5, 2009)


Exhibit No.			Description

	10.45	*	Form of Warrant (exercisable at $0.75 per share) issued to each of Michael Ciabattoni, Scott Casey, Jean Heaton, Stephanie Heaton, Jennifer Heaton, Cobea Associates, LLC, William Wallace, Trustee of the Wallace Family Revocable Trust dated April 23, 2001, Otto J. Claricurzio, and Phillip J. Ciabatton (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on March 5, 2009)

	10.46	*	Form of Convertible Promissory Note issued to each of Frank Darras, Trustee of the Darras Family Trust, SFV, Incorporated, NFS LLC/FMTC Rol IRA FBO Neal Katz A/C LMG-001902 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on April 20, 2009)

	10.47	*	Form of Warrant (exercisable at $0.50 per share) Frank Darras, Trustee of the Darras Family Trust, SFV, Incorporated, NFS LLC/FMTC Rol IRA FBO Neal Katz A/C LMG-001902 (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on April 20, 2009)

	10.48	*	Form of Warrant (exercisable at $0.75 per share) Frank Darras, Trustee of the Darras Family Trust, SFV, Incorporated, NFS LLC/FMTC Rol IRA FBO Neal Katz A/C LMG-001902 (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on April 20, 2009)

	10.49	*	Form of Series 6-A Preferred Stock and Warrant Purchase Agreement (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on June 12, 2009)

	10.50	*	Form of Investor Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on June 12, 2009)

	10.51	*	Form of Medical Advisory Board Warrant (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on June 12, 2009)

	10.52	*	Form of Series 5-A Preferred Stock and Warrant Purchase Agreement, dated October 19, 2009 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on October 23, 2009)

	10.53	*	Form of Warrant issued in connection with 5-A (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on October 23, 2009)

	10.54	*	Form of Series 6-A Preferred Stock and Warrant Purchase Agreement, dated October 19, 2009 (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on October 23, 2009)

	10.55	*	Form of Warrant issued in connection with 6-A (filed as Exhibit 10.4 to the Form 8-K, as filed with the SEC on October 23, 2009)

	10.56	*	Form Subscription Agreement, dated December 3, 2009 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on December 14, 2009)

	10.57	*	Form of Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on December 14, 2009)

	10.58	*	Real Property Purchase and Sale Agreement, by and between Southern Plains Associates, LLC and Southern Plains Medical Center, Inc., dated December 16, 2009 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on January 20, 2010)

	10.59	*	Form of USDA Loan Guaranty (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on January 20, 2010)

	10.60	*	USDA Loan Agreement, by and among FB S. Plains Financing, LLC, James B. Swickey, David W. Durrett, Capital Investors of Oklahoma, LLC, First Physicians Realty Group, LLC, Rural Hospital Acquisition, LLC, Southern Plains Associates, L.L.C. and First Liberty Bank, dated January 13, 2010 (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on January 20, 2010)


Exhibit No.			Description

	10.61	*	First Amended and Restated Promissory Note, by and between FB S. Plains Financing, LLC and First Liberty Bank, dated January 13, 2010 (filed as Exhibit 10.4 to the Form 8-K, as filed with the SEC on January 20, 2010)

	14.1	*	Corporate Code of Business Conduct and Ethics for Directors, Executive Officers, and Employees, dated effective as of April 22, 2008 (filed as Exhibit 14.1 to the Form 10-K, as filed with the SEC on January 13, 2009)

	21.1	*	Subsidiaries of First Physicians Capital Group, Inc. (f/k/a Tri-Isthmus Group, Inc.)

	31.1		Certification Pursuant to Rule 13a-14(d) promulgated under the Securities Exchange Act of 1934

	31.2		Certification Pursuant to Rule 13a-14(d) promulgated under the Securities Exchange Act of 1934

	32.1		Certification Pursuant to 18 U.S.C. 1350

	32.2		Certification Pursuant to 18 U.S.C. 1350


*		Previously filed with the SEC as indicated, and hereby incorporated herein by reference.

†		Certain portions of these documents have been omitted based on a request for confidential treatment submitted to the SEC. The non-public information that has been omitted from these documents has been separately filed with the SEC. Each redacted portion of these documents is indicated by a “[*]” and is subject to the request for confidential treatment submitted to the SEC. The redacted information is confidential information of the Registrant.

SIGNATURES

Pursuant to the requirements 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.


Date: May 21, 2010	First Physicians Capital Group, Inc. (Registrant)
	By:	/s/ David Hirschhorn
		David Hirschhorn
		Chief Executive Officer (Principal Executive Officer)

Date: May 21, 2010	/s/ Donald C. Parkerson
	Donald C. Parkerson
	Chief Financial Officer (Principal Financial Officer)

EXHIBIT INDEX


Exhibit No.			Description

	2.1	*	Membership Interest Purchase Agreement (filed as Exhibit 2.1 to the Form 8-K, as filed with the SEC on November 5, 2007)

	3.1	*	Certificate of Incorporation (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on November 14, 2000)

	3.2	*	Amended and Restated Bylaws dated October 25, 2002 (filed as Exhibit 3.2 to the Form 8-K, as filed with the SEC on October 28, 2002)

	3.3	*	Certificate of Designation of Rights and Preferences of Series 2-A Convertible Preferred Stock filed November 8, 2000 (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on November 14, 2000)

	3.4	*	Certificate of Merger filed November 8, 2000, merging Vsource, Inc. (a Nevada corporation) with and into the Vsource, Inc. (a Delaware corporation) (filed as Exhibit 4.2 to the Form 8-K, as filed with the SEC on November 14, 2000)

	3.5	*	Agreement and Plan of Merger dated as of December 14, 2000, among the Registrant, OTT Acquisition Corp., Online Transaction Technologies, Inc. and its Shareholders (filed as Exhibit 10.11 to the Form 10-Q, as filed with the SEC on December 15, 2000)

	3.6	*	Certificate of Designation of Rights and Preferences of Series 3-A Convertible Preferred Stock filed June 20, 2001 (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on July 2, 2001)

	3.7	*	Amendment to Certificate of Incorporation, dated January 16, 2002 (filed as Exhibit 3.3 to the Form 8-K, as filed with the SEC on January 23, 2002)

	3.8	*	Certificate of Designation of Rights and Preferences of Series 4-A Convertible Preferred Stock (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on October 28, 2002)

	3.9	*	Amendment to Certificate of Incorporation, dated November 20, 2002 (filed as Exhibit 3.1 to the Form 10-Q for the period ending October 31, 2002, as filed with the SEC on December 5, 2002)

	3.10	*	Certificate of Designation of Rights and Preferences of Series 5-A Convertible Preferred Stock (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on July 21, 2005)

	3.11	*	Amendment to Certificate of Incorporation, dated December 16, 2005 (filed as Exhibit 3.5 to the Form 10-Q for the period ending October 31, 2005, as filed with the SEC on December 20, 2005)

	3.12	*	Certificate of Amendment to the Certificate of Designation of Rights and Preferences Series 5-A Convertible Preferred Stock filed January 10, 2008 (filed as Exhibit B to the Form of Series 5-A Preferred Stock and Warrant Purchase Agreement, filed as Exhibit 10.52 herein)

	3.13	*	Certificate of Designation of Rights and Preferences of Series 6-A Convertible Preferred Stock filed April 2, 2008 (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on April 3, 2008)

	3.14	*	Certificate of Amendment to the Certificate of Designation of Rights and Preferences of Series 5-A Convertible Preferred Stock filed May 15, 2008 (filed as Exhibit 4.2 to the Form 10-Q, as filed with the SEC on May 20, 2008)


Exhibit No.			Description

	3.15	*	Certificate of Amendment to the Certificate of Designation of Rights and Preferences of Series 6-A Convertible Preferred Stock filed May 15, 2008 (filed as Exhibit B to the Form of Series 6-A Preferred Stock and Warrant Purchase Agreement, filed as Exhibit 10.54 herein)

	3.16	*	Amendment to Certificate of Incorporation, dated September 29, 2009 (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on October 1, 2009)

	3.17	*	Certificate of Decrease of Shares Designated as Series 7-A Convertible Preferred Stock, dated and filed January 22, 2010 (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on January 28, 2010)

	4.1	*	Certificate of Decrease of Shares Designated as Series 1-A Convertible Preferred Stock (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on July 13, 2005)

	4.2	*	Certificate of Decrease of Shares Designated as Series 2-A Convertible Preferred Stock (filed as Exhibit 4.2 to the Form 8-K, as filed with the SEC on July 13, 2005)

	4.3	*	Certificate of Decrease of Shares Designated as Series 3-A Convertible Preferred Stock (filed as Exhibit 4.3 to the Form 8-K, as filed with the SEC on July 13, 2005)

	4.4	*	Certificate of Decrease of Shares Designated as Series 4-A Convertible Preferred Stock (filed as Exhibit 4.4 to the Form 8-K, as filed with the SEC on July 13, 2005)

	4.5	*	Series 5-A Preferred Stock and Warrant Purchase Agreement, dated as of July 7, 2005, by and among Vsource, Inc. and the investors listed therein (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on July 21, 2005)

	4.6	*	Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on July 21, 2005)

	4.7	*	Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on August 23, 2005)

	4.8	*	Series 5-A Preferred Stock and Warrant Purchase Agreement, dated as of September, 18, 2006, by and among First Physicians Capital Group, Inc. and certain Series 5-A Preferred Stock Investors (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on September 22, 2006)

	4.9	*	Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on September 22, 2006)

	4.10	*	Amended and Restated Articles of Organization of Rural Hospital Acquisition LLC (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on November 5, 2007)

	4.11	*	Amended and Restated Operating Agreement Rural Hospital Acquisition LLC (filed as Exhibit 4.2 to the Form 8-K, as filed with the SEC on November 5, 2007)

	4.12	*	Form of Extension of Warrant, dated July 18, 2007 (filed as Exhibit 4.1 to Form 8-K as filed with the SEC on December 18, 2008)

	10.1	*	Form of First Group Notes (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on November 2, 2007)

	10.2	*	Form of Second Group Notes (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on November 2, 2007)

	10.3	*	Form of First Group Warrants (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on November 2, 2007)

	10.4	*	Form of Second Group Warrants (filed as Exhibit 10.4 to the Form 8-K, as filed with the SEC on November 2, 2007)


Exhibit No.			Description

	10.5	*	Form of Limited Guaranty by Tri-Isthmus Group, Inc. (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on November 5, 2007)

	10.6	*	Employment Agreement of Dennis M. Smith, dated effective as of October 10, 2007 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on December 21, 2007)

	10.7	*	Option Agreement of Dennis M. Smith, dated effective as of October 10, 2007 (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on December 21, 2007)

	10.8	*	Series 5-A Preferred Stock and Warrant Purchase Agreement, dated January 14, 2008 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on January 22, 2008)

	10.9	*	Form of Investor Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on January 22, 2008)

	10.10	*	Form of Warrant issued to SMP Investments I, LLC (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on March 26, 2008)

	10.11	*	Series 6-A Preferred Stock and Warrant Purchase Agreement, dated March 31, 2008 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on April 3, 2008)

	10.12	*	Form of Investor Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on April 3, 2008)

	10.13	*	Form of Waveland Warrant (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on April 3, 2008)

	10.14	*	Agreement and Plan of Merger, dated April 24, 2008 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on April 30, 2008)

	10.15	*	Form of Series 5-A Preferred Stock and Warrant Purchase Agreement (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on May 7, 2008)

	10.16	*	Form of Warrant issued to each of SMP Investments I, LLC and Ciabattoni Living Trust dated August 17, 2000 (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on May 7, 2008)

	10.17	*	Form of Letter Agreement for the issuance of shares of Series 6-A Convertible Preferred Stock in complete satisfaction of that certain convertible promissory note dated as of October 29, 2007 between Tri-Isthmus Group, Inc., Surgical Center Acquisition Holdings, Inc., Del Mar Acquisition, Inc., Del Mar GenPar, Inc., Point Loma Acquisition, Inc., and Point Loma GenPar, Inc. (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on May 7, 2008)

	10.18	*	Series 6-A Preferred Stock and Warrant Purchase Agreement, dated May 29, 2008 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on June 4, 2008)

	10.19	*	Form of Investor Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on June 4, 2008)

	10.20	*	Employment Agreement of David Hirschhorn, dated as of July 1, 2008 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on July 7, 2008)

	10.21	*	Form of Option Grant Agreement of David Hirschhorn, dated as of July 1, 2008 (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on July 7, 2008)


Exhibit No.			Description

	10.22	*	Series 6-A Preferred Stock and Warrant Purchase Agreement, dated September 8, 2008 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on September 12, 2008)

	10.23	*	Form of Investor Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on September 12, 2008)

	10.24	*	Employment Agreement of Thomas Rice, dated effective as of November 10, 2008 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on November 14, 2008)

	10.25	*	Option Grant Agreement of Thomas Rice, dated effective as of November 10, 2008 (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on November 14, 2008)

	10.26	*	Form of Loan Agreement, effective November 6, 2008, among RHA Anadarko, LLC, Tri-Isthmus Group, Inc., Rural Hospital Acquisition, LLC, First Physicians Community Healthcare Services, Inc., RHA Stroud, LLC, RHA Tishomingo, LLC, TSG Physicians Group, LLC, and Canadian State Bank (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.27	*	Form of Loan Agreement, effective November 6, 2008, among RHA Stroud, LLC, Tri-Isthmus Group, Inc., Rural Hospital Acquisition, LLC, First Physicians Community Healthcare Services, Inc., RHA Anadarko, LLC, RHA Tishomingo, LLC, TSG Physicians Group, LLC, and Valliance Bank (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.28	*	Form of Loan Agreement, effective November 6, 2008, among RHA Tishomingo, LLC, Tri-Isthmus Group, Inc., Rural Hospital Acquisition, LLC, First Physicians Community Healthcare Services, Inc., RHA Stroud, LLC, RHA Anadarko, LLC, TSG Physicians Group, LLC, and Canadian State Bank (filed as Exhibit 10.4 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.29	*	Form of Promissory Note, effective November 6, 2008, by RHA Anadarko, LLC, in favor of Canadian State Bank (filed as Exhibit 10.5 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.30	*	Form of Promissory Note, effective November 6, 2008, by RHA Stroud, LLC, in favor of Valliance Bank (filed as Exhibit 10.6 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.31	*	Form of Promissory Note, effective November 6, 2008, by RHA Tishomingo, LLC, in favor of Canadian State Bank (filed as Exhibit 10.7 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.32	*	USDA Guaranty Agreement, effective November 6, 2008, by RHA Anadarko, LLC, in favor of Canadian State Bank (filed as Exhibit 10.8 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.33	*	USDA Guaranty Agreement, effective November 6, 2008, by RHA Stroud, LLC, in favor of Valliance Bank (filed as Exhibit 10.9 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.34	*	USDA Guaranty Agreement, effective November 6, 2008, by RHA Anadarko, LLC, in favor of Canadian State Bank (filed as Exhibit 10.10 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.35	*†	Form of Promissory Note, dated December 11, 2008, by Rural Hospital Acquisition, LLC, in favor of Carol Schuster (filed as Exhibit 10.11 to the Form 8-K, as filed with the SEC on December 17, 2008)

	10.36	*	Form of Guaranty of Tri-Isthmus Group, Inc., dated December 11, 2008, in favor of Carol Schuster (filed as Exhibit 10.12 to the Form 8-K, as filed with the SEC on December 17, 2008)


Exhibit No.			Description

	10.37	*	Form of Convertible Promissory Note Issued in Favor of SMP Investments I, LLC (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on February 13, 2009)

	10.38	*	Form of Convertible Promissory Note Issued in Favor of Anthony J. Ciabattoni, Trustee of the Ciabattoni Living Trust dated August 17, 2000 (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on February 13, 2009)

	10.39	*	Form of Warrant No. 108 (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on February 13, 2009)

	10.40	*	Form of Warrant No. 109 (filed as Exhibit 10.4 to the Form 8-K, as filed with the SEC on February 13, 2009)

	10.41	*	Form of Warrant No. 110 (filed as Exhibit 10.5 to the Form 8-K, as filed with the SEC on February 13, 2009)

	10.42	*	Form of Warrant No. 111 (filed as Exhibit 10.6 to the Form 8-K, as filed with the SEC on February 13, 2009)

	10.43	*	Form of Convertible Promissory Note (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on March 5, 2009)

	10.44	*	Form of Warrant (exercisable at $0.50 per share) issued to each of Michael Ciabattoni, Scott Casey, Jean Heaton, Stephanie Heaton, Jennifer Heaton, Cobea Associates, LLC, William Wallace, Trustee of the Wallace Family Revocable Trust dated April 23, 2001, Otto J. Claricurzio, and Phillip J. Ciabattoni (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on March 5, 2009)

	10.45	*	Form of Warrant (exercisable at $0.75 per share) issued to each of Michael Ciabattoni, Scott Casey, Jean Heaton, Stephanie Heaton, Jennifer Heaton, Cobea Associates, LLC, William Wallace, Trustee of the Wallace Family Revocable Trust dated April 23, 2001, Otto J. Claricurzio, and Phillip J. Ciabatton (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on March 5, 2009)

	10.46	*	Form of Convertible Promissory Note issued to each of Frank Darras, Trustee of the Darras Family Trust, SFV, Incorporated, NFS LLC/FMTC Rol IRA FBO Neal Katz A/C LMG-001902 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on April 20, 2009)

	10.47	*	Form of Warrant (exercisable at $0.50 per share) Frank Darras, Trustee of the Darras Family Trust, SFV, Incorporated, NFS LLC/FMTC Rol IRA FBO Neal Katz A/C LMG-001902 (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on April 20, 2009)

	10.48	*	Form of Warrant (exercisable at $0.75 per share) Frank Darras, Trustee of the Darras Family Trust, SFV, Incorporated, NFS LLC/FMTC Rol IRA FBO Neal Katz A/C LMG-001902 (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on April 20, 2009)

	10.49	*	Form of Series 6-A Preferred Stock and Warrant Purchase Agreement (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on June 12, 2009)

	10.50	*	Form of Investor Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on June 12, 2009)

	10.51	*	Form of Medical Advisory Board Warrant (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on June 12, 2009)

	10.52	*	Form of Series 5-A Preferred Stock and Warrant Purchase Agreement, dated October 19, 2009 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on October 23, 2009)


Exhibit No.			Description

	10.53	*	Form of Warrant issued in connection with 5-A (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on October 23, 2009)

	10.54	*	Form of Series 6-A Preferred Stock and Warrant Purchase Agreement, dated October 19, 2009 (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on October 23, 2009)

	10.55	*	Form of Warrant issued in connection with 6-A (filed as Exhibit 10.4 to the Form 8-K, as filed with the SEC on October 23, 2009)

	10.56	*	Form Subscription Agreement, dated December 3, 2009 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on December 14, 2009)

	10.57	*	Form of Warrant (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on December 14, 2009)

	10.58	*	Real Property Purchase and Sale Agreement, by and between Southern Plains Associates, LLC and Southern Plains Medical Center, Inc., dated December 16, 2009 (filed as Exhibit 10.1 to the Form 8-K, as filed with the SEC on January 20, 2010)

	10.59	*	Form of USDA Loan Guaranty (filed as Exhibit 10.2 to the Form 8-K, as filed with the SEC on January 20, 2010)

	10.60	*	USDA Loan Agreement, by and among FB S. Plains Financing, LLC, James B. Swickey, David W. Durrett, Capital Investors of Oklahoma, LLC, First Physicians Realty Group, LLC, Rural Hospital Acquisition, LLC, Southern Plains Associates, L.L.C. and First Liberty Bank, dated January 13, 2010 (filed as Exhibit 10.3 to the Form 8-K, as filed with the SEC on January 20, 2010)

	10.61	*	First Amended and Restated Promissory Note, by and between FB S. Plains Financing, LLC and First Liberty Bank, dated January 13, 2010 (filed as Exhibit 10.4 to the Form 8-K, as filed with the SEC on January 20, 2010)

	14.1	*	Corporate Code of Business Conduct and Ethics for Directors, Executive Officers, and Employees, dated effective as of April 22, 2008 (filed as Exhibit 14.1 to the Form 10-K, as filed with the SEC on January 13, 2009)

	21.1	*	Subsidiaries of First Physicians Capital Group, Inc. (f/k/a Tri-Isthmus Group, Inc.)

	31.1		Certification Pursuant to Rule 13a-14(d) promulgated under the Securities Exchange Act of 1934

	31.2		Certification Pursuant to Rule 13a-14(d) promulgated under the Securities Exchange Act of 1934

	32.1		Certification Pursuant to 18 U.S.C. 1350

	32.2		Certification Pursuant to 18 U.S.C. 1350


*		Previously filed with the SEC as indicated, and hereby incorporated herein by reference.

†		Certain portions of these documents have been omitted based on a request for confidential treatment submitted to the SEC. The non-public information that has been omitted from these documents has been separately filed with the SEC. Each redacted portion of these documents is indicated by a “[*]” and is subject to the request for confidential treatment submitted to the SEC. The redacted information is confidential information of the Registrant.