- 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 June 30, 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 (Do not check if a smaller reporting company)		Smaller reporting company þ

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 August 16, 2010		15,049,507

TABLE OF CONTENTS


	PAGE

PART I FINANCIAL INFORMATION		3

Item 1. FINANCIAL STATEMENTS (UNAUDITED)		3

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		17

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		24

Item 4. CONTROLS AND PROCEDURES		24

PART II OTHER INFORMATION		24

Item 1. LEGAL PROCEEDINGS		24

Item 1A. RISK FACTORS		24

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		25

Item 3. DEFAULTS UPON SENIOR SECURITIES		25

Item 4. [REMOVED AND RESERVED]		25

Item 5. OTHER INFORMATION		25

Item 6. EXHIBITS		26

SIGNATURES		32

EXHIBIT INDEX		33

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)


	June 30,		September 30,
	2010		2009
	(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents	$	1,778	$	2,324
Restricted cash		—		1,523
Accounts receivable, net of allowance for uncollectible accounts		5,017		4,891
Prepaid expenses		414		111
Other current assets		1,137		1,772

Total current assets		8,346		10,621

Property and equipment, net		17,878		17,033
Goodwill		759		759
Other assets		1,088		1,078

Total assets	$	28,071	$	29,491


LIABILITIES, PREFERRED STOCK AND SHAREHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	4,147	$	3,598
Accrued expenses		3,698		3,515
Notes payable		—		4,309
Current maturities of long-term debt		1,345		1,028

Total current liabilities		9,190		12,450

Long-term debt, net of current portion		17,390		12,441
Deferred gain		1,727		—
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)


	June 30,			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 June 30, 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 June 30, 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 June 30, 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 June 30, 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; 15,049,507 and 13,448,683 shares issued and outstanding as of June 30, 2010 and September 30, 2009, respectively)		152			136
Additional paid-in capital		78,951			77,109
Accumulated deficit		(93,038	)		(86,122	)
Treasury stock, at cost (149,744 shares as of June 30, 2010 and 93,494 as of September 30, 2009)		(104	)		(79	)


Total First Physicians Capital Group shareholders’ deficit		(14,039	)		(8,956	)

Noncontrolling interests		1,399			1,083

Total shareholders’ deficit		(12,640	)		(7,873	)

Total liabilities, preferred stock and shareholders’ deficit	$	28,071		$	29,491

FIRST PHYSICIANS CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except share and per share data)
(Unaudited)


	Three Months Ended						Nine Months Ended
	June 30,			June 30,			June 30,			June 30,
	2010			2009			2010			2009
Revenue from services	$	10,354		$	9,195		$	30,286		$	30,196


Costs and expenses:
Selling, general and administrative expenses		9,534			9,962			29,092			29,534
Provision for doubtful accounts		1,662			1,199			4,367			3,364
Amortization of stock-based compensation		248			471			794			988
Depreciation and amortization		353			286			1,023			788

Total costs and expenses		11,797			11,918			35,276			34,674


Operating loss		(1,443	)		(2,723	)		(4,990	)		(4,478	)

Other income (expense)		22			131			476			(52	)
Interest expense		(379	)		(837	)		(1,600	)		(1,449	)

Net loss from operations before taxation and non-cash beneficial conversion feature		(1,800	)		(3,429	)		(6,114	)		(5,979	)
Taxation		—			—			—			—

Net loss	$	(1,800	)	$	(3,429	)	$	(6,114	)	$	(5,979	)
Net income (loss) attributable to noncontrolling interest		(258	)		37			(754	)		(199	)

Net loss attributable to First Physicians Capital Group		(2,058	)		(3,392	)		(6,868	)		(6,178	)
Non-cash beneficial conversion feature preferred dividend		—			(317	)		(48	)		(317	)

Net loss attributable to First Physicians Capital Group common shareholders	$	(2,058	)	$	(3,709	)	$	(6,916	)	$	(6,495	)


Net loss per common share:
Basic	$	(0.14	)	$	(0.35	)	$	(0.47	)	$	(0.62	)
Diluted		N/A			N/A			N/A			N/A

FIRST PHYSICIANS CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)


	Nine months ended
	June 30,			June 30,
	2010			2009
Cash flows from operating activities:
Net loss	$	(6,868	)	$	(6,178	)
Adjustments to reconcile net loss to net cash used in operating activities:

Noncontrolling interest		754			199
Depreciation and amortization		1,023			788
Amortization of stock based compensation		794			988
Amortization of debt discount		521			556
Amortization of deferred gain on sale of assets		(33	)		—
Bad debt provision		4,367			3,364
Loss from sale of investments		—			281
Changes in working capital components:
Accounts receivable		(4,493	)		(2,810	)
Accounts payable and accrued expenses		732			972
Others		321			(885	)


Net cash provided by (used in) operating activities		(2,882	)		(2,725	)


Cash flows from investing activities:
Purchase of property and equipment		(1,868	)		(4,014	)
Purchase of equity interest in consolidated affiliate		—			(35	)
Deferred gain from sale of property and equipment		1,760			—
Acquisition of subsidiaries, net of cash acquired		—			(50	)
Proceeds from sale of equity interests in consolidated affiliates		—			325
Decrease (Increase) in restricted cash		1,523			(9	)

Net cash provided by (used in) investing activities		1,415			(3,783	)


Cash flows from financing activities:
Drawdown on convertible loans		—			2,200
Repayment of notes payable		(4,643	)		(5,488	)
Proceeds from long-term debt		5,368			8,902
Distributions to noncontrolling interests		(438	)		(80	)
Proceeds from exercise of stock warrants		503			233
Purchase of treasury stock		(25	)
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			350

Net cash provided by financing activities		921			6,117


Net decrease in cash and cash equivalents		(546	)		(391	)


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

Cash and cash equivalents at end of period	$	1,778		$	2,579

Cash paid for interest	$	959		$	893

During the nine-month period ended June 30, 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 nine-month period ended June 30, 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 THE CONDENSED 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 June 30, 2010 and September 30, 2009 and for the nine-month periods ended June 30, 2010 and June 30, 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 Fiscal Year Ended September 30, 2009 (the “ Fiscal 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

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 $93.0 million as of June 30, 2010. This deficit has been funded primarily through preferred stock financing, sales of promissory notes and cash generated from operations.

At June 30, 2010, we had current liabilities of $9.2 million and current assets of $8.3 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 securities and other types of securities, issuance of debt and revenues from operations; however, despite our efforts, we may not be able to generate revenues from operations or obtain sufficient capital on acceptable terms, if at all. If we are unable to 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 twelve (12) months from the date of our last-presented balance sheet. 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. Critical accounting policies affecting us have not changed materially since September 30, 2009.

Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (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 the fiscal year ended September 30, 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. 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 the Fiscal Year Ended September 30, 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 Accounting Standards Codification Topic 825-10-50, “Disclosures about Fair Value of Financial Instruments,” we calculate the fair value of our assets and liabilities which qualify as financial instruments under this topic, and we include 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. None of the Company’s financial instruments held for trading purposes.

2. Net Loss Per Share


	Three Months ended						Nine Months ended
	(in thousands)						(in thousands)
	June 30,			June 30,			June 30,			June 30,
	2010			2009			2010			2009
Numerator for basic and diluted loss per share:
Net loss attributable to common shareholders	$	(2,058	)	$	(3,709	)	$	(6,916	)	$	(6,495	)

Denominator for basic (loss)/profit per share — weighted average shares		15,046,375			10,581,885			14,741,694			10,409,248
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	$	(0.14	)	$	(0.35	)	$	(0.47	)	$	(0.62	)

Since we had a net loss for the three and nine months ended June 30, 2010 and June 30, 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):


	June 30,			September 30,
	2010			2009
Gross patient accounts receivable	$	26,592		$	18,470
Reserves for bad debt		(6,684	)		(3,842	)
Reserves for contractual allowances		(14,891	)		(9,737	)

Patient accounts receivable, net	$	5,017		$	4,891

4. Other Current Assets

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


	June 30,		September 30,
	2010		2009
Deposits	$	120	$	120
Medical supplies		507		510
Other receivables		510		1,142


Total other current assets	$	1,137	$	1,772

5. Property and Equipment

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


	June 30,			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		(3,546	)		(2,759	)


Property and equipment, net	$	17,878		$	17,033

6. 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 originally became due and payable on November 6, 2009; 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: (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. The new due date of the Bridge Notes pursuant to the extension option was February 6, 2010; we were to repay the unpaid principal of each Bridge Note on this date, together with accrued and unpaid interest of 16% per annum.

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 was 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. As of June 30, 2010, none of the Bridge Lenders has effected such a conversion.

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.

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 (each, a “ Second Bridge Lender ” and together, the “ Second Bridge Lenders ”).

Each Second Bridge Note originally became due and payable on December 3, 2009, unless the maturity date is extended pursuant to the terms of an extension option. 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. As of June 30, 2010, none of the Second Bridge Lenders has effected such a conversion.

We extended the Second Bridge Notes for an additional three months under the terms of the extension option contained in the Second Bridge Notes. Upon exercising this option, we were 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 Second Bridge 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.

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 originally became due and payable on December 31, 2009 and the Katz Note originally became due and payable on January 14, 2010. The terms 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, 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 dates for the Third Bridge Notes, pursuant to the extension option, were March 31, 2010 for each of the Darras Note and the SFV Note 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 June 30, 2009 and June 30, 2010 was $390,000 and $163,000, respectively.

Unregistered Sales of Equity Securities

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.

7. Long-term Debt

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


	June 30,		September 30,
	2010		2009
Note payable, secured by equipment, $4,558 payable monthly, including 8.25% interest through September 2011	$	50	$	89

8% Notes payable to prior shareholders for stock repurchases, six notes outstanding at June 30, 2010, unsecured, maturity dates ranging from 2010 through 2017		229		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		4,655		—

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		3,387		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		3,390		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		1,148		1,164

Note payable, secured by equipment, $2,660 payable monthly including 5.3% interest through March 2013		79		99

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

Capitalized lease obligations — six (6) leases for buildings and medical equipment with imputed interest rates ranging from 4% to 17.2%, maturing at various dates through 2013		231		300

Note payable, secured by equipment, $2,413 payable monthly, including 7.04% interest through March 2011		19		39

Note payable, secured by equipment, $7,530 payable monthly, including 6.75% interest through June 15, 2013		243		298

Notes payable, two (2) notes, secured by equipment, $5,116 payable monthly, including 7.05% interest through March, 2011		40		83


	June 30,			September 30,
	2010			2009
Notes payable, 16% interest, unsecured, face value $1.5 million less beneficial conversion feature and debt discount of $84,000 at September 30, 2009	$	—		$	1,416

Notes payable five (5), unsecured 10% interest, mature at various dates in August 2011 and September 2011,		850			—

Notes payable nine (9), unsecured 10% interest, mature at various dates February 2013 through April 2013		1,350			—

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		837			1,027

Note payable, unsecured 11.25% interest, matures March 2013		525			—

Note payable, secured by equipment, $1,567 payable monthly, including 6.75% interest through July 2013		52			64

Total		18,735			13,469

Less current maturities of long-term debt		(1,345	)		(1,028	)

Total long-term debt	$	17,390		$	12,441

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


June 30,	Payments
2011	$	1,345
2012		3,627
2013		2,312
2014		628
2015		578
Thereafter		10,245

Total	$	18,735

8. 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 nine months ended June 30, 2010 amounted to $754,000, compared to $199,000 for the nine months ended June 30, 2009. The noncontrolling interest attributable to equity interests not held by us for the three months ended June 30, 2010 was $258,000 compared to $(37,000). Noncontrolling interest has increased at our Del Mar Ambulatory Surgical Center from 51% at June 30, 2009 to 65% at June 30, 2010 primarily as a result of sales of our equity interest, but we have retained voting control.

9. Warrants

Outstanding exercisable warrants consisted of the following as of June 30, 2010:


	Remaining	Exercise
Description	Life	Price		Warrants
September 30, 2007 Preferred Stock Series 5-A warrants issued to investor	2 years	$	0.45		50,000
September 30, 2008 warrants issued in connection with notes payable	4 months		0.31		1,980,000
September 30, 2008 warrants issued in connection with notes payable	4 months		0.50		1,237,500
September 30, 2008 Preferred Stock Series 6-A warrants issued to investor	2 months		0.50		67,200
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
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	2 years		0.50		210,000
June 10, 2009 warrants issued to Medical Advisory Board	2 years		0.63		150,000
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	2 years		0.50		375,000
November 6, 2009 warrants issued in connection with notes payable	2 years		0.75		250,000
December 3, 2009 warrants issued in connection with notes payable	2 years		0.50		125,000
December 3, 2009 warrants issued in connection with notes payable	2 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	2 years		0.50		37,500
December 31, 2009 warrants issued in connection with notes payable	2 years		0.75		24,999
January 14, 2010 warrants issued in connection with notes payable	2 years		0.50		12,500
January 14, 2010 warrants issued in connection with notes payable	2 years		0.75		8,333


					8,016,213

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


							Weighted-Average
	Number of Shares of Common Stock						Exercise Price Per Share
	Nine months						Nine months
	ended			Year ended			ended		Year ended
	June 30,			September 30,			June 30,		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		(1,105,685	)		(525,000	)		0.46		0.50
Cancelled or expired		(6,293,800	)		(266,000	)		0.50		0.48


Warrants outstanding at end of the period		8,016,213			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.

10. 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 nine month periods ended June 30, 2010 was $11,500 and $70,000, respectively.

The following summarizes activities under the stock option plans:


							Weighted-Average
	Number of Options						Exercise Price Per Share
	June 30,			September 30,			June 30,		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		(235,207	)		(924,138	)		0.63		0.40


Options outstanding at end of the period		8,513,795			8,249,002		$	0.62	$	0.62


Options vested/exercisable at end of the period		2,425,703			2,037,613		$	0.59	$	0.59

11. SPMC Sale/Leaseback

On January 13, 2010, Southern Plains Medical Center, Inc., our wholly-owned indirect subsidiary and an Oklahoma corporation (“ SPMC ”), 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.

In connection with the purchase agreement, SPMC leased back from SPA the property sold, 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 a security on the debt in the amount of $1,524,091 was released and returned to us.

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

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 in this Quarterly Report on Form 10-Q (this “ Form 10-Q ”).

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, par value $0.01 per share (the “ 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 filings with and compliance with the rules and regulations of the United States Securities and Exchange Commission (the “ SEC ”) and limited revenue to offset these expenses; the 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, which are publicly available on EDGAR.

OVERVIEW

References to “we,” “us,” “our,” “Tri-Isthmus Group,” “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 fiscal period ended June 30, 2010.

Information in this Form 10-Q is current as of August 20, 2010, unless otherwise specified.

CURRENT OPERATIONS

We focus on the delivery of financial and managerial services to healthcare facilities in non-urban markets, as described more fully in the section entitled “Strategy” in this Form 10-Q.

Our support staff at hospitals owned by Rural Health Acquisition, LLC, our subsidiary and 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 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 operating center. Use of our surgery centers 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, Inc., our indirect wholly-owned subsidiary and an Oklahoma corporation (“ SPMC ”), 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 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 depend our ability to identify suitable candidates and negotiate and close acquisition and development transactions; as such, we are currently evaluating some potential acquisitions and development projects and expect to continue to evaluate acquisitions and development projects in the future.

Our portfolio consists of and 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 the support of new treatment solutions and in business solutions that provide financial and processing services to healthcare providers and physicians.

We will need additional capital to continue to maintain and expand our operations and endeavor to raise funds through the sale of equity securities and other types of securities, issuance of debt and revenues from operations. 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 the availability of debt or equity financing on favorable terms.

RECENT DEVELOPMENTS

Exercise of Warrants

On May 21, 2010, we issued 60,000 shares of our common stock, par value $0.01 per share (the “ Common Stock ”), to one investor for an aggregate purchase price of $30,000. The issuance was 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 a 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 offer and sale of the Common Stock pursuant to the warrant exercise was 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 our 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 originally became due and payable on November 6, 2009. We extended the maturity date of the Bridge Notes to February 6, 2010 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: (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.

The Bridge Lenders have agreed to further extend the maturity dates of the Bridge Notes such that the Bridge Note held by SMP was extended to August 6, 2011 and the Bridge Note held by Ciabattoni was extended to February 6, 2013. In connection with this extension, effective February 1, 2010, the interest rate on the Bridge Notes was changed from 16% to 10% per annum.

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, and is adjustable as set forth in the Bridge Notes. As of June 30, 2010, none of the Bridge Lenders has effected such a conversion.

The Bridge Notes also include a provision granting the Bridge Lenders demand registration rights with respect to the resale of the shares of Common Stock that would be issuable upon conversion of the Bridge Notes. These demand registration 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, once declared effective, would allow the shares of Common Stock underlying the Bridge Notes to be sold on a continuous basis. In such circumstance, 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 originally became due and payable on December 3, 2009. We extended the maturity date of the Second Bridge Notes to March 3, 2010 under the terms of an extension option contained in the Second Bridge Notes. Upon exercising this option, we were 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 Second Bridge Lenders have agreed to additional extensions of the maturity dates for each of the Second Bridge Notes, ranging from eighteen to thirty-six months from the March 3, 2010 due date. In connection with these extensions, the Second Bridge Lenders also agreed to a reduction in the annual interest rate from 16% to 10%.

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, and is adjustable as set forth in the Second Bridge Notes. As of June 30, 2010, none of the Second Bridge Lenders has effected such a conversion.

The Second Bridge Notes also include a provision granting the Second Bridge Lenders 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, once declared effective, would allow the shares of Common Stock underlying the Bridge Notes to be sold on a continuous basis. In such circumstance, we would 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 originally became due and payable on December 31, 2009 and the Katz Note originally became due and payable on January 14, 2010. The terms 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 Third Bridge Notes under the terms of their respective options, and therefore are obligated to issue warrants to the Third Bridge Lenders to purchase shares of Common Stock as follows: (i) to 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) to 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; and (iii) to Katz — 20,833 shares, 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 dates for the Third Bridge Notes, pursuant to the extension option, were March 31, 2010 for each of the Darras Note and the SFV Note and April 14, 2010 for the Katz Note. The Third Bridge Lenders have agreed to additional extensions of the maturity dates for each of the Third Bridge Notes, ranging from eighteen to thirty-six months from their respective due dates. In connection with these extensions, the Third Bridge Lenders 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, and is adjustable as set forth in the Third Bridge Notes.

The Third Bridge Notes also include a provision granting the Third Bridge Lenders 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, once declared effective, would allow the shares of Common Stock underlying the Third Bridge Notes to be sold on a continuous basis. In such circumstance, we would 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, Second Bridge Notes and Third Bridge Notes amounted to $291,000 The beneficial conversion feature associated with the Bridge Notes, Second Bridge Notes and Third Bridge Notes totaled $253,000. Both the fair value of the warrants issued under the Bridge Financing and the subsequent extension of the Bridge Notes, Second Bridge Notes and Third Bridge Notes, as well as the beneficial conversion feature, will be amortized over the term of the loans. Amortization for the fiscal quarter ended June 30, 2009 and June 30, 2010 was $390,000 and $163,000, respectively.

RESULTS OF OPERATIONS

MATERIAL CHANGES IN RESULTS OF OPERATIONS

REVENUE

Revenue from services was $10.4 million for three-month period ended June 30, 2010, compared to $9.2 million for the three-month period ended June 30, 2009, representing a increase of $1.2 million, or 13.0%. Revenue from services increased $0.7 million at our Del Mar Ambulatory Surgical Center in the same period. The increase was primarily due to an increase in case volume. Additionally, we saw an increase over the three-month period ended June 30, 2009 of $0.1 million due to the acquisition of The Chandler Clinic in Chandler, Oklahoma (“ The Chandler Clinic ”) in May 2009. Patient days increased 10.1% at our critical access hospitals, which contributed to an increase of $0.3 million for the three-month period ended June 30, 2010 as compared to the three-month period ended June 30, 2009. Net clinical revenues and other operating revenue increased $0.1 million for the three-month period ended June 30, 2010 as compared to the period ended June 30, 2009.

For the nine-month periods ended June 30, 2010 and June 30, 2009, revenue from services was $30.3 million at June 30, 2010, compared to $30.2 million for June 30, 2009, representing an increase of $0.1 million, or 0.3%. Revenue from services increased $2.0 million at our Del Mar Ambulatory Surgical Center in the same period. The increase was primarily due to an increase in case volume. Additionally, we saw an increase over the nine-month period ended June 30, 2009 of $0.6 million due to the acquisition of The Chandler Clinic in May 2009. These increases were offset by decreases in revenue from services of $2.1 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 reimbursable at lower rates from governmental payors.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses decreased by $0.5 million, from $10.0 million in the three-month period ended June 30, 2009 to $9.5 million in the three-month period ended June 30, 2010, representing a 5.0% decrease. The decrease resulted primarily from a reduction of $0.3 million in corporate legal expenses. The remaining decrease of $0.2 million is the net sum of reductions in other selling, general and administrative expenses. Selling, general and administrative expenses for the nine-month period ended June 30, 2010 as compared to the nine-month period ended June 30, 2009 decreased $0.4 million, from $29.5 million to $29.1 million. This decrease was primarily due to a $0.4 decrease in corporate legal expenses. Other selling, general and administrative expenses for the nine-month period ended June 30, 2010, as compared to the nine-month period ended June 30, 2009, remained unchanged.

PROVISION FOR DOUBTFUL ACCOUNTS

Provision for doubtful accounts increased from $1.2 million in the three-month period ended June 30, 2009 to $1.7 million in the three-month period ended June 30, 2010, representing an increase of $0.5, or 41.7%. The increase was primarily due to an increase in revenue for services from private pay uninsured patients at our critical access hospitals. The provision for doubtful accounts increased from $3.4 million for the nine-month period ended June 30, 2009 to $4.4 million for the nine-month period ended June 30, 2010. This represents an increase of $1.0 million, or 29.4%. Revenue from private pay uninsured patients at our critical access hospitals increased approximately 18.6%, or $0.4 million, as compared to the nine-month period ended June 30, 2009. We monitor our provision for doubtful accounts on a monthly basis for adequacy. The increase is due to an increase in the account balances of private pay uninsured patients and an increase in the amount of account patient balances that are in excess of 90 days old.

OTHER INCOME (EXPENSE)

Other income was $22,000 for the three-month period ended June 30, 2010 and $131,000 for the three-month period ended June 30, 2009. Other income (expense) was ($52,000) for the nine-month period ended June 30, 2009 and $476,000 for the nine-month period ended June 30, 2010. This represents an increase of $528,000, or 1,015.4%. This increase is primarily due to $429,000 of insurance proceeds received in the nine-month period ended June 30, 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 decreased to $0.4 million for the three-month period ended June 30, 2010, as compared to $0.8 million for the three-month period ended June 30, 2009. This represents a decrease of $0.4 million, or 50.0%. The three-month period ended June 30, 2009 included expenses of $0.4 million related to the Bridge Financing for amortization of points, debt discount, and amortization of beneficial conversion feature. Interest expense increased to $1.6 million for the nine-month period ended June 30, 2010, compared to $1.4 million for the nine-month period ended June 30, 2009. This represents an increase of $0.2 million, or 14.3%. The increase in interest expense arose primarily from (i) increased borrowings under loans associated with refinancing of RHA critical hospitals 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 nine months ended June 30, 2010 was $521,000.

BASIC WEIGHTED-AVERAGE NUMBER OF COMMON STOCK OUTSTANDING

The weighted average number of shares of Common Stock outstanding was 15,046,375 and 10,581,885 for the three-month periods ended June 30, 2010 and June 30, 2009, respectively. The weighted average number of shares was 14,741,694 and 10,409,248 for the nine-month periods ended June 30, 2010 and June 30, 2009, respectively. The weighted average number of shares increased as a result of the conversion of preferred stock to Common Stock, the sale of additional Common Stock, and the exercise of warrants to purchase shares of Common Stock.

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

CASH AND CASH EQUIVALENTS

As of June 30, 2010, cash and cash equivalents totaled $1.8 million, a decrease of $0.5 million when compared with the $2.3 million on hand at September 30, 2009. This represents a change of 21.7%. Net cash provided from investing activities of $1.4 million and net cash provided from financing activities of $0.9 million were offset by cash used for operations of $2.9 million, resulting in the $0.5 million reduction.

ACCOUNTS RECEIVABLES

As of June 30, 2010, accounts receivables, net of reserves for third-party contractual adjustments and allowance for uncollectible accounts totaled $5.0 million, an increase of $0.1 million from $4.9 million at September 30, 2009. This represents a change of 2.0%, which was a nominal change due to normal business fluctuations.

PREPAID EXPENSES

As of June 30, 2010, prepaid expenses totaled $0.4 million, an increase of $0.3 million from $0.1 million at September 30, 2009. This represents a change of 300.0%. The increase arose primarily from the purchase of additional prepaid insurance.

OTHER CURRENT ASSETS

As of June 30, 2010, other current assets totaled $1.1 million, a decrease of $0.7 million from $1.8 million at September 30, 2009. This represents a change of 38.9%. The decrease arose primarily from a reduction in other receivables offset by a cash advance in the amount of $0.1 million to our minority partner in and Southern Plains Associates, LLC, an Oklahoma limited liability company, during the three-month period ended June 30, 2010.

ACCOUNTS PAYABLE

As of June 30, 2010, accounts payable totaled $4.1 million, compared to $3.6 million at September 30, 2009. This represents an increase of $0.5 million, or 13.9%. Of this increase, $0.2 million is attributable to an increase in refunds due to patients and other third parties. The remainder is due to normal operational fluctuations. Accounts payable to vendors has increased due to cash constraints.

ACCRUED EXPENSES

As of June 30, 2010, accrued expenses totaled $3.7 million, compared to $3.5 million at September 30, 2009. This represents an increase of $0.2 million, or 5.7%. The increase is primarily attributable to an increase in accrued payroll and other accrued expenses of $0.1 million and a decrease in funds received in advance for warrant exercises in the amount of $0.1 million.

NOTES PAYABLE

At September 30, 2009, notes payable consisted of the Second Bridge Notes and Third Bridge Notes promissory notes with a face value of $0.7 million and $3.6 million in short-term debt related to the buildings and property owned by SPMC, which was paid-off in the current period. The Bridge Notes, Second Bridge Notes and Third Bridge Notes have been extended and have maturity dates in excess of twelve months from June 30, 2010.

INFLATION

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

OTHER EVENTS

We are not aware of any trends, events or uncertainties that will result in a material change in our results of operations.

LIQUIDITY AND CAPITAL RESOURCES

Our cash and cash equivalents totaled $1.8 million as of June 30, 2010, compared to $2.3 million at September 30, 2009, a decrease of $0.5 million. This decrease is primarily due to operating deficits that required the use of cash. As of June 30, 2010 we had a working capital deficit of working capital deficit of $(0.9) million compared with a working capital deficit of $(1.8) million at September 30, 2009. The working capital increase was primarily a result of debt refinancing that converted short-term debt into long-term debt. As of June 30, 2010, we had a shareholders’ deficit of ($14.0) 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 nine-month period ended June 30, 2010 was $1.4 million, as compared with net cash used of $3.8 million in the nine-month period ended June 30, 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 that occurred in the nine-month period ended June 30, 2009.

Cash generated in respect of financing activities totaled $0.9 million in the nine-month period ended June 30, 2010, as compared with $6.1 million at June 30, 2009. The change was principally derived from the proceeds of debt instruments decreasing in the nine-month period ended June 30, 2010, as compared with the proceeds of debt instruments in the nine-month period ended June 30, 2009.

As of June 30, 2010 we had current liabilities of $9.2 million and current assets of $8.3 million, including $1.8 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 to buildings and property owned by SPMC and the reduction of $3.6 million of short-term debt related to the buildings and property owned by SPMC.

We have sustained operating losses since our inception and had an accumulated deficit of approximately $93.0 million as of June 30, 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 not aware 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 ARRANGEMENTS

None.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures : As of the end of the fiscal quarter ended June 30, 2010, 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 this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our controls and procedures were effective as of the end of the fiscal quarter ended June 30, 2010.

PART II
OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

None.

Item 1A. RISK FACTORS

In addition to the other information set forth in this Form 10-Q, 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 Fiscal 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

Exercise of Warrants

On May 21, 2010, we issued 60,000 shares of our Common Stock to one investor for an aggregate purchase price of $30,000. The issuance was 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 offer and sale of the Common Stock pursuant to the warrant exercise was 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.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. [REMOVED AND RESERVED]

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)

	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)

	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)


Exhibit No.			Description

	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)

	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)


Exhibit No.			Description

	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)

	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)


Exhibit No.			Description

	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.

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: August 20, 2010	First Physicians Capital Group, Inc. (Registrant)
	By:	/s/ David Hirschhorn
		David Hirschhorn
		Chief Executive Officer (Principal Executive Officer)

Date: August 20, 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)


Exhibit No.			Description

	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)

	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.